AGREEMENT AND PLAN OF REORGANIZATION
Exhibit
4
This AGREEMENT AND PLAN OF
REORGANIZATION, dated as of ______, 2008, (the “Agreement”) is made
between Prudent Bear Funds, Inc., a Maryland corporation (“Corporation”), with
its principal place of business at _______________, with respect to its
portfolio, Prudent Global Income Fund (the “Reorganizing Fund”),
and Federated Income Securities Trust, a Massachusetts business trust (the
“Federated
Trust”), with its principal place of business located at 0000 Xxxxxxxxx
Xxxxx, Xxxxxxxxxx, XX 00000-0000, on behalf of its newly-organized portfolio,
Federated Prudent
Global Income Fund(the “Surviving
Fund”).
RECITALS
WHEREAS, the parties desire to enter
into a plan of exchange which would constitute a reorganization within the
meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended
(the “Code”),
and the Treasury Regulations promulgated thereunder. The
reorganization will consist of: (i) the transfer of all of the assets of the
Reorganizing Fund (subject to the stated liabilities of the Reorganizing Fund
accrued and reflected in the books and records and net asset value of the
Reorganizing Fund (“Stated Liabilities”))
in exchange for the full and fractional shares of beneficial interest, no par
value per share, of the Class A Shares of the Surviving Fund (“Surviving Fund
Shares”), and (ii) the distribution of the Surviving Fund Shares to the
holders of the No Load Shares of the Reorganizing Fund, which are full and
fractional shares of beneficial interest of the Reorganizing Fund (the “Reorganizing Fund
Shares”), and the liquidation of the Reorganizing Fund as provided
herein, all upon the terms and conditions set forth in this
Agreement;
WHEREAS, each of the Reorganizing Fund
and the Surviving Fund is a separate series of the Corporation and the Federated
Trust, respectively, and the Corporation and the Federated Trust are open-end,
registered management investment companies and the Reorganizing Fund owns
securities that generally are assets of the character in which the Surviving
Fund is permitted to invest;
WHEREAS, the Surviving Fund and the
Reorganizing Fund, respectively, are authorized to issue their shares of
beneficial interest and common stock; and
WHEREAS, the Board of Directors of the
Corporation and the Board of Trustees of the Federated Trust have determined
that it is in the best interests of the Corporation and the Federated Trust,
respectively, that the assets of the Reorganizing Fund (subject to the Stated
Liabilities of the Reorganizing Fund) be acquired by the Surviving Fund pursuant
to this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the
premises and of the covenants and agreements hereinafter set forth, the parties
hereto agree as follows:
1. Plan of
Exchange.
(a) Subject
to the terms and conditions set forth herein and on the basis of the
representations and warranties contained herein:
(i) The
Reorganizing Fund shall assign, transfer and convey its assets, including all
securities, cash, commodities, interests in futures and dividends or interest
receivable, owned by the Reorganizing Fund and any deferred or prepaid expenses
shown as an asset on the books of the Reorganizing Fund on the Exchange Date (as
hereinafter defined below) (subject to the Stated Liabilities of the
Reorganizing Fund which shall be assumed by the Surviving Fund), to the
Surviving Fund; and
(ii) The
Surviving Fund shall acquire all of the assets of the Reorganizing Fund (subject
as aforesaid to the Stated Liabilities of the Reorganizing Fund) in exchange for
the Surviving Fund Shares to be issued by the Federated Trust, having an
aggregate number equal to the number of Reorganizing Fund Shares then
outstanding, and having an aggregate net asset value equal to the total net
assets of the Reorganizing Fund.
(b) The
value of the assets of the Reorganizing Fund and the net asset value per share
of the Surviving Fund Shares shall be computed as of the close of the New York
Stock Exchange (“NYSE”) (normally 4:00
p.m. Eastern time) on the Exchange Date (as hereinafter defined) (such time and
date being hereinafter called the “Valuation Time”) in
accordance with the procedures for determining the value of the Surviving Fund's
assets set forth in the Surviving Fund's organizational documents and the
then-current prospectus and statement of additional information for the
Surviving Fund that forms a part of the Surviving Fund's Registration Statement
on Form N-1A as amended and adopted by the Surviving Fund (the “Registration
Statement”). All computations of value shall be made by State
Street Bank and Trust Company, on behalf of the Reorganizing Fund and the
Surviving Fund.
(c) The
Surviving Fund will not issue certificates representing Surviving Fund Shares in
connection with the Reorganization. In lieu of delivering
certificates for the Surviving Fund Shares, the Federated Trust shall credit the
Surviving Fund Shares to the Reorganizing Fund's account on the share record
books of the Federated Trust and shall deliver a confirmation thereof to the
Reorganizing Fund. The Federated Trust shall then deliver written
instructions to the Federated Trust's transfer agent to establish accounts for
the shareholders on the share record books relating to the Surviving
Fund. Ownership of Surviving Fund Shares will be shown on the books
of the Surviving Fund’s transfer agent.
(d) When
the Surviving Fund Shares are distributed pursuant to Sections 1(a)-(c), all
outstanding Reorganizing Fund Shares, including any represented by certificates,
shall be canceled on the Reorganizing Fund's share transfer books. No
redemption or repurchase of Surviving Fund Shares credited to a shareholder's
account in respect of Reorganizing Fund Shares represented by unsurrendered
share certificates shall be permitted until such certificates have been
surrendered to the Federated Trust for cancellation or, if such certificates are
lost or misplaced, lost certificate affidavits and/or such other documentation
that is satisfactory to the Federated Trust or its transfer agent have been
executed and delivered thereto.
(e) Delivery
of the assets of the Reorganizing Fund to be transferred shall be made on the
Exchange Date (as hereinafter defined). Assets transferred shall be
delivered to State Street Bank and Trust Company, the Federated Trust's
custodian (the “Custodian”), for the
account of the Federated Trust and the Surviving Fund with all securities not in
bearer or book entry form duly endorsed, or accompanied by duly executed
separate assignments or stock powers, in proper form for transfer, with
signatures guaranteed, and with all necessary stock transfer stamps, sufficient
to transfer good and marketable title thereto (including all accrued interest
and dividends and rights pertaining thereto) to the Custodian for the account of
the Federated Trust and the Surviving Fund free and clear of all liens,
encumbrances, rights, restrictions and claims. All cash delivered
shall be in the form of immediately available funds payable to the order of the
Custodian for the account of the Federated Trust and the Surviving
Fund.
(f) The
Reorganizing Fund will pay or cause to be paid to the Federated Trust any
interest received on or after the Exchange Date with respect to assets
transferred from the Reorganizing Fund to the Surviving Fund hereunder and to
the Federated Trust and any distributions, rights or other assets received by
the Reorganizing Fund after the Exchange Date as distributions on or with
respect to the securities transferred from the Reorganizing Fund to the
Surviving Fund hereunder. All such assets shall be deemed included in
assets transferred to the Surviving Fund on the Exchange Date and shall not be
separately valued.
(g) The
transactions contemplated by this Agreement shall be consummated (the “Closing”) on the
Exchange Date. The Exchange Date shall be____________, 2008, or such
earlier or later date as may be mutually agreed upon by the
parties. All acts taking place in connection with the Closing shall
be deemed to take place at 4:00 p.m., Eastern Time, on the Exchange Date unless
otherwise provided herein. The Closing shall be held at the offices
of Federated Services Company, 0000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx
00000-0000, or at such other time and/or place as may be mutually agreed upon by
the parties.
(h) On
or as soon as practicable after the Exchange Date:
(i) The
Reorganizing Fund shall distribute in complete liquidation of the Reorganizing
Fund all of the Surviving Fund Shares received by the Reorganizing Fund among
the shareholders of the Reorganizing Fund Shares determined as of the close of
business on the Exchange Date (the “Reorganizing Fund
Shareholders”) in numbers equal to the number of Reorganizing Fund Shares
that each such Reorganizing Fund Shareholder holds in the Reorganizing Fund;
and
(ii) The
Reorganizing Fund shall take all other steps necessary to effect its dissolution
and termination.
The
Reorganizing Fund shall be terminated promptly following the Exchange Date and
the making of all distributions as contemplated in this Section 1. After
the Exchange Date, the Reorganizing Fund shall not conduct any business except
in connection with its dissolution and termination.
(i) Any
transfer taxes payable upon the issuance of Surviving Fund Shares in a name
other than the registered holder of the Surviving Fund Shares on the books of
the Federated Trust and Surviving Fund as of that time shall, as a condition of
such issuance and transfer, be paid by the person to whom such Surviving Fund
Shares are to be issued and transferred.
(j) Any
reporting responsibility of the Corporation or the Reorganizing Fund is and
shall remain the responsibility of the Corporation or the Reorganizing
Fund.
(k) The
Corporation and the Reorganizing Fund have provided the Federated Trust and the
Surviving Fund with the Reorganizing Fund’s most recent audited financial
statements, which contain a list of all of the Reorganizing Fund’s assets and
liabilities as of the date of such statements. The Corporation, on
behalf of the Reorganizing Fund, hereby represents that as of the date of the
execution of this Agreement, there have been no changes in the Reorganizing
Fund’s financial position as reflected in such financial statements other than
those occurring in the ordinary course in connection with the purchase and sale
of securities, the issuance and redemption of Reorganizing Fund Shares and the
payment of normal operating expenses, dividends and capital gains
distributions.
(l) All
books and records of the Reorganizing Fund, including all books and records
required by the Investment Company Act of 1940, as amended, and the rules and
regulations thereunder (the “1940 Act”), shall be
available to the Federated Trust and Surviving Fund from and after the Exchange
Date and shall be turned over to the Federated Trust and Surviving Fund on or as
soon as practicable following the Exchange Date.
(m) In
the event that on the scheduled Exchange Date, either (i) the NYSE or another
primary exchange on which the portfolio securities of the Reorganizing Fund are
purchased or sold, shall be closed to trading or trading on such exchange shall
be restricted, or (ii) trading or the reporting of trading on the NYSE or
elsewhere shall be disrupted so that accurate appraisal of the value of the net
assets of the Reorganizing Fund is impracticable, the Exchange Date shall be
postponed until the next Friday (which is a business day and which is not the
last Friday of the month) when trading is fully resumed and reporting is
restored.
(n) Shareholders
of the Reorganizing Fund as of the Exchange Date shall not be subject to any
front-end or
contingent deferred sales load of the Surviving Fund on shares received on the
Exchange Date or on future purchases of the same class of shares of the
Surviving Fund as those received on the Exchange Date.
2. The Corporation’s
Representations and Warranties. The Corporation, on behalf of
the Reorganizing Fund, represents and warrants to and agrees with the Federated
Trust on behalf of the Surviving Fund as follows:
(a) The
Corporation is a Maryland corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland; the Reorganizing Fund is
a duly organized portfolio of the Corporation; and each of the Corporation and
Reorganizing Fund has the power to own all of its properties and assets and,
subject to the approval of the Reorganizing Fund Shareholders as contemplated
hereby, to carry out this Agreement.
(b) This
Agreement has been duly authorized, executed and delivered by and is valid and
binding on the Corporation, enforceable against the Corporation in accordance
with its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, and other similar laws of general applicability relating
to or affecting creditors' rights and to general principles of
equity.
(c) The
Corporation is registered under the 1940 Act as an open-end management
investment company, and such registration has not been revoked or rescinded and
is in full force and effect.
(d) The
current prospectus and statement of additional information of the Reorganizing
Fund conform in all material respects to the applicable requirements of the
Securities Act of 1933, and the rules and regulations thereunder (the “1933 Act”), and the
1940 Act, and do not include any untrue statement of a material fact or omit to
state any material fact required to be stated or necessary to make the
statements therein, in light of the circumstances under which there were made,
not misleading.
(e) Neither
the Corporation nor the Reorganizing Fund is in, and the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement (subject to Reorganizing Fund Shareholder
approval) does not constitute and will not result in a, violation of any
provision of the Corporation’s Articles of Incorporation or By-Laws or any
material agreement, indenture, instrument, contract, lease or other undertaking
or arrangement to which the Corporation or the Reorganizing Fund is a party or
by which the Corporation or the Reorganizing Fund is bound.
(f) Except
as otherwise disclosed in writing to and accepted by the Surviving Fund, no
litigation, administrative proceeding, investigation or other proceeding of or
before any court or governmental body is presently pending or, to the
Corporation’s or Reorganizing Fund’s knowledge, threatened against the
Corporation or the Reorganizing Fund, or any of the Corporation’s or
Reorganizing Fund’s properties or assets. The Corporation or
Reorganizing Fund know of no facts that 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 that materially and
adversely affects the Corporation’s or the Reorganizing Fund’s business or the
Corporation’s or the Reorganizing Fund’s ability to consummate the transactions
contemplated herein.
(g) Except
as shown on the audited financial statements of the Reorganizing Fund dated
September 30, 2007, and as incurred in the ordinary course of the Reorganizing
Fund's business since then, the Reorganizing Fund has no liabilities of a
material amount, contingent or otherwise. The audited financial
statements of the Reorganizing Fund as of September 30, 2007, and for the fiscal
year then ended, have been prepared in accordance with generally accepted
accounting principles, and such statements (copies of which have been furnished
to the Federated Trust and the Surviving Fund) fairly reflect the financial
condition of the Reorganizing Fund as of such date, and there are no known
contingent liabilities of the Reorganizing Fund as of such date that are not
disclosed in such statements.
(h) The
unaudited financial statements of the Reorganizing Fund as of March 31, 2008,
and for the six months then ended (copies of which have been furnished to the
Federated Trust and the Surviving Fund), have been prepared in accordance with
generally acceptable accounting principles, and fairly reflect the
financial condition of the Reorganizing Fund as of such date, and there are no
known contingent liabilities of the Reorganizing Fund as of such date that are
not disclosed in such statements.
(i) Since
the date of the audited financial statements referred to in Section 2(g) above, there have
been no material adverse changes in the Reorganizing Fund’s financial condition,
assets, liabilities or business (other than changes occurring in the ordinary
course of business), or any incurrence by the Reorganizing Fund of indebtedness
maturing more than one year from the date such indebtedness was incurred, except
as otherwise disclosed to and accepted by the Surviving Fund. For the
purposes of this Section
2(i), a decline in the net asset value of the Reorganizing Fund shall not
constitute a material adverse change.
(j) On
the Exchange Date, the Reorganizing Fund will have full right, power and
authority to sell, assign, transfer and deliver the Reorganizing Fund's assets
to be transferred by it hereunder.
(k) At
the Exchange Date, all Federal and other tax returns and reports of the
Reorganizing Fund required by law then to be filed shall have been filed, and
all Federal and other taxes shall have been paid so far as due or provision
shall have been made for the payment thereof, and to the best of the
Reorganizing Fund’s knowledge no such return is currently under audit and no
assessment has been asserted with respect to such returns.
(l) As
of the date hereof, except as previously disclosed to the Surviving Fund in
writing, and except as have been corrected as required by applicable law, and to
the best of the Reorganizing Fund’s knowledge, there have been no material
miscalculations of the net asset value of the Reorganizing Fund or the net asset
value per share during the twelve-month period preceding the date hereof and
preceding the Exchange Date, and all such calculations have been made in
accordance with the applicable provisions of the 1940 Act.
(m) The
minute books and other similar records of the Reorganizing Fund as made
available to the Surviving Fund prior to the execution of this Agreement contain
a true and complete record of all action taken at all meetings and by all
written consents in lieu of meetings of the shareholders of the Reorganizing
Fund and of the Reorganizing Fund, the Reorganizing Fund’s Board of Directors
and committees of the Reorganizing Fund’s Board of Directors. The stock transfer
ledgers and other similar records of the Reorganizing Fund as made available to
the Surviving Fund prior to the execution of this Agreement, and as existing on
the Exchange Date, accurately reflect all record transfers prior to the
execution of this Agreement, or the Exchange Date, as applicable, in the shares
of the Reorganizing Fund.
(n) The
Reorganizing Fund has maintained, or caused to be maintained on its behalf, all
books and records required of a registered investment company in compliance with
the requirements of the 0000 Xxx.
(o) All
issued and outstanding shares of the Reorganizing Fund are duly and validly
issued and outstanding, fully paid and non-assessable by the Reorganizing
Fund. All of the issued and outstanding shares of the Reorganizing
Fund will, at the time of the Exchange Date, be held by the persons and in the
amounts set forth in the records of the Reorganizing Fund’s transfer
agent. The Reorganizing Fund has no outstanding options, warrants, or
other rights to subscribe for or purchase any of the Reorganizing Fund Shares,
and has no outstanding securities convertible into any of the Reorganizing Fund
Shares.
(p) At
the Valuation Time, the Reorganizing Fund will have good and marketable title to
the Reorganizing Fund’s assets to be transferred to the Surviving Fund pursuant
to Section 1, and full
right, power, and authority to sell, assign, transfer, and deliver such assets
hereunder, free of any lien or other encumbrance, and, upon delivery and payment
for such assets, and the filing of any articles, certificates or other documents
under the laws of the State of Maryland or The Commonwealth of Massachusetts,
the Surviving Fund will acquire good and marketable title, subject to no
restrictions on the full transfer of such assets, other than such restrictions
as might arise under the 1933 Act.
(q) The
information to be furnished by the Corporation or the Reorganizing Fund for use
in no-action letters, applications for orders, registration statements, proxy
materials, and other documents that may be necessary in connection with the
transactions contemplated herein shall be accurate and complete in all material
respects and shall comply in all material respects with federal securities and
other laws and regulations.
(r) From
the effective date of the proxy/registration statement to be filed in connection
with the transactions contemplated herein (“Registration
Statement”), through the time of the meeting of the Reorganizing Fund
Shareholders and on the Exchange Date, any written information furnished by the
Corporation or the Reorganizing Fund for use in any proxy materials, or any
other materials provided in connection with the transactions contemplated
herein, does not and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated or necessary to make the
statements, in light of the circumstances under which such statements were made,
not misleading.
(s) The
Reorganizing Fund has qualified and elected to be treated as a “regulated
investment company” under the Code (a “RIC”), as of and
since its first taxable year; and qualifies and will continue to qualify as a
RIC under the Code for its taxable year ending upon its
liquidation.
(t) No
governmental consents, approvals, authorizations or filings are required under
the 1933 Act, the Securities Exchange Act of 1934 (the “1934 Act”), the 1940
Act or Maryland law for the execution of this Agreement by the Corporation, for
itself and on behalf of the Reorganizing Fund, except for the effectiveness of
the Registration Statement, and the filing of any articles, certificates or
other documents that may be required under Maryland law, and except for such
other consents, approvals, authorizations and filings as have been made or
received, and such consents, approvals, authorizations and filings as may be
required subsequent to the Exchange Date, it being understood, however, that
this Agreement and the transactions contemplated herein must be approved by the
Reorganizing Fund Shareholders in accordance with applicable law.
3. The Federated Trust's
Representations and Warranties. The Federated Trust, on behalf
of the Surviving Fund, represents and warrants to and agrees with the
Corporation, on behalf of the Reorganizing Fund, as follows:
(a) The
Federated Trust is a Massachusetts business trust duly organized, validly
existing and in good standing under the laws of The Commonwealth of
Massachusetts; the Surviving Fund is a duly organized portfolio of the Federated
Trust; and each of the Federated Trust and Surviving Fund has the power to carry
on its business as it is now being conducted and to carry out this
Agreement.
(b) This
Agreement has been duly authorized, executed and delivered by the Federated
Trust and is valid and binding on the Federated Trust, enforceable against the
Federated Trust in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, and other similar laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity.
(c) The
Federated Trust is registered under the 1940 Act as an open-end management
investment company and such registration has not been revoked or rescinded and
is in full force and effect.
(d) The
current prospectus and statement of additional information of the Surviving Fund
conform in all material respects to the applicable requirements of the
Securities Act of 1933, and the rules and regulations thereunder (the “1933 Act”), and the
1940 Act, as applied to a newly created portfolio of a series management
investment company, and do not include any untrue statement of a material fact
or omit to state any material fact required to be stated or necessary to make
the statements therein, in light of the circumstances under which there were
made, not misleading.
(e) Neither
the Federated Trust nor the Surviving Fund is in, and the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated by this Agreement does not constitute and will not result in a,
violation of any provision of the Federated Trust’s Declaration of Trust or
By-Laws or any material agreement, indenture, instrument, contract, lease or
other undertaking or arrangement to which the Federated Trust or the Surviving
Fund is a party or by which the Federated Trust or the Surviving Fund is
bound.
(f) The
Surviving Fund does not have any liabilities of a material amount, contingent or
otherwise, and there are no investigations, or legal, administrative or other
proceedings, pending or, to the Federated Trust's or the Surviving Fund’s
knowledge, threatened against the Surviving Fund. Other than
organizational activities, the Surviving Fund has not engaged in any business
activities.
(g) At
the Exchange Date, the Surviving Fund Shares to be issued to the Reorganizing
Fund (the only Surviving Fund Shares to be outstanding as of the Exchange Date)
will have been duly authorized and, when issued and delivered pursuant to this
Agreement, will be legally and validly issued and will be fully paid and
non-assessable by the Federated Trust. No Federated Trust or
Surviving Reorganizing Fund shareholder will have any preemptive
right of subscription or purchase in respect thereof.
(h) The
information to be furnished by the Federated Trust or the Surviving Fund for use
in no-action letters, applications for orders, registration statements, proxy
materials, and other documents that may be necessary in connection with the
transactions contemplated herein shall be accurate and complete in all material
respects and shall comply in all material respects with federal securities and
other laws and regulations.
(i) From
the effective date of the Registration Statement, through the time of the
meeting of the Reorganizing Fund Shareholders and on the Exchange Date, any
written information furnished by the Federated Trust or the Surviving Fund for
use in any proxy materials, or any other materials provided in connection with
the transactions contemplated herein, does not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated or necessary to make the statements, in light of the circumstances under
which such statements were made, not misleading.
(j) The
Surviving Fund intends to qualify and elect to be treated as a RIC under the
Code.
(k) No
governmental consents, approvals, authorizations or filings are required under
the 1933 Act, the 1934 Act, the 1940 Act or Massachusetts law for the execution
of this Agreement by the Federated Trust, for itself and on behalf of the
Surviving Fund, except for the effectiveness of the Registration Statement, and
the filing of any articles, certificates or other documents that may be required
under Massachusetts law, and except for such other consents, approvals,
authorizations and filings as have been made or received, and such consents,
approvals, authorizations and filings as may be required subsequent to the
Exchange Date, it being understood, however, that this Agreement and the
transactions contemplated herein must be approved by the Reorganizing Fund
Shareholders in accordance with applicable law.
4. Certain
Covenants.
(a) The
Reorganizing Fund will, and the Corporation will cause the Reorganizing Fund to,
operate the Reorganizing Fund’s business in the ordinary course between the date
of this Agreement and the Exchange Date, it being understood that such ordinary
course of business will include customary dividends and shareholder purchases
and redemptions.
(b) The
Corporation will call a special meeting of the Reorganizing Fund Shareholders to
consider and act upon this Agreement and to take all other appropriate action
necessary to obtain approval of the transactions contemplated
herein.
(c)
The Corporation, for itself and the Reorganizing Fund, covenants that the
Surviving Fund Shares to be issued pursuant to this Agreement are not being
acquired for the purpose of making any distribution, other than in connection
with the reorganization transactions contemplated by, and in accordance with the
terms of, this Agreement.
(d) The
Corporation and Reorganizing Fund will assist the Surviving Fund in obtaining
such information as the Surviving Fund reasonably requests concerning the
beneficial ownership of the Reorganizing Fund Shares.
(e) Subject
to the provisions of this Agreement, the Federated Trust, on
behalf of the Surviving Fund, and the Corporation, on behalf of the
Reorganizing 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 Agreement,
including any actions required to be taken after the Exchange Date.
(f) The
Federated Trust will prepare and file with the U.S. Securities and Exchange
Commission (the “Commission”) the
Registration Statement on Form N-14 relating to the Surviving Fund Shares
to be issued to shareholders of the Reorganizing Fund. The
Registration Statement on Form N-14 shall include a proxy statement and a
prospectus of the Surviving Fund relating to the transaction contemplated by
this Agreement. The Registration Statement shall be in compliance
with the 1933 Act, the 1934 Act and the 1940 Act, as applicable. Each
party will provide the other party with the materials and information necessary
to prepare the registration statement on Form N-14, for inclusion therein,
in connection with the meeting of the Reorganizing Fund Shareholders to consider
the approval of this Agreement and the transactions contemplated
herein.
5. The Federated Trust's
Conditions Precedent. The obligations of the Federated Trust
hereunder shall be subject, at its election, to the following
conditions:
(a) The
Reorganizing Fund shall have furnished to the Federated Trust a statement of the
Reorganizing Fund's assets, including a list of securities owned by the
Reorganizing Fund with their respective tax costs and values determined as
provided in Section 1
hereof, all as of the Exchange Date.
(b) As
of the Exchange Date, all representations and warranties of Corporation, on
behalf of the Reorganizing Fund, made in this Agreement shall be true and
correct as if made at and as of such date, and each of the Corporation and the
Reorganizing Fund shall have complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to such
date.
(c) The
Corporation and the Reorganizing Fund also shall have delivered (or caused to be
delivered) to the Surviving Fund, as required by the Surviving Fund or its
counsel, the following documents in the name of the Reorganizing Fund by the
Corporation or by its officers, counsel or service providers (as
applicable): A xxxx of sale and assignment, treasurer’s certificate,
chief financial officer certificate, statements of earnings and profits,
statements of assets and liabilities, transfer agency certificates, custodian
certificates, secretary’s or assistant secretary’s certificate, copies of
custodian and transfer agent instructions, custodian and transfer agent
acknowledgements of transfer or certificates, an opinion of counsel to the
Reorganizing Fund addressed to the Federated Trust and Surviving Fund in form
and substance reasonably acceptable to the Surviving Fund (covering such matters
as may be reasonably requested by the Surviving Fund and its counsel), tax
representation certificates, and any other opinion, certificate or document
mutually agreed as necessary or appropriate to consummate the reorganization and
exchange transactions under this Agreement.
6. The Corporation’s Conditions
Precedent. The obligations of the Corporation hereunder with
respect to the Reorganizing Fund shall be subject, at its election, to the
following conditions:
(a) As
of the Exchange Date all representations and warranties of the Federated Trust,
on behalf of the Surviving Fund, made in this Agreement shall be true and
correct as if made at and as of such date, and that each of the Federated Trust
and the Surviving Fund shall have complied with all of the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to such date.
(b) The
Federated Trust and Surviving Fund also shall have delivered (or caused to be
delivered) to the Reorganizing Fund, as required by the Reorganizing Fund or its
counsel, the following documents in the name of the Surviving Fund by the
Federated Trust or by its officers, counsel or service providers (as
applicable): secretary’s or assistant secretary’s certificate, copies
of custodian and transfer agent instructions, custodian and transfer agent
acknowledgements of transfer or certificates, an opinion of counsel to the
Surviving Fund addressed to the Corporation and Reorganizing Fund in form and
substance reasonably acceptable to the Reorganizing Fund (covering such matters
as may be reasonably requested by the Reorganizing Fund and its counsel), and
any other opinion, certificate or document mutually agreed as necessary or
appropriate to consummate the reorganization and exchange transactions under
this Agreement.
7. The Federated Trust's and
the Corporation’s Conditions Precedent. The obligations of
both the Federated Trust and the Corporation hereunder shall be subject to the
following conditions:
(a) The
post-effective amendment to the Federated Trust's Registration Statement on Form
N-1A relating to the Surviving Fund under the 1933 Act, and the 1940 Act, if
applicable, shall have become effective, and any additional post-effective
amendments to such Registration Statement as are determined by the Trustees of
the Federated Trust to be necessary and appropriate shall have been filed with
the Commission and shall have become effective.
(b) This
Agreement and the transactions contemplated herein, with respect to the
Reorganizing Fund, shall have been approved by the requisite vote of the
Reorganizing Fund Shareholders in accordance with applicable law and the
provisions of the Corporation’s Articles of Incorporation and
By-Laws. Certified copies of the resolutions evidencing such approval
shall have been delivered to the Surviving Fund. Notwithstanding
anything herein to the contrary, neither the Corporation, on behalf of the
Reorganizing Fund, nor the Federated Trust, on behalf of Surviving Fund, may
waive the conditions set forth in Sections 7(a) and (b).
(c) On
the Exchange Date, the Commission shall not have issued an unfavorable report
under Section 25(b) of the 1940 Act, or instituted any proceeding seeking
to enjoin the consummation of the transactions contemplated by this Agreement
under Section 25(c) of the 1940 Act. No action, suit or other
proceeding shall be threatened or pending before any court or governmental
agency which seeks to restrain or prohibit, or obtain damages or other relief in
connection with, this Agreement or the transactions contemplated
herein.
(d) The
Registration Statement on Form N-14 shall have become effective under the 1933
Act, and no stop orders suspending the effectiveness thereof shall have been
issued. To the best knowledge of the parties to this Agreement, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 1933 Act.
(e) All
required consents of other parties and all other consents, orders, and permits
of federal, state and local regulatory authorities (including those of the
Commission and of State securities authorities, including any necessary
“no-action” positions and exemptive orders from such federal and state
authorities) to permit consummation of the transactions contemplated herein
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 Surviving Fund or the Reorganizing Fund, provided
that either party hereto may waive any such conditions for itself.
(f) Each
party shall have received an opinion of Xxxx Xxxxx, LLP to the effect that the
reorganization contemplated by this Agreement qualifies as a “reorganization”
under Section 368(a)(1)(F) of the Code.
8. Expenses. The
Surviving Fund, the Reorganizing Fund, the Federated Trust and the Corporation
will not bear any expenses associated with the transactions contemplated by this
Agreement, except that the Surviving Fund may incur registration fees on an as
incurred basis.
9 Termination of
Agreement.
(a) This
Agreement and the transactions contemplated hereby may be terminated and
abandoned by resolution of the Board of Directors of the Corporation or the
Board of Trustees of the Federated Trust at any time prior to the Exchange Date
(and notwithstanding any vote of the Reorganizing Fund Shareholders) if
circumstances should develop that, in the opinion of either the Board of
Directors of the Corporation or the Board of Trustees of the Federated Trust,
make proceeding with this Agreement inadvisable.
(b) In
addition, either the Federated Trust or the Corporation may at its option
terminate this Agreement at or before the Valuation Time due to:
(i) a
breach by the other of any representation, warranty, or agreement contained
herein to be performed at or before the Exchange Date, if not cured within 30
days;
(ii) a
condition herein expressed to be precedent to the obligations of the terminating
party that has not been met and it reasonably appears that it will not or cannot
be met; or
(iii) a
determination by a party’s Board of Directors or Trustees, as appropriate, that
the consummation of the transactions contemplated herein is not in the best
interest of the Corporation or the Federated Trust, respectively, and notice
given to the other party hereto.
If this Agreement is terminated and the
exchange contemplated hereby is abandoned pursuant to the provisions of this
Section 9, this
Agreement shall become void and have no effect, without any liability for
damages (in the absence of willful default) on the part of any party hereto or
the Trustees, officers or shareholders of the Federated Trust or the Directors,
officers or shareholders of Corporation in respect of this
Agreement.
10. Waiver and
Amendments. At any time prior to the Exchange Date, any of the
conditions set forth in Section
5 may be waived by the Board of the Federated Trust, and any of the
conditions set forth in Section
6 may be waived by the Board of the Corporation, if, in the judgment of
the waiving party, such waiver will not have a material adverse effect on the
benefits intended under this Agreement to the Reorganizing Fund Shareholders or
the shareholders of the Surviving Fund, as the case may be. Any time
prior to the Exchange Date, unless provided otherwise in Section 7, any of the
conditions in Section 7
may be waived by the parties if, in the judgment of the parties, such
waiver will not have a material adverse effect on the benefits intended under
this Agreement to the Reorganizing Fund Shareholders or the shareholders of the
Surviving Fund. In addition, prior to the Exchange Date, any
provision of this Agreement may be amended or modified by the Boards of the
Corporation and the Federated Trust if such amendment or modification would not
have a material adverse effect upon the benefits intended under this Agreement
and would be consistent with the best interests of the Reorganizing Fund
Shareholders and the shareholders of the Surviving Fund.
11. No Survival of
Representations. None of the representations and warranties
included or provided for herein shall survive consummation of the transactions
contemplated hereby.
12. Governing
Law. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without giving
effect to principles of conflict of laws.
13. Capacity of Trustees,
Etc.
(a) The
names “Federated Income Securities Trust” and “Board of Trustees of the
Federated Income Securities Trust” refer, respectively, to the trust created and
the trustees, as trustees but not individually or personally, acting from time
to time under the Federated Trust's Declaration of Trust, which is hereby
referred to and a copy of which is on file at the office of the State Secretary
of The Commonwealth of Massachusetts and at the principal office of the
Federated Trust. The obligations of the Federated Trust entered into
in the name or on behalf of the Surviving Fund by any of the trustees,
representatives or agents are made not individually, but in such capacities, and
are not binding upon any of the trustees, shareholders or representatives of the
Federated Trust personally, but bind only the Surviving Fund's trust property,
and all persons dealing with any portfolio of shares of the Federated Trust must
look solely to the trust property belonging to such portfolio for the
enforcement of any claims against the Federated Trust.
(b) Both
parties specifically acknowledge and agree that any liability of the Federated
Trust under this Agreement, or in connection with the transactions contemplated
herein, shall be discharged only out of the assets of the Surviving Fund and
that no other portfolio of the Federated Trust shall be liable with respect
thereto.
14. Miscellaneous.
(a) The
Federated Trust, on behalf of the Surviving Fund, and the Corporation, on behalf
of the Reorganizing Fund, agree that neither party has made to the other party
any representation, warranty and/or covenant not set forth herein, and that this
Agreement constitutes the entire agreement between the parties.
(b) This
Agreement shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns, but, except as provided in this Section 14(b), 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 Agreement.
(c) The
Article and paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(d) This
Agreement may be executed in counterparts, each of which, when executed and
delivered, shall be deemed to be an original.
[Signature
Page Follows]
IN WITNESS WHEREOF, Corporation and the
Federated Trust have caused this Agreement and Plan of Reorganization to be
executed as of the date above first written.
PRUDENT
BEAR FUNDS, INC.,
on behalf
of its portfolio, Prudent Global Income Fund
By:
Title:
on behalf
of its portfolio, Federated Prudent Global
Income Fund
By:
Title:
