EXHIBIT 4
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
FEDERATED SHORT-TERM MUNICIPAL TRUST
AND
FEDERATED FIXED INCOME SECURITIES, INC.
WITH RESPECT TO FEDERATED LIMITED TERM MUNICIPAL FUND
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this 25 day of October 2006, by and between FEDERATED SHORT-TERM MUNICIPAL
TRUST, a Massachusetts business trust, with its principal place of business at
0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, XX, 00000 (the "Acquiring Fund"), and
Federated Fixed Income Securities, Inc., a Maryland corporation, with its
principal place of business at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, XX, 00000 (the
"Corporation"), with respect to its Federated Limited Term Municipal Fund, a
series of the Corporation (the "Acquired Fund" and, collectively with the
Acquiring Fund, the "Funds").
RECITALS
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx 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 Acquired Fund in exchange for Class A Shares and
Institutional Service Shares, par value $0.01 per share, of the Acquiring Fund
("Acquiring Fund Shares"); and (ii) the distribution of Class A Shares and
Institutional Service Shares of the Acquiring Fund to the holders of Class A
Shares and Class F Shares, respectively, of the Acquired Fund and the
liquidation of the Acquired Fund as provided herein, all upon the terms and
conditions set forth in this Agreement (the "Reorganization").
WHEREAS, the Acquired Fund is a separate series of the Corporation, and
the Acquiring Fund and the Corporation are open-end, registered management
investment companies and the Acquired Fund owns securities that generally are
assets of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, each of the Acquiring Fund and the Acquired Fund is authorized
to issue its respective shares of beneficial interest;
WHEREAS, the Trustees of the Acquiring Fund have determined that the
Reorganization, with respect to the Acquiring Fund, is in the best interests of
the Acquiring Fund and that the interests of the existing shareholders of the
Acquiring Fund will not be diluted as a result of the Reorganization; and
WHEREAS, the Directors of the Corporation have determined that the
Reorganization, with respect to the Acquired Fund, is in the best interests of
the Acquired Fund and that the interests of the existing shareholders of the
Acquired Fund will not be diluted as a result of the Reorganization;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
A-1
ARTICLE*I
TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ACQUIRING FUND
SHARES AND LIQUIDATION OF THE ACQUIRED FUND
1.1 THE EXCHANGE. Subject to the terms and conditions contained herein
and on the basis of the representations and warranties contained herein, the
Acquired Fund agrees to transfer all of its assets, as set forth in
paragraph 1.2, to the Acquiring Fund. In exchange, the Acquiring Fund agrees to
deliver to the Acquired Fund:
(a) the number of full and fractional Class A Shares of the
Acquiring Fund determined by multiplying (i) the Class A Shares
outstanding of the Acquired Fund by (ii) the ratio computed by dividing
(x) the net asset value per Class A Share of the Acquired Fund by (y) the
net asset value per Class A Share of the Acquiring Fund; and
(b) the number of full and fractional Institutional Service Shares
of the Acquiring Fund determined by multiplying (i) the Class F Shares
outstanding of the Acquired Fund by (ii) the ratio computed by dividing
(x) the net asset value per Class F Share of the Acquired Fund by (y) the
net asset value per Institutional Service Share of the Acquiring Fund;
in each case computed in the manner and as of the time and date set forth in
paragraph 2.2; and
Holders of the Class A Shares of the Acquired Fund will receive Class A
Shares of the Acquiring Fund, and holders of the Class F Shares of Acquired Fund
will receive Institutional Service Shares of the Acquiring Fund. Such
transactions shall take place at the closing on the Closing Date provided for in
paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The assets of the Acquired Fund to be
acquired by the Acquiring Fund shall consist of property having a value equal to
the total net assets of the Acquired Fund, including, without limitation, cash,
securities, commodities, interests in futures and dividends or interest
receivable, 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.
The Acquired Fund has provided the Acquiring Fund with its most recent
audited financial statements, which contain a list of all of the Acquired Fund's
assets as of the date of such statements. The Acquired Fund hereby represents
that as of the date of the execution of this Agreement, there have been no
changes in its financial position as reflected in such financial statements
other than as the result of changes in the market values of securities or
otherwise occurring in the ordinary course of business in connection with the
purchase and sale of securities, the issuance and redemption of Acquired Fund
shares and the payment of normal operating expenses, dividends and capital gains
distributions.
1.3 LIABILITIES TO BE DISCHARGED. The Acquired Fund will discharge all
of its liabilities and obligations prior to the Closing Date.
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date
as is conveniently practicable: (a) the Acquired Fund will distribute in
complete liquidation of the Acquired Fund, pro rata to the shareholders of
record, determined as of the close of business on the Closing Date (the
"Acquired Fund Shareholders"), of its Class A Shares and Class F Shares,
respectively, all of the Acquiring Fund Class A Shares and Institutional Service
Shares, respectively, received by the Acquired Fund pursuant to paragraph 1.1;
and (b) the Acquired Fund will thereupon proceed to dissolve and terminate as
set forth in paragraph 1.8 below. Such distribution will be accomplished by the
transfer of Acquiring Fund Shares 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 name of the Acquired Fund Shareholders, and representing
the respective pro rata number of Acquiring Fund Shares due such shareholders.
All issued and outstanding shares of the Acquired Fund (the "Acquired Fund
Shares") will simultaneously be canceled on the books of the Acquired Fund. The
Acquiring Fund shall not issue certificates representing Acquiring Fund Shares
in connection with such transfer. After the Closing Date, the Acquired Fund
shall not conduct any business except in connection with its termination.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be
shown on the books of the Acquiring Fund's transfer agent. Acquiring Fund
Shares will be issued simultaneously to the Acquired Fund, in an amount equal in
value to the aggregate net asset value of the Acquired Fund Shares, to be
distributed to Acquired Fund Shareholders.
1.6 TRANSFER TAXES. Any transfer taxes payable upon the issuance of
Acquiring Fund Shares in a name other than the registered holder of the Acquired
Fund shares on the books of the Acquired Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of the
Acquired Fund is and shall remain the responsibility of the Acquired Fund.
1.8 TERMINATION. The Acquired Fund shall be terminated promptly
following the Closing Date and the making of all distributions pursuant to
paragraph 1.4.
1.9 BOOKS AND RECORDS. All books and records of the Acquired Fund,
including all books and records required to be maintained under the Investment
Company Act of 1940 (the "1940 Act"), and the rules and regulations thereunder,
shall be available to the Acquiring Fund from and after the Closing Date and
shall be turned over to the Acquiring Fund as soon as practicable following the
Closing Date.
ARTICLE*II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Acquired Fund's assets to be
acquired by the Acquiring Fund hereunder shall be the value of such assets at
the closing on the Closing Date, using the valuation procedures set forth in the
Acquiring Fund's Declaration of Trust and the Acquiring Fund's then current
prospectus and statement of additional information or such other valuation
procedures as shall be mutually agreed upon by the parties.
2.2 VALUATION OF SHARES. The net asset value per share of Acquiring
Fund Shares shall be the net asset value per share computed at the closing on
the Closing Date, using the valuation procedures set forth in the Acquiring
Fund's Declaration of Trust and the Acquiring Fund's then current prospectus and
statement of additional information, or such other valuation procedures as shall
be mutually agreed upon by the parties.
2.3 SHARES TO BE ISSUED. The number of the Acquiring Fund's Class A Shares
and Institutional Service Shares to be issued (including fractional shares, if
any) in exchange for the Acquired Fund's assets, shall be determined by (a)
multiplying the shares outstanding of each class of the Acquired Fund by (b) the
ratio computed by (x) dividing the net asset value per share of such class of
the Acquired Fund by (y) the net asset value per share of the corresponding
class, as provided in paragraph 1.1, of Acquiring Fund Shares, determined in
accordance with paragraph 2.2.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by
State Street Bank and Trust Company, on behalf of the Acquiring Fund and the
Acquired Fund.
ARTICLE*III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing shall occur on or about December 8,
2006, or such other date(s) as the parties may agree to in writing (the "Closing
Date"). All acts taking place at the closing shall be deemed to take place at
4:00 p.m. Eastern Time on the Closing 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 the parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. State Street Bank and Trust Company, as
custodian for the Acquired Fund (the "Custodian"), shall deliver at the Closing
a certificate of an authorized officer stating that: (a) the Acquired Fund's
portfolio securities, cash, and any other assets have been delivered in proper
form to the Acquiring Fund on the Closing Date; and (b) all necessary taxes
including all applicable federal and state stock transfer stamps, if any, shall
have been paid, or provision for payment shall have been made, in conjunction
with the delivery of portfolio securities by the Acquired Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on the
scheduled Closing Date, either: (a) the New York Stock Exchange ("NYSE") or
another primary exchange on which the portfolio securities of the Acquiring Fund
or the Acquired Fund are purchased or sold, shall be closed to trading or
trading on such exchange shall be restricted; or (b) 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 Acquiring Fund or the Acquired Fund is
impracticable, the Closing Date shall be postponed until the first business day
after the day when trading is fully resumed and reporting is restored.
3.4 TRANSFER AGENT'S CERTIFICATE. State Street Bank and Trust Company,
as transfer agent for the Acquired Fund as of the Closing Date, shall deliver at
the Closing a certificate of an authorized officer stating that its records
contain the names and addresses of Acquired Fund Shareholders, and the number
and percentage ownership of outstanding shares of each class owned by each such
shareholder immediately prior to the Closing. The Acquiring Fund shall issue
and deliver or cause State Street Bank and Trust Company, its transfer agent, to
issue and deliver a confirmation evidencing Acquiring Fund Shares to be credited
on the Closing Date to the Secretary of the Corporation or provide evidence
satisfactory to the Acquired Fund that the Acquiring Fund Shares have been
credited to the Acquired Fund's account 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, receipts, officers certificates, transfer agent
certificates, custodian certificates, opinions, and other certificates and
documents, if any, as such other party or its counsel may reasonably request.
ARTICLE*IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE ACQUIRED FUND. The Corporation, on behalf
of the Acquired Fund, represents and warrants to the Acquiring Fund as follows:
a) The Acquired Fund is a legally designated, separate series of a
corporation duly organized, validly existing, and in good standing
under the laws of Maryland.
b) The Corporation is registered as an open-end management investment
company under the 1940 Act, and the Corporation's registration with
the Securities and Exchange Commission (the "Commission") as an
investment company under the 1940 Act is in full force and effect.
c) The current prospectus and statement of additional information of the
Acquired Fund conform in all material respects to the applicable
requirements of the Securities Act of 1933 (the "1933 Act") and the
1940 Act, and the rules and regulations thereunder, 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 they were made, not
misleading.
d) The Acquired Fund is not in violation, and the execution, delivery,
and performance of this Agreement (subject to shareholder approval)
will not result in the violation, of any provision of the
Corporation's Articles of Incorporation or By-Laws or of any material
agreement, indenture, instrument, contract, lease, or other
undertaking to which the Acquired Fund is a party or by which it is
bound.
e) The Acquired Fund has no material contracts or other commitments
(other than this Agreement) that will be terminated with liability to
it before the Closing Date, except for liabilities, if any, to be
discharged as provided in paragraph 1.3 hereof.
f) Except as otherwise disclosed in writing to and accepted by the
Acquiring Fund, no litigation, 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, which, if adversely determined, would
materially and adversely affect its financial condition, the conduct
of its business, or the ability of the Acquired Fund to carry out the
transactions contemplated by this Agreement. The Acquired Fund knows
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 its business or its ability to
consummate the transactions contemplated herein.
g) The financial statements of the Acquired Fund as of November 30, 2005,
and for the fiscal year then ended have been prepared in accordance
with generally accepted accounting principles, and audited by Ernst &
Young LLP, independent registered public accountants, and such
statements (copies of which have been furnished to the Acquiring Fund)
fairly reflect the financial condition of the Acquired Fund as of such
date, and there are no known contingent liabilities of the Acquired
Fund as of such date that are not disclosed in such statements.
h) The unaudited financial statements of the Acquired Fund as of May 31,
2006, and for the six months then ended have been prepared in
accordance with generally accepted accounting principles, and such
statements (copies of which have been furnished to the Acquiring Fund)
fairly reflect the financial condition of the Acquired Fund as of such
date, and there are no known contingent liabilities of the Acquired
Fund as of such date that are not disclosed in such statements.
i) Since the date of the financial statements referred to in paragraph
(h) above, there have been no material adverse changes 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 paragraph (i), a decline in the net asset value of the Acquired
Fund shall not constitute a material adverse change.
j) All federal and other tax returns and reports of the Acquired Fund
required by law to be filed, have been filed, and all federal and
other taxes shown due on such returns and reports have been paid, or
provision shall have been made for the payment thereof. 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.
k) All issued and outstanding shares of the Acquired Fund are duly and
validly issued and outstanding, fully paid and non-assessable by the
Acquired Fund. All of the issued and outstanding shares of the
Acquired Fund will, at the time of the Closing Date, be held by the
persons and in the amounts set forth in the records of the Acquired
Fund's transfer agent as provided in paragraph 3.4. The Acquired Fund
has no outstanding options, warrants, or other rights to subscribe for
or purchase any of the Acquired Fund shares, and has no outstanding
securities convertible into any of the Acquired Fund shares.
l) At the Closing Date, the Acquired Fund will have good and marketable
title to the Acquired Fund's assets to be transferred to the Acquiring
Fund pursuant to paragraph 1.2, and full right, power, and authority
to sell, assign, transfer, and deliver such assets hereunder, free of
any lien or other encumbrance, except those liens or encumbrances of
which the Acquiring Fund has received notice, and, upon delivery and
payment for such assets, and the filing of any articles, certificates
or other documents under the laws of Maryland, the Acquiring 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, and other than as disclosed to and accepted
by the Acquiring Fund.
m) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the Acquired
Fund. Subject to approval by the Acquired Fund Shareholders, this
Agreement constitutes a valid and binding obligation 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.
n) The information to be furnished by the Acquired 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 comply in
all material respects with federal securities and other laws and
regulations 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.
o) The Acquired Fund has elected to qualify and has qualified as a
"regulated investment company" under the Code (a "RIC"), as of and
since its first taxable year; has been a RIC under the Code at all
times since the end of its first taxable year when it so qualified;
and qualifies and will continue to qualify as a RIC under the Code for
its taxable year ending upon its liquidation.
p) 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 Acquired
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 Closing Date, it being understood, however,
that this Agreement and the transactions contemplated herein must be
approved by the shareholders of the Acquired Fund as described in
paragraph 5.2.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Acquiring Fund
represents and warrants to the Corporation as follows:
a) The Acquiring Fund is a Massachusetts business trust, duly organized,
validly existing and in good standing under the laws of Massachusetts.
b) The Acquiring Fund is registered as an open-end management investment
company under the 1940 Act, and the Acquiring Fund's registration with
the Commission as an investment company under the 1940 Act is in full
force and effect.
c) The current prospectus and statement of additional information of the
Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and
regulations thereunder, 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 such statements therein, in light of the
circumstances under which they were made, not misleading.
d) The Acquiring Fund is not in violation, and the execution, delivery
and performance of this Agreement will not result in a violation, of
the Acquiring Fund's Declaration of Trust or By-Laws or of any
material agreement, indenture, instrument, contract, lease, or other
undertaking to which the Acquiring Fund is a party or by which it is
bound.
e) Except as otherwise disclosed in writing to and accepted by the
Acquired Fund, no litigation, administrative proceeding or
investigation of or before any court or governmental body is presently
pending or to its knowledge threatened against the Acquiring Fund or
any of its properties or assets, which, if adversely determined, would
materially and adversely affect its financial condition, the conduct
of its business or the ability of the Acquiring Fund to carry out the
transactions contemplated by this Agreement. The Acquiring Fund knows
of no facts that might form the basis for the institution of such
proceedings and it 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 its business or its ability to
consummate the transaction contemplated herein.
f) The financial statements of the Acquiring Fund as of June 30, 2006,
and for the fiscal year then ended have been prepared in accordance
with generally accepted accounting principles, and audited by Ernst &
Young LLP, independent registered public accountants, and such
statements (copies of which have been furnished to the Acquired Fund)
fairly reflect the financial condition of the Acquiring Fund as of
such date, and there are no known contingent liabilities of the
Acquiring Fund as of such date that are not disclosed in such
statements.
g) Since the date of the financial statements referred to in paragraph
(f) above, there have been no material adverse changes 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 the
purposes of this paragraph (g), a decline in the net asset value of
the Acquiring Fund shall not constitute a material adverse change.
h) All federal and other tax returns and reports of the Acquiring Fund
required by law to be filed, have been filed. All federal and other
taxes shown due on such returns and reports have been paid or
provision shall have been made for their payment. 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.
i) All issued and outstanding Acquiring Fund Shares are duly and validly
issued and outstanding, fully paid and non-assessable by the Acquiring
Fund. The Acquiring Fund has no outstanding options, warrants, or
other rights to subscribe for or purchase any Acquiring Fund Shares,
and there are no outstanding securities convertible into any Acquiring
Fund Shares.
j) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the Acquiring
Fund, and this Agreement constitutes a valid and binding obligation of
the Acquiring Fund, enforceable in accordance with its terms, subject
as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights
and to general equity principles.
k) 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 Agreement will, at the Closing Date, have been duly
authorized. When so issued and delivered, such shares will be duly and
validly issued Acquiring Fund Shares, and will be fully paid and
non-assessable.
l) The information to be furnished by the Acquiring 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 comply in
all material respects with federal securities and other laws and
regulations 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.
m) The Acquiring Fund has elected to qualify and has qualified as a RIC
under the Code as of and since its first taxable year; has been a RIC
under the Code at all times since the end of its first taxable year
when it so qualified; and qualifies and shall continue to qualify as a
RIC under the Code for its current taxable year.
n) 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 Acquiring
Fund or the performance of the Agreement by the Acquiring 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 such other consents, approvals,
authorizations and filings as have been made or received, and except
for such consents, approvals, authorizations and filings as may be
required subsequent to the Closing Date.
o) The Acquiring Fund agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act,
and any state Blue Sky or securities laws as it may deem appropriate
in order to continue its operations after the Closing Date.
ARTICLE*V
COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 OPERATION IN ORDINARY COURSE. The Acquiring Fund and the Acquired
Fund will each operate its respective business in the ordinary course between
the date of this Agreement and the Closing Date, it being understood that such
ordinary course of business will include customary dividends and shareholder
purchases and redemptions.
5.2 APPROVAL OF SHAREHOLDERS. The Corporation will call a special
meeting of the Acquired 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.
5.3 INVESTMENT REPRESENTATION. The Acquired Fund covenants that the
Acquiring 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 and in accordance with the terms of this Agreement.
5.4 ADDITIONAL INFORMATION. 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 FURTHER ACTION. Subject to the provisions of this Agreement, 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
Agreement, including any actions required to be taken after the Closing Date.
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but
in any case within sixty days after the Closing Date, the Acquired Fund shall
furnish the Acquiring Fund, in such form as is reasonably satisfactory to the
Acquiring Fund, a statement of the earnings and profits of the Acquired Fund for
federal income tax purposes that will be carried over by the Acquiring Fund as a
result of Section 381 of the Code, and which will be certified by the
Corporation's Treasurer.
5.7 PREPARATION OF REGISTRATION STATEMENT AND SCHEDULE 14A PROXY
STATEMENT. The Acquiring Fund will review and file with the Commission a
registration statement on Form N-14 relating to the Acquiring Fund Shares to be
issued to shareholders of the Acquired Fund (the "Registration Statement"). The
Registration Statement on Form N-14 shall include a proxy statement and a
prospectus of the Acquiring 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 Form N-14, and the proxy materials for
inclusion therein in connection with the meeting of the Acquired Fund's
Shareholders to consider the approval of this Agreement and the transactions
contemplated herein (the "Proxy Materials").
5.8 On or before the Closing Date, the Acquired Fund shall have
declared and paid a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to its shareholders all of the
Acquired Fund's investment company taxable income (computed without regard to
any deduction for dividends paid), if any, plus the excess, if any, of its
interest income excludible from gross income under Section 103(a) of the Code
over its deductions disallowed under Sections 265 and 171(a)(2) of the Code for
all taxable periods or years ending on or before the Closing Date, and all of
its net capital gains realized (after reduction for any capital loss carry
forward), if any, in all taxable periods or years ending on or before the
Closing Date.
ARTICLE*VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by the Acquiring Fund
pursuant to this Agreement on or before the Closing Date, and, in addition,
subject to the following conditions:
6.1 All representations, covenants, and warranties of the Acquiring
Fund contained in this Agreement shall be true and correct in all material
respects as of the date hereof and as of the Closing Date, with the same force
and effect as if made on and as of the Closing Date. The Acquiring Fund shall
have delivered to the Acquired Fund a certificate executed in the Acquiring
Fund's name by its President or Vice President and its Treasurer or Assistant
Treasurer, in form and substance satisfactory to the Acquired Fund and dated as
of the Closing Date, to such effect and as to such other matters as the Acquired
Fund shall reasonably request.
ARTICLE*VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all the obligations to be performed by the Acquired Fund
pursuant to this Agreement, on or before the Closing Date and, in addition,
shall be subject to the following conditions:
7.1 All representations, covenants, and warranties of the Acquired Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of such Closing Date. The Acquired Fund shall have
delivered to the Acquiring Fund on such Closing Date a certificate executed in
the Acquired Fund's name by the Corporation's President or Vice President and
its Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Acquiring Fund and dated as of such Closing Date, to such effect and as to such
other matters as the Acquiring Fund shall reasonably request.
7.2 The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities, together with a list of
the Acquired Fund's portfolio securities showing the tax costs of such
securities by lot and the holding periods of such securities, as of the Closing
Date, certified by the Treasurer of the Corporation.
ARTICLE*VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRING FUND AND ACQUIRED FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein, with
respect to the Acquired Fund, shall have been approved by the requisite vote of
the holders of the outstanding shares of the Acquired Fund 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 Acquiring Fund. Notwithstanding anything herein to
the contrary, neither the Acquiring Fund nor the Acquired Fund may waive the
conditions set forth in this paragraph 8.1.
8.2 On the Closing 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. Furthermore, no action,
suit or other proceeding shall be threatened or pending 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 Agreement or the transactions
contemplated herein.
8.3 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 Acquiring Fund or the Acquired Fund,
provided that either party hereto may waive any such conditions for itself.
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. 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 0000 Xxx.
8.5 The parties shall have received an opinion of Xxxx Xxxxx LLP
substantially to the effect that for federal income tax purposes:
a) The transfer of all of the Acquired Fund's assets to the Acquiring
Fund solely in exchange for Acquiring Fund Shares (followed by the
distribution of Acquiring Fund Shares to the Acquired Fund
Shareholders in dissolution and liquidation of the Acquired Fund) will
constitute a "reorganization" within the meaning of Section 368(a) of
the Code, and the Acquiring Fund and the Acquired Fund will each be a
"party to a reorganization" within the meaning of Section 368(b) of
the Code.
b) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund solely in exchange for
Acquiring Fund Shares.
c) No gain or loss will be recognized by the Acquired Fund upon the
transfer of the Acquired Fund's assets to the Acquiring Fund solely in
exchange for Acquiring Fund Shares or upon the distribution (whether
actual or constructive) of Acquiring Fund Shares to Acquired Fund
Shareholders in exchange for their Acquired Fund Shares.
d) No gain or loss will be recognized by any Acquired Fund Shareholder
upon the exchange of its Acquired Fund Shares for Acquiring Fund
Shares.
e) The aggregate tax basis of the Acquiring Fund Shares received by each
Acquired Fund Shareholder pursuant to the Reorganization will be the
same as the aggregate tax basis of the Acquired Fund Shares held by it
immediately prior to the Reorganization. The holding period of
Acquiring Fund Shares received by each Acquired Fund Shareholder will
include the period during which the Acquired Fund Shares exchanged
therefor were held by such shareholder, provided the Acquired Fund
Shares are held as capital assets at the time of the Reorganization.
f) The tax basis of the Acquired Fund's assets acquired by the Acquiring
Fund will be the same as the tax basis of such assets to the Acquired
Fund immediately prior to the Reorganization. The holding period of
the assets of the Acquired Fund in the hands of the Acquiring Fund
will include the period during which those assets were held by the
Acquired Fund.
Such opinion shall be based on customary assumptions and such
representations as Xxxx Xxxxx LLP may reasonably request, and the
Acquired Fund and Acquiring Fund will cooperate to make and certify the
accuracy of such representations. The foregoing opinion may state that
no opinion is expressed as to the effect of the Reorganization on the
Acquiring Fund, the Acquired Fund or any Acquired Fund Shareholder with
respect to any asset as to which unrealized gain or loss is required to
be recognized for federal income tax purposes at the end of a taxable
year (or on the termination or transfer thereof) under a xxxx-to-market
system of accounting. Notwithstanding anything herein to the contrary,
neither the Acquiring Fund nor the Acquired Fund may waive the conditions
set forth in this paragraph 8.5.
ARTICLE*IX
EXPENSES
Federated Investment Management Company or its affiliates will pay all
expenses associated with Acquiring Fund's and Acquired Fund's participation in
the Reorganization, provided, however, that Acquiring Fund shall bear expenses
associated with the qualification of Acquiring Fund Shares for sale in the
various states. Reorganization expenses include, without limitation: (a)
expenses associated with the preparation and filing of the Proxy Materials; (b)
postage; (c) printing; (d) accounting fees; (e) legal fees incurred by each
Fund; (f) solicitation costs of the transaction; and (g) other related
administrative or operational costs.
ARTICLE*X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund and the Corporation, on behalf of the Acquired
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.
10.2 Except as specified in the next sentence set forth in this
paragraph 10.2, the representations, warranties, and covenants contained in this
Agreement or in any document delivered pursuant to or in connection with this
Agreement, shall not survive the consummation of the transactions contemplated
hereunder. The covenants to be performed after the Closing Date shall continue
in effect beyond the consummation of the transactions contemplated hereunder.
ARTICLE*XI
TERMINATION
This Agreement may be terminated by the mutual agreement of the Acquiring
Fund and the Corporation. In addition, either the Acquiring Fund or the
Corporation may at its option terminate this Agreement at or before the Closing
Date due to:
a) a breach by the other of any representation, warranty, or agreement
contained herein to be performed at or before the Closing Date, if not
cured within 30 days;
b) 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
c) 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 Acquiring
Fund, respectively, and notice given to the other party hereto.
In the event of any such termination, in the absence of willful default, there
shall be no liability for damages on the part of either the Acquiring Fund, the
Acquired Fund, the Corporation, or their respective directors, trustees or
officers, to the other party or its directors, trustees or officers.
ARTICLE*XII
AMENDMENTS
This Agreement may be amended, modified, or supplemented in such manner
as may be mutually agreed upon in writing by the officers of the Corporation and
the Acquiring Fund as specifically authorized by their respective Board of
Directors or Trustees; provided, however, that following the meeting of the
Acquired Fund Shareholders called by the Acquired Fund pursuant to paragraph 5.2
of this Agreement, no such amendment may have the effect of changing the
provisions for determining the number of Acquiring Fund Shares to be issued to
the Acquired Fund Shareholders under this Agreement to the detriment of such
shareholders without their further approval.
ARTICLE*XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 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.
13.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania, without regard to the
conflict of laws rules of that or any other jurisdiction.
13.4 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 paragraph, 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.
A-2
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as
of the date first written above.
FEDERATED FIXED INCOME SECURITIES, INC.
on behalf of its portfolio,
Federated Limited Term Municipal Fund
/s/ Xxxx X. XxXxxxxxx
Xxxx X. XxXxxxxxx, Secretary
FEDERATED SHORT-TERM MUNICIPAL TRUST
/s/ Xxxx X. XxXxxxxxx
Xxxx X. XxXxxxxxx, Secretary
