EXHIBIT (4)
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as
of the ___ day of __________, 1994, by and between MuniBond Income Fund,
Inc., a Maryland corporation ("MuniBond"), and MuniAssets Fund, Inc., a
Maryland corporation ("MuniAssets").
PLAN OF REORGANIZATION
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The reorganization will comprise the acquisition by MuniAssets of
substantially all of the assets, and the assumption of all of the
liabilities, of MuniBond in exchange solely for an equal aggregate value of
MuniAssets's shares of common stock, with a par value of $0.10 per share
("MuniAssets Common Stock"), and the subsequent distribution to MuniBond
stockholders in liquidation of MuniBond of all of the MuniAssets Common Stock
received in exchange for their corresponding shares of common stock of
MuniBond, with a par value of $0.10 per share ("MuniBond Common Stock"), upon
and subject to the terms hereinafter set forth (the "Reorganization").
In the course of the Reorganization, MuniAssets Common Stock will be
distributed to MuniBond stockholders as follows: each holder of MuniBond
Common Stock will be entitled to receive the number of shares of MuniAssets
Common Stock to be received by MuniBond equal to the aggregate net asset
value of the MuniBond Common Stock owned by such stockholder on the Exchange
Date (as defined in Section 7 of this Agreement). In consideration therefor,
on the Exchange Date MuniAssets shall assume all of MuniBond's obligations
and liabilities then existing, whether absolute, accrued, contingent or
otherwise. It is intended that the Reorganization described in this Plan
shall be a reorganization within the meaning of Section 368(a) (l) (D) of the
Internal Revenue Code of 1986, as amended (the "Code"), and any successor
provision.
As promptly as practicable after the liquidation of MuniBond pursuant to
the Reorganization, MuniBond shall be dissolved in accordance with the laws
of the State of Maryland and will terminate its registration under the
Investment Company Act of 1940, as amended (the "1940 Act").
AGREEMENT
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In order to consummate the Reorganization and in consideration of the
premises and the covenants and agreements hereinafter set forth, and
intending to be legally bound, MuniBond and MuniAssets hereby agree as
follows:
1. Representations and Warranties of MuniBond. MuniBond represents
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and warrants to, and agrees with, MuniAssets that:
(a) MuniBond is a corporation duly organized, validly existing and
in good standing in conformity with the laws of the State of Maryland, and
has the power to own all of its assets and to carry out this Agreement.
MuniBond has all necessary Federal, state and local authorizations to carry
on its business as it is now being conducted and to carry out this Agreement.
(b) MuniBond is duly registered under the 1940 Act as a non-
diversified, closed-end management investment company (File No. 811-_____),
and such registration has not been revoked or rescinded and is in full force
and effect. MuniBond has elected to qualify and has qualified as a
regulated investment company under Sections 851-855 of the Code as of its
taxable year ended May 31, 1994, has been a regulated investment company at
all times since its inception and meets the requirements for and intends to
continue to qualify as a regulated investment company for its taxable year
ending upon the liquidation of MuniBond.
(c) As used in this Agreement, the term "Investments" shall mean
(i) the investments of MuniBond shown on the schedule of its investments as
of the Valuation Time (as defined in Section 3(c) of this Agreement)
furnished to MuniAssets, with such additions thereto and deletions therefrom
as may have arisen in the course of MuniBond's business up to the Valuation
Time; and (ii) all other assets owned by MuniBond or liabilities incurred as
of the Valuation Time, except that MuniBond shall retain cash, bank deposits
or cash equivalent securities in an estimated amount necessary to (1)
discharge its unpaid liabilities on its books at the Valuation Time
(including, but not limited to, its income dividends and capital gains
distributions, if any, payable for the period prior to the Valuation Time),
and (2) pay such contingent and other liabilities as the Directors of
MuniBond reasonably shall deem to exist against the Fund, if any, at the
Valuation Time, for which contingent and other liabilities appropriate
liability reserves shall be established on MuniBond's books. MuniBond also
shall retain any and all rights which it may have over and against any other
person which may have accrued up to and the Valuation Time. Any unexpended
portion of the foregoing funds so retained by MuniBond shall be disbursed by
MuniBond pro rata to its stockholders upon dissolution of the Fund as a final
liquidating dividend.
(d) MuniBond has full power and authority to enter into and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
action of its Board of Directors, and this Agreement constitutes a valid and
binding contract enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto.
(e) MuniAssets has been furnished with a statement of assets,
liabilities and capital and a schedule of investments of MuniBond, each as of
May 31, 1994, said financial statements having been audited by Deloitte &
Touche, independent public accountants. An unaudited statement of assets,
liabilities and capital of MuniBond and an unaudited schedule of investments
of MuniBond, each as of the Valuation Time, will be furnished to MuniAssets
at or prior to the Date for the purpose of determining the number of shares
of MuniAssets Common Stock to be issued pursuant to Section 4 of this
Agreement; and each will fairly present the financial position of MuniBond as
of the Valuation Time in conformity with generally accepted accounting
principles applied on a consistent basis.
[(f) MuniAssets has been furnished with MuniBond's
Semi-Annual Report to Stockholders for the six months ended __________, 1994,
and the unaudited financial statements appearing therein fairly present the
financial position of MuniBond as of the respective dates indicated, in
conformity with generally accepted accounting principles applied on a
consistent basis.]
(g) MuniAssets has been furnished with (i) the prospectus of
MuniBond, dated October 22, 1993, relating to the MuniBond Common Stock (the
"MuniBond Common Stock Prospectus") and
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said prospectus does not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(h) There are no material legal, administrative or other
proceedings pending or, to the knowledge of MuniBond, threatened against
MuniBond which assert liability on the part of MuniBond or which materially
affect its financial condition or its ability to consummate the
Reorganization. MuniBond is not charged with or, to the best of its
knowledge, threatened with any violation or investigation of any possible
violation of any provisions of any Federal, state or local law or regulation
or administrative ruling relating to any aspect of its business.
(i) There are no material contracts outstanding to which MuniBond
is a party that have not been disclosed in the N-14 Registration Statement
(as defined in subsection (p) below) or will not otherwise be disclosed to
MuniAssets prior to the Valuation Time.
(j) MuniBond is not a party to or obligated under any provision of
its Articles of Incorporation, as amended, or its by-laws, as amended, or any
contract or other commitment or obligation, and is not subject to any order
or decree which would be violated by its execution of or performance under
this Agreement.
(k) MuniBond has no known liabilities of a material amount,
contingent or otherwise, other than those shown on its statements of
assets, liabilities and capital referred to above, those incurred in the
ordinary course of its business as an investment company since May 31, 1994
and those incurred in connection with the Reorganization. As of the
Valuation Time, MuniBond will advise MuniAssets in writing of all known
liabilities, contingent or otherwise, whether or not incurred in the
ordinary course of business, existing or accrued as of such time.
(l) MuniBond has filed, or has obtained extensions to file, all
Federal, state and local tax returns which are required to be filed by it,
and has paid or has obtained extensions to pay, all Federal, state and local
taxes shown on said returns to be due and owing and all assessments received
by it, up to and including the taxable year in which the Exchange Date
occurs. All tax liabilities of MuniBond have adequately been provided for on
its books, and no tax deficiency or liability of MuniBond has been asserted
and no question with respect thereto has been raised by the Internal Revenue
Service or by any state or local tax authority for taxes in excess of those
already paid, up to and including the taxable year in which the Exchange Date
occurs.
(m) At both the Valuation Time and the Exchange Date, MuniBond
will have full right, power and authority to sell, assign, transfer and
deliver the Investments. At the Exchange Date, subject only to the delivery
of the Investments as contemplated by this Agreement, MuniBond will have good
and marketable title to all of the Investments, and MuniAssets will acquire
all of the Investments free and clear of any encumbrances, liens or security
interests and without any restrictions upon the transfer thereof (except
those imposed by the Federal or state securities laws and those imperfections
of title or encumbrances as do not materially detract from the value or use
of the Investments or materially affect title thereto).
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(n) No registration under the Securities Act of 1933, as amended
(the "1933 Act"), of any of the Investments would be required if they were,
as of the time of such transfer, the subject of a public distribution by
MuniAssets.
(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by MuniBond of the
Reorganization, except such as may be required under the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the 1940
Act or state securities laws (which term as used herein shall include the
laws of the District of Columbia and Puerto Rico).
(p) The registration statement filed by MuniAssets on Form N-14
relating to the MuniAssets Common Stock to be issued pursuant to this
Agreement, and any supplement or amendment thereto or to the documents
therein (as amended, the "N-14 Registration Statement"), on the effective
date of the N-14 Registration Statement, at the time of the stockholders'
meetings referred to in Section 6(a) of this Agreement and on the Exchange
Date, insofar as it relates to MuniBond (i) complied or will comply in all
material respects with the provisions of the 1933 Act, the 1934 Act and the
1940 Act and the rules and regulations thereunder, and (ii) did not or will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading; and the prospectus and statement of
additional information included therein did not or will not contain any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the
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representations and warranties in this subsection shall apply only to
statements in or omissions from the N-14 Registration Statement made in
reliance upon and in conformity with information furnished by MuniBond for
use in the N-14 Registration Statement as provided in Section 7 of this
Agreement.
(q) MuniBond is authorized to issue 200,000,000 shares of capital
stock, par value $0.10 per share, each outstanding share of which is fully
paid, nonassessable and has full voting rights.
(r) All of the issued and outstanding shares of MuniBond Common
Stock were offered for sale and sold in conformity with all applicable
Federal and state securities laws.
(s) The books and records of MuniBond made available to MuniAssets
and/or its counsel are substantially true and correct and contain no material
misstatements or omissions with respect to the operations of MuniBond.
(t) MuniBond will not sell or otherwise dispose of any of the
shares of MuniAssets to be received in the Reorganization, except in
distribution to the stockholders of MuniBond.
2. Representations and Warranties of MuniAssets. MuniAssets
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represents and warrants to, and agrees with, MuniBond that:
(a) MuniAssets is a corporation duly organized, validly existing
and in good standing in conformity with the laws of the State of Maryland,
and has the power to own all of its assets and to carry out this Agreement.
MuniAssets has all necessary Federal, state and local authorizations to carry
on its business as it is now being conducted and to carry out this Agreement.
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(b) MuniAssets is duly registered under the 1940 Act as a non-
diversified, closed-end management investment company (File No. 811-7642),
and such registration has not been revoked or rescinded and is in full force
and effect. MuniBond has elected to qualify and has qualified as a regulated
investment company under Sections 851-855 of the Code as of its taxable year
ending May 31, 1994, and has been a regulated investment company at all times
since its inception.
(c) MuniBond has been furnished with a statement of assets,
liabilities and capital and a schedule of investments of MuniAssets, each as
of May 31, 1994, said financial statements having been examined by Deloitte &
Touche, independent public accountants. An unaudited statement of assets,
liabilities and capital of MuniAssets and an unaudited schedule of
investments of MuniAssets, each as of the Valuation Time, will be furnished
to MuniBond at or prior to the Exchange Date for the purpose of determining
the number of shares of MuniAssets Common Stock to be issued pursuant to
Section 4 of this Agreement; each will fairly present the financial position
of MuniAssets as of the Valuation Time in conformity with generally accepted
accounting principles applied on a consistent basis.
(d) MuniBond has been furnished with (i) the prospectus of
MuniAssets, dated June 18, 1993, relating to the MuniAssets Common Stock (the
"MuniAssets Common Stock Prospectus") and said prospectus does not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(e) MuniAssets has full power and authority to enter into and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
action of its Board of Directors and this Agreement constitutes a valid and
binding contract enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto.
(f) There are no material legal, administrative or other
proceedings pending or, to the knowledge of MuniAssets, threatened against
MuniAssets which assert liability on the part of MuniAssets or which
materially affect its financial condition or its ability to consummate the
Reorganization. MuniAssets is not charged with or, to the best of its
knowledge, threatened with any violation or investigation of any possible
violation of any provisions of any Federal, state or local law or regulation
or administrative ruling relating to any aspect of its business.
(g) MuniAssets is not a party to or obligated under any provision
of its Articles of Incorporation, as amended, or its by-laws, as amended, or
any contract or other commitment or obligation, and is not subject to any
order or decree which would be violated by its execution of or performance
under this Agreement.
(h) There are no material contracts outstanding to which
MuniAssets is a party that have not been disclosed in the N-14 Registration
Statement or will not otherwise be disclosed to MuniAssets prior to the
Valuation Time.
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(i) MuniAssets has no known liabilities of a material amount,
contingent or otherwise, other than those shown on MuniAssets's statements of
assets, liabilities and capital referred to above, those incurred in the
ordinary course of its business as an investment company since May 31, 1994
and those incurred in connection with the Reorganization. As of the
Valuation Time, MuniAssets will advise MuniBond in writing of all known
liabilities, contingent or otherwise, whether or not incurred in the ordinary
course of business, existing or accrued as of such time.
(j) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by MuniAssets of the
Reorganization, except such as may be required under the 1933 Act, the 1934
Act, the 1940 Act or state securities laws.
(k) The N-14 Registration Statement, on its effective date, at the
time of the stockholders' meetings referred to in Section 6(a) of this
Agreement and at the Exchange Date, insofar as it relates to MuniAssets (i)
complied or will comply in all material respects with the provisions of the
1933 Act, the 1934 Act and the 1940 Act and the rules and regulations
thereunder and (ii) did not or will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; and the
prospectus and statement of additional information included therein did not
or will not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided,
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however, that the representations and warranties in this subsection only
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shall apply to statements in or omissions from the N-14 Registration
Statement made in reliance upon and in conformity with information furnished
by MuniAssets for use in the N-14 Registration Statement as provided in
Section 7 of this Agreement.
(l) MuniAssets is authorized to issue 200,000,000 shares of
capital stock, par value $0.10 per share, each outstanding share of which is
fully paid, nonassessable and has full voting rights.
(m) The MuniAssets Common Stock to be issued to MuniBond pursuant
to this Agreement will have been duly authorized and, when issued and
delivered pursuant to this Agreement, will be legally and validly issued and
will be fully paid and nonassessable and will have full voting rights, and no
stockholder of MuniAssets will have any preemptive right of subscription or
purchase in respect thereof.
(n) At or prior to the Exchange Date, the MuniAssets Common Stock
to be transferred to MuniBond on the Exchange Date will be duly qualified for
offering to the public in all states of the United States in which the sale
of shares of MuniAssets presently are qualified, and there are a sufficient
number of such shares registered under the 1933 Act and with each pertinent
state securities commission to permit the transfers contemplated by this
Agreement to be consummated.
