EXHIBIT A
AGREEMENTS AND PLANS OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
FEDERATED MUNICIPAL SECURITIES INCOME TRUST
WITH RESPECT TO FEDERATED NEW YORK MUNICIPAL
INCOME FUND
AND
SENTINEL GROUP OF FUNDS, INC.
WITH RESPECT TO SENTINEL NEW YORK TAX-FREE
INCOME FUND
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of this
20th day of June 2006, by and between FEDERATED MUNICIPAL SECURITIES INCOME
TRUST, a Massachusetts business trust, with its principal place of business at
0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, XX, 00000 (the "Federated Trust"), with
respect to its FEDERATED NEW YORK MUNICIPAL INCOME FUND, a series of the
Federated Trust (the "Acquiring Fund"), and SENTINEL GROUP OF FUNDS, INC., a
Maryland corporation, with its principal place of business at One National Life
Drive, Montpelier, VT 05604 (the "Corporation"), with respect to its SENTINEL
NEW YORK TAX-FREE INCOME FUND, a series of the Corporation (the "Acquired Fund"
and, collectively with the Acquiring Fund, the "Funds").
RECITALS
This Agreement is intended to be, and is adopted as, a plan of reorganization
within the meaning of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Internal Revenue Code of
1986, as amended (the "Code") and the Treasury Regulations promulgated
thereunder. The reorganization will consist of: (i) the transfer of all of the
assets of the Acquired Fund (other than the assets of the Acquired Fund reserved
to discharge its liabilities in accordance with Section 1.3 of this Agreement)
in exchange for Class A Shares, no par value per share, of the Acquiring Fund
("Acquiring Fund Shares"); and (ii) the distribution of Acquiring Fund Shares to
the holders of 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, each of the Acquiring Fund and the Acquired Fund is a separate series
of the Federated Trust and the Corporation, respectively, the Federated Trust
and the Corporation are open-end, registered management investment companies and
the Acquired Fund owns securities that generally are assets of the character in
which the Acquiring Fund is permitted to invest;
WHEREAS, each of the Acquiring Fund and the Acquired Fund is authorized to issue
its respective shares of beneficial interest;
WHEREAS, the Trustees of the Federated 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; and
WHEREAS, the Directors of the Corporation have determined that the
Reorganization, with respect to the Acquired Fund, is in the best interests of
the Acquired Fund and that the interests of the existing shareholders of the
Acquired Fund will not be diluted as a result of the Reorganization.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
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 (other than the assets of the
Acquired Fund reserved to discharge its liabilities in accordance with Section
1.3 of this Agreement), as set forth in paragraph 1.2, to the Acquiring Fund. In
exchange, the Acquiring Fund agrees: (i) to deliver to the Acquired Fund the
number of full and fractional Acquiring Fund Shares, determined by (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 Class A Shares of the Acquiring Fund. Such
transactions shall take place at the closing on the Closing Date provided for in
paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The assets of the Acquired Fund to be acquired
by the Acquiring Fund shall consist of property having a value equal to the
total net assets of the Acquired Fund, including, without limitation, cash,
securities, commodities, interests in futures and dividends or interest
receivable, owned by the Acquired Fund and any deferred or prepaid expenses
shown as an asset on the books of the Acquired Fund on the Closing Date.
The Acquired Fund has provided the Acquiring Fund with its most recent
audited financial statements, which contain a list of all of the Acquired Fund's
assets as of the date of such statements. The Acquired Fund hereby represents
that as of the date of the execution of this Agreement, there have been no
material changes in its financial position as reflected in such financial
statements other than as the result of changes in the market values of
securities or otherwise occurring in the ordinary course of business in
connection with the purchase and sale of securities, the issuance and redemption
of Acquired Fund shares and the payment of normal operating expenses, dividends
and capital gains distributions.
1.3 LIABILITIES TO BE DISCHARGED. The Acquired Fund will (a) discharge, or
make provision for the discharge of, all of its known liabilities and
obligations, and (b) make provision for the assumption of all of its unknown
liabilities and obligations by Sentinel Asset Management, Inc., in each case
prior to the Closing Date. It is understood and agreed by the parties that the
Acquiring Fund shall not assume any of the Acquired Fund's liabilities and
obligations, whether known or unknown.
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 equal
in value to the aggregate net asset value of the Acquired Fund Shares will be
issued simultaneously to the Acquired Fund and will be distributed to the
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
Federated Trust's Declaration of Trust and the Acquiring Fund's then current
prospectus and statement of additional information or such other valuation
procedures as shall be mutually agreed upon by the parties.
2.2 VALUATION OF SHARES. The net asset value per share of Acquiring Fund
Shares shall be the net asset value per share computed at the closing on the
Closing Date, using the valuation procedures set forth in the Federated Trust's
Declaration of Trust and the Acquiring Fund's then current prospectus and
statement of additional information, or such other valuation procedures as shall
be mutually agreed upon by the parties.
2.3 SHARES TO BE ISSUED. The number of Acquiring Fund Shares to be issued
(including fractional shares, if any) in exchange for the Acquired Fund's
assets, shall be determined 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 Shares determined in accordance with paragraph 2.2.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by
State Street Bank and Trust Company, on behalf of the Acquiring Fund and the
Acquired Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing shall occur on or about October 13, 2006, or
such other date(s) as the parties may agree to in writing (the "Closing Date").
All acts taking place at the closing shall be deemed to take place at 4:00 p.m.
Eastern Time on the Closing Date unless otherwise provided herein. The closing
shall be held at the offices of Federated Services Company, 0000 Xxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000, or at such other time and/or place as the
parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. State Street Bank and Trust Company, as
custodian for the Acquired Fund (the "Custodian"), shall deliver at the Closing
a certificate of an authorized officer stating that: (a) the Acquired Fund's
portfolio securities, cash, and any other assets have been delivered in proper
form to the Acquiring Fund on the Closing Date; and (b) all necessary taxes
including all applicable federal and state stock transfer stamps, if any, shall
have been paid, or provision for payment shall have been made, in conjunction
with the delivery of portfolio securities by the Acquired Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on the scheduled
Closing Date, either: (a) the New York Stock Exchange ("NYSE") or another
primary exchange on which the portfolio securities of the Acquiring Fund or the
Acquired Fund are purchased or sold, shall be closed to trading or trading on
such exchange shall be restricted; or (b) trading or the reporting of trading on
the NYSE or elsewhere shall be disrupted so that accurate appraisal of the value
of the net assets of the Acquiring Fund or the Acquired Fund is impracticable,
the Closing Date shall be postponed until the first business day after the day
when trading is fully resumed and reporting is restored.
3.4 TRANSFER AGENT'S CERTIFICATE. Sentinel Administrative 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 State Street Bank and Trust Company, its transfer agent, to issue and
deliver a confirmation evidencing Acquiring Fund Shares to be credited on the
Closing Date to the Secretary of the Corporation or provide evidence
satisfactory to the Acquired Fund that the Acquiring Fund Shares have been
credited to the Acquired Fund's account on the books of the Acquiring Fund. At
the Closing, each party shall deliver to the other such bills of sale, checks,
assignments, share certificates, receipts, officers certificates, transfer agent
certificates, custodian certificates, opinions, and other certificates and
documents, if any, as such other party or its counsel may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE ACQUIRED FUND. The Corporation, on behalf of the
Acquired Fund, represents and warrants to the Federated Trust, on behalf of the
Acquiring Fund, as follows:
a) The Acquired Fund is a legally designated, separate series of a
corporation duly organized, validly existing, and in good standing
under the laws of Maryland.
b) The Corporation is registered as an open-end management investment
company under the 1940 Act, and the Corporation's registration with
the Securities and Exchange Commission (the "Commission") as an
investment company under the 1940 Act is in full force and effect.
c) The current prospectus and statement of additional information of the
Acquired Fund conform in all material respects to the applicable
requirements of the Securities Act of 1933 (the "1933 Act") and the
1940 Act, and the rules and regulations thereunder, and do not include
any untrue statement of a material fact or omit to state any material
fact required to be stated or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
d) The Acquired Fund is not in violation, and the execution, delivery,
and performance of this Agreement (subject to shareholder approval)
will not result in a violation, of any provision of the Corporation's
Articles of Incorporation or By-Laws or of any material agreement,
indenture, instrument, contract, lease, or other undertaking to which
the Acquired Fund is a party or by which it is bound.
e) The Acquired Fund has no material contracts or other commitments
(other than this Agreement) that will be terminated with liability to
it before the Closing Date, except for liabilities, if any, to be
discharged as provided in paragraph 1.3 hereof.
f) Except as otherwise disclosed in writing to and accepted by the
Acquiring Fund, no litigation, administrative proceeding, or
investigation by or before any court or governmental body is presently
pending or to its knowledge threatened against the Acquired Fund or
any of its properties or assets, which, if adversely determined, would
materially and adversely affect its financial condition, the conduct
of its business, or the ability of the Acquired Fund to carry out the
transactions contemplated by this Agreement. The Acquired Fund knows
of no facts that might form the basis for the institution of such
proceedings and is not a party to or subject to the provisions of any
order, decree, or judgment of any court or governmental body that
materially and adversely affects its business or its ability to
consummate the transactions contemplated herein.
g) The financial statements of the Acquired Fund as of November 30, 2005,
and for the fiscal year then ended have been prepared in accordance
with generally accepted accounting principles, and audited by
PricewaterhouseCoopers LLP, independent registered public accountants,
and such statements (copies of which have been furnished to the
Acquiring Fund) fairly reflect the financial condition of the Acquired
Fund as of such date, and there are no known contingent liabilities of
the Acquired Fund as of such date that are not disclosed in such
statements.
h) 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 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 prior to the date hereof have been filed
(and all federal and other tax returns and reports of the Acquired
Fund required by law to be filed from and after the date hereof to the
Closing Date will be filed), and all federal and other taxes shown due
on such returns and reports have been (or will be) paid, or provision
shall have been made for the payment thereof. To the best of the
Acquired Fund's knowledge, no such return is currently under audit,
and no assessment has been asserted with respect to such returns.
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 of
which the Acquiring Fund has received notice, and, upon delivery and
payment for such assets, and the filing of any articles, certificates
or other documents under the laws of Maryland, the Acquiring Fund will
acquire good and marketable title, subject to no restrictions on the
full transfer of such assets, other than such restrictions as might
arise under the 1933 Act, and other than as disclosed to and accepted
by the Acquiring Fund.
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 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 comply in
all material respects with federal securities and other laws and
regulations and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated or
necessary to make the statements, in light of the circumstances under
which such statements were made, not misleading.
n) 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.
o) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the Securities Exchange Act of 1934 (the
"1934 Act"), the 1940 Act or Maryland law for the execution of this
Agreement by the Corporation, for itself and on behalf of the Acquired
Fund, except for the effectiveness of the Registration Statement, and
the filing of any articles, certificates or other documents that may
be required under Maryland law, and except for such other consents,
approvals, authorizations and filings as have been made or received,
and such consents, approvals, authorizations and filings as may be
required subsequent to the Closing Date, it being understood, however,
that this Agreement and the transactions contemplated herein must be
approved by the shareholders of the Acquired Fund as described in
paragraph 5.2.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Federated Trust, on behalf
of the Acquiring Fund, represents and warrants to the Corporation 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 Massachusetts.
b) The Federated Trust is registered as an open-end management investment
company under the 1940 Act, and the Federated 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 in violation, and the execution, delivery
and performance of this Agreement will not result in a violation, of
the Federated Trust's Declaration of Trust or By-Laws or of any
material agreement, indenture, instrument, contract, lease, or other
undertaking to which the Acquiring Fund is a party or by which it is
bound.
e) Except as otherwise disclosed in writing to and accepted by the
Acquired Fund, no litigation, administrative proceeding or
investigation by or before any court or governmental body is presently
pending or to its knowledge threatened against the Acquiring Fund or
any of its properties or assets, which, if adversely determined, would
materially and adversely affect its financial condition, the conduct
of its business or the ability of the Acquiring Fund to carry out the
transactions contemplated by this Agreement. The Acquiring Fund knows
of no facts that might form the basis for the institution of such
proceedings and it is not a party to or subject to the provisions of
any order, decree, or judgment of any court or governmental body that
materially and adversely affects its business or its ability to
consummate the transaction contemplated herein.
f) The financial statements of the Acquiring Fund as of August 31, 2005
and for the fiscal year then ended have been prepared in accordance
with generally accepted accounting principles, and audited by Deloitte
& Touche LLP, independent registered public accountants, and such
statements (copies of which have been furnished to the Acquired Funds)
fairly reflect the financial condition of the Acquiring Fund as of
such date, and there are no known contingent liabilities of the
Acquiring Fund as of such date that are not disclosed in such
statements.
g) The unaudited financial statements of the Acquiring Fund as of
February 28, 2006, and for the six months then ended have been
prepared in accordance with generally accepted accounting principles,
and such statements (copies of which have been furnished to the
Acquired Fund) fairly reflect the financial condition of the Acquiring
Fund as of such date, and there are no known contingent liabilities of
the Acquiring Fund as of such date that are not disclosed in such
statements.
h) Since the date of the financial statements referred to in paragraph
(g) above, there have been no material adverse changes in the
Acquiring Fund's financial condition, assets, liabilities or business
(other than changes occurring in the ordinary course of business), or
any incurrence by the Acquiring Fund of indebtedness maturing more
than one year from the date such indebtedness was incurred, except as
otherwise disclosed to and accepted by the Acquired Fund. For the
purposes of this paragraph (h), a decline in the net asset value of
the Acquiring Fund shall not constitute a material adverse change.
i) All federal and other tax returns and reports of the Acquiring Fund
required by law to be filed prior to the date hereof have been filed
(and all federal and other tax returns and reports of the Acquiring
Fund required by law to be filed from and after the date hereof to the
Closing Date will be filed), and all federal and other taxes shown due
on such returns and reports have been (or will be) paid, or provision
shall have been made for the payment thereof. To the best of the
Acquiring Fund's knowledge, no such return is currently under audit,
and no assessment has been asserted with respect to such returns.
j) All issued and outstanding Acquiring Fund Shares are duly and validly
issued and outstanding, fully paid and non-assessable by the Acquiring
Fund. The Acquiring Fund has no outstanding options, warrants, or
other rights to subscribe for or purchase any Acquiring Fund Shares,
and there are no outstanding securities convertible into any Acquiring
Fund Shares.
k) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the Acquiring
Fund, and this Agreement constitutes a valid and binding obligation of
the Acquiring Fund, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors' rights and to general equity
principles.
l) Acquiring Fund Shares to be issued and delivered to the Acquired Fund
for the account of the Acquired Fund Shareholders pursuant to the
terms of this Agreement will, at the Closing Date, have been duly
authorized. When so issued and delivered, such shares will be duly and
validly issued Acquiring Fund Shares, and will be fully paid and
non-assessable.
m) The information to be furnished by the Acquiring Fund for use in
no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in
connection with the transactions contemplated herein shall comply in
all material respects with federal securities and other laws and
regulations and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated or
necessary to make the statements, in light of the circumstances under
which such statements were made, not misleading.
n) 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.
o) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the 1934 Act, the 1940 Act or
Massachusetts law for the execution of this Agreement by the Federated
Trust, for itself and on behalf of the Acquiring Fund, or the
performance of the Agreement by the Federated Trust, for itself and on
behalf of the Acquiring Fund, except for the effectiveness of the
Registration Statement, and the filing of any articles, certificates
or other documents that may be required under Massachusetts law, and
such other consents, approvals, authorizations and filings as have
been made or received, and except for such consents, approvals,
authorizations and filings as may be required subsequent to the
Closing Date.
p) The Acquiring Fund agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act,
and any state Blue Sky or securities laws as it may deem appropriate
in order to continue its operations after the Closing Date.
ARTICLE V
COVENANTS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
5.1 OPERATION IN ORDINARY COURSE. The Acquiring Fund and the Acquired Fund
will each operate its respective business in the ordinary course between the
date of this Agreement and the Closing Date, it being understood that such
ordinary course of business will include customary dividends and shareholder
purchases and redemptions.
5.2 APPROVAL OF SHAREHOLDERS. The Corporation will call a special meeting
of the Acquired Fund Shareholders to consider and act upon this Agreement and to
take all other appropriate action necessary to obtain approval of the
transactions contemplated herein.
5.3 INVESTMENT REPRESENTATION. The Acquired Fund covenants that the
Acquiring Fund Shares to be issued pursuant to this Agreement are not being
acquired for the purpose of making any distribution, other than in connection
with the Reorganization and in accordance with the terms of this Agreement.
5.4 ADDITIONAL INFORMATION. The Acquired Fund will assist the Acquiring
Fund in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Acquired Fund's shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the
Acquiring Fund and the Acquired Fund will each take or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, including any actions required to be taken after the Closing Date.
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in
any case within sixty days after the Closing Date, the Acquired Fund shall
furnish the Acquiring Fund, in such form as is reasonably satisfactory to the
Acquiring Fund, a statement of the earnings and profits of the Acquired Fund for
federal income tax purposes that will be carried over by the Acquiring Fund as a
result of Section 381 of the Code. Such statement will be certified by the
Corporation's Treasurer.
5.7 PREPARATION OF REGISTRATION STATEMENT AND SCHEDULE 14A PROXY STATEMENT.
The Federated Trust will review and file with the Commission a registration
statement on Form N-14 relating to the Acquiring Fund Shares to be issued to
shareholders of the Acquired Fund (the "Registration Statement"). The
Registration Statement on Form N-14 shall include a proxy statement and a
prospectus of the Acquiring Fund relating to the transaction contemplated by
this Agreement. The Registration Statement shall be in compliance with the 1933
Act, the 1934 Act and the 1940 Act, as applicable. Each party will provide the
other party with the materials and information necessary to prepare the
registration statement on Form N-14 (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 On or before the Closing Date, the Acquired Fund shall have declared
and paid a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to its shareholders all of the
Acquired Fund's investment company taxable income (computed without regard to
any deduction for dividends paid), if any, plus the excess, if any, of its
interest income excludible from gross income under Section 103(a) of the Code
over its deductions disallowed under Sections 265 and 171(a)(2) of the Code for
all taxable periods or years ending on or before the Closing Date, and all of
its net capital gains realized (after reduction for any capital loss carry
forward), if any, in all taxable periods or years ending on or before the
Closing Date.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRED FUND
6.1 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:
6.2 All representations, covenants, and warranties of the Acquiring Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of the Closing Date. The Acquiring Fund shall have
delivered to the Acquired Fund a certificate executed in the Acquiring Fund's
name by the Federated Trust's President or Vice President and its Treasurer or
Assistant Treasurer, in form and substance satisfactory to the Acquired Fund and
dated as of the Closing Date, to such effect and as to such other matters as the
Acquired Fund shall reasonably request.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRING FUND
7.1 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:
7.2 All representations, covenants, and warranties of the Acquired Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of such Closing Date. The Acquired Fund shall have
delivered to the Acquiring Fund on such Closing Date a certificate executed in
the Acquired Fund's name by the Corporation's President or Vice President and
its Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Acquiring Fund and dated as of such Closing Date, to such effect and as to such
other matters as the Acquiring Fund shall reasonably request.
7.3 The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities, together with a list of
the Acquired Fund's portfolio securities showing the tax costs of such
securities by lot and the holding periods of such securities, as of the Closing
Date, certified by the Treasurer of the Corporation.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE
ACQUIRING FUND AND ACQUIRED FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein, with respect
to the Acquired Fund, shall have been approved by the requisite vote of the
holders of the outstanding shares of the Acquired Fund in accordance with
applicable law and the provisions of the Corporation's Articles of Incorporation
and By-Laws. Certified copies of the resolutions evidencing such approval shall
have been delivered to the Acquiring Fund. Notwithstanding anything herein to
the contrary, neither the Acquiring Fund nor the Acquired Fund may waive the
conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the Commission shall not have issued an
unfavorable report under Section 25(b) of the 1940 Act, or instituted any
proceeding seeking to enjoin the consummation of the transactions contemplated
by this Agreement under Section 25(c) of the 1940 Act. Furthermore, no action,
suit or other proceeding shall be threatened or pending before any court or
governmental agency in which it is sought to restrain or prohibit, or obtain
damages or other relief in connection with this Agreement or the transactions
contemplated herein.
