EXHIBIT(h)(5)
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization dated as of September 11, 2007 (the
"Agreement") is between each selling entity identified in Schedules A, B and C
hereto (each a "Selling Corporation")(1), on behalf of each series thereof
identified in Schedules A, B and C hereto as a Selling Fund (each a "Selling
Fund"), the corresponding buying entity identified in Schedules A, B and C
hereto (the "Buying Trust")(2), on behalf of each series thereof identified in
Schedules A, B and C hereto as the corresponding Buying Fund (each a "Buying
Fund"), and RiverSource Investments, LLC (solely for the purposes of Sections 3c
and 11 of this Agreement).
This Agreement and Plan of Reorganization addresses three sets of
reorganizations, the "RIC Redomiciling Reorganizations" identified in Schedule
A, the "Non-RIC Redomiciling Reorganizations" identified in Schedule B, and the
"Core Bond-Diversified Bond Fund Reorganization" identified in Schedule C.
This Agreement shall be treated as if each reorganization between a Selling Fund
and its corresponding Buying Fund contemplated hereby had been the subject of a
separate agreement.
In consideration of their mutual promises, the parties agree as follows:
1. CONTRACT HOLDER APPROVAL. Each Selling Fund will call a meeting of its
contract holders for the purpose of approving the Agreement and the
transactions it contemplates (each a "Reorganization"). Each Buying Fund
agrees to furnish data and information, as reasonably requested, for the
proxy statement to be furnished to shareholders of the corresponding
Selling Fund.
2. REORGANIZATION.
a. Plan of Reorganization. The RIC Redomiciling Reorganizations and the
Core Bond - Diversified Bond Fund Reorganization will be
reorganizations within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"). The Non-RIC
Redomiciling Reorganizations will be liquidations of the relevant
Selling Fund into the Relevant Buying Fund for federal income tax
purposes. It is intended that the Plans of Reorganization for the
Non-RIC Redomiciling Reorganizations will also serve as Plans of
Liquidations for federal income tax purposes. At the Closing, each
relevant Selling Corporation will convey all of the assets of each
relevant Selling Fund to the corresponding relevant Buying Fund.
Each relevant Buying Fund will assume all liabilities of the
corresponding relevant Selling Fund. At the Closing, the Buying
Trust will deliver shares of each relevant Buying Fund, including
fractional shares, to the corresponding Selling Corporation. The
number of shares will be determined by dividing the value of the net
assets of shares of each relevant Selling Fund, computed as
described in paragraph 3(a), by the net asset value of one share of
the corresponding relevant Buying Fund, computed as described in
paragraph 3(b). Each relevant Selling Fund will not pay a sales
charge on the receipt of the corresponding relevant Buying Fund's
shares in exchange for the assets of such relevant Selling Fund. In
addition, the separate account shareholders of each relevant Selling
Fund will not pay a sales charge on distribution to them of shares
of the corresponding relevant 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
contract holders of each Selling Fund and receipt of all necessary
regulatory approvals, or such later date as the parties may agree.
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(1) As noted in Schedule C, the Selling Corporation for the Core Bond -
Diversified Bond Fund Reorganization will be either RiverSource Variable
Portfolio - Income Series, Inc., a Minnesota corporation on behalf of its
series, RiverSource Variable Portfolio - Core Bond Fund (in the event that
shareholders of the RiverSource Variable Portfolio - Core Bond Fund do not
approve the RIC Redomiciling Reorganization of their fund described in
Schedule A) or RiverSource Variable Series Trust, on behalf of its series
RiverSource Variable Portfolio - Core Bond (in the event that shareholders
of the RiverSource Variable Portfolio - Core Bond Fund approve the RIC
Redomiciling Reorganization of their fund described in Schedule A).
(2) As noted in Schedule C, the Buying Trust will be either RiverSource
Variable Portfolio - Income Series, Inc., a Minnesota corporation on
behalf of its series, RiverSource Variable Portfolio - Diversified Bond
Fund (in the event that shareholders of the RiverSource Variable Portfolio
- Diversified Bond Fund do not approve the RIC Redomiciling Reorganization
of their fund described in Schedule A), or RiverSource Variable Portfolio
- Diversified Bond Fund, a series of RiverSource Variable Series Trust in
the event that shareholders of the RiverSource Variable Portfolio -
Diversified Bond Fund approve the RIC Redomiciling reorganization of their
fund described in Schedule A.
