AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of October 26, 2000
by and among Liberty Funds Trust III (the "Trust"), a Massachusetts business
trust established under a Declaration of Trust dated May 30, 1986, as amended,
on behalf of Liberty Newport Global Equity Fund (the "Acquired Fund"), a series
of the Trust, Liberty Funds Trust III (the "Acquiring Trust"), a Massachusetts
business trust established under a Declaration of Trust dated May 30, 1986, as
amended, on behalf of Liberty Newport Global Utilities Fund (the "Acquiring
Fund"), a series of the Acquiring Trust, and Liberty Financial Companies, Inc.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "Code"), and any
successor provision. The reorganization will consist of the transfer of all of
the assets of the Acquired Fund in exchange solely for Class A, B and C shares
of beneficial interest of the Acquiring Fund ("Acquiring Shares") and the
assumption by Acquiring Fund of the liabilities of the Acquired Fund (other than
certain expenses of the reorganization contemplated hereby) and the distribution
of such Acquiring Shares to the shareholders of the Acquired Fund in liquidation
of the Acquired Fund, all upon the terms and conditions set forth in this
Agreement.
In consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:
1. TRANSFER OF ASSETS OF ACQUIRED FUND IN EXCHANGE FOR ASSUMPTION
OF LIABILITIES AND ACQUIRING SHARES AND LIQUIDATION OF
ACQUIRED FUND.
1.1 Subject to the terms and conditions herein set forth and on
the basis of the representations and warranties contained herein,
(a) The Trust, on behalf of the Acquired Fund, will transfer and
deliver to the Acquiring Fund, and the Acquiring Fund will
acquire, all the assets of the Acquired Fund as set forth in
paragraph 1.2.
(b) The Acquiring Fund will assume all of the Acquired Fund's
liabilities and obligations of any kind whatsoever, whether
absolute, accrued, contingent or otherwise in existence on
the Closing Date (as defined in paragraph 1.2 hereof) (the
"Obligations"), except that expenses of reorganization
contemplated hereby to be paid by the Acquired Fund pursuant
to paragraphs 1.5 and 9.2 shall not be assumed or paid by
the Acquiring Fund, and
(c) The Acquiring Fund will issue and deliver to the Acquired
Fund in exchange for such assets the number of Acquiring
Shares (including fractional shares, if any) determined by
dividing the net asset value of the Acquired Fund, computed
in the manner and as of the time and date set forth in
paragraph 2.1, by the net asset value of one Acquiring
Share, computed in the manner and as of the time and date
set forth in paragraph 2.2. Such transactions shall take
place at the closing provided for in paragraph 3.1 (the
"Closing").
A-1
1.2 The assets of the Acquired Fund to be acquired by the Acquiring
Fund shall consist of all cash, securities, dividends and interest receivable,
receivables for shares sold and all other assets which are owned by the Acquired
Fund on the closing date provided in paragraph 3.1 (the "Closing Date") and any
deferred expenses, other than unamortized organizational expenses, shown as an
asset on the books of the Acquired Fund on the Closing Date.
1.3 As provided in paragraph 3.4, as soon after the Closing Date as
is conveniently practicable (the "Liquidation Date"), the
Acquired Fund will liquidate and distribute pro rata to its
shareholders of record ("Acquired Fund Shareholders"), determined
as of the close of business on the Valuation Date (as defined in
paragraph 2.1), the Acquiring Shares received by the Acquired
Fund pursuant to paragraph 1.1. Such liquidation and distribution
will be accomplished by the transfer of the Acquiring Shares then
credited to the account of the Acquired Fund on the books of the
Acquiring Fund to open accounts on the share records of Acquiring
Fund in the names of the Acquired Fund Shareholders and
representing the respective pro rata number of Acquiring Shares
due such shareholders. The Acquiring Fund shall not be obligated
to issue certificates representing Acquiring Shares in connection
with such exchange.
1.4 With respect to Acquiring Shares distributable pursuant to
paragraph 1.3 to an Acquired Fund Shareholder holding a
certificate or certificates for shares of the Acquired Fund, if
any, on the Valuation Date, the Acquiring Trust will not permit
such shareholder to receive Acquiring Share certificates
therefor, exchange such Acquiring Shares for shares of other
investment companies, effect an account transfer of such
Acquiring Shares, or pledge or redeem such Acquiring Shares until
the Acquiring Trust has been notified by the Acquired Fund or its
agent that such Shareholder has surrendered all his or her
outstanding certificates for Acquired Fund shares or, in the
event of lost certificates, posted adequate bond.
1.5 [RESERVED]
1.6 As promptly as possible after the Closing Date, the Acquired Fund
shall be terminated pursuant to the provisions of the laws of the
Commonwealth of Massachusetts, and, after the Closing Date, the
Acquired Fund shall not conduct any business except in connection
with its liquidation.
2. VALUATION.
2.1 For the purpose of paragraph 1, the value of the Acquired Fund's
assets to be acquired by the Acquiring Fund hereunder shall be
the net asset value computed as of the close of regular trading
on the New York Stock Exchange on the business day next preceding
the Closing (such time and date being herein called the
"Valuation Date") using the valuation procedures set forth in the
Declaration of Trust of the Acquiring Trust and the then current
prospectus or statement of additional information of the
Acquiring Fund, after deduction for the expenses of the
reorganization contemplated hereby to be paid by the Acquired
Fund pursuant to paragraphs 1.5, and shall be certified by the
Acquired Fund.
A-2
2.2 For the purpose of paragraph 2.1, the net asset value of an
Acquiring Share shall be the net asset value per share computed
as of the close of regular trading on the New York Stock Exchange
on the Valuation Date, using the valuation procedures set forth
in the Declaration of Trust of the Acquiring Trust and the then
current prospectus or prospectuses and the statement of
additional information or statements of additional information of
the Acquiring Fund (collectively, as from time to time amended
and supplemented, the "Acquiring Fund Prospectus").
3. CLOSING AND CLOSING DATE.
3.1 The Closing Date shall be on January 29, 2001, or on such other
date as the parties may agree in writing. The Closing shall be
held at 9:00 a.m. at the offices of Colonial Management
Associates, Inc., Xxx Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, or at such other time and/or place as the parties may
agree.
3.2 The portfolio securities of the Acquired Fund shall be made
available by the Acquired Fund to The Chase Manhattan Bank, as
custodian for the Acquiring Fund (the "Custodian"), for
examination no later than five business days preceding the
Valuation Date. On the Closing Date, such portfolio securities
and all the Acquired Fund's cash shall be delivered by the
Acquired Fund to the Custodian for the account of the Acquiring
Fund, such portfolio securities to be duly endorsed in proper
form for transfer in such manner and condition as to constitute
good delivery thereof in accordance with the custom of brokers
or, in the case of portfolio securities held in the U.S. Treasury
Department's book-entry system or by the Depository Trust
Company, Participants Trust Company or other third party
depositories, by transfer to the account of the Custodian in
accordance with Rule 17f-4 or Rule 17f-5, as the case may be,
under the Investment Company Act of 1940 (the "1940 Act") and
accompanied by all necessary federal and state stock transfer
stamps or a check for the appropriate purchase price thereof. The
cash delivered shall be in the form of currency or certified or
official bank checks, payable to the order of "The Chase
Manhattan Bank, custodian for Acquiring Fund."
3.3 In the event that on the Valuation Date (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be
restricted, or (b) trading or the reporting of trading on said
Exchange or elsewhere shall be disrupted so that accurate
appraisal of the value of the net assets of the Acquired Fund or
the Acquiring Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been
restored; provided that if trading shall not be fully resumed and
reporting restored within three business days of the Valuation
Date, this Agreement may be terminated by either of the Trust or
the Acquiring Trust upon the giving of written notice to the
other party.
3.4 At the Closing, the Acquired Fund or its transfer agent shall
deliver to the Acquiring Fund or its designated agent a list of
the names and addresses of the Acquired Fund Shareholders and the
number of outstanding shares of beneficial interest of the
Acquired Fund owned by each Acquired Fund Shareholder, all as of
the close of business on the Valuation Date, certified by the
Secretary or Assistant Secretary of the Trust. The Acquiring
Trust will provide to the Acquired Fund evidence satisfactory to
the Acquired Fund that the Acquiring Shares issuable pursuant to
paragraph 1.1 have been credited to the Acquired Fund's account
on the books of the Acquiring Fund. On the Liquidation Date, the
Acquiring Trust will provide to the Acquired Fund evidence
satisfactory to the
A-3
Acquired Fund that such Acquiring Shares have been credited pro
rata to open accounts in the names of the Acquired Fund
shareholders as provided in paragraph 1.3.
3.5 At the Closing each party shall deliver to the other such bills
of sale, instruments of assumption of liabilities, checks,
assignments, stock certificates, receipts or other documents as
such other party or its counsel may reasonably request in
connection with the transfer of assets, assumption of liabilities
and liquidation contemplated by paragraph 1.
4. REPRESENTATIONS AND WARRANTIES.
4.1 The Trust, on behalf of the Acquired Fund, represents and
warrants the following to the Acquiring Trust and to the
Acquiring Fund as of the date hereof and agrees to confirm the
continuing accuracy and completeness in all material respects of
the following on the Closing Date:
(a) The Trust is a business trust duly organized, validly
existing and in good standing under the laws of the
Commonwealth of Massachusetts;
(b) The Trust is a duly registered investment company classified
as a management company of the open-end type and its
registration with the Securities and Exchange Commission as
an investment company under the 1940 Act is in full force
and effect, and the Acquired Fund is a separate series
thereof duly designated in accordance with the applicable
provisions of the Declaration of Trust of the Trust and the
1940 Act;
(c) The Trust is not in violation in any material respect of any
provision of its Declaration of Trust or By-laws or of any
agreement, indenture, instrument, contract, lease or other
undertaking to which the Trust is a party or by which the
Acquired Fund is bound, and the execution, delivery and
performance of this Agreement will not result in any such
violation;
(d) The Trust has no material contracts or other commitments
(other than this Agreement and such other contracts as may
be entered into in the ordinary course of its business)
which if terminated may result in material liability to the
Acquired Fund or under which (whether or not terminated) any
material payments for periods subsequent to the Closing Date
will be due from the Acquired Fund;
(e) No litigation or administrative proceeding or investigation
of or before any court or governmental body is presently
pending or threatened against the Acquired Fund, any of its
properties or assets, or any person whom the Acquired Fund
may be obligated to indemnify in connection with such
litigation, proceeding or investigation. The Acquired Fund
knows of no facts which 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 which materially and
adversely affects its business or its ability to consummate
the transactions contemplated hereby;
(f) The statement of assets and liabilities, the statement of
operations, the statement of changes in net assets, and the
schedule of investments as at and for the two years
A-4
ended October 31, 1999 of the Acquired Fund, audited by
PricewaterhouseCoopers LLP and the statement of assets, the
statement of changes in net assets and the schedule of
investments for the six months ended April 30, 2000, copies
of which have been furnished to the Acquiring Fund, fairly
reflect the financial condition and results of operations of
the Acquired Fund as of such dates and for the periods then
ended in accordance with generally accepted accounting
principles consistently applied, and the Acquired Fund has
no known liabilities of a material amount, contingent or
otherwise, other than those shown on the statements of
assets referred to above or those incurred in the ordinary
course of its business since April 30, 2000;
(g) Since April 30, 2000, there has not been any material
adverse change 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, except as
disclosed in writing to the Acquiring Fund. For the purposes
of this subparagraph (g), distributions of net investment
income and net realized capital gains, changes in portfolio
securities, changes in the market value of portfolio
securities or net redemptions shall be deemed to be in the
ordinary course of business;
(h) By the Closing Date, all federal and other tax returns and
reports of the Acquired Fund required by law to have been
filed by such date (giving effect to extensions) shall have
been filed, and all federal and other taxes shown to be due
on said returns and reports shall have been paid so far as
due, or provision shall have been made for the payment
thereof, and 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;
(i) For all taxable years and all applicable quarters of such
years from the date of its inception, the Acquired Fund has
met the requirements of subchapter M of the Code, for
treatment as a "regulated investment company" within the
meaning of Section 851 of the Code. Neither the Trust nor
the Acquired Fund has at any time since its inception been
liable for nor is now liable for any material excise tax
pursuant to Section 852 or 4982 of the Code. The Acquired
Fund has duly filed all federal, state, local and foreign
tax returns which are required to have been filed, and all
taxes of the Acquired Fund which are due and payable have
been paid except for amounts that alone or in the aggregate
would not reasonably be expected to have a material adverse
effect. The Acquired Fund is in compliance in all material
respects with applicable regulations of the Internal Revenue
Service pertaining to the reporting of dividends and other
distributions on and redemptions of its capital stock and to
withholding in respect of dividends and other distributions
to shareholders, and is not liable for any material
penalties which could be imposed thereunder;
(j) The authorized capital of the Trust consists of an unlimited
number of shares of beneficial interest with no par value,
of multiple series and classes. All issued and outstanding
shares of the Acquired Fund are, and at the Closing Date
will be, duly and validly issued and outstanding, fully paid
and (except as set forth in the Acquired Fund's then current
prospectus or prospectuses and statement of additional
information or statements of additional information
(collectively, as
A-5
amended or supplemented from time to time, the "Acquired
Fund Prospectus")),non-assessable by the Acquired Fund and
will have been issued in compliance with all applicable
registration or qualification requirements of federal and
state securities laws. No options, warrants or other rights
to subscribe for or purchase, or securities convertible
into, any shares of beneficial interest of the Acquired Fund
are outstanding and none will be outstanding on the Closing
Date (except that Class B shares of the Acquired Fund
convert automatically into Class A shares, as set forth in
the Acquired Fund Prospectus);
(k) The Acquired Fund's investment operations from inception to
the date hereof have been in compliance in all material
respects with the investment policies and investment
restrictions set forth in its prospectus and statement of
additional information as in effect from time to time,
except as previously disclosed in writing to the Acquiring
Fund;
(l) The execution, delivery and performance of this Agreement
has been duly authorized by the Trustees of the Trust, and,
upon approval thereof by the required majority of the
shareholders of the Acquired Fund, this Agreement will
constitute the valid and binding obligation of the Acquired
Fund enforceable in accordance with its terms except as the
same may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the
enforcement of creditors' rights generally and other
equitable principles;
(m) The Acquiring Shares to be issued to the Acquired Fund
pursuant to paragraph 1 will not be acquired for the purpose
of making any distribution thereof other than to the
Acquired Fund Shareholders as provided in paragraph 1.3; and
(n) The information provided by the Acquired Fund for use in the
Registration Statement and Proxy Statement referred to in
paragraph 5.3 shall be accurate and complete in all material
respects and shall comply with federal securities and other
laws and regulations applicable thereto.
(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by
the Acquired Fund of the transactions contemplated by this
Agreement, except such as may be required under the
Securities Act of 1933, as amended (the "1933 Act"), the
Securities Exchange Act of 1934, as amended (the "1934
Act"), the 1940 Act and state insurance, securities or blue
sky laws (which term as used herein shall include the laws
of the District of Columbia and of Puerto Rico).
