Exhibit 4
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this __day of ____ 2007, by and between FEDERATED EQUITY FUNDS (the "Trust"), a
Massachusetts business Trust, with its principal place of business at 0000
Xxxxxxxxx Xxxxx, Xxxxxxxxxx, XX, 00000, with respect to Federated
InterContinental Fund, a series of the Trust ("Acquiring Fund"), and FEDERATED
WORLD INVESTMENT SERIES, INC, a Maryland corporation, with its principal place
of business at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, XX, 00000 (the "Corporation"),
with respect to Federated International Capital Appreciation Fund, a series of
the Corporation ("Acquired Fund" and, collectively with the Acquiring Fund, the
"Funds").
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Internal
Revenue Code of 1986, as amended (the "Code") and the Treasury Regulations
promulgated thereunder. The reorganization will consist of: (i) the transfer
of all of the assets of the Acquired Fund in exchange for Class A Shares, Class
B Shares and Class C Shares of the Acquiring Fund ("Acquiring Fund Shares"); and
(ii) the distribution of Class A Shares, Class B Shares and Class C Shares of
the Acquiring Fund to the holders of Class A Shares, Class B Shares and Class C
Shares, respectively, of the Acquired Fund and the liquidation of the Acquired
Fund as provided herein, all upon the terms and conditions set forth in this
Agreement (the "Reorganization").
WHEREAS, the Acquired Fund is a separate series of the Corporation, the
Acquiring Fund is a separate series of the Trust and the Corporation 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 interests;
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;
WHEREAS, the Directors of the Corporation have determined that the
Reorganization, with respect to the Acquired Fund, is in the best interests of
the Acquired Fund and that the interests of the existing shareholders of the
Acquired Fund will not be diluted as a result of the Reorganization;
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 full and fractional Acquiring Fund Shares, determined by (a) multiplying
the shares outstanding of each class of the Acquired Fund by (b) the ratio
computed by dividing (x) the net asset value per share of such class of the
Acquired Fund by (y) the net asset value per share of the corresponding class
of the Acquiring Fund Shares computed in the manner and as of the time and date
set forth in paragraph 2.2. Holders of the Acquired Fund's Class A Shares,
Class B Shares and Class C Shares will receive Class A Shares, Class B Shares
and Class C Shares, respectively, of the Acquiring Fund. Such transactions
shall take place at the closing on the Closing Date provided for in
paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The assets of
the Acquired Fund to be acquired by the Acquiring Fund shall consist of property
having a value equal to the total net assets of the Acquired Fund, including,
without limitation, cash, securities, commodities, interests in futures and
dividends or interest receivable, owned by the Acquired Fund and any deferred or
prepaid expenses shown as an asset on the books of the Acquired Fund on the
Closing Date.
The Acquired Fund has provided the Acquiring Fund with its most recent
audited financial statements, which contain a list of all of the Acquired Fund's
assets as of the date of such statements. The Acquired Fund hereby represents
that as of the date of the execution of this Agreement, there have been no
changes in its financial position as reflected in such financial statements
other than those occurring in the ordinary course of business in connection with
fluctuations in value of its investment portfolio, the purchase and sale of
securities, the issuance and redemption of Acquired Fund shares and the payment
of normal operating expenses, dividends and capital gains distributions.
1.3 LIABILITIES TO BE DISCHARGED. The
Acquired Fund will discharge all of its liabilities and obligations prior to the
Closing Date.
1.4 LIQUIDATION AND DISTRIBUTION. On or
as soon after the Closing Date as is conveniently practicable: (a) the Acquired
Fund will distribute in complete liquidation of the Acquired Fund, pro rata to
its shareholders of record, determined as of the close of business on the
Closing Date (the "Acquired Fund Shareholders"), all of the Acquiring Fund
Shares received by the Acquired Fund pursuant to paragraph 1.1; and (b) the
Acquired Fund will thereupon proceed to dissolve and terminate as set forth in
paragraph 1.8 below. Such distribution will be accomplished by the transfer of
the Acquiring Fund's Class A Shares, Class B Shares and Class C Shares,
respectively, credited to the account of the Acquired Fund on the books of the
Acquiring Fund to open accounts on the share records of the Acquiring Fund in
the name of the Acquired Fund Shareholders, and representing the respective
pro rata number of Acquiring Fund Shares due such shareholders. All issued and
outstanding shares of the Acquired Fund (the "Acquired Fund Shares") will
simultaneously be canceled on the books of the Acquired Fund. The Acquiring
Fund shall not issue certificates representing Acquiring Fund Shares in
connection with such transfer. After the Closing Date, the Acquired Fund shall
not conduct any business except in connection with its termination.
