AGREEMENT AND PLAN OF REORGANIZATION MAINSTAY SMALL CAP GROWTH FUND MAINSTAY U.S. SMALL CAP FUND
Exhibit
4
MAINSTAY
SMALL CAP GROWTH FUND
MAINSTAY
U.S. SMALL CAP FUND
The Board
of Trustees of Eclipse Funds, a Massachusetts business trust, and the Board of
Trustees of The MainStay Funds, a Massachusetts business trust, (collectively,
the “Boards”), deem it advisable that MainStay U.S. Small Cap Fund (formerly
MainStay Small Company Value Fund, the “Acquiring Fund”), a series of Eclipse
Funds, and MainStay Small Cap Growth Fund (the “Acquired Fund”), a series of The
MainStay Funds, engage in the reorganization described below.
This
agreement is intended to be and is adopted as a plan of reorganization and
liquidation (the “Plan”) within the meaning of Section 368(a)(1) of the United
States Internal Revenue Code of 1986, as amended (the “Code”). The
reorganization and liquidation will consist of the transfer of all of the assets
of the Acquired Fund to the Acquiring Fund in exchange solely for Investor
Class, Class A, Class B, Class C and Class I shares of beneficial interest of
the Acquiring Fund (“Acquiring Fund Shares”), the assumption by the Acquiring
Fund of all liabilities of the Acquired Fund, and the distribution of the
Acquiring Fund Shares to the shareholders of the Acquired Fund in complete
liquidation of the Acquired Fund, as provided herein (“Reorganization”), all
upon the terms and conditions hereinafter set forth in this Plan.
WHEREAS,
the Acquired Fund and the Acquiring Fund are each a series of an open-end,
registered investment company of the management type and the Acquired Fund owns
securities that generally are assets of the character in which the Acquiring
Fund is permitted to invest;
WHEREAS,
the Board of Trustees of Eclipse Funds has determined, with respect to the
Acquiring Fund, that the exchange of all of the assets of the Acquired Fund for
Acquiring Fund Shares and the assumption of all liabilities of the Acquired Fund
by the Acquiring Fund is in the best interests of the Acquiring Fund and its
shareholders and that the interests of the existing shareholders of the
Acquiring Fund would not be diluted as a result of this transaction;
and
WHEREAS,
the Board of Trustees of The MainStay Funds has determined, with respect to the
Acquired Fund, that the exchange of all of the assets of the Acquired Fund for
Acquiring Fund Shares and the assumption of all liabilities of the Acquired Fund
by the Acquiring Fund is in the best interests of the Acquired Fund and its
shareholders and that the interests of the existing shareholders of the Acquired
Fund would not be diluted as a result of this transaction;
Exhibit
4
NOW,
THEREFORE, in consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as
follows:
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1.
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Transfer
of Assets of the Acquired Fund to the Acquiring Fund in Exchange for
Acquiring Fund Shares, the Assumption of all of the Acquired Fund’s
Liabilities and the Liquidation of the Acquired
Fund
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1.1 Subject
to the requisite approval of the Acquired Fund’s shareholders and the other
terms and conditions herein set forth and on the basis of the representations
and warranties contained herein, the Acquired Fund agrees to transfer all of its
respective assets, as set forth in paragraph 1.2, to the Acquiring Fund, and the
Acquiring Fund agrees in exchange therefor: (i) to deliver to the Acquired
Fund the number of full and fractional Investor Class, Class A, Class B, Class C
and Class I Acquiring Fund Shares, determined by dividing the value of the
Acquired Fund’s net assets, computed in the manner and as of the time and date
set forth in paragraph 2.1, by the net asset value of one Acquiring Fund Share
of the corresponding class, computed in the manner and as of the time and date
set forth in paragraph 2.2; and (ii) to assume all liabilities of the
Acquired Fund, as set forth in paragraph 1.3. Such transactions shall
take place on the date of the closing provided for in paragraph 3.1 (“Closing
Date”).
1.2 The
assets of the Acquired Fund to be acquired by the Acquiring Fund shall consist
of all assets and property, including, without limitation, all cash, securities,
commodities and futures interests and dividends or interests receivable that are
owned by the Acquired Fund and any deferred or prepaid expenses shown as an
asset on the books of the Acquired Fund on the Closing Date (collectively,
“Assets”).
1.3 The
Acquired Fund will endeavor to discharge all of its liabilities and obligations
prior to the Closing Date. The Acquiring Fund shall also assume all
of the liabilities of the Acquired Fund, whether accrued or contingent, known or
unknown, existing at the Valuation Date as defined in paragraph 2.1
(collectively, “Liabilities”). On or as soon as practicable prior to
the Closing Date, the Acquired Fund will declare and pay to its shareholders of
record one or more dividends and/or other distributions so that it will have
distributed substantially all (and in no event less than 98%) of its investment
company taxable income (computed without regard to any deduction for dividends
paid) and realized net capital gain, if any, for the current taxable year
through the Closing Date.
