FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION made this 31st day of August, 1998 by
and between The Crabbe Huson Special Fund, Inc., Oregon Corporation (the "Crabbe
Huson Fund"), and Colonial Trust III (the "Colonial Trust"), a Massachusetts
business trust, on behalf of Crabbe Huson Special Fund, a series of the Colonial
Trust (the "New Crabbe Huson fund").
WHEREAS, the parties hereto intend to provide for the reorganization of the
Crabbe Huson Fund through the acquisition by the New Crabbe Huson Fund of all of
the assets, subject to all of the liabilities, of the Crabbe Huson Fund in
exchange for shares of beneficial interest, without par value, of the New Crabbe
Huson Fund (the "New Crabbe Huson Fund Shares"), the distribution to
shareholders of the Crabbe Huson Fund of such New Crabbe Huson Fund Shares, and
the liquidation of the Crabbe Huson Fund, all pursuant to the provisions of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual promises herein contained, the
parties hereto agree as follows:
1. Plan of Reorganization and Liquidation. (a) Crabbe Huson Fund shall assign,
sell, convey, transfer and deliver to the New Crabbe Huson Fund at the
closing provided for in Section 2 (hereinafter called the "Closing") all of
the then existing assets of the Crabbe Huson Fund of every kind and nature.
In consideration therefor, the Colonial Trust, on behalf of the New Crabbe
Huson Fund, shall at the Closing (i) assume all of the Crabbe Huson Fund's
liabilities then existing, whether absolute, accrued, contingent or
otherwise, and (ii) deliver to the Crabbe Huson Fund a number of full and
fractional Class A New Crabbe Huson Fund Shares (as defined in Paragraph
3(i) below) equal to the number of full and fractional Primary Class shares
of the Crabbe Huson Fund ("Retail Crabbe Huson Fund Shares") then
outstanding which are held by holders of Retail Crabbe Huson Fund Shares
("Retail Crabbe Huson Fund Shareholders"). The respective numbers of Retail
Crabbe Huson Fund Shares issued and outstanding and the numbers of Class A
New Crabbe Huson Fund Shares to be issued to the Crabbe Huson Fund shall be
determined by the transfer agent of the Crabbe Huson Fund (the "Transfer
Agent"), as of the close of business on the New York Stock Exchange on the
Closing Date (as defined in Section 2 hereof). The determination of the
Transfer Agent shall be conclusive and binding on the Crabbe Huson Fund,
the New Crabbe Huson Fund and their respective shareholders.
(b) Upon consummation of the transactions described in paragraph (a) of
this Section 1, the Crabbe Huson Fund shall distribute, in complete
liquidation of the Crabbe Huson Fund, pro rata to the Retail Crabbe
Huson Fund Shareholders of record as of the Closing Date the Class A
New Crabbe Huson Fund Shares received by the Crabbe Huson Fund. Such
distribution shall be accomplished by the establishment, at the expense
of the New Crabbe Huson Fund of an open account on the records of the
New Crabbe Huson Fund in the name of each Retail Crabbe Huson Fund
Shareholder representing a number of Class A New Crabbe Huson Fund
Shares equal to the number of shares of the Crabbe Huson Fund owned of
record by such shareholder at the Closing Date. Certificates, if any,
for shares of the Crabbe Huson Fund issued prior to the reorganization
and held by Retail Crabbe Huson Fund Shareholders shall represent the
same number of outstanding Class A New Crabbe Huson Fund Shares
following the reorganization. In the interest of economy and
convenience, certificates representing the Crabbe Huson Fund Shares
will not be physically issued.
(c) As promptly as practicable after the Closing Date, the Crabbe Huson
Fund shall be terminated pursuant to the provisions of the laws of the
State of Delaware, and, after the Closing Date, the Crabbe Huson Fund
shall not conduct any business except in connection with its
liquidation.
2. Closing and Closing Date. The Closing shall occur at the offices of the
Colonial Trust, One Financial Center, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ at 9:00 a.m. Boston time on October 19, 1998 or such other date
agreed to between the parties and after the required approval by the
shareholders of the Crabbe Huson Fund specified in Section 3(c) hereof
and the fulfillment (to the extent not waived) of the other conditions
precedent set forth in Section 3, or at such later time and date as the
parties may mutually agree (the "Closing Date"). All acts taking place
at the Closing shall be deemed to take place simultaneously as of the
close of business on the Closing Date unless otherwise provided.
