Agreement and Plan of Reorganization
This Agreement and Plan of Reorganization dated as of Jan. 8, 2004 (the
"Agreement") is between AXP Growth Series, Inc. (the "Corporation"), a Minnesota
corporation, on behalf of its series AXP Research Opportunities Fund (the
"Selling Fund"), and the same Corporation, on behalf of its series AXP Large Cap
Equity Fund (the "Buying Fund"), and American Express Financial Corporation
(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 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 Corporation will deliver shares of the Buying Fund, including
fractional shares, to the 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.
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 American Express Financial
Corporation, the investment manager.
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4. Liquidation and Dissolution of the Selling Fund.
a. As soon as practicable after the Valuation Date, the 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 Corporation. The Buying Fund or its
transfer agent will establish shareholder accounts in accordance with
instructions from the Corporation.
b. Immediately after the Valuation Date, the share transfer books of the
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 Corporation on behalf of
the Buying Fund.
The Corporation represents and warrants to the Selling Fund as follows:
a. Organization, Existence, etc. The 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
Corporation, registered under the Investment Company Act of 1940 (the
"1940 Act") as an open-end, management investment company.
c. Capitalization. The 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 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 and no other proceedings by the
Corporation or the Buying Fund are necessary.
g. No Violation. The 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.
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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 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 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 Corporation on behalf
of the Selling Fund.
The Corporation represents and warrants to the Buying Fund as follows:
a. Organization, Existence, etc. The 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
Corporation, registered under the 1940 Act as an open-end, management
investment company.
c. Capitalization. The 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
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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 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 and no other proceedings by the
Corporation or the Selling Fund are necessary.
f. No Violation. The 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.
i. Contracts. Except for contracts and agreements previously disclosed to
the 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 a 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.
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l. Registration Statement. The Selling Fund will cooperate with the Buying
Fund and will furnish information relating to the 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 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 Corporation or the Selling
Fund for use in the Registration Statement.
7. Conditions to Obligations of the Corporation with respect to the Selling
Fund. The obligations of the 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 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 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 Selling Fund since the date of its last financial
statement, except as otherwise indicated in any financial statements,
certified by an officer of the 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 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 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.
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e. Opinion of Counsel. The Corporation will have received an opinion of
counsel for the Selling Fund, dated as of the Closing, to the effect
that: (i) the Corporation is a corporation duly organized and validly
existing under the laws of the state of Minnesota; (ii) the Fund is a
series of the 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
Corporation and the Selling Fund and this Agreement has been duly
executed by, and is a valid and binding obligation of, the Corporation.
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 Corporation with respect to the Buying
Fund. The obligations of the 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 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 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 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 written representations as
an officer of the 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
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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 Corporation will have received the opinion of
counsel for the Buying Fund, dated as of the Closing, to the effect
that: (i) the 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 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 Corporation and the Buying Fund and this Agreement has
been duly executed by, and is a valid and binding obligation of, the
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 Corporation may terminate this Agreement at any time prior to the
Closing by notice to the Buying Fund if a material condition to its
performance or a material covenant of the 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
Corporation on behalf of the Buying Fund and is not cured.
d. The Corporation may terminate this Agreement at any time prior to the
Closing by notice to the Selling Fund if a material condition to its
performance or a material covenant of the 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
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 December 31, 2004, 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.
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10. Expenses. American Express Financial Corporation will pay the costs of
carrying out the provisions of this Agreement whether or not the
Reorganization is completed.
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 Minnesota.
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.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed.
AXP Growth Series, Inc.
on behalf of AXP Research Opportunities Fund
By /s/ Xxxxxx X. Xxx
----------------------
Xxxxxx X. Xxx
Vice President
AXP Growth Series, Inc.
on behalf of AXP Large Cap Equity 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.
American Express Financial Corporation
By /s/ Xxxxx X. Xxxxx
---------------------
Xxxxx X. Xxxxx
Senior Vice President and General Manager - Mutual Funds
