AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (“Agreement”), is made as of this 5th day of August, 2019, by and between Nationwide Mutual Funds (the “NMF Trust”), a statutory trust created under the laws of the State of Delaware, with its principal place of business at One Nationwide Plaza, 5-02-210, Columbus, OH 43215, with respect to the Nationwide Mellon
Disciplined Value Fund (hereinafter the “Acquiring Fund”), a series of the NMF Trust, and BNY Mellon Investment Funds IV, Inc. (formerly known as “The Dreyfus/Laurel Funds, Inc.”) (the “Target Company”), a corporation created under the laws of the State of Maryland, with its principal place of business at 240 Greenwich Street, New York, NY 10286, with respect to the BNY Mellon Disciplined Stock
Fund (formerly known as the “Dreyfus Disciplined Stock Fund”) (hereinafter the “Target Fund”), a series of the Target Company. The NMF Trust and the Target Company, with respect to the Acquiring Fund and the
Target Fund, respectively, are hereinafter collectively referred to as the “parties.” Other than the Target Fund and the Acquiring Fund, no other series of either the Target Company or the NMF Trust are subject to this Agreement. Nationwide Fund
Advisors, a Delaware statutory trust (“NFA”), BNY Mellon Investment Adviser, Inc. (formerly known as “The Dreyfus Corporation”), a New York corporation (“BNYM Adviser”),
and Mellon Investments Corporation ("Mellon"), a Delaware corporation, each join this Agreement solely for the purposes of Section 10.
Target Fund shareholders are to be issued the following class of shares of beneficial interest, without par value, of the Acquiring Fund (“Acquiring Fund Shares”) pursuant to the
Reorganization (as defined below):
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Target Fund
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Acquiring Fund
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Common Shares
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Class K Shares
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PLAN OF REORGANIZATION
This Agreement is intended to be and is adopted as a “plan of reorganization” within the meaning of Section 368(a)(1) of the United States Internal Revenue Code of 1986, as amended (the “Code”)
and the regulations thereunder. The reorganization of the Target Fund into the Acquiring Fund (the “Reorganization”) will consist of: (i) the acquisition by the NMF Trust on behalf of the Acquiring Fund of all
of the Assets (as defined in Section 1(a) below) of the Target Fund in exchange for both Acquiring Fund Shares and the assumption by the NMF Trust with respect to the Acquiring Fund of the Liabilities (as defined in Section 1(a) below) of the Target
Fund; (ii) the distribution by the Acquiring Fund of Acquiring Fund Shares to the shareholders of the Target Fund according to their respective interests in the Target Fund in complete liquidation of the Target Fund; and (iii) the liquidation and, as
soon as practicable after the closing (as referenced in Section 3 hereof and hereinafter called the “Closing”), the termination of the Target Fund all upon and subject to the terms and conditions of this
Agreement hereinafter set forth. The Acquiring Fund is as of the date hereof and will be as of the Closing a shell series, without assets or liabilities, other than as noted in Section 5(k) below, newly created for the purpose of acquiring the
Assets and Liabilities (each term as defined in Section 1(a) below) of the Target Fund.
AGREEMENT
In order to consummate the Reorganization and in consideration of the premises and of the covenants and agreements hereinafter set forth, and intending to be legally bound, the parties hereto covenant and agree as
follows:
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1. |
Sale and Transfer of Assets and Liabilities, and Termination of the Target Fund
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(a) Subject to the terms and conditions of this Agreement, and in reliance on the representations and
warranties of the NMF Trust herein contained, the Target Company will sell, assign, convey, transfer and deliver to the NMF Trust, for the Acquiring Fund, at the Closing, all of the assets including, without limitation, all portfolio securities,
cash, cash equivalents, commodities, interests in futures and other financial instruments, claims (whether absolute or contingent, known or unknown), receivables (including dividends or interest and other receivables), any deferred or prepaid
expenses, or any other assets of the Target Fund (“Assets”) as of the close of business (which hereinafter shall be, unless otherwise noted, the regular close of business of the New York Stock Exchange, Inc. (“NYSE”)) (“Close of Business”) on the business day immediately preceding the Effective Date of the Reorganization (as such term is defined in Section 3(a) hereof) (the “Valuation Date”), except for cash, bank deposits, or cash equivalent securities in an estimated amount necessary (1) to pay the Target Fund’s costs and expenses, if any, of restructuring its portfolio in
connection with the Reorganization, which costs and expenses shall be established on the books of the Target Fund as liability reserves, subject to Section 10; (2) subject to clause (3), to discharge all of the Target Fund’s Liabilities (as defined
below) on its books at the Close of Business on the Valuation Date including, but not limited to, its income dividends and capital gains distributions, if any, payable for any period prior to, and through, the Close of Business on the Valuation Date,
and excluding those Liabilities that would otherwise be discharged at a later date in the ordinary course of business; and (3) to pay such contingent Liabilities as the directors of the Target Company shall reasonably deem to exist against the Target
Fund, if any, at the Close of Business on the Valuation Date, for which contingent and other appropriate liability reserves shall have been established on the books of the Target Fund. “Liabilities” shall mean
all of the Target Fund’s liabilities, debts, obligations and duties of any nature, whether accrued, absolute, contingent, unknown, or otherwise which have not been discharged by the Target Company prior to the Closing (including, but not limited to,
those reflected in the unaudited statement of assets and liabilities to be provided under Section 4(g) and 7(h) of this Agreement). To the extent that any Liabilities of the Target Fund, whether known or unknown, are not discharged on or prior to
the Valuation Date, the Acquiring Fund shall assume any and all such Liabilities (excluding the expenses borne by BNYM Adviser or NFA pursuant to Section 10 of this Agreement).
Subject to the terms and conditions of this Agreement, and in reliance on the representations and warranties of the Target Company herein, the NMF Trust agrees that at the Closing (i) the Acquiring Fund shall assume the
Liabilities of the Target Fund existing on or after the Effective Date of the Reorganization (as defined in Section 3(a) hereof), and which have not been discharged by the Target Company prior to the Closing as provided in this Section 1(a), and
shall thereafter pay such Liabilities when due; and (ii) the NMF Trust shall deliver to the Target Company the number of full and fractional Acquiring Fund Shares, determined by dividing the net asset value of the Assets to be acquired by the
Acquiring Fund, computed pursuant to Section 2(a) below, by the net asset value per share (“NAV”) of the Acquiring Fund as of the Close of Business on the Valuation Date; provided that such NAV is the same as
the NAV of the Target Fund as of the Close of Business on the Valuation Date. The
Acquiring Fund Shares received shall be distributed pro rata to the shareholders of the Target Fund of record as of the Close of Business on the Valuation Date.
(b) In order to effect the delivery of Acquiring Fund Shares described in Section 1(a)(ii) hereof, the NMF
Trust will establish an open account of the Acquiring Fund for each record shareholder of the Target Fund and, on the Effective Date of the Reorganization, will credit to such account the full and fractional Acquiring Fund Shares received by each
such record shareholder as described in Section 1(a). Fractional shares of the Target Fund are, and fractional shares of the Acquiring Fund will be, carried to the third decimal place. Simultaneously with the crediting of Acquiring Fund Shares to
the shareholders of record of the Target Fund, the shares of the Target Fund held by such shareholders shall be cancelled. As soon as practicable following the Closing, the Target Company shall terminate, and all issued and outstanding shares of the
Target Fund simultaneously will be cancelled on the books of the Target Fund and will be null and void.
(c) [Reserved]
(d) At the Closing, each shareholder of record of the Target Fund as of the record date (the “Distribution Record Date”) with respect to any unpaid dividends and other distributions that were declared prior to the Closing shall have the right to receive such unpaid dividends and distributions with respect
to the shares of the Target Fund that such person had on such Distribution Record Date.
(e) Any transfer taxes payable upon issuance of the Acquiring Fund Shares in a name other than the
registered holder of the Target Fund’s shares on the books and records of the Target Fund as of the Effective Date of the Reorganization, as a condition of such issuance and transfer, shall be paid by the person to whom the Acquiring Fund Shares are
to be issued and transferred.