3. VALUATION OF NET ASSETS.
a. The net asset value of shares of each Selling Fund will be computed
as of the close of regular trading on the NYSE on the business day
immediately preceding the day of Closing (the "Valuation Date")
using the valuation procedures in the corresponding Buying Fund's
prospectus.
b. The net asset value per share of shares of each Buying Fund will be
determined as of the close of regular trading on the NYSE on the
Valuation Date, using the valuation procedures in each Buying Fund's
prospectus.
c. At the Closing, each Selling Fund will provide the corresponding
Buying Fund with a copy of the computation showing the valuation of
the net asset value per share of shares of such Selling Fund on the
Valuation Date. Each Buying Fund will provide the corresponding
Selling Fund with a copy of the computation showing the
determination of the net asset value per share of shares of such
Buying Fund on the Valuation Date. Both computations will be
certified by an officer of RiverSource Investments, LLC, the
investment manager.
4. LIQUIDATION AND DISSOLUTION OF THE SELLING FUND.
a. As soon as practicable after the Valuation Date, each Selling
Corporation will liquidate each Selling Fund and distribute shares
of each class of the corresponding Buying Fund to such Selling
Fund's shareholders of record of such class. Each Buying Fund will
establish shareholder accounts in the names of each corresponding
Selling Fund shareholder, representing the respective pro rata
number of full and fractional shares of such class the Buying Fund
due to each shareholder. All issued and outstanding shares of each
Selling Fund will simultaneously be cancelled on the books of each
Selling Corporation. Each Buying Fund or its transfer agent will
establish shareholder accounts in accordance with instructions from
the corresponding Selling Corporation.
b. Immediately after the Valuation Date, the share transfer books of
each Selling Corporation relating to each Selling Fund will be
closed and no further transfer of shares will be made.
c. Promptly after the distribution, each Buying Fund or its transfer
agent will notify each shareholder of the corresponding 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 each Selling
Fund, and in no event later than twelve months from the date of the
Closing, each Selling Fund will be dissolved.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYING TRUST.
With respect to each Reorganization, the Buying Trust represents and
warrants to the corresponding Selling Fund as follows:
a. Organization, Existence, etc. The Buying Trust is a Massachusetts
business trust that is duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts (for
the Core Bond - Diversified Bond Fund Reorganization, in the event
that shareholders of the RiverSource Variable Portfolio -
Diversified Bond Fund do not approve the RIC Redomiciling
Reorganization of their fund described in Schedule A, the Buying
Trust 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 Trust, registered under the Investment Company Act of
1940 (the "1940 Act") as an open-end, management investment company.
c. Capitalization. The beneficial interest in the Buying Trust shall at
all times be divided into an unlimited number of shares, without par
value (for the Core Bond - Diversified Bond Fund Reorganization, in
the event that shareholders of the RiverSource Variable Portfolio -
Diversified Bond Fund do not approve the RIC Redomiciling
Reorganization of their fund described in Schedule A, the Buying
Trust has authorized capital of 10,000,000,000 shares of common
stock, par value $0.01 per share). For each Reorganization other
than the Core Bond - Diversified Bond Fund Reorganization, the
Buying Trust was formed for the purpose of the Redomiciling
Reorganizations, and has no shares of beneficial interest issued and
outstanding. All of the outstanding shares of the Buying Trust will
be duly authorized and will be validly issued, fully paid and non-
assessable. Since the Buying Fund will be engaged in the continuous
offering and redemption of its shares, the number of outstanding
shares may vary daily.
d. Financial Statements. For the Core Bond - Diversified Bond Fund
Reorganization, 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 Trust 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 Trustees of Buying Trust
and no other proceedings by the Buying Trust or the Buying Fund are
necessary.
