EXHIBIT 4(a)
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this 13th day of January, 2006, by and between MTB Group of Funds, a
Delaware statutory trust, with its principal place of business at 0000
Xxxxxxxxx Xxxxx, Xxxxxxxxxx, XX, 00000 (the "MTB Trust"), with respect to MTB
Maryland Municipal Bond Fund (the "Acquiring Fund"), a series of the MTB
Trust, and The FBR Funds, a Delaware statutory trust, with its principal
place of business at 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, XX 00000 (the
"FBR Trust"), with respect to FBR Maryland Tax-Free Portfolio, a series of
the FBR Trust ("Acquired Fund" and, collectively with the Acquiring Fund, the
"Funds").
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 of the Acquiring Fund ("Acquiring Fund Shares"); and (ii) the
distribution of the Acquiring Fund Shares to the holders of the shares 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 Acquiring Fund and the Acquired Fund are a separate series
of the MTB Trust and the FBR Trust, respectively, and the MTB Trust and the
FBR Trust 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, the Acquiring Fund and the Acquired Fund are each authorized
to issue their shares of beneficial interest;
WHEREAS, the Trustees of the MTB 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 FBR 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 to deliver to the Acquired Fund the number of full and fractional
Acquiring Fund Shares, determined by (a) multiplying the shares outstanding
of the Acquired Fund by (b) the ratio computed by dividing (x) the net asset
value per share of the Acquired Fund 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 shares of the Acquired Fund 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 all property, including,
without limitation, all cash, securities, commodities, interests in futures
and dividends or interest receivable, stock splits, settlement rights and
payments 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 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 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 MTB Trust's Amended and Restated Agreement and Declaration of Trust
(the "Trust Instrument"), the Acquiring Fund's then current Prospectus and
Statement of Additional Information, and the MTB Trust's Pricing Committee
Procedures, 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 MTB Trust
Instrument the Acquiring Fund's then current Prospectus and Statement of
Additional Information, and the MTB Trust's Pricing Committee Procedures, 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 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 the Acquired Fund by (b) the ratio computed by (x) dividing the net asset
value per share of the Acquired Fund by (y) the net asset value per share of
the Acquiring Fund 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 February 24,
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. The 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 business day after the
day when trading is fully resumed and reporting is restored, or such other
date(s) as the parties may agree to in writing.
3.4 TRANSFER AGENT'S CERTIFICATE. Integrated Fund Services, Inc., 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 Boston Financial Data Services, 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 MTB 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 FBR Trust, on behalf
of the Acquired Fund, represents and warrants to the MTB 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 State of Delaware.
b) The FBR Trust is registered as an open-end management investment
company under the 1940 Act, and the FBR 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 FBR Trust's Trust Instrument 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 could
materially and adversely affect its business or its ability to
consummate the transactions contemplated herein.
g) The audited financial statements of the Acquired Fund as of October 31,
2005, 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 MTB Trust on
behalf of 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) Since the date of the financial statements referred to in paragraph (g)
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 MTB Trust on behalf of the Acquiring
Fund. For the purposes of this paragraph (h), a decline in the net
asset value of the Acquired Fund shall not constitute a material
adverse change.
i) 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 to be due on such returns and reports have been paid or
provision shall have been made for the payment thereof. To the best of
the FBR Trust'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 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.
k) 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 state of Delaware, 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.
l) 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.
m) 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.
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 FBR 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.
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 Delaware law for the execution of this
Agreement by the FBR 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 Delaware 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 MTB Trust, on behalf
of the Acquiring Fund, represents and warrants to the FBR Trust, on behalf of
the Acquired Fund, as follows:
I. The Acquiring Fund is a legally designated, separate series of a
business trust, duly organized, validly existing and in good standing
under the laws of the State of Delaware.
II. The MTB Trust is registered as an open-end management investment
company under the 1940 Act, and the MTB Trust's registration with the
Commission as an investment company under the 1940 Act is in full force
and effect.
III. 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.
IV. The Acquiring Fund is not, and the execution, delivery and performance
of this Agreement will not, result in a violation of the MTB Trust's
Trust Instrument 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.
V. 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
could materially and adversely affect its business or its ability to
consummate the transaction contemplated herein.
VI. The audited financial statements of the Acquiring Fund as of April 30,
2005 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 FBR Trust on
behalf of 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.