(a) The net asset value of the Assets to be acquired by the Acquiring Fund hereunder shall be computed as of
the Close of Business on the Valuation Date by the administrator of the Acquiring Fund by calculating the value of the Assets and subtracting therefrom the amount of the Liabilities using the valuation procedures established by the Board of Trustees
of the NMF Trust and described in the Acquiring Fund’s currently effective prospectus and statement of additional information (“Acquiring Fund Valuation Procedures”); provided, however, that such computation is
consistent with the valuation procedures of the Target Fund and, in the event of any inconsistency, the parties hereto shall confer and mutually agree on the valuation. In the event that valuation of the Target Fund’s assets using the NMF Trust’s
Valuation Procedures would result in a valuation difference or the diminution in value of shares of either the Target Fund or the Acquiring Fund, the Reorganization will not be consummated, unless NFA and BNYM Adviser, subject to their discretion and
mutual agreement, elect to contribute such funds, as necessary and appropriate, to resolve any diminution in value of the Target Fund Shares or the Acquiring Fund Shares.
All computations of value of the Assets of the Target Fund to be acquired by the Acquiring Fund shall be made by or under the direction of the Target Fund’s and the Acquiring Fund’s respective accounting agent in
accordance with its regular practice and the requirements of the 1940 Act. Such computations shall be evaluated by BNYM Adviser and shall be subject to review by the Target Fund’s and the Acquiring Fund’s respective transfer agent and independent
registered public accounting firm.
(b) The NAV of Acquiring Fund Shares shall be determined to the nearest full cent as of the Close of
Business on the Valuation Date, using the Acquiring Fund’s Valuation Procedures.
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3. |
Closing and Valuation Date
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(a) The Closing shall consist of (i) the conveyance, transfer and delivery of the Assets of the Target Fund
to the NMF Trust, for the Acquiring Fund, in exchange for the assumption by the Acquiring Fund of the Liabilities of the Target Fund; and (ii) the issuance and delivery of Acquiring Fund Shares in accordance with Section 1(a), together with related
acts necessary to consummate such transactions. Subject to receipt of all necessary regulatory approvals and the final adjournment of the meeting of shareholders of the Target Fund at which this Agreement is considered and approved, the Closing
shall occur on December 13, 2019, or such other date as the officers of the parties may mutually agree (“Closing Date”), and shall be effective as of 9:00 a.m. Eastern Daylight Time or Eastern Standard Time, as
applicable, on the Closing Date (“Effective Date of the Reorganization”). The Closing shall take place at the principal office of the NMF Trust at approximately 9:00 a.m. Eastern Daylight Time or Eastern
Standard Time, as applicable, on the Closing Date, or such other time or place as the officers of the parties may mutually agree.
(b) Notwithstanding anything herein to the contrary, in the event that on the Valuation Date (i) the NYSE
shall be closed to trading or trading thereon shall be restricted or (ii) trading or the reporting of trading on the NYSE or such other exchange or market where the Target Fund’s assets are traded shall be disrupted so that, in the reasonable
judgment of the NMF Trust or Target Company, accurate appraisal of the value of the net assets of the Target Fund is impracticable, the Valuation Date shall be postponed until the first business day after the day when trading on the NYSE shall have
been fully resumed without restriction or disruption, reporting shall have been restored and accurate appraisal of the value of the net assets of the Target Fund is practicable in the reasonable judgment of the NMF Trust and Target Company.
(c) The Target Company shall provide, as of the Closing, for delivery of the Assets of the Target Fund to be
transferred to the custodian of the Acquiring Fund (the “Custodian”) for the account of the Acquiring Fund. Portfolio securities of the Target Fund shall be duly endorsed in proper form for transfer in such
manner and condition as to constitute good delivery thereof in accordance with the custom of brokers and in accordance with applicable law. All cash being delivered shall be transferred to the account of the Acquiring Fund at the Custodian in a
manner agreed to by the parties. Also, the Target Company shall deliver at the Closing a list (which may be in electronic form) of names and addresses of the shareholders of record of the Target Fund, and the number of full and fractional shares of
common stock owned by each such shareholder, indicating thereon which such shares are represented by outstanding certificates, if any, and which by book-entry accounts, all as of the Close of Business on the Valuation Date, certified by its transfer
agent, or by its President or Vice President to the best of their knowledge and belief. If the Target Company is unable to make such delivery on the Closing Date in the manner contemplated by this Section for the reason that any of such securities
or other investments purchased prior to the Closing Date have not yet been delivered to the Target Company or its broker, then the Acquiring Fund may, in its sole discretion, waive the delivery requirements of this Section with respect to said
undelivered securities or other investments if the Target Company has, by or on the Closing Date, delivered to the Acquiring Fund or its Custodian executed copies of an agreement of assignment and escrow and due bills executed on behalf of said
broker or brokers, together with such other documents as may be required by the Acquiring Fund or its Custodian, such as brokers’ confirmation slips.
(d) The NMF Trust shall issue and deliver a certificate or certificates providing evidence satisfactory to
the Target Company in such manner as the Target Company may reasonably request that Acquiring Fund Shares to be delivered at the Closing have been registered in open accounts of the Acquiring Fund on the books of the NMF Trust.
(e) Each of the Target Company and the NMF Trust shall deliver to the other such bills of sale, instruments
of assumption of liabilities, checks, assignments, stock certificates, receipts or other documents as such other party or its counsel may reasonably request in connection with the transfer of Assets and assumption of Liabilities and liquidation
contemplated in this Agreement.
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4. |
Representations and Warranties by the Target Company
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The Target Company represents and warrants to the NMF Trust that:
(a) The Target Company is a corporation created under the laws of the State of Maryland on August 6, 1987,
and is validly existing and in good standing under the laws thereunder. The Target Company, of which the Target Fund is a series of shares of common stock, is duly registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end, management investment company. Such registration is in full force and effect as of the date hereof, and will be in full force and effect as of the Closing, and all of the shares of the
Target Fund issued and outstanding have been offered and sold pursuant to an effective registration statement filed under the Securities Act of 1933 (the “1933 Act”) and the 1940 Act, except for any shares sold
pursuant to the private offering exemption for purposes of raising initial capital and in compliance with all applicable registration requirements of state securities laws, including blue sky laws.
(b) The Target Company is authorized to issue 25 billion shares of common stock, each having a par value of
$0.001. Each outstanding share of the Target Fund is validly issued, fully paid, non-assessable, has full voting rights, and is freely transferable.
(c) The current prospectus and statement of additional information of the Target Fund conform in all
material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Securities and Exchange Commission (the “Commission”) thereunder and do not include any
untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Target Fund currently is
in compliance in all material respects with the applicable investment policies and restrictions set forth in the Target Fund’s prospectus and statement of additional information. To the best of the Target Fund’s knowledge, the value of the net
assets of the Target Fund currently is determined, and since its organization has been determined, using portfolio valuation methods that comply in all material respects with the requirements of the 1940 Act and the rules and regulations of the
Commission thereunder and the pricing and valuation policies of the Target Fund, each as of such time that the applicable rules, regulations or policies were in effect, or the Target Fund has taken any action necessary to remedy any prior failure to
use such valuation methods that comply in all material respects with such laws, rules, regulations or policies. There have been no known miscalculations of the net asset value of the Target Fund or the NAV of the Target Fund which would have a
material adverse effect on the Target Fund at the time of this Agreement or on the Target Fund’s properties or assets at the time of this Agreement.
(d) The financial statements appearing in the Target Fund’s Annual Report to Shareholders for its most
recently completed fiscal year, audited by KPMG LLP, copies of which have
been delivered to the NMF Trust, and any subsequent unaudited financial statements of the Target Fund provided to the NMF Trust prior to the Closing, fairly present the financial position of the Target Fund as of the date indicated, and the
results of its operations for the period indicated, in conformity with generally accepted accounting principles applied on a consistent basis (with the exception, in the case of the unaudited financial statements, of the omission of footnotes).
(e) The Target Fund has no known Liabilities of a material nature other than those shown as belonging to it
on its statement of assets and liabilities as of the Close of Business on the Valuation Date, those incurred pursuant to this Agreement and those incurred in the ordinary course of the Target Fund’s business as an investment company since such
Valuation Date. Prior to the Effective Date of the Reorganization, the Target Company will advise the NMF Trust of all known Liabilities incurred by the Target Fund subsequent to the date hereof, whether or not incurred in the ordinary course of
business.
(f) The books and records of, or relating to, the Target Fund (including all books and records required to
be maintained under the 1940 Act and the Code and the rules and regulations under the 1940 Act and the Code) made available to the NMF Trust and/or its counsel are true and correct in all material respects and contain no material omissions with
respect to the business and operations of the Target Company and the Target Fund.
(g) The statement of assets and liabilities of the Target Fund to be furnished by the Target Company as of
the Close of Business on the Valuation Date for the purpose of determining the number of Acquiring Fund Shares to be issued pursuant to Section 1(a) hereof will accurately reflect the NAV of the Target Fund and each of the outstanding shares of
common stock of the Target Fund, as of such date, in conformity with generally accepted accounting principles applied on a consistent basis. The Target Fund has no known Liabilities of a material amount, contingent or otherwise, other than those
shown on the statement of assets and liabilities referred to above or those incurred in the ordinary course of its business since the last day of the Target Fund’s most recently completed fiscal year.