(o) At or prior to the Exchange Date, MuniAssets will have
obtained any and all regulatory, Director and stockholder approvals necessary
to issue the MuniAssets Common Stock to MuniBond.
3. The Reorganization. (a) Subject to the requisite approvals of the
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stockholders of each of MuniBond and MuniAssets being given, and to the other
terms and conditions contained herein,
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MuniBond agrees to convey, transfer and deliver to MuniAssets for the
benefit of MuniAssets, and MuniAssets agrees to acquire from MuniBond for
the benefit of MuniAssets, on the Exchange Date all of the Investments
(including interest accrued as of the Valuation Time on debt instruments)
of MuniBond, and assume all of the liabilities of MuniBond, in exchange
solely for that number of shares of MuniAssets Common Stock provided in
Section 4 of this Agreement. Pursuant to this Agreement, as soon as
practicable MuniBond will distribute all MuniAssets Common Stock received
by it to its stockholders in exchange for their corresponding MuniBond
Common Stock. Such distribution shall be accomplished by the opening of
stockholder accounts on the stock ledger records of MuniAssets in the
amounts due the stockholders of MuniBond based on their respective holdings
in MuniBond as of the Valuation Time.
(b) MuniBond will pay or cause to be paid any interest it receives
on or after the Exchange Date with respect to the Investments transferred to
MuniAssets hereunder.
(c) The Valuation Time shall be [4:00 P.M.], New York time, on
__________, 1994, or such earlier or later day and time as mutually may be
agreed upon in writing (the "Valuation Time").
(d) MuniAssets will acquire substantially all of the assets of,
and assume all of the known liabilities of, MuniBond, except that recourse
for such liabilities will be limited to MuniAssets. The known liabilities of
MuniBond as of the Valuation Time shall be confirmed in writing to MuniAssets
by MuniBond pursuant to Section 1(g) of this Agreement.
4. Issuance and Valuation of MuniAssets Common Stock in the
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Reorganization. Full MuniAssets Common Stock of an aggregate net asset value
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or liquidation preference, as the case may be, equal (to the nearest one ten
thousandth of one cent) to the value of the assets of MuniBond acquired
determined as hereinafter provided, reduced by the amount of liabilities
assumed by MuniAssets, shall be issued by MuniAssets in exchange for such
assets of MuniBond. The assets of MuniBond and MuniAssets shall be
determined in accordance with the procedures described in the MuniAssets
Common Stock Prospectus as of the Valuation Time, and no formula will be used
to adjust the net asset value so determined of either MuniBond or MuniAssets
to take into account differences in realized and unrealized gains and losses.
Values in all cases shall be determined as of the Valuation Time. The value
of the Investments of MuniBond to be transferred to MuniAssets shall be
determined by MuniAssets pursuant to the procedures utilized by MuniAssets in
valuing its own assets and determining its own liabilities for purposes of
the Reorganization. Such valuation and determination shall be made by
MuniAssets in cooperation with MuniBond and shall be confirmed in writing to
MuniAssets by MuniBond. The net asset value per share of the MuniAssets
Common Stock shall be determined in accordance with such procedures and
MuniAssets shall certify the computations involved. MuniAssets shall issue to
MuniBond separate certificates or share deposit receipts for the MuniAssets
Common Stock registered in the name of MuniBond. MuniBond then shall
distribute the MuniAssets Common Stock to its corresponding stockholders of
MuniBond Common Stock by redelivering the certificates or share deposit
receipts evidencing ownership of the MuniAssets Common Stock to The Bank of
New York, as the transfer agent and registrar for the MuniAssets Common
Stock. With respect to any MuniBond stockholder holding certificates
evidencing ownership of the MuniBond Common Stock as of the Exchange Date,
and subject to MuniAssets being informed thereof in writing by MuniBond,
MuniAssets will not permit such stockholder to receive new certificates
evidencing ownership of the
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MuniAssets Common Stock, exchange MuniAssets Common Stock credited to such
stockholder's account for shares of other investment companies managed by
Merrill Lynch Asset Management, L.P. or any of its affiliates, or pledge or
redeem such MuniAssets Common Stock, in any case, until notified by MuniBond
or its agent that such stockholder has surrendered his or her outstanding
certificates evidencing ownership of the MuniBond Common Stock or, in the
event of lost certificates, posted adequate bond. MuniBond, at its own
expense, will request its stockholders to surrender their outstanding
certificates evidencing ownership of the MuniBond Common Stock, as the case
may be, or post adequate bond therefor.
5. Payment of Expenses. (a) With respect to expenses incurred in
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connection with the Reorganization, MuniAssets shall pay, subsequent to the
Exchange Date, all expenses incurred in connection with the Reorganization,
including, but not limited to, all costs related to the preparation and
distribution of the N-14 Registration Statement and the fees of special
counsel to the Reorganization. Such fees and expenses shall include legal,
accounting and state securities or blue sky fees, printing costs, filing
fees, stock exchange fees, portfolio transfer taxes (if any), and any similar
expenses incurred in connection with the Reorganization. Neither MuniBond
nor MuniAssets shall pay any expenses of its respective stockholders arising
out of or in connection with the Reorganization.
(b) If for any reason the Reorganization is not consummated, no
party shall be liable to any other party for any damages resulting therefrom,
including, without limitation, consequential damages.
6. Covenants of MuniBond and MuniAssets. (a) MuniBond and MuniAssets
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each agrees to call a meeting of its respective stockholders as soon as is
practicable after the effective date of the N-14 Registration Statement for
the purpose of considering the Reorganization as described in this Agreement.
As a condition to the obligations of each of the parties hereto, the holders
of (i) more than fifty percent of the shares of MuniBond Common Stock, and
(ii) more than fifty percent of the MuniAssets Common Stock in each case
issued and outstanding and entitled to vote thereon, shall have approved this
Agreement at such a meeting at or prior to the Valuation Time.
(b) MuniBond and MuniAssets each covenants to operate its
respective business as presently conducted between the date hereof and the
Exchange Date.
(c) MuniBond agrees that following the consummation of the
Reorganization, it will liquidate and dissolve in accordance with the laws of
the State of Maryland and any other applicable law, it will not make any
distributions of any MuniAssets Common Stock other than to the stockholders
of MuniBond and without first paying or adequately providing for the payment
of all of MuniBond's liabilities not assumed by MuniAssets, if any, and on
and after the Exchange Date it shall not conduct any business except in
connection with its liquidation and dissolution.
(d) MuniBond undertakes that if the Reorganization is consummated,
it will file an application pursuant to Section 8(f) of the 1940 Act for an
order declaring that MuniBond has ceased to be a registered investment
company.
(e) MuniBond and MuniAssets jointly will file the N-14
Registration Statement with the Securities and Exchange Commission (the
"Commission") and will use their best efforts to provide that the N-14
Registration Statement becomes effective as promptly as practicable.
MuniBond and MuniAssets
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agree to cooperate fully with each other, and each will furnish to the other
the information relating to itself to be set forth in the N-14 Registration
Statement as required by the 1933 Act, 1934 Act, the 1940 Act, and the rules
and regulations thereunder and the state securities or blue sky laws.
(f) MuniAssets agrees to advise MuniBond promptly in writing if at
any time prior to the Exchange Date the assets of MuniBond include any assets
which MuniAssets is not permitted, or reasonably believes to be unsuitable
for it, to acquire, including without limitation any security which, prior to
its acquisition by MuniBond, MuniAssets has informed MuniBond is unsuitable
for MuniAssets to acquire. Moreover, MuniAssets has no plan or intention to
sell or otherwise dispose of the assets of MuniBond to be acquired in the
Reorganization, except for dispositions made in the ordinary course of
business.
