Exhibit 1
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION BETWEEN FEDERATED INDEX TRUST, WITH
RESPECT TO FEDERATED MID-CAP INDEX FUND AND THE XXXXX STREET FUNDS, INC.,
WITH RESPECT TO THE XXXXX STREET INDEX 400 STOCK FUND
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this 14th day of December, 2005, by and between Federated Index Trust, a
Massachusetts Business Trust, with its principal place of business at 0000
Xxxxxxxxx Xxxxx, Xxxxxxxxxx, XX, 00000 (the "Federated Trust"), with respect to
its Federated Mid-Cap Index Fund (the "Acquiring Fund"), a series of the
Federated Trust, and Xxxxx Street Funds, Inc., a Maryland corporation, with its
principal place of business at 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000
(the "Corporation"), with respect to its Xxxxx Street Index 400 Stock 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 Shares, no par value per
share, of the Acquiring Fund ("Acquiring Fund Shares"); and (ii) the
distribution of Shares of the Acquiring Fund to the holders of Class A Shares
and Class B Shares of the Acquired Fund and the liquidation of the Acquired Fund
as provided herein, all upon the terms and conditions set forth in this
Agreement (the "Reorganization").
WHEREAS, the Acquiring Fund and the Acquired Fund is a separate series of
the Federated Trust and the Corporation, respectively, and the Federated Trust
and the Corporation are open-end, registered management investment companies and
the Acquired Fund owns securities that generally are assets of the character in
which the Acquiring Fund is permitted to invest;
WHEREAS, the Acquiring Fund and the Acquired Fund are authorized to issue
their shares of beneficial interests and common stock, respectively;
WHEREAS, the Trustees of the Federated Trust have determined that the
Reorganization, with respect to the Acquiring Fund, is in the best interests of
the Acquiring Fund and that the interests of the existing shareholders of the
Acquiring Fund will not be diluted as a result of the Reorganization;
WHEREAS, the 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 to deliver to the
Acquired Fund the number of full and fractional Acquiring Fund Shares,
determined by aggregating for each class of shares of the Acquired Fund the
product of (a) the shares outstanding of such class of the Acquired Fund, times
(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 Acquiring
Fund Shares computed in the manner and as of the time and date set forth in
paragraph 2.2. Holders of the Class A Shares and Class B Shares of the Acquired
Fund will receive Shares of the Acquiring Fund without a sales load, commission
or other similar fee being imposed (it also is understood that the initial
minimum investment amount of $25,000 that is applicable to initial purchases
into the fund shall be waived with respect to such Acquired Fund shareholders).
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 all property, 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
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 Acquiring Fund Shares credited to the
account of the Acquired Fund on the books of the Acquiring Fund to open accounts
on the share records of the Acquiring Fund in the name of the Acquired Fund
Shareholders, and representing the respective pro rata number of Acquiring Fund
Shares due such shareholders. All issued and outstanding shares of the Acquired
Fund (the "Acquired Fund Shares") will simultaneously be canceled on the books
of the Acquired Fund. The Acquiring Fund shall not issue certificates
representing Acquiring Fund Shares in connection with such transfer. After the
Closing Date, the Acquired Fund shall not conduct any business except in
connection with its termination.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be shown on the
books of the Acquiring Fund's transfer agent. Acquiring Fund Shares will be
issued simultaneously to the Acquired Fund, in an amount described in paragraph
1.1, 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 the Closing Date 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.
1.10 SALES LOAD ON CLASS A SHARES OF FEDERATED FUNDS. Shareholders of the
Acquired Fund as of the Closing Date shall not be subject to the sales load on
any future purchases of Class A Shares of funds advised and distributed by
subsidiaries of Federated Investors, Inc.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Acquired Fund's assets to be acquired
by the Acquiring Fund hereunder shall be the value of such assets at the closing
on the Closing Date, using the valuation procedures set forth in the Federated
Trust's Declaration of Trust and the Acquiring Fund's then current prospectus
and statement of additional information or such other valuation procedures as
shall be mutually agreed upon by the parties.