(h) At the Closing, the Target Company, with respect to the Target Fund, will have good and marketable title
to all of the securities and other assets shown on the statement of assets and liabilities referred to in subsection (g) above, free and clear of all liens or encumbrances of any nature whatsoever except liens or encumbrances of which the Acquiring
Fund has received written notice and such restrictions as might arise under the 1933 Act with respect to privately placed or otherwise restricted securities that it may have acquired in the ordinary course of business.
(i) The Target Company has the necessary power and authority to conduct its business and the business of the
Target Fund as such businesses are now being conducted.
(j) The Target Company is not a party to or obligated under any provision of its Articles of Incorporation,
as amended (the “Target Company Articles”), Bylaws, as amended (the “Target Company Bylaws”), or any material contract or any other material commitment or obligation with
respect to the Target Fund that is listed on Part C of the Target Fund’s current registration statement (collectively, “Target Company Material Agreements”), and is not subject to any order or decree that would
be violated by its execution of, or performance under, this Agreement.
(k) The Target Fund, a series of the Target Company, was duly constituted in accordance with the applicable
provisions of the Target Company Articles and the 1940 Act and other applicable law.
(l) The Target Company is not a party to any litigation or administrative proceeding or investigation of or
before any court or governmental body that is pending or, to the Target Company’s knowledge, threatened against the Target Company with respect to the Target Fund or any of the Target Fund’s properties or assets, that, if adversely determined, would
materially and adversely affect its financial condition or the conduct of the Target Fund’s business. The Target Company, with respect to the Target Fund, is not a party to or subject to the provisions of any order, decree or judgment of any court
or governmental body that materially and adversely affects the Target Fund’s business or the Target Company’s ability to consummate the transactions herein contemplated with respect to the Target Fund. The Target Company, with respect to the Target
Fund, does not know of any facts that would reasonably be expected to form the basis for the institution of proceedings that would materially and adversely affect the Target Fund’s financial condition, the conduct of its business, or the Target
Company’s ability to consummate the transactions herein contemplated.
(m) The Target Company, on its own behalf and with respect to the Target Fund, has full power and authority
to enter into and perform its obligations under this Agreement, subject to approval, with respect to the Target Fund, by the shareholders of the Target Fund. Except as provided in the immediately preceding sentence, the execution, delivery and
performance of this Agreement have been validly authorized by the Board of Directors of the Target Company. This Agreement, and all other necessary corporate action on the part of the Target Company with respect to the Target Fund, executed and
delivered by the Target Company, on its own behalf and with respect to the Target Fund, constitute legal, valid and binding obligations of the Target Company with respect to the Target Fund, enforceable against it in accordance with the terms of this
Agreement, subject as to enforcement to the effect of bankruptcy, insolvency, reorganization, arrangement among creditors, moratorium, fraudulent transfer or conveyance, and other similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles.
(n) Neither the Target Company nor the Target Fund is under the jurisdiction of a Court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
(o) Neither the Target Company nor the Target Fund has any unamortized or unpaid organizational fees or
expenses.
(p) The Target Fund has elected to be treated as a regulated investment company (“RIC”) for federal income tax purposes under Part I of Subchapter M of the Code. The Target Fund (i) is a “fund” as defined in Section 851(g)(2) of the Code; (ii) has qualified for treatment as a RIC for each taxable year since its
inception ending before the Closing and will maintain such qualification at all times through the Closing; (iii) for each such taxable year (or portion thereof) has been eligible to compute its federal income tax under Section 852 of the Code; (iv)
has not had any earnings or profits accumulated in any taxable year to which the provisions of Subchapter M of the Code (or the corresponding provisions of prior law) did not apply; and (v) the consummation of the transaction contemplated by this
Agreement will not cause the Target Fund to fail to be qualified as a RIC as of the Closing. The Target Fund has not changed its taxable year end since its inception and it does not intend to change its taxable year end prior to the Closing. The
Target Fund has not had at any time since its inception (and will not
have as of the Closing Date) any material tax liability under Sections 852 or 4982 of the Code for any period ended on or before the Closing Date.
(q) The Target Company has duly and timely filed, with respect to the Target Fund, all Tax (as defined
below) returns and reports (including, but not limited to, information returns) that are required to be filed by the Target Fund on or before the Closing. All such returns and reports are true, correct and complete as of the time of their filing and
accurately state the amount of Tax (if any) owed for the periods covered by the returns, or, in the case of information returns, the amount and character of income or other information required to be reported by the Target Fund. With respect to the
Target Fund, the Target Company has paid or made provision and properly accounted for all Taxes (as defined below) due or properly shown to be due on such returns and reports. The amounts set up as provisions for Taxes in the books and records of
the Target Fund as of the Close of Business on the Valuation Date will, to the extent required by generally accepted accounting principles, be sufficient for the payment of all Taxes of any kind, whether accrued, due, absolute, contingent, known or
unknown or otherwise, which were or which may be payable by the Target Fund for any periods or fiscal years prior to and including the Close of Business on the Valuation Date, including, but not limited to, all Taxes imposed before or after the Close
of Business on the Valuation Date that are attributable to any such period or fiscal year. No return filed by the Target Company with respect to the Target Fund is currently being audited by the Internal Revenue Service or by any state or local
taxing authority. There are no known actual or proposed deficiency assessments with respect to any Taxes payable by the Target Fund. To the Target Fund's knowledge, no claim has ever been made by a taxing authority in a jurisdiction where the
Target Fund does not file a Tax return or report that the Target Fund is or may be subject to taxation in that jurisdiction. As used in this Agreement, “Tax” or “Taxes”
means all federal, state, local and foreign (whether imposed by a country or political subdivision or authority thereunder) income, gross receipts, excise, sales, use, value added, employment, franchise, profits, property, ad valorem or other taxes,
stamp taxes and duties, fees, assessments or charges, whether payable directly or by withholding, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority (foreign or domestic) with respect
thereto. There are no levies, liens or encumbrances relating to Taxes existing or pending, or, to the knowledge of the Target Fund, threatened with respect to the Assets of the Target Fund.
(r) The Target Fund does not directly own any “converted property” (as that term is defined in Treasury
Regulation Section 1.337(d)-7T(a)(2)) that is subject to the rules of Section 1374 of the Code as a consequence of the application of Section 337(d)(1)of the Code and the Treasury Regulations thereunder.
(s) The Target Fund is in compliance in all material respects with applicable regulations of the Internal
Revenue Service pertaining to the reporting of dividends and other distributions on, and redemptions of, its shares of common stock including, but not limited to, those related to shareholder cost basis reporting pursuant to Sections 1012, 6045,
6045A and 6045B of the Code and related Treasury regulations, and has withheld in respect of dividends and other distributions and paid to the proper taxing authorities all Taxes required to be withheld, and is not liable for any penalties which
could be imposed thereunder.
(t) The Target Fund has not been granted any waiver, extension, or comparable consent regarding the
application of the statute of limitations with respect to any Taxes or tax return that is outstanding, nor has any request for such waiver or consent been made with respect to any such Taxes or tax return.
(u) The Target Fund has not received written notification from any tax authority that asserts a position
contrary to any of the above representations set forth in paragraphs (m) through (s) of this Section 4.
(v) [Reserved]
(w) All information provided or identified in writing by the Target Company to the NMF Trust in response to
formal due diligence requests relating to the Target Company and the Target Fund are true and correct in all material respects and contain no material misstatements or omissions with respect to the operation of the Target Company and with respect to
the Target Fund as of the date hereof.
(x) Since the last day of the Target Fund’s most recently completed fiscal year, there has not been any
material adverse change in the Target Fund’s financial condition, assets, obligations or business (other than changes occurring in the ordinary course of business), or any incurrence by the Target Fund of indebtedness, except as disclosed in writing
to the NMF Trust. For the purposes of this subparagraph, distributions of net investment income and net realized capital gains, changes in portfolio securities, changes in the market value of portfolio securities or net redemptions shall be deemed
to be in the ordinary course of business.
