EXHIBIT 4
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
FEDERATED MDT SERIES, WITH RESPECT TO ITS PORTFOLIO,
FEDERATED MDT LARGE CAP GROWTH FUND
AND
FEDERATED EQUITY FUNDS, WITH RESPECT TO ITS PORTFOLIO,
FEDERATED LARGE CAP GROWTH FUND
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this 1st day of May 2007, by and between FEDERATED MDT SERIES, a Massachusetts
business trust, with its principal place of business at 0000 Xxxxxxxxx Xxxxx,
Xxxxxxxxxx, XX, 00000 (the "MDT Trust"), with respect to its portfolio,
FEDERATED MDT LARGE CAP GROWTH FUND (the "Acquiring Fund"), and FEDERATED EQUITY
FUNDS, a Massachusetts business trust, with its principal place of business at
0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, XX, 00000 (the "FEF Trust" and, collectively
with the MDT Trust, the "Trusts"), with respect to its portfolio, FEDERATED
LARGE CAP GROWTH FUND (the "Acquired Fund" and, collectively with the Acquiring
Fund, the "Funds").
RECITALS
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Internal
Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations
promulgated thereunder. The reorganization will consist of: (i) the transfer
of all of the assets of the Acquired Fund in exchange for Class A Shares, Class
B Shares, Class C Shares of the Acquiring Fund ("Acquiring Fund Shares"); and
(ii) the distribution of Class A Shares, Class B Shares and Class C Shares of
the Acquiring Fund to the holders of Class A Shares, Class B Shares and Class C
Shares, respectively, of the Acquired Fund and the liquidation of the Acquired
Fund as provided herein, all upon the terms and conditions set forth in this
Agreement (the "Reorganization").
WHEREAS, the Acquired Fund is a separate portfolio of the FEF Trust, the
Trusts 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 MDT 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 FEF Trust have determined that the
Reorganization, with respect to the Acquired Fund, is in the best interests of
the Acquired Fund and that the interests of the existing shareholders of the
Acquired Fund will not be diluted as a result of the Reorganization.
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, as set forth in
paragraph 1.2, to the Acquiring Fund. In exchange, the Acquiring Fund agrees to
deliver to the Acquired Fund:
(a) the number of full and fractional Class A Shares of the
Acquiring Fund determined by multiplying (i) the outstanding Class A
Shares of the Acquired Fund by (ii) the ratio computed by dividing (x) the
net asset value per Class A Share of the Acquired Fund by (y) the net
asset value per Class A Share of the Acquiring Fund;
(a) the number of full and fractional Class B Shares of the
Acquiring Fund determined by multiplying (i) the outstanding Class B
Shares of the Acquired Fund by (ii) the ratio computed by dividing (x) the
net asset value per Class B Share of the Acquired Fund by (y) the net
asset value per Class B Share of the Acquiring Fund; and
(a) the number of full and fractional Class C Shares of the
Acquiring Fund determined by multiplying (i) the outstanding Class C
Shares of the Acquired Fund by (ii) the ratio computed by dividing (x) the
net asset value per Class C Share of the Acquired Fund by (y) the net
asset value per Class C Share of the Acquiring Fund;
in each case computed in the manner and as of the time and date set forth in
paragraph 2.2. Holders of the Class A Shares of the Acquired Fund will receive
Class A Shares of the Acquiring Fund, holders of the Class B Shares of the
Acquired Fund will receive Class B Shares of the Acquiring Fund, and holders of
the Class C Shares of the Acquired Fund will receive Class C Shares of the
Acquiring Fund. Such transactions shall take place at the closing on the
Closing Date provided for in paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The assets of the Acquired Fund to be
acquired by the Acquiring Fund shall consist of property having a value equal to
the total net assets of the Acquired Fund, including, without limitation, cash,
securities, commodities, interests in futures and dividends or interest
receivable, owned by the Acquired Fund and any deferred or prepaid expenses
shown as an asset on the books of the Acquired Fund on the Closing Date.