VII. The unaudited financial statements of the Acquiring Fund as of October
31, 2005, 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 FBR Trust on
behalf of the Acquired Fund) fairly reflect the financial condition of
the Acquiring Fund as of October 31, 2005, and there are no know
contingent liabilities of the Acquiring Fund as of such date that are
not disclosed in such statements.
VIII. 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.
IX. 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 to be 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.
X. 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.
XI. 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.
XII. 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.
XIII. 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.
XIV. 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 MTB 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.
XV. 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.
XVI. No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the 1934 Act, the 1940 Act or Delaware law
for the execution of this Agreement by the MTB Trust, for itself and on
behalf of the Acquiring Fund, or the performance of the Agreement by
the MTB 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 Delaware 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.
XVII. 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 FBR 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 FBR Trust's Treasurer.
5.7 PREPARATION OF REGISTRATION STATEMENT AND SCHEDULE 14A PROXY
STATEMENT. The MTB 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 of the Acquired Fund and a Prospectus of the Acquiring Fund
relating to the transactions 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 PAYMENT OF DIVIDENDS AND CAPITAL GAINS. 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 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 and all covenants
of the Acquiring Fund contained in this Agreement shall have been complied
with in all material respects 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 MTB 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.
6.2 The Acquired Fund shall have received an opinion of Xxxx Xxxxx
LLP, counsel to the MTB Trust ("Counsel"), substantially to the effect that:
a) The Acquiring Fund is a validly existing series of the MTB Trust, a
statutory trust duly formed and validly existing and in good standing
under the laws of the State of Delaware with the power under its Trust
Instrument to carry on its business and to own all of its properties
and assets.
b) This Agreement (a) has been duly authorized and executed by the MTB
Trust on behalf of the Acquiring Fund and (b) assuming due
authorization, execution, and delivery of this Agreement by the
Acquired Fund, is a legal, valid and binding obligation of the
Acquiring Fund, enforceable against the Acquiring Fund in accordance
with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, receivership, fraudulent
conveyance, moratorium or other laws of general application relating to
or affecting the enforcement of creditors' rights and remedies, as from
time to time in effect, (ii) application of equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and (iii) principles of course of
dealing or course of performance and standards of good faith, fair
dealing, materiality and reasonableness that may be applied by a court
to the exercise of rights and remedies.
c) The Acquiring Fund's Shares to be issued and delivered to the
Acquired Fund Shareholders under this Agreement, assuming their due
delivery as contemplated by this Agreement, will be duly authorized and
validly issued and outstanding and fully paid and non-assessable
(except as disclosed in the MTB Trust's then current prospectus and
statement of additional information).
d) The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not (a)
materially violate the MTB Trust's Trust Instrument or By-laws or any
provision of any agreement known to Counsel, to which the MTB Trust
(with respect to the Acquiring Fund) is a party or by which it is bound
or (b) to the knowledge of Counsel, result in the acceleration of any
obligation, or the imposition of any penalty, under any agreement,
judgment, or decree known to Counsel to which the MTB Trust (with
respect to the Acquiring Fund) is a party or by which it (with respect
to the Acquiring Fund) is bound.
e) To the knowledge of Counsel, no consent, approval, authorization
or order of any Delaware or Federal Court or governmental authority of
the State of Delaware or the United States of America is required for
the consummation by the MTB Trust on behalf of the Acquiring Fund, of
the transactions contemplated by this Agreement, except such as may be
required under the 1933 Act, the 1934 Act and the 0000 Xxx.
f) The MTB Trust is registered with the SEC as an investment
company, and to the knowledge of Counsel, no order has been issued or
proceeding instituted to suspend such registration.
g) To the knowledge of Counsel, (a) no litigation, administrative
proceeding, or investigation of or before any court or governmental
body is pending or threatened as to the MTB Trust (with respect to the
Acquiring Fund) or any of its properties or assets attributable or
allocable to the Acquiring Fund and (b) the Trust (with respect to the
Acquiring Fund) is not a party to or subject to the provisions of any
order, decree, or judgment of any court or governmental body that
materially and adversely affects the Acquiring Fund's business.
In rendering such opinion, Counsel may (i) rely, as to matters governed
by the laws of the State of Delaware, on an opinion of competent Delaware
counsel, (ii) make assumptions regarding the authenticity, genuineness,
and/or conformity of documents and copies thereof without independent
verification thereof, and other customary assumptions as the parties may
agree, (iii) limit such opinion to applicable federal and state law, (iv)
define the word "knowledge" and related terms to mean the knowledge of
attorneys then with such firm who have devoted substantive attention to
matters directly related to this Agreement and the Reorganization; and (v)
rely on certificates of officers or trustees of the MTB Trust, in each case
reasonably acceptable to the MTB Trust.
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 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 and all covenants of the Acquired Fund
contained in this Agreement shall have been complied with in all material
respects as of the 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 FBR 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.
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 FBR Trust.
7.3 The Acquiring Fund shall have received an opinion of Dechert LLP,
counsel to the FBR Trust ("Counsel"), substantially to the effect that:
a) The Acquired Fund is a validly existing series of the FBR Trust, a
statutory trust duly formed and validly existing and in good standing
under the laws of the State of Delaware with the power under its Trust
Instrument to carry on its business and to own all of its properties
and assets.
b) This Agreement (a) has been duly authorized and executed by the FBR
Trust on behalf of the Acquired Fund and (b) assuming due
authorization, execution, and delivery of this Agreement by the
Acquiring Fund, is a legal, valid and binding obligation of the
Acquired Fund, enforceable against the Acquired Fund in accordance with
its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, receivership, fraudulent
conveyance, moratorium or other laws of general application relating to
or affecting the enforcement of creditors' rights and remedies, as from
time to time in effect, (ii) application of equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and (iii) principles of course of
dealing or course of performance and standards of good faith, fair
dealing, materiality and reasonableness that may be applied by a court
to the exercise of rights and remedies.
c) All issued and outstanding shares of the Acquired Fund are duly
authorized and validly issued and outstanding and fully paid and
non-assessable (except as disclosed in the FBR Trust's then current
prospectus and statement of additional information).
d) The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not (a)
materially violate the FBR Trust's Trust Instrument or By-laws or any
provision of any agreement known to Counsel, to which the FBR Trust
(with respect to the Acquired Fund) is a party or by which it is bound
or (b) to the knowledge of Counsel, result in the acceleration of any
obligation, or the imposition of any penalty, under any agreement,
judgment, or decree known to Counsel to which the FBR Trust (with
respect to the Acquired Fund) is a party or by which it (with respect
to the Acquired Fund) is bound.
e) To the knowledge of Counsel, no consent, approval, authorization
or order of any Delaware or Federal Court or governmental authority of
the State of Delaware or the United States of America is required for
the consummation by the FBR Trust on behalf of the Acquired Fund, of
the transactions contemplated by this Agreement, except such as may be
required under the 1933 Act, the 1934 Act and the 0000 Xxx.
f) The FBR Trust is registered with the SEC as an investment
company, and to the knowledge of Counsel, no order has been issued or
proceeding instituted to suspend such registration.
g) To the knowledge of Counsel, (a) no litigation, administrative
proceeding, or investigation of or before any court or governmental
body is pending or threatened as to the FBR Trust (with respect to the
Acquired Fund) or any of its properties or assets attributable or
allocable to the Acquired Fund and (b) the FBR Trust (with respect to
the Acquired Fund) is not a party to or subject to the provisions of
any order, decree, or judgment of any court or governmental body that
materially and adversely affects the Acquired Fund's business.
In rendering such opinion, Counsel may (i) rely, as to matters governed
by the laws of the State of Delaware, on an opinion of competent Delaware
counsel, (ii) make assumptions regarding the authenticity, genuineness,
and/or conformity of documents and copies thereof without independent
verification thereof, and other customary assumptions as the parties may
agree, (iii) limit such opinion to applicable federal and state law, (iv)
define the word "knowledge" and related terms to mean the knowledge of
attorneys then with such firm who have devoted substantive attention to
matters directly related to this Agreement and the Reorganization; and (v)
rely on certificates of officers or trustees of the FBR Trust, in each case
reasonably acceptable to the FBR 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 FBR Trust's Trust Instrument
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 reorganized 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
9.1 MTB Investment Advisors, Inc. ("MTBIA"), on behalf of the
Acquiring Fund, and FBR Fund Advisers, Inc., on behalf of the Acquired Fund,
or their respective affiliates will pay all expenses associated with
Acquiring Fund's and Acquired Fund's, as the case may be, participation in
the Reorganization. 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. Registration fees
will be borne by the MTB Trust on an as-incurred basis.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The MTB Trust, on behalf of the Acquiring Fund, and the FBR
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
11.1 This Agreement may be terminated by the mutual agreement of the
MTB Trust and the FBR Trust. In addition, either the MTB Trust or the FBR
Trust 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 Trustees, as appropriate, that
the consummation of the transactions contemplated herein is not in the
best interest of the FBR Trust or the MTB Trust, respectively, and
notice given to the other party hereto.