(g) MuniBond and MuniAssets each agrees that by the Exchange Date
all of its Federal and other tax returns and reports required to be filed on
or before such date shall have been filed and all taxes shown as due on said
returns either have been paid or adequate liability reserves have been
provided for the payment of such taxes. In connection with this covenant,
the funds agree to cooperate with each other in filing any tax return,
amended return or claim for refund, determining a liability for taxes or a
right to a refund of taxes or participating in or conducting any audit or
other proceeding in respect of taxes. MuniAssets agrees to retain for a
period of ten years following the Exchange Date all returns, schedules and
work papers and all material records or other documents relating to tax
matters of MuniBond for its taxable period first ending after the Exchange
Date and for all prior taxable periods. Any information obtained under this
subsection shall be kept confidential except as otherwise may be necessary in
connection with the filing of returns or claims for refund or in conducting
an audit or other proceeding. After the Exchange Date, MuniBond shall
prepare, or cause it agents to prepare, any Federal, state or local tax
returns, including any Forms 1099, required to be filed by MuniBond with
respect to MuniBond's final taxable year ending with its complete liquidation
and for any prior periods or taxable years and further shall cause such tax
returns and Forms 1099 to be duly filed with the appropriate taxing
authorities. Notwithstanding the aforementioned provisions of this
subsection, any expenses incurred by MuniBond (other than for payment of
taxes) in connection with the preparation and filing of said tax returns and
Forms 1099 after the Exchange Date shall be borne by MuniBond to the extent
such expenses have been accrued by MuniBond in the ordinary course without
regard to the Reorganization; any excess expenses shall be borne by Fund
Asset Management, L.P. ("FAM") at the time such tax returns and Forms 1099
are prepared.
(h) MuniBond and MuniAssets each agrees to mail to each of its
respective stockholders of record entitled to vote at the meeting of
stockholders at which action is to be considered regarding this Agreement, in
sufficient time to comply with requirements as to notice thereof, a combined
Proxy Statement and Prospectus which complies in all material respects with
the applicable provisions of Section 14(a) of the 1934 Act and Section 20(a)
of the 1940 Act, and the rules and regulations, respectively, thereunder.
(i) Following the consummation of the Reorganization, MuniAssets
expects to stay in existence and continue its business as a closed-end
management investment company registered under the 1940 Act.
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7. Exchange Date. (a) Delivery of the assets of MuniBond to be
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transferred, together with any other Investments, and the MuniAssets Common
Stock to be issued, shall be made at the offices of Rogers & Wells, 200 Park
Avenue, New York, New York 10166, at [10:00 A.M.] on the next full business
day following the Valuation Time, or at such other place, time and date
agreed to by MuniBond and MuniAssets, the date and time upon which such
delivery is to take place being referred to herein as the "Exchange Date".
To the extent that any Investments, for any reason, are not transferable on
the Exchange Date, MuniBond shall cause such Investments to be transferred to
MuniAssets's account with The Bank of New York at the earliest practicable
date thereafter.
(b) MuniBond will deliver to MuniAssets on the Exchange Date
confirmations or other adequate evidence as to the tax basis of each of the
Investments delivered to MuniAssets hereunder, certified by Deloitte &
Touche.
(c) MuniAssets shall have made prior arrangements for the delivery
on the Exchange Date of the Investments to The Bank of New York as the
custodian for MuniAssets.
(d) As soon as practicable after the close of business on the
Exchange Date, MuniBond shall deliver to MuniAssets a list of the names and
addresses of all of the stockholders of record of MuniBond on the Exchange
Date and the number of shares of MuniBond Common Stock owned by each such
stockholder, certified by its transfer agent for the MuniBond Common Stock,
as applicable or by its President to the best of their knowledge and belief.
8. MuniBond Conditions. The obligations of MuniBond hereunder shall
-------------------
be subject to the following conditions:
(a) That this Agreement shall have been adopted, and the
Reorganization shall have been approved, by the affirmative vote of the
holders of (i) more than fifty percent of the MuniAssets Common Stock, issued
and outstanding and entitled to vote thereon; and that MuniAssets shall have
delivered to MuniBond a copy of the resolution approving this Agreement
adopted by MuniAssets's Board of Directors, certified by the Secretary of
MuniAssets.
(b) That MuniAssets shall have furnished to MuniBond a statement
of MuniAssets's assets, liabilities and capital, with values determined as
provided in Section 4 of this Agreement, together with a schedule of its
investments, all as of the Valuation Time, certified on MuniBond's behalf by
its President (or any Vice President) and its Treasurer, and a certificate
signed by MuniAssets's President (or any Vice President) and its Treasurer,
dated as of the Exchange Date, certifying that as of the Valuation Time and
as of the Exchange Date there has been no material adverse change in the
financial position of MuniAssets since May 31, 1994, other than changes in
its portfolio securities since that date or changes in the market value of
its portfolio securities.
(c) That MuniAssets shall have furnished to MuniBond a certificate
signed by MuniAssets's President (or any Vice President) and its Treasurer,
dated as of the Exchange Date, certifying that all representations and
warranties of MuniAssets made in this Agreement are true and correct in all
material respects with the same effect as if made at and as of the Exchange
Date, and that MuniAssets has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or satisfied at
or prior to such date.
10
(d) That there shall not be any material litigation pending with
respect to the matters contemplated by this Agreement.
(e) That MuniBond shall have received an opinion of Gallan,
Kharasch, Morse & Garfinkle, P.C., Maryland counsel to MuniBond, in form
satisfactory to MuniBond and dated the Exchange Date, to the: effect that (i)
MuniAssets is a corporation duly organized, validly existing and in good
standing in conformity with the laws of the State of Maryland; (ii) the
MuniAssets Common Stock to be delivered to MuniBond stockholders as provided
for by this Agreement are duly authorized and, upon delivery, will be validly
issued and outstanding and fully paid and nonassessable by MuniAssets, and no
stockholder of MuniAssets has any preemptive right to subscription or
purchase in respect thereof (pursuant to the Articles of Incorporation, as
amended, or the by-laws of MuniAssets or, to the best of such counsel's
knowledge, otherwise); (iii) this Agreement has been duly authorized,
executed and delivered by MuniAssets, and represents a valid and binding
contract, enforceable in accordance with its terms, subject to the effects of
bankruptcy, insolvency, moratorium, fraudulent conveyance and similar laws
relating to or affecting creditors' rights generally and court decisions with
respect thereto; provided, that such counsel shall express no opinion with
--------
respect to the application of equitable principles in any proceeding, whether
at law or in equity; (iv) the execution and delivery of this Agreement did
not, and the consummation of the Reorganization will not, violate the
Articles of Incorporation, as amended, or the by-laws of MuniAssets; (v) no
consent, approval, authorization or order of any Maryland court or
governmental authority is required for the consummation by MuniBond of the
Reorganization, except such as have been obtained under Maryland law; and
(vi) such opinion is solely for the benefit of MuniBond and its Directors and
officers.