8.3 All required consents of other parties and all other consents, orders,
and permits of federal, state and local regulatory authorities (including those
of the Commission and of State securities authorities, including any necessary
"no-action" positions and exemptive orders from such federal and state
authorities) to permit consummation of the transactions contemplated herein
shall have been obtained, except where failure to obtain any such consent,
order, or permit would not involve a risk of a material adverse effect on the
assets or properties of the Acquiring Fund or the Acquired Fund, provided that
either party hereto may waive any such conditions for itself.
8.4 The Registration Statement shall have become effective under the 1933
Act, and no stop orders suspending the effectiveness thereof shall have been
issued. To the best knowledge of the parties to this Agreement, no investigation
or proceeding for that purpose shall have been instituted or be pending,
threatened or contemplated under the 0000 Xxx.
8.5 The parties shall have received an opinion of Xxxx Xxxxx LLP
substantially to the effect that for federal income tax purposes:
a) The transfer of all of the assets of the Acquired Fund (other than the
assets of the Acquired Fund reserved to discharge its liabilities in
accordance with Section 1.3 of this Agreement) 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 Xxxx Xxxxx LLP may reasonably request, and the
Acquired Fund and Acquiring Fund will cooperate to make and certify
the accuracy of such representations. 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.
8.6 All conditions under the Agreement, dated June 20, 2006, by and among
Federated Investors, Inc., Sentinel Asset Management, Inc. and NLV Financial
(the "Purchase Agreement") to Closing (as defined in the Purchase Agreement)
shall have been or concurrently be satisfied or waived as contemplated by the
Purchase Agreement.
ARTICLE IX
EXPENSES
On or before the Closing, unless otherwise agreed by Federated Investment
Management Company and the adviser to the Acquired Fund, Federated Investment
Management Company or its affiliates will pay all expenses associated with
Acquiring Fund's and Acquired Fund's participation in the Reorganization (and,
except as provided in the following proviso, in no event shall the Acquiring
Fund or Acquired Fund bear such expenses), provided, however, that Acquiring
Fund shall bear expenses associated with the qualification of Acquiring Fund
Shares for sale in the various states. Reorganization expenses include, without
limitation: (a) expenses associated with the preparation and filing of the Proxy
Materials; (b) postage; (c) printing; (d) accounting fees; (e) legal fees
incurred by each Fund; (f) solicitation costs of the transaction; and (g) other
related administrative or operational costs.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF
WARRANTIES
10.1 The Federated Trust, on behalf of the Acquiring Fund, and the
Corporation, on behalf of the Acquired Fund, agree that neither party has made
to the other party any representation, warranty and/or covenant not set forth
herein, and that this Agreement constitutes the entire agreement between the
parties.
10.2 Except as specified in the next sentence set forth in this paragraph
10.2, the representations, warranties, and covenants contained in this Agreement
or in any document delivered pursuant to or in connection with this Agreement,
shall not survive the consummation of the transactions contemplated hereunder.
The covenants to be performed after the Closing Date, shall continue in effect
beyond the consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
This Agreement may be terminated by the mutual agreement of the Federated
Trust and the Corporation. In addition, either the Federated Trust or the
Corporation may at its option terminate this Agreement at or before the Closing
Date due to:
a) a breach by the other of any representation, warranty, or agreement
contained herein to be performed at or before the Closing Date, if not cured
within 30 days;
b) a condition herein expressed to be precedent to the obligations of the
terminating party that has not been met and it reasonably appears that it will
not or cannot be met; or
c) a determination by a party's Board of Trustees or Board of Directors, as
appropriate, that the consummation of the transactions contemplated herein is
not in the best interest of the Federated Trust or Corporation, respectively,
and notice given to the other party hereto.
In the event of any such termination, in the absence of willful default,
there shall be no liability for damages on the part of any of the Acquiring
Fund, the Federated Trust, the Acquired Fund, the Corporation, or their
respective trustees, directors or officers, to the other party or its trustees,
directors or officers.
ARTICLE XII
AMENDMENTS
This Agreement may be amended, modified, or supplemented in such manner as
may be mutually agreed upon in writing by the officers of the Corporation and
the Federated Trust as specifically authorized by its Board of Directors and
Board of Trustees, respectively; provided, however, that following the meeting
of the Acquired Fund Shareholders called by the Acquired Fund pursuant to
paragraph 5.2 of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of Acquiring Fund Shares to
be issued to the Acquired Fund Shareholders under this Agreement to the
detriment of such shareholders without their further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW;
ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania, without regard to the conflict of
laws rules of that or any other jurisdiction.
13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but, except as provided in
this paragraph, no assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
13.5 It is expressly agreed that the obligations of the Acquiring Fund
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents, or employees of the Federated Trust personally, but shall bind
only the Trust property of the Acquiring Fund, as provided in the Federated
Trust's Declaration of Trust. The execution and delivery of this Agreement have
been authorized by the Trustees of the Federated Trust on behalf of the
Acquiring Fund and signed by authorized officers of the Federated Trust, acting
as such. Neither the authorization by such Trustees nor the execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the Trust property of the Acquiring Fund as provided in the Federated
Trust's Declaration of Trust.
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as
of the date first written above.
SENTINEL GROUP FUNDS, INC.
on behalf of its portfolio,
SENTINEL NEW YORK TAX-FREE INCOME FUND
/s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx,
Secretary
FEDERATED MUNICIPAL SECURITIES INCOME TRUST
on behalf of its portfolio,
FEDERATED NEW YORK MUNICIPAL INCOME FUND
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx,
Treasurer
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
FEDERATED MUNICIPAL SECURITIES INCOME TRUST
WITH RESPECT TO FEDERATED PENNSYLVANIA
MUNICIPAL INCOME FUND
AND
SENTINEL PENNSYLVANIA TAX-FREE TRUST
THIS AGREEMENT AND PLAN OF
REORGANIZATION (the "Agreement") is made as
of this 20th day of June 2006, by and
between FEDERATED MUNICIPAL SECURITIES
INCOME TRUST, a Massachusetts business
trust, with its principal place of business
at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, XX
00000 (the "Federated Trust"), with respect
to its FEDERATED PENNSYLVANIA MUNICIPAL
INCOME FUND, a series of the Federated Trust
(the "Acquiring Fund"), and SENTINEL
PENNSYLVANIA TAX-FREE TRUST, a Pennsylvania
business trust, with its principal place of
business at One National Life Drive,
Montpelier, VT 05604 (the "Acquired Fund"
and, collectively with the Acquiring Fund,
the "Funds").
RECITALS
This Agreement is intended to be, and
is adopted as, a plan of reorganization
within the meaning of Xxxxxxx 000 xx xxx
Xxxxxx Xxxxxx Internal Revenue Code of 1986,
as amended (the "Code") and the Treasury
Regulations promulgated thereunder. The
reorganization will consist of: (i) the
transfer of all of the assets of the
Acquired Fund (other than the assets of the
Acquired Fund reserved to discharge its
liabilities in accordance with Section 1.3
of this Agreement) in exchange for Class A
Shares, no par value per share, of the
Acquiring Fund ("Acquiring Fund Shares");
and (ii) the distribution of Acquiring Fund
Shares to the holders of 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 is a
separate series of the Federated Trust, the
Federated Trust and the Acquired Fund are
open-end, registered management investment
companies and the Acquired Fund owns
securities that generally are assets of the
character in which the Acquiring Fund is
permitted to invest;
WHEREAS, each of the Acquiring Fund
and the Acquired Fund is authorized to issue
its respective shares of beneficial interest;
WHEREAS, the Trustees of the Federated
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; and
WHEREAS, the Trustees of the Acquired
Fund have determined that the
Reorganization, with respect to the Acquired
Fund, is in the best interests of the
Acquired Fund and that the interests of the
existing shareholders of the Acquired Fund
will not be diluted as a result of the
Reorganization.
AGREEMENT
NOW, THEREFORE, in consideration of
the premises and of the covenants and
agreements hereinafter set forth, the
parties hereto covenant and agree as follows:
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
(other than the assets of the Acquired Fund
reserved to discharge its liabilities in
accordance with Section 1.3 of this
Agreement), as set forth in paragraph 1.2,
to the Acquiring Fund. In exchange, the
Acquiring Fund agrees: (i) to deliver to
the Acquired Fund the number of full and
fractional Acquiring Fund Shares, determined
by (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 Class A Shares of the Acquiring
Fund. Such transactions shall take place at
the closing on the Closing Date provided for
in paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The
assets of the Acquired Fund to be acquired
by the Acquiring Fund shall consist of
property having a value equal to the total
net assets of the Acquired Fund, including,
without limitation, cash, securities,
commodities, interests in futures and
dividends or interest receivable, owned by
the Acquired Fund and any deferred or
prepaid expenses shown as an asset on the
books of the Acquired Fund on the Closing
Date.
The Acquired Fund has provided the
Acquiring Fund with its most recent audited
financial statements, which contain a list
of all of the Acquired Fund's assets as of
the date of such statements. The Acquired
Fund hereby represents that as of the date
of the execution of this Agreement, there
have been no material changes in its
financial position as reflected in such
financial statements other than as the
result of changes in the market values of
securities or otherwise occurring in the
ordinary course of business in connection
with the purchase and sale of securities,
the issuance and redemption of Acquired Fund
shares and the payment of normal operating
expenses, dividends and capital gains
distributions.