The Acquired Fund has provided the Acquiring Fund with its most recent
audited financial statements, which contain a list of all of the Acquired Fund's
assets as of the date of such statements. The Acquired Fund hereby represents
that as of the date of the execution of this Agreement, there have been no
changes in its financial position as reflected in such financial statements
other than as the result of changes in the market values of securities or
otherwise occurring in the ordinary course of business in connection with the
purchase and sale of securities, the issuance and redemption of Acquired Fund
shares and the payment of normal operating expenses, dividends and capital gains
distributions.
1.3 LIABILITIES TO BE DISCHARGED. The Acquired Fund will discharge all
of its liabilities and obligations prior to the Closing Date.
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date
as is conveniently practicable: (a) the Acquired Fund will distribute in
complete liquidation of the Acquired Fund, pro rata to the shareholders of
record, determined as of the close of business on the Closing Date (the
"Acquired Fund Shareholders"), of its Class A Shares, Class B Shares and Class C
Shares, respectively, all of the Acquiring Fund Class A Shares, Class B Shares
and Class C Shares, respectively, received by the Acquired Fund pursuant to
paragraph 1.1; and (b) the Acquired Fund will thereupon proceed to dissolve and
terminate as set forth in paragraph 1.8 below. Such distribution will be
accomplished by the transfer of Acquiring Fund Shares credited to the account of
the Acquired Fund on the books of the Acquiring Fund to open accounts on the
share records of the Acquiring Fund in the names of the Acquired Fund
Shareholders, and representing the respective pro rata numbers of Acquiring Fund
Shares due such shareholders. All issued and outstanding shares of the Acquired
Fund (the "Acquired Fund Shares") will simultaneously be canceled on the books
of the Acquired Fund. The Acquiring Fund shall not issue certificates
representing Acquiring Fund Shares in connection with such transfer. After the
Closing Date, the Acquired Fund shall not conduct any business except in
connection with its termination.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be
shown on the books of the Acquiring Fund's transfer agent. Acquiring Fund
Shares will be issued simultaneously to the Acquired Fund, in an amount equal in
value to the aggregate net asset value of the Acquired Fund Shares, to be
distributed to Acquired Fund Shareholders.
1.6 TRANSFER TAXES. Any transfer taxes payable upon the issuance of
Acquiring Fund Shares in a name other than the registered holder of the Acquired
Fund shares on the books of the Acquired Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of the
Acquired Fund is and shall remain the responsibility of the Acquired Fund.
1.8 TERMINATION. The Acquired Fund shall be terminated promptly
following the Closing Date and the making of all distributions pursuant to
paragraph 1.4.
1.9 BOOKS AND RECORDS. All books and records of the Acquired Fund,
including all books and records required to be maintained under the Investment
Company Act of 1940 (the "1940 Act"), and the rules and regulations thereunder,
shall be available to the Acquiring Fund from and after the Closing Date and
shall be turned over to the Acquiring Fund as soon as practicable following the
Closing Date.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Acquired Fund's assets to be
acquired by the Acquiring Fund hereunder shall be the value of such assets at
the closing on the Closing Date, using the valuation procedures set forth in the
Acquiring Fund's Declaration of Trust and the Acquiring Fund's then current
prospectus and statement of additional information or such other valuation
procedures as shall be mutually agreed upon by the parties.
2.2 VALUATION OF SHARES. The net asset value per share of Acquiring
Fund Shares shall be the net asset value per share computed at the closing on
the Closing Date, using the valuation procedures set forth in the Acquiring
Fund's Declaration of Trust and the Acquiring Fund's then current prospectus and
statement of additional information, or such other valuation procedures as shall
be mutually agreed upon by the parties.
2.3 SHARES TO BE ISSUED. The number of the Acquiring Fund's Class A
Shares, Class B Shares and Class C Shares to be issued (including fractional
shares, if any) in exchange for the Acquired Fund's assets, shall be determined
by (a) multiplying the shares outstanding of each class of the Acquired Fund by
(b) the ratio computed by (x) dividing the net asset value per share of such
class of the Acquired Fund by (y) the net asset value per share of the
corresponding class, as provided in paragraph 1.1, of Acquiring Fund Shares,
determined in accordance with paragraph 2.2.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by
State Street Bank and Trust Company, on behalf of the Acquiring Fund and the
Acquired Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing shall occur on or about June 22, 2007, or
such other date(s) as the parties may agree to in writing (the "Closing Date").
All acts taking place at the closing shall be deemed to take place at 4:00 p.m.
Eastern Time on the Closing Date unless otherwise provided herein. The closing
shall be held at the offices of Federated Services Company, 0000 Xxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000, or at such other time and/or place as the
parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. State Street Bank and Trust Company, as
custodian for the Acquired Fund (the "Custodian"), shall deliver at the Closing
a certificate of an authorized officer stating that: (a) the Acquired Fund's
portfolio securities, cash, and any other assets have been delivered in proper
form to the Acquiring Fund on the Closing Date; and (b) all necessary taxes
including all applicable federal and state stock transfer stamps, if any, shall
have been paid, or provision for payment shall have been made, in conjunction
with the delivery of portfolio securities by the Acquired Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on the scheduled
Closing Date, either: (a) the New York Stock Exchange ("NYSE") or another
primary exchange on which the portfolio securities of the Acquiring Fund or the
Acquired Fund are purchased or sold, shall be closed to trading or trading on
such exchange shall be restricted; or (b) trading or the reporting of trading on
the NYSE or elsewhere shall be disrupted so that accurate appraisal of the value
of the net assets of the Acquiring Fund or the Acquired Fund is impracticable,
the Closing Date shall be postponed until the first business day after the day
when trading is fully resumed and reporting is restored.
3.4 TRANSFER AGENT'S CERTIFICATE. State Street Bank and Trust Company,
as transfer agent for the Acquired Fund as of the Closing Date, shall deliver at
the Closing a certificate of an authorized officer stating that its records
contain the names and addresses of Acquired Fund Shareholders, and the number
and percentage ownership of outstanding shares of each class owned by each such
shareholder immediately prior to the Closing. The Acquiring Fund shall issue
and deliver or cause State Street Bank and Trust Company, its transfer agent, to
issue and deliver a confirmation evidencing Acquiring Fund Shares to be credited
on the Closing Date to the Secretary of the FEF Trust or provide evidence
satisfactory to the Acquired Fund that the Acquiring Fund Shares have been
credited to the Acquired Fund's account on the books of the Acquiring Fund. At
the Closing, each party shall deliver to the other such bills of sale, checks,
assignments, share certificates, receipts, 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 FEF Trust, on behalf of
the Acquired
Fund, represents and warrants to the MDT Trust as follows:
a) The Acquired Fund is a legally designated, separate portfolio
of a trust duly organized, validly existing, and in good standing under
the laws of Massachusetts.
b) The FEF Trust is registered as an open-end management
investment company under the 1940 Act, and the FEF Trust's registration
with the Securities and Exchange Commission (the "Commission") as an
investment company under the 1940 Act is in full force and effect.
c) The current prospectus and statement of additional information
of the Acquired Fund conform in all material respects to the applicable
requirements of the Securities Act of 1933 (the "1933 Act") and the 1940
Act, and the rules and regulations thereunder, and do not include any
untrue statement of a material fact or omit to state any material fact
required to be stated or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
d) The Acquired Fund is not in violation, and the execution,
delivery, and performance of this Agreement (subject to shareholder
approval) will not result in the violation, of any provision of the FEF
Trust's Declaration of Trust or By-Laws or of any material agreement,
indenture, instrument, contract, lease, or other undertaking to which the
Acquired Fund is a party or by which it is bound.
e) The Acquired Fund has no material contracts or other
commitments (other than this Agreement) that will be terminated with
liability to it before the Closing Date, except for liabilities, if any,
to be discharged as provided in paragraph 1.3 hereof.
f) Except as otherwise disclosed in writing to and accepted by
the Acquiring Fund, no litigation, administrative proceeding, or
investigation of or before any court or governmental body is presently
pending or to its knowledge threatened against the Acquired Fund or any of
its properties or assets, which, if adversely determined, would materially
and adversely affect its financial condition, the conduct of its
business, or the ability of the Acquired Fund to carry out the
transactions contemplated by this Agreement. The Acquired Fund knows of
no facts that might form the basis for the institution of such proceedings
and is not a party to or subject to the provisions of any order, decree,
or judgment of any court or governmental body that materially and
adversely affects its business or its ability to consummate the
transactions contemplated herein.
g) The financial statements of the Acquired Fund as of October
31, 2006, and for the fiscal year then ended have been prepared in
accordance with generally accepted accounting principles, and audited by
KPMG 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 (i), a decline in the net asset value of the Acquired Fund shall
not constitute a material adverse change.
i) All federal and other tax returns and reports of the Acquired
Fund required by law to be filed, have been filed, and all federal and
other taxes shown due on such returns and reports have been paid, or
provision shall have been made for the payment thereof. To the best of
the Acquired Fund's knowledge, no such return is currently under audit,
and no assessment has been asserted with respect to such returns.
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 Massachusetts, the Acquiring Fund will
acquire good and marketable title, subject to no restrictions on the full
transfer of such assets, other than such restrictions as might arise under
the 1933 Act, and other than as disclosed to and accepted by the Acquiring
Fund.
l) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of the FEF Trust.
Subject to approval by the Acquired Fund Shareholders, this Agreement
constitutes a valid and binding obligation of the FEF Trust, enforceable
in accordance with its terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium, and other laws relating to or
affecting creditors' rights and to general equity principles.
m) The information to be furnished by the Acquired Fund for use
in no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in connection
with the transactions contemplated herein shall 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 Massachusetts law for the execution of this
Agreement by the FEF Trust or the performance of this Agreement by the FEF
Trust, for itself and on behalf of the Acquired Fund, except for the
effectiveness of the Registration Statement, and the filing of any
articles, certificates or other documents that may be required under
Massachusetts law, and except for such other consents, approvals,
authorizations and filings as have been made or received, and such
consents, approvals, authorizations and filings as may be required
subsequent to the Closing Date, it being understood, however, that this
Agreement and the transactions contemplated herein must be approved by the
shareholders of the Acquired Fund as described in paragraph 5.2.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The MDT Trust, on behalf of
the
Acquiring Fund, represents and warrants to the FEF Trust as follows:
a) The MDT Trust is a legally designated business trust duly
organized, validly existing, and in good standing under the laws of
Massachusetts.
b) The MDT Trust is registered as an open-end management
investment company under the 1940 Act, and the MDT Trust's registration
with the Commission as an investment company under the 1940 Act is in full
force and effect.
c) The current prospectuses 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 MDT Trust's Declaration of Trust or By-Laws or of any material
agreement, indenture, instrument, contract, lease, or other undertaking to
which the Acquiring Fund is a party or by which it is bound.
e) Except as otherwise disclosed in writing to and accepted by
the Acquired Fund, no litigation, administrative proceeding or
investigation of or before any court or governmental body is presently
pending or to its knowledge threatened against the Acquiring Fund or any
of its properties or assets, which, if adversely determined, would
materially and adversely affect its financial condition, the conduct of
its business or the ability of the Acquiring Fund to carry out the
transactions contemplated by this Agreement. The Acquiring Fund knows of
no facts that might form the basis for the institution of such proceedings
and it is not a party to or subject to the provisions of any order,
decree, or judgment of any court or governmental body that materially and
adversely affects its business or its ability to consummate the
transaction contemplated herein.
f) The financial statements of the Acquiring Fund as of July 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 Fund) fairly reflect
the financial condition of the Acquiring Fund as of such date, and there
are no known contingent liabilities of the Acquiring Fund as of such date
that are not disclosed in such statements.
g) The unaudited financial statements of the Acquiring Fund as of
January 31, 2007, and for the six months then ended have been prepared in
accordance with generally accepted accounting principles, and such
statements (copies of which have been furnished to the Acquired Fund)
fairly reflect the financial condition of the Acquiring Fund as of such
date, and there are no known contingent liabilities of the Acquiring Fund
as of such date that are not disclosed in such statements.