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5. |
Representations and Warranties by the NMF Trust
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The NMF Trust represents and warrants to the Target Company that:
(a) The NMF Trust is a statutory trust created under the laws of the State of Delaware on September 1, 2004,
and is validly existing and in good standing under the laws of that State. The NMF Trust, of which the Acquiring Fund is a separate series of shares of beneficial interest, is duly registered under the 1940 Act as an open-end, management investment
company. Such registration is in full force and effect as of the date hereof and will be in full force and effect as of the Closing. The Acquiring Fund was formed for the purpose of effecting the Reorganization and, prior to the Closing, will have
not commenced operations or carried on any business activity, will have had no assets or liabilities and will have no issued or outstanding shares other than as described in this Agreement. The NMF Trust is a registered open-end management
investment company and its registration with the Commission as an investment company under the 1940 Act is in full force and effect.
(b) The NMF Trust is authorized to issue an unlimited number of Acquiring Fund Shares without par value.
The Acquiring Fund Shares to be issued pursuant to Section 1 hereof will, upon their issuance, be validly issued, fully paid, non-assessable and freely transferable and have full voting rights.
(c) At the Closing, the Acquiring Fund Shares to be issued pursuant to this Agreement will be eligible for
offering to the public in those states of the United States and jurisdictions in which the shares of the Target Fund are currently eligible for offering to the public, and there will be an unlimited number of Acquiring Fund Shares registered under
the 1933 Act such that there is a sufficient number of such shares to permit the transfers contemplated by this Agreement to be consummated.
(d) The NMF Trust has the necessary power and authority to conduct its business and the business of the
Acquiring Fund.
(e) The NMF Trust is not a party to or obligated under any provision of its Certificate of Trust, Second
Amended and Restated Agreement and Declaration of Trust, as amended (the “NMF Declaration of Trust”), Second Amended and Restated Bylaws (the “NMF Bylaws”), or any
material contract or any other material commitment or obligation with respect to the Acquiring Fund that is listed on Part C of the Acquiring Fund’s current registration statement (collectively, “NMF Material
Agreements”), and is not subject to any order or decree that would be violated by its execution of or performance under this Agreement.
(f) The NMF Trust is not a party to any litigation or administrative proceeding or investigation of or
before any court or governmental body that is pending or, to the NMF Trust’s knowledge, threatened against the NMF Trust, with respect to the Acquiring Fund, or any of the Acquiring Fund’s properties or assets, that, if adversely determined, would
materially and adversely affect its financial condition or the conduct of the Acquiring Fund’s business. The NMF Trust, with respect to 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 that materially and adversely affects the Acquiring Fund’s business or the NMF Trust’s ability to consummate the transactions herein contemplated on behalf of the Acquiring Fund. The NMF Trust, with respect to the Acquiring
Fund, does not know of any facts that would reasonably be expected to form the basis for the institution of proceedings that would materially and adversely affect the Acquiring Fund’s financial condition or the conduct of its business or its ability
to consummate the transaction herein contemplated.
(g) The NMF Trust, on its own behalf and with respect to the Acquiring Fund, has full power and authority to
enter into and perform its obligations under this Agreement. The execution, delivery and performance of this Agreement have been validly authorized by the Board of Trustees of the NMF Trust. This Agreement and all other necessary trust action on
the part of the NMF Trust and the Acquiring Fund, executed and delivered by the NMF Trust, on its own behalf and with respect to the Acquiring Fund, constitute legal, valid and binding obligations enforceable against the NMF Trust, on its own behalf
and with respect to the Acquiring Fund, in accordance with the terms of this Agreement, subject as to enforcement to the effect of bankruptcy, insolvency, reorganization, arrangements among creditors, moratorium, fraudulent transfer or conveyance,
and other similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.
(h) Neither the NMF Trust nor the Acquiring Fund is under the jurisdiction of a Court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
(i) The books and records of or relating to the Acquiring Fund (if any), including all books and records
required to be maintained under the rules and regulations of the 1940 Act and the Code, made available to the Target Company and/or its counsel are true and correct in all material respects and contain no material omissions with respect to the
business and operations of the NMF Trust and the Acquiring Fund.
(j) The Acquiring Fund, a series of the NMF Trust, was duly constituted in accordance with the applicable
provisions of the NMF Declaration of Trust and the 1940 Act and other applicable law.
(k) [Reserved]
(l) The Acquiring Fund is, and will be at the time of Closing, a shell series created for the purpose of
acquiring the Assets and assuming the Liabilities of the Target Fund, and, prior to the Closing, will not commence operations or carry on any business activities (other than such activities as are customary to the organization of a new series of a
registered investment company prior to its commencement of investment operations).
(m) The Acquiring Fund intends to continue to qualify as a RIC for federal income tax purposes under Part I
of Subchapter M of the Code for its taxable year that includes the Closing, and intends to be eligible to compute its U.S. federal income tax under Section 852 of the Code for such taxable year, and to qualify and be eligible for treatment as a RIC
for each subsequent taxable year; the Acquiring Fund will be a “fund” as defined in Section 851(g)(2) of the Code; and the consummation of the transactions contemplated by this Agreement will not cause the Acquiring Fund to fail to qualify as a RIC
from and after the Closing.
(n) The NMF Trust has adopted and implemented written policies and procedures in accordance with Rule 38a-1
under the 1940 Act and, at the time of Closing, such policies and procedures have been appropriately tailored to address the business of the Acquiring Fund.
(o) The current prospectus and statement of additional information filed as part of the NMF Trust’s
registration statement on Form N-1A, which will become effective prior to the Effective Date of the Reorganization, insofar as they relate to the Acquiring Fund and the Acquiring Fund Shares (the “NMF Trust
Registration Statement”) conform 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 do not include any untrue statement of a material fact
or omit to state any material fact required to be stated in the NMF Trust Registration Statement or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading.
(p) As of the date of the Closing, the Acquiring Fund will be in compliance in all material respects with
the requirements of, and the rules and regulations under, the 1933 Act, the 1934 Act and the 1940 Act, state securities laws and all other applicable federal and state laws or regulations.
(q) All information provided or identified in writing by the Acquiring Fund to the Target Fund in response
to formal due diligence requests relating to the Acquiring Fund are true and correct in all material respects and contain no material misstatements or omissions with respect to the operation of the Acquiring Fund as of the date hereof.
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6. |
Representations and Warranties by the Target Company and the NMF Trust
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The Target Company and the NMF Trust each represents and warrants to the other, with respect to itself and the Target Fund or Acquiring Fund, respectively, that:
(a) Except as disclosed in its currently effective prospectus as of the Closing, there are no legal,
administrative or other proceedings or investigations against it, or, to its knowledge, threatened against it, that would materially affect its financial condition or its ability to consummate the transactions contemplated by this Agreement.
(b) All information provided to the Target Company by the NMF Trust, insofar as it relates to the NMF Trust
and the Acquiring Fund, and by the Target Company to the NMF Trust, insofar as it relates to the Target Company and the Target Fund, for inclusion in, or transmittal with, the
registration statement on Form N-14 (the “Registration Statement”), which includes a proxy statement/prospectus (the “Proxy Statement/Prospectus”), with respect to
this Agreement pursuant to which approval of the Reorganization by vote of the Target Fund’s shareholders will be sought, as of the effective date of the Registration Statement, the date of the meeting of the shareholders of the Target Fund and at
the Effective Date of the Reorganization, (i) complies and will comply in all material respects with the 1933 Act, the Securities Exchange Act of 1934 (the “1934 Act”) and the 1940 Act and the rules and
regulations thereunder; and (ii) does not and will not contain any untrue statement of a material fact, or omit to state a material fact required to be stated in order to make the statements made therein, in light of the circumstances under which
they were made, not misleading.
(c) Except in the case of the Target Company with respect to the approval of this Agreement and the
Reorganization by vote of the Target Fund’s shareholders, no consent, approval, authorization or order of any court or governmental authority, or of any other person or entity, is required by the parties for the consummation of the transactions
contemplated by this Agreement, except as may be required by the 1933 Act, the 1934 Act, the 1940 Act, the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), state securities laws, Maryland
corporation laws or Delaware statutory trust laws (including, in the case of each of the foregoing, the rules and regulations thereunder).
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7. |
Covenants of the Target Company
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(a) The Target Company covenants to operate the business of the Target Fund in the ordinary course between
the date of this Agreement and the Closing; it being understood that such ordinary course of business will include customary dividends, shareholder purchases and redemptions, and such selling and purchasing of securities and other changes as are
contemplated by the Target Fund’s normal operations.
(b) The Target Company will call a meeting of shareholders of the Target Fund to be held prior to the
Closing to consider and act upon this Agreement and the transactions contemplated herein, and will take all other reasonable action necessary to obtain the required shareholder approval of the transactions contemplated hereby.
(c) The Target Company undertakes that the Target Company and the Target Fund will not acquire Acquiring
Fund Shares for the purpose of making distributions thereof other than to the Target Fund’s shareholders.