1.3 LIABILITIES TO BE DISCHARGED.
The Acquired Fund will (a) discharge, or
make provision for the discharge of, all of
its known liabilities and obligations, and
(b) make provision for the assumption of all
of its unknown liabilities and obligations
by Sentinel Asset Management, Inc., in each
case prior to the Closing Date. It is
understood and agreed by the parties that
the Acquiring Fund shall not assume any of
the Acquired Fund's liabilities and
obligations, whether known or unknown.
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 equal in value
to the aggregate net asset value of the
Acquired Fund Shares will be issued
simultaneously to the Acquired Fund and will
be distributed to the 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 Federated Trust's
Declaration of Trust and the Acquiring
Fund's then current prospectus and statement
of additional information or such other
valuation procedures as shall be mutually
agreed upon by the parties.
2.2 VALUATION OF SHARES. The net
asset value per share of Acquiring Fund
Shares shall be the net asset value per
share computed at the closing on the Closing
Date, using the valuation procedures set
forth in the Federated Trust's Declaration
of Trust and the Acquiring Fund's then
current prospectus and statement of
additional information, or such other
valuation procedures as shall be mutually
agreed upon by the parties.
2.3 SHARES TO BE ISSUED. The number
of Acquiring Fund Shares to be issued
(including fractional shares, if any) in
exchange for the Acquired Fund's assets,
shall be determined 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 Shares determined in
accordance with paragraph 2.2.
2.4 DETERMINATION OF VALUE. All
computations of value shall be made by State
Street Bank and Trust Company, on behalf of
the Acquiring Fund and the Acquired Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing shall
occur on or about October 13, 2006, or such
other date(s) as the parties may agree to in
writing (the "Closing Date"). All acts
taking place at the closing shall be deemed
to take place at 4:00 p.m. Eastern Time on
the Closing Date unless otherwise provided
herein. The closing shall be held at the
offices of Federated Services Company, 0000
Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx
00000-0000, or at such other time and/or
place as the parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. State
Street Bank and Trust Company, as custodian
for the Acquired Fund (the "Custodian"),
shall deliver at the Closing a certificate
of an authorized officer stating that:
(a) the Acquired Fund's portfolio
securities, cash, and any other assets have
been delivered in proper form to the
Acquiring Fund on the Closing Date; and
(b) all necessary taxes including all
applicable federal and state stock transfer
stamps, if any, shall have been paid, or
provision for payment shall have been made,
in conjunction with the delivery of
portfolio securities by the Acquired Fund.
3.3 EFFECT OF SUSPENSION IN
TRADING. In the event that on the scheduled
Closing Date, either: (a) the New York
Stock Exchange ("NYSE") or another primary
exchange on which the portfolio securities
of the Acquiring Fund or the Acquired Fund
are purchased or sold, shall be closed to
trading or trading on such exchange shall be
restricted; or (b) trading or the reporting
of trading on the NYSE or elsewhere shall be
disrupted so that accurate appraisal of the
value of the net assets of the Acquiring
Fund or the Acquired Fund is impracticable,
the Closing Date shall be postponed until
the first business day after the day when
trading is fully resumed and reporting is
restored.
3.4 TRANSFER AGENT'S CERTIFICATE.
Sentinel Administrative 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 State Street Bank and
Trust Company, its transfer agent, to issue
and deliver a confirmation evidencing
Acquiring Fund Shares to be credited on the
Closing Date to the Secretary of the
Acquired Fund or provide evidence
satisfactory to the Acquired Fund that the
Acquiring Fund Shares have been credited to
the Acquired Fund's account on the books of
the Acquiring Fund. At the Closing, each
party shall deliver to the other such bills
of sale, checks, assignments, share
certificates, receipts, officers
certificates, transfer agent certificates,
custodian certificates, opinions, and other
certificates and documents, if any, as such
other party or its counsel may reasonably
request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE ACQUIRED
FUND. The Acquired Fund represents and
warrants to the Federated Trust, on behalf
of the Acquiring Fund, as follows:
a) The Acquired Fund is a business trust
duly organized, validly existing, and
in good standing under the laws of
Pennsylvania.
b) The Acquired Fund is registered as an
open-end management investment company
under the 1940 Act, and the Acquired
Fund's registration with the
Securities and Exchange Commission
(the "Commission") as an investment
company under the 1940 Act is in full
force and effect.
c) The current prospectus and statement
of additional information of the
Acquired Fund conform in all material
respects to the applicable
requirements of the Securities Act of
1933 (the "1933 Act") and the 1940
Act, and the rules and regulations
thereunder, and do not include any
untrue statement of a material fact or
omit to state any material fact
required to be stated or necessary to
make the statements therein, in light
of the circumstances under which they
were made, not misleading.
d) The Acquired Fund is not in violation,
and the execution, delivery, and
performance of this Agreement (subject
to shareholder approval) will not
result in a violation, of any
provision of the Acquired Fund's
Declaration of Trust or Code of
Regulations 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 by or before any court
or governmental body is presently
pending or to its knowledge threatened
against the Acquired Fund or any of
its properties or assets, which, if
adversely determined, would materially
and adversely affect its financial
condition, the conduct of its
business, or the ability of the
Acquired Fund to carry out the
transactions contemplated by this
Agreement. The Acquired Fund knows of
no facts that might form the basis for
the institution of such proceedings
and is not a party to or subject to
the provisions of any order, decree,
or judgment of any court or
governmental body that materially and
adversely affects its business or its
ability to consummate the transactions
contemplated herein.
g) The financial statements of the
Acquired Fund as of November 30, 2005,
and for the fiscal year then ended
have been prepared in accordance with
generally accepted accounting
principles, and audited by
PricewaterhouseCoopers LLP,
independent registered public
accountants, and such statements
(copies of which have been furnished
to the Acquiring Fund) fairly reflect
the financial condition of the
Acquired Fund as of such date, and
there are no known contingent
liabilities of the Acquired Fund as of
such date that are not disclosed in
such statements.
h) 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 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 prior to the date
hereof have been filed (and all
federal and other tax returns and
reports of the Acquired Fund required
by law to be filed from and after the
date hereof to the Closing Date will
be filed), and all federal and other
taxes shown due on such returns and
reports have been (or will be) paid,
or provision shall have been made for
the payment thereof. To the best of
the Acquired Fund's knowledge, no such
return is currently under audit, and
no assessment has been asserted with
respect to such returns.
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 of which the Acquiring
Fund has received notice, and, upon
delivery and payment for such assets,
and the filing of any articles,
certificates or other documents under
the laws of Pennsylvania, 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 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 comply in all material respects
with federal securities and other laws
and regulations and will not contain
any untrue statement of a material
fact or omit to state a material fact
required to be stated or necessary to
make the statements, in light of the
circumstances under which such
statements were made, not misleading.
n) 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.
o) 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 Pennsylvania law for
the execution of this Agreement by 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
Pennsylvania 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 Federated Trust, on behalf of the
Acquiring Fund, represents and warrants to
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 Massachusetts.
b) The Federated Trust is registered as
an open-end management investment
company under the 1940 Act, and the
Federated 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 in
violation, and the execution, delivery
and performance of this Agreement will
not result in a violation, of the
Federated Trust's Declaration of Trust
or By-Laws or of any material
agreement, indenture, instrument,
contract, lease, or other undertaking
to which the Acquiring Fund is a party
or by which it is bound.
e) Except as otherwise disclosed in
writing to and accepted by the
Acquired Fund, no litigation,
administrative proceeding or
investigation by or before any court
or governmental body is presently
pending or to its knowledge threatened
against the Acquiring Fund or any of
its properties or assets, which, if
adversely determined, would materially
and adversely affect its financial
condition, the conduct of its business
or the ability of the Acquiring Fund
to carry out the transactions
contemplated by this Agreement. The
Acquiring Fund knows of no facts that
might form the basis for the
institution of such proceedings and it
is not a party to or subject to the
provisions of any order, decree, or
judgment of any court or governmental
body that materially and adversely
affects its business or its ability to
consummate the transaction
contemplated herein.
f) The financial statements of the
Acquiring Fund as of August 31, 2005
and for the fiscal year then ended
have been prepared in accordance with
generally accepted accounting
principles, and audited by Deloitte &
Touche LLP, independent registered
public accountants, and such
statements (copies of which have been
furnished to the Acquired Funds)
fairly reflect the financial condition
of the Acquiring Fund as of such date,
and there are no known contingent
liabilities of the Acquiring Fund as
of such date that are not disclosed in
such statements.
g) The unaudited financial statements of
the Acquiring Fund as of February 28,
2006, and for the six months then
ended have been prepared in accordance
with generally accepted accounting
principles, and such statements
(copies of which have been furnished
to the Acquired Fund) fairly reflect
the financial condition of the
Acquiring Fund as of such date, and
there are no known contingent
liabilities of the Acquiring Fund as
of such date that are not disclosed in
such statements.
h) Since the date of the financial
statements referred to in
paragraph (g) above, there have been
no material adverse changes in the
Acquiring Fund's financial condition,
assets, liabilities or business (other
than changes occurring in the ordinary
course of business), or any incurrence
by the Acquiring Fund of indebtedness
maturing more than one year from the
date such indebtedness was incurred,
except as otherwise disclosed to and
accepted by the Acquired Fund. For
the purposes of this paragraph (h), a
decline in the net asset value of the
Acquiring Fund shall not constitute a
material adverse change.
i) All federal and other tax returns and
reports of the Acquiring Fund required
by law to be filed prior to the date
hereof have been filed (and all
federal and other tax returns and
reports of the Acquiring Fund required
by law to be filed from and after the
date hereof to the Closing Date will
be filed), and all federal and other
taxes shown due on such returns and
reports have been (or will be) paid,
or provision shall have been made for
the payment thereof. To the best of
the Acquiring Fund's knowledge, no
such return is currently under audit,
and no assessment has been asserted
with respect to such returns.
j) All issued and outstanding Acquiring
Fund Shares are duly and validly
issued and outstanding, fully paid and
non-assessable by the Acquiring Fund.