h) Since the date of the financial statements referred to in
paragraph (g) above, there have been no material adverse changes in the
Acquiring Fund's financial condition, assets, liabilities or business
(other than changes occurring in the ordinary course of business), or any
incurrence by the Acquiring Fund of indebtedness maturing more than one
year from the date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquired Fund. For the purposes of this
paragraph (h), a decline in the net asset value of the Acquiring Fund
shall not constitute a material adverse change.
i) All federal and other tax returns and reports of the Acquiring
Fund required by law to be filed, have been filed. All federal and other
taxes shown due on such returns and reports have been paid or provision
shall have been made for their payment. To the best of the Acquiring
Fund's knowledge, no such return is currently under audit, and no
assessment has been asserted with respect to such returns.
i) All issued and outstanding Acquiring Fund Shares are duly and
validly issued and outstanding, fully paid and non-assessable by the
Acquiring Fund. The Acquiring Fund has no outstanding options, warrants,
or other rights to subscribe for or purchase any Acquiring Fund Shares,
and there are no outstanding securities convertible into any Acquiring
Fund Shares.
j) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of the MDT Trust,
and this Agreement constitutes a valid and binding obligation of the MDT
Trust, enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights and to general
equity principles.
k) Acquiring Fund Shares to be issued and delivered to the
Acquired Fund for the account of the Acquired Fund Shareholders pursuant
to the terms of this Agreement will, at the Closing Date, have been duly
authorized. When so issued and delivered, such shares will be duly and
validly issued Acquiring Fund Shares, and will be fully paid and non-
assessable.
l) The information to be furnished by the Acquiring Fund for use
in no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in connection
with the transactions contemplated herein shall comply in all material
respects with federal securities and other laws and regulations and will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or necessary to make the statements,
in light of the circumstances under which such statements were made, not
misleading.
m) The Acquiring Fund has elected to qualify and has qualified as
a RIC under the Code as of and since its first taxable year; has been a
RIC under the Code at all times since the end of its first taxable year
when it so qualified; and qualifies and shall continue to qualify as a RIC
under the Code for its current taxable year.
n) No governmental consents, approvals, authorizations or filings
are required under the 1933 Act, the 1934 Act, the 1940 Act or
Massachusetts law for the execution of this Agreement by the MDT Trust or
the performance of the Agreement by the MDT Trust, for itself and on
behalf of the Acquired Fund, except for the effectiveness of the
Registration Statement, and the filing of any articles, certificates or
other documents that may be required under Massachusetts law, and 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 FEF Trust will call a special meeting
of the Acquired Fund Shareholders to consider and act upon this Agreement and to
take all other appropriate action necessary to obtain approval of the
transactions contemplated herein.
5.3 INVESTMENT REPRESENTATION. The Acquired Fund covenants that the
Acquiring Fund Shares to be issued pursuant to this Agreement are not being
acquired for the purpose of making any distribution, other than in connection
with the Reorganization and in accordance with the terms of this Agreement.
5.4 ADDITIONAL INFORMATION. The Acquired Fund will assist the Acquiring
Fund in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Acquired Fund's shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the
Acquiring Fund and the Acquired Fund will each take or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, including any actions required to be taken after the Closing Date.
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but
in any case within sixty days after the Closing Date, the Acquired Fund shall
furnish the Acquiring Fund, in such form as is reasonably satisfactory to the
Acquiring Fund, a statement of the earnings and profits of the Acquired Fund for
federal income tax purposes that will be carried over by the Acquiring Fund as a
result of Section 381 of the Code, and which will be certified by the FEF
Trust's Treasurer.
5.7 PREPARATION OF REGISTRATION STATEMENT AND SCHEDULE 14A PROXY
STATEMENT. The MDT 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, and the proxy materials for inclusion
therein in connection with the meeting of the Acquired Fund's Shareholders to
consider the approval of this Agreement and the transactions contemplated herein
(the "Proxy Materials").