(p) At the Closing Date, the Trust, on behalf of the Acquired
Fund will have good and marketable title to its assets to be
transferred to the Acquiring Fund pursuant to paragraph 1.1
and will have full right, power and authority to sell,
assign, transfer and deliver the Investments (as defined
below) and any other assets and liabilities of the Acquired
Fund to be transferred to the Acquiring Fund pursuant to
this Agreement. At the Closing Date, subject only to the
delivery of the Investments and any such other assets and
liabilities and payment therefor as contemplated by this
Agreement, the Acquiring Fund will acquire good and
marketable title thereto and will acquire the Investments
and any such other assets and liabilities subject to no
encumbrances, liens or security interests whatsoever and
without any
A-6
restrictions upon the transfer thereof, except as previously
disclosed to the Acquiring Fund. As used in this Agreement,
the term "Investments" shall mean the Acquired Fund's
investments shown on the schedule of its investments as of
April 30, 2000 referred to in Section 4.1(f) hereof, as
supplemented with such changes in the portfolio as the
Acquired Fund shall make, and changes resulting from stock
dividends, stock split-ups, mergers and similar corporate
actions through the Closing Date.
(q) At the Closing Date, the Acquired Fund will have sold such
of its assets, if any, as are necessary to assure that,
after giving effect to the acquisition of the assets of the
Acquired Fund pursuant to this Agreement, the Acquiring Fund
will remain a "diversified company" within the meaning of
Section 5(b)(1) of the 1940 Act and in compliance with such
other mandatory investment restrictions as are set forth in
the Acquiring Fund Prospectus, as amended through the
Closing Date.
(r) No registration of any of the Investments would be required
if they were, as of the time of such transfer, the subject
of a public distribution by either of the Acquiring Fund or
the Acquired Fund, except as previously disclosed by the
Acquired Fund to the Acquiring Fund.
4.2 The Acquiring Trust, on behalf of the Acquiring Fund, represents
and warrants the following to the Trust and to the Acquired Fund
as of the date hereof and agrees to confirm the continuing
accuracy and completeness in all material respects of the
following on the Closing Date:
(a) The Acquiring Trust is a business trust duly organized,
validly existing and in good standing under the laws of The
Commonwealth of Massachusetts;
(b) The Acquiring Trust is a duly registered investment company
classified as a management company of the open-end type and
its registration with the Securities and Exchange Commission
as an investment company under the 1940 Act is in full force
and effect, and the Acquiring Fund is a separate series
thereof duly designated in accordance with the applicable
provisions of the Declaration of Trust of the Acquiring
Trust and the 1940 Act;
(c) The Acquiring Fund Prospectus conforms in all material
respects to the applicable requirements of the 1933 Act and
the rules and regulations of the Securities and Exchange
Commission thereunder and does not include any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading, and there are no
material contracts to which the Acquiring Fund is a party
that are not referred to in such Prospectus or in the
registration statement of which it is a part;
(d) At the Closing Date, the Acquiring Fund will have good and
marketable title to its assets;
(e) The Acquiring Trust is not in violation in any material
respect of any provisions of its Declaration of Trust or
By-laws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Acquiring
Trust is a party or by
A-7
which the Acquiring Fund is bound, and the execution,
delivery and performance of this Agreement will not result
in any such violation;
(f) No litigation or administrative proceeding or investigation
of or before any court or governmental body is presently
pending or threatened against the Acquiring Fund or any of
its properties or assets. The Acquiring Fund knows of no
facts which 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 which materially and adversely affects its
business or its ability to consummate the transactions
contemplated hereby;
(g) The statement of assets, the statement of operations, the
statement of changes in assets and the schedule of
investments as at and for the two years ended October 31,
1999 of the Acquiring Fund, audited by Pricewaterhouse-
Coopers LLP, and the statement of assets, the statement of
changes in net assets and the schedule of investments for
the six months ended April 30, 2000, copies of which have
been furnished to the Acquired Fund, fairly reflect the
financial condition and results of operations of the
Acquiring Fund as of such dates and the results of its
operations for the periods then ended in accordance with
generally accepted accounting principles consistently
applied, and the Acquiring Fund has no known liabilities of
a material amount, contingent or otherwise, other than those
shown on the statements of assets referred to above or those
incurred in the ordinary course of its business since April
30, 2000;
(h) Since April 30, 2000, there has not been any material
adverse change 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. For the
purposes of this subparagraph (h), changes in portfolio
securities, changes in the market value of portfolio
securities or net redemptions shall be deemed to be in the
ordinary course of business;
(i) By the Closing Date, all federal and other tax returns and
reports of the Acquiring Fund required by law to have been
filed by such date (giving effect to extensions) shall have
been filed, and all federal and other taxes shown to be due
on said returns and reports shall have been paid so far as
due, or provision shall have been made for the payment
thereof, and 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;
(j) For each fiscal year of its operation, the Acquiring Fund
has met the requirements of Subchapter M of the Code for
qualification as a regulated investment company;
(k) The authorized capital of the Acquiring Trust consists of an
unlimited number of shares of beneficial interest, no par
value, of such number of different series as the Board of
Trustees may authorize from time to time. The outstanding
shares of beneficial interest in the Acquiring Fund are, and
at the Closing Date will be, divided into Class A shares,
Class B shares and Class C shares each having the
characteristics described in the Acquiring Fund Prospectus.