The failure of the Acquired Fund to consummate the
transactions contemplated in this Agreement, or the FBR Virginia Tax-Free
Portfolio to consummate the transaction in its Agreement and Plan of
Reorganization with MTB Virginia Municipal Bond Fund, will not affect the
consummation of the Reorganization with respect to the other Acquired Fund.
11.2 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 MTB Trust, the FBR Trust, or their
respective Trustees or officers, to the other party or its Trustees or
officers.
ARTICLE XII
INDEMNIFICATION
12.1 FBR Fund Advisers, Inc. and Friedman, Billings, Xxxxxx Group,
Inc. (together, the "Indemnitors") agree to indemnify and hold harmless MTBIA
and the Acquiring Fund from and against any and all claims, demands, liens,
suits, causes of action, obligations, liabilities, damages, losses,
shareholder dilution, fees, penalties, expenses (including reasonable
attorneys' fees), fines, judgments, and orders resulting from or arising out
of, and costs associated with, the matter described under -- "Fund Manager -
Sub-Adviser" in the Fixed Income Prospectus dated February 28, 2005 of FBR
Trust, as it may be further amended or supplemented.
ARTICLE XIII
AMENDMENTS
13.1 This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the officers of the FBR
Trust and the MTB Trust as specifically authorized by their respective Board
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 XIV
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
14.1 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.
14.2 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
14.4 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.
14.5 It is expressly agreed that the obligations of the Acquiring
Fund shall not be binding upon any of the MTB Trust Trustees, shareholders,
nominees, officers, agents or employees of the MTB Trust personally, but
shall bind only the trust property of the Acquiring Fund as provided in the
Trust Instrument of the MTB Trust. The execution and delivery of this
Agreement have been authorized by the Trustees of the MTB Trust and signed by
authorized officers of the MTB Trust acting as such. Neither the
authorization of 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 MTB Trust's Trust
Instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all
as of the date first written above.
THE FBR FUNDS
on behalf of its portfolio, FBR Maryland
Tax-Free Portfolio
Name: /s/ Xxxxx X. Xxxxx
Title:_____________________Treasurer
MTB GROUP OF FUNDS
on behalf of its portfolio,
MTB Maryland Municipal Bond Fund
Name: /s/ Xxxxxx X. Xxxxxx
Title:Vice President
MTB INVESTMENT ADVISORS, INC.,
with respect to the agreement described
in Article IX, Section 9.1 of the
Agreement
Name: /s/ Xxxxxxx X. Xxxxx
Title:President and Chief Investment Officer
FBR FUND ADVISERS, INC.,
with respect to the agreements described
in Article IX, Section 9.1 and Article
XII, Section 12.1 of the Agreement
Name: /s/ W. Xxxx Xxxxxxx
Title:Senior Vice President and Assistant
Secretary
FRIEDMAN, BILLINGS, XXXXXX
GROUP, INC.,
with respect to the agreement described
in Article XII, Section 12.1 of the
Agreement
Name: /s/ Xxxxxxx X. Xxxxxxx
Title:President and Chief Operating Officer
B-15
Exhibit 4(b)
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this 13th day of January, 2006, by and between MTB Group of Funds, a
Delaware statutory trust, with its principal place of business at 0000
Xxxxxxxxx Xxxxx, Xxxxxxxxxx, XX, 00000 (the "MTB Trust"), with respect to MTB
Virginia Municipal Bond Fund (the "Acquiring Fund"), a newly-organized series
of the MTB Trust, and The FBR Funds, a Delaware statutory trust, with its
principal place of business at 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, XX
00000 (the "FBR Trust"), with respect to FBR Virginia Tax-Free Portfolio, a
series of the FBR Trust ("Acquired Fund" and, collectively with the Acquiring
Fund, the "Funds").