1.4 Immediately
after the transfer of assets provided for in paragraph 1.1, the Acquired Fund
will distribute to its respective shareholders of record with respect to each
class of shares, determined as of immediately after the close of business on the
Closing Date (“Acquired Fund Shareholders”), on a pro rata basis within that
class, the Acquiring Fund Shares of the corresponding class received by the
Acquired Fund pursuant to paragraph 1.1, and will completely
liquidate. Such distribution and liquidation will be accomplished,
with respect to each class of the Acquired Fund’s shares, by the transfer of the
Acquiring Fund Shares then credited to the account of the Acquired Fund on the
books of the Acquiring Fund to open accounts on the share records of the
Acquiring Fund in the names of the Acquired Fund Shareholders. The
aggregate net asset value of Investor Class, Class A, Class B, Class C and Class
I Acquiring Fund Shares to be so credited to Investor Class, Class A, Class B,
Class C and Class I Acquired Fund’ Shareholders, respectively, shall, with
respect to each class, be equal to the aggregate net asset value of the shares
of beneficial interest of the Acquired Fund (“Acquired Fund Shares”) of the
corresponding class owned by Acquired Fund Shareholders on the Closing
Date. All issued and outstanding shares of the Acquired Fund will
simultaneously be redeemed and canceled on the books of the Acquired Fund,
although share certificates representing interests in Investor Class, Class A,
Class B, Class C and Class I shares of the Acquired Fund will represent a number
of the corresponding class of Acquiring Fund Shares after the Closing Date, as
determined in accordance with paragraph 2.3. The Acquiring Fund shall
not issue certificates representing the Investor Class, Class A, Class B, Class
C and Class I Acquiring Fund Shares in connection with such
exchange.
Exhibit
4
1.5 Ownership
of Acquiring Fund Shares will be shown on the books of the Acquiring Fund’s
Transfer Agent, as defined in paragraph 3.3. Shares of the Acquiring
Fund will be issued in the manner described in the Acquiring Fund’s current
prospectus.
1.6 Any
reporting responsibility of the Acquired Fund, including, but not limited to,
the responsibility for filing regulatory reports, tax returns, or other
documents with the Securities and Exchange Commission (“SEC”), any state
securities commission, and any Federal, state or local tax authorities or any
other relevant regulatory authority, is and shall remain the responsibility of
the Acquired Fund up to and including the Closing Date.
2. Valuation
2.1 The
value of the Assets shall be the value of such Assets computed as of immediately
after the close of business of the New York Stock Exchange and after the
declaration of any dividends on the Closing Date (such time and date being
hereinafter called the “Valuation Date”), using the valuation procedures set
forth in the then-current prospectus and statement of additional information
with respect to the Acquired Fund, and valuation procedures established by the
Acquired Fund’s Board.
2.2 The
net asset value of an Acquiring Fund Share shall be the net asset value per
share computed with respect to that class as of the Valuation Date, using the
valuation procedures set forth in the Acquiring Fund’s then-current prospectus
and statement of additional information, each as may be supplemented, and
valuation procedures established by the Acquiring Fund’s Board.
2.3 The
number of the Investor Class, Class A, Class B, Class C and Class I Acquiring
Fund Shares to be issued (including fractional shares, if any) in exchange for
the Acquired Fund’s Assets shall be determined with respect to each such class
by dividing the value of the net assets with respect to the Investor Class,
Class A, Class B, Class C and Class I Acquired Fund Shares, as the case may be,
determined using the same valuation procedures referred to in paragraph 2.1, by
the net asset value of an Acquiring Fund Share of the same class, determined in
accordance with paragraph 2.2.
2.4 All
computations of value shall be made by New York Life Investment Management LLC
(“New York Life Investments”), in its capacity as administrator for the Acquired
Fund and the Acquiring Fund, and shall be subject to confirmation by each Fund’s
record keeping agent and by each Fund’s independent accountants.
3. Closing
and Closing Date
3.1 The
Closing Date shall be November 24, 2009 or such other date as the parties may
agree. All acts taking place at the closing of the transactions
provided for in this Plan (“Closing”) shall be deemed to take place
simultaneously as of immediately after the close of business on the Closing Date
unless otherwise agreed to by the parties. The close of business on
the Closing Date shall be as of 4:00 p.m. Eastern time. The Closing
shall be held at the offices of the Funds or at such other time and/or place as
the parties may agree.
Exhibit
4
3.2 The
MainStay Funds shall direct State Street Bank and Trust Company as custodian for
the Acquired Fund (“Custodian”), to deliver, at the Closing, a certificate of an
authorized officer stating that the Assets shall have been delivered in proper
form to the Acquiring Fund within two business days prior to or on the Closing
Date. The Acquired Fund’s portfolio securities represented by a
certificate or other written instrument shall be presented by the Custodian to
those persons at the Custodian who have primary responsibility for the
safekeeping of the assets of the Acquiring Fund, which Custodian also serves as
the custodian for the Acquiring Fund. Such presentation shall be made
for examination no later than five business days preceding the Closing Date, and
shall be transferred and delivered by the Acquired Fund as of the Closing Date
for the account of the Acquiring Fund duly endorsed in proper form for transfer
in such condition as to constitute good delivery thereof. The
Custodian shall deliver to those persons at the Custodian who have primary
responsibility for the safekeeping of the assets of the Acquiring Fund as of the
Closing Date by book entry, in accordance with the customary practices of the
Custodian and of each securities depository, as defined in Rule 17f-4 under the
Investment Company Act of 1940, as amended (“1940 Act”), in which the Acquired
Fund’s Assets are deposited, the Acquired Fund’s Assets deposited with such
depositories. The cash to be transferred by the Acquired Fund shall
be delivered by wire transfer of Federal funds on the Closing Date.