(d) The Target Company covenants that by the time of the Closing, all of the Target Fund’s federal and other
Tax returns and reports required by law to be filed on or before the Closing, shall have been filed and all federal and other Taxes (if any) shown as due on said returns shall have either been paid or, if not yet due, adequate liability reserves
shall have been provided for the payment of such Taxes; provided, however, if any of the income tax returns (e.g., Form 1120-RIC) required to be filed by the Target Fund for its fiscal year ended October 31, 2018 have not been filed by the Closing,
the Target Company shall prepare and timely file with the relevant taxing authorities all such returns and the Target Company shall make available to the NMF Trust drafts of such returns at least one week prior to filing such returns.
(e) The Target Company will at the Closing, or as promptly as practicable following the Closing, provide the
NMF Trust with:
(i) A statement of the respective adjusted tax basis of all investments to be transferred
by the Target Fund to the Acquiring Fund;
(ii) A copy of any other Tax books and records of the Target Fund necessary for purposes
of preparing any Tax returns, schedules, forms, statements or related documents (including but not limited to any income, excise or information returns, as well as any transfer statements (as described in Sections 1.6045A-1 and 1.6045B-1(a) of the
Treasury regulations)) required by law to be filed by the Acquiring Fund after the Closing;
(iii) A copy (which may be in electronic form) of the shareholder ledger accounts of the
Target Fund, including, without limitation,
(A) the name, address and taxpayer identification number of each shareholder of record,
(B) the number of shares of common stock held by each shareholder,
(C) the dividend reinvestment elections applicable to each shareholder,
(D) the backup withholding certifications (e.g., IRS Form W-9) or foreign person
certifications (e.g., IRS Form W-8BEN, W-8BEN-E, W-8ECI, W-8IMY), notices or records on file with the Target Fund with respect to each shareholder, and
(E) such information as the NMF Trust may reasonably request concerning Target Fund
shares or Target Fund shareholders in connection with Acquiring Fund’s cost basis reporting and related obligations under Sections 1012, 6045, 6045A, and 6045B of the Code and related Treasury regulations following the Closing.
for all of the shareholders of record of the Target Fund’s shares as of the Close of Business on the Valuation Date, who are to become holders of the Acquiring Fund as a result of the transfer of assets that is the
subject of this Agreement (the “Target Fund Shareholder Documentation”), certified by its transfer agent or its President or its Vice President to the best of his or her knowledge and belief; and
(iv) Copies of all FASB ASC 740-10-25 (formerly, FIN 48) work papers and supporting
statements pertaining to the Target Fund.
(f) As promptly as practicable, but in any case within sixty (60) calendar days after the date of Closing,
the Target Company shall furnish the NMF Trust a statement of earnings and profits of the Target Fund for U.S. federal income tax purposes that will be carried over by the Target Fund pursuant to Section 381 of the Code.
(g) The Target Company shall cause to be mailed to each shareholder of record of the Target Fund the Proxy
Statement/Prospectus.
(h) The Target Company shall supply to the NMF Trust, at the Closing, the statement of the assets and
liabilities described in Section 4(g) of this Agreement in conformity with the requirements described in such Section. In addition, the Target Company shall supply a schedule of portfolio investments as of the Valuation Date. The schedule of
portfolio investments will present fairly the portfolio investments of the Target Fund as of the Valuation Date in conformity with generally accepted accounting principles applied on a consistent basis. The statement of assets and liabilities and
schedule of portfolio investments shall be certified by the treasurer of the Target Company, to the best of his or her knowledge, as being in conformity with generally accepted accounting principles applied on a consistent basis.
(i) As soon as is reasonably practicable after the Closing, the Target Fund will distribute to its
shareholders the Acquiring Fund Shares received at the Closing, as set forth in Section 1(a) hereof.
(j) The Target Company agrees that the acquisition of all Assets and Liabilities of the Target Fund by the
NMF Trust, on behalf of the Acquiring Fund, includes any right of action against current and former service providers of the Target Fund, such right to survive for the statute of limitation of any such claim. For the avoidance of all doubt, the
Target Company hereby assigns to the NMF Trust all rights, causes of action, and other claims against third parties relating to the Target Fund, whether known or unknown, contingent or non-contingent, inchoate or choate, or otherwise.
(k) The Target Company shall cause the liquidation and termination of the Target Fund to be effected in the
manner provided in the Target Company Material Agreements in accordance with applicable law and that on or after the Effective Date of the Reorganization, the Target Fund shall not conduct any business except in connection with its liquidation and
termination.
(l) It is the intention of the parties to the Reorganization that the Reorganization will qualify as a
“reorganization” within the meaning of Section 368(a) of the Code. Neither the Target Company nor the Target Fund shall take any action or cause any action to be taken (including, without limitation the filing of any Tax return) that is inconsistent
with such treatment or results in the failure of the Reorganization to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.
(m) For the period beginning at the Effective Date of the Reorganization and ending no less than six (6)
years thereafter, the Target Company shall, at no cost or expense to the NMF Trust, list the Target Fund as an "insured fund" under the directors and officers and errors and omissions liability insurance policies (the "Insurance Policy") insuring the present and former directors and officers of the Target Fund (the "Target Fund Directors and Officers") against liabilities and expenses arising out of claims,
actions or proceedings asserted or threatened against them in their respective capacities for the Target Fund. The Insurance Policy shall provide the Target Fund Directors and Officers with coverage equivalent to that provided to the Target Fund’s
directors and officers under the insurance policies from time to time in effect with respect to the Target Fund and its directors and officers generally, and shall provide for the payment of any claims of liability covered under such Insurance Policy
against the Target Fund Directors and Officers with respect to the Target Fund made after the Effective Date of the Reorganization, but only with respect to actions or omissions occurring prior to the Effective Date of the Reorganization.
(n) Any reporting responsibility of, or with respect to, the Target Fund including, but not limited to, the
responsibility for filing of regulatory reports, Tax returns, or other documents
with the 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 Target Fund.
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8. |
Covenants of the NMF Trust
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(a) The NMF Trust covenants that the Acquiring Fund Shares to be issued and delivered to the Target Fund
pursuant to the terms of Section 1(a) hereof shall have been duly authorized as of the Closing and, when so issued and delivered, shall be registered under the 1933 Act, validly issued, fully paid and non-assessable, and no shareholder of the
Acquiring Fund shall have any statutory or contractual preemptive right of subscription or purchase in respect thereof.
(b) The NMF Trust covenants to establish and organize the Acquiring Fund as a series of the NMF Trust, but
that the Acquiring Fund will not carry on any business activities between the date hereof and the Effective Date of the Reorganization (other than such activities as are customary to the organization of a new registered investment company prior to
its commencement of operations, including holding and redeeming the initial investment of the initial shareholder of the Acquiring Fund prior to the Closing).
(c) The NMF Trust will prepare and file with the Commission the Registration Statement, which includes the
Proxy Statement/Prospectus, and will use its best efforts to provide that such Registration Statement becomes effective as promptly as practicable; provided, however, that the NMF Trust will not file the Registration Statement prior to (i) providing
a copy of the Registration Statement to BNYM Adviser in substantially the same form that such Registration Statement will be filed with the Commission, and (ii) obtaining written approval from BNYM Adviser to file the Registration Statement with the
Commission.
(d) The NMF Trust, on behalf of 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.
(e) It is the intention of the parties to the Reorganization that the Reorganization will qualify as a
“reorganization” within the meaning of Section 368(a) of the Code. Neither the NMF Trust nor the Acquiring Fund shall take any action or cause any action to be taken (including, without limitation the filing of any Tax return) that is inconsistent
with such treatment or results in the failure of the Reorganization to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.
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9. |
Conditions Precedent to be Fulfilled by the Target Company and the NMF Trust
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The respective obligations of the Target Company and the NMF Trust to effectuate this Agreement and the Reorganization hereunder shall be subject to the following respective conditions:
(a) That (i) all the representations and warranties of the other party contained herein shall be true and
correct in all material respects as of the Closing with the same effect as though made as of and at such date; (ii) the other party shall have performed all obligations required by this Agreement to be performed by it at or prior to the Closing; and
(iii) the other party shall have delivered to such party a certificate to the foregoing effect signed by the President or Vice President and by the Secretary or equivalent officer of the party.
(b) That each party shall have delivered to the other party a copy
of the resolutions approving this Agreement adopted by the Board of Directors or Board of Trustees, as applicable, of the party delivering the copy, and certified by the Secretary, Assistant Secretary or equivalent officer of the party delivering the
copy.
