FORM OF AGREEMENT AND PLAN OF REORGANIZATION
Exhibit
4
THIS
AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) is made as of this ____
day of _____________, by and between Federated Insurance Series, a MASSACHUSETTS BUSINESS TRUST,
with its principal place of business at 0000 Xxxxxxxx Xxxxx, Xxxxxxxxxx, XX,
00000-0000 (the “TRUST”), with respect to its
Federated Capital Income Fund II (the “Acquiring Fund”), a series of the TRUST, and the Trust with
respect to its Federated Equity Income Fund II, a series of the TRUST (“Acquired Fund” and,
collectively with the Acquiring Fund, the “Funds”).
The
reorganization will consist of: (i) the transfer of all of the assets of
the Acquired Fund in exchange for shares (Primary Shares ), no par value per
share, of the Acquiring Fund (“Acquiring Fund Shares”); (ii) the
distribution of the Acquiring Fund Shares to the holders of shares of the
Acquired Fund; and (iii) the liquidation of the Acquired Fund as provided
herein, all upon the terms and conditions set forth in this agreement (the
“Reorganization”).
WHEREAS,
the Acquiring Fund and the Acquired Fund are separate series of the TRUST; the TRUST is an open-end,
registered management investment company; and the Acquired Fund owns securities
that generally are assets of the character in which the Acquiring Fund is
permitted to invest;
WHEREAS,
the Acquiring Fund and the Acquired Fund are authorized to issue their shares of
beneficial interests;
WHEREAS,
the TRUSTEES of the
TRUST 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;
WHEREAS,
the TRUSTEES of the
TRUST 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;
NOW,
THEREFORE, in consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as
follows:
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: (i) to deliver to the Acquired Fund the number of full
and fractional Acquiring Fund Shares, determined by multiplying (a) the
shares outstanding of the Acquired Fund (the “Acquired Fund Shares”) by
(b) the ratio computed by dividing (x) the net asset value per share
of the Acquired Fund Shares by (y) the net asset value per share of the
Acquiring Fund Shares computed in the manner and as of the time and date set
forth in paragraph 2.2 Holders of the Acquired Fund Shares will receive
Acquiring Fund Shares. 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. The assets to be acquired by the Acquiring Fund shall not
include any deferred or prepaid expenses shown as an asset on the books of the
Acquired Fund on the Closing Date, and shall be excluded from the Valuation of
Assets under paragraph 2.1 and the corresponding calculation of net asset value
per share of the Acquired Fund Shares under this Agreement.
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 those 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 its shareholders
of record, determined as of the close of business on the Closing Date (the
“Acquired Fund Shareholders”), all of the Acquiring Fund Shares 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 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 TRUST’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 of Acquired Fund Shares computed at the
closing on the Closing Date, using the valuation procedures set forth in the
TRUST’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 Acquiring Fund Shares to be issued
(including fractional shares, if any) in exchange for the Acquired Fund’s
assets, shall be determined in accordance with paragraph 1.1.
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 March 12, 2010, 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 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 Friday that is a 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 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 TRUST 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 and other
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 TRUST, on behalf of the
Acquired Fund, represents and warrants to the TRUST, on behalf of the
Acquiring Fund, as follows:
|
a)
|
The
Acquired Fund is a legally designated, separate series of a statutory
trust duly organized, validly existing, and in good standing under the
laws of the Massachusetts.
|
|
b)
|
The
TRUST is
registered as an open-end management investment company under the 1940
Act, and the TRUST’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, and the execution, delivery, and performance of this
Agreement (subject to shareholder approval) will not, result in the
violation of any provision of the TRUST’s DECLARATION OF TRUST 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
audited financial statements of the Acquired Fund as of December 31, 2008,
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 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 June 30, 2009,
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)
|
As
of the date hereof, except as previously disclosed to the Acquiring Fund
in writing, and except as have been corrected as required by applicable
law, and to the best of the Acquired Fund’s knowledge, there have been no
material miscalculations of the net asset value of the Acquired Fund or
the net asset value per share of any class or series of shares during the
twelve-month period preceding the date hereof and preceding the Closing
Date, and all such calculations have been made in accordance with the
applicable provisions of the 0000
Xxx.
|
|
k)
|
The
minute books and other similar records of the Acquired Fund as made
available to the Acquiring 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
Acquired Fund and of the Acquired Fund, the Acquired Fund’s Board of
Trustees and committees of the Acquired Fund’s Board of Trustees. The
stock transfer ledgers and other similar records of the Acquired Fund as
made available to the Acquiring Fund prior to the execution of this
Agreement, and as existing on the Closing Date, accurately reflect all
record transfers prior to the execution of this Agreement, or the Closing
Date, as applicable, in the Acquired Fund
Shares.
|
|
l)
|
The
Acquired 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 Section 31 of the 1940 Act and rules
thereunder.
|
|
m)
|
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.
|
|
n)
|
All
issued and outstanding Acquired Fund Shares are duly and validly issued
and outstanding, fully paid and non-assessable by the Acquired
Fund. All of the issued and outstanding Acquired Fund Shares
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.
|
|
o)
|
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 to 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 the Commonwealth of Massachusetts, 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.
|
|
p)
|
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.
|
|
q)
|
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 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 Registration Statement (as defined in
paragraph 5.7), through the time of the meeting of the Acquired Fund
Shareholders and on the Closing Date, any written information furnished by
the TRUST with
respect to the Acquired Fund for use in the Proxy Materials (as defined in
paragraph 5.7), or any other materials provided in connection with
the Reorganization, 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
Acquired 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 Massachusetts law for the execution of this Agreement by
the TRUST, 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 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 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 TRUST, on behalf of the
Acquiring Fund, represents and warrants to the TRUST, on behalf of the
Acquired Fund, as follows:
|
a)
|
The
Acquiring Fund is a separate series of a business trust, duly organized,
validly existing and in good standing under the laws of the Commonwealth
of Massachusetts.
|
|
b)
|
The
TRUST is
registered as an open-end management investment company under the 1940
Act, and the TRUST’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, and the execution, delivery and performance of this
Agreement will not, result in a violation of the TRUST’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 December 31, 2008 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 Acquired Funds) 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)
|
The
unaudited financial statements of the Acquiring Fund as of June 30, 2009,
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 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.
|
|
h)
|
Since
the date of the financial statements referred to in paragraph (g)
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 (h), a decline in the net asset value of the Acquiring Fund
shall not constitute a material adverse
change.
|
|
i)
|
All
federal and other tax returns and reports of the Acquiring 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 therof. 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.
|
|
j)
|
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.
|
|
k)
|
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.
|
|
l)
|
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.
|
|
m)
|
The
information to be furnished by the Acquiring Fund for use in no-action
letters, 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.
|
|
n)
|
From
the effective date of the Registration Statement (as defined in
paragraph 5.7), through the time of the meeting of the Acquired Fund
Shareholders and on the Closing Date, any written information furnished by
the TRUST with
respect to the Acquiring Fund for use in the Proxy Materials (as defined
in paragraph 5.7), or any other materials provided in connection with
the Reorganization, 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.
|
|
o)
|
The
Acquiring Fund has qualified and elected to be treated as a RIC under the
Code as of and since its first taxable year; and qualifies and shall
continue to qualify as a RIC under the Code for its current taxable year
.
|
|
p)
|
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 TRUST, for itself and on
behalf of the Acquiring Fund, or the performance of the Agreement by the
TRUST, for itself
and on behalf of 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.
|
|
q)
|
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 TRUST 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 TRUST’s
Treasurer.
5.7 PREPARATION
OF REGISTRATION STATEMENT AND SCHEDULE 14A PROXY STATEMENT. The
TRUST will prepare 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 (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.
5.8 DECLARATION
AND PAYMENT OF FINAL DIVIDEND. 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:
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 the
TRUST’s 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:
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 TRUST’s President or Vice
President and the 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.
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 TRUST.
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 TRUST’s DECLARATION OF TRUST 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 1933 Act.
ARTICLE
IX
EXPENSES
The
Acquired Fund and the Acquiring Fund will not bear any expenses associated with
their participation in the Reorganization, except as contemplated in this
Article IX. Federated Equity Management Company of Pennsylvania or its
affiliates (collectively, “Federated”) will bear certain expenses associated
with Acquiring Fund’s and Acquired Fund’s participation in the
Reorganization. Such reorganization expenses
include: (a) expenses associated with the preparation and filing
of the Proxy Materials; (b) postage; (c) printing; (d) accounting
fees; (e) legal and accounting fees incurred in connection with the
preparation of the Proxy Materials; (f) solicitation costs of the
transaction; and (g) other related administrative or operational
costs. The Acquiring Fund shall bear expenses associated with the
qualification of Acquiring Fund Shares for sale in the various
states. In addition, to the extent that any transition of portfolio
securities is required in connection with the Reorganization, the Fund may incur
transaction expenses associated with the purchase and sale of portfolio
securities.
ARTICLE
X
ENTIRE
AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The
TRUST, on behalf of the
Acquiring Fund, and the TRUST, 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 TRUST and the TRUST at its option on or
before the Closing Date.
In the
event of any such termination, in the absence of willful default, there shall be
no liability for damages on the part of any of the Acquiring Fund, the Acquired
Fund, the TRUST or their
respective TRUSTEES or
officers, to the other party or its 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 TRUST as specifically
authorized by of 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
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.
This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original.
This
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania.
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, trust, or
entitles other than the parties hereto and their respective successors and
assigns, any rights or remedies under or by reason of this
Agreement.
It is
expressly agreed that the obligations of the Acquiring Fund hereunder shall not
be binding upon any of the Trustees, shareholders, nominees, officers, agents,
or employees of the Trust personally, but shall bind only the Trust property of
the Acquiring Fund, as provided in the Declaration of Trust of the
Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust on behalf of the Acquiring Fund and
signed by authorized officers of the Federated Trust, acting as
such. Neither the authorization by such Trustees nor the execution
and delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the Trust property of the Acquiring Fund as provided in the Trust’s
Declaration of Trust.
It is
expressly agreed that the obligations of the Acquired Fund hereunder shall not
be binding upon any of the Trustees, shareholders, nominees, officers, agents,
or employees of the Trust personally, but shall bind only the Trust property of
the Acquired Fund, as provided in the Declaration of Trust of the
Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust on behalf of the Acquired Fund and
signed by authorized officers of the Trust, acting as such. Neither
the authorization by such Trustees nor the execution and delivery by such
officers shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the Trust
property of the Acquired Fund as provided in the Trust’s Declaration of
Trust.
IN
WITNESS WHEREOF, the parties have duly executed this Agreement, all as of the
date first written above.
on behalf
of its portfolio,
Federated
Equity Income Fund II
Xxxx X.
XxXxxxxxx, Secretary
on behalf
of its portfolio,
Federated
Capital Income Fund II
Xxxx X.
XxXxxxxxx, Secretary