1.5 OWNERSHIP OF SHARES. Ownership of
Acquiring Fund Shares will be shown on the books of the Acquiring Fund's
transfer agent. Acquiring Fund Shares will be issued simultaneously to the
Acquired Fund, in an amount equal in value to the aggregate net asset value of
the Acquired Fund Shares, to be distributed to Acquired Fund Shareholders.
1.6 TRANSFER TAXES. Any transfer taxes
payable upon the issuance of Acquiring Fund Shares in a name other than the
registered holder of the Acquired Fund shares on the books of the Acquired Fund
as of that time shall, as a condition of such issuance and transfer, be paid by
the person to whom such Acquiring Fund Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any
reporting responsibility of the Acquired Fund is and shall remain the
responsibility of the Acquired Fund.
1.8 TERMINATION. The Acquired Fund shall
be terminated promptly following the Closing Date and the making of all
distributions pursuant to paragraph 1.4.
1.9 BOOKS AND RECORDS. All books and
records of the Acquired Fund, including all books and records required to be
maintained under the Investment Company Act of 1940 (the "1940 Act"), and the
rules and regulations thereunder, shall be available to the Acquiring Fund from
and after the Closing Date and shall be turned over to the Acquiring Fund as
soon as practicable following the Closing Date.
ARTICLE*II
VALUATION
2.1 VALUATION OF ASSETS. The value of the
Acquired Fund's assets to be acquired by the Acquiring Fund hereunder shall be
the value of such assets at the closing on the Closing Date, using the valuation
procedures set forth in the Trust's Declaration of Trust and the Acquiring
Fund's then current prospectus and statement of additional information or such
other valuation procedures as shall be mutually agreed upon by the parties.
2.2 VALUATION OF SHARES. The net asset
value per share of Acquiring Fund Shares shall be the net asset value per share
computed at the closing on the Closing Date, using the valuation procedures set
forth in the 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 (a) multiplying the shares outstanding each class of the Acquired Fund by
(b) the ratio computed by (x) dividing the net asset value per share of such
class of the Acquired Fund by (y) the net asset value per share of the
corresponding class of the Acquiring Fund Shares determined in accordance with
paragraph 2.2.
2.4 DETERMINATION OF VALUE. All
computations of value shall be made by State Street Bank and Trust Company, on
behalf of the Acquiring Fund and the Acquired Fund.
ARTICLE*III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing shall occur
on or about December 14, 2007, or such other date(s) as the parties may agree to
in writing (the "Closing Date"). All acts taking place at the closing shall be
deemed to take place at 4:00 p.m. Eastern Time on the Closing Date unless
otherwise provided herein. The closing shall be held at the offices of
Federated Services Company, 0000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 15222-
3779, 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 Corporation or
provide evidence satisfactory to the Acquired Fund that the Acquiring Fund
Shares have been credited to the Acquired Fund's account on the books of the
Acquiring Fund. At the Closing, each party shall deliver to the other such
bills of sale, checks, assignments, share certificates, receipts 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 Corporation, on behalf of the Acquired Fund, represents and warrants to the
Trust, as follows:
a) The Corporation is registered as an open-end management investment company
under the 1940 Act, and the Corporation's registration with the Securities
and Exchange Commission (the "Commission") as an investment company under
the 1940 Act is in full force and effect, and the Corporation is duly
incorporated validly existing in good standing under the laws of the State
of Maryland. The Fund is a portfolio of the Corporation.
b) 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.