All issued and outstanding shares of the Acquiring Fund are,
and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable (except as set
A-8
forth in the Acquiring Fund Prospectus) by the Acquiring
Trust, and will have been issued in compliance with all
applicable registration or qualification requirements of
federal and state securities laws. Except for Class B shares
which convert to Class A shares after the expiration of a
period of time, no options, warrants or other rights to
subscribe for or purchase, or securities convertible into,
any shares of beneficial interest in the Acquiring Fund of
any class are outstanding and none will be outstanding on
the Closing Date;
(l) The Acquiring Fund's investment operations from inception to
the date hereof have been in compliance in all material
respects with the investment policies and investment
restrictions set forth in its prospectus and statement of
additional information as in effect from time to time;
(m) The execution, delivery and performance of this Agreement
have been duly authorized by all necessary action on the
part of the Acquiring Trust, and this Agreement constitutes
the valid and binding obligation of the Acquiring Trust and
the Acquiring Fund enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the
enforcement of creditors' rights generally and other
equitable principles;
(n) The Acquiring Shares to be issued and delivered to the
Acquired Fund pursuant to the terms of this Agreement will
at the Closing Date have been duly authorized and, when so
issued and delivered, will be duly and validly issued Class
A shares, Class B shares and Class C shares of beneficial
interest in the Acquiring Fund, and will be fully paid and
non-assessable (except as set forth in the Acquiring Fund
Prospectus) by the Acquiring Trust, and no shareholder of
the Acquiring Trust will have any preemptive right of
subscription or purchase in respect thereof; and
(o) The information to be furnished by the Acquiring Fund for
use in the Registration Statement and Proxy Statement
referred to in paragraph 5.3 shall be accurate and complete
in all material respects and shall comply with federal
securities and other laws and regulations applicable
thereto.
(p) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by
the Acquiring Fund of the transactions contemplated by this
Agreement, except such as may be required under 1933 Act,
the 1934 Act, the 1940 Act and state insurance, securities
or blue sky laws (which term as used herein shall include
the laws of the District of Columbia and of Puerto Rico).
A-9
5. COVENANTS OF THE ACQUIRED FUND AND THE ACQUIRING FUND.
The Acquiring Trust, on behalf of the Acquiring Fund, and the Trust, on
behalf of the Acquired Fund, each hereby covenants and agrees with the other as
follows:
5.1 The Acquiring Fund and the Acquired Fund each will operate its
business in the ordinary course between the date hereof and the
Closing Date, it being understood that such ordinary course of
business will include regular and customary periodic dividends
and distributions.
5.2 The Acquired Fund will call a meeting of its shareholders to be
held prior to the Closing Date to consider and act upon this
Agreement and take all other reasonable action necessary to
obtain the required shareholder approval of the transactions
contemplated hereby.
5.3 In connection with the Acquired Fund shareholders' meeting
referred to in paragraph 5.2, the Acquired Fund will prepare a
Proxy Statement for such meeting, to be included in a
Registration Statement on Form N-14 (the "Registration
Statement") which the Acquiring Trust will prepare and file for
the registration under the 1933 Act of the Acquiring Shares to be
distributed to the Acquired Fund shareholders pursuant hereto,
all in compliance with the applicable requirements of the 1933
Act, the 1934 Act, and the 0000 Xxx.
5.4 The information to be furnished by the Acquired Fund for use in
the Registration Statement and the information to be furnished by
the Acquiring Fund for use in the Proxy Statement, each as
referred to in paragraph 5.3, shall be accurate and complete in
all material respects and shall comply with federal securities
and other laws and regulations thereunder applicable thereto.
5.5 The Acquiring Fund will advise the Acquired Fund promptly if at
any time prior to the Closing Date the assets of the Acquired
Fund include any securities which the Acquiring Fund is not
permitted to acquire.
5.6 Subject to the provisions of this Agreement, the Acquired Fund
and the Acquiring 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 cause the conditions to the
other party's obligations to consummate the transactions
contemplated hereby to be met or fulfilled and otherwise to
consummate and make effective such transactions.
5.7 The Acquiring Fund will use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940
Act and such of the state securities or "Blue Sky" laws as it may
deem appropriate in order to continue its operations after the
Closing Date.
6. 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 Trust and the
A-10
Acquiring Fund of all the obligations to be performed by them
hereunder on or before the Closing Date and, in addition thereto,
to the following further conditions:
6.1 The Acquiring Trust, on behalf of the Acquiring Fund, shall have
delivered to the Trust a certificate executed in its name by its
President or Vice President and its Treasurer or Assistant
Treasurer, in form satisfactory to the Trust and dated as of the
Closing Date, to the effect that the representations and
warranties of the Acquiring Trust on behalf of the Acquiring Fund
made in this Agreement are true and correct at and as of the
Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and that the Acquiring Trust and
the Acquiring Fund have complied with all the covenants and
agreements and satisfied all of the conditions on their parts to
be performed or satisfied under this Agreement at or prior to the
Closing Date.