2.2 VALUATION OF SHARES. The net asset value per share of Acquiring Fund Shares
and Acquired Fund Shares shall be the net asset value per share computed at the
closing on the Closing Date, using the valuation procedures set forth in the
Federated Trust's Declaration of Trust and the Acquiring Fund's then current
prospectus and statement of additional information, or such other valuation
procedures as shall be mutually agreed upon by the parties.
2.3 SHARES TO BE ISSUED. The number of the Acquiring Fund's shares to be issued
(including fractional shares, if any) in exchange for the Acquired Fund's
assets, shall be determined by aggregating for each class of shares of the
Acquired Fund the product of (a) the shares outstanding of such class of the
Acquired Fund, times (b) the ratio computed by (x) dividing the net asset value
per share of such class of the Acquired Fund determined in accordance with
paragraph 2.2 by (y) the net asset value per share of the Acquiring Fund Shares
determined in accordance with paragraph 2.2.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by State
Street Bank and Trust Company, on behalf of the Acquiring Fund and the Acquired
Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing shall occur on or about March 31, 2006, or such
other date(s) as the parties may agree to in writing (the "Closing Date"). All
acts taking place at the closing shall be deemed to take place at 4:00 p.m.
Eastern Time on the Closing Date unless otherwise provided herein. The closing
shall be held at the offices of Federated Services Company, 0000 Xxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000, or at such other time and/or place as the
parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. X.X. Xxxxxx Xxxxx Bank, 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.
3.4 TRANSFER AGENT'S CERTIFICATE. Boston Financial Data Services, 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, custodian certificates, transfer agent certificates, president,
vice president, treasurer, secretary, chief financial officer and other officer
certificates, instructions, acknowledgements, receipts, legal opinions 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 Federated Trust, on behalf
of the Acquiring Fund, as follows:
a) The Acquired Fund is a separate series of the Corporation duly organized,
validly existing, and in good standing under the laws of the State of Maryland.
b) The Corporation is registered as an open-end management investment company
under the 1940 Act, and the Corporation's registration with the Securities and
Exchange Commission (the "Commission") as an investment company under the 1940
Act is in full force and effect.
c) The current prospectus and statement of additional information of the
Acquired Fund conform in all material respects to the applicable requirements of
the Securities Act of 1933 (the "1933 Act") and the 1940 Act, and the rules and
regulations thereunder, and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
d) The Acquired Fund is not, 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.
e) The Acquired Fund has no material contracts or other commitments (other than
this Agreement) that will be terminated with liability to it before the Closing
Date, except for liabilities, if any, to be discharged as provided in paragraph
1.3 hereof.
f) Except as otherwise disclosed in writing to the Acquiring Fund, no
litigation, administrative proceeding, or investigation of or before any court
or governmental body is presently pending or to its knowledge threatened against
the Acquired Fund or any of its properties or assets, which, if adversely
determined, would materially and adversely affect its financial condition, the
conduct of its business, or the ability of the Acquired Fund to carry out the
transactions contemplated by this Agreement. The Acquired Fund knows of no facts
that might form the basis for the institution of such proceedings and is not a
party to or subject to the provisions of any order, decree, or judgment of any
court or governmental body that materially and adversely affects its business or
its ability to consummate the transactions contemplated herein.
g) The audited financial statements of the Acquired Fund as of March 31, 2005,
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.
h) The unaudited financial statements of the Acquired Fund as of September 30,
2005, and for the six months then ended have been prepared in accordance with
generally accepted accounting principles, and such statements (copies of which
have been furnished to the Acquired Fund) fairly reflect the financial condition
of the 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.
i) Since the date of the financial statements referred to in paragraph (g)
above, there have been no material adverse changes in the Acquired Fund's
financial condition, assets, liabilities or business (other than changes
occurring in the ordinary course of business), or any incurrence by the Acquired
Fund of indebtedness maturing more than one year from the date such indebtedness
was incurred, except as otherwise disclosed to and accepted by the Acquiring
Fund. For the purposes of this paragraph (i), a decline in the net asset value
of the Acquired Fund shall not constitute a material adverse change.
j) 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 to be
due on such returns and reports have been paid, or provision shall have been
made for the payment thereof. To the best of the Corporation's knowledge, no
such return is currently under audit, and no assessment has been asserted with
respect to such returns.
k) 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.
l) 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.
m) 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.
n) 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.
o) 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.
p) 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.
q) 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 of Maryland law for the execution of this Agreement by the
Corporation, for itself and on behalf of the Acquired Fund, except for the
effectiveness of the Registration Statement, and the filing of any articles,
certificates or other documents that may be required under Maryland law, and
except for such other consents, approvals, authorizations and filings as have
been made or received, and such consents, approvals, authorizations and filings
as may be required subsequent to the Closing Date, it being understood, however,
that this Agreement and the transactions contemplated herein must be approved by
the shareholders of the Acquired Fund as described in paragraph 5.2.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Federated Trust, on behalf of the
Acquiring Fund, represents and warrants to the Corporation, on behalf of the
Acquired Fund, as follows:
a) 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.
b) The Federated Trust is registered as an open-end management investment
company under the 1940 Act, and the Federated Trust's registration with the
Commission as an investment company under the 1940 Act is in full force and
effect.
c) The current prospectus and statement of additional information of the
Acquiring Fund conform in all material respects to the applicable requirements
of the 1933 Act and the 1940 Act and the rules and regulations thereunder, and
do not include any untrue statement of a material fact or omit to state any
material fact required to be stated or necessary to make such statements
therein, in light of the circumstances under which they were made, not
misleading.
d) The Acquiring Fund is not, and the execution, delivery and performance of
this Agreement will not, result in a violation of the Federated Trust's
Declaration of Trust or By-Laws or of any material agreement, indenture,
instrument, contract, lease, or other undertaking to which the Acquiring Fund is
a party or by which it is bound.
e) Except as otherwise disclosed in writing to the Acquired Fund, no litigation,
administrative proceeding or investigation of or before any court or
governmental body is presently pending or to its knowledge threatened against
the Acquiring Fund or any of its properties or assets, which, if adversely
determined, would materially and adversely affect its financial condition, the
conduct of its business or the ability of the Acquiring Fund to carry out the
transactions contemplated by this Agreement. The Acquiring Fund knows of no
facts that might form the basis for the institution of such proceedings and it
is not a party to or subject to the provisions of any order, decree, or judgment
of any court or governmental body that materially and adversely affects its
business or its ability to consummate the transaction contemplated herein.
f) The financial statements of the Acquiring Fund as of October 31, 2005 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 Acquired Funds) fairly reflect the financial condition of the
Acquiring Fund as of such date, and there are no known contingent liabilities of
the Acquiring Fund as of such date that are not disclosed in such statements.
g) Since the date of the financial statements referred to in paragraph (f)
above, there have been no material adverse changes in the Acquiring Fund's
financial condition, assets, liabilities or business (other than changes
occurring in the ordinary course of business), or any incurrence by the
Acquiring Fund of indebtedness maturing more than one year from the date such
indebtedness was incurred, except as otherwise disclosed to and accepted by the
Acquired Fund. For the purposes of this paragraph (g), a decline in the net
asset value of the Acquiring Fund shall not constitute a material adverse
change.
h) All federal and other tax returns and reports of the Acquiring Fund required
by law to be filed, have been filed. All federal and other taxes shown to be due
on such returns and reports have been paid, or provision shall have been made
for the payment thereof. To the best of the Federated Trust's knowledge, no such
return is currently under audit, and no assessment has been asserted with
respect to such returns.
i) All issued and outstanding Acquiring Fund Shares are duly and validly issued
and outstanding, fully paid and non-assessable by the Acquiring Fund. The
Acquiring Fund has no outstanding options, warrants, or other rights to
subscribe for or purchase any Acquiring Fund Shares, and there are no
outstanding securities convertible into any Acquiring Fund Shares.
j) The execution, delivery and performance of this Agreement have been duly
authorized by all necessary action on the part of the Acquiring Fund, and this
Agreement constitutes a valid and binding obligation of the Acquiring Fund,
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights and to general equity principles.
k) Acquiring Fund Shares to be issued and delivered to the Acquired Fund for the
account of the Acquired Fund Shareholders pursuant to the terms of this
Agreement will, at the Closing Date, have been duly authorized. When so issued
and delivered, such shares will be duly and validly issued Acquiring Fund
Shares, and will be fully paid and non-assessable.
l) The information to be furnished by the Acquiring Fund for use in no-action
letters, registration statements, proxy materials, and other documents that may
be necessary in connection with the transactions contemplated herein shall be
accurate and complete in all material respects and shall comply in all material
respects with federal securities and other laws and regulations.
m) From the effective date of the Registration Statement (as defined in
paragraph 5.7), through the time of the meeting of the Acquired Fund
Shareholders and on the Closing Date, any written information furnished by the
Federated Trust with respect to the Acquiring Fund for use in the Proxy
Materials (as defined in paragraph 5.7), or any other materials provided in
connection with the Reorganization, does not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated or necessary to make the statements, in light of the circumstances under
which such statements were made, not misleading.
n) The Acquiring Fund has elected to qualify and has qualified as a RIC under
the Code as of and since its first taxable year; has been a RIC under the Code
at all times since the end of its first taxable year when it so qualified; and
qualifies and shall continue to qualify as a RIC under the Code for its current
taxable year.
o) No governmental consents, approvals, authorizations or filings are required
under the 1933 Act, the 1934 Act, the 1940 Act or Massachusetts law for the
execution of this Agreement by the Federated Trust, for itself and on behalf of
the Acquiring Fund, or the performance of the Agreement by the Federated Trust,
for itself and on behalf of the Acquiring Fund, except for the effectiveness of
the Registration Statement, and the filing of any articles, certificates or
other documents that may be required under Massachusetts law, and such other
consents, approvals, authorizations and filings as have been made or received,
and except for such consents, approvals, authorizations and filings as may be
required subsequent to the Closing Date.
ARTICLE V
COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 OPERATION IN ORDINARY COURSE. The Acquiring Fund and the Acquired Fund will
each operate its respective business in the ordinary course between the date of
this Agreement and the Closing Date, it being understood that such ordinary
course of business will include customary dividends and shareholder purchases
and redemptions.
5.2 APPROVAL OF SHAREHOLDERS. The Corporation will call a special meeting of the
Acquired Fund Shareholders to consider and act upon this Agreement and to take
all other appropriate action necessary to obtain approval of the transactions
contemplated herein.
5.3 INVESTMENT REPRESENTATION. The Acquired Fund covenants that the Acquiring
Fund Shares to be issued pursuant to this Agreement are not being acquired for
the purpose of making any distribution, other than in connection with the
Reorganization and in accordance with the terms of this Agreement.
5.4 ADDITIONAL INFORMATION. The Acquired Fund will assist the Acquiring Fund in
obtaining such information as the Acquiring Fund reasonably requests concerning
the beneficial ownership of the Acquired Fund's shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the Acquiring
Fund and the Acquired Fund will each take or cause to be taken, all action, and
do or cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement,
including any actions required to be taken after the Closing Date.
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in any
case within sixty days after the Closing Date, the Acquired Fund shall furnish
the Acquiring Fund, in such form as is reasonably satisfactory to the Acquiring
Fund, a statement of the earnings and profits of the Acquired Fund for federal
income tax purposes that will be carried over by the Acquiring Fund as a result
of Section 381 of the Code, and which will be certified by the Corporation's
Treasurer.
5.7 PREPARATION OF REGISTRATION STATEMENT AND SCHEDULE 14A PROXY STATEMENT. The
Federated Trust will prepare and file with the Commission a registration
statement on Form N-14 relating to the Acquiring Fund Shares to be issued to
shareholders of the 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 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.
5.9 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 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:
6.1 All representations, covenants, and warranties of the Acquiring Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of the Closing Date. The Acquiring Fund shall have
delivered to the Acquired Fund a certificate executed in the Acquiring Fund's
name by the Federated Trust's President or Vice President and its Treasurer or
Assistant Treasurer, in form and substance satisfactory to the Acquired Fund and
dated as of the Closing Date, to such effect and as to such other matters as the
Acquired Fund shall reasonably request.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all the obligations to be performed by the Acquired Fund
pursuant to this Agreement, on or before the Closing Date and, in addition,
shall be subject to the following conditions:
7.1 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.