c) 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 Corporation's Articles of Incorporation
or By-Laws or of any material agreement, indenture, instrument, contract,
lease, or other undertaking to which the Acquired Fund is a party or by
which it is bound.
d) 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.
e) Except as otherwise disclosed in writing to and accepted by the Acquiring
Fund, or as otherwise disclosed in the Acquired Funds current registration
statement, 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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f) The audited financial statements of the Acquired Fund as of November 30,
2006, 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.
g) The unaudited financial statements of the Acquired Fund as of May 31,
2007, and for the six months then ended have been prepared in accordance
with generally accepted accounting principles, (subject to absence of
footnotes and year-end adjustments) and such statements (copies of which
have been furnished to the Acquiring Fund) fairly reflect the financial
condition of the Acquired Fund as of such date, and there are no known
contingent liabilities of the Acquired Fund as of such date that are not
disclosed in such statements.
h) Since the date of the financial statements referred to in paragraph (g)
above, there have been no material adverse changes in the Acquired Fund's
financial condition, assets, liabilities or business (other than changes
occurring in the ordinary course of business), or any incurrence by the
Acquired Fund of indebtedness maturing more than one year from the date
such indebtedness was incurred, except as otherwise disclosed to and
accepted by the Acquiring Fund. For the purposes of this paragraph (h), a
decline in the net asset value of the Acquired Fund shall not constitute a
material adverse change.
i) All federal and other tax returns and reports of the Acquired Fund
required by law to be filed, have been filed, and all federal and other
taxes shown due on such returns and reports have been paid, or provision
shall have been made for the payment thereof. To the best of the Acquired
Fund's knowledge, no such return is currently under audit, and no
assessment has been asserted with respect to such returns.
j) All issued and outstanding shares of the Acquired Fund are duly and
validly issued and outstanding, fully paid and non-assessable by the
Acquired Fund. All of the issued and outstanding shares of the Acquired
Fund will, at the time of the Closing Date, be held by the persons and in
the amounts set forth in the records of the Acquired Fund's transfer agent
as provided in paragraph 3.4. The Acquired Fund has no outstanding
options, warrants, or other rights to subscribe for or purchase any of the
Acquired Fund shares, and has no outstanding securities convertible into
any of the Acquired Fund shares.
k) At the Closing Date, the Acquired Fund will have good and marketable title
to the Acquired Fund's assets to be transferred to the Acquiring Fund
pursuant to paragraph 1.2, and full right, power, and authority to sell,
assign, transfer, and deliver such assets hereunder, free of any lien or
other encumbrance, except those liens or encumbrances to which the
Acquiring Fund has received notice, and, upon delivery and payment for
such assets, and the filing of any articles, certificates or other
documents under the laws of the state of Maryland, the Acquiring Fund will
acquire good and marketable title, subject to no restrictions on the full
transfer of such assets, other than such restrictions as might arise under
the 1933 Act, and other than as disclosed to and accepted by the Acquiring
Fund.
l) The execution, delivery and performance of this Agreement have been duly
authorized by all necessary action on the part of the Acquired Fund.
Subject to approval by the Acquired Fund Shareholders, this Agreement
constitutes a valid and binding obligation of the Acquired Fund,
enforceable in accordance with its terms, subject 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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m) The information to be furnished by the Acquired Fund for use in no-action
letters, applications for orders, registration statements, proxy
materials, and other documents that may be necessary in connection with
the transactions contemplated herein shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations.
n) From the effective date of the Registration Statement (as defined in
paragraph 5.7), through the time of the meeting of the Acquired Fund
Shareholders and on the Closing Date, any written information furnished by
the Corporation with respect to the Acquired Fund for use in the Proxy
Materials (as defined in paragraph 5.7), or any other materials provided
in connection with the Reorganization, does not and will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated or necessary to make the statements, in light of the
circumstances under which such statements were made, not misleading.
o) The Acquired Fund has elected to qualify and has qualified as a "regulated
investment company" under the Code (a "RIC"), as of and since its first
taxable year; has been a RIC under the Code at all times since the end of
its first taxable year when it so qualified; and qualifies and will
continue to qualify as a RIC under the Code for its taxable year ending
upon its liquidation.
p) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the Securities Exchange Act of 1934 (the
"1934 Act"), the 1940 Act or Maryland law for the execution of this
Agreement by the Trust, for itself and on behalf of the Acquired Fund,
except for the effectiveness of the Registration Statement, and the filing
of any articles, certificates or other documents that may be required
under Maryland law, and except for such other consents, approvals,
authorizations and filings as have been made or received, and such
consents, approvals, authorizations and filings as may be required
subsequent to the Closing Date, it being understood, however, that this
Agreement and the transactions contemplated herein must be approved by the
shareholders of the Acquired Fund as described in paragraph 5.2.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND.
The Trust, on behalf of the Acquiring Fund represents and warrants to the
Corporation, on behalf of the Acquired Fund, as follows:
a) The Trust is a Massachusetts business trust duly organized, validly
existing and in good standing under the laws of The Commonwealth of
Massachusetts; the Acquiring Fund is a duly organized portfolio of the
Trust; and the Trust has the power to carry on its business as it is now
being conducted and to carry out this Agreement. The Trust is registered
as a management investment company under the 0000 Xxx.
b) 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.
c) 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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d) Except as otherwise disclosed in writing to and accepted by the Acquired
Fund, or as otherwise disclosed in the Acquiring Funds current
registration statement, 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.
e) 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.
f) 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.
g) 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.
h) 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.
i) 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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j) 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 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.
k) 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.
l) 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 Acquiring Fund, or the
performance of the Agreement by the Acquiring Fund, except for the
effectiveness of the Registration Statement, and the filing of any
articles, certificates or other documents that may be required under
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.
m) 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*I
COVENANTS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
5.1 OPERATION IN ORDINARY COURSE. Except
to the extent required to transition its portfolio holdings in anticipation of
the Reorganization. The Acquiring Fund and the Acquired Fund will each operate
its respective business in the ordinary course between the date of this
Agreement and the Closing Date, it being understood that such ordinary course of
business will include customary dividends and shareholder purchases and
redemptions.
5.2 APPROVAL OF SHAREHOLDERS. The
Corporation will call a special meeting of the Acquired Fund Shareholders to
consider and act upon this Agreement and to take all other appropriate action
necessary to obtain approval of the transactions contemplated herein.
5.3 INVESTMENT REPRESENTATION. The
Acquired Fund covenants that the Acquiring Fund Shares to be issued pursuant to
this Agreement are not being acquired for the purpose of making any
distribution, other than in connection with the Reorganization and in accordance
with the terms of this Agreement.
5.4 ADDITIONAL INFORMATION. The Acquired
Fund will assist the Acquiring Fund in obtaining such information as the
Acquiring Fund reasonably requests concerning the beneficial ownership of the
Acquired Fund's shares.
5.5 FURTHER ACTION. Subject to the
provisions of this Agreement, the Acquiring Fund and the Acquired Fund will each
take or cause to be taken, all action, and do or cause to be done, all things
reasonably necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, including any actions required to
be taken after the Closing Date.
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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 Trust'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 on Form N-14 shall include a proxy
statement and a prospectus of the Acquiring Fund relating to the transaction
contemplated by this Agreement. The Registration Statement shall be in
compliance with the 1933 Act, the 1934 Act and the 1940 Act, as applicable.
Each party will provide the other party with the materials and information
necessary to prepare the registration statement on Form N-14 (the "Proxy
Materials"), for inclusion therein, in connection with the meeting of the
Acquired Fund's Shareholders to consider the approval of this Agreement and the
transactions contemplated herein.
5.8 On or before the Closing Date, the
Acquired Fund shall have declared and paid a dividend or dividends which,
together with all previous such dividends, shall have the effect of distributing
to its shareholders all of the Acquired Fund's investment company taxable income
(computed without regard to any deduction for dividends paid), if any, plus the
excess, if any, of its interest income excludible from gross income under
Section 103(a) of the Code over its deductions disallowed under Sections 265 and
171(a)(2) of the Code for all taxable periods or years ending on or before the
Closing Date, and all of its net capital gains realized (after reduction for any
capital loss carry forward), if any, in all taxable periods or years ending on
or before the Closing Date.
ARTICLE*II
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 a certificate executed in the Acquiring Fund's
name by the Trust's President or Vice President and its Treasurer or Assistant
Treasurer, in form and substance satisfactory to the Acquired Fund and dated as
of the Closing Date, to such effect and as to such other matters as the Acquired
Fund shall reasonably request.
ARTICLE*III
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:
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All representations, covenants, and warranties of the Acquired Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of such Closing Date. The Acquired Fund shall have
delivered to the Acquiring Fund on such Closing Date a certificate executed in
the Acquired Fund's name by the Corporation's President or Vice President and
the Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Acquiring Fund and dated as of such Closing Date, to such effect and as to such
other matters as the Acquiring Fund shall reasonably request.
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 Trust.
ARTICLE*IV
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE
ACQUIRING FUND AND ACQUIRED FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 This Agreement and the transactions
contemplated herein, with respect to the Acquired Fund, shall have been approved
by the requisite vote of the holders of the outstanding shares of the Acquired
Fund in accordance with applicable law and the provisions of the Corporation's
Articles of Incorporation and By-Laws. Certified copies of the resolutions
evidencing such approval shall have been delivered to the Acquiring Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor
the Acquired Fund may waive the conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the Commission
shall not have issued an unfavorable report under Section 25(b) of the 1940 Act,
or instituted any proceeding seeking to enjoin the consummation of the
transactions contemplated by this Agreement under Section 25(c) of the 1940 Act.
Furthermore, no action, suit or other proceeding shall be threatened or pending
before any court or governmental agency in which it is sought to restrain or
prohibit, or obtain damages or other relief in connection with this Agreement or
the transactions contemplated herein.
8.3 All required consents of other parties
and all other consents, orders, and permits of federal, state and local
regulatory authorities (including those of the Commission and of State
securities authorities, including any necessary "no-action" positions and
exemptive orders from such federal and state authorities) to permit consummation
of the transactions contemplated herein shall have been obtained, except where
failure to obtain any such consent, order, or permit would not involve a risk of
a material adverse effect on the assets or properties of the Acquiring Fund or
the Acquired Fund, provided that either party hereto may waive any such
conditions for itself.
8.4 The Registration Statement shall have
become effective under the 1933 Act, and no stop orders suspending the
effectiveness thereof shall have been issued. To the best knowledge of the
parties to this Agreement, no investigation or proceeding for that purpose shall
have been instituted or be pending, threatened or contemplated under the 0000
Xxx.
8.5 The parties shall have received an
opinion of Xxxx Xxxxx LLP substantially to the effect that for federal income
tax purposes:
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a) The transfer of all of the Acquired Fund's assets to the Acquiring Fund
solely in exchange for the Acquiring Fund Shares (followed by the
distribution of the Acquiring Fund Shares to the Acquired Fund
Shareholders in dissolution and liquidation of the Acquired Fund) will
constitute a "reorganization" within the meaning of Section 368(a) of the
Code, and the Acquiring Fund and the Acquired Fund will each be a "party
to a reorganization" within the meaning of Section 368(b) of the Code.
b) No gain or loss will be recognized by the Acquiring Fund upon the receipt
of the assets of the Acquired Fund solely in exchange for the Acquiring
Fund Shares.
c) No gain or loss will be recognized by the Acquired Fund upon the transfer
of the Acquired Fund's assets to the Acquiring Fund solely in exchange for
Acquiring Fund Shares or upon the distribution (whether actual or
constructive) of the Acquiring Fund Shares to Acquired Fund Shareholders
in exchange for their Acquired Fund Shares.
d) No gain or loss will be recognized by any Acquired Fund Shareholder upon
the exchange of its Acquired Fund Shares for Acquiring Fund Shares.
e) The aggregate tax basis of the Acquiring Fund Shares received by each
Acquired Fund Shareholder pursuant to the Reorganization will be the same
as the aggregate tax basis of the Acquired Fund Shares held by it
immediately prior to the Reorganization. The holding period of Acquiring
Fund Shares received by each Acquired Fund Shareholder will include the
period during which the Acquired Fund Shares exchanged therefor were held
by such shareholder, provided the Acquired Fund Shares are held as capital
assets at the time of the Reorganization.
f) The tax basis of the Acquired Fund's assets acquired by the Acquiring Fund
will be the same as the tax basis of such assets to the Acquired Fund
immediately prior to the Reorganization. The holding period of the assets
of the Acquired Fund in the hands of the Acquiring Fund will include the
period during which those assets were held by the Acquired Fund.