(f) That MuniBond shall have received an opinion of Rogers &
Wells, as counsel to MuniAssets, in form satisfactory to MuniBond and dated
the Exchange Date, to the effect that (i) no consent, approval, authorization
or order of any United States Federal court or governmental authority is
required for the consummation by MuniBond and MuniAssets of the
Reorganization, except such as have been obtained under the 1933 Act, the
1934 Act and the 1940 Act and the published rules and regulations of the
Commission thereunder and such as may be required under state securities or
blue sky laws; (ii) the N-14 Registration Statement has become effective
under the 1933 Act, no stop order suspending the effectiveness of the N-14
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the 1933 Act, and
the N-14 Registration Statement, and each amendment or supplement thereto,
as of their respective effective dates, appear on their face to be
appropriately responsive in all material respects to the requirements of
the 1933 Act, the 1934 Act and the 1940 Act and the published rules and
regulations of the Commission thereunder; (iii) the descriptions in the N-14
Registration Statement of statutes, legal and governmental proceedings and
contracts and other documents are accurate and fairly present the
information required to be shown; and (iv) such counsel do not know of any
statutes, legal or governmental proceedings or contracts or other documents
related to the Reorganization of a character required to be described in the
N-14 Registration Statement which are not described therein or, if required
to be filed, filed as required; (v) the execution and delivery of this
Agreement does not, and the consummation of the Reorganization will not,
violate any material provision of any agreement (known to such counsel) to
which
11
MuniAssets is a party or by which MuniAssets is bound; (vi) MuniAssets, to
the knowledge of such counsel, is not required to qualify to do business as
a foreign corporation in any jurisdiction except as may be required by state
securities or blue sky laws, and except where it has so qualified or the
failure so to qualify would not have a material adverse effect on MuniAssets,
or its stockholders; (vii) such counsel does not have actual knowledge of
any material suit, action or legal or administrative proceeding pending or
threatened against MuniAssets, the unfavorable outcome of which would
materially and adversely affect MuniAssets; and (viii) all corporate actions
required to be taken by MuniAssets to authorize this Agreement and to effect
the Reorganization have been duly authorized by all necessary corporate
actions on the part of MuniAssets. Such opinion also shall state that (x)
while such counsel cannot make any representation as to the accuracy or
completeness of statements of fact in the N-14 Registration Statement or any
amendment or supplement thereto, nothing has come to their attention that
would lead them to believe that, on the respective effective dates of the
N-14 Registration Statement and any amendment or supplement thereto, (1) the
N-14 Registration Statement or any amendment or supplement thereto contained
any untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading; and (2) the prospectus and statement of additional
information included in the N-14 Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and (y) such counsel do not express
any opinion or belief as to the financial statements, other financial data,
statistical data or information relating to MuniAssets contained or
incorporated by reference in the N-14 Registration Statement. In giving the
opinion set forth above, Rogers & Wells may state that it is relying on
certificates of officers of MuniAssets with regard to matters of fact and
certain certificates and written statements of governmental officials with
respect to the good standing of MuniAssets and on the opinion of Gallan,
Kharasch, Morse & Garfinkle, P.C. as to matters of Maryland law.
(g) That MuniBond shall have received either (a) a private letter
ruling from the Internal Revenue Service or (b) an opinion of Rogers & Wells,
to the effect that for Federal income tax purposes (i) the transfer of
substantially all of the Investments of MuniBond to MuniAssets in exchange
solely for MuniAssets Common Stock as provided in this Agreement will
constitute a reorganization within the meaning of Section 368(a) (I) (C) of
the Code; (ii) in accordance with Section 361(a) of the Code, no gain or loss
will be recognized to MuniBond as a result of the Reorganization; (iii) no
gain or loss will be recognized to MuniAssets as a result of the
Reorganization; (iv) in accordance with Section 354(a) (I) of the Code, no
gain or loss will be recognized to the stockholders of MuniBond on the
distribution to them by MuniBond of MuniAssets Common Stock in exchange for
their corresponding MuniBond Common Stock, and in accordance with Section
356(a) of the Code gain, if any, will be recognized with respect to any cash
or property other than MuniAssets Common Stock received; (v) in accordance
with Section 1032 of the Code, no gain or loss will be recognized by the
stockholders of MuniAssets upon the issuance of MuniAssets Common Stock and
the distribution of such MuniAssets Common Stock to MuniBond stockholders in
the Reorganization; (vi) in accordance with Section 362(b) of the Code, the
basis to MuniAssets of the Investments will be the same as the basis of the
Investments in the hands of
12
MuniBond immediately prior to the consummation of the Reorganization, except
for any necessary adjustment on account of cash or property received; (vii)
in accordance with Section 1223 of the Code, a stockholder's holding period
for his MuniAssets Common Stock will be determined by including the period
for which he or she held the MuniBond Common Stock exchanged therefor,
provided that he or she held such MuniBond shares as a capital asset;
--------
(viii) in accordance with Section 1223 of the Code, MuniAssets's holding
period with respect to the Investments will include the period for which
such Investments were held by MuniBond; and (ix) no gain or loss will be
recognized to MuniBond or its stockholders upon the liquidation of MuniBond
in connection with the Reorganization. In addition, such opinion shall
state that, without any independent investigation having been made with
respect to the qualification of either MuniBond or MuniAssets as a regulated
investment company under the Code and based upon certain representations by
MuniBond and MuniAssets, the status of MuniBond and MuniAssets as regulated
investment companies under Sections 851-855 of the Code will not be affected
as a result of the Reorganization, except that upon the liquidation of
MuniBond in connection with the Reorganization its regulated investment
company status will terminate.
(h) That all proceedings taken by MuniAssets and its counsel in
connection with the Reorganization and all documents incidental thereto
shall be satisfactory in form and substance to MuniBond.
(i) That the N-14 Registration Statement shall have become
effective under the 1933 Act, and no stop order suspending such effectiveness
shall have been instituted or, to the knowledge of MuniAssets, contemplated
by the Commission.
(j) That MuniBond shall have received from Deloitte & Touche a
letter dated as of the effective date of the N-14 Registration Statement and
a similar letter dated within five days prior to the Exchange Date, in form
and substance satisfactory to MuniBond, to the effect that (i) they are
independent public accountants with respect to MuniAssets within the meaning
of the 1933 Act and the applicable published rules and regulations
thereunder; (ii) in their opinion, the' financial statements and
supplementary information of MuniAssets included or incorporated by reference
in the N-14 Registration Statement and reported on by them comply as to form
in all material respects with the applicable accounting requirements of the
1933 Act and the published rules and regulations thereunder; (iii) on the
basis of limited procedures agreed upon by MuniBond and described in such
letter (but not an examination in accordance with generally accepted auditing
standards) consisting of a reading of any unaudited interim financial
statements and unaudited supplementary information of MuniAssets included in
the N-14 Registration Statement, and inquiries of certain officials of
MuniAssets responsible for financial and accounting matters, nothing came to
their attention that caused them to believe that (a) such unaudited financial
statements and related unaudited supplementary information do not comply as
to form in all material respects with the applicable accounting requirements
of the 1933 Act and the published rules and regulations thereunder, (b) such
unaudited financial statements are not fairly presented in conformity with
generally accepted accounting principles, applied on a basis substantially
consistent with that of the audited financial statements, or (c) such
unaudited supplementary information is not fairly stated in all material
respects in relation to the unaudited financial
13
statements taken as a whole; and (iv) on the basis of limited procedures
agreed upon by MuniBond and described in such letter (but not an examination
in accordance with generally accepted auditing standards), the information
relating to MuniAssets appearing in the N-14 Registration Statement, which
information is expressed in dollars (or percentages derived from such
dollars) (with the exception of performance comparisons, if any), if any,
has been obtained from the accounting records of MuniAssets or from
schedules prepared by officials of MuniAssets having responsibility for
financial and reporting matters and such information is in agreement with
such records, schedules or computations made therefrom.
