AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization dated as of Nov. 10, 2005 (the
"Agreement") is between AXP Stock Series, Inc. (the "Selling Corporation"), a
Minnesota corporation, on behalf of its series, RiverSource Stock Fund (the
"Selling Fund"), and AXP Growth Series, Inc. (the "Buying Corporation), a
Minnesota corporation, on behalf of its series, RiverSource Disciplined Equity
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.
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.
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
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.
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.
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
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.
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
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
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 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 Stock Series, Inc.
on behalf of RiverSource Stock Fund
By /s/ Xxxxxx X. Xxx
-----------------
Xxxxxx X. Xxx
Vice President
AXP Growth Series, Inc.
on behalf of RiverSource Disciplined 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.
RiverSource Investments, LLC
By /s/ Xxxxx X. Xxxxx
------------------
Xxxxx X. Xxxxx
Senior Vice President - Mutual Funds