5.8 On or before the Closing Date, the Acquired Fund shall have declared
and paid a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to its shareholders all of the
Acquired Fund's investment company taxable income (computed without regard to
any deduction for dividends paid), if any, plus the excess, if any, of its
interest income excludible from gross income under Section 103(a) of the Code
over its deductions disallowed under Sections 265 and 171(a)(2) of the Code for
all taxable periods or years ending on or before the Closing Date, and all of
its net capital gains realized (after reduction for any capital loss carry
forward), if any, in all taxable periods or years ending on or before the
Closing Date.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
MDT Trust and the Acquiring Fund of all the obligations to be performed by them
pursuant to this Agreement on or before the Closing Date, and, in addition,
subject to the following conditions:
6.1 All representations, covenants, and warranties of the MDT Trust and
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 MDT Trust
shall have delivered to the Acquired Fund a certificate executed in the MDT
Trust's name by its President or Vice President and its Treasurer or Assistant
Treasurer, in form and substance satisfactory to the Acquired Fund and dated as
of the Closing Date, to such effect and as to such other matters as the Acquired
Fund shall reasonably request.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by FEF
Trust and the Acquired Fund of all the obligations to be performed by them
pursuant to this Agreement, on or before the Closing Date and, in addition,
shall be subject to the following conditions:
7.1 All representations, covenants, and warranties of FEF Trust and 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 FEF Trust
shall have delivered to the Acquiring Fund on such Closing Date a certificate
executed in the FEF Trust's name by its President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Acquiring Fund and dated as of such Closing Date, to such effect and as to such
other matters as the Acquiring Fund shall reasonably request.
7.2 The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities, together with a list of
the Acquired Fund's portfolio securities showing the tax costs of such
securities by lot and the holding periods of such securities, as of the Closing
Date, certified by the Treasurer of the FEF Trust.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRING FUND AND ACQUIRED FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein, with
respect to the Acquired Fund, shall have been approved by the requisite vote of
the holders of the outstanding shares of the Acquired Fund in accordance with
applicable law and the provisions of the FEF Trust's Declaration of Trust and
By-Laws. Certified copies of the resolutions evidencing such approval shall
have been delivered to the Acquiring Fund. Notwithstanding anything herein to
the contrary, neither the Acquiring Fund nor the Acquired Fund may waive the
conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the Commission shall not have issued an
unfavorable report under Section 25(b) of the 1940 Act, or instituted any
proceeding seeking to enjoin the consummation of the transactions contemplated
by this Agreement under Section 25(c) of the 1940 Act. Furthermore, no action,
suit or other proceeding shall be threatened or pending before any court or
governmental agency in which it is sought to restrain or prohibit, or obtain
damages or other relief in connection with, this Agreement or the transactions
contemplated herein.
8.3 All required consents of other parties and all other consents,
orders, and permits of federal, state and local regulatory authorities
(including those of the Commission and of State securities authorities,
including any necessary "no-action" positions and exemptive orders from such
federal and state authorities) to permit consummation of the transactions
contemplated herein shall have been obtained, except where failure to obtain any
such consent, order, or permit would not involve a risk of a material adverse
effect on the assets or properties of the Acquiring Fund or the Acquired Fund,
provided that either party hereto may waive any such conditions for itself.
8.4 The Registration Statement shall have become effective under the
1933 Act, and no stop orders suspending the effectiveness thereof shall have
been issued. To the best knowledge of the parties to this Agreement, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 0000 Xxx.
8.5 The parties shall have received an opinion of Xxxxxxxxx Xxxxxxx LLP
substantially to the effect that for federal income tax purposes:
a) The transfer of all of the Acquired Fund's assets to the Acquiring
Fund solely in exchange for Acquiring Fund Shares (followed by the
distribution of Acquiring Fund Shares to the Acquired Fund
Shareholders in dissolution and liquidation of the Acquired Fund)
will constitute a "reorganization" within the meaning of
Section 368(a) of the Code, and the Acquiring Fund and the Acquired
Fund will each be a "party to a reorganization" within the meaning
of Section 368(b) of the Code.
b) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund solely in exchange for
Acquiring Fund Shares.
c) No gain or loss will be recognized by the Acquired Fund upon the
transfer of the Acquired Fund's assets to the Acquiring Fund solely
in exchange for Acquiring Fund Shares or upon the distribution
(whether actual or constructive) of Acquiring Fund Shares to
Acquired Fund Shareholders in exchange for their Acquired Fund
Shares.