The Acquiring Fund has no outstanding
options, warrants, or other rights to
subscribe for or purchase any
Acquiring Fund Shares, and there are
no outstanding securities convertible
into any Acquiring Fund Shares.
k) The execution, delivery and
performance of this Agreement have
been duly authorized by all necessary
action on the part of the Acquiring
Fund, and this Agreement constitutes a
valid and binding obligation of the
Acquiring Fund, enforceable in
accordance with its terms, subject to
bankruptcy, insolvency,
reorganization, moratorium, and other
laws relating to or affecting
creditors' rights and to general
equity principles.
l) Acquiring Fund Shares to be issued and
delivered to the Acquired Fund for the
account of the Acquired Fund
Shareholders pursuant to the terms of
this Agreement will, at the Closing
Date, have been duly authorized. When
so issued and delivered, such shares
will be duly and validly issued
Acquiring Fund Shares, and will be
fully paid and non-assessable.
m) The information to be furnished by the
Acquiring Fund for use in no-action
letters, applications for orders,
registration statements, proxy
materials, and other documents that
may be necessary in connection with
the transactions contemplated herein
shall comply in all material respects
with federal securities and other laws
and regulations and will not contain
any untrue statement of a material
fact or omit to state a material fact
required to be stated or necessary to
make the statements, in light of the
circumstances under which such
statements were made, not misleading.
n) 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.
o) No governmental consents, approvals,
authorizations or filings are required
under the 1933 Act, the 1934 Act, the
1940 Act or Massachusetts law for the
execution of this Agreement by the
Federated Trust, for itself and on
behalf of the Acquiring Fund, or the
performance of the Agreement by the
Federated Trust, for itself and on
behalf of the Acquiring Fund, except
for the effectiveness of the
Registration Statement, and the filing
of any articles, certificates or other
documents that may be required under
Massachusetts law, and such other
consents, approvals, authorizations
and filings as have been made or
received, and except for such
consents, approvals, authorizations
and filings as may be required
subsequent to the Closing Date.
p) 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
Acquired Fund 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. Such statement
will be certified by the Acquired Fund's
Treasurer.
5.7 PREPARATION OF REGISTRATION
STATEMENT AND SCHEDULE 14A PROXY STATEMENT.
The Federated Trust will review and file
with the Commission a registration statement
on Form N-14 relating to the Acquiring Fund
Shares to be issued to shareholders of the
Acquired Fund (the "Registration
Statement"). The Registration Statement on
Form N-14 shall include a proxy statement
and a prospectus of the Acquiring Fund
relating to the transaction contemplated by
this Agreement. The Registration Statement
shall be in compliance with the 1933 Act,
the 1934 Act and the 1940 Act, as
applicable. Each party will provide the
other party with the materials and
information necessary to prepare the
registration statement on Form N-14 (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 On or before the Closing Date,
the Acquired Fund shall have declared and
paid a dividend or dividends which, together
with all previous such dividends, shall have
the effect of distributing to its
shareholders all of the Acquired Fund's
investment company taxable income (computed
without regard to any deduction for
dividends paid), if any, plus the excess, if
any, of its interest income excludible from
gross income under Section 103(a) of the
Code over its deductions disallowed under
Sections 265 and 171(a)(2) of the Code for
all taxable periods or years ending on or
before the Closing Date, and all of its net
capital gains realized (after reduction for
any capital loss carry forward), if any, in
all taxable periods or years ending on or
before the Closing Date.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRED FUND
6.1 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:
6.2 All representations, covenants,
and warranties of the Acquiring Fund
contained in this Agreement shall be true
and correct in all material respects as of
the date hereof and as of the Closing Date,
with the same force and effect as if made on
and as of the Closing Date. The Acquiring
Fund shall have delivered to the Acquired
Fund a certificate executed in the Acquiring
Fund's name by the Federated Trust's
President or Vice President and its
Treasurer or Assistant Treasurer, in form
and substance satisfactory to the Acquired
Fund and dated as of the Closing Date, to
such effect and as to such other matters as
the Acquired Fund shall reasonably request.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRING FUND
7.1 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:
7.2 All representations, covenants,
and warranties of the Acquired Fund
contained in this Agreement shall be true
and correct in all material respects as of
the date hereof and as of the Closing Date,
with the same force and effect as if made on
and as of such Closing Date. The Acquired
Fund shall have delivered to the Acquiring
Fund on such Closing Date a certificate
executed in the Acquired Fund's name by the
Acquired Fund's President or Vice President
and its Treasurer or Assistant Treasurer, in
form and substance satisfactory to the
Acquiring Fund and dated as of such Closing
Date, to such effect and as to such other
matters as the Acquiring Fund shall
reasonably request.
7.3 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 Acquired Fund.
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 Acquired
Fund's Declaration of Trust and Code of
Regulations. 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 assets of
the Acquired Fund (other than the
assets of the Acquired Fund reserved
to discharge its liabilities in
accordance with Section 1.3 of this
Agreement) 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 Xxxx Xxxxx LLP may
reasonably request, and the Acquired
Fund and Acquiring Fund will cooperate
to make and certify the accuracy of
such representations. 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.
8.6 All conditions under the
Agreement, dated June 20, 2006, by and among
Federated Investors, Inc., Sentinel Asset
Management, Inc. and NLV Financial (the
"Purchase Agreement") to Closing (as defined
in the Purchase Agreement) shall have been
or concurrently be satisfied or waived as
contemplated by the Purchase Agreement.
ARTICLE IX
EXPENSES
On or before the Closing, unless
otherwise agreed by Federated Investment
Management Company and the adviser to the
Acquired Fund, Federated Investment
Management Company or its affiliates will
pay all expenses associated with Acquiring
Fund's and Acquired Fund's participation in
the Reorganization (and, except as provided
in the following proviso, in no event shall
the Acquiring Fund or Acquired Fund bear
such expenses), provided, however, that
Acquiring Fund shall bear expenses
associated with the qualification of
Acquiring Fund Shares for sale in the
various states. Reorganization expenses
include, without limitation: (a) expenses
associated with the preparation and filing
of the Proxy Materials; (b) postage;
(c) printing; (d) accounting fees;
(e) legal fees incurred by each Fund;
(f) solicitation costs of the transaction;
and (g) other related administrative or
operational costs.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF
WARRANTIES
10.1 The Federated Trust, on behalf
of the Acquiring Fund, and the Acquired Fund
agree that neither party has made to the
other party any representation, warranty
and/or covenant not set forth herein, and
that this Agreement constitutes the entire
agreement between the parties.
10.2 Except as specified in the next
sentence set forth in this paragraph 10.2,
the representations, warranties, and
covenants contained in this Agreement or in
any document delivered pursuant to or in
connection with this Agreement, shall not
survive the consummation of the transactions
contemplated hereunder. The covenants to be
performed after the Closing Date, shall
continue in effect beyond the consummation
of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
This Agreement may be terminated by
the mutual agreement of the Federated Trust
and the Acquired Fund. In addition, either
the Federated Trust or the Acquired Fund 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 that the consummation of the
transactions contemplated herein is
not in the best interest of the
Federated Trust or the Acquired Fund,
respectively, and notice given to the
other party hereto.
In the event of any such termination, in the
absence of willful default, there shall be
no liability for damages on the part of any
of the Acquiring Fund, the Federated Trust,
the Acquired Fund, or their respective
trustees or officers, to the other party or
its trustees or officers.
ARTICLE XII
AMENDMENTS
This Agreement may be amended,
modified, or supplemented in such manner as
may be mutually agreed upon in writing by
the officers of the Acquired Fund and the
Federated 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 XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW;
ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph
headings contained in this Agreement are for
reference purposes only and shall not affect
in any way the meaning or interpretation of
this Agreement.
13.2 This Agreement may be executed
in any number of counterparts, each of which
shall be deemed an original.
13.3 This Agreement shall be governed
by and construed in accordance with the laws
of the Commonwealth of Pennsylvania, without
regard to the conflict of laws rules of that
or any other jurisdiction.
13.4 This Agreement shall bind and
inure to the benefit of the parties hereto
and their respective successors and assigns,
but, except as provided in this paragraph,
no assignment or transfer hereof or of any
rights or obligations hereunder shall be
made by any party without the written
consent of the other party. Nothing herein
expressed or implied is intended or shall be
construed to confer upon or give any person,
firm, or corporation, other than the parties
hereto and their respective successors and
assigns, any rights or remedies under or by
reason of this Agreement.
13.5 It is expressly agreed that the
obligations of the Acquiring Fund hereunder
shall not be binding upon any of the
Trustees, shareholders, nominees, officers,
agents, or employees of the Federated Trust
personally, but shall bind only the Trust
property of the Acquiring Fund, as provided
in the Federated Trust's Declaration of
Trust. The execution and delivery of this
Agreement have been authorized by the
Trustees of the Federated Trust on behalf of
the Acquiring Fund and signed by authorized
officers of the Federated Trust, acting as
such. Neither the authorization by such
Trustees nor the execution and delivery by
such officers shall be deemed to have been
made by any of them individually or to
impose any liability on any of them
personally, but shall bind only the Trust
property of the Acquiring Fund as provided
in the Federated Trust's Declaration of
Trust.
IN WITNESS WHEREOF, the parties have
duly executed this Agreement, all as of the
date first written above.
SENTINEL PENNSYLVANIA TAX-FREE TRUST
/s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx,
Secretary
FEDERATED MUNICIPAL SECURITIES
INCOME TRUST
on behalf of its portfolio,
FEDERATED PENNSYLVANIA MUNICIPAL INCOME
FUND
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx,
Treasurer
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
FEDERATED MUNICIPAL SECURITIES FUND, INC.
AND
SENTINEL GROUP OF FUNDS, INC.
WITH RESPECT TO SENTINEL TAX-FREE INCOME FUND
THIS AGREEMENT AND PLAN OF
REORGANIZATION (the "Agreement") is made as
of this 20th day of June 2006, by and
between FEDERATED MUNICIPAL SECURITIES FUND,
INC., a Maryland corporation, with its
principal place of business at 0000
Xxxxxxxxx Xxxxx, Xxxxxxxxxx, XX, 00000 (the
"Acquiring Fund"), and SENTINEL GROUP OF
FUNDS, INC., a Maryland corporation, with
its principal place of business at One
National Life Drive, Montpelier, VT 05604
(the "Corporation"), with respect to its
SENTINEL TAX-FREE INCOME FUND, a series of
the Corporation (the "Acquired Fund" and,
collectively with the Acquiring Fund, the
"Funds").