Such opinion shall be based on customary assumptions and such
representations Xxxx Xxxxx LLP may reasonably request, and the Acquired
Fund and Acquiring Fund will cooperate to make and certify the accuracy of
such representations. The foregoing opinion may state that no opinion is
expressed as to the effect of the Reorganization on the Acquiring Fund,
the Acquired Fund or any Acquired Fund Shareholder with respect to any
asset as to which unrealized gain or loss is required to be recognized for
federal income tax purposes at the end of a taxable year (or on the
termination or transfer thereof) under a xxxx-to-market system of
accounting. Notwithstanding anything herein to the contrary, neither the
Acquiring Fund nor the Acquired Fund may waive the conditions set forth in
this paragraph 8.5.
ARTICLE*I
EXPENSES
Federated Global Investment Management Corp., or its affiliates will pay
all expenses associated with Acquiring Fund's and Acquired Fund's participation
in the Reorganization, provided, however, that Acquiring Fund shall bear
expenses associated with registration of Acquiring Fund Shares under the 1933
Act and the qualification of Acquiring Fund Shares for sale in the various
states. Reorganization expenses include, without limitation: (a) expenses
associated with the preparation and filing of the Proxy Materials; (b) postage;
(c) printing; (d) accounting fees; (e) legal fees incurred by each Fund;
(f) solicitation costs of the transaction; and (g) other related administrative
or operational costs.
ARTICLE*II
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Trust on behalf of the Acquiring
Fund, and the Corporation, on behalf of the Acquired Fund, agree that neither
party has made to the other party any representation, warranty and/or covenant
not set forth herein, and that this Agreement constitutes the entire agreement
between the parties.
10.2 Except as specified in the next
sentence set forth in this paragraph 10.2, the representations, warranties, and
covenants contained in this Agreement or in any document delivered pursuant to
or in connection with this Agreement, shall not survive the consummation of the
transactions contemplated hereunder. The covenants to be performed after the
Closing Date, shall continue in effect beyond the consummation of the
transactions contemplated hereunder.
ARTICLE*III
TERMINATION
This Agreement may be terminated by the mutual agreement of the Trust and
the Corporation. In addition, either the Corporation or the 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 or Directors, as
appropriate, that the consummation of the transactions contemplated herein
is not in the best interest of the Corporation, or the Acquired Fund, the
Trust or the Acquiring Fund, respectively, and notice given to the other
party hereto.
In the event of any such termination, in the absence of willful default,
there shall be no liability for damages on the part of any of the Acquiring
Fund, the Acquired Fund, the Corporation or the Trust, or their respective
directors, trustees or officers, to the other party or its directors, trustees
or officers.
ARTICLE*I
AMENDMENTS
This Agreement may be amended, modified, or supplemented in such manner as
may be mutually agreed upon in writing by the officers of the Corporation and
the Trust as specifically authorized by their respective Board of Directors or
Trustees; provided, however, that following the meeting of the Acquired Fund
Shareholders called by the Acquired Fund pursuant to paragraph 5.2 of this
Agreement, no such amendment may have the effect of changing the provisions for
determining the number of Acquiring Fund Shares to be issued to the Acquired
Fund Shareholders under this Agreement to the detriment of such shareholders
without their further approval.
ARTICLE*II
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.
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as
of the date first written above.
FEDERATED WORLD INVESTMENT SERIES, INC.
on behalf of its portfolio,
Federated International Capital
Appreciation Fund
Xxxx X. XxXxxxxxx, Secretary
FEDERATED EQUITY FUNDS
on behalf of its portfolio,
Federated InterContinental Fund
Xxxx X. XxXxxxxxx, Secretary
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