7.2 The Acquired Fund shall have delivered to the Acquiring Fund a statement of
the Acquired Fund's assets and liabilities, together with a list of the Acquired
Fund's portfolio securities showing the tax costs of such securities by lot and
the holding periods of such securities, as of the Closing Date, certified by the
Treasurer of the Corporation.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRING FUND AND ACQUIRED FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein, with respect to the
Acquired Fund, shall have been approved by the requisite vote of the holders of
the outstanding shares of the Acquired Fund in accordance with applicable law
and the provisions of the Corporation's Articles of Incorporation and By-Laws,
as amended or supplemented. Certified copies of the resolutions evidencing such
approval shall have been delivered to the Acquiring Fund. Notwithstanding
anything herein to the contrary, neither the Acquiring Fund nor the Acquired
Fund may waive the conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the Commission shall not have issued an unfavorable
report under Section 25(b) of the 1940 Act, or instituted any proceeding seeking
to enjoin the consummation of the transactions contemplated by this Agreement
under Section 25(c) of the 1940 Act. Furthermore, no action, suit or other
proceeding shall be threatened or pending before any court or governmental
agency in which it is sought to restrain or prohibit, or obtain damages or other
relief in connection with this Agreement or the transactions contemplated
herein.
8.3 All required consents of other parties and all other consents, orders, and
permits of federal, state and local regulatory authorities (including those of
the Commission and of State securities authorities, including any necessary
"no-action" positions and exemptive orders from such federal and state
authorities) to permit consummation of the transactions contemplated herein
shall have been obtained, except where failure to obtain any such consent,
order, or permit would not involve a risk of a material adverse effect on the
assets or properties of the Acquiring Fund or the Acquired Fund, provided that
either party hereto may waive any such conditions for itself.
8.4 The Registration Statement shall have become effective under the 1933 Act,
and no stop orders suspending the effectiveness thereof shall have been issued.
To the best knowledge of the parties to this Agreement, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 0000 Xxx.
8.5 The parties shall have received an opinion of Xxxxxxxxx Xxxxxxx Xxxxx &
Xxxxxxxx LLP substantially to the effect that for federal income tax purposes:
a) The transfer of all of the Acquired Fund's assets to the Acquiring Fund
solely in exchange for Acquiring Fund Shares (followed by the distribution of
Acquiring Fund Shares to the Acquired Fund Shareholders in dissolution and
liquidation of the Acquired Fund) will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and the Acquiring Fund and the Acquired
Fund will each be a "party to a reorganization" within the meaning of Section
368(b) of the Code.
b) No gain or loss will be recognized by the Acquiring Fund upon the receipt of
the assets of the Acquired Fund solely in exchange for Acquiring Fund Shares.
c) No gain or loss will be recognized by the Acquired Fund upon the transfer of
the Acquired Fund's assets to the Acquiring Fund solely in exchange for
Acquiring Fund Shares or upon the distribution (whether actual or constructive)
of Acquiring Fund Shares to Acquired Fund Shareholders in exchange for their
Acquired Fund Shares.
d) No gain or loss will be recognized by any Acquired Fund Shareholder upon the
exchange of its Acquired Fund Shares for Acquiring Fund Shares.
e) The aggregate tax basis of the Acquiring Fund Shares received by each
Acquired Fund Shareholder pursuant to the Reorganization will be the same as the
aggregate tax basis of the Acquired Fund Shares held by it immediately prior to
the Reorganization. The holding period of Acquiring Fund Shares received by each
Acquired Fund Shareholder will include the period during which the Acquired Fund
Shares exchanged therefor were held by such shareholder, provided the Acquired
Fund Shares are held as capital assets at the time of the Reorganization.
f) The tax basis of the Acquired Fund's assets acquired by the Acquiring Fund
will be the same as the tax basis of such assets to the Acquired Fund
immediately prior to the Reorganization. The holding period of the assets of the
Acquired Fund in the hands of the Acquiring Fund will include the period during
which those assets were held by the Acquired Fund.
Such opinion shall be based on customary assumptions and such representations as
Xxxxxxxxx Xxxxxxx Xxxxx & Xxxxxxxx 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.