RECITALS
This Agreement is intended to be, and
is adopted as, a plan of reorganization
within the meaning of Xxxxxxx 000 xx xxx
Xxxxxx Xxxxxx Internal Revenue Code of 1986,
as amended (the "Code") and the Treasury
Regulations promulgated thereunder. The
reorganization will consist of: (i) the
transfer of all of the assets of the
Acquired Fund (other than the assets of the
Acquired Fund reserved to discharge its
liabilities in accordance with Section 1.3
of this Agreement) in exchange for Class A
Shares, par value $0.01 per share, of the
Acquiring Fund ("Acquiring Fund Shares");
and (ii) the distribution of Acquiring Fund
Shares to the holders of 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 Acquired Fund is a
separate series of the Corporation, and the
Acquiring Fund and the Corporation are
open-end, registered management investment
companies and the Acquired Fund owns
securities that generally are assets of the
character in which the Acquiring Fund is
permitted to invest;
WHEREAS, each of the Acquiring Fund
and the Acquired Fund is authorized to issue
its respective shares of beneficial interest;
WHEREAS, the Directors of the
Acquiring Fund have determined that the
Reorganization, with respect to the
Acquiring Fund, is in the best interests of
the Acquiring Fund and that the interests of
the existing shareholders of the Acquiring
Fund will not be diluted as a result of the
Reorganization; and
WHEREAS, the Directors of the
Corporation have determined that the
Reorganization, with respect to the Acquired
Fund, is in the best interests of the
Acquired Fund and that the interests of the
existing shareholders of the Acquired Fund
will not be diluted as a result of the
Reorganization.
AGREEMENT
NOW, THEREFORE, in consideration of
the premises and of the covenants and
agreements hereinafter set forth, the
parties hereto covenant and agree as follows:
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
(other than the assets of the Acquired Fund
reserved to discharge its liabilities in
accordance with Section 1.3 of this
Agreement), as set forth in paragraph 1.2,
to the Acquiring Fund. In exchange, the
Acquiring Fund agrees: (i) to deliver to
the Acquired Fund the number of full and
fractional Acquiring Fund Shares, determined
by (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 Class A Shares of the Acquiring
Fund. Such transactions shall take place at
the closing on the Closing Date provided for
in paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The
assets of the Acquired Fund to be acquired
by the Acquiring Fund shall consist of
property having a value equal to the total
net assets of the Acquired Fund, including,
without limitation, cash, securities,
commodities, interests in futures and
dividends or interest receivable, owned by
the Acquired Fund and any deferred or
prepaid expenses shown as an asset on the
books of the Acquired Fund on the Closing
Date.
The Acquired Fund has provided the
Acquiring Fund with its most recent audited
financial statements, which contain a list
of all of the Acquired Fund's assets as of
the date of such statements. The Acquired
Fund hereby represents that as of the date
of the execution of this Agreement, there
have been no material changes in its
financial position as reflected in such
financial statements other than as the
result of changes in the market values of
securities or otherwise occurring in the
ordinary course of business in connection
with the purchase and sale of securities,
the issuance and redemption of Acquired Fund
shares and the payment of normal operating
expenses, dividends and capital gains
distributions.
1.3 LIABILITIES TO BE DISCHARGED.
The Acquired Fund will (a) discharge, or
make provision for the discharge of, all of
its known liabilities and obligations, and
(b) make provision for the assumption of all
of its unknown liabilities and obligations
by Sentinel Asset Management, Inc., in each
case prior to the Closing Date. It is
understood and agreed by the parties that
the Acquiring Fund shall not assume any of
the Acquired Fund's liabilities and
obligations, whether known or unknown.
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 equal in value
to the aggregate net asset value of the
Acquired Fund Shares will be issued
simultaneously to the Acquired Fund and will
be distributed to the Acquired Fund
Shareholders.
1.6 TRANSFER TAXES. Any transfer
taxes payable upon the issuance of Acquiring
Fund Shares in a name other than the
registered holder of the Acquired Fund
shares on the books of the Acquired Fund as
of that time shall, as a condition of such
issuance and transfer, be paid by the person
to whom such Acquiring Fund Shares are to be
issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any
reporting responsibility of the Acquired
Fund is and shall remain the responsibility
of the Acquired Fund.
1.8 TERMINATION. The Acquired Fund
shall be terminated promptly following the
Closing Date and the making of all
distributions pursuant to paragraph 1.4.
1.9 BOOKS AND RECORDS. All books
and records of the Acquired Fund, including
all books and records required to be
maintained under the Investment Company Act
of 1940 (the "1940 Act"), and the rules and
regulations thereunder, shall be available
to the Acquiring Fund from and after the
Closing Date and shall be turned over to the
Acquiring Fund as soon as practicable
following the Closing Date.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value
of the Acquired Fund's assets to be acquired
by the Acquiring Fund hereunder shall be the
value of such assets at the closing on the
Closing Date, using the valuation procedures
set forth in the Acquiring Fund's Articles
of Incorporation and the Acquiring Fund's
then current prospectus and statement of
additional information or such other
valuation procedures as shall be mutually
agreed upon by the parties.
2.2 VALUATION OF SHARES. The net
asset value per share of Acquiring Fund
Shares shall be the net asset value per
share computed at the closing on the Closing
Date, using the valuation procedures set
forth in the Acquiring Fund's Articles of
Incorporation and the Acquiring Fund's then
current prospectus and statement of
additional information, or such other
valuation procedures as shall be mutually
agreed upon by the parties.
2.3 SHARES TO BE ISSUED. The number
of Acquiring Fund Shares to be issued
(including fractional shares, if any) in
exchange for the Acquired Fund's assets
shall be determined 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 Shares determined in
accordance with paragraph 2.2.
2.4 DETERMINATION OF VALUE. All
computations of value shall be made by State
Street Bank and Trust Company, on behalf of
the Acquiring Fund and the Acquired Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing shall
occur on or about October 13, 2006, or such
other date(s) as the parties may agree to in
writing (the "Closing Date"). All acts
taking place at the closing shall be deemed
to take place at 4:00 p.m. Eastern Time on
the Closing Date unless otherwise provided
herein. The closing shall be held at the
offices of Federated Services Company, 0000
Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx
00000-0000, or at such other time and/or
place as the parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. State
Street Bank and Trust Company, as custodian
for the Acquired Fund (the "Custodian"),
shall deliver at the Closing a certificate
of an authorized officer stating that:
(a) the Acquired Fund's portfolio
securities, cash, and any other assets have
been delivered in proper form to the
Acquiring Fund on the Closing Date; and
(b) all necessary taxes including all
applicable federal and state stock transfer
stamps, if any, shall have been paid, or
provision for payment shall have been made,
in conjunction with the delivery of
portfolio securities by the Acquired Fund.
3.3 EFFECT OF SUSPENSION IN
TRADING. In the event that on the scheduled
Closing Date, either: (a) the New York
Stock Exchange ("NYSE") or another primary
exchange on which the portfolio securities
of the Acquiring Fund or the Acquired Fund
are purchased or sold shall be closed to
trading or trading on such exchange shall be
restricted; or (b) trading or the reporting
of trading on the NYSE or elsewhere shall be
disrupted so that accurate appraisal of the
value of the net assets of the Acquiring
Fund or the Acquired Fund is impracticable,
the Closing Date shall be postponed until
the first business day after the day when
trading is fully resumed and reporting is
restored.
3.4 TRANSFER AGENT'S CERTIFICATE.
Sentinel Administrative 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 State Street Bank and
Trust Company, its transfer agent, to issue
and deliver a confirmation evidencing
Acquiring Fund Shares to be credited on the
Closing Date to the Secretary of the
Corporation or provide evidence satisfactory
to the Acquired Fund that the Acquiring Fund
Shares have been credited to the Acquired
Fund's account on the books of the Acquiring
Fund. At the Closing, each party shall
deliver to the other such bills of sale,
checks, assignments, share certificates,
receipts, officers certificates, transfer
agent certificates, custodian certificates,
opinions, and other certificates and
documents, if any, as such other party or
its counsel may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE ACQUIRED
FUND. The Corporation, on behalf of the
Acquired Fund, represents and warrants to
the Acquiring Fund as follows:
a) The Acquired Fund is a legally
designated, separate series of a
corporation duly organized, validly
existing, and in good standing under
the laws of Maryland.
b) The Corporation is registered as an
open-end management investment company
under the 1940 Act, and the
Corporation's registration with the
Securities and Exchange Commission
(the "Commission") as an investment
company under the 1940 Act is in full
force and effect.
c) The current prospectus and statement
of additional information of the
Acquired Fund conform in all material
respects to the applicable
requirements of the Securities Act of
1933 (the "1933 Act") and the 1940
Act, and the rules and regulations
thereunder, and do not include any
untrue statement of a material fact or
omit to state any material fact
required to be stated or necessary to
make the statements therein, in light
of the circumstances under which they
were made, not misleading.
d) The Acquired Fund is not in violation,
and the execution, delivery, and
performance of this Agreement (subject
to shareholder approval) will not
result in a violation, of any
provision of the Corporation's
Articles of Incorporation or By-Laws
or of any material agreement,
indenture, instrument, contract,
lease, or other undertaking to which
the Acquired Fund is a party or by
which it is bound.
e) The Acquired Fund has no material
contracts or other commitments (other
than this Agreement) that will be
terminated with liability to it before
the Closing Date, except for
liabilities, if any, to be discharged
as provided in paragraph 1.3 hereof.
f) Except as otherwise disclosed in
writing to and accepted by the
Acquiring Fund, no litigation,
administrative proceeding, or
investigation by or before any court
or governmental body is presently
pending or to its knowledge threatened
against the Acquired Fund or any of
its properties or assets, which, if
adversely determined, would materially
and adversely affect its financial
condition, the conduct of its
business, or the ability of the
Acquired Fund to carry out the
transactions contemplated by this
Agreement. The Acquired Fund knows of
no facts that might form the basis for
the institution of such proceedings
and is not a party to or subject to
the provisions of any order, decree,
or judgment of any court or
governmental body that materially and
adversely affects its business or its
ability to consummate the transactions
contemplated herein.
g) The financial statements of the
Acquired Fund as of November 30, 2005,
and for the fiscal year then ended
have been prepared in accordance with
generally accepted accounting
principles, and audited by
PricewaterhouseCoopers LLP,
independent registered public
accountants, and such statements
(copies of which have been furnished
to the Acquiring Fund) fairly reflect
the financial condition of the
Acquired Fund as of such date, and
there are no known contingent
liabilities of the Acquired Fund as of
such date that are not disclosed in
such statements.
h) 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 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 prior to the date
hereof have been filed (and all
federal and other tax returns and
reports of the Acquired Fund required
by law to be filed from and after the
date hereof to the Closing Date will
be filed), and all federal and other
taxes shown due on such returns and
reports have been (or will be) paid,
or provision shall have been made for
the payment thereof. To the best of
the Acquired Fund's knowledge, no such
return is currently under audit, and
no assessment has been asserted with
respect to such returns.