(c) That the Commission shall not have issued an unfavorable advisory report under Section 25(b) of the 1940
Act, nor instituted nor threatened to institute any proceeding seeking to enjoin the consummation of the Reorganization contemplated hereby under Section 25(c) of the 1940 Act, and no other legal, administrative or other proceeding shall be
instituted or threatened that would materially and adversely affect the financial condition of either party or would prohibit the transactions contemplated hereby.
(d) That this Agreement, the Reorganization and the transactions contemplated hereby for the Target Fund
shall have been approved by the appropriate action of the shareholders of the Target Fund at an annual or special meeting or any adjournment or postponement thereof.
(e) That all required consents of other parties and all other consents, orders and permits of federal, state
and local authorities (including those of the Commission and of state securities authorities, including any necessary “no-action” positions or exemptive orders from such federal and state authorities) to permit consummation of the transaction
contemplated hereby shall have been obtained, except where failure to obtain any such consent, order or permit would not involve a material adverse effect, or the risk thereof, on the assets and properties of the Target Fund and/or Acquiring Fund.
(f) That prior to or at the Closing, the Target Company and the NMF Trust shall each receive an opinion from
Stradley Ronon Stevens & Young, LLP (“Stradley Ronon”) satisfactory to both parties to the effect that, provided the acquisition contemplated hereby is carried out in accordance with the applicable laws of
the State of Maryland and the State of Delaware, the terms of this Agreement and in accordance with customary representations provided by the NMF Trust and the Target Company in certificates delivered to Stradley Ronon, as to the Acquiring Fund and
the Target Fund:
(i) The acquisition by the Acquiring Fund of all of the Assets of the Target Fund, as
provided for in this Agreement, in exchange solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of the Liabilities of the Target Fund, followed by the distribution by the Target Fund to its shareholders of Acquiring Fund Shares
in complete liquidation of the Target Fund, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and the Target Fund and the Acquiring Fund each will be “a party to a reorganization” within the meaning of Section
368(b) of the Code;
(ii) Pursuant to Section 361(a) and Section 357(a) of the Code, no gain or loss will be
recognized by the Target Fund upon the transfer of all of its Assets to the Acquiring Fund in exchange solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of the Liabilities of the Target Fund;
(iii) Pursuant to Section 1032(a) of the Code, no gain or loss will be recognized by the
Acquiring Fund upon the receipt by it of all of the Assets of the Target
Fund in exchange solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of the Liabilities of the Target Fund;
(iv) Pursuant to Section 361(c)(1) of the Code, no gain or loss will be recognized by the
Target Fund upon the distribution of Acquiring Fund Shares by the Target Fund to its shareholders in complete liquidation pursuant to this Agreement;
(v) Pursuant to Section 362(b) of the Code, the tax basis of the Assets of the Target
Fund received by the Acquiring Fund will be the same as the tax basis of such Assets in the hands of the Target Fund immediately prior to the transfer;
(vi) Pursuant to Section 1223(2) of the Code, the holding periods of the Assets of the
Target Fund in the hands of the Acquiring Fund will include the periods during which such Assets were held by the Target Fund;
(vii) Pursuant to Section 354(a) of the Code, no gain or loss will be recognized by the
shareholders of the Target Fund upon the exchange of all of their Target Fund shares solely for Acquiring Fund Shares (including fractional shares to which they may be entitled).
(viii) Pursuant to Section 358(a)(1) of the Code, the aggregate tax basis of Acquiring
Fund Shares received by a shareholder of the Target Fund (including fractional shares to which the shareholder may be entitled) will be the same as the aggregate tax basis of Target Fund shares exchanged therefor;
(ix) Pursuant to Section 1223(1) of the Code, the holding period of Acquiring Fund Shares
received by each shareholder of the Target Fund (including fractional shares to which the shareholder may be entitled) will include the holding period of Target Fund shares exchanged therefor, provided that the shareholder held the Target Fund shares
as a capital asset on the date of the exchange; and
(x) The Acquiring Fund will succeed to and take into account as of the date of the
transfer (as defined in Section 1.381(b)-1(b) of the regulations issued by the United States Treasury (“Treasury Regulations”)) the items of the Target Fund described in Section 381(c) of the Code as if there
had been no Reorganization.
(g) That each of the Registration Statement and the NMF Trust Registration Statement with respect to the
Acquiring Fund Shares to be delivered to the Target Fund’s shareholders in accordance with Section 1(a) hereof shall have become effective, and no stop order suspending the effectiveness of the Registration Statement or NMF Trust Registration
Statement with respect to the Acquiring Fund Shares or any amendment or supplement thereto, shall have been issued prior to the Closing or shall be in effect at the Closing, and no proceedings for the issuance of such an order shall be pending or
threatened on that date.
(h) That the Acquiring Fund Shares to be delivered in accordance with Section 1(a) hereof shall be eligible
for sale by the NMF Trust with the securities commission or agency of each state or other jurisdiction of the United States with which such eligibility is required in order to permit the Shares lawfully to be delivered to the shareholders of the
Target Fund.
(i) That the NMF Trust and the Acquiring Fund shall have received in form reasonably satisfactory to the NMF
Trust and the Acquiring Fund at the Closing an opinion of Proskauer LLP (“Proskauer”), counsel to the independent Directors of the Target Company (which opinion will be subject to certain qualifications reasonably satisfactory to the NMF Trust and
the Acquiring Fund) substantially to the effect that:
(i) Assuming due authorization, execution and delivery by the NMF Trust, on behalf of the
Acquiring Fund, and assuming that the Registration Statement complies with the 1933 Act, the 1934 Act and the 1940 Act, this Agreement is a valid and legally binding obligation of the Target Company, enforceable against the Target Company in
accordance with its terms, subject to the effect of bankruptcy, insolvency, fraudulent transfer, reorganization, receivership, moratorium and other laws affecting the rights and remedies of creditors or secured parties generally and general
principles of equity;
(ii) The execution and delivery by the Target Company of this Agreement did not, and the
consummation by the Target Company of the transactions contemplated pursuant to this Agreement will not, result in a violation of the express terms of any Target Fund Material Agreement or, to the knowledge of such counsel, result in the acceleration
of any obligation, or the imposition of any penalty, under any such Target Company Material Agreement, or any judgment or decree know to such counsel to which the Target Company is a party or by which it is or its property is bound under the express
terms thereof;
(iii) To the knowledge of such counsel, no consent, approval, authorization or order of
any court or governmental authority of the United States or the State of Maryland is required for the consummation by the Target Company, on behalf of the Target Fund, of the transactions contemplated pursuant to this Agreement, except such as have
been obtained under the 1933 Act, the 1934 Act and the 1940 Act, and such as may be required under the securities or blue sky laws of the various states (as to which such counsel need express no opinion);
(iv) To the knowledge of such counsel without investigation, there is no legal,
administrative or governmental proceeding, investigation, order, decree or judgment of any court or governmental body, only insofar as they relate to the Target Fund or its assets or properties, pending or overtly threatened in writing on or before
the effective date of the Registration Statement or the Closing Date that is required to be described in the Registration Statement or to be filed as an exhibit to the Registration Statement that is not described or filed as required; and
(v) The Target Company is registered with the Commission as an investment company under
the 1940 Act, and, to the knowledge of such counsel, no order has been issued or proceeding instituted to suspend such registration.
(j) That the NMF Trust and the Acquiring Fund shall have received in form reasonably satisfactory to the NMF
Trust and the Acquiring Fund at the Closing an opinion of Venable LLP, Maryland counsel to the Target Fund (together with Proskauer, "Target Fund Counsel"), which opinion will be subject to certain
qualifications reasonably satisfactory to the NMF Trust and the Acquiring Fund, substantially to the effect that:
(i) The Target Company is a corporation duly incorporated and existing under, and by
virtue of, the laws of the State of Maryland and is in good standing with the State Department of Assessments and Taxation of Maryland, and has the power to own all of its properties and assets and to carry on its business as a registered investment
company as described in its current registration statement on Form N-1A;
(ii) The execution and delivery by the Target Company of this Agreement has been duly
authorized by all requisite corporate action; and
(iii) The execution and delivery by the Target Company of this Agreement did not, and the
consummation by the Target Fund of the transactions contemplated pursuant to this Agreement will not, violate the Target Company Articles or Target Company Bylaws.
In providing the opinions set forth in this Section 9(i)(a) and (b), Target Fund Counsel (i) may rely as to the factual matters, exclusively and without independent verification, on the representations and warranties made in this Agreement, which
each Target Fund Counsel may treat as representations and warranties made to it, and in separate letters address to such counsel, and (ii) may rely upon officers’ certificates and certificates of public officials.
(k) That the Target Company shall have received an opinion of Stradley Ronon at the Closing, in form
satisfactory to the Target Company (which opinion will be subject to certain qualifications satisfactory to the Target Company), to the effect that:
(i) The NMF Trust is a statutory trust validly created and validly existing in good
standing under the laws of the State of Delaware and has the power to own all of its properties and assets and to carry on its business as a registered investment company as described in its current registration statement on Form N-1A, and that the
Acquiring Fund is a separate series thereof duly constituted in accordance with the applicable provisions of the 1940 Act and the NMF Certificate, NMF Declaration of Trust and NMF Bylaws;
(ii) This Agreement has been duly authorized, executed, and delivered by the NMF Trust,
with respect to the Acquiring Fund, and, assuming due authorization, execution and delivery of this Agreement by the Target Company, on behalf of the Target Fund, and assuming that the Registration Statement complies with the 1933 Act, the 1934 Act
and the 1940 Act, is a valid and legally binding obligation of the NMF Trust, on behalf of the Acquiring Fund, enforceable against the NMF Trust, with respect to the Acquiring Fund, in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and other equitable principles;
(iii) Acquiring Fund Shares to be delivered to the Target Fund as provided for by this
Agreement are duly authorized and upon such delivery will be validly issued and outstanding and, assuming receipt by the Acquiring Fund of the consideration contemplated hereby, fully paid and non-assessable by the Acquiring Fund, and no shareholder
of the Acquiring Fund has any preemptive right of subscription or purchase in respect thereof;
(iv) The execution and delivery of this Agreement did not, and the consummation of the
transactions contemplated hereby will not, violate the NMF Trust’s Certificate of Trust, the NMF Declaration of Trust or the NMF Bylaws, or result in a violation of the express terms of any provision of any NMF Material Agreement, or, to the
knowledge of such counsel, result in the acceleration of any obligation, or the imposition of any penalty, under any such NMF Material Agreement, or any judgment or decree known to such counsel to which the NMF Trust or the Acquiring Fund is a party
or by which any of them is bound under the express terms thereof;
(v) To the knowledge of such counsel, no consent, approval, authorization or order of any
court or governmental authority of the United States or the State of Delaware is required for the consummation by the NMF Trust, on behalf of the Acquiring Fund, of the transactions contemplated pursuant to this Agreement, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act, and such as may be required under the securities or blue sky laws of the various states (as to which such counsel need express no opinion); and
(vi) To the knowledge of such counsel without investigation, there is no legal,
administrative or governmental proceeding, investigation, order, decree or judgment of any court or governmental body, only insofar as they relate to the Acquiring Fund or its assets or properties, pending or overtly threatened in writing on or
before the effective date of the Registration Statement or the Closing Date that is required to be described in the Registration Statement or to be filed as an exhibit to the Registration Statement that is not described or filed as required.
In connection with the foregoing, it is understood that Stradley Ronon may reasonably rely upon the representations made in this Agreement, as well as certificates of officers of the NMF Trust.
(l) The Target Fund shall have delivered to the Acquiring Fund (a) information concerning the tax basis and
holding period of the Target Fund in all securities transferred to Acquiring Fund; (b) the Target Fund Shareholder Documentation; (c) all FASB ASC 740-10-25 (formerly, FIN 48) work papers; and (d) the Tax books and records of the Target Fund for
purposes of preparing any Tax returns required by law to be filed after the Effective Date of the Reorganization.
(m) The NMF Trust, on behalf of the Acquiring Fund, has obtained 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.
(n) Unless the Target Fund has been advised by the Acquiring Fund that the Acquiring Fund will deliver an
opinion of counsel that the Reorganization qualifies as a “reorganization” under Section 368(a)(1)(F) of the Code, the Target Fund shall have declared and paid a distribution or distributions prior to the Closing that, together with all previous
distributions, shall have the effect of distributing to its shareholders (A) all of Target Fund’s investment company taxable income (determined without regard to any deductions for dividends paid) for the taxable year ended prior to the Closing Date
and all of such investment company taxable income for the short taxable year beginning on the first day of its current taxable year and ending on the Closing Date; (B) all of Target Fund’s net capital gain recognized in its taxable year ended prior
to the Closing Date, and all of any such net capital gain recognized in the short taxable year beginning on the first day of its current taxable year and ending on
the Closing Date (in each case after reduction for any capital loss carryover); and (C) at least 90 percent of the excess, if any, of a Target Fund’s interest income excludible from gross income under Section 103(a) of the Code over its deductions
disallowed under Sections 265 and 171(a)(2) of the Code for the taxable year ended prior to the Closing Date and at least ninety (90) percent of such net tax-exempt income for such final taxable year.
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10. |
Fees and Expenses; Other Agreements
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(a) The NMF Trust represents and warrants to the Target Company, and the Target Company represents and
warrants to the NMF Trust, that no brokers or finders or other entities are entitled to receive any payments in connection with the transactions described in this Agreement.
(b) Neither the NMF Trust nor the Target Company shall be responsible for the expenses of entering into and
carrying out the provisions of this Agreement. Rather, the expenses of entering into and carrying out the provisions of this Agreement, whether or not consummated, including, but not limited to, any and all taxes in connection with the delivery of
the Assets, including all applicable federal, state, and foreign stock transfer stamps and/or financial transaction taxes, the preparation and filing of the Registration Statement, registration of the Acquiring Fund Shares, delivery of and
solicitation of approval of Target Fund shareholders to the Reorganization pursuant to the Registration Statement, any printing and mailing fees, fees of accountants and attorneys and the costs of holding the Target Fund’s shareholder meeting and
soliciting proxies, shall be borne by NFA, BNYM Adviser and Mellon pursuant to terms mutually agreed to by NFA, BNYM Adviser and Mellon.
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11. |
Termination; Waiver; Order
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(a) Anything contained in this Agreement to the contrary notwithstanding, this Agreement may be terminated
and the Reorganization abandoned at any time (whether before or after approval thereof by the shareholders of the Target Fund) prior to the Closing as follows:
(i) by mutual consent of the Target Company and the NMF Trust;
(ii) by the NMF Trust if any condition precedent to its obligations set forth in Section
9 has not been fulfilled or waived by the NMF Trust as of the Closing, or if it reasonably appears that any condition precedent to the obligations of the NMF Trust set forth in Section 9 will not or cannot be met as of the Closing; or
(iii) by the Target Company if any condition precedent to its obligations set forth in
Section 9 has not been fulfilled or waived by the Target Company as of the Closing, or if it reasonably appears that any condition precedent to the obligations of the Target Company set forth in Section 9 will not or cannot be met as of the Closing.
(b) If the transactions contemplated by this Agreement have not been consummated by the later of September
30, 2020 or ninety (90) days after the date of the final shareholder meeting at which approval of this Agreement is voted upon by the shareholders of the Target Fund, this Agreement shall automatically terminate on such later date, unless a later
date is agreed to by both the Target Company and the NMF Trust.
(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 the Target Company or the NMF Trust or persons who are their trustees, officers, agents or shareholders in respect of this Agreement.
(d) At any time prior to the Closing, any of the terms or conditions of this Agreement may be waived by
either the Target Company or the NMF Trust, respectively (whichever is entitled to the benefit thereof). Such waiver shall be in writing and authorized by an officer of the waiving party. The failure of either party hereto to enforce at any time
any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision, nor in any way to affect the validity of this Agreement or any part hereof, or the right of either party thereafter to enforce each and every
such provision. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach. Notwithstanding anything herein to the contrary, neither the Target Fund nor the Acquiring Fund may waive the shareholder
approval requirement with respect to the Reorganization.
(e) The respective representations, warranties and covenants contained in Sections 4-8 hereof, other than
those set forth in Sections 7(i) and 7(j), shall expire with, and be terminated by, the consummation of the Reorganization, and neither the Target Company nor the NMF Trust, nor any of their officers, directors, trustees, agents or shareholders shall
have any liability with respect to such representations or warranties after the Closing, provided that this section shall not limit any covenant contained herein that by its terms contemplates performance after
closing. This provision shall not protect any officer, director, trustee, agent or shareholder of the Target Company or the NMF Trust against any liability to the entity for which that officer, director, trustee, agent or shareholder so acts or to
its shareholders to which that officer, director, trustee, agent or shareholder would otherwise 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
Closing and shall impose any terms or conditions that are determined by action of the Board of Directors of the Target Company or the Board of Trustees of the NMF Trust to be acceptable, such terms and conditions shall be binding as if a part of this
Agreement without further vote or approval of the shareholders of the Target Fund, unless such further vote is required by applicable law or by mutual consent of the parties.