3. Conditions Precedent. The obligation of the Crabbe Huson Fund and the
Colonial Trust to effect the transactions contemplated hereunder shall
be subject to the satisfaction of each of the following conditions:
(a) the Crabbe Huson Fund and the Colonial Trust shall have received an
opinion of Ropes & ▇▇▇▇ substantially to the effect that for federal
income tax purposes: (i) no gain or loss will be recognized by the
Crabbe Huson Fund upon (a) the exchange of any of its assets solely for
New Crabbe Huson Fund Shares and the assumption by the New Crabbe Huson
Fund of any of the liabilities of the Crabbe Huson Fund or (b) upon the
distribution to the Retail Crabbe Huson Fund Shareholders of the Class
A New Crabbe Huson Fund Shares; (ii) the tax basis of all of the assets
of the Crabbe Huson Fund received by the New Crabbe Huson Fund will be,
in each instance, the same as the tax basis of such assets in the hands
of the Crabbe Huson Fund immediately prior to the transfer; (iii) the
New Crabbe Huson Fund's holding period in all of the assets acquired
from the Crabbe Huson Fund will include, in each instance, the periods
during which such assets were held by the Crabbe Huson Fund; (iv) no
gain or loss will be recognized by the New Crabbe Huson Fund upon the
receipt of any of the assets of the Crabbe Huson Fund solely in
exchange for New Crabbe Huson Fund Shares and the assumption by the New
Crabbe Huson Fund of any of the liabilities of the Crabbe Huson Fund;
(v) no gain or loss will be recognized by the shareholders of the
Crabbe Huson Fund upon the receipt of the New Crabbe Huson Fund Shares
solely in exchange for their shares in the Crabbe Huson Fund as part of
the transaction; (vi) the basis of the New Crabbe Huson Fund Shares
received by the shareholders of the Crabbe Huson Fund will be, in each
instance, the same as the basis of the shares of the Crabbe Huson Fund
exchanged therefor; and (vii) the holding period of the New Crabbe
Huson Fund Shares received by the shareholders of the Crabbe Huson Fund
will include, in each instance, the holding period of the shares of the
Crabbe Huson Fund exchanged therefor, provided that at the time of the
exchange the shares of the Crabbe Huson Fund were held as capital
assets; and as to such other matters as the Crabbe Huson Fund and the
Colonial Trust may reasonably request;
(b) This Agreement and Plan of Reorganization and the reorganization
contemplated hereby shall have been approved by the Board of Directors
of the Crabbe Huson Fund and by the Board of Trustees of the Colonial
Trust, and shall have been recommended for approval to the shareholders
of the Crabbe Huson Fund by the Board of Directors of the Crabbe Huson
Fund;
(c) This Agreement and Plan of Reorganization and the reorganization
contemplated hereby shall have been adopted and approved by the
affirmative vote of two-thirds of the outstanding shares of the Crabbe
Huson Fund;
(d) The Colonial Trust on behalf of the New Crabbe Huson Fund shall
have entered into an Investment Management Agreement with LFC
Acquisition Corp., and such Agreement shall have been approved by the
Board of Trustees of the Colonial Trust and, to the extent required by
law, by the Board of Trustees of the Colonial Trust who are not
"interested persons" of the Colonial Trust as defined in the 1940 Act
(the "Independent Trustees"), as well as by the shareholders of the New
Crabbe Huson Fund (it being understood that the Crabbe Huson Fund, as
sole shareholder of the New Crabbe Huson Fund prior to the consummation
of the reorganization, hereby agrees and is authorized to vote for such
approval);
(e) The Colonial Trust, on behalf of the New Crabbe Huson Fund, shall
have entered into a Distributor's Contract, including distribution
plans (the "Rule 12b-1 Plans") adopted for Class A, B and C shares of
the New Crabbe Huson Fund pursuant to Rule 12b-1 of the rules and
regulations under the 1940 Act, with Liberty Funds Distributor, Inc.,
and such Contract (including the Plans) shall have been approved by the
Board of Trustees of the Colonial Trust and, to the extent required by
law, by the Independent Trustees of the Colonial Trust;
(f) The Colonial Trust, on behalf of the New Crabbe Huson Fund, shall
have entered into a Transfer Agency Agreement with Colonial Investors
Service Center, Inc., and such Agreement shall have been approved by
the Board of Trustees of the Colonial Trust and, to the extent required
by law, by the Independent Trustees of the Colonial Trust;
(g) The Class A New Crabbe Huson Fund Shares shall have been designated
by the Board of Trustees of the Colonial Trust as a separate class of
shares of beneficial interest in the New Crabbe Huson Fund which shall
be subject to an asset-based service charge under the Rule 12b-1 Plan
for such Class A shares of up to 0.25% per annum and shall not be
subject to any deferred sales charge on redemption, and additional
Class A shares may be purchased by Retail Crabbe Huson Fund
Shareholders without a sales charge; and
(h) The transactions contemplated by the Asset Acquisition Agreement dated June
10, 1998 among The Crabbe Huson Group, Inc., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, Liberty Financial Companies, Inc. and LFC Acquisition Corp. shall
have been consummated.
At any time prior to the Closing, any of the foregoing conditions other than
that set forth in (h) above may be waived jointly by the Board of Directors of
the Crabbe Huson Fund and the Board of Trustees of the Colonial Trust if, in
their judgment, such waiver will not have a material adverse effect on the
interests of the shareholders of the Crabbe Huson Fund and the New Crabbe Huson
Fund. If the transactions contemplated by this Agreement and Plan of
Reorganization have not been substantially completed by December 31, 1998, this
Agreement and Plan of Reorganization shall automatically terminate on that date
unless a later date is agreed to by both the Crabbe Huson Fund and the Colonial
Trust acting by their respective Boards.
4. Amendment. This Agreement may be amended at any time by the joint
action of the Board of Directors of the Crabbe Huson Fund and the Board
of Trustees of the Colonial Trust, notwithstanding approval thereof by
the shareholders of the Crabbe Huson Fund, provided that no amendment
shall have a material adverse effect on the interests of the
shareholders of the Crabbe Huson Fund or the New Crabbe Huson Fund.
5. Termination. The Board of Directors of the Crabbe Huson Fund and the
Board of Trustees of the Colonial Trust may jointly terminate this
Agreement and abandon the reorganization contemplated hereby,
notwithstanding approval thereof by the shareholders of the Crabbe
Huson Fund, at any time prior to the Closing, if circumstances should
develop that, in their judgment, make proceeding with the Agreement
inadvisable.
6. No Broker's or Finder's Fee. The Crabbe Huson Fund and the Colonