Form of AGREEMENT AND PLAN OF REORGANIZATION
Form
of
THIS AGREEMENT AND PLAN OF
REORGANIZATION (the “Agreement”) is made as of this ____ day of _______,
2009, by and between FEDERATED
AMERICAN LEADERS FUND, INC., a Maryland corporation, with its principal
place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ (the
“Acquired Fund”) and FEDERATED
EQUITY FUNDS, a Massachusetts business trust, with its principal place of
business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ (the “Trust”), with
respect to FEDERATED CLOVER
VALUE FUND, a series of the Trust (“Acquiring Fund” and, collectively
with the Acquired Fund, the “Funds”).
This
Agreement is intended to be, and is adopted as, a plan of reorganization within
the meaning of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 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 and Class K Shares, no par value per
share, of the Acquiring Fund (“Acquiring Fund Shares”); (ii) the distribution of
Class A Shares of the Acquiring Fund to the holders of the Acquired Fund’s Class
A Shares and Class F Shares; the distribution of Class B Shares of the Acquiring
Fund to the holders of the Acquired Fund’s Class B Shares; the distribution of
Class C Shares of the Acquiring Fund to the holders of the Acquired Fund’s Class
C Shares; and the distribution of Class K Shares of the Acquiring Fund to the
holders of Class K Shares of the Acquired Fund; and (iii) the liquidation of the
Acquired Fund as provided herein, all upon the terms and conditions set forth in
this Agreement (the “Reorganization”).
WHEREAS,
the Acquired Fund is a stand-alone corporate entity having no separate series;
the Acquiring Fund is a separate series of the Trust; the Acquired Fund and the
Trust are open-end, registered management investment companies; and the Acquired
Fund owns securities that generally are assets of the character in which the
Acquiring Fund is permitted to invest;
WHEREAS,
the Acquiring Fund and the Acquired Fund are authorized to issue their shares of
beneficial interest;
WHEREAS,
the Directors of the Acquired Fund have determined that the Reorganization 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;
WHEREAS,
the Trustees of the Trust have determined that the Reorganization, with respect
to the Acquiring Fund, is in the best interests of the Acquiring Fund and that
the interests of the existing shareholders of the Acquiring Fund will not be
diluted as a result of the Reorganization;
NOW,
THEREFORE, in consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as
follows:
ARTICLE I
TRANSFER
OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ACQUIRING FUND SHARES AND
LIQUIDATION OF THE ACQUIRED FUND
1.1 THE
EXCHANGE. Subject to the terms and conditions contained herein and on
the basis of the representations and warranties contained herein, the Acquired
Fund agrees to transfer all of its assets, as set forth in paragraph 1.2, to the
Acquiring Fund. In exchange, the Acquiring Fund
agrees: (i) to deliver to the Acquired Fund the number of each class of full and fractional Acquiring Fund
Shares, determined by multiplying (a) the shares outstanding of each class of shares of the Acquired Fund (“Acquired Fund
Shares”) by (b) the ratio computed
by dividing (x) the net asset value per share of such class of Acquired Fund Shares 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. Holders of Class A Shares and Class F Shares of the Acquired
Fund will receive Class A Shares of the Acquiring Fund, holders of Class B
Shares of the Acquired Fund will receive Class B Shares of the Acquiring Fund,
holders of Class C Shares of the Acquired Fund will receive Class C Shares of
the Acquiring Fund and holders of Class K Shares of the Acquired Fund will
receive Class K 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. The assets acquired by the Acquiring Fund shall not include
any deferred or prepaid expenses shown as an asset on the books of the Acquired
Fund on the Closing Date, and shall be excluded from the Valuation of Assets
under paragraph 2.1 and the corresponding calculation of net asset value per
share of each class of the Acquired Fund Shares under this
Agreement.
The
Acquired Fund has provided the Acquiring Fund with its most recent audited
financial statements, which contain a list of all of the Acquired Fund’s assets
as of the date of such statements. The Acquired Fund hereby
represents that as of the date of the execution of this Agreement, there have
been no changes in its financial position as reflected in such financial
statements other than those occurring in the ordinary course of business in
connection with the purchase and sale of securities, the issuance and redemption
of Acquired Fund Shares and the payment of normal operating expenses, dividends
and capital gains distributions.
1.3 LIABILITIES
TO BE DISCHARGED. The Acquired Fund will discharge all of its
liabilities and obligations prior to the Closing Date.
1.4 LIQUIDATION
AND DISTRIBUTION. On or as soon after the Closing Date as is
conveniently practicable: (a) the Acquired Fund will distribute
in complete liquidation of the Acquired Fund, pro rata to its shareholders
of record, determined as of the close of business on the Closing Date (the
“Acquired Fund Shareholders”), all of the Acquiring Fund Shares received by the
Acquired Fund pursuant to paragraph 1.1; and (b) the Acquired Fund
will thereupon proceed to dissolve 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 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 DISSOLUTION. The
Acquired Fund shall be dissolved promptly following the Closing Date and the
making of all distributions pursuant to paragraph 1.4.
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1.9 BOOKS
AND RECORDS. All books and records of the Acquired Fund, including
all books and records required to be maintained under the Investment Company Act
of 1940 (the “1940 Act”), and the rules and regulations thereunder, shall be
available to the Acquiring Fund from and after the Closing Date and shall be
turned over to the Acquiring Fund as soon as practicable following the Closing
Date.
ARTICLE II
VALUATION
2.1 VALUATION
OF ASSETS. The value of the Acquired Fund’s assets to be acquired by
the Acquiring Fund hereunder shall be the value of such assets at the closing on
the Closing Date, using the valuation procedures set forth in the Trust’s
Declaration of Trust and the Acquiring Fund’s then current prospectus and
statement of additional information or such other valuation procedures as shall
be mutually agreed upon by the parties.
2.2 VALUATION
OF SHARES. The net asset value per share of each class of Acquiring
Fund Shares shall be the net asset value per share of such class of Acquiring
Fund Shares computed at the closing on the Closing Date, using the valuation
procedures set forth in the Trust’s Declaration of Trust and the Acquiring
Fund’s then current prospectus and statement of additional information, or such
other valuation procedures as shall be mutually agreed upon by the
parties.
2.3 SHARES
TO BE ISSUED. The number of each
class of the Acquiring Fund Shares
to be issued (including fractional shares, if any) in exchange for the Acquired
Fund’s assets, shall be determined by multiplying (a) the shares outstanding of
each class of Acquired Fund Shares by (b) the ratio computed by dividing (x)
the net asset value per share of such class
of Acquired Fund Shares by (y) the
net asset value per share of the corresponding
class 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
(“Closing”) shall occur on or after ________, 2009, 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, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or at such other time and/or place as the
parties may agree.
3.2 CUSTODIAN’S
CERTIFICATE. State Street Bank and Trust Company, as custodian for the Acquired
Fund (the “Custodian”), shall deliver at the Closing a certificate of an
authorized officer stating that: (a) the Acquired Fund’s
portfolio securities, cash, and any other assets have been delivered in proper
form to the Acquiring Fund on the Closing Date; and (b) all necessary taxes
including all applicable federal and state stock transfer stamps, if any, shall
have been paid, or provision for payment shall have been made, in conjunction
with the delivery of portfolio securities by the Acquired Fund.
3.3 EFFECT
OF SUSPENSION IN TRADING. In the event that on the scheduled Closing
Date, either: (a) the NYSE or another primary exchange on which
the portfolio securities of the Acquiring Fund or the Acquired Fund are
purchased or sold, shall be closed to trading or trading on such exchange shall
be restricted; or (b) trading or the reporting of trading on the NYSE or
elsewhere shall be disrupted so that accurate appraisal of the value of the net
assets of the Acquiring Fund or the Acquired Fund is impracticable, the Closing
Date shall be postponed until the first business day after the day when trading
is fully resumed and reporting is restored.
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3.4 TRANSFER
AGENT’S CERTIFICATE. State Street Bank and Trust Company, as transfer
agent for the Acquired Fund as of the Closing Date, shall deliver at the Closing
a certificate of an authorized officer stating that its records contain the
names and addresses of Acquired Fund Shareholders, and the number and percentage
ownership of outstanding shares owned by each such shareholder immediately prior
to the Closing. The Acquiring Fund shall issue and deliver, or cause
State Street Bank and Trust Company, its transfer agent, to issue and deliver a
confirmation evidencing Acquiring Fund Shares to be credited on the Closing Date
to the Secretary of the Trust or provide evidence satisfactory to the Acquired
Fund that the Acquiring Fund Shares have been credited to the Acquired Fund’s
account on the books of the Acquiring Fund. At the Closing, each
party shall deliver to the other such bills of sale, checks, assignments, share
certificates, receipts and other documents, if any, as such other party or its
counsel may reasonably request.
ARTICLE IV
REPRESENTATIONS
AND WARRANTIES
4.1 REPRESENTATIONS
OF THE ACQUIRED FUND. The Acquired Fund represents and warrants to
the Trust, on behalf of the Acquiring Fund, as follows:
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a)
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The
Acquired Fund is a corporation duly organized, validly existing, and in
good standing under the laws of the State of
Maryland.
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b)
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The
Acquired Fund is registered as an open-end management investment company
under the 1940 Act, and the Acquired Fund’s registration with the
Securities and Exchange Commission (the “Commission”) as an investment
company under the 1940 Act is in full force and
effect.
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c)
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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.
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d)
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The
Acquired Fund is not, and the execution, delivery, and performance of this
Agreement (subject to shareholder approval) will not, result in the
violation of any provision of the Acquired Fund’s Articles of Incorportion
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.
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e)
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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.
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f)
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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.
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g)
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The
audited financial statements of the Acquired Fund as of March 31, 2008 and
for the fiscal year then ended have been prepared in accordance with
generally accepted accounting principles, and such statements (copies of
which have been furnished to the Acquiring Fund) fairly reflect the
financial condition of the Acquired Fund as of such date, and there are no
known contingent liabilities of the Acquired Fund as of such date that are
not disclosed in such statements.
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h)
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Since
the date of the financial statements referred to in paragraph (g)
above, there have been no material adverse changes in the Acquired Fund’s
financial condition, assets, liabilities or business (other than changes
occurring in the ordinary course of business), or any incurrence by the
Acquired Fund of indebtedness maturing more than one year from the date
such indebtedness was incurred, except as otherwise disclosed to and
accepted by the Acquiring Fund. For the purposes of this
paragraph (h), a decline in the net asset value of the Acquired Fund
shall not constitute a material adverse
change.
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i)
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As
of the date hereof, except as previously disclosed to the Acquired Fund in
writing, and except as have been corrected as required by applicable law,
and to the best of the Acquired Fund’s knowledge, there have been no
material miscalculations of the net asset value of the Acquired Fund or
the net asset value per share during the twelve-month preceding the date
hereof and preceding the Closing Date, and all such calculations have been
made in accordance with the applicable provisions of the 1940
Act.
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j)
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The
minute books and other similar records of the Acquired Fund as made
available to the Acquiring Fund prior to the execution of this Agreement
contain a true and complete record of all action taken at all meetings and
by all written consents in lieu of meetings of the shareholders of the
Acquired Fund, the Acquired Fund’s Board of Directors and committees of
the Acquired Fund’s Board of Directors. The stock transfer ledger and
other similar records of the Acquired Fund as made available to the
Acquiring Fund prior to the execution of this Agreement, and as existing
on the Closing Date, accurately reflect all record transfers prior to the
execution of this Agreement, or the Closing Date, as applicable, in the
Acquired Fund Shares.
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k)
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The
Acquired Fund has maintained, or caused to be maintained on its behalf,
all books and records required of a registered investment company in
compliance with the requirements of Section 31 of the 1940 Act and ▇▇▇▇▇
thereunder.
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l)
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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.
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m)
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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.
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n)
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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 the State of Maryland, the Acquiring Fund will
acquire good and marketable title to such assets, 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.
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o)
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The
execution, delivery and performance of this Agreement have been duly
authorized by all necessary action on the part of the Acquired
Fund. Subject to approval by the Acquired Fund Shareholders,
this Agreement constitutes a valid and binding obligation of the Acquired
Fund, enforceable in accordance with its terms, subject as to enforcement,
to bankruptcy, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors’ rights and to general equity
principles.
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p)
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The
information to be furnished by the Acquired Fund for use in no-action
letters, applications for orders, registration statements, proxy
materials, and other documents that may be necessary in connection with
the transactions contemplated herein shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and
regulations.
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q)
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From
the effective date of the Registration Statement (as defined in
paragraph 5.7), through the time of the meeting of the Acquired Fund
Shareholders and on the Closing Date, any written information furnished by
the Acquired Fund for use in the Proxy Materials (as defined in
paragraph 5.7), or any other materials provided in connection with
the Reorganization, does not and will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated or
necessary to make the statements, in light of the circumstances under
which such statements were made, not
misleading.
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r)
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The
Acquired Fund has qualified and elected to be treated as a “regulated
investment company” under the Code (a “RIC”), as of and since its first
taxable year; and qualifies and will continue to qualify as a RIC under
the Code for its taxable year ending upon its
liquidation.
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s)
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No
governmental consents, approvals, authorizations or filings are required
under the 1933 Act, the Securities Exchange Act of 1934 (the “1934 Act”),
the 1940 Act or Maryland law for the execution of this Agreement by the
Acquired Fund, except for the effectiveness of the Registration Statement,
and the filing of any articles, certificates or other documents that may
be required under Maryland law, and except for such other consents,
approvals, authorizations and filings as have been made or received, and
such consents, approvals, authorizations and filings as may be required
subsequent to the Closing Date, it being understood, however, that this
Agreement and the transactions contemplated herein must be approved by the
shareholders of the Acquired Fund as described in
paragraph 5.2.
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4.2 REPRESENTATIONS
OF THE ACQUIRING FUND. The Trust, on behalf of the Acquiring Fund,
represents and warrants to the Acquired Fund, as follows:
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a)
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The
Acquiring Fund is a separate series of a business trust, duly organized,
validly existing and in good standing under the laws of the Commonwealth
of Massachusetts.
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b)
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The
Trust is registered as an open-end management investment company under the
1940 Act, and the Trust’s registration with the Commission as an
investment company under the 1940 Act is in full force and
effect.
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c)
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The
current prospectus and statement of additional information of the
Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and
regulations thereunder, and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated or
necessary to make such statements therein, in light of the circumstances
under which they were made, not
misleading.
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d)
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The
Acquiring Fund is not, and the execution, delivery and performance of this
Agreement will not, result in a violation of the Trust’s Declaration of
Trust or By-Laws or of any material agreement, indenture, instrument,
contract, lease, or other undertaking to which the Acquiring Fund is a
party or by which it is bound.
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e)
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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.
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f)
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The
Acquiring Fund commenced operations on March __, 2009 and accordingly has
not prepared audited or unaudited financial statements at the date of this
Agreement.
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g)
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All
federal and other tax returns and reports of the Acquiring Fund required
by law to be filed, have been filed, and all federal and other taxes shown
due on such returns and reports have been paid, or provision shall have
been made for the payment thereof. To the best of
the Acquiring Fund’s knowledge, no such return is currently under audit,
and no assessment has been asserted with respect to such
returns.
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h)
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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.
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i)
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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.
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j)
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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.
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k)
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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.
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l)
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From
the effective date of the Registration Statement (as defined in
paragraph 5.7), through the time of the meeting of the Acquired Fund
Shareholders and on the Closing Date, any written information furnished by
the Trust with respect to the Acquiring Fund for use in the Proxy
Materials (as defined in paragraph 5.7), or any other materials
provided in connection with the Reorganization, does not and will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated or necessary to make the statements,
in light of the circumstances under which such statements were made, not
misleading.
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m)
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The
Acquiring Fund will qualify and elect to be treated as a RIC under the
Code for its first taxable year.
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n)
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No
governmental consents, approvals, authorizations or filings are required
under the 1933 Act, the 1934 Act, the 1940 Act or Massachusetts law for
the execution of this Agreement by the Trust, for itself and on behalf of
the Acquiring Fund, or the performance of the Agreement by the Trust, for
itself and on behalf of the Acquiring Fund, except for the effectiveness
of the Registration Statement, and the filing of any articles,
certificates or other documents that may be required under Massachusetts
law, and such other consents, approvals, authorizations and filings as
have been made or received, and except for such consents, approvals,
authorizations and filings as may be required subsequent to the Closing
Date.
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o)
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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.
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ARTICLE V
COVENANTS
OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 OPERATION
IN ORDINARY COURSE. The Acquiring Fund and the Acquired Fund will
each operate its respective business in the ordinary course between the date of
this Agreement and the Closing Date, it being understood that such ordinary
course of business will include customary dividends and shareholder purchases
and redemptions.
5.2 APPROVAL
OF SHAREHOLDERS. The Acquired Fund will call a special meeting of its
Shareholders (“Special Meeting”) 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 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 Acquired
Fund’s Treasurer.
5.7 PREPARATION
OF REGISTRATION STATEMENT AND SCHEDULE 14A PROXY STATEMENT. The
Trust will prepare and file with the Commission a registration statement on
Form N-14 relating to the Acquiring Fund Shares to be issued to
shareholders of the Acquired Fund (the “Registration Statement”). The
Registration Statement shall include a proxy statement for use in
connection with the meeting of the Acquired Fund Shareholders to consider the
approval of this Agreement and the transactions contemplated herein (“Proxy
Materials”), and a prospectus of the Acquiring Fund relating to the transactions
contemplated by this Agreement. The Registration Statement shall be
in compliance with the 1933 Act, the 1934 Act and the 1940 Act, as
applicable. Each party will provide the other party with the
materials and information necessary to prepare the Registration Statement and
Proxy Materials, for inclusion therein.
5.8 DIVIDENDS. 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.
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ARTICLE VI
CONDITIONS
PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The
obligations of the Acquired Fund to consummate the transactions provided for
herein shall be subject, at its election, to the performance by the Acquiring
Fund of all the obligations to be performed by the Acquiring Fund pursuant to
this Agreement on or before the Closing Date, and, in addition, subject to the
following conditions:
All
representations, covenants, and warranties of the Acquiring Fund contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and as of the Closing Date, with the same force and effect as if made on
and as of the Closing Date. The Acquiring Fund shall have delivered
to the Acquired Fund on the Closing Date a certificate executed in the Acquiring
Fund’s name by the Trust’s President or Vice President and the Treasurer or
Assistant Treasurer, in form and substance satisfactory to the Acquired Fund and
dated as of such Closing Date, to such effect and as to such other matters as
the Acquired Fund shall reasonably request.
ARTICLE VII
CONDITIONS
PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The
obligations of the Acquiring Fund to consummate the transactions provided for
herein shall be subject, at its election, to the performance by the Acquired
Fund of all the obligations to be performed by the Acquired Fund pursuant to
this Agreement on or before the Closing Date and, in addition, shall be subject
to the following conditions:
All
representations, covenants, and warranties of the Acquired Fund contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and as of the Closing Date, with the same force and effect as if made on
and as of the Closing Date. The Acquired Fund shall have delivered to the
Acquiring Fund on such closing date a certificate executed in the Acquired
Fund’s name by the Acquired Fund’s President or Vice President and the Treasurer
or Assistant Treasurer in form and substance and satisfactory to the Acquiring
Fund and dated as of such Closing Date, to such effect and as to such other
matters as the Acquiring Fund shall reasonably request.
The
Acquired Fund shall have delivered to the Acquiring Fund a statement of the
Acquired Fund’s assets and liabilities, together with a list of the Acquired
Fund’s portfolio securities showing the tax costs of such securities by lot and
the holding periods of such securities, as of the Closing Date, certified by the
Treasurer of the Acquired Fund.
ARTICLE VIII
FURTHER
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRING
FUND AND ACQUIRED FUND
If any of
the conditions set forth below do not exist on or before the Closing Date with
respect to the Acquired Fund or the Acquiring Fund, the other party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
8.1 This
Agreement and the transactions contemplated herein, with respect to the Acquired
Fund, shall have been approved by the requisite vote of the holders of the
outstanding shares of the Acquired Fund in accordance with applicable law and
the provisions of the Acquired Fund’s Article of Incorporation and
By-Laws. Certified copies of the resolutions evidencing such approval
shall have been delivered to the Acquiring Fund. Notwithstanding
anything herein to the contrary, neither the Acquiring Fund nor the Acquired
Fund may waive the conditions set forth in this paragraph 8.1.
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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 ▇▇▇▇ ▇▇▇.
8.5 The
parties shall have received an opinion of ▇▇▇▇ ▇▇▇▇▇ LLP substantially to the
effect that for federal income tax purposes:
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a)
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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.
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b)
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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.
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c)
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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.