g. No Violation. The Buying Trust is not in violation of its Agreement
and Declaration of Trust or By-Laws (the "Charter Documents") or in
default in the performance of any material agreement to which it is
a party (for the Core Bond - Diversified Bond Fund Reorganization
described in Schedule C, in the event that shareholders of the
RiverSource Variable Portfolio - Diversified Bond Fund do not
approve the RIC Redomiciling Reorganization of their fund described
in Schedule A, the Buying Fund 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 Charter Documents or Articles, as the case
may be, or any law, administrative regulation or administrative or
court decree applicable to the Buying Fund.
h. Liabilities. The Buying Fund has no liabilities other than
liabilities previously disclosed to the Selling Fund. For the Core
Bond - Diversified Bond Fund Reorganization, the Buying Fund has no
liabilities other than liabilities disclosed in the Buying Fund
Financial Statements, liabilities incurred in the ordinary course of
business subsequent to the date of the latest annual or semi-annual
financial statements, or 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 or that would
prevent or hinder completion of the 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. Regulated Investment Company Qualification. With respect to each RIC
Redomiciling Reorganization, the Buying Fund intends to meet the
requirements of subchapter M of the Code for treatment as a
"regulated investment company" within the meaning of Section 851 of
the Code in respect of each taxable year beginning with the
commencement of operations on the Closing Date. With respect to each
RIC Redomiciling Reorganization, each Buying Fund intends to comply
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 shares of beneficial
interest and to withholding in respect of dividends and other
distributions to shareholders and to avoid any potential material
penalties that could be imposed thereunder. With respect to the Core
Bond - Diversified Bond Fund Reorganization, in the event that
shareholders of the RiverSource Variable Portfolio - Diversified
Bond Fund do not approve the RIC Redomiciling Reorganization of
their fund described in Schedule A, the Buying Fund will have
qualified as a regulated investment company under the Internal
Revenue Code with respect to its first taxable year since
commencement of its operations and will qualify as a regulated
investment company at all times through Closing, and in the event
that the shareholders of RiverSource Variable Portfolio -
Diversified Bond Fund do approve the RIC Redomiciling Reorganization
of their fund described in Schedule A, the Buying Fund will intend
to qualify as a regulated investment company under the Internal
Revenue Code with respect to its first taxable year.
l. Taxes. Except with respect to the Core Bond - Diversified Bond Fund
Reorganization, as of the Closing, no federal or state tax returns
of a Buying Fund will have been required by law to be filed and no
federal or state taxes will be due; each Buying Fund will not have
been required to pay any assessments; and each Buying Fund will not
have any tax liabilities. Consequently, each Buying Fund will not
have any tax deficiency or liability asserted against it or question
with respect thereto raised, and each Buying Fund will 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. For Core Bond -
Diversified Bond Fund Reorganization, 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.
m. Registration Statement. With respect to the Core Bond - Diversified
Bond Fund Reorganization, 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.
n. Business Activities. With respect to each RIC Redomiciling
Reorganization and each Non-RIC Redomiciling Reorganization, and the
Core Bond Fund - Diversified Bond Fund Reorganization in the event
that shareholders of the RiverSource Variable Portfolio -
Diversified Bond Fund do approve the RIC Redomiciling Reorganization
of their fund described in Schedule A, the Buying Fund will not
carry on any business activities between the date hereof and the
Closing Date, it being understood that the Buying Fund was formed
solely for the purpose of consummating the corresponding
Reorganization. With respect to the Core Bond - Diversified Bond
Fund Reorganization, in the event that shareholders of the
RiverSource Variable Portfolio - Diversified Bond Fund do not
approve the RIC Redomiciling Reorganization of their fund described
in Schedule A, the Buying Fund will operate its business in the
ordinary course between the Closing Date of that Redomiciling
Reorganization and the Closing Date of the Core Bond - Diversified
Bond Fund Reorganization, it being understood that such ordinary
course of business will include regular and customary periodic
dividends and distributions and any other distribution that may be
advisable.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF EACH SELLING CORPORATION.
With respect to each Reorganization, the Selling Corporation represents
and warrants to the corresponding 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 (for the Core Bond -
Diversified Bond Fund Reorganization described in Schedule C, in the
event that shareholders of RiverSource Variable Portfolio - Core
Bond Fund approve the RIC Redomiciling Reorganization of their fund
described in Schedule A, the Selling Corporation is a Massachusetts
business trust that is duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts).
b. Registration as Investment Company. The Selling Fund is a series of
its corresponding Selling Corporation, registered under the 1940 Act
as an open-end, management investment company.
c. Capitalization. The Selling Corporation has authorized capital of
10,000,000,000 shares of common stock, par value $0.01 per share
(for the Core Bond - Diversified Bond Fund Reorganization described
in Schedule C, in the event that shareholders of RiverSource
Variable Portfolio - Core Bond Fund approve the RIC Redomiciling
Reorganization of their fund described in Schedule A, the beneficial
interest of the Selling Corporation shall at all times be divided
into an unlimited number of shares, without par value). 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 or the Board of
Trustees, as the case may be, of the Selling Corporation and no
other proceedings by the Selling Corporation or the corresponding
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 (for the Core Bond - Diversified Bond Fund
Reorganization described in Schedule C, in the event that
shareholders of RiverSource Variable Portfolio - Core Bond Fund
approve the RIC Redomiciling Reorganization of their fund described
in Schedule A, the Selling Corporation is not in violation of its
Charter Documents). 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 each
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 each Selling Fund.
g. Liabilities. The Selling Fund has no liabilities other than
liabilities disclosed in the Selling Fund Financial Statements,
liabilities incurred in the ordinary course of business subsequent
to the date of the latest annual or semi-annual financial
statements, or liabilities previously disclosed to the Buying Fund,
none of which has been materially adverse to the business, assets or
results of operation of the corresponding 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.
i. Contracts. Except for contracts and agreements previously disclosed
to the Buying Trust, the Selling Fund is not a party to or subject
to any material contract, debt instrument, plan, lease, franchise,
license or permit.
j. Regulated Investment Company Qualification. With the exception of
the Selling Fund in the Core Bond - Diversified Bond Fund
Reorganization in the event that the shareholders of RiverSource
Variable Portfolio - Diversified Bond Fund do approve the RIC
Redomiciling Reorganization of their fund described in Schedule A,
each 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. Each Selling
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 shares of beneficial interest and to withholding in respect of
dividends and other distributions to shareholders and is not liable
for any material penalties that could be imposed thereunder.
k. Taxes. As of the Closing, each 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 corresponding 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 corresponding 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.
l. Fund Securities. All securities listed in the schedule of
investments of each Selling Fund as of the Closing will be owned by
such Selling Fund free and clear of any encumbrances, except as
indicated in the schedule.
m. Registration Statement. With respect to the Core Bond - Diversified
Bond Fund Reorganization described in Schedule C, the Selling Fund
will cooperate with the corresponding 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 listed, 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.
n. Provision of Books and Records. The Selling Fund will provide its
books and records to the corresponding Buying Fund for purposes of
preparing any tax returns required by law to be filed after the
Closing date, including (1) the tax return for the period ending on
the Closing date, and (2) the tax return for the period beginning
the date after the Closing and ending the earlier of the current
fiscal year-end of the Buying Fund and the taxable year end chosen
by the corresponding Buying Fund following each Reorganization.
o. Business Activities. The Selling Fund 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 and any
other distribution that may be advisable.
7. CONDITIONS TO OBLIGATIONS OF THE BUYING TRUST. The obligations of the
Buying Trust with respect to each Reorganization are subject to the
satisfaction of the following conditions:
a. Contract Holder 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 corresponding 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 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 corresponding Selling Fund since the date of its last
financial statement, except as otherwise indicated in any financial
statements, certified by an officer of each Selling Corporation, and
delivered to the Buying Fund on or prior to the last business day
before the Closing.
c. Regulatory Approvals.
- The Registration Statement referred to in Sections 5(m) and
6(m) will be effective and no stop orders under the 1933 Act
will have been issued.