(k) That the Commission shall not have issued an unfavorable
advisory report under Section 25(b) of the 1940 Act, nor instituted or
threatened to institute any proceeding seeking to enjoin consummation of
the Reorganization under Section 25(c) of the 1940 Act, no other legal,
administrative or other proceeding shall be instituted or threatened which
would materially affect the financial condition of MuniAssets or would
prohibit the Reorganization.
(j) That MuniBond shall have received from the Commission such
orders or interpretations as Brown & Wood, as counsel to MuniBond, deems
reasonably necessary or desirable under the 1933 Act and the 1940 Act in
connection with the Reorganization, provided that such counsel shall have
--------
requested such orders as promptly as practicable, and all such orders shall
be in full force and effect.
9. MuniAssets Conditions. The obligations of MuniAssets hereunder
---------------------
shall be subject to the following conditions:
(a) That this Agreement shall have been adopted, and the
Reorganization shall have been approved, by the affirmative vote of the
holders of (i) more than fifty percent of the MuniAssets Common Stock issued
and outstanding and entitled to vote thereon; and that MuniBond shall have
delivered to MuniAssets a copy of the resolution approving this Agreement
adopted by MuniBond's Board of Directors, certified by the Secretary of
MuniBond.
(b) That MuniBond shall have furnished to MuniAssets a statement
of MuniBond's assets, liabilities and capital, with values determined as
provided in Section 4 of this Agreement, together with a schedule of
investments with their respective dates of acquisition and tax costs, all as
of the Valuation Time, certified on MuniBond's behalf by its President (or
any Vice President) and its Treasurer, and a certificate of both such
officers, dated the Exchange Date, certifying that there has been no material
adverse change in the financial position of MuniBond since May 31, 1994,
other than changes in the Investments since that date or changes in the
market value of the Investments.
(c) That MuniBond shall have furnished to MuniAssets a certificate
signed by MuniBond's President (or any Vice President) and its Treasurer,
dated the Exchange Date, certifying that as of the Valuation Time and as of
the Exchange Date all representations and warranties of MuniBond made in this
Agreement are true and correct in all material respects as if made at and as
of such date and MuniBond has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or satisfied at
or prior to such dates.
14
(d) That MuniBond shall have delivered to MuniAssets a letter from
Deloitte & Touche, dated the Exchange Date, stating that such firm has
performed a limited review of the Federal, state and local income tax returns
of MuniBond for the period ended May 31, 1994 (which returns originally were
prepared and filed by MuniBond), and that based on such limited review,
nothing came to their attention which caused them to believe that such
returns did not properly reflect, in all material respects, the Federal,
state and local income taxes of MuniBond for the period covered thereby; and
that for the period from May 31, 1994 to and including the Exchange Date
such firm has performed a limited review to ascertain the amount of
applicable Federal, state and local taxes, and has determined that either
such amount has been paid or reserves established for payment of such taxes,
this review to be based on unaudited financial data; and that based on such
limited review, nothing has come to their attention which caused them to
believe that the taxes paid or reserves set aside for payment of such taxes
were not adequate in all material respects for the satisfaction of Federal,
state and local taxes for the period from May 31, 1994 to and including the
Exchange Date and for any taxable year of MuniBond ending upon the
liquidation of MuniBond or that MuniBond would not continue to qualify as a
regulated investment company for Federal income tax purposes.
(e) That there shall not be any material litigation pending with
respect to the matters contemplated by this Agreement.
(f) That MuniAssets shall have received an opinion of Gallan,
Kharasch, Morse & Garfinkle, P.C., Maryland counsel to MuniAssets, in form
satisfactory to MuniAssets and dated the Exchange Date, to the effect that
(i) MuniBond is a corporation duly organized, validly existing and in good
standing in conformity with the laws of the State of Maryland; (ii) this
Agreement has been duly authorized, executed and delivered by MuniBond, and
represents a valid and binding contract, enforceable in accordance with its
terms, subject to the effects of bankruptcy, insolvency, moratorium,
fraudulent conveyance and similar laws relating to or affecting creditors'
rights generally and court decisions with respect thereto, provided, that
--------
such counsel shall express no opinion with respect to the application of
equitable principles in any proceeding, whether at law or in equity; (iii)
MuniBond has the power to sell, assign, transfer and deliver the assets
transferred by it hereunder and, upon consummation of the Reorganization in
accordance with the terms of this Agreement, MuniBond will have duly
transferred such assets and liabilities in accordance with this Agreement;
(iv) the execution and delivery of this Agreement does not, and the
consummation of the Reorganization will not, violate the Articles of
Incorporation, as amended, or the by-laws of MuniBond; (v) no consent,
approval, authorization or order of any Maryland court or governmental
authority is required for the consummation by MuniBond of the Reorganization,
except such as have been obtained under Maryland law; and (vi) such opinion
is solely for the benefit of MuniAssets and its Directors and officers.
(g) That MuniAssets shall have received an opinion of Brown &
Wood, as counsel to MuniBond, in form satisfactory to MuniAssets and dated
the Exchange Date, with respect to the matters specified in Section 8(f) of
this Agreement and such other matters as MuniAssets reasonably may deem
necessary or desirable.
15
(h) That MuniAssets shall have received a private letter ruling
from the Internal Revenue Service or opinion of Rogers & Wells with respect
to the matters specified in Section 8(g) of this Agreement.
(i) That MuniAssets shall have received from Deloitte & Touche a
letter dated as of the effective date of the N-14 Registration Statement and
a similar letter dated within five days prior to the Exchange Date, in form
and substance satisfactory to MuniAssets, to the effect that (i) they are
independent public accountants with respect to MuniBond within the meaning of
the 1933 Act and the applicable published rules and regulations thereunder;
(ii) in their opinion, the financial statements and supplementary information
of MuniBond included or incorporated by reference in the N-14 Registration
Statement and reported on by them comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and the published
rules and regulations thereunder; (iii) on the basis of limited procedures
agreed upon by MuniAssets and described in such letter (but not an
examination in accordance with generally accepted auditing standards)
consisting of a reading of any unaudited interim financial statements and
unaudited supplementary information of MuniBond included in the N-14
Registration Statement, and inquiries of certain officials of MuniBond
responsible for financial and accounting matters, nothing came to their
attention that caused them to believe that (a) such unaudited financial
statements and related unaudited supplementary information do not comply as
to form in all material respects with the applicable accounting requirements
of the 1933 Act and the published rules and regulations thereunder, (b) such
unaudited financial statements are not fairly presented in conformity with
generally accepted accounting principles, applied on a basis substantially
consistent with that of the audited financial statements, or (c) such
unaudited supplementary information is not fairly stated in all material
respects in relation to the unaudited financial statements taken as a whole;
and (iv) on the basis of limited procedures agreed upon by MuniAssets and
described in such letter (but not an examination in accordance with generally
accepted auditing standards), the information relating to MuniBond appearing
in the N-14 Registration Statement, which information is expressed in dollars
(or percentages derived from such dollars) (with the exception of performance
comparisons, if any), if any, has been obtained from the accounting records
of MuniBond or from schedules prepared by officials of MuniBond having
responsibility for financial and reporting matters and such information is in
agreement with such records, schedules or computations made therefrom.