d) No gain or loss will be recognized by any Acquired Fund Shareholder
upon the exchange of its Acquired Fund Shares for Acquiring Fund
Shares.
e) The aggregate tax basis of the Acquiring Fund Shares received by
each Acquired Fund Shareholder pursuant to the Reorganization will
be the same as the aggregate tax basis of the Acquired Fund Shares
held by it immediately prior to the Reorganization. The holding
period of Acquiring Fund Shares received by each Acquired Fund
Shareholder will include the period during which the Acquired Fund
Shares exchanged therefor were held by such shareholder, provided
the Acquired Fund Shares are held as capital assets at the time of
the Reorganization.
f) The tax basis of the Acquired Fund's assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to
the Acquired Fund immediately prior to the Reorganization. The
holding period of the assets of the Acquired Fund in the hands of
the Acquiring Fund will include the period during which those assets
were held by the Acquired Fund.
Such opinion shall be based on customary assumptions and such
representations as Xxxxxxxxx Xxxxxxx LLP may reasonably request, and the
Acquired Fund and Acquiring Fund will cooperate to make and certify the accuracy
of such representations. The foregoing opinion may state that no opinion is
expressed as to the effect of the Reorganization on the Acquiring Fund, the
Acquired Fund or any Acquired Fund Shareholder with respect to any asset as to
which unrealized gain or loss is required to be recognized for federal income
tax purposes at the end of a taxable year (or on the termination or transfer
thereof) under a xxxx-to-market system of accounting. Notwithstanding anything
herein to the contrary, neither the Acquiring Fund nor the Acquired Fund may
waive the conditions set forth in this paragraph 8.5.
ARTICLE IX
EXPENSES
Federated Equity Management Company of Pennsylvania, Federated MTDA LLC or
their affiliates will pay all expenses associated with Acquiring Fund's and
Acquired Fund's participation in the Reorganization, provided, however, that the
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 MDT Trust, on behalf of the Acquiring Fund and the FEF Trust, on
behalf of the Acquired Fund, agree that neither party has made to the other
party any representation, warranty and/or covenant not set forth herein, and
that this Agreement constitutes the entire agreement between the parties.
10.2 Except as specified in the next sentence set forth in this paragraph
10.2, the representations, warranties, and covenants contained in this Agreement
or in any document delivered pursuant to or in connection with this Agreement,
shall not survive the consummation of the transactions contemplated hereunder.
The covenants to be performed after the Closing Date shall continue in effect
beyond the consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
This Agreement may be terminated by the mutual agreement of the MDT Trust
and the FEF Trust. In addition, either the MDT Trust or the FEF Trust may at
its option terminate this Agreement at or before the Closing Date due to:
a) a breach by the other of any representation, warranty, or agreement
contained herein to be performed at or before the Closing Date, if not cured
within 30 days;
b) a condition herein expressed to be precedent to the obligations of
the terminating party that has not been met and it reasonably appears that it
will not or cannot be met; or
c) a determination by a party's Board of Trustees that the consummation
of the transactions contemplated herein is not in the best interest of Acquired
Fund or the Acquiring Fund, and notice given to the other party hereto.
In the event of any such termination, in the absence of willful default,
there shall be no liability for damages on the part of either the Acquiring
Fund, the MDT Trust, the Acquired Fund, the FEF Trust, or their respective
trustees or officers, to the other party or its trustees or officers.
ARTICLE XII
AMENDMENTS
This Agreement may be amended, modified, or supplemented in such manner as
may be mutually agreed upon in writing by the officers of the MDT Trust and the
FEF Trust as specifically authorized by their respective Boards 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.
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as
of the date first written above.
FEDERATED EQUITY FUNDS
on behalf of its portfolio,
Federated Large Cap Growth Fund
/s/ Xxxx X. XxXxxxxxx
Xxxx X. XxXxxxxxx, Secretary
FEDERATED MDT SERIES
on behalf of its portfolio,
Federated MDT Large Cap Growth
Fund
/s/ Xxxx X. XxXxxxxxx
Xxxx X. XxXxxxxxx, Secretary
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