- All necessary approvals, consents and exemptions from federal
and state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Buying Trust 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 (for the Core Bond - Diversified Bond Fund Reorganization
described in Schedule C in the event that shareholders of
RiverSource Variable Portfolio - Core Bond Fund approve the RIC
Redomiciling Reorganization of their fund described in Schedule A,
the Selling Corporation is a Massachusetts business trust duly
organized and validly existing under the laws of the Commonwealth of
Massachusetts); (ii) each Selling Fund is a series of the
corresponding 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 each Selling Corporation and each Selling Fund
and this Agreement has been duly executed by, and is a valid and
binding obligation of, each Selling Corporation.
e. Declaration of Dividend. With respect to the Non-RIC Redomiciling
Reorganizations and the Core Bond - Diversified Bond Fund
Reorganization, each 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 each
Selling Fund shareholders (i) all of the excess of (x) each Selling
Fund's investment income excludable from gross income under Section
103 of the Code over (y) each Selling Fund's deductions disallowed
under Sections 265 and 171 of the Code, (ii) all of each 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 each 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 each Reorganization are subject to
the satisfaction of the following conditions:
a. Contract Holder 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 Trust 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 corresponding 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
Trust, and delivered to the Selling Fund on or prior to the last
business day before the Closing.
c. Regulatory Approvals.
- The Registration Statement referred to in Sections 5(m) and
6(m) will be effective and no stop orders under the 1933 Act
will have been issued.
- All necessary approvals, consents and exemptions from federal
and state regulatory authorities will have been obtained.
d. Opinion of Counsel. The Selling Corporation will have received the
opinion of counsel for the Buying Trust, dated as of the Closing, to
the effect that: (i) the Buying Trust is a corporation duly
organized and validly existing under the laws of the state of
Minnesota (for the Core Bond - Diversified Bond Fund Reorganization
described in Schedule C, in the event that shareholders of
RiverSource Variable Portfolio - Core Bond Fund approve the RIC
Redomiciling Reorganization of their fund described in Schedule A,
the Buying Trust is a Massachusetts business trust duly organized
and validly existing under the laws of the Commonwealth of
Massachusetts); (ii) the Buying Fund is a series of the Buying
Trust, 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 Trust and this
Agreement has been duly executed by, and is a valid and binding
obligation of, the Buying Trust; 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. CONDITIONS TO OBLIGATIONS OF EACH OF THE SELLING CORPORATION AND THE
BUYING TRUST. The obligations of each of the Selling Corporation and the
Buying Trust with respect to each Reorganization are subject to the
satisfaction of the following conditions:
Tax Opinion. With respect to each RIC Redomiciling Reorganization and the
Core Bond - Diversified Bond Fund Reorganization, each Selling Fund shall
have received a favorable opinion of Ropes & Xxxx LLP satisfactory to each
Selling Fund, and each Buying Fund shall have received a favorable opinion
of Ropes & Xxxx LLP satisfactory to each Buying Fund, each substantially
to the effect that, on the basis of existing provisions of the Code,
Treasury regulations promulgated thereunder, current administrative rules
and court decisions, generally for federal income tax purposes:
a. The transactions contemplated by this Agreement will constitute a
reorganization within the meaning of Section 368(a) of the Code, and
each Selling Fund and the corresponding Buying 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 each Selling Fund upon the
transfer of its assets to the corresponding Buying Fund in exchange
for the acquisition shares or upon the distribution of the
acquisition shares by such Selling Fund to its shareholders in
liquidation, as contemplated in paragraph 1 hereof;
c. No gain or loss will be recognized by each Buying Fund upon receipt
of the assets of the corresponding Selling Fund in exchange for
acquisition shares and the assumption by each Buying Fund of the
liabilities of such Selling Fund as contemplated in paragraph 1
hereof;
d. The basis in the hands of each Buying Fund of the assets of each
Selling Fund transferred to the Buying Fund in the Reorganization
will be the same as the basis of such assets in the hands of such
Selling Fund immediately prior to the transfer;
e. The holding periods of the assets of each Selling Fund in the hands
of each Buying Fund will include the periods during which such
assets were held by each Selling Fund;
f. No gain or loss will be recognized by each Selling Fund's
shareholders upon the exchange of their shares of each Selling Fund
for the acquisition shares;
g. The aggregate basis of the acquisition shares each Selling Fund
shareholder receives in connection with the Reorganization will be
the same as the aggregate basis of his or her Selling Fund's shares
exchanged therefor;
h. Each Selling Fund shareholder's holding period for the acquisition
shares will be determined by including the period for which he or
she held the Selling Fund's shares exchanged therefor, provided that
the shareholder held such Selling Fund's shares as capital assets;
and
i. Each 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.