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 of the Acquiring Fund ("Acquiring Fund Shares"); (ii) the
assumption by the Acquiring Fund of the liabilities of the Acquired Fund; and
(iii) the distribution of the Acquiring Fund Shares to the holders of the
shares 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 Acquiring Fund and the Acquired Fund are a separate series
of the MTB Trust and the FBR Trust, respectively, and the MTB Trust and the
FBR Trust 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, the Acquiring Fund and the Acquired Fund are each authorized
to issue their shares of beneficial interest;
WHEREAS, the Trustees of the MTB 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 FBR 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 THE ASSUMPTION OF ACQUIRED FUNDS' LIABILITIES; 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 (i) deliver to the Acquired Fund the number of full and fractional
Acquiring Fund Shares equal to the number of full and fractional number of
shares of the Acquired Fund ("Acquired Fund Shares") outstanding at the
Closing Date, so that the net asset value per share of the Acquired Fund
Shares becomes the net asset value per share of the Acquiring Fund computed
in the manner and as of the time and date set forth in paragraph 2.2; and
(ii) to assume all of the liabilities of the Acquired Fund, as set forth in
paragraph 1.3. Holders of 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 all property, including,
without limitation, all cash, securities, commodities, interests in futures
and dividends or interest receivable, stock splits, settlement rights and
payments 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 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 endeavor to
discharge all of its liabilities and obligations prior to the Closing Date.
Notwithstanding the foregoing, any liabilities not so discharged shall be
assumed by the Acquiring Fund, which assumed liabilities shall include all of
such Acquired Fund's liabilities, debts, obligations, and duties of whichever
kind or nature, whether absolute, accrued, contingent, or otherwise, whether
or not determinable at the Closing Date, and whether or not specifically
referred to in this Agreement.
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 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 MTB Trust's Amended and Restated Agreement and Declaration of Trust
(the "Trust Instrument"), the Acquiring Fund's then current Prospectus and
Statement of Additional Information, and the MTB Trust's Pricing Committee
Procedures, 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 MTB Trust
Instrument, the Acquiring Fund's then current Prospectus and Statement of
Additional Information, and the MTB Trust's Pricing Committee Procedures, 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 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 the Acquired Fund by (b) the ratio computed by (x) dividing the net asset
value per share of the Acquired Fund by (y) the net asset value per share of
the Acquiring Fund 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 February 24,
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. The 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 business day after the
day when trading is fully resumed and reporting is restored, or such other
date(s) as the parties may agree to in writing.
3.4 TRANSFER AGENT'S CERTIFICATE. Integrated Fund Services, Inc., 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 Boston Financial Data Services, 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 MTB 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 FBR Trust, on behalf
of the Acquired Fund, represents and warrants to the MTB Trust, on behalf of
the Acquiring Fund, as follows:
q) 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 State of Delaware.
r) The FBR Trust is registered as an open-end management investment
company under the 1940 Act, and the FBR 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.
s) 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.
t) 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 FBR Trust's Trust Instrument 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.
u) 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.
v) 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 could
materially and adversely affect its business or its ability to
consummate the transactions contemplated herein.
w) The audited financial statements of the Acquired Fund as of October 31,
2005, 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 MTB Trust on
behalf of 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.
x) Since the date of the financial statements referred to in paragraph (g)
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 MTB Trust on behalf of the Acquiring
Fund. For the purposes of this paragraph (h), a decline in the net
asset value of the Acquired Fund shall not constitute a material
adverse change.
y) 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 to be due on such returns and reports have been paid or
provision shall have been made for the payment thereof. To the best of
the FBR Trust's knowledge, no such return is currently under audit, and
no assessment has been asserted with respect to such returns.
z) 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.
aa) 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 state of Delaware, 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.
bb) 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.
cc) 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.
dd) 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 FBR 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.
ee) 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.
ff) 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 Delaware law for the execution of this
Agreement by the FBR 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 Delaware 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 MTB Trust, on behalf
of the Acquiring Fund, represents and warrants to the FBR Trust, on behalf of
the Acquired Fund, as follows:
a) The Acquiring Fund is a legally designated, separate series of a
business trust, duly organized, validly existing and in good standing
under the laws of the State of Delaware.
b) The MTB Trust is registered as an open-end management investment
company under the 1940 Act, and the MTB 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 MTB Trust's
Trust Instrument 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
could materially and adversely affect its business or its ability to
consummate the transaction contemplated herein.
f) 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 to be 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.
g) Any issued and outstanding Acquiring Fund Shares prior to the Closing
Date represent the initial capital and 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.