3.3 The
MainStay Funds shall direct NYLIM Service Company LLC, in its capacity as
transfer agent for the Acquired Fund (“Transfer Agent”), to deliver at the
Closing a certificate of an authorized officer stating that its records contain
the names and addresses of the Acquired Fund Shareholders and the number and
percentage ownership of outstanding Investor Class, Class A, Class B, Class C
and Class I shares owned by each such shareholder immediately prior to the
Closing. The Acquiring Fund shall issue and deliver to the Secretary
of the Acquired Fund prior to the Closing Date a confirmation evidencing that
the appropriate number of Acquiring Fund Shares will be credited to the Acquired
Fund on the Closing Date, or provide other evidence satisfactory to the Acquired
Fund as of the Closing Date that such Acquiring Fund Shares have been credited
to the Acquired Fund’s accounts on the books of the Acquiring
Fund. At the Closing each party shall deliver to the other such bills
of sale, checks, assignments, share certificates, if any, receipts or other
documents as such other party or its counsel may reasonably
request.
3.4 In
the event that on the Valuation Date (a) the New York Stock Exchange or
another primary trading market for portfolio securities of the Acquiring Fund or
the Acquired Fund (each, an “Exchange”) shall be closed to trading or trading
thereupon shall be restricted, or (b) trading or the reporting of trading
on such Exchange or elsewhere shall be disrupted so that, in the judgment of the
Boards, accurate appraisal of the value of the net assets of the Acquired Fund
or the Acquiring Fund is impracticable, the Closing Date shall be postponed
until the first business day after the day when trading shall have been fully
resumed and reporting shall have been restored.
Exhibit
4
4. Representations
and Warranties
4.1 Except
as has been fully disclosed to the Acquiring Fund in a written instrument
executed by an officer of The MainStay Funds, The MainStay Funds, on behalf of
the Acquired Fund, represents and warrants to the Acquiring Fund, as
follows:
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(a)
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The
Acquired Fund is duly organized as a series of The MainStay Funds, which
is a business trust duly organized, validly existing and in good standing
under the laws of the State of Massachusetts, with power under The
MainStay Funds’ Declaration of Trust and By-Laws, as amended from time to
time, to own all of its Assets and to carry on its business as it is now
being conducted; and
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(b)
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The
MainStay Funds is a registered investment company classified as a
management company of the open-end type, and its registration with the SEC
as an investment company under the 1940 Act, and the registration of
Investor Class, Class A, Class B, Class C and Class I Acquired Fund Shares
under the Securities Act of 1933, as amended (“1933 Act”), is in full
force and effect;
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(c)
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No
consent, approval, authorization, or order of any court or governmental
authority is required for the consummation by the Acquired Fund of the
transactions contemplated herein, except such as have been obtained under
the 1933 Act, the Securities Exchange Act of 1934, as amended (“1934
Act”), and the 1940 Act, and such as may be required by state securities
laws;
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(d)
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The
current prospectus and statement of additional information of the Acquired
Fund and each prospectus and statement of additional information of the
Acquired Fund used at all times prior to the date of this Plan conforms or
conformed at the time of its use in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the SEC thereunder and does not or did not at the time of
its use include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not materially misleading;
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(e)
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On
the Closing Date, The MainStay Funds, on behalf of the Acquired Fund, will
have good and marketable title to the Assets and full right, power, and
authority to sell, assign, transfer and deliver such Assets hereunder free
of any liens or other encumbrances, and upon delivery and payment for such
Assets, Eclipse Funds, on behalf of the Acquiring Fund, will acquire good
and marketable title thereto, subject to no restrictions on the full
transfer thereof, including such restrictions as might arise under the
1933 Act, other than as disclosed to the Acquiring
Fund;
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(f)
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The
MainStay Funds is not engaged currently, and the execution, delivery and
performance of this Plan will not result, in (i) a material violation
of its Declaration of Trust or By-Laws, or of any agreement, indenture,
instrument, contract, lease or other undertaking to which The MainStay
Funds, on behalf of the Acquired Fund, is a party or by which it is bound,
or (ii) the acceleration of any obligation, or the imposition of any
penalty, under any agreement, indenture, instrument, contract, lease,
judgment or decree to which The MainStay Funds, on behalf of the Acquired
Fund, is a party or by which it is
bound;
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Exhibit
4
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(g)
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All
material contracts or other commitments of the Acquired Fund (other than
this Plan and certain investment contracts, including options, futures,
and forward contracts) will terminate without liability to the Acquired
Fund on or prior to the Closing
Date;
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(h)
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Except
as otherwise disclosed in writing to and accepted by Eclipse Funds, on
behalf of the Acquiring Fund, no litigation or administrative proceeding
or investigation of or before any court or governmental body is presently
pending or, to its knowledge, threatened against the Acquired Fund or any
of its properties or assets that, if adversely determined, would
materially and adversely affect its financial condition or the conduct of
its business. The MainStay Funds, on behalf of the Acquired Fund, knows of
no facts which might form the basis for the institution of such
proceedings and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to consummate
the transactions herein
contemplated;
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(i)
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The
Statement of Assets and Liabilities, Statements of Operations and Changes
in Net Assets, and Schedule of Investments of the Acquired Fund dated
October 31, 2008 have been audited by KPMG LLP, independent accountants,
and are in accordance with accounting principles generally accepted in the
United States of America (“GAAP”) consistently applied, and such
statements (copies of which have been furnished to the Acquiring Fund)
present fairly, in all material respects, the financial condition of the
Acquired Fund as of such date in accordance with GAAP, and there are no
known contingent liabilities of the Acquired Fund required to be reflected
on a balance sheet (including the notes thereto) in accordance with GAAP
as of such date not disclosed
therein;
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(j)
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Since
October 31, 2008, there has not been any material adverse change in the
Acquired Fund’s financial condition, assets, liabilities or business,
other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one
year from the date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquiring Fund. For the
purposes of this subparagraph (j), a decline in net asset value per share
of Acquired Fund Shares due to declines in market values of securities
held by the Acquired Fund, the discharge of the Acquired Fund’s
liabilities, or the redemption of the Acquired Fund’s shares by
shareholders of the Acquired Fund shall not constitute a material adverse
change;
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(k)
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On
the Closing Date, all Federal and other tax returns, dividend reporting
forms, and other tax-related reports of the Acquired Fund required by law
to have been filed by such date (including any extensions) shall have been
filed and are or will be correct in all material respects, and all Federal
and other taxes shown as due or required to be shown as due on said
returns and reports shall have been paid or provision shall have been made
for the payment thereof, and to the best of the Acquired Fund’s knowledge,
no such return is currently under audit and no assessment has been
asserted with respect to such
returns;
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Exhibit
4
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(l)
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For
each taxable year of its operation (including the taxable year ending on
the Closing Date), the Acquired Fund has met (or will meet) the
requirements of Subchapter M of the Code for qualification as a regulated
investment company, has been (or will be) eligible to and has computed (or
will compute) its Federal income tax under Section 852 of the Code, and
will have distributed all of its investment company taxable income and net
capital gain (as defined in the Code) that has accrued through the Closing
Date, and before the Closing Date will have declared dividends sufficient
to distribute all of its investment company taxable income and net capital
gain for the period ending on the Closing
Date;
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(m)
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All
issued and outstanding shares of the Acquired Fund are, and on the Closing
Date will be, duly and validly issued and outstanding, fully paid and
non-assessable by The MainStay Funds and have been offered and sold in
every state and the District of Columbia in compliance in all material
respects with applicable registration requirements of the 1933 Act and
state securities laws. All of the issued and outstanding shares
of the Acquired Fund will, at the time of Closing, be held by the persons
and in the amounts set forth in the records of the Transfer Agent, on
behalf of the Acquired Fund, as provided in paragraph 3.3. The
Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the shares of the Acquired
Fund, nor is there outstanding any security convertible into any of the
Acquired Fund’s shares;
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(n)
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The
execution, delivery and performance of this Plan will have been duly
authorized prior to the Closing Date by all necessary action, if any, on
the part of the Board of Trustees, on behalf of the Acquired Fund, and,
subject to the approval of the shareholders of the Acquired Fund, this
Plan will constitute a valid and binding obligation of The MainStay Funds,
on behalf of the Acquired Fund, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors’ rights and
to general equity principles;
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(o)
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The
information to be furnished by the Acquired Fund for use in registration
statements, proxy materials and other documents filed or to be filed with
any Federal, state or local regulatory authority (including the Financial
Industry Regulatory Authority), which may be necessary in connection with
the transactions contemplated hereby, shall be accurate and complete in
all material respects and shall comply in all material respects with
Federal securities and other laws and regulations thereunder applicable
thereto; and
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(p)
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The
combined proxy statement and prospectus (“Proxy Statement”) to be included
in the Registration Statement referred to in paragraph 5.6, insofar as it
relates to the Acquired Fund, will, on the effective date of the
Registration Statement and on the Closing Date (i) not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which such statements were made, not
materially misleading, provided, however, that the representations and
warranties of this subparagraph (p) shall not apply to statements in or
omissions from the Proxy Statement and the Registration Statement made in
reliance upon and in conformity with information that was furnished by the
Acquiring Fund for use therein, and (ii) comply in all material
respects with the provisions of the 1933 Act, the 1934 Act, and the 1940
Act and the rules and regulations
thereunder.