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 of which the Acquiring
Fund has received notice, and, upon
delivery and payment for such assets,
and the filing of any articles,
certificates or other documents under
the laws of Maryland, the Acquiring
Fund will acquire good and marketable
title, subject to no restrictions on
the full transfer of such assets,
other than such restrictions as might
arise under the 1933 Act, and other
than as disclosed to and accepted by
the Acquiring Fund.
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 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 comply in all material respects
with federal securities and other laws
and regulations and will not contain
any untrue statement of a material
fact or omit to state a material fact
required to be stated or necessary to
make the statements, in light of the
circumstances under which such
statements were made, not misleading.
n) 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.
o) No governmental consents, approvals,
authorizations or filings are required
under the 1933 Act, the Securities
Exchange Act of 1934 (the "1934 Act"),
the 1940 Act or Maryland law for the
execution of this Agreement by the
Corporation, for itself and on behalf
of the Acquired Fund, except for the
effectiveness of the Registration
Statement, and the filing of any
articles, certificates or other
documents that may be required under
Maryland law, and except for such
other consents, approvals,
authorizations and filings as have
been made or received, and such
consents, approvals, authorizations
and filings as may be required
subsequent to the Closing Date, it
being understood, however, that this
Agreement and the transactions
contemplated herein must be approved
by the shareholders of the Acquired
Fund as described in paragraph 5.2.
4.2 REPRESENTATIONS OF THE ACQUIRING
FUND. The Acquiring Fund represents and
warrants to the Corporation as follows:
a) The Acquiring Fund is a corporation,
duly organized, validly existing and
in good standing under the laws of
Maryland.
b) The Acquiring Fund is registered as an
open-end management investment company
under the 1940 Act, and the Acquiring
Fund's registration with the
Commission as an investment company
under the 1940 Act is in full force
and effect.
c) The current prospectus and statement
of additional information of the
Acquiring Fund conform in all material
respects to the applicable
requirements of the 1933 Act and the
1940 Act and the rules and regulations
thereunder, and do not include any
untrue statement of a material fact or
omit to state any material fact
required to be stated or necessary to
make such statements therein, in light
of the circumstances under which they
were made, not misleading.
d) The Acquiring Fund is not in
violation, and the execution, delivery
and performance of this Agreement will
not result in a violation, of the
Acquiring Fund's Articles of
Incorporation 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 by or before any court
or governmental body is presently
pending or to its knowledge threatened
against the Acquiring Fund or any of
its properties or assets, which, if
adversely determined, would materially
and adversely affect its financial
condition, the conduct of its business
or the ability of the Acquiring Fund
to carry out the transactions
contemplated by this Agreement. The
Acquiring Fund knows of no facts that
might form the basis for the
institution of such proceedings and it
is not a party to or subject to the
provisions of any order, decree, or
judgment of any court or governmental
body that materially and adversely
affects its business or its ability to
consummate the transaction
contemplated herein.
f) The financial statements of the
Acquiring Fund as of March 31, 2006
and for the fiscal year then ended
have been prepared in accordance with
generally accepted accounting
principles, and audited by Ernst &
Young LLP, independent registered
public accountants, and such
statements (copies of which have been
furnished to the Acquired Funds)
fairly reflect the financial condition
of the Acquiring Fund as of such date,
and there are no known contingent
liabilities of the Acquiring Fund as
of such date that are not disclosed in
such statements.
g) Since the date of the financial
statements referred to in
paragraph (f) above, there have been
no material adverse changes in the
Acquiring Fund's financial condition,
assets, liabilities or business (other
than changes occurring in the ordinary
course of business), or any incurrence
by the Acquiring Fund of indebtedness
maturing more than one year from the
date such indebtedness was incurred,
except as otherwise disclosed to and
accepted by the Acquired Fund. For
the purposes of this paragraph (g), a
decline in the net asset value of the
Acquiring Fund shall not constitute a
material adverse change.
h) All federal and other tax returns and
reports of the Acquiring Fund required
by law to be filed prior to the date
hereof have been filed (and all
federal and other tax returns and
reports of the Acquiring Fund required
by law to be filed from and after the
date hereof to the Closing Date will
be filed), and all federal and other
taxes shown due on such returns and
reports have been (or will be) paid,
or provision shall have been made for
the payment thereof. To the best of
the Acquiring Fund's knowledge, no
such return is currently under audit,
and no assessment has been asserted
with respect to such returns.
i) All issued and outstanding Acquiring
Fund Shares are duly and validly
issued and outstanding, fully paid and
non-assessable by the Acquiring Fund.
The Acquiring Fund has no outstanding
options, warrants, or other rights to
subscribe for or purchase any
Acquiring Fund Shares, and there are
no outstanding securities convertible
into any Acquiring Fund Shares.
j) The execution, delivery and
performance of this Agreement have
been duly authorized by all necessary
action on the part of the Acquiring
Fund, and this Agreement constitutes a
valid and binding obligation of the
Acquiring Fund, enforceable in
accordance with its terms, subject to
bankruptcy, insolvency,
reorganization, moratorium, and other
laws relating to or affecting
creditors' rights and to general
equity principles.
k) Acquiring Fund Shares to be issued and
delivered to the Acquired Fund for the
account of the Acquired Fund
Shareholders pursuant to the terms of
this Agreement will, at the Closing
Date, have been duly authorized. When
so issued and delivered, such shares
will be duly and validly issued
Acquiring Fund Shares, and will be
fully paid and non-assessable.
l) The information to be furnished by the
Acquiring Fund for use in no-action
letters, applications for orders,
registration statements, proxy
materials, and other documents that
may be necessary in connection with
the transactions contemplated herein
shall comply in all material respects
with federal securities and other laws
and regulations and will not contain
any untrue statement of a material
fact or omit to state a material fact
required to be stated or necessary to
make the statements, in light of the
circumstances under which such
statements were made, not misleading.
m) The Acquiring Fund has elected to
qualify and has qualified as a RIC
under the Code as of and since its
first taxable year; has been a RIC
under the Code at all times since the
end of its first taxable year when it
so qualified; and qualifies and shall
continue to qualify as a RIC under the
Code for its current taxable year.
n) No governmental consents, approvals,
authorizations or filings are required
under the 1933 Act, the 1934 Act, the
1940 Act or Maryland law for the
execution of this Agreement by the
Acquiring Fund or the performance of
the Agreement by the Acquiring Fund,
except for the effectiveness of the
Registration Statement, and the filing
of any articles, certificates or other
documents that may be required under
Maryland law, and such other consents,
approvals, authorizations and filings
as have been made or received, and
except for such consents, approvals,
authorizations and filings as may be
required subsequent to the Closing
Date.
o) The Acquiring Fund agrees to use all
reasonable efforts to obtain the
approvals and authorizations required
by the 1933 Act, the 1940 Act, and any
state Blue Sky or securities laws as
it may deem appropriate in order to
continue its operations after the
Closing Date.
ARTICLE V
COVENANTS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
5.1 OPERATION IN ORDINARY COURSE.
The Acquiring Fund and the Acquired Fund
will each operate its respective business in
the ordinary course between the date of this
Agreement and the Closing Date, it being
understood that such ordinary course of
business will include customary dividends
and shareholder purchases and redemptions.
5.2 APPROVAL OF SHAREHOLDERS. The
Corporation will call a special meeting of
the Acquired Fund Shareholders to consider
and act upon this Agreement and to take all
other appropriate action necessary to obtain
approval of the transactions contemplated
herein.
5.3 INVESTMENT REPRESENTATION. The
Acquired Fund covenants that the Acquiring
Fund Shares to be issued pursuant to this
Agreement are not being acquired for the
purpose of making any distribution, other
than in connection with the Reorganization
and in accordance with the terms of this
Agreement.
5.4 ADDITIONAL INFORMATION. The
Acquired Fund will assist the Acquiring
Fund in obtaining such information as the
Acquiring Fund reasonably requests
concerning the beneficial ownership of the
Acquired Fund's shares.
5.5 FURTHER ACTION. Subject to the
provisions of this Agreement, the Acquiring
Fund and the Acquired Fund will each take or
cause to be taken, all action, and do or
cause to be done, all things reasonably
necessary, proper or advisable to consummate
and make effective the transactions
contemplated by this Agreement, including
any actions required to be taken after the
Closing Date.
5.6 STATEMENT OF EARNINGS AND
PROFITS. As promptly as practicable, but in
any case within sixty days after the Closing
Date, the Acquired Fund shall furnish the
Acquiring Fund, in such form as is
reasonably satisfactory to the Acquiring
Fund, a statement of the earnings and
profits of the Acquired Fund for federal
income tax purposes that will be carried
over by the Acquiring Fund as a result of
Section 381 of the Code. Such statement
will be certified by the Corporation's
Treasurer.