h) 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.
i) Acquiring Fund Shares to be issued and delivered to the Acquired Fund
for the account of the Acquired Fund Shareholders pursuant to the terms
of this 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.
j) 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.
k) 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 MTB 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.
l) The Acquiring Fund will qualify as a RIC under the Code for its first
taxable year ending after the Closing Date.
m) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the 1934 Act, the 1940 Act or Delaware law
for the execution of this Agreement by the MTB Trust, for itself and on
behalf of the Acquiring Fund, or the performance of the Agreement by
the MTB 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 Delaware 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.
n) 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 Acquired Fund will operate its
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 FBR 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 FBR Trust's Treasurer.
5.7 PREPARATION OF REGISTRATION STATEMENT AND SCHEDULE 14A PROXY
STATEMENT. The MTB 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 of the Acquired Fund and a Prospectus of the Acquiring Fund
relating to the transactions 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.
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 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 and all covenants
of the Acquiring Fund contained in this Agreement shall have been complied
with in all material respects 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 MTB 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.
6.2 The Acquired Fund shall have received an opinion of Xxxx Xxxxx
LLP, counsel to the MTB Trust ("Counsel"), substantially to the effect that:
a) The Acquiring Fund is a validly existing series of the MTB Trust, a
statutory trust duly formed and validly existing and in good standing
under the laws of the State of Delaware with the power under its Trust
Instrument to carry on its business and to own all of its properties
and assets.
b) This Agreement (a) has been duly authorized and executed by the MTB
Trust on behalf of the Acquiring Fund and (b) assuming due
authorization, execution, and delivery of this Agreement by the
Acquired Fund, is a legal, valid and binding obligation of the
Acquiring Fund, enforceable against the Acquiring Fund in accordance
with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, receivership, fraudulent
conveyance, moratorium or other laws of general application relating to
or affecting the enforcement of creditors' rights and remedies, as from
time to time in effect, (ii) application of equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and (iii) principles of course of
dealing or course of performance and standards of good faith, fair
dealing, materiality and reasonableness that may be applied by a court
to the exercise of rights and remedies.
c) The Acquiring Fund's Shares to be issued and delivered to the
Acquired Fund Shareholders under this Agreement, assuming their due
delivery as contemplated by this Agreement, will be duly authorized and
validly issued and outstanding and fully paid and non-assessable
(except as disclosed in the MTB Trust's then current prospectus and
statement of additional information).
d) The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not (a)
materially violate the MTB Trust's Trust Instrument or By-laws or any
provision of any agreement known to Counsel, to which the MTB Trust
(with respect to the Acquiring Fund) is a party or by which it is bound
or (b) to the knowledge of Counsel, result in the acceleration of any
obligation, or the imposition of any penalty, under any agreement,
judgment, or decree known to Counsel to which the MTB Trust (with
respect to the Acquiring Fund) is a party or by which it (with respect
to the Acquiring Fund) is bound.
e) To the knowledge of Counsel, no consent, approval, authorization
or order of any Delaware or Federal Court or governmental authority of
the State of Delaware or the United States of America is required for
the consummation by the MTB Trust on behalf of the Acquiring Fund, of
the transactions contemplated by this Agreement, except such as may be
required under the 1933 Act, the 1934 Act and the 0000 Xxx.
f) The MTB Trust is registered with the SEC as an investment
company, and to the knowledge of Counsel, no order has been issued or
proceeding instituted to suspend such registration.
g) To the knowledge of Counsel, (a) no litigation, administrative
proceeding, or investigation of or before any court or governmental
body is pending or threatened as to the MTB Trust (with respect to the
Acquiring Fund) or any of its properties or assets attributable or
allocable to the Acquiring Fund and (b) the Trust (with respect to the
Acquiring Fund) is not a party to or subject to the provisions of any
order, decree, or judgment of any court or governmental body that
materially and adversely affects the Acquiring Fund's business.
In rendering such opinion, Counsel may (i) rely, as to matters governed
by the laws of the State of Delaware, on an opinion of competent Delaware
counsel, (ii) make assumptions regarding the authenticity, genuineness,
and/or conformity of documents and copies thereof without independent
verification thereof, and other customary assumptions as the parties may
agree, (iii) limit such opinion to applicable federal and state law, (iv)
define the word "knowledge" and related terms to mean the knowledge of
attorneys then with such firm who have devoted substantive attention to
matters directly related to this Agreement and the Reorganization; and (v)
rely on certificates of officers or trustees of the MTB Trust, in each case
reasonably acceptable to the MTB Trust.
