Exhibit 4
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this 17th day of May, 2002, by and between Federated Equity Funds, a
Massachusetts business trust, with its principal place of business of 0000
Xxxxxxxxx Xxxxx, Xxxxxxxxxx, XX, 00000 (the "Federated Trust"), with respect to
its Federated Capital Appreciation Fund (the "Acquiring Fund"), a series of the
Federated Trust; and FirstMerit Funds, a Massachusetts business trust, with its
principal place of business at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, XX 00000 (the
"FirstMerit Trust"), with respect to its FirstMerit Equity Fund, a series of the
FirstMerit Trust ("Selling Fund" and, collectively with the Acquiring Fund, the
"Funds").
This Agreement is intended to be, and is adopted as, a Plan of
Reorganization within the meaning of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Internal
Revenue Code of 1986, as amended (the "Code") and the Treasury Regulations
promulgated thereunder. The reorganization will consist of: (i) the transfer of
all of the assets of the Selling Fund in exchange for Class A Shares of the
Acquiring Fund ("Acquiring Fund Shares"); and (ii) the distribution, after the
Closing Date hereinafter referred to, of the Acquiring Fund Shares to the
shareholders of the Selling Fund and the liquidation of the Selling Fund as
provided herein, all upon the terms and conditions set forth in this Agreement
(the "Reorganization").
WHEREAS, the Acquiring Fund and the Selling Fund are separate series of the
Federated Trust and the FirstMerit Trust, respectively, and the Federated Trust
and the FirstMerit Trust are open-end, registered management investment
companies and the Selling Fund owns securities that generally are assets of the
character in which the Acquiring Fund is permitted to invest;
WHEREAS, each Fund is authorized to issue its 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;
WHEREAS, the Trustees of the FirstMerit Trust have determined that the
Reorganization, with respect to the Selling Fund, is in the best interests of
the Selling Fund and that the interests of the existing shareholders of the
Selling Fund will not be diluted as a result of the Reorganization;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
ARTICLE I
TRANSFER OF ASSETS OF THE SELLING FUND IN EXCHANGE FOR ACQUIRING FUND
SHARES AND LIQUIDATION OF THE SELLING 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 Selling
Fund agrees to transfer all of its assets, as set forth in paragraph 1.2, to the
Acquiring Fund. In exchange, the Acquiring Fund agrees: (i) to deliver to its
corresponding Selling Fund the number of full and fractional Acquiring Fund
Shares, determined by (a) multiplying the shares outstanding of the Selling Fund
by (b) the ratio computed by dividing (x) the net asset value per share of the
Selling Fund by (y) the net asset value per share of the corresponding class of
Acquiring Fund Shares computed in the manner and as of the time and date set
forth in paragraph 2.2. Such transactions shall take place at the Closing Date
provided for in paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The assets of the Selling Fund to be acquired by
the Acquiring Fund shall consist of all property, including, without limitation,
all cash, securities, commodities, interests in futures and dividends or
interest receivables, owned by the Selling Fund and any deferred or prepaid
expenses shown as an asset on the books of the Selling Fund on the Closing Date.
The Selling Fund has provided the Acquiring Fund with it most recent
audited financial statements, which contain a list of all of the Selling Fund's
assets as of the date of such statements. The Selling Fund hereby represents
that as of the date of the execution of this Agreement, there have been no
changes in its financial position as reflected in such financial statements
other than those occurring in the ordinary course of business in connection with
the purchase and sale of securities, the issuance and redemption of Selling Fund
shares and the payment of normal operating expenses, dividends and capital gains
distributions.
The Selling Fund will, within a reasonable period of time before the
Closing Date, furnish the Acquiring Fund with a list of the Selling Fund's
portfolio securities and other investments. The Acquiring Fund will, within a
reasonable time before the Closing Date, furnish the Selling Fund with a list of
the securities, if any, on the Selling Fund's list referred to above that do not
conform to the Acquiring Fund's investment objectives, policies, and
restrictions. The Selling Fund, if requested by the Acquiring Fund, will dispose
of securities on the Acquiring Fund's list before the Closing Date. In addition,
if it is determined that the portfolio of the Selling Fund and the Acquiring
Fund, when aggregated, would contain investments exceeding certain percentage
limitations imposed upon the Acquiring Fund with respect to such investments,
the Selling Fund, if requested by the Acquiring Fund, will dispose of a
sufficient amount of such investments, as may be necessary to avoid violating
such limitations as of the Closing Date. Notwithstanding the foregoing, nothing
herein will require the Selling Fund to dispose of any investments or
securities, if, in the reasonable judgment of the Selling Fund's trustees or
adviser, such disposition would adversely affect the tax-free nature of the
Reorganization or would violate their fiduciary duties to the Selling Fund's
shareholders.
1.3 LIABILITIES TO HE DISCHARGED. The Selling Fund will discharge all of
its liabilities and obligations prior to the Closing Date.
1.4 STATE FILINGS. Prior to the Closing Date, the Federated Trust shall
make any filings with the Commonwealth of Massachusetts that may be required
under the laws of the Commonwealth of Massachusetts, effective as of the
respective Closing Date.
1.5 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date as
is conveniently practicable (the "Liquidation Date"): (a) the Selling Fund will
distribute in complete liquidation of the Selling Fund, pro rata to its
shareholders of record, determined as of the close of business on the Valuation
Date (the "Selling Fund Shareholders"), all of the Acquiring Fund Shares
received by the Selling Fund pursuant to paragraph 1.1; and (b) the Selling Fund
will thereupon proceed to dissolve and terminate as set forth in paragraph 1.9
below. Such distribution will be accomplished by the transfer of Acquiring Fund
Shares credited to the account of the Selling Fund on the books of the Acquiring
Fund to open accounts on the share records of the Acquiring Fund in the name of
the Selling Fund Shareholders, and representing the respective pro rata number
of Acquiring Fund Shares due such shareholders. All issued and outstanding
shares of the Selling Fund will simultaneously be canceled on the books of the
Selling Fund. The acquiring Fund shall not issue certificates representing
Acquiring Fund Shares in connection with such transfer.
1.6 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be shown
on the books of the Acquiring Fund's transfer agent. Shares of the Acquiring
Fund will be issued simultaneously to the Selling Fund, in an amount equal in
value to the aggregate net asset value of the Selling Fund's shares to be
distributed to Selling Fund shareholders.
1.7 TRANSFER TAXES. Any transfer taxes payable upon the issuance of
Acquiring Fund Shares in a name other than the registered holder of the Selling
Fund shares on the books of the Selling 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.
1.8 REPORTING RESPONSIBILITY. Any reporting responsibility of the Selling
Fund is and shall remain the responsibility of the Selling Fund.
1.9 TERMINATION. The Selling Fund shall be terminated promptly following
the Closing Date and the making of all distributions pursuant to paragraph 1.5.
1.10 BOOKS AND RECORDS. All books and records of the Selling 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. The value of the Acquired Fund's net assets to be acquired
by the Acquiring Fund hereunder shall be the value of such assets as of the
close of the New York Stock Exchange (normally 4:00 p.m., Eastern time) on the
Closing Date (such time and date being hereinafter called the "Valuation Date"),
using the valuation procedures set forth in the Acquiring Fund's then-current
prospectus or statement of additional information.
2.2 VALUATION OF SHARES. The net asset value per share of Acquiring Fund
Shares shall be the net asset value per share computed on the Valuation Date,
using the valuation procedures set forth in the Federated Trust's Trust
Instrument 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 shares to be
issued (including fractional shares, if any) in exchange for the Selling Fund's
assets, shall be determined by (a) multiplying the shares outstanding of the
Selling Fund by (b) the ratio computed by (x) dividing the net asset value per
share of the Selling Fund by (y) the net asset value per share of the Acquiring
Fund determined in accordance with paragraph 2.2.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by
Federated Services Company, on behalf of the Acquiring Fund and the Selling
Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing shall occur on or about August 16, 2002 or
such other date(s) as the parties may agree to in writing (the "Closing Date").
The Closing shall be held as of 8:00 a.m. Eastern time (the "Effective time") 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 Selling Fund (the "Custodian"), shall deliver at the Closing a
certificate of an authorized officer stating that: (a) Selling 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 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 Selling Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on the Valuation
Date, either: (a) the NYSE or another primary exchange on which the portfolio
securities of the Acquiring Fund or the Selling 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 Selling Fund is impracticable, the Valuation 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. Federated Services Company, as transfer
agent for the Selling 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 Selling 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 Federated
Services 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 FirstMerit Trust or provide evidence satisfactory to the
Selling Fund that the Acquiring Fund Shares have been credited to the Selling
Fund's account on the books of the Acquiring Fund. At the Closing, each party
shall deliver to the other such bills of sale, checks, assignments, share
certificates, receipts and other documents, if any, as such other party or its
counsel may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE SELLING FUND. The FirstMerit Trust, on behalf of
the Selling Fund, represents and warrants to the Federated Trust, on behalf of
the Acquiring Fund, as follows:
a) The Selling Fund is a legally designated, separate series of a voluntary
association duly organized, validly existing, and in good standing under the
laws of the Commonwealth of Massachusetts.
b) The FirstMerit Trust is registered as an open-end management investment
company under the 1940 Act, and the FirstMerit 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
Selling 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 Selling Fund is not, and the execution, delivery, and performance of
this Agreement (subject to shareholder approval) will not, result in the
violation of any provision of the FirstMerit Trust's Declaration of trust or
By-Laws or of any material agreement, indenture, instrument, contract, lease, or
other undertaking to which the Selling Fund is a party or by which it is bound.
e) The Selling 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 Selling 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 Selling Fund to
carry out the transactions contemplated by this Agreement. The Selling 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 Selling Fund as of November 30, 2001 and
for the fiscal year then ended have been prepared in accordance with generally
accepted accounting principles, and such statements (copies of which have been
furnished to the Acquiring Fund) fairly reflect the financial condition of the
Selling Fund as of November 30, 2001 and there are no known contingent
liabilities of the Selling 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 Selling Fund's
financial condition, assets, liabilities or business (other than changes
occurring in the ordinary course of business), or any incurrence by the Selling
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 Selling Fund shall not constitute a material adverse change.
i) All federal and other tax returns and reports of the Selling Fund
required by law to be filed, have been filed, and all federal and other taxes
shown due on such returns and report have been paid, or provision shall have
been made for the payment thereof. To the best of the Selling 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 Selling Fund are duly and
validly issued and outstanding, fully paid and non-assessable by the Selling
Fund. All of the issued and outstanding shares of the Selling 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 Selling Fund's transfer agent as provided in paragraph 3.4.
The Selling Fund has no outstanding options, warrants, or other rights to
subscribe for or purchase any of the Selling Fund shares, and has no outstanding
securities convertible into any of the Selling Fund shares.
k) At the Closing Date, the Selling Fund will have good and marketable
title to the Selling Fund's assets to be transferred to the Acquiring Fund
pursuant to paragraph 1.2, and full right, power, and authority to sell, assign,
transfer, and deliver such assets hereunder, free of any lien or other
encumbrance, except those liens or encumbrances to which the Acquiring Fund has
received notice, and, upon delivery and payment for such assets, and the filing
of any articles, certificates or other documents under the laws of the
Commonwealth of Massachusetts, the Acquiring Fund will acquire good and
marketable title, subject to no restrictions on the full transfer of such
assets, other than such restrictions as might arise under the 1933 Act, and
other than as disclosed to and accepted by the Acquiring Fund.
l) The execution, delivery and performance of this Agreement have been duly
authorized by all necessary action on the part of the Selling Fund. Subject to
approval by the Selling Fund Shareholders, this Agreement constitutes a valid
and binding obligation of the Selling Fund, enforceable in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights and to
general equity principles.
m) The information to be furnished by the Selling Fund for use in no-action
letters, applications for orders, registration statements, proxy materials, and
other documents that may be necessary in connection with the transactions
contemplated herein shall be accurate and complete in all material respects and
shall comply in all material respects with federal securities and other laws and
regulations.
n) From the effective date of the Registration Statement (as defined in
paragraph 5.7), through the time of the meeting of the Selling Fund Shareholders
and on the Closing Date, any written information furnished by the FirstMerit
Trust with respect to the Selling Fund for use in the Proxy Materials (as
defined in paragraph 5.7), or any other materials provided in connection with
the Reorganization, does not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated or
necessary to make the statements, in light of the circumstances under which such
statements were made, not misleading.
o) The Selling Fund has elected to qualify and has qualified as a
"regulated investment company" under the Code (a "RIC"), as of and since its
first taxable year; has been a RIC under the Code at all times since the end of
its first taxable year when it so qualified; and qualifies and will continue to
qualify as a RIC under the Code for its taxable year ending upon its
liquidation.
p) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the Securities Exchange Act of 1934 (the "1934
Act"), the 1940 Act or Massachusetts law for the execution of this Agreement by
the FirstMerit Trust, for itself and on behalf of the Selling 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 Selling 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 FirstMerit Trust, on
behalf of the Selling Fund, as follows:
a) The Acquiring Fund is a legally designated, separate series of a
voluntary association, duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts.
b) The Federated Trust is registered as an open-end management investment
company under the 1940 Act, and the Trust's registration with the Commission as
an investment company under the 1940 Act is in full force and effect.
c) The current prospectus and statement of additional information of the
Acquiring Fund conform in all material respects to the applicable requirements
of the 1933 Act and the 1940 Act and the rules and regulations thereunder, and
do no include any untrue statement of a material fact or omit to state any
material fact required to be stated or necessary to make such statements
therein, in light of the circumstances under which they were made, not
misleading.
d) The Acquiring Fund is not, and the execution, delivery and performance
of this Agreement will not, result in a violation of the Federated Trust's Trust
Instrument or By-Laws or of any material agreement, indenture, instrument,
contract, lease, or other undertaking to which the Acquiring Fund is a party or
by which it is bound.
e) Except as otherwise disclosed in writing to and accepted by the Selling
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 October 31, 2001,
and for the fiscal year then ended have been prepared in accordance with
generally accepted accounting principles, and such statements (copies of which
have been furnished to the Selling Fund) fairly reflect the financial condition
of the Acquiring Fund as of October 31, 2001, 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
Selling Fund. For the purposes of this paragraph (g), a decline in the net asset
value of the Acquiring Fund shall not constitute a material adverse change.
h) All federal and other tax returns and reports of the Acquiring Fund
required by law to be filed, have been filed. All federal and other taxes shown
due on such returns and reports have been paid or provision shall have been made
for their payment. To the best of the Acquiring Fund's knowledge, no such return
is currently under audit, and no assessment has been asserted with respect to
such returns.
i) All issued and outstanding Acquiring Fund Shares are duly and validly
issued and outstanding, fully paid and non-assessable by the Acquiring Fund. The
Acquiring Fund has no outstanding options, warrants, or other rights to
subscribe for or purchase any Acquiring Fund Shares and there are no outstanding
securities convertible into any Acquiring Fund Shares.
j) The execution, delivery and performance of this Agreement have been duly
authorized by all necessary action on the part of the Acquiring Fund, and this
Agreement constitutes a valid and binding obligation of the Acquiring Fund,
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights and to general equity principles.
k) Acquiring Fund Shares to be issued and delivered to the Selling Fund for
the account of the Selling Fund Shareholders pursuant to the terms of this
Agreement will, at the Closing Date, have been 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, registration statements, proxy materials, and other documents
that may be necessary in connection with the transactions contemplated herein
shall be accurate and complete in all material respects and shall comply in all
material respects with federal securities and other laws and regulations.
m) From the effective date of the Registration Statement (as defined in
paragraph 5.7), through time of the meeting of the Selling Fund Shareholders and
on the Closing Date, any written information furnished by the Federated Trust
with respect to the Acquiring Fund for use in the Proxy Materials (as defined in
paragraph 5.7), or any other materials provided in connection with the
Reorganization, does not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated or necessary to make
the statements, in light of the circumstances under which such statements were
made, not misleading.
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 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 SELLING FUND
5.1 OPERATION IN ORDINARY COURSE. Subject to paragraph 8.5, the Acquiring
Fund and the Selling 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 FirstMerit Trust will call a special
meeting of Selling Fund Shareholders to consider and act upon this Agreement (or
transactions contemplated thereby) and to take all other appropriate action
necessary to obtain approval of the transactions contemplated herein.
5.3 INVESTMENT REPRESENTATION. The Selling 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 Selling Fund will assist the Acquiring Fund
in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Selling Fund's shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the
Acquiring Fund and the Selling 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 Selling 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 Selling 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 FirstMerit
Trust's Treasurer.
5.7 PREPARATION OF REGISTRATION STATEMENT. The Federated Trust will prepare
and file with the Commission a registration statement on Form N-14 relating to
the Acquiring Fund Shares to be issued to shareholders of the Selling 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 in connection with the meeting
of the Selling Fund's Shareholders to consider the approval of this Agreement
and the transactions contemplated herein.
5.8 INVOLUNTARY CONVERSIONS. Notwithstanding any reservation of rights
retained by the Acquiring Fund to involuntarily redeem shareholders for failure
to maintain account balances equal to the minimum initial investment prescribed
from time to time by the Acquiring Fund, the Federated Trust agrees that it will
not exercise such rights with respect to any Selling Fund Shareholder.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLING FUND
The obligations of the Selling 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 condition:
6.1 All representations, covenants, and warranties of the Acquiring Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of the Closing Date. The Acquiring Fund shall have
delivered to the Selling 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 Selling Fund and
dated as of the Closing Date, to such effect and as to such other matters as the
Selling Fund shall reasonably request.
6.2 As of the Closing Date, there shall have been no material change in the
investment objective, policies and restrictions nor any material change in the
investment management fees, fee levels payable pursuant to the Rule 12b-1 plan
of distribution, other fees payable for services provided to the Acquiring Fund,
fee waiver or expense reimbursement undertakings, or sales loads of the
Acquiring Fund from those fee amounts, undertakings and sales load amounts of
the Acquiring Fund described in the Proxy Materials.
6.3 As of the Closing Date, the Federated Trust's fidelity bond for the
Acquiring Fund shall meet all applicable requirements under the 1940 Act based
on the level of the Acquiring Fund's assets immediately after the Effective
Time.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Selling Fund of all the obligations to be performed by the Selling Fund pursuant
to this Agreement, on or before the Closing Date and, in addition, shall be
subject to the following conditions:
7.1 All representations, covenants, and warranties of the Selling 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 Selling Fund shall have delivered
to the Acquiring Fund on such Closing Date a certificate executed in the Selling
Fund's name by the FirstMerit Trust's President or Vice President and the
Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Acquiring Fund and dated as of such Closing Date to such effect and as too such
other matters as the Acquiring Fund shall reasonably request.
7.2 The Selling Fund shall have delivered to the Acquiring Fund a statement
of the Selling Fund's assets and liabilities, together with a list of the
Selling 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 FirstMerit Trust.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND
SELLING FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Selling 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 Selling Fund, shall have been approved by the requisite vote of the
holders of the outstanding shares of the Selling Fund in accordance with
applicable law and the provisions of the FirstMerit 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 Selling 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 Selling 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 Selling 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 Selling Fund's investment company
taxable income (computed without regard to any deduction for dividends paid), if
any, plus the excess of its interest income, if any, 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 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 ending on or
before the Closing Date.
8.6 The parties shall have received an opinion of Xxxxxxxxx Xxxxxxx Xxxxx &
Xxxxxxxx, LLP substantially to the effect that for federal income tax purposes:
a) The transfer of all of the Selling Fund's assets to the Acquiring Fund
solely in exchange for Acquiring Fund Shares (followed by the distribution of
Acquiring Fund Shares to the Selling Fund Shareholders in dissolution and
liquidation of the Selling Fund) will constitute a "reorganization" within the
meaning of Section 368(a)(i)(C) of the Code, and the Acquiring Fund and the
Selling Fund each will 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 Selling Fund solely in exchange for Acquiring Funds
Shares.
c) No gain or loss will be recognized by the Selling Fund upon the transfer
of the Selling 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 Selling Fund Shareholders in exchange for such
shareholders' shares of the Selling Fund.
d) No gain or loss will be recognized by the Selling Fund Shareholders upon
the exchange of their Selling Fund shares for Acquiring Fund Shares in the
Reorganization. e) The aggregate tax basis of the Acquiring Fund Shares received
by each Selling Fund Shareholder pursuant to the Reorganization will be the same
as the aggregate tax basis of the Selling Fund shares held by such shareholder
immediately prior to the Reorganization. The holding period of Acquiring Fund
Shares to be received by each Selling Fund Shareholder will include the period
during which the Selling Fund shares exchanged therefor were held by such
shareholder, provided the Selling Fund shares are held as capital assets at the
time of the Reorganization.
f) The tax basis of the Selling Fund's assets acquired by the Acquiring
Fund will be the same as the tax basis of such assets to the Selling Fund
immediately before the Reorganization. The holding period of the assets of the
Selling Fund in the hands of the Acquiring Fund will include the period during
which those assets were held by the Selling Fund.
The foregoing opinion may state that no opinion is expressed as to the
effect of the Reorganization on the Funds or any Selling Fund Shareholder with
respect to any asset as to which any 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. Such opinion shall be based on customary assumptions and such
representations as Xxxxxxxxx Xxxxxxx Xxxxx & Xxxxxxxx LLP may reasonably
request, and the Selling 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 Selling Fund may waive the
conditions set forth in this paragraph 8.6.
ARTICLE IX
EXPENSES
9.1 Federated Investment Management Company or its affiliates will pay all
expenses associated with Acquiring Fund's and Selling Fund's participation in
the Reorganization. Reorganization expenses include, without limitation: (a)
expenses associated with the preparation and filing of the Proxy Materials; (b)
postage; (c) printing; (d) accounting fees; (e) legal fees incurred by each
Fund; (f) solicitation costs of the transaction; and (g) other related
administrative or operational costs.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Federated Trust, on behalf of the Acquiring Fund, and the
FirstMerit Trust, on behalf of the Selling 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, and the obligations of the
Acquiring Funds in paragraph 5.8, shall continue in effect beyond the
consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Federated Trust and the FirstMerit Trust. In addition, either the Federated
Trust or the FirstMerit Trust may at its option terminate this Agreement at or
before the Closing Date due to:
a) a breach by the other of any representation, warranty, or agreement
contained herein to be performed at or before the Closing Date, if not cured
within 30 days;
b) a condition herein expressed to be precedent to the obligations of the
terminating party that has not been met and it reasonably appears that it will
not or cannot be met; or
c) a determination by a party's Board of Trustees, as appropriate, that the
consummation of the transactions contemplated herein is not in the best interest
of the FirstMerit Trust or the Federated Trust, respectively, and notice given
to the other party hereto.
11.2 In the event of any such termination, in the absence of willful
default, there shall be no liability for damages on the part of either the
Acquiring Fund, the Selling Fund, the Federated Trust, the FirstMerit Trust, or
their respective Trustees or officers, but the Federated Trust shall bear the
expenses incurred in the preparation and carrying out of this Agreement.
ARTICLE XII
AMENDMENTS
12.1 This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the officers of the Trust
and the FirstMerit Trust as specifically authorized by their respective Board of
Trustees; provided, however, that following the meeting of the Selling Fund
Shareholders called by the Selling 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 Selling Fund
Shareholders under this Agreement to the detriment of such shareholders without
their further approval.
ARTICLE XIII
HADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATIN OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect 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 Massachusetts.
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 Trust
Instrument of the Federated 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 Trust Instrument.
13.6 It is expressly agreed that the obligations of the Selling Fund
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents, or employees of the FirstMerit Trust personally, but shall
bind only the trust property of the Selling Fund, as provided in the Declaration
of Trust of the FirstMerit Trust. The execution and delivery of this Agreement
have been authorized by the Trustees of the FirstMerit Trust on behalf of the
Selling Fund and signed by authorized officers of the FirstMerit 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 Selling Fund as provided in the FirstMerit
Trust's Declaration of trust.
13.7 IN WITNESS WHEREOF, the parties have duly executed this Agreement, all
as of the date first written above.
FIRSTMERIT FUNDS
By: /s/ Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
ACKNOWLEDGED
By: /s/ C. Xxxxx Xxxxxxxx
Name: C. Xxxxx Xxxxxxxx
Title: Assistant Secretary
FEDERATED EQUITY FUNDS
By: /s/ J. Xxxxxxxxxxx Xxxxxxx
Name: J. Xxxxxxxxxxx Xxxxxxx
Title: President
ACKNOWLEDGED
By: /s/ Xxxx X. XxXxxxxxx
Name: Xxxx X. XxXxxxxxx
Title: Secretary