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Exhibit
4
4.2 Except
as has been fully disclosed to the Acquired Fund in a written instrument
executed by an officer of Eclipse Funds, Eclipse Funds, on behalf of the
Acquiring Fund, represents and warrants to the Acquired Fund, as
follows:
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(a)
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The
Acquiring Fund is duly organized as series of Eclipse Funds, which is a
business trust duly organized, validly existing, and in good standing
under the laws of the State of Massachusetts with power under its
Declaration of Trust and By-Laws to own all of its properties and assets
and to carry on its business as it is now being
conducted;
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(b)
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Eclipse
Funds is a registered investment company classified as a management
company of the open-end type, and its registration with the Commission as
an investment company under the 1940 Act and the registration of the
Investor Class, Class A, Class B, Class C and Class I Acquiring Fund
Shares under the 1933 Act, is in full force and
effect;
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(c)
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No
consent, approval, authorization, or order of any court or governmental
authority is required for the consummation by the Acquiring Fund of the
transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by
state securities laws;
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(d)
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The
current prospectus and statement of additional information of the
Acquiring Fund and each prospectus and statement of additional information
of the Acquiring Fund used at all times prior to the date of this Plan
conforms or conformed at the time of its use in all material respects to
the applicable requirements of the 1933 Act and the 1940 Act and the rules
and regulations of the Commission thereunder and does not or did not at
the time of its use include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not materially
misleading;
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(e)
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On
the Closing Date, Eclipse Funds, on behalf of the Acquiring Fund, will
have good and marketable title to the Acquiring Fund’s assets, free of any
liens or other encumbrances, except those liens or encumbrances as to
which the Acquired Fund has received notice and necessary documentation at
or prior to the Closing;
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(f)
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The
Acquiring Fund is not engaged currently, and the execution, delivery and
performance of this Plan will not result, in (i) a material violation
of Eclipse Funds’ Declaration of Trust or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which
Eclipse Funds, on behalf of the Acquiring Fund, is a party or by which it
is bound, or (ii) the acceleration of any obligation, or the
imposition of any penalty, under any agreement, indenture, instrument,
contract, lease, judgment or decree to which Eclipse Funds, on behalf of
the Acquiring Fund, is a party or by which it is
bound;
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Exhibit
4
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(g)
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Except
as otherwise disclosed in writing to and accepted by The MainStay Funds,
on behalf of the Acquired Fund, no litigation or administrative proceeding
or investigation of or before any court or governmental body is presently
pending or, to the Acquiring Fund’s knowledge, threatened against Eclipse
Funds, on behalf of the Acquiring Fund, or any of the Acquiring Fund’s
properties or assets that, if adversely determined, would materially and
adversely affect the Acquiring Fund’s financial condition or the conduct
of its business. Eclipse Funds, on behalf of the Acquiring
Fund, knows of no facts which might form the basis for the institution of
such proceedings and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which
materially and adversely affects the Acquiring Fund’s business or its
ability to consummate the transactions herein
contemplated;
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(h)
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The
Statement of Assets and Liabilities, Statements of Operations and Changes
in Net Assets and Schedule of Investments of the Acquiring Fund dated
October 31, 2008 have been audited by KPMG LLP, independent accountants,
and are in accordance with GAAP consistently applied, and such statements
(copies of which have been furnished to the Acquired Fund) present fairly,
in all material respects, the financial condition of the Acquiring Fund as
of such date in accordance with GAAP, and there are no known contingent
liabilities of the Acquiring Fund required to be reflected on a balance
sheet (including the notes thereto) in accordance with GAAP as of such
date not disclosed therein;
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(i)
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Since
October 31, 2008, there has not been any material adverse change in the
Acquiring Fund’s financial condition, assets, liabilities or business,
other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing more than one
year from the date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquired Fund. For purposes of
this subparagraph (i), a decline in net asset value per share of the
Acquiring Fund’s shares due to declines in market values of securities
held by the Acquiring Fund, the discharge of the Acquiring Fund’s
liabilities, or the redemption of the Acquiring Fund’s shares by
shareholders of the Acquiring Fund, shall not constitute a material
adverse change;
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(j)
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On
the Closing Date, all Federal and other tax returns, dividend reporting
forms, and other tax-related reports of the Acquiring Fund required by law
to have been filed by such date (including any extensions) shall have been
filed and are or will be correct in all material respects, and all Federal
and other taxes shown as due or required to be shown as due on said
returns and reports shall have been paid or provision shall have been made
for the payment thereof, and to the best of the Acquiring Fund’s knowledge
no such return is currently under audit and no assessment has been
asserted with respect to such
returns;
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Exhibit
4
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(k)
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For
each taxable year of its operation (including the taxable year that
includes the Closing Date), the Acquiring Fund has met (or will meet) the
requirements of Subchapter M of the Code for qualification as a regulated
investment company, has been eligible to (or will be eligible to) and has
computed (or will compute) its Federal income tax under Section 852 of the
Code, and has distributed all of its investment company taxable income and
net capital gain (as defined in the Code) for periods ending prior to the
Closing Date;
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(l)
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All
issued and outstanding Acquiring Fund Shares are, and on the Closing Date
will be, duly and validly issued and outstanding, fully paid and
non-assessable by Eclipse Funds and have been offered and sold in every
state and the District of Columbia in compliance in all material respects
with applicable registration requirements of the 1933 Act and state
securities laws. The Acquiring Fund does not have outstanding
any options, warrants or other rights to subscribe for or purchase any
Acquiring Fund Shares, nor is there outstanding any security convertible
into any Acquiring Fund Shares;
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(m)
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The
execution, delivery and performance of this Plan will have been duly
authorized prior to the Closing Date by all necessary action, if any, on
the part of the Board of Trustees of Eclipse Funds, on behalf of the
Acquiring Fund, and this Plan will constitute a valid and binding
obligation of the Acquiring Fund, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors’ rights and to general equity
principles;
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(n)
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The
Investor Class, Class A, Class B, Class C and Class I Acquiring Fund
Shares to be issued and delivered to the Acquired Fund, for the account of
the Acquired Fund Shareholders, pursuant to the terms of this Plan, will
on the Closing Date have been duly authorized and, when so issued and
delivered, will be duly and validly issued Acquiring Fund Shares, and will
be fully paid and non-assessable by the Acquiring
Fund;
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(o)
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The
information to be furnished by the Acquiring Fund for use in the
registration statements, proxy materials and other documents that may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all
material respects with Federal securities and other laws and regulations
applicable thereto; and
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(p)
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The
Proxy Statement to be included in the Registration Statement (and any
amendment or supplement thereto), insofar as it relates to the Acquiring
Fund and the Acquiring Fund Shares, will, from the effective date of the
Registration Statement through the date of the Special Meeting of
Shareholders of the Acquired Fund contemplated therein and on the Closing
Date (i) not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
such statements were made, not materially misleading, provided, however,
that the representations and warranties of this subparagraph (p) shall not
apply to statements in or omissions from the Proxy Statement and the
Registration Statement made in reliance upon and in conformity with
information that was furnished by the Acquired Fund for use therein, and
(ii) comply in all material respects with the provisions of the 1933
Act, the 1934 Act, and the 1940 Act and the rules and regulations
thereunder.