(j) That the Investments to be transferred to MuniAssets shall not
include any assets or liabilities which MuniAssets, by reason of charter
limitations or otherwise, may not properly acquire or assume.
(k) That the N-14 Registration Statement shall have become
effective under the 1933 Act and no stop order suspending such effectiveness
shall have been instituted or, to the knowledge of MuniBond, contemplated by
the Commission.
(l) That the Commission shall not have issued an unfavorable
advisory report under Section 25(b) of the 1940 Act, nor instituted or
threatened to institute any proceeding seeking to enjoin consummation of the
Reorganization under Section 25(c) of the 1940 Act, no other legal,
16
administrative or other proceeding shall be instituted or threatened which
would materially affect the financial condition of MuniBond or would prohibit
the Reorganization.
(m) That MuniAssets shall have received from the Commission such
orders or interpretations as Rogers & Wells, as counsel to MuniAssets, deems
reasonably necessary or desirable under the 1933 Act and the 1940 Act in
connection with the Reorganization, provided that such counsel shall have
--------
requested such orders as promptly as practicable, and all such orders shall
be in full force and effect.
(n) That all proceedings taken by MuniBond and its counsel in
connection with the Reorganization and all documents incidental thereto shall
be satisfactory in form and substance to MuniAssets.
(o) That prior to the Exchange Date, MuniBond shall have declared
a dividend or dividends which, together with all previous such dividends,
shall have the effect of distributing to its stockholders all of its net
investment company taxable income for the period from November 1, 1993 to and
including the Exchange Date, if any (computed without regard to any deduction
or dividends paid), and all of its net capital gain, if any, realized for the
period from November 1, 1993 to and including the Exchange Date.
10. Termination, Postponement and Waivers.
-------------------------------------
(a) Notwithstanding anything contained in this Agreement to the
contrary, this Agreement may be terminated and the Reorganization abandoned
at any time (whether before or after adoption thereof by the stockholders of
each of MuniBond and MuniAssets) prior to the Exchange Date, or the Exchange
Date may be postponed, (i) by mutual consent of the Boards of Directors of
MuniBond and MuniAssets; (ii) by the Board of Directors of MuniBond if any
condition of MuniBond's obligations set forth in Section 8 of this Agreement
has not been fulfilled or waived by such Board; or (iii) by the Board of
Directors of MuniAssets if any condition of MuniAssets's obligations set
forth in Section 9 of this Agreement has not been fulfilled or waived by such
Board.
(b) If the transactions contemplated by this Agreement have not
been consummated by December 31, 1994, this Agreement automatically shall
terminate on that date, unless a later date is mutually agreed to by the
Boards of Directors of MuniBond and MuniAssets.
(c) In the event of termination of this Agreement pursuant to the
provisions hereof, the same shall become void and have no further effect, and
there shall not be any liability on the part of either MuniBond or MuniAssets
or persons who are their directors, trustees, officers, agents or
stockholders in respect of this Agreement.
(d) At any time prior to the Exchange Date, any of the terms or
conditions of this Agreement may be waived by the Board of Directors of
either MuniBond or MuniAssets, respectively (whichever is entitled to the
benefit thereof), if, in the judgment of such Board after consultation with
its counsel, such action or waiver will not have a material adverse effect on
the benefits intended under this Agreement to the stockholders of their
respective fund, on behalf of which such action is taken. In addition, the
Board of Directors of both MuniBond and MuniAssets hereby delegate to FAM the
ability to make non-
17
material changes to the transaction if it deems it to be in the best
interests of both MuniBond and MuniAssets to do so.
(e) The respective representations and warranties contained in
Sections 1 and 2 of this Agreement shall expire with, and be terminated by,
the consummation of the Reorganization, and neither MuniBond nor MuniAssets
nor any of their officers, directors or trustees, agents or stockholders
shall have any liability with respect to such representations or warranties
after the Exchange Date. This provision shall not protect any officer,
director or trustee, agent or stockholder of MuniBond or MuniAssets against
any liability to the entity for which that officer, director or trustee,
agent or stockholder so acts or to its stockholders to which that officer,
director or trustee, agent or stockholder otherwise would be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties in the conduct of such office.
(f) If any order or orders of the Commission with respect to this
Agreement shall be issued prior to the Exchange Date and shall impose any
terms or conditions which are determined by action of the Boards of Directors
of MuniBond and MuniAssets to be acceptable, such terms and conditions shall
be binding as if a part of this Agreement without further vote. or approval
of the stockholders of MuniBond and MuniAssets, unless such terms and
conditions shall result in a change in the method of computing the number of
shares of MuniAssets Common Stock to be issued to MuniBond in which event,
unless such terms and conditions shall have been included in the proxy
solicitation materials furnished to the stockholders of MuniBond and
MuniAssets prior to the meeting at which the Reorganization shall have been
approved, this Agreement shall not be consummated and shall terminate unless
MuniBond and MuniAssets promptly shall call special meetings of stockholders
at which such conditions so imposed shall be submitted for approval.
11. Indemnification. (a) MuniBond hereby agrees to indemnify and hold
---------------
MuniAssets harmless from all loss, liability and expense (including
reasonable counsel fees and expenses in connection with the contest of any
claim) which MuniAssets may incur or sustain by reason of the fact that (i)
MuniAssets shall be required to pay any corporate obligation of MuniBond,
whether consisting of tax deficiencies or otherwise, based upon a claim or
claims against MuniBond which were omitted or not fairly reflected in the
financial statements to be delivered to MuniAssets in connection with the
Reorganization; (ii) any representations or warranties made by MuniBond in
this Agreement should prove to be false or erroneous in any material respect;
(iii) any covenant has been breached in any material respect; or (iv) any
claim is made alleging that (a) the N-14 Registration Statement included any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading or (b) the Proxy Statement and Prospectus delivered to the
stockholders of MuniBond and forming a part of the N-14 Registration
Statement included any untrue statement of a material fact or omitted to
state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except
insofar as such claim is based on written information furnished to MuniBond
by MuniAssets.
(b) MuniAssets hereby agrees to indemnify and hold MuniBond
harmless from all loss, liability and expenses (including reasonable counsel
fees and expenses in connection with the contest of any claim) which MuniBond
may incur or sustain by reason of the fact that (i) any representations or
18
warranties made in this Agreement should prove false or erroneous in any
material respect, (ii) any covenant has been breached in any material
respect, or (iii) any claim is made alleging that (a) the N-14 Registration
Statement included any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make
the statements therein, not misleading or (b) the Proxy Statement and
Prospectus delivered to the stockholders of MuniAssets and forming a part of
the N-14 Registration Statement included any untrue statement of a material
fact or omitted to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except insofar as such claim is based on written information
furnished to MuniAssets by MuniBond.
