AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization dated as of Nov. 10, 2005 (the
"Agreement") is between AXP Global Series, Inc. (the "Selling Corporation"),
a Minnesota corporation, on behalf of its series, RiverSource Global
Balanced Fund (the "Selling Fund"), and AXP Investment Series, Inc. (the
"Buying Corporation"), a Minnesota corporation, on behalf of its series,
RiverSource Balanced Fund (the "Buying Fund"), and RiverSource Investments,
LLC (solely for the purposes of Section 3c and 10 of the Agreement).
In consideration of their mutual promises, the parties agree as follows:
1. SHAREHOLDER APPROVAL. The Selling Fund will call a meeting of its
shareholders for the purpose of approving the Agreement and the
transactions it contemplates (the "Reorganization"). The Buying Fund
agrees to furnish data and information, as reasonably requested, for
the proxy statement to be furnished to shareholders of the Selling
Fund.
2. REORGANIZATION.
a. Plan of Reorganization. The Reorganization will be a reorganization
within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"). At the Closing, the Selling
Corporation will convey all of the assets of the Selling Fund to
the Buying Fund. The Buying Fund will assume all liabilities of the
Selling Fund. At the Closing, the Buying Corporation will deliver
shares of the Buying Fund, including fractional shares, to the
Selling Corporation. The number of shares will be determined by
dividing the value of the net assets of shares of the Selling Fund,
computed as described in paragraph 3(a), by the net asset value of
one share of the Buying Fund, computed as described in paragraph
3(b). The Selling Fund will not pay a sales charge on the receipt
of Buying Fund shares in exchange for the assets of the Selling
Fund. In addition, the shareholders of the Selling Fund will not
pay a sales charge on distribution to them of shares of the Buying
Fund.
b. Closing and Effective Time of the Reorganization. The
Reorganization and all related acts necessary to complete the
Reorganization (the "Closing") will occur on the first day on which
the New York Stock Exchange (the "NYSE") is open for business
following approval of shareholders of the Selling Fund and receipt
of all necessary regulatory approvals, or such later date as the
parties may agree.
3. VALUATION OF NET ASSETS.
a. The net asset value of shares of the Selling Fund will be computed
as of the close of regular trading on the NYSE on the day of
Closing (the "Valuation Date") using the valuation procedures in
the Buying Fund's prospectus.
#225143 v01
b. The net asset value per share of shares of the Buying Fund will be
determined as of the close of regular trading on the NYSE on the
Valuation Date, using the valuation procedures in the Buying Fund's
prospectus.
c. At the Closing, the Selling Fund will provide the Buying Fund with
a copy of the computation showing the valuation of the net asset
value per share of shares of the Selling Fund on the Valuation
Date. The Buying Fund will provide the Selling Fund with a copy of
the computation showing the determination of the net asset value
per share of shares of the Buying Fund on the Valuation Date. Both
computations will be certified by an officer of Ameriprise
Financial, Inc.
4. LIQUIDATION AND DISSOLUTION OF THE SELLING FUND.
a. As soon as practicable after the Valuation Date, the Selling
Corporation will liquidate the Selling Fund and distribute shares
of the Buying Fund to the Selling Fund's shareholders of record.
The Buying Fund will establish shareholder accounts in the names of
each Selling Fund shareholder, representing the respective pro rata
number of full and fractional shares of the Buying Fund due to each
shareholder. All issued and outstanding shares of the Selling Fund
will simultaneously be cancelled on the books of the Selling
Corporation. The Buying Fund or its transfer agent will establish
shareholder accounts in accordance with instructions from the
Selling Corporation.
b. Immediately after the Valuation Date, the share transfer books of
the Selling Corporation relating to the Selling Fund will be closed
and no further transfer of shares will be made.
c. Promptly after the distribution, the Buying Fund or its transfer
agent will notify each shareholder of the Selling Fund of the
number of shares distributed to the shareholder and confirm the
registration in the shareholder's name.
d. As promptly as practicable after the liquidation of the Selling
Fund, and in no event later than twelve months from the date of the
Closing, the Selling Fund will be dissolved.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYING CORPORATION.
The Buying Corporation represents and warrants to the Selling Fund as
follows:
a. Organization, Existence, etc. The Buying Corporation is a
corporation duly organized, validly existing and in good standing
under the laws of the state of Minnesota and has the power to carry
on its business as it is now being conducted.
b. Registration as Investment Company. The Buying Fund is a series of
the Buying Corporation, registered under the Investment Company Act
of 1940 (the "1940 Act") as an open-end, management investment
company.
#225143 v01
c. Capitalization. The Buying Corporation has authorized capital of
10,000,000,000 shares of common stock, par value $0.01 per share.
All of the outstanding shares have been duly authorized and are
validly issued, fully paid and non-assessable. Since the Buying
Fund is engaged in the continuous offering and redemption of its
shares, the number of outstanding shares may vary daily.
d. Financial Statements. The audited financial statements as of the
end of the last fiscal year, and the subsequent unaudited
semi-annual financial statements, if any (the "Buying Fund
Financial Statements"), fairly present the financial position of
the Buying Fund, and the results of its operations and changes in
its net assets for the periods shown.
e. Shares to be Issued Upon Reorganization. The shares to be issued in
connection with the Reorganization will be duly authorized and, at
the time of the Closing, will be validly issued, fully paid and
non-assessable.
f. Authority Relative to the Agreement. The Buying Corporation has the
power to enter into and carry out the obligations described in this
Agreement. The Agreement and the transactions contemplated by it
have been duly authorized by the Board of Directors of the Buying
Corporation and no other proceedings by the Buying Corporation or
the Buying Fund are necessary.
g. No Violation. The Buying Corporation is not in violation of its
Articles of Incorporation or By-Laws (the "Articles") or in default
in the performance of any material agreement to which it is a
party. The execution of this Agreement and the completion of the
transactions contemplated by it will not conflict with, or
constitute a breach of, any material contract or other instrument
to which the Buying Fund is subject. The transactions will not
result in any violation of the provisions of the Articles or any
law, administrative regulation or administrative or court decree
applicable to the Buying Fund.
h. Liabilities. There are no liabilities of the Buying Fund other
than:
o liabilities disclosed in the Buying Fund Financial Statements,
o liabilities incurred in the ordinary course of business
subsequent to the date of the latest annual or semi-annual
financial statements, or
o liabilities previously disclosed to the Selling Fund, none of
which has been materially adverse to the business, assets or
results of operation of the Buying Fund.
i. Litigation. There is no litigation, administrative proceeding or
investigation before any court or governmental body currently
pending or, to the knowledge of the Buying Fund, threatened, that
would materially and adversely affect the Buying Fund, its
financial condition or the conduct of its business, or that would
prevent or hinder completion of the
#22513 v01
transactions contemplated by this Agreement. The Buying Fund knows
of no facts that might form the basis for the institution of any
such litigation, proceeding or investigation and the Buying Fund is
not a party to or subject to the provisions of any order, decree or
judgment.
j. Contracts. Except for contracts and agreements previously disclosed
to the Selling Corporation, the Buying Fund is not a party to or
subject to any material contract, debt instrument, plan, lease,
franchise, license or permit.
k. Taxes. The Buying Fund has qualified as a regulated investment
company under the Internal Revenue Code with respect to each
taxable year since commencement of its operations and will qualify
as a regulated investment company at all times through the Closing.
As of the Closing, the Buying Fund will (i) have filed all federal
and other tax returns and reports that have been required to be
filed, (ii) have paid or provided for payment of all federal and
other taxes shown to be due on such returns or on any assessments
received, (iii) have adequately provided for all tax liabilities on
its books, (iv) except as disclosed to the Selling Fund, not have
had any tax deficiency or liability asserted against it or question
with respect thereto raised, and (v) except as disclosed to the
Selling Fund, not be under audit by the Internal Revenue Service or
by any state or local tax authority for taxes in excess of those
already paid.
l. Registration Statement. The Buying Fund will file a registration
statement on Form N-14 (the "Registration Statement") with the
Securities and Exchange Commission under the Securities Act of 1933
(the "1933 Act") relating to the shares to be issued in the
Reorganization. At the time the Registration Statement becomes
effective, at the time of the shareholders' meeting and at the
Closing, the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading. However,
none of the representations and warranties in this subsection apply
to statements in, or omissions from, the Registration Statement
made in reliance on information furnished by the Selling Fund for
use in the Registration Statement.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING CORPORATION.
The Selling Corporation represents and warrants to the Buying Fund as
follows:
a. Organization, Existence, etc. The Selling Corporation is a
corporation duly organized, validly existing and in good standing
under the laws of the state of Minnesota and has the power to carry
on its business as it is now being conducted.
b. Registration as Investment Company. The Selling Fund is a series of
the Selling Corporation, registered under the 1940 Act as an
open-end, management investment company.
#225143 v01
c. Capitalization. The Selling Corporation has authorized capital of
10,000,000,000 shares of common stock, par value $0.01 per share.
All of the outstanding shares have been duly authorized and are
validly issued, fully paid and non-assessable. Since the Selling
Fund is engaged in the continuous offering and redemption of its
shares, the number of outstanding shares may vary daily.
d. Financial Statements. The audited financial statements as of the
end of the last fiscal year, and the subsequent unaudited
semi-annual financial statements, if any (the "Selling Fund
Financial Statements"), fairly present the financial position of
the Selling Fund, and the results of its operations and changes in
its net assets for the periods shown.
e. Authority Relative to the Agreement. The Selling Corporation has
the power to enter into and to carry out its obligations under this
Agreement. The Agreement and the transactions contemplated by it
have been duly authorized by the Board of Directors of the Selling
Corporation and no other proceedings by the Selling Corporation or
the Selling Fund are necessary.
f. No Violation. The Selling Corporation is not in violation of its
Articles or in default in the performance of any material agreement
to which it is a party. The execution of this Agreement and the
completion of the transactions contemplated by it will not conflict
with or constitute a breach of, any material contract to which the
Selling Fund is subject. The transactions will not result in any
violation of the provisions of the Articles or any law,
administrative regulation or administrative or court decree
applicable to the Selling Fund.
g. Liabilities. There are no liabilities of the Selling Fund other
than:
o liabilities disclosed in the Selling Fund Financial Statements,
o liabilities incurred in the ordinary course of business
subsequent to the date of the latest annual or semi-annual
financial statements, or
o liabilities previously disclosed to the Buying Fund, none of
which has been materially adverse to the business, assets or
results of operation of the Selling Fund.
h. Litigation. There is no litigation, administrative proceeding or
investigation before any court or governmental body currently
pending or, to the knowledge of the Selling Fund, threatened, that
would materially and adversely affect the Selling Fund, its
financial condition or the conduct of its business, or that would
prevent or hinder completion of the transactions contemplated by
this Agreement. The Selling Fund knows of no facts that might form
the basis for the institution of any such litigation, proceeding or
investigation and is not a party to or subject to the provisions of
any order, decree or judgment.
#225143 v01
i. Contracts. Except for contracts and agreements previously disclosed
to the Buying Corporation, the Selling Fund is not a party to or
subject to any material contract, debt instrument, plan, lease,
franchise, license or permit.
j. Taxes. The Selling Fund has qualified as a regulated investment
company under the Internal Revenue Code with respect to each
taxable year since commencement of its operations and will qualify
as regulated investment company at all times through the Closing.
As of the Closing, the Selling Fund will (i) have filed all federal
and other tax returns and reports that have been required to be
filed, (ii) have paid or provided for payment of all federal and
other taxes shown to be due on such returns or on any assessments
received, (iii) have adequately provided for all tax liabilities on
its books, (iv) except as disclosed to the Buying Fund, not have
had any tax deficiency or liability asserted against it or question
with respect thereto raised, and (v) except as disclosed to the
Buying Fund, not be under audit by the Internal Revenue Service or
by any state or local tax authority for taxes in excess of those
already paid.
k. Fund Securities. All securities listed in the schedule of
investments of the Selling Fund as of the Closing will be owned by
the Selling Fund free and clear of any encumbrances, except as
indicated in the schedule.
l. Registration Statement. The Selling Fund will cooperate with the
Buying Fund and will furnish information relating to the Selling
Corporation and the Selling Fund required in the Registration
Statement. At the time the Registration Statement becomes
effective, at the time of the shareholders' meeting and at the
Closing, the Registration Statement, as it relates to the Selling
Corporation or the Selling Fund, will not contain an untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading. However,
the representations and warranties in this subsection apply only to
statements in or omissions from the Registration Statement made in
reliance upon information furnished by the Selling Corporation or
the Selling Fund for use in the Registration Statement.
7. CONDITIONS TO OBLIGATIONS OF THE BUYING CORPORATION. The obligations of
the Buying Corporation with respect to the Reorganization are subject
to the satisfaction of the following conditions:
a. Shareholder Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power
of all Selling Fund shares entitled to vote.
b. Representations, Warranties and Agreements. The Selling Corporation
and the Selling Fund will have complied with this Agreement and
each of the representations and warranties in this Agreement will
be true in all material respects as of the Closing. An officer of
the Selling Corporation will provide a certificate to the Buying
Fund confirming that, as of the
#225143 v01
Closing, the representations and warranties set forth in Section 6
are true and correct and that there have been no material adverse
changes in the financial condition, results of operations,
business, properties or assets of the Selling Fund since the date
of its last financial statement, except as otherwise indicated in
any financial statements, certified by an officer of the Selling
Corporation, and delivered to the Buying Fund on or prior to the
last business day before the Closing.
c. Regulatory Approvals.
o The Registration Statement referred to in Section 5(l) will be
effective and no stop orders under the 1933 Act will have been
issued.
o All necessary approvals, consents and exemptions from federal
and state regulatory authorities will have been obtained.
d. Tax Opinion. The Buying Corporation will have received the opinion
of Ropes & Xxxx LLP dated as of the Closing, as to the federal
income tax consequences of the Reorganization to the Buying Fund
and its shareholders. For purposes of rendering their opinion,
Ropes & Xxxx LLP may rely, as to factual matters, upon the
statements made in this Agreement, the proxy statement which will
be distributed to the shareholders of the Selling Fund, and other
written representations as an officer of the Selling Corporation
will have verified as of Closing. The opinion of Ropes & Xxxx LLP
will be to the effect that: (i) neither the Selling Fund nor the
Buying Fund will recognize any gain or loss upon the transfer of
the assets of the Selling Fund to, and assumption of its
liabilities by, the Buying Fund in exchange for shares of the
Buying Fund and upon the distribution of the shares to the Selling
Fund shareholders in exchange for their shares of the Selling Fund;
(ii) the shareholders of the Selling Fund who receive shares of the
Buying Fund in the Reorganization will not recognize any gain or
loss on the exchange of their shares of the Selling Fund for the
shares of the Buying Fund; (iii) the holding period and the basis
of the shares received by the Selling Fund shareholders will be the
same as the holding period and the basis of the shares of the
Selling Fund surrendered in the exchange; (iv) the holding period
and the basis of the assets acquired by the Buying Fund will be the
same as the holding period and the basis of the assets to the
Selling Fund immediately prior to the Reorganization.
e. Opinion of Counsel. The Buying Corporation will have received an
opinion of counsel for the Selling Corporation, dated as of the
Closing, to the effect that: (i) the Selling Corporation is a
corporation duly organized and validly existing under the laws of
the state of Minnesota; (ii) the Selling Fund is a series of the
Selling Corporation, an open-end investment company registered
under the 1940 Act; (iii) this Agreement and the Reorganization
have been duly authorized and approved by all requisite action of
the Selling Corporation and the Selling Fund and this Agreement has
been duly executed by, and is a valid and binding obligation of,
the Selling Corporation.
#225143 v01
f. Declaration of Dividend. The Selling Fund, prior to the Closing,
has declared a dividend or dividends, which, together with all
previous such dividends, shall have the effect of distributing to
the Selling Fund shareholders (i) all of the excess of (x) the
Selling Fund's investment income excludable from gross income under
Section 103 of the Code over (y) the Selling Fund's deductions
disallowed under Sections 265 and 171 of the Code, (ii) all of the
Selling Fund's investment company taxable income as defined in
Section 852 of the Code (in each case computed without regard to
any deduction for dividends paid) and (iii) all of the Selling
Fund's net capital gain realized (after reduction for any capital
loss carryover), in each case for the current taxable year (which
will end on the Closing date) and any preceding taxable years for
which such a dividend is eligible to be made under Section 855 of
the Code.
8. CONDITIONS TO OBLIGATIONS OF THE SELLING CORPORATION. The obligations
of the Selling Corporation with respect to the Reorganization are
subject to the satisfaction of the following conditions:
a. Shareholder Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power
of all Selling Fund shares entitled to vote.
b. Representations, Warranties and Agreements. The Buying Fund will
have complied with this Agreement and each of the representations
and warranties in this Agreement will be true in all material
respects as of the Closing. An officer of the Buying Corporation
will provide a certificate to the Selling Fund confirming that, as
of the Closing, the representations and warranties set forth in
Section 5 are true and correct and that there have been no material
adverse changes in the financial condition, results of operations,
business, properties or assets of the Buying Fund since the date of
its last financial statement, except as otherwise indicated in any
financial statements, certified by an officer of the Buying
Corporation, and delivered to the Selling Fund on or prior to the
last business day before the Closing.
c. Regulatory Approvals.
o The Registration Statement referred to in Section 5(l) will be
effective and no stop orders under the 1933 Act will have been
issued.
o All necessary approvals, consents and exemptions from federal
and state regulatory authorities will have been obtained.
d. Tax Opinion. The Selling Corporation will have received the opinion
of Ropes & Xxxx LLP dated as of the Closing, as to the federal
income tax consequences of the Reorganization to the Selling Fund
and its shareholders. For purposes of rendering their opinion,
Ropes & Xxxx LLP may rely, as to factual matters, upon the
statements made in this Agreement, the proxy statement which will
be distributed to the shareholders of the Selling Fund, and other
#225143 v01
written representations as an officer of the Buying Corporation
will have verified as of Closing. The opinion of Ropes & Xxxx LLP
will be to the effect that: (i) neither the Selling Fund nor the
Buying Fund will recognize any gain or loss upon the transfer of
the assets of the Selling Fund to, and assumption of its
liabilities by, the Buying Fund in exchange for shares of the
Buying Fund and upon the distribution of the shares to the Selling
Fund shareholders in exchange for their shares of the Selling Fund;
(ii) the shareholders of the Selling Fund who receive shares of the
Buying Fund in the Reorganization will not recognize any gain or
loss on the exchange of their shares of the Selling Fund for the
shares of the Buying Fund; (iii) the holding period and the basis
of the shares received by the Selling Fund shareholders will be the
same as the holding period and the basis of the shares of the
Selling Fund surrendered in the exchange; (iv) the holding period
and the basis of the assets acquired by the Buying Fund will be the
same as the holding period and the basis of the assets to the
Selling Fund immediately prior to the Reorganization; and (v) the
Buying Fund will succeed to and take into account the items of the
Selling 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.
e. Opinion of Counsel. The Selling Corporation will have received the
opinion of counsel for the Buying Corporation, dated as of the
Closing, to the effect that: (i) the Buying Corporation is a
corporation duly organized and validly existing under the laws of
the state of Minnesota; (ii) the Buying Fund is a series of the
Buying Corporation, an open-end investment company registered under
the 1940 Act; (iii) this Agreement and the Reorganization have been
authorized and approved by all requisite action of the Buying
Corporation and the Buying Fund and this Agreement has been duly
executed by, and is a valid and binding obligation of, the Buying
Corporation; and (iv) the shares to be issued in the Reorganization
are duly authorized and upon issuance in accordance with this
Agreement will be validly issued, fully paid and non-assessable
shares of the Buying Fund.
9. AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS.
a. This Agreement may be amended in writing if authorized by the
respective Boards of Directors. The Agreement may be amended at any
time before or after approval by the shareholders of the Selling
Fund, but after shareholder approval, no amendment shall be made
that substantially changes the terms of paragraphs 2 or 3.
b. At any time prior to the Closing, any of the parties may waive in
writing (i) any inaccuracies in the representations and warranties
made to it and (ii) compliance with any of the covenants or
conditions made for its benefit. However, neither party may waive
the requirement to obtain shareholder approval or the requirement
to obtain a tax opinion.
c. The Selling Corporation may terminate this Agreement at any time
prior to the Closing by notice to the Buying Corporation if a
material condition to its performance or a material
#225143 v01
covenant of the Buying Corporation on behalf of the Buying Fund is
not fulfilled on or before the date specified for its fulfillment
or a material breach of this Agreement is made by the Buying
Corporation on behalf of the Buying Fund and is not cured.
d. The Buying Corporation may terminate this Agreement at any time
prior to the Closing by notice to the Selling Corporation if a
material condition to its performance or a material covenant of the
Selling Corporation on behalf of the Selling Fund is not fulfilled
on or before the date specified for its fulfillment or a material
breach of this Agreement is made by the Selling Corporation on
behalf of the Selling Fund and is not cured.
e. This Agreement may be terminated by any party at any time prior to
the Closing, whether before or after approval by the shareholders
of the Selling Fund, without any liability on the part of either
party or its respective directors, officers, or shareholders, on
written notice to the other party, and shall be terminated without
liability as of the close of business on Dec. 31, 2006, or a later
date agreed upon by the parties, if the Closing is not on or prior
to that date.
f. The representations, warranties and covenants contained in this
Agreement, or in any document delivered in connection with this
Agreement, will survive the Reorganization.
10. EXPENSES. RiverSource Investments, LLC will pay all solicitation
expenses in order to achieve shareholder approval of the Reorganization
whether or not the Reorganization is completed and will bear the other
costs of effecting the Reorganization.
11. GENERAL.
a. Headings. The headings contained in this Agreement are for
reference purposes only and will not affect the meaning or
interpretation of this Agreement. Nothing in this Agreement is
intended to confer upon any other person any rights or remedies by
reason of this Agreement.
b. Governing Law. This Agreement will be governed by the laws of the
state of Minnesot.
12. INDEMNIFICATION.
Each party will indemnify and hold the other and its officers and
directors (each an "Indemnitee") harmless from and against any
liability or other cost and expense, in connection with the defense or
disposition of any action, suit, or other proceeding, before any court
or administrative or investigative body in which the Indemnitee may be
involved as a party, with respect to actions taken under this
Agreement. However, no Indemnitee will be indemnified against any
liability or expense arising by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in
the conduct of the Indemnitee's position.
#225143 v01
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
signed.
----------------------------------------------------------------------------
AXP Global Series, Inc.
on behalf of RiverSource Global Balanced Fund
By:
----------------------------------------
/s/ Xxxxxx X. Xxx
-----------------
Xxxxxx X. Xxx -- Vice President
----------------------------------------------------------------------------
AXP Investment Series, Inc.
on behalf of RiverSource Balanced Fund
By:
----------------------------------------
/s/ Xxxxxx X. Xxx
-----------------
Xxxxxx X. Xxx -- Vice President
The undersigned is a party to this Agreement for purposes of Section 3c and
10 only.
RiverSource Investments, LLC
By:
----------------------------------------
/s/ Xxxxx X. Xxxxx
------------------
Xxxxx X. Xxxxx -- Senior Vice President -- Mutual Funds