8.6 The Acquired Fund shall receive an opinion of Xxxx Xxxxx LLP, counsel to the
Acquiring Fund, in form and substance reasonably acceptable to the Acquired
Fund, covering such matters as may be reasonably requested by the Acquired Fund
and its counsel.
8.7 The Acquiring Fund shall receive an opinion of Xxxxxxx Xxxxx Xxxxxxx &
Ingersoll, LLP, counsel to the Acquired Fund, in form and substance reasonably
acceptable to the Acquiring Fund, covering such matters as may be reasonably
requested by the Acquiring Fund and its counsel.
ARTICLE IX
EXPENSES
9.1 Federated Equity Management Company of Pennsylvania and/or Xxxxx Street
Advisors LLC or their 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 the
qualification of Acquiring Fund Shares for sale in the various states.
Reorganization expenses include, without limitation: (a) expenses associated
with the preparation and filing of the Proxy Materials; (b) postage; (c)
printing; (d) accounting fees; (e) legal fees incurred by each Fund; (f)
solicitation costs of the transaction; and (g) other related administrative or
operational costs.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Federated Trust, on behalf of the Acquiring Fund, and the Corporation,
on behalf of the Acquired Fund, agree that neither party has made to the other
party any representation, warranty and/or covenant not set forth herein, and
that this Agreement constitutes the entire agreement between the parties.
10.2 Except as specified in the next sentence set forth in this paragraph 10.2,
the representations, warranties, and covenants contained in this Agreement or in
any document delivered pursuant to or in connection with this Agreement, shall
not survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing Date, shall continue in effect
beyond the consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the Federated
Trust and the Corporation. In addition, either the Federated Trust or the
Corporation may at its option terminate this Agreement at or before the Closing
Date due to:
a) a breach by the other of any representation, warranty, or agreement contained
herein to be performed at or before the Closing Date, if not cured within 30
days;
b) a condition herein expressed to be precedent to the obligations of the
terminating party that has not been met and it reasonably appears that it will
not or cannot be met; or
c) a determination by a party's Board of Directors/Trustees, as appropriate,
that the consummation of the transactions contemplated herein is not in the best
interest of the Corporation or the Federated Trust, respectively, and notice
given to the other party hereto.
11.2 In the event of any such termination, in the absence of willful default,
there shall be no liability for damages on the part of the Acquiring Fund, the
Acquired Fund, the Federated Trust, the Corporation, or their respective
Trustees/Directors or officers, to the other party or its Trustees/Directors or
officers.
ARTICLE XII
AMENDMENTS
12.1 This Agreement may be amended, modified, or supplemented in such manner as
may be mutually agreed upon in writing by the officers of the Corporation and
the Federated Trust as specifically authorized by their respective Board of
Directors/Trustees; provided, however, that following the meeting of the
Acquired Fund Shareholders called by the Acquired Fund pursuant to paragraph 5.2
of this Agreement, no such amendment may have the effect of changing the
provisions for determining the number of Acquiring Fund Shares to be issued to
the Acquired Fund Shareholders under this Agreement to the detriment of such
shareholders without their further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
13.4 This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but, except as provided in this
paragraph, no assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
13.5 It is expressly agreed that the obligations of the Acquiring Fund hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents, or employees of the Federated Trust personally, but shall bind only the
Federated Trust property of the Acquiring Fund, as provided in the Declaration
of Trust of the Federated Trust. The execution and delivery of this Agreement
have been authorized by the Trustees of the Federated Trust on behalf of the
Acquiring Fund and signed by authorized officers of the Federated Trust, acting
as such. Neither the authorization by such Trustees nor the execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the Federated Trust property of the Acquiring Fund as provided in the
Federated Trust's Declaration of Trust.
[Signature Page to Agreement and Plan of Reorganization]
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as of the
date first written above.
XXXXX STREET FUNDS, INC.
on behalf of its portfolio,
Xxxxx Street Index 400 Stock Fund
----------------------------
Xxxx X. Xxxx, President
FEDERATED INDEX TRUST
on behalf of its portfolio,
Federated Mid-Cap Index Fund
-----------------------------
Xxxx X. XxXxxxxxx, Secretary