(c) In the event that any claim is made against MuniAssets in
respect of which indemnity may be sought by MuniAssets from MuniBond under
Section 11(a) of this Agreement, or in the event that any claim is made
against MuniBond in respect of which indemnity may be sought by MuniBond from
MuniAssets under Section 11(b) of this Agreement, then the party seeking
indemnification (the Indemnified Party"), with reasonable promptness and
before payment of such claim, shall give written notice of such claim to the
other party (the "Indemnifying Party"). If no objection as to the validity
of the claim is made in writing to the Indemnified Party by the Indemnifying
Party within thirty (30) days after the giving of notice hereunder, then the
Indemnified Party may pay such claim and shall be entitled to reimbursement
therefor, pursuant to this Agreement. If, prior to the termination of such
thirty-day period, objection in writing as to the validity of such claim is
made to the Indemnified Party, the Indemnified Party shall withhold payment
thereof until the validity of such claim is established (i) to the
satisfaction of the Indemnifying Party, or (ii) by a final determination of a
court of competent jurisdiction, whereupon the Indemnified Party may pay such
claim and shall be entitled to reimbursement thereof, pursuant to this
Agreement, or (iii) with respect to any tax claims, within seven calendar
days following the earlier of (A) an agreement between MuniBond and
MuniAssets that an indemnity amount is payable, (B) an assessment of a tax by
a taxing authority, or (C) a "determination" as defined in Section 1313(a) of
the Code. For purposes of this Section 13, the term "assessment" shall have
the same meaning as used in Chapter 63 of the Code and Treasury Regulations
thereunder, or any comparable provision under the laws of the appropriate
taxing authority. In the event of any objection by the Indemnifying Party,
the Indemnifying Party promptly shall investigate the claim, and if it is not
satisfied with the validity thereof, the Indemnifying Party shall conduct the
defense against such claim. All costs and expenses incurred by the
Indemnifying Party in connection with such investigation and defense of such
claim shall be borne by it. These indemnification provisions are in addition
to, and not in limitation of, any other rights the parties may have under
applicable law.
12. Other Matters. (a) Pursuant to Rule 145 under the 1933 Act, and in
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connection with the issuance of any shares to any person who at the time of
the Reorganization is, to its knowledge, an affiliate of a party to the
Reorganization pursuant to Rule 145(c), MuniAssets will cause to be affixed
upon the certificate(s) issued to such person (if any) a legend as follows:
THESE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS (I) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE SECURITIES ACT OF 1933 OR (II) IN THE OPINION OF
19
COUNSEL REASONABLY SATISFACTORY TO THE FUND, SUCH REGISTRATION
IS NOT REQUIRED.
and, further, that stop transfer instructions will be issued to MuniAssets's
transfer agent with respect to such shares. MuniBond will provide MuniAssets
on the Exchange Date with the name of any MuniBond stockholder who is to the
knowledge of MuniBond an affiliate of it on such date.
(b) All covenants, agreements, representations and warranties made
under this Agreement and any certificates delivered pursuant to this
Agreement shall be deemed to have been material and relied upon by each of
the parties, notwithstanding any investigation made by them or on their
behalf.
(c) Any notice, report or demand required or permitted by any
provision of this Agreement shall be in writing and shall be deemed to have
been given if delivered or mailed, first class postage prepaid, addressed to
MuniBond or MuniAssets, in either case at 800 Scudders Mill Road, Plainsboro,
New Jersey 08536, Attn: Arthur Zeikel, President.
(d) This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the Reorganization, constitutes
the only understanding with respect to the Reorganization, may not be changed
except by a letter of agreement signed by each party and shall be governed by
and construed in accordance with the laws of the State of New York applicable
to agreements made and to be performed in said state.
(e) Copies of the Articles of Incorporation, as amended, of
MuniBond and MuniAssets are on file with the Department of Assessments and
Taxation of the State of Maryland and notice is hereby given that this
instrument is executed on behalf of the Directors of each fund.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original but all
such counterparts together shall constitute but one instrument.
MUNIBOND INCOME FUND, INC.
By:
Witness:
MUNIASSETS FUND, INC.
By:
Witness:
20
COMMON STOCK
MUNIASSETS FUND, INC.
P.O. BOX 9011
PRINCETON, NEW JERSEY 08543-9011
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints each of Mark B. Goldfus,
Terry K. Glenn and Gerald M. Richard as proxies, each with
the power to appoint his substitute, and authorizes each of
them to represent and to vote, as designated on the reverse
hereof, all the common stock of MuniAssets Fund, Inc.
(the "Fund") held of record by the undersigned on August 26,
1994 at the special meeting of stockholders of the Fund to
be held on October 21, 1994 or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,
2 AND 3.
(Continued and to be signed on the reverse side)
1. To consider and act upon a proposal to approve the Agreement and Plan FOR / / AGAINST / / ABSTAIN / /
of Reorganization between the Fund and MuniBond Income Fund, Inc. WITHHOLD AUTHORITY
to vote for all nominees listed below / /
2. To consider and act upon a FOR all nominees listed below
proposal to elect the following (except as marked to the contrary below) / /
persons as Directors of the Fund:
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THAT PARTICULAR NOMINEE'S NAME IN THE LIST BELOW.)
CLASS I TO SERVE UNTIL 1995. CLASS II TO SERVE UNTIL 1996. CLASS III TO SERVE UNTIL 1997.
HARRY WOOLF JOE GRILLS MELVIN R. SEIDEN
ARTHUR ZEIKEL WALTER MINTZ STEPHEN B. SWENSRUD
3. To consider and act upon a proposal to ratify the selection of Deloitte & Touche FOR / / AGAINST / / ABSTAIN / /
as the independent auditors of the Fund to serve for the current fiscal year.
4. In the discretion of such proxies, upon such other business as may properly come
before the meeting or any adjournment thereof.
Please sign this proxy in the space provided below.
Execution by stockholders who are not individuals
must be made by an authorized signatory.
Dated: _____________________________________, 1994
X ________________________________________________
Name of Stockholder
X ________________________________________________
Signature
PLEASE MARK BOXES / / OR /X/ IN BLUE OR BLACK INK. PLEASE
SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
COMMON STOCK
MUNIBOND INCOME FUND, INC.
P.O. BOX 9011
PRINCETON, NEW JERSEY 08543-9011
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints each of Mark B. Goldfus,
Terry K. Glenn and Gerald M. Richard as proxies, each with
the power to appoint his substitute, and authorizes each of
them to represent and to vote, as designated on the reverse
hereof, all the common stock of MuniBond Income Fund, Inc.
(the "Fund") held of record by the undersigned on August 26,
1994 at the special meeting of stockholders of the Fund to
be held on October 21, 1994 or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,
2 AND 3.
(Continued and to be signed on the reverse side)
1. To consider and act upon a proposal to approve the Agreement and Plan FOR / / AGAINST / / ABSTAIN / /
of Reorganization between the Fund and MuniAssets Fund, Inc. WITHHOLD AUTHORITY
to vote for all nominees listed below / /
2. To consider and act upon a FOR all nominees listed below
proposal to elect the following (except as marked to the contrary below) / /
persons as Directors of the Fund:
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THAT PARTICULAR NOMINEE'S NAME IN THE LIST BELOW.)
CLASS I TO SERVE UNTIL 1995. CLASS II TO SERVE UNTIL 1996. CLASS III TO SERVE UNTIL 1997.
HARRY WOOLF JOE GRILLS MELVIN R. SEIDEN
ARTHUR ZEIKEL WALTER MINTZ STEPHEN B. SWENSRUD
3. To consider and act upon a proposal to ratify the selection of Deloitte & Touche FOR / / AGAINST / / ABSTAIN / /
as the independent auditors of the Fund to serve for the current fiscal year.
4. In the discretion of such proxies, upon such other business as may properly come
before the meeting or any adjournment thereof.
Please sign this proxy in the space provided below.
Execution by stockholders who are not individuals
must be made by an authorized signatory.
Dated: _____________________________________, 1994
X ________________________________________________
Name of Stockholder
X ________________________________________________
Signature
PLEASE MARK BOXES / / OR /X/ IN BLUE OR BLACK INK. PLEASE
SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.