Tax Opinion. With respect to each Non-RIC Redomiciling Reorganization
identified in Schedule B, the Selling Fund shall have received a favorable
opinion of Ropes & Xxxx LLP satisfactory to each Selling Fund, and each
Buying Fund shall have received a favorable opinion of Ropes & Xxxx LLP
satisfactory to each Buying Fund, each substantially to the effect that,
on the basis of existing provisions of the Code, Treasury regulations
promulgated thereunder, current administrative rules and court decisions,
generally for federal income tax purposes:
The Selling Fund's distribution (in a form qualifying for the deduction
for dividends paid) of any gain the Selling Fund recognizes in the Non-RIC
Redomiciling Reorganization will eliminate any tax liability of the
Selling Fund on such gain.
The opinions will be based on certain factual certifications made by
officers of the Selling Fund and the corresponding Buying Fund and will
also be based on customary assumptions. The opinion is not a guarantee
that the tax consequences of the Reorganization will be as described
above.
Ropes & Xxxx LLP will express no view with respect to the effect of the
Reorganization on any transferred asset as to which any unrealized gain or
loss is required to be recognized at the end of a taxable year (or on the
termination or transfer thereof) under federal income tax principles.
10. 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/Trustees. The Agreement may be
amended at any time before or after approval by the shareholders of
each Selling Fund.
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.
c. Each party hereto may terminate this Agreement at any time prior to
the Closing by notice to the other party if a material condition to
its performance or a material covenant of the other party is not
fulfilled on or before the date specified for its fulfillment or a
material breach of this Agreement is made by the other party and is
not cured.
d. This Agreement may be terminated by any party at any time prior to
the Closing, whether before or after approval by the shareholders of
each 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 December 31, 2008, or a later date
agreed upon by the parties, if the Closing is not on or prior to
that date.
e. The representations, warranties and covenants contained in this
Agreement, or in any document delivered in connection with this
Agreement, will survive the Reorganization.
11. EXPENSES. RiverSource Investments, LLC and its affiliates will pay all
solicitation expenses in order to achieve shareholder approval of each
Reorganization whether or not the Reorganization is completed and will
bear the other costs of effecting each Reorganization (other than any
brokerage or other transaction costs associated with the sale or purchase
of portfolio securities in connection with a Reorganization).
12. 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 Minnesota.
13. 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.
14. NON-RECOURSE. A copy of the Declaration of Trust of RiverSource Variable
Series Trust is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that no trustee, officer, agent
or employee of such fund shall have any personal liability under this
Agreement, and that this Agreement is binding only upon the assets and
properties of the relevant Acquiring Fund.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed.
RIVERSOURCE VARIABLE PORTFOLIO -- INCOME SERIES, INC., on behalf of
RiverSource Variable Portfolio -- Core Bond Fund
RiverSource Variable Portfolio -- Diversified Bond Fund
RiverSource Variable Portfolio -- Global Bond Fund
RiverSource Variable Portfolio -- Global Inflation Protected Securities Fund
RiverSource Variable Portfolio -- High Yield Bond Fund
RiverSource Variable Portfolio -- Income Opportunities Fund
RiverSource Variable Portfolio -- Short Duration U.S. Government Fund
RIVERSOURCE VARIABLE PORTFOLIO -- INVESTMENT SERIES, INC., on behalf of
RiverSource Variable Portfolio -- Emerging Markets Fund
RiverSource Variable Portfolio -- Growth Fund
RiverSource Variable Portfolio -- International Opportunity Fund
RiverSource Variable Portfolio -- Large Cap Equity Fund
RiverSource Variable Portfolio -- Large Cap Value Fund
RiverSource Variable Portfolio -- Mid Cap Growth Fund
RiverSource Variable Portfolio -- Mid Cap Value Fund
RiverSource Variable Portfolio -- S&P 500 Index Fund
RiverSource Variable Portfolio -- Small Cap Advantage Fund
RIVERSOURCE VARIABLE PORTFOLIO -- MANAGED SERIES, INC., on behalf of
RiverSource Variable Portfolio -- Balanced Fund
RiverSource Variable Portfolio -- Diversified Equity Income Fund
RIVERSOURCE VARIABLE PORTFOLIO -- MANAGERS SERIES, INC., on behalf of
RiverSource Variable Portfolio -- Fundamental Value Fund
RiverSource Variable Portfolio -- Select Value Fund
RiverSource Variable Portfolio -- Small Cap Value Fund
RIVERSOURCE VARIABLE PORTFOLIO -- MONEY MARKET SERIES, INC., on behalf of
RiverSource Variable Portfolio -- Cash Management Fund
RIVERSOURCE VARIABLE PORTFOLIO -- SELECT SERIES INC., on behalf of
RiverSource Variable Portfolio -- Core Equity Fund
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: President
RIVERSOURCE VARIABLE SERIES TRUST, on behalf of
RiverSource Variable Portfolio -- Balanced Fund
RiverSource Variable Portfolio -- Cash Management Fund
RiverSource Variable Portfolio -- Core Bond Fund
RiverSource Variable Portfolio -- Core Equity Fund
RiverSource Variable Portfolio -- Diversified Bond Fund
RiverSource Variable Portfolio -- Diversified Equity Income Fund
RiverSource Variable Portfolio -- Emerging Markets Fund
RiverSource Variable Portfolio -- Fundamental Value Fund
RiverSource Variable Portfolio -- Global Bond Fund
RiverSource Variable Portfolio -- Global Inflation Protected Securities Fund
RiverSource Variable Portfolio -- Growth Fund
RiverSource Variable Portfolio -- High Yield Bond Fund
RiverSource Variable Portfolio -- Income Opportunities Fund
RiverSource Variable Portfolio -- International Opportunity Fund
RiverSource Variable Portfolio -- Large Cap Equity Fund
RiverSource Variable Portfolio -- Large Cap Value Fund
RiverSource Variable Portfolio -- Mid Cap Growth Fund
RiverSource Variable Portfolio -- Mid Cap Value Fund
RiverSource Variable Portfolio -- S&P 500 Index Fund
RiverSource Variable Portfolio -- Select Value Fund
RiverSource Variable Portfolio -- Short Duration U.S. Government Fund
RiverSource Variable Portfolio -- Small Cap Advantage Fund
RiverSource Variable Portfolio -- Small Cap Value Fund
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: President
The undersigned is a party to this Agreement for the purposes of Section 3c and
11 only.
RIVERSOURCE INVESTMENTS, LLC
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: President and Chief Investment Officer
SCHEDULE A
RIC REDOMICILING REORGANIZATIONS
BUYING ENTITY
(EACH A SERIES OF RIVERSOURCE VARIABLE
SELLING ENTITY SELLING FUNDS SERIES TRUST)
---------------------------- -------------------------------------------------- -------------------------------------------------
RiverSource Variable
Portfolio -- Income Series,
Inc.
RiverSource Variable Portfolio -- Core Bond Fund RiverSource Variable Portfolio -- Core Bond Fund
RiverSource Variable Portfolio -- Diversified Bond RiverSource Variable Portfolio -- Diversified Bond
Fund Fund
RiverSource Variable Portfolio -- Global Bond Fund RiverSource Variable Portfolio -- Global Bond Fund
RiverSource Variable Portfolio -- Global Inflation RiverSource Variable Portfolio -- Global Inflation
Protected Securities Fund Protected Securities Fund
RiverSource Variable Portfolio -- High Yield Bond RiverSource Variable Portfolio -- High Yield Bond
Fund Fund
RiverSource Variable Portfolio -- Income RiverSource Variable Portfolio -- Income
Opportunities Fund Opportunities Fund
RiverSource Variable Portfolio -- Short Duration RiverSource Variable Portfolio -- Short Duration
U.S. Government Fund U.S. Government Fund
RiverSource Variable
Portfolio -- Investment
Series, Inc.
RiverSource Variable Portfolio -- Emerging Markets RiverSource Variable Portfolio -- Emerging Markets
Fund Fund
RiverSource Variable Portfolio -- International RiverSource Variable Portfolio -- International
Opportunity Fund Opportunity Fund
RiverSource Variable
Portfolio -- Money Market
Series, Inc.
RiverSource Variable Portfolio -- Cash Management RiverSource Variable Portfolio -- Cash Management
Fund Fund
SCHEDULE B
NON-RIC REDOMICILING REORGANIZATIONS
BUYING ENTITY
(EACH A SERIES OF RIVERSOURCE VARIABLE
SELLING ENTITY SELLING FUNDS SERIES TRUST)
---------------------------- -------------------------------------------------- -------------------------------------------------
RiverSource Variable
Portfolio -- Investment
Series, Inc.
RiverSource Variable Portfolio -- Growth Fund RiverSource Variable Portfolio -- Growth Fund
RiverSource Variable Portfolio -- Large Cap Equity RiverSource Variable Portfolio -- Large Cap
Fund Equity Fund
RiverSource Variable Portfolio -- Large Cap Value RiverSource Variable Portfolio -- Large Cap
Fund Value Fund
RiverSource Variable Portfolio -- Mid Cap Growth RiverSource Variable Portfolio -- Mid Cap Growth
Fund Fund
RiverSource Variable Portfolio -- Mid Cap Value RiverSource Variable Portfolio -- Mid Cap
Fund Value Fund
RiverSource Variable Portfolio -- S&P 500 Index RiverSource Variable Portfolio -- S&P 500
Fund Index Fund
RiverSource Variable Portfolio -- Small Cap RiverSource Variable Portfolio -- Small Cap
Advantage Fund Advantage Fund
RiverSource Variable
Portfolio -- Managed
Series, Inc.
RiverSource Variable Portfolio -- Balanced Fund RiverSource Variable Portfolio -- Balanced Fund
RiverSource Variable Portfolio -- Diversified RiverSource Variable Portfolio -- Diversified
Equity Income Fund Equity Income Fund
RiverSource Variable
Portfolio -- Managers
Series, Inc.
RiverSource Variable Portfolio -- Fundamental RiverSource Variable Portfolio -- Fundamental
Value Fund Value Fund
RiverSource Variable Portfolio -- Select Value RiverSource Variable Portfolio -- Select
Fund Value Fund
RiverSource Variable Portfolio -- Small Cap Value RiverSource Variable Portfolio -- Small Cap Value
Fund Fund
RiverSource Variable
Portfolio -- Select
Series, Inc.
RiverSource Variable Portfolio -- Core RiverSource Variable Portfolio -- Core
Equity Fund Equity Fund
SCHEDULE C
CORE BOND -- DIVERSIFIED BOND FUND REORGANIZATION
SELLING ENTITY SELLING FUND BUYING ENTITY BUYING FUND
--------------------------- --------------------------- -------------------------------- -----------------------------------
RiverSource Variable Series RiverSource Variable RiverSource Variable Series RiverSource Variable Portfolio --
Trust(1) Portfolio -- Core Bond Fund Trust(2) Diversified Bond Fund
------------
(1) RiverSource Variable Portfolio - Income Series, Inc. in the event that
shareholders of the RiverSource Variable Portfolio - Core Bond Fund do not
approve the RIC Redomiciling Reorganization of their fund described in
Schedule A.
(2) RiverSource Variable Portfolio - Income Series, Inc. in the event that
shareholders of the RiverSource Variable Portfolio - Diversified Bond Fund
do not approve the RIC Redomiciling Reorganization of their fund described
in Schedule A.