(g) In the event of the termination of this Agreement and abandonment of the transactions contemplated
hereby pursuant to this Section 11, this Agreement shall become void and have no effect except that Sections 10(b), 11(d), and 11(g) shall survive any termination of this Agreement.
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12. |
Liability of the NMF Trust
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(a) Each party acknowledges and agrees (i) that all obligations of the NMF Trust under this Agreement are
binding only with respect to the Acquiring Fund; (ii) that any liability of the NMF Trust under this Agreement with respect to the Acquiring Fund, or in connection with the transactions contemplated herein with respect to the Acquiring Fund, shall be
discharged only out of the assets of the Acquiring Fund; (iii) that no other series of the NMF Trust or the NMF Trust generally shall be liable with respect to this Agreement or in connection with the transactions contemplated herein; and (iv) that
neither the Target Company nor the Target Fund shall seek satisfaction of any such
obligation or liability from the shareholders of the NMF Trust, the trustees, officers, employees or agents of the NMF Trust, or any of them.
(b) [Reserved]
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13. |
Cooperation and Exchange of Information
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(a) The NMF Trust and the Target Company will provide each other and their respective representatives with
such cooperation, assistance and information as either of them reasonably may request of the other in: (i) filing any Tax returns, amended return or claim for refund; (ii) determining a liability for Taxes or
a right to a refund of Taxes; (iii) requesting a closing agreement or similar relief from a Taxing authority; (iv) participating in or conducting any audit or other proceeding in respect of Taxes; or (v) in determining the financial reporting of any
Tax position. Each party or their respective agents will retain for a period of six (6) years following the Closing all returns, schedules and work papers and all material records or other documents relating to Tax matters and financial reporting of
Tax positions of the Target Fund and Acquiring Fund for its taxable period first ending after the Closing and for prior taxable periods for which the party is required to retain records as of the Closing.
(b) Any reporting responsibility of the Target Fund is, and shall remain, the responsibility of the Target
Fund including, without limitation, responsibility for (i) preparing and filing Tax returns of the Target Fund relating to tax periods ending on or prior to the date of the Closing (whether due before or after the Closing); and (ii) preparing and
filing other documents with the Commission, any state securities commission, and any federal, state or local tax authorities or any other relevant regulatory authority that is the responsibility of the Target Fund under applicable law, except as
otherwise is mutually agreed by the parties.
(c) The Acquiring Fund shall receive certificates following the Closing, promptly upon reasonable request,
from the principal executive officer and principal financial officer, or persons performing similar functions, of the Target Company to the effect that such principal executive officer and principal financial officer, or persons performing similar
functions, of the Target Company have concluded that, based on their evaluation of the effectiveness of the Target Company’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the 1940 Act), to the best of their knowledge, the
design and operation of such procedures were effective to provide reasonable assurance that information provided by the Target Company to the NMF Trust with respect to the Target Fund’s operations prior to the Closing that is required to be disclosed
by the NMF Trust on Forms N-CEN, N-PORT and N-CSR for the period from November 1, 2018 through the Closing Date, which Forms will include information relating to the Target Fund, was recorded, processed, summarized, and reported within the time
periods specified in the Commission’s rules and forms with respect to the Target Fund’s operations prior to the Closing, and that there have been no changes in the Target Company’s internal control over financial reporting (as defined in Rule
30a-3(d) under the 1940 Act) that occurred since November 1, 2018 that have materially affected, or are reasonably likely to materially affect, the Target Company’s internal control over financial reporting during the relevant periods.
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14. |
Entire Agreement and Amendments
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This Agreement embodies the entire agreement between the Target Company, on behalf of the Target Fund, and the NMF Trust, on behalf of the Acquiring Fund, and there are no agreements, understandings, restrictions, or
warranties between such parties other than those set forth
herein or herein provided for. This Agreement may be amended only by mutual consent of the parties in writing. Neither this Agreement nor any interest herein may be assigned without the prior written consent of the other parties.
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts together shall constitute but one instrument.
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 the
following addresses:
To the Target Company:
BNY Mellon Investment Funds IV, Inc.
c/o BNY Mellon Investment Adviser, Inc.
240 Greenwich Street, 18th Floor
New York, NY 10286
Attention: Legal Department
To the NMF Trust:
Nationwide Mutual Funds
One Nationwide Plaza, 5-02-210
Columbus, OH 43215
Attention: General Counsel
To BNYM Adviser:
240 Greenwich Street, 18th Floor
New York, NY 102806
Attention: Legal Department
To Mellon Investments Corporation:
BNY Mellon Center
201 Washington Street, 14th Floor
Boston, MA 02108
Attention: Client Service Manager
To NFA:
Nationwide Fund Advisors
One Nationwide Plaza, 5-02-210
Columbus, OH 43215
Attention: General Counsel
This Agreement shall be governed by and carried out in accordance with the laws of the State of Delaware without regard to its principles of conflicts of laws.
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18. |
Effect of Facsimile or Electronic Signature
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A facsimile or electronic (e.g., PDF) signature of an authorized officer of a party hereto on this Agreement and/or any transfer document shall have the same effect as if executed in the original by such officer.
Any public announcements or similar publicity with respect to this Agreement or the transactions contemplated herein will be made at such time and in such manner as the parties mutually shall agree in writing, provided
that nothing herein shall prevent either party from making such public announcements as may be required by applicable law, in which case the party issuing such statement or communication shall advise the other party prior to such issuance.
(a) The parties will hold, and will cause their board members, officers, employees, representatives, agents
and affiliated persons to hold, in strict confidence, and not disclose to any other person, and not use in any way except in connection with the transactions herein contemplated, without the prior written consent of the other party, all confidential
information obtained from the other party in connection with the transactions contemplated by this Agreement, except such information may be disclosed: (i) to governmental or regulatory bodies, and, when necessary, to any other person in connection
with the obtaining of consents or waivers as contemplated by this Agreement; (ii) if required by court order or decree or applicable law; (iii) if it is publicly available through no act or failure to act of such party; (iv) if it was already known
to such party on a non-confidential basis on the date of receipt; (v) during the course of or in connection with any litigation, government investigation, arbitration, or other proceedings based upon or in connection with the subject matter of this
Agreement, including, without limitation, the failure of the transactions contemplated hereby to be consummated; or (vi) if it is otherwise expressly provided for herein.
(b) In the event of a termination of this Agreement, the parties agree that they, along with their board
members, employees, representative agents and affiliated persons, shall, and shall cause their affiliates to, except with the prior written consent of the other party, keep secret and retain in strict confidence, and not use for the benefit of itself
or themselves, nor disclose to any other persons, any and all confidential or proprietary information relating to the other party and their related parties and affiliates, whether obtained through their due diligence investigation, this Agreement or
otherwise, except such information may be disclosed: (i) if required by court order or decree or applicable law; (ii) if it is publicly available through no act or failure to act of such party; (iii) if it was already known to such party on a
non-confidential basis on the date of receipt; (iv) during the course of or in connection with any litigation, government investigation, arbitration, or other proceedings based upon or in connection with the subject matter of this Agreement,
including, without limitation, the failure of the transactions contemplated hereby to be consummated; or (v) if it is otherwise expressly provided for herein.
The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Target Company and the NMF Trust have each caused this Agreement and Plan of Reorganization to be executed on its behalf by its duly authorized officers, all as of the day and year first-above
written.
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BNY Mellon Investment Funds IV, Inc., on behalf of BNY Mellon Disciplined Stock Fund
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By:
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/s/ Jeff Prusnofsky |
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Name:
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Jeff Prusnofsky |
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Title:
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Vice President and Assistant Secretary |
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Nationwide Mutual Funds, on behalf of Nationwide Mellon Disciplined Value Fund
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By:
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/s/ Michael S. Spangler |
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Name:
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Michael S. Spangler |
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Title:
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President |
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Solely for purposes of Section 10
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Nationwide Fund Advisors
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By:
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/s/ Michael S. Spangler |
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Name:
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Michael S. Spangler |
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Title:
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President |
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Solely for purposes of Section 10
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BNY Mellon Investment Adviser, Inc.
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By:
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/s/ Renee LaRoche-Morris |
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Name:
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Renee LaRoche-Morris |
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Title:
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President |
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Solely for purposes of Section 10
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Mellon Investments Corporation
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By:
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/s/ Des MacIntyre |
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Name:
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Des MacIntyre |
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Title:
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Chairman & CEO |
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