5.7 PREPARATION OF REGISTRATION
STATEMENT AND SCHEDULE 14A PROXY STATEMENT.
The Acquiring Fund will review and file with
the Commission a registration statement on
Form N-14 relating to the Acquiring Fund
Shares to be issued to shareholders of the
Acquired Fund (the "Registration
Statement"). The Registration Statement on
Form N-14 shall include a proxy statement
and a prospectus of the Acquiring Fund
relating to the transaction contemplated by
this Agreement. The Registration Statement
shall be in compliance with the 1933 Act,
the 1934 Act and the 1940 Act, as
applicable. Each party will provide the
other party with the materials and
information necessary to prepare the
registration statement on Form N-14 (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 On or before the Closing Date,
the Acquired Fund shall have declared and
paid a dividend or dividends which, together
with all previous such dividends, shall have
the effect of distributing to its
shareholders all of the Acquired Fund's
investment company taxable income (computed
without regard to any deduction for
dividends paid), if any, plus the excess, if
any, of its interest income excludible from
gross income under Section 103(a) of the
Code over its deductions disallowed under
Sections 265 and 171(a)(2) of the Code for
all taxable periods or years ending on or
before the Closing Date, and all of its net
capital gains realized (after reduction for
any capital loss carry forward), if any, in
all taxable periods or years ending on or
before the Closing Date.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRED FUND
6.1 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:
6.2 All representations, covenants,
and warranties of the Acquiring Fund
contained in this Agreement shall be true
and correct in all material respects as of
the date hereof and as of the Closing Date,
with the same force and effect as if made on
and as of the Closing Date. The Acquiring
Fund shall have delivered to the Acquired
Fund a certificate executed in the Acquiring
Fund's name by its President or Vice
President and its Treasurer or Assistant
Treasurer, in form and substance
satisfactory to the Acquired Fund and dated
as of the Closing Date, to such effect and
as to such other matters as the Acquired
Fund shall reasonably request.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRING FUND
7.1 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:
7.2 All representations, covenants,
and warranties of the Acquired Fund
contained in this Agreement shall be true
and correct in all material respects as of
the date hereof and as of the Closing Date,
with the same force and effect as if made on
and as of such Closing Date. The Acquired
Fund shall have delivered to the Acquiring
Fund on such Closing Date a certificate
executed in the Acquired Fund's name by the
Corporation's President or Vice President
and its Treasurer or Assistant Treasurer, in
form and substance satisfactory to the
Acquiring Fund and dated as of such Closing
Date, to such effect and as to such other
matters as the Acquiring Fund shall
reasonably request.
7.3 The Acquired Fund shall have
delivered to the Acquiring Fund a statement
of the Acquired Fund's assets and
liabilities, together with a list of the
Acquired Fund's portfolio securities showing
the tax costs of such securities by lot and
the holding periods of such securities, as
of the Closing Date, certified by the
Treasurer of the Corporation.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE
ACQUIRING FUND AND ACQUIRED FUND
If any of the conditions set forth
below do not exist on or before the Closing
Date with respect to the Acquired Fund or
the Acquiring Fund, the other party to this
Agreement shall, at its option, not be
required to consummate the transactions
contemplated by this Agreement:
8.1 This Agreement and the
transactions contemplated herein, with
respect to the Acquired Fund, shall have
been approved by the requisite vote of the
holders of the outstanding shares of the
Acquired Fund in accordance with applicable
law and the provisions of the Corporation's
Articles of Incorporation and By-Laws.
Certified copies of the resolutions
evidencing such approval shall have been
delivered to the Acquiring Fund.
Notwithstanding anything herein to the
contrary, neither the Acquiring Fund nor the
Acquired Fund may waive the conditions set
forth in this paragraph 8.1.
8.2 On the Closing Date, the
Commission shall not have issued an
unfavorable report under Section 25(b) of
the 1940 Act, or instituted any proceeding
seeking to enjoin the consummation of the
transactions contemplated by this Agreement
under Section 25(c) of the 1940 Act.
Furthermore, no action, suit or other
proceeding shall be threatened or pending
before any court or governmental agency in
which it is sought to restrain or prohibit,
or obtain damages or other relief in
connection with this Agreement or the
transactions contemplated herein.
8.3 All required consents of other
parties and all other consents, orders, and
permits of federal, state and local
regulatory authorities (including those of
the Commission and of State securities
authorities, including any necessary
"no-action" positions and exemptive orders
from such federal and state authorities) to
permit consummation of the transactions
contemplated herein shall have been
obtained, except where failure to obtain any
such consent, order, or permit would not
involve a risk of a material adverse effect
on the assets or properties of the Acquiring
Fund or the Acquired Fund, provided that
either party hereto may waive any such
conditions for itself.
8.4 The Registration Statement shall
have become effective under the 1933 Act,
and no stop orders suspending the
effectiveness thereof shall have been
issued. To the best knowledge of the
parties to this Agreement, no investigation
or proceeding for that purpose shall have
been instituted or be pending, threatened or
contemplated under the 0000 Xxx.
8.5 The parties shall have received
an opinion of Xxxx Xxxxx LLP substantially
to the effect that for federal income tax
purposes:
a) The transfer of all of the assets of
the Acquired Fund (other than the
assets of the Acquired Fund reserved
to discharge its liabilities in
accordance with Section 1.3 of this
Agreement) 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 Xxxx Xxxxx LLP may
reasonably request, and the Acquired
Fund and Acquiring Fund will cooperate
to make and certify the accuracy of
such representations. 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.
8.6 All conditions under the
Agreement, dated June 20, 2006, by and among
Federated Investors, Inc., Sentinel Asset
Management, Inc. and NLV Financial (the
"Purchase Agreement") to Closing (as defined
in the Purchase Agreement) shall have been
or concurrently be satisfied or waived as
contemplated by the Purchase Agreement.
ARTICLE IX
EXPENSES
On or before the Closing, unless
otherwise agreed by Federated Investment
Management Company and the adviser to the
Acquired Fund, Federated Investment
Management Company or its affiliates will
pay all expenses associated with Acquiring
Fund's and Acquired Fund's participation in
the Reorganization (and, except as provided
in the following proviso, in no event shall
the Acquiring Fund or Acquired Fund bear
such expenses), provided, however, that
Acquiring Fund shall bear expenses
associated with the qualification of
Acquiring Fund Shares for sale in the
various states. Reorganization expenses
include, without limitation: (a) expenses
associated with the preparation and filing
of the Proxy Materials; (b) postage;
(c) printing; (d) accounting fees;
(e) legal fees incurred by each Fund;
(f) solicitation costs of the transaction;
and (g) other related administrative or
operational costs.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF
WARRANTIES
10.1 The Acquiring Fund and the
Corporation, on behalf of the Acquired Fund,
agree that neither party has made to the
other party any representation, warranty
and/or covenant not set forth herein, and
that this Agreement constitutes the entire
agreement between the parties.
10.2 Except as specified in the next
sentence set forth in this paragraph 10.2,
the representations, warranties, and
covenants contained in this Agreement or in
any document delivered pursuant to or in
connection with this Agreement, shall not
survive the consummation of the transactions
contemplated hereunder. The covenants to be
performed after the Closing Date, shall
continue in effect beyond the consummation
of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
This Agreement may be terminated by
the mutual agreement of the Acquiring Fund
and the Corporation. In addition, either
the Acquiring Fund or the Corporation may at
its option terminate this Agreement at or
before the Closing Date due to:
a) a breach by the other of any
representation, warranty, or agreement
contained herein to be performed at or
before the Closing Date, if not cured
within 30 days;
b) a condition herein expressed to be
precedent to the obligations of the
terminating party that has not been
met and it reasonably appears that it
will not or cannot be met; or
c) a determination by a party's Board of
Directors, as appropriate, that the
consummation of the transactions
contemplated herein is not in the best
interest of the Corporation or the
Acquiring Fund, respectively, and
notice given to the other party hereto.
In the event of any such termination, in the
absence of willful default, there shall be
no liability for damages on the part of any
of the Acquiring Fund, the Acquired Fund,
the Corporation, or their respective
directors or officers, to the other party or
its directors or officers.
ARTICLE XII
AMENDMENTS
This Agreement may be amended,
modified, or supplemented in such manner as
may be mutually agreed upon in writing by
the officers of the Corporation and the
Acquiring Fund as specifically authorized by
their respective Board of Directors;
provided, however, that following the
meeting of the Acquired Fund Shareholders
called by the Acquired Fund pursuant to
paragraph 5.2 of this Agreement, no such
amendment may have the effect of changing
the provisions for determining the number of
Acquiring Fund Shares to be issued to the
Acquired Fund Shareholders under this
Agreement to the detriment of such
shareholders without their further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW;
ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph
headings contained in this Agreement are for
reference purposes only and shall not affect
in any way the meaning or interpretation of
this Agreement.
13.2 This Agreement may be executed
in any number of counterparts, each of which
shall be deemed an original.
13.3 This Agreement shall be governed
by and construed in accordance with the laws
of the Commonwealth of Pennsylvania, without
regard to the conflict of laws rules of that
or any other jurisdiction.
13.4 This Agreement shall bind and
inure to the benefit of the parties hereto
and their respective successors and assigns,
but, except as provided in this paragraph,
no assignment or transfer hereof or of any
rights or obligations hereunder shall be
made by any party without the written
consent of the other party. Nothing herein
expressed or implied is intended or shall be
construed to confer upon or give any person,
firm, or corporation, other than the parties
hereto and their respective successors and
assigns, any rights or remedies under or by
reason of this Agreement.
IN WITNESS WHEREOF, the parties have
duly executed this Agreement, all as of the
date first written above.
SENTINEL GROUP FUNDS, INC.
on behalf of its portfolio,
SENTINEL TAX-FREE INCOME FUND
/s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx,
Secretary
FEDERATED MUNICIPAL SECURITIES FUND, INC.
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, Treasurer