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d)
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No
gain or loss will be recognized by any Acquired Fund Shareholder upon the
exchange of its Acquired Fund Shares for Acquiring Fund
Shares.
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e)
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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.
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f)
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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.
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Such
opinion shall be based on customary assumptions and such representations
as ▇▇▇▇ ▇▇▇▇▇ 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 ▇▇▇▇-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.
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ARTICLE IX
EXPENSES
The
Acquired Fund will pay the following direct expenses relating to its
participation in the Reorganization: (a) the cost of printing and mailing of the
Proxy Materials; and (b) the cost of soliciting and tabulating the vote of its
shareholders in connection with the Special Meeting. Federated Global
Investment Management Corp. or its affiliates will pay all remaining direct and
redirect 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. Such other expenses include, without
limitation: (a) expenses associated with the preparation and
filing of the Proxy Materials; (b) accounting fees; (c) legal fees
incurred by each Fund; and (d) other related administrative or operational
costs.
ARTICLE X
ENTIRE
AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The
Acquiring Fund, and the Trust, on behalf of the Acquired Fund, agree that
neither party has made to the other party any representation, warranty and/or
covenant not set forth herein, and that this Agreement constitutes the entire
agreement between the parties.
10.2 Except
as specified in the next sentence set forth in this paragraph 10.2, the
representations, warranties, and covenants contained in this Agreement or in any
document delivered pursuant to or in connection with this Agreement, shall not
survive the consummation of the transactions contemplated
hereunder. The covenants to be performed after the Closing Date,
shall continue in effect beyond the consummation of the transactions
contemplated hereunder.
ARTICLE XI
TERMINATION
This
Agreement may be terminated by either the Acquired Fund or the Trust at its
option at or before the Closing Date. In the event of any such
termination, in the absence of willful default, there shall be no liability for
damages on the part of any of the Acquiring Fund, the Acquired Fund, the Trust,
or their respective Directors, Trustees or officers.
ARTICLE XII
AMENDMENTS
This
Agreement may be amended, modified, or supplemented in such manner as may be
mutually agreed upon in writing by the officers of the Acquired Fund and the
Trust as authorized by the Board of Directors of the Acquired Fund and the Board
of Trustees of the Acquiring Fund, respectively; provided, however, that
following the meeting of the Acquired Fund Shareholders called by the Acquired
Fund pursuant to paragraph 5.2 of this Agreement, no such amendment may
have the effect of changing the provisions for determining the number of
Acquiring Fund Shares to be issued to the Acquired Fund Shareholders under this
Agreement to the detriment of such shareholders without their further
approval.
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ARTICLE XIII
HEADINGS;
COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION
OF LIABILITY
The
Article and paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original.
This
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania.
This
Agreement shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns, but, except as provided in this paragraph, no
assignment or transfer hereof or of any rights or obligations hereunder shall be
made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give any person, firm, or corporation, other than
the parties hereto and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
It is
expressly agreed that the obligations of the Acquired Fund hereunder shall not
be binding upon any of the Directors, shareholders, nominees, officers, agents
or employees of the Acquired Fund personally, but shall bind only the property
of the Acquired Fund, as provided in the Articles of Incorporation of the
Acquired Fund. The execution and delivery by officers of the Acquired
Fund have been authorized by the Directors of the Acquired Fund and signed by
authorized officers of the Acquired Fund, acting as such. Neither the
authorization by such Directors 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 property of the
Acquired Fund as provided in the Acquired Fund’s Articles of
Incorporation.
It is
expressly agreed that the obligations of the Acquiring Fund hereunder shall not
be binding upon any of the Trustees, shareholders, nominees, officers, agents,
or employees of the Trust personally, but shall bind only the Trust property of
the Acquiring Fund, as provided in the Declaration of Trust of the
Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust on behalf of the Acquiring Fund and
signed by authorized officers of the Trust, acting as such. Neither
the authorization by such Trustees nor the execution and delivery by such
officers shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the Trust
property of the Acquiring Fund as provided in the Trust’s Declaration of
Trust.
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IN
WITNESS WHEREOF, the parties have duly executed this Agreement, all as of the
date first written above.
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FEDERATED
AMERICAN LEADERS FUND, INC.
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By:
______________________________
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Title:
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on
behalf of its portfolio,
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Federated
Clover Value Fund
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By:
______________________________
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Title:
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