6.2 The Trust shall have received a favorable opinion from Ropes &
Xxxx, counsel to the Acquiring Trust for the transactions
contemplated hereby, dated the Closing Date and, in a form
satisfactory to the Trust, to the following effect:
(a) The Acquiring Trust is a business trust duly organized and
validly existing under the laws of The Commonwealth of
Massachusetts and has power to own all of its properties and
assets and to carry on its business as presently conducted,
and the Acquiring Fund is a separate series thereof duly
constituted in accordance with the applicable provisions of
the 1940 Act and the Declaration of Trust and By-laws of the
Acquiring Trust; (b) this Agreement has been duly
authorized, executed and delivered on behalf of the
Acquiring Fund and, assuming the Prospectus and Registration
Statement referred to in paragraph 5.3 complies with
applicable federal securities laws and assuming the due
authorization, execution and delivery of this Agreement by
the Trust on behalf of the Acquired Fund, is the valid and
binding obligation of the Acquiring Fund enforceable against
the Acquiring Fund in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the
enforcement of creditors' rights generally and other
equitable principles; (c) the Acquiring Fund has the power
to assume the liabilities to be assumed by it hereunder and
upon consummation of the transactions contemplated hereby
the Acquiring Fund will have duly assumed such liabilities;
(d) the Acquiring Shares to be issued for transfer to the
shareholders of the Acquired Fund as provided by this
Agreement are duly authorized and upon such transfer and
delivery will be validly issued and outstanding and fully
paid and nonassessable Class A shares, Class B shares and
Class C shares of beneficial interest in the Acquiring Fund,
and no shareholder of the Acquiring Fund has any preemptive
right of subscription or purchase in respect thereof; (e)
the execution and delivery of this Agreement did not, and
the performance by the Acquiring Trust and the Acquiring
Fund of their respective obligations hereunder will not,
violate the Acquiring Trust's Declaration of Trust or
By-laws, or any provision of any agreement known to such
counsel to which the Acquiring Trust or the Acquiring Fund
is a party or by which either of them is bound or, to the
knowledge of such counsel, result in the acceleration of any
obligation or the imposition of any penalty under any
agreement, judgment, or decree to which the Acquiring Trust
or the Acquiring Fund is a party or by which either of them
is bound; (f) to the knowledge of such counsel, no consent,
approval, authorization or order of any court or
governmental authority is required for the consummation by
the Acquiring Trust or the Acquiring Fund of the
A-11
transactions contemplated by this Agreement except such as
may be required under state securities or "Blue Sky" laws or
such as have been obtained; (g) except as previously
disclosed, pursuant to section 4.2(f) above, such counsel
does not know of any legal or governmental proceedings
relating to the Acquiring Trust or the Acquiring Fund
existing on or before the date of mailing of the Prospectus
referred to in paragraph 5.3 or the Closing Date required to
be described in the Registration Statement referred to in
paragraph 5.3 which are not described as required; (h) the
Acquiring Trust is registered with the Securities and
Exchange Commission as an investment company under the 1940
Act; and (i) to the best knowledge of such counsel, no
litigation or administrative proceeding or investigation of
or before any court or governmental body is presently
pending or threatened as to the Acquiring Trust or the
Acquiring Fund or any of their properties or assets and
neither the Acquiring Trust nor the Acquiring Fund is a
party to or subject to the provisions of any order, decree
or judgment of any court or governmental body, which
materially and adversely affects its business.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to complete 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 it hereunder on or before the
Closing Date and, in addition thereto, to the following further
conditions:
7.1 The Trust, on behalf of the Acquired Fund, shall have delivered
to the Acquiring Trust a certificate executed in its name by its
President or Vice President and its Treasurer or Assistant
Treasurer, in form and substance satisfactory to the Acquiring
Trust and dated the Closing Date, to the effect that the
representations and warranties of the Acquired Fund made in this
Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions contemplated
by this Agreement, and that the Trust and the Acquired Fund have
complied with all the covenants and agreements and satisfied all
of the conditions on its part to be performed or satisfied under
this Agreement at or prior to the Closing Date;
7.2 The Acquiring Trust shall have received a favorable opinion from
Ropes & Xxxx, counsel to the Trust, dated the Closing Date and in
a form satisfactory to the Acquiring Trust, to the following
effect:
(a) The Trust is a business trust duly organized and validly
existing under the laws of the Commonwealth of Massachusetts
and has corporate power to own all of its properties and
assets and to carry on its business as presently conducted,
and the Acquired Fund is a separate series thereof duly
constituted in accordance with the applicable provisions of
the 1940 Act and the Declaration of Trust of the Trust; (b)
this Agreement has been duly authorized, executed and
delivered on behalf of the Acquired Fund and, assuming the
Proxy Statement referred to in paragraph 5.3 complies with
applicable federal securities laws and assuming the due
authorization, execution and delivery of this Agreement by
the Acquiring Trust on behalf of the Acquiring Fund, is the
valid and binding obligation of the Acquired Fund
enforceable against the Acquired Fund in accordance with its
terms, except as the same may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and other
A-12
equitable principles; (c) the Acquired Fund has the power to
sell, assign, transfer and deliver the assets to be
transferred by it hereunder, and, upon consummation of the
transactions contemplated hereby, the Acquired Fund will
have duly transferred such assets to the Acquiring Fund; (d)
the execution and delivery of this Agreement did not, and
the performance by the Trust and the Acquired Fund of their
respective obligations hereunder will not, violate the
Trust's Declaration of Trust or By-laws, or any provision of
any agreement known to such counsel to which the Trust or
the Acquired Fund is a party or by which either of them is
bound or, to the knowledge of such counsel, result in the
acceleration of any obligation or the imposition of any
penalty under any agreement, judgment, or decree to which
the Trust or the Acquired Fund is a party or by which either
of them is bound; (e) to the knowledge of such counsel, no
consent, approval, authorization or order of any court or
governmental authority is required for the consummation by
the Trust or the Acquired Fund of the transactions
contemplated by this Agreement, except such as may be
required under state securities or "Blue Sky" laws or such
as have been obtained; (f) such counsel does not know of any
legal or governmental proceedings relating to the Trust or
the Acquired Fund existing on or before the date of mailing
of the Prospectus referred to in paragraph 5.3 or the
Closing Date required to be described in the Registration
Statement referred to in paragraph 5.3 which are not
described as required; (g) the Trust is registered with the
Securities and Exchange Commission as an investment company
under the 1940 Act; and (h) to the best knowledge of such
counsel, no litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or threatened as to the Trust or the
Acquired Fund or any of its properties or assets and neither
the Trust nor the Acquired Fund is a party to or subject to
the provisions of any order, decree or judgment of any court
or governmental body, which materially and adversely affects
its business.