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 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 and all covenants of the Acquired Fund
contained in this Agreement shall have been complied with in all material
respects as of the 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 FBR 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.
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 FBR Trust.
7.3 The Acquiring Fund shall have received an opinion of Dechert LLP,
counsel to the FBR Trust ("Counsel"), substantially to the effect that:
a) The Acquired Fund is a validly existing series of the FBR Trust, a
statutory trust duly formed and validly existing and in good standing
under the laws of the State of Delaware with the power under its Trust
Instrument to carry on its business and to own all of its properties
and assets.
b) This Agreement (a) has been duly authorized and executed by the FBR
Trust on behalf of the Acquired Fund and (b) assuming due
authorization, execution, and delivery of this Agreement by the
Acquiring Fund, is a legal, valid and binding obligation of the
Acquired Fund, enforceable against the Acquired Fund in accordance with
its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, receivership, fraudulent
conveyance, moratorium or other laws of general application relating to
or affecting the enforcement of creditors' rights and remedies, as from
time to time in effect, (ii) application of equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and (iii) principles of course of
dealing or course of performance and standards of good faith, fair
dealing, materiality and reasonableness that may be applied by a court
to the exercise of rights and remedies.
c) All issued and outstanding shares of the Acquired Fund are duly
authorized and validly issued and outstanding and fully paid and
non-assessable (except as disclosed in the FBR Trust's then current
prospectus and statement of additional information).
d) The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not (a)
materially violate the FBR Trust's Trust Instrument or By-laws or any
provision of any agreement known to Counsel, to which the FBR Trust
(with respect to the Acquired Fund) is a party or by which it is bound
or (b) to the knowledge of Counsel, result in the acceleration of any
obligation, or the imposition of any penalty, under any agreement,
judgment, or decree known to Counsel to which the FBR Trust (with
respect to the Acquired Fund) is a party or by which it (with respect
to the Acquired Fund) is bound.
e) To the knowledge of Counsel, no consent, approval, authorization
or order of any Delaware or Federal Court or governmental authority of
the State of Delaware or the United States of America is required for
the consummation by the FBR Trust on behalf of the Acquired Fund, of
the transactions contemplated by this Agreement, except such as may be
required under the 1933 Act, the 1934 Act and the 0000 Xxx.
f) The FBR Trust is registered with the SEC as an investment
company, and to the knowledge of Counsel, no order has been issued or
proceeding instituted to suspend such registration.
g) To the knowledge of Counsel, (a) no litigation, administrative
proceeding, or investigation of or before any court or governmental
body is pending or threatened as to the FBR Trust (with respect to the
Acquired Fund) or any of its properties or assets attributable or
allocable to the Acquired Fund and (b) the FBR Trust (with respect to
the Acquired Fund) is not a party to or subject to the provisions of
any order, decree, or judgment of any court or governmental body that
materially and adversely affects the Acquired Fund's business.
In rendering such opinion, Counsel may (i) rely, as to matters governed
by the laws of the State of Delaware, on an opinion of competent Delaware
counsel, (ii) make assumptions regarding the authenticity, genuineness,
and/or conformity of documents and copies thereof without independent
verification thereof, and other customary assumptions as the parties may
agree, (iii) limit such opinion to applicable federal and state law, (iv)
define the word "knowledge" and related terms to mean the knowledge of
attorneys then with such firm who have devoted substantive attention to
matters directly related to this Agreement and the Reorganization; and (v)
rely on certificates of officers or trustees of the FBR Trust, in each case
reasonably acceptable to the FBR 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 FBR Trust's Trust Instrument
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:
g) The transfer of all of the Acquired Fund's assets to the Acquiring Fund
in exchange for Acquiring Fund Shares and the assumption by the
Acquiring Fund of the liabilities of the Acquired Fund (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.
h) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund in exchange for Acquiring
Fund Shares and the assumption by the Acquiring Fund of the liabilities
of the Acquired Fund.
i) No gain or loss will be recognized by the Acquired Fund upon the
transfer of the Acquired Fund's assets to the Acquiring Fund in
exchange for Acquiring Fund Shares and the assumption by the Acquiring
Fund of the liabilities of the Acquired Fund or upon the distribution
(whether actual or constructive) of Acquiring Fund Shares to Acquired
Fund Shareholders in exchange for their Acquired Fund Shares.
j) No gain or loss will be recognized by any Acquired Fund Shareholder
upon the exchange of its Acquired Fund Shares for Acquiring Fund Shares.
k) 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.
l) 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 reorganized 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
9.1 MTB Investment Advisors, Inc ("MTBIA"), on behalf of the
Acquiring Fund, and FBR Fund Advisers, Inc., on behalf of the Acquired Fund,
or their respective affiliates will pay all expenses associated with
Acquiring Fund's and Acquired Fund's, as the case may be, participation in
the Reorganization. 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. Registration fees
will be borne by the MTB Trust on an as-incurred basis.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The MTB Trust, on behalf of the Acquiring Fund, and the FBR
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
11.1 This Agreement may be terminated by the mutual agreement of the
MTB Trust and the FBR Trust. In addition, either the MTB Trust or the FBR
Trust may at its option terminate this Agreement at or before the Closing
Date due to:
d) 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;
e) 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
f) a determination by a party's Board of Trustees, as appropriate, that
the consummation of the transactions contemplated herein is not in the
best interest of the FBR Trust or the MTB Trust, respectively, and
notice given to the other party hereto.
The failure of the Acquired Fund to consummate the transactions
contemplated in this Agreement, or the FBR Maryland Tax-Free Portfolio to
consummate the transaction in its Agreement and Plan of Reorganization with
MTB Maryland Municipal Bond Fund, will not affect the consummation of the
Reorganization with respect to the other Acquired Fund.
11.2 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 MTB Trust, the FBR Trust, or their
respective Trustees or officers, to the other party or its Trustees or
officers.
ARTICLE XII
INDEMNIFICATION
12.1 FBR Fund Advisers, Inc. and Friedman, Billings, Xxxxxx Group,
Inc. (together, the "Indemnitors") agree to indemnify and hold harmless MTBIA
and the Acquiring Fund from and against any and all claims, demands, liens,
suits, causes of action, obligations, liabilities, damages, losses,
shareholder dilution, fees, penalties, expenses (including reasonable
attorneys' fees), fines, judgments, and orders resulting from or arising out
of, and costs associated with, the matter described under -- "Fund Manager -
Sub-Adviser" in the Fixed Income Prospectus dated February 28, 2005 of FBR
Trust, as it may be further amended or supplemented.
ARTICLE XIII
AMENDMENTS
13.1 This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the officers of the FBR
Trust and the MTB Trust as specifically authorized by their respective Board
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 XIV
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
14.1 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.
14.2 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
14.4 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.
14.5 It is expressly agreed that the obligations of the Acquiring Fund
shall not be binding upon any of the MTB Trust Trustees, shareholders,
nominees, officers, agents or employees of the MTB Trust personally, but
shall bind only the trust property of the Acquiring Fund as provided in the
Trust Instrument of the MTB Trust. The execution and delivery of this
Agreement have been authorized by the Trustees of the MTB Trust and signed by
authorized officers of the MTB Trust acting as such. Neither the
authorization of 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 MTB Trust's Trust
Instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all
as of the date first written above.
THE FBR FUNDS
on behalf of its portfolio, FBR Virginia
Tax-Free Portfolio
Name: /s/ Xxxxx X. Xxxxx
Title:Treasurer
MTB GROUP OF FUNDS
on behalf of its portfolio,
MTB Virginia Municipal Bond Fund
Name: /s/ Xxxxxx X. Xxxxxx
Title:Vice President
MTB INVESTMENT ADVISORS, INC.,
with respect to the agreement described
in Article IX, Section 9.1 of the
Agreement
Name: /s/ Xxxxxxx X. Xxxxx
Title:President and Chief Investment Officer
FBR FUND ADVISERS, INC.,
with respect to the agreements described
in Article IX, Section 9.1 and Article
XII, Section 12.1 of the Agreement
Name: /s/ W. Xxxx Xxxxxxx
Title:Senior Vice President and Assistant
Secretary
FRIEDMAN, BILLINGS, XXXXXX
GROUP, INC.,
with respect to the agreement described
in Article XII, Section 12.1 of the
Agreement
Name: /s/ Xxxxxxx X. Xxxxxxx
Title: President and Chief Operating Officer