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Exhibit
4
5. Covenants
of the Acquiring Fund and the Acquired Fund
5.1 The
Acquiring Fund and the Acquired Fund each will operate its business in the
ordinary course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include the declaration
and payment of customary dividends and distributions, and any other distribution
that may be advisable.
5.2 The
MainStay Funds has called a Special Meeting of the Shareholders of the Acquired
Fund to consider and act upon this Plan and has taken all other action necessary
to obtain approval of the transactions contemplated herein.
5.3 The
Acquired Fund covenants that the Investor Class, Class A, Class B, Class C and
Class I Acquiring Fund Shares to be issued hereunder are not being acquired for
the purpose of making any distribution thereof, other than in accordance with
the terms of this Plan.
5.4 The
Acquired Fund will assist the Acquiring Fund in obtaining such information as
the Acquiring Fund reasonably requests concerning the beneficial ownership of
the Acquired Fund’s shares.
5.5 Subject
to the provisions of this Plan, the Acquiring Fund and the Acquired Fund will
each take, or cause to be taken, all action, and do or cause to be done all
things, reasonably necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Plan.
5.6 The
Acquired Fund has provided the Acquiring Fund with information reasonably
necessary for the preparation of the Proxy Statement (referred to in paragraph
4.1(p)) to be included in a Registration Statement on Form N-14 (“Registration
Statement”), in compliance with the 1933 Act, the 1934 Act and the 1940 Act, in
connection with the Special Meeting of the Shareholders of the Acquired Fund to
consider approval of this Plan and the transactions contemplated
herein.
5.7 As
soon as is reasonably practicable after the Closing, the Acquired Fund will make
a liquidating distribution to its respective shareholders consisting of the
Investor Class, Class A, Class B, Class C and Class I Acquiring Fund Shares
received at the Closing.
5.8 The
Acquiring Fund and the Acquired Fund shall each use their reasonable best
efforts to fulfill or obtain the fulfillment of the conditions precedent to
effect the transactions contemplated by this Plan as promptly as
practicable.
5.9 The
MainStay Funds, on behalf of the Acquired Fund, covenants that it will, from
time to time, as and when reasonably requested by the Acquiring Fund, execute
and deliver or cause to be executed and delivered all such assignments and other
instruments, and will take or cause to be taken such further action as Eclipse
Funds, on behalf of the Acquiring Fund, may reasonably deem necessary or
desirable in order to vest in and confirm (a) The MainStay Funds’, on
behalf of the Acquired Fund, title to and possession of the Acquiring Fund
Shares to be delivered hereunder, and (b) Eclipse Funds’, on behalf of the
Acquiring Fund, title to and possession of all the Assets and otherwise to carry
out the intent and purpose of this Plan.
Exhibit
4
5.10 The
Acquiring Fund will use all reasonable efforts to obtain the approvals and
authorizations required by the 1933 Act, the 1940 Act and such of the state blue
sky or securities laws as may be necessary in order to continue its operations
after the Closing Date.
6. Conditions
Precedent to Obligations of the Acquired Fund
The
obligations of The MainStay Funds, on behalf of the Acquired Fund, to consummate
the transactions provided for herein shall be subject, at The MainStay Funds’
election, to the performance by Eclipse Funds, on behalf of the Acquiring Fund,
of all the obligations to be performed by it hereunder on or before the Closing
Date, and, in addition thereto, the following further conditions:
6.1 All
representations and warranties of Eclipse Funds, on behalf of the Acquiring
Fund, contained in this Plan shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Plan, as of the Closing Date, with the same force and
effect as if made on and as of the Closing Date;
6.2 Eclipse
Funds, on behalf of the Acquiring Fund, shall have delivered to the Acquired
Fund a certificate executed in the name of the Acquiring Fund by its President
or Vice President and its Treasurer or Assistant Treasurer, in a form reasonably
satisfactory to The MainStay Funds, and dated as of the Closing Date, to the
effect that the representations and warranties of Eclipse Funds, on behalf of
the Acquiring Fund, made in this Plan are true and correct at and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Plan, and as to such other matters as The MainStay Funds shall reasonably
request;
6.3 Eclipse
Funds, on behalf of the Acquiring Fund, shall have performed all of the
covenants and complied with all of the provisions required by this Plan to be
performed or complied with by Eclipse Funds, on behalf of the Acquiring Fund, on
or before the Closing Date; and
6.4 The
Acquired Fund and the Acquiring Fund shall have agreed on the number of full and
fractional Investor Class, Class A, Class B, Class C and Class I Acquiring Fund
Shares to be issued in connection with the Reorganization after such number has
been calculated in accordance with paragraph 1.1.
7. Conditions
Precedent to Obligations of the Acquiring Fund
The
obligations of Eclipse Funds, on behalf of the Acquiring Fund, to complete the
transactions provided for herein shall be subject, at Eclipse Funds’ election,
to the performance by The MainStay Funds, on behalf of the Acquired Fund, of all
of the obligations to be performed by it hereunder on or before the Closing Date
and, in addition thereto, the following conditions:
Exhibit
4
7.1 All
representations and warranties of The MainStay Funds, on behalf of the Acquired
Fund, contained in this Plan shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Plan, as of the Closing Date, with the same force and
effect as if made on and as of the Closing Date;
7.2 The
MainStay Funds shall have delivered to the Acquiring Fund a statement of the
Acquired Fund’s Assets and Liabilities, as of the Closing Date, certified by the
Treasurer of The MainStay Funds;
7.3 The
MainStay Funds, on behalf of the Acquired Fund, shall have delivered to the
Acquiring Fund a certificate executed in the name of the Acquired Fund by its
President or Vice President and its Treasurer or Assistant Treasurer, in a form
reasonably satisfactory to the Acquiring Fund and dated as of the Closing Date,
to the effect that the representations and warranties of The MainStay Funds, on
behalf of the Acquired Fund, made in this Plan are true and correct at and as of
the Closing Date, except as they may be affected by the transactions
contemplated by this Plan, and as to such other matters as Eclipse Funds shall
reasonably request;
7.4 The
MainStay Funds, on behalf of the Acquired Fund, shall have performed all of the
covenants and complied with all of the provisions required by this Plan to be
performed or complied with by The MainStay Funds, on behalf of the Acquired
Fund, on or before the Closing Date;
7.5 The
Acquired Fund and the Acquiring Fund shall have agreed on the number of full and
fractional Investor Class, Class A, Class B, Class C and Class I Acquiring Fund
Shares to be issued in connection with the Reorganization after such number has
been calculated in accordance with paragraph 1.1; and
7.6 The
Acquired Fund shall have declared and paid a distribution or distributions prior
to the Closing that, together with all previous distributions, shall have the
effect of distributing to its shareholders (i) all of its investment
company taxable income and all of its net realized capital gains, if any, for
the period from the close of its last fiscal year to 4:00 p.m. Eastern time on
the Closing Date; and (ii) any undistributed investment company taxable
income and net realized capital gains from any period to the extent not
otherwise already distributed.
8. Further
Conditions Precedent to Obligations of the Acquiring Fund and the Acquired
Fund
If any of
the conditions set forth below have not been satisfied on or before the Closing
Date with respect to The MainStay Funds, on behalf of the Acquired Fund, or
Eclipse Funds, on behalf of the Acquiring Fund, the other party to this Plan
shall, at its option, not be required to consummate the transactions
contemplated by this Plan:
8.1 The
Plan and the transactions contemplated herein shall have been approved by the
requisite vote of the holders of the outstanding shares of the Acquired Fund in
accordance with the provisions of The MainStay Funds’ Declaration of Trust and
By-Laws, applicable Massachusetts law and the 1940 Act, and certified copies of
the resolutions evidencing such approval shall have been delivered to the
Acquiring Fund. Notwithstanding anything herein to the contrary, The
MainStay Funds and Eclipse Funds, on behalf of either the Acquired Fund or the
Acquiring Fund, respectively, may not waive the conditions set forth in this
paragraph 8.1;
Exhibit
4
8.2 On
the Closing Date no action, suit or other proceeding shall be pending or, to
Eclipse Funds’ or The MainStay Funds’ knowledge, threatened before any court or
governmental agency in which it is sought to restrain or prohibit, or obtain
damages or other relief in connection with, this Plan or the transactions
contemplated herein;
8.3 All consents
of other parties and all other consents, orders and permits of Federal, state
and local regulatory authorities deemed necessary by Eclipse Funds and The
MainStay Funds to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where failure
to obtain any such consent, order or permit would not involve a risk of a
material adverse effect on the assets or properties of the Acquiring Fund or the
Acquired Fund, provided that either party hereto may for itself waive any of
such conditions;
8.4 The
Registration Statement shall have become effective under the 1933 Act and no
stop orders suspending the effectiveness thereof shall have been issued and, to
the best knowledge of the parties hereto, no investigation or proceeding for
that purpose shall have been instituted or be pending, threatened or
contemplated under the 1933 Act; and
8.5 The
parties shall have received the opinion of counsel to The MainStay Funds, on
behalf of the Acquired Fund, substantially to the effect that, based upon
certain facts, assumptions, and representations, the transaction contemplated by
this Plan shall constitute a tax-free reorganization for Federal income tax
purposes. The delivery of such opinion is conditioned upon receipt by
counsel to The MainStay Funds of representations it shall request of The
MainStay Funds. Notwithstanding anything herein to the contrary, The
MainStay Funds and Eclipse Funds, on behalf of either the Acquired Fund or the
Acquiring Fund, respectively, may not waive the condition set forth in this
paragraph 8.5.
9. Indemnification
9.1 Eclipse
Funds, out of the Acquiring Fund’s assets and property, agrees to indemnify and
hold harmless the Acquired Fund from and against any and all losses, claims,
damages, liabilities or expenses (including, without limitation, the payment of
reasonable legal fees and reasonable costs of investigation) to which the
Acquired Fund may become subject, insofar as such loss, claim, damage, liability
or expense (or actions with respect thereto) arises out of or is based on any
breach by the Acquiring Fund of any of its representations, warranties,
covenants or agreements set forth in this Plan.
9.2 The
MainStay Funds, out of the Acquired Fund’s assets and property, agrees to
indemnify and hold harmless the Acquiring Fund from and against any and all
losses, claims, damages, liabilities or expenses (including, without limitation,
the payment of reasonable legal fees and reasonable costs of investigation) to
which the Acquiring Fund may become subject, insofar as such loss, claim,
damage, liability or expense (or actions with respect thereto) arises out of or
is based on any breach by the Acquired Fund of any of its representations,
warranties, covenants or agreements set forth in this Plan.
Exhibit
4
10. Brokerage
Fees and Expenses
10.1 The
Acquiring Fund and the Acquired Fund represent and warrant to each other that
there are no brokers or finders entitled to receive any payments in connection
with the transactions provided for herein, other than any brokerage fees and
expenses incurred in connection with the Reorganization.
10.2 The
expenses relating to the proposed Reorganization will be borne by New York Life
Investments, the Acquired Fund and/or the Acquiring Fund as mutually agreed
upon. The costs of the Reorganization shall include, but not be
limited to, costs associated with obtaining any necessary order of exemption
from the 1940 Act, if any, preparation of the Registration Statement, printing
and distributing the Proxy Statement, legal fees, accounting fees, securities
registration fees, and expenses of holding shareholders’
meetings. Notwithstanding any of the foregoing, expenses will in any
event be paid by the party directly incurring such expenses if and to the extent
that the payment by another person of such expenses would result in the
disqualification of such party as a “regulated investment company” within the
meaning of Section 851 of the Code.
11. Entire
Agreement; Survival of Warranties
11.1 Eclipse
Funds and The MainStay Funds agree that they have not made any representation,
warranty or covenant, on behalf of either the Acquiring Fund or the Acquired
Fund, respectively, not set forth herein and that this Plan constitutes the
entire agreement between the parties.
11.2 The
representations, warranties and covenants contained in this Plan or in any
document delivered pursuant hereto or in connection herewith shall survive the
consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing and the obligations of the Acquired
Fund and Acquiring Fund in Sections 9.1 and 9.2 shall survive the
Closing.
12. Termination
This Plan
may be terminated and the transactions contemplated hereby may be abandoned by
resolution of the Boards of Eclipse Funds and The MainStay Funds, on behalf of
either the Acquiring Fund or the Acquired Fund, respectively, at any time prior
to the Closing Date, if circumstances should develop that, in the opinion of the
Boards, make proceeding with the Plan inadvisable.
13. Amendments
This Plan
may be amended, modified or supplemented in such manner as may be deemed
necessary or advisable by the authorized officers of Eclipse Funds and The
MainStay Funds, on behalf of either the Acquiring Fund or the Acquired Fund,
respectively; provided, however, that following the Special Meeting of the
Shareholders of the Acquired Fund called by The MainStay Funds, pursuant to
paragraph 5.2 of this Plan, no such amendment may have the effect of changing
the provisions for determining the number of Investor Class, Class A, Class B,
Class C and Class I Acquiring Fund Shares to be issued to the Investor Class,
Class A, Class B, Class C and Class I Acquired Fund Shareholders, respectively,
under this Plan to the detriment of such shareholders without their further
approval.
Exhibit
4
14. Notices
Any
notice, report, statement or demand required or permitted by any provisions of
this Plan shall be in writing and shall be given by facsimile, electronic
delivery (i.e., e-mail) personal service or prepaid or certified mail addressed
to the Funds, 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000, Attn:
Xxxxxxxxxx X. X. Xxxxxxxx, in each case with a copy to Dechert LLP, 0000 X
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, Attn: Sander M. Bieber.
15. Headings;
Governing Law; Assignment; Limitation of Liability
15.1 The
Article and paragraph headings contained in this Plan are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Plan.
15.2 This
Plan shall be governed by and construed in accordance with the laws of the State
of New York without regard to its principles of conflicts of laws.
15.3 This
Plan shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns, but no assignment or transfer hereof or of
any rights or obligations hereunder shall be made by any party without the
written consent of the other party. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Plan. Except as expressly provided otherwise in this Plan, the
parties hereto will bear the expenses relating to the Reorganization as set
forth in Section 10.2 as mutually agreed upon.
Exhibit
4
IN
WITNESS WHEREOF, each of the parties hereto has caused this Plan to be executed
as of the 24th day of November, 2009.
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ECLIPSE
FUNDS
On
behalf of the Acquiring Fund:
MainStay
U.S. Small Cap Fund
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THE
MAINSTAY FUNDS
On
behalf of the Acquired Fund:
MainStay
Small Cap Growth Fund
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By:
/s/ Xxxxxxx X.
Xxxxxx
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By:
/s/ Xxxxxxx X.
Xxxxxx
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Xxxxxxx
X. Xxxxxx
President
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Xxxxxxx
X. Xxxxxx
President
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New York
Life Investments agrees to the provisions set forth in Sections 10.2 and 15.3 of
this Plan.
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NEW
YORK LIFE INVESTMENT MANAGEMENT LLC
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By:
/s/ Xxxxx X.
Xxxxx
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Xxxxx
X. Xxxxx
Executive
Vice President
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