7.3 [Reserved}
7.4 Prior to the Closing Date, the Acquired Fund shall have declared
a dividend or dividends which, together with all previous
dividends, shall have the effect of distributing all of the
Acquired Fund's investment company taxable income for its taxable
years ending on or after October 31, 2000 and on or prior to the
Closing Date (computed without regard to any deduction for
dividends paid), and all of its net capital gains realized in
each of its taxable years ending on or after October 31, 2000 and
on or prior to the Closing Date.
7.5 The Acquired Fund shall have furnished to the Acquiring Fund a
certificate, signed by the President (or any Vice President) and
the Treasurer of the Trust, as to the adjusted tax basis in the
hands of the Acquired Fund of the securities delivered to the
Acquiring Fund pursuant to this Agreement.
7.6 The custodian of the Acquired Fund shall have delivered to the
Acquiring Fund a certificate identifying all of the assets of the
Acquired Fund held by such custodian as of the Valuation Date.
A-13
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH OF THE
ACQUIRING FUND AND THE ACQUIRED FUND.
The respective obligations of the Trust and the Acquiring Trust
hereunder are each subject to the further conditions that on or before the
Closing Date:
8.1 This Agreement and the transactions contemplated herein shall
have been approved by the vote of the required majority of the
holders of the outstanding shares of the Acquired Fund of record
on the record date for the meeting of its shareholders referred
to in paragraph 5.2;
8.2 On the Closing Date no action, suit or other preceding shall be
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 hereby;
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities
(including those of the Securities and Exchange Commission and of
state Blue Sky and securities authorities) deemed necessary by
the Trust or the Acquiring Trust to permit consummation, in all
material respects, of the transactions contemplated hereby 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.
8.4 The Registration Statement referred to in paragraph 5.3 shall
have become effective under the 1933 Act and no stop order
suspending the effectiveness thereof shall have been issued and,
to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 1933 Act;
8.5 The Trust shall have received a favorable opinion of Ropes & Xxxx
satisfactory to the Trust and the Acquiring Trust shall have
received a favorable opinion of Ropes & Xxxx satisfactory to the
Acquiring Trust, each substantially to the effect that, for
federal income tax purposes:
(a) The acquisition by the Acquiring Fund of the assets of the
Acquired Fund in exchange for the Acquiring Fund's
assumption of the Obligations of the Acquired Fund and
issuance of the Acquiring Shares, followed by the
distribution by the Acquired Fund of such the Acquiring
Shares to the shareholders of the Acquired Fund in exchange
for their shares of the Acquired Fund, all as provided in
paragraph 1 hereof, will constitute a reorganization within
the meaning of Section 368(a) of the Code, and the Acquired
Fund and the Acquiring 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 to the Acquired Fund (i)
upon the transfer of its assets to the Acquiring Fund in
exchange for the Acquiring Shares or (ii) upon the
distribution of the Acquiring Shares to the shareholders of
the Acquired Fund as contemplated in paragraph 1 hereof;
A-14
(c) No gain or loss will be recognized to the Acquiring Fund
upon the receipt of the assets of the Acquired Fund in
exchange for the assumption of the Obligations and issuance
of the Acquiring Shares as contemplated in paragraph 1
hereof;
(d) The tax basis of the assets of the Acquired Fund acquired by
the Acquiring Fund will be the same as the basis of those
assets in the hands of the Acquired Fund immediately prior
to the transfer, and 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;
(e) The shareholders of the Acquired Fund will recognize no gain
or loss upon the exchange of their shares of the Acquired
Fund for the Acquiring Shares;
(f) The tax basis of the Acquiring Shares to be received by each
shareholder of the Acquired Fund will be the same in the
aggregate as the aggregate tax basis of the shares of the
Acquired Fund surrendered in exchange therefor;
(g) The holding period of the Acquiring Shares to be received by
each shareholder of the Acquired Fund will include the
period during which the shares of the Acquired Fund
surrendered in exchange therefor were held by such
shareholder, provided such shares of the Acquired Fund were
held as a capital asset on the date of the exchange.
(h) Acquiring Fund will succeed to and take into account the
items of Acquired Fund described in Section 381(c) of the
Code, subject to the conditions and limitations specified in
Sections 381, 382, 383 and 384 of the Code and the
regulations thereunder.
8.6 At any time prior to the Closing, any of the foregoing conditions
of this Agreement may be waived jointly by the Board of Trustees
of the Trust and the Board of Trustees of the Acquiring Trust if,
in their judgment, such waiver will not have a material adverse
effect on the interests of the shareholders of the Acquired Fund
and the Acquiring Fund.
9. BROKERAGE FEES AND EXPENSES.
9.1 The Trust, on behalf of the Acquired Fund, and the Acquiring
Trust, on behalf of the Acquiring Fund, each represents and
warrants to the other that there are no brokers or finders
entitled to receive any payments in connection with the
transactions provided for herein.
9.2 The Acquiring Trust, on behalf of the Acquiring Fund, shall pay
all fees paid to governmental authorities for the registration or
qualification of the Acquiring Shares. The other expenses of the
transactions contemplated by this Agreement shall be borne by the
following parties in the percentages indicated: (a) the Trust, on
behalf of the Acquired Fund, __%, (b) the Acquiring Trust, on
behalf of the Acquiring Fund, __%, and (c) Liberty Financial
Companies, Inc. __%.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES.
10.1 The Trust on behalf of the Acquired Fund and the Acquiring Trust
on behalf of the Acquiring Fund agree that neither party has made
any representation, warranty or
A-15
covenant not set forth herein and that this Agreement constitutes
the entire agreement between the parties.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in
connection herewith shall not survive the consummation of the
transactions contemplated hereunder except paragraphs 1.1, 1.3,
1.5, 1.6, 5.4, 9, 10, 13 and 14.
11. TERMINATION.
11.1 This Agreement may be terminated by the mutual agreement of the
Acquiring Trust and the Trust. In addition, either the Acquiring
Trust or the Trust may at its option terminate this Agreement at
or prior to the Closing Date because:
(a) Of a material breach by the other of any representation,
warranty, covenant or agreement contained herein to be
performed by the other party at or prior to the Closing
Date; or
(b) A condition herein expressed to be precedent to the
obligations of the terminating party has not been met and it
reasonably appears that it will not or cannot be met.
(c) If the transactions contemplated by this Agreement have not
been substantially completed by May 31, 2001 this Agreement
shall automatically terminate on that date unless a later
date is agreed to by both the Trust and the Acquiring Trust.
11.2 If for any reason the transactions contemplated by this Agreement
are not consummated, no party shall be liable to any other party
for any damages resulting therefrom, including without limitation
consequential damages.
12. AMENDMENTS.
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the authorized officers of the
Trust on behalf of the Acquired Fund and the Acquiring Trust on behalf of the
Acquiring Fund; provided, however, that following the shareholders' meeting
called by the Acquired Fund pursuant to paragraph 5.2 no such amendment may have
the effect of changing the provisions for determining the number of the
Acquiring Shares to be issued to shareholders of the Acquired Fund under this
Agreement to the detriment of such shareholders without their further approval.
13. NOTICES.
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to: Liberty Funds Trust III, Xxx
Xxxxxxxxx Xxxxxx, Xxxxxx, XX 00000 attention Secretary.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT NON-RECOURSE.
A-16
14.1 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.
14.2 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance
with the domestic substantive laws of The Commonwealth of
Massachusetts, without giving effect to any choice or conflicts
of law rule or provision that would result in the application of
the domestic substantive laws of any other jurisdiction.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but 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.
14.5 A copy of the Declaration of Trust of the Trust and the
Declaration of Trust of the Acquiring Trust are each on file with
the Secretary of State of the Commonwealth of Massachusetts, and
notice is hereby given that no trustee, officer, agent or
employee of either the Trust or the Acquiring Trust shall have
any personal liability under this Agreement, and that this
Agreement is binding only upon the assets and properties of the
Acquired Fund and the Acquiring Fund.
A-17
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as a sealed instrument by its President or Vice
President and its corporate seal to be affixed thereto and attested by its
Secretary or Assistant Secretary.
LIBERTY FUNDS TRUST III,
on behalf of Liberty Newport Global
Equity Fund
By:_____________________________________
Name:___________________________________
Title:__________________________________
ATTEST:
_______________________________________
Name:__________________________________
Title:_________________________________
LIBERTY FUNDS TRUST III,
on behalf of Liberty Newport Global
Utilities Fund
By:_____________________________________
Name:___________________________________
Title:__________________________________
ATTEST:
________________________________________
Name:___________________________________
Title:__________________________________
Solely for purposes of Section 9.2
of the Agreement:
LIBERTY FINANCIAL COMPANIES, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
ATTEST:
________________________________________
Name:___________________________________
Title:__________________________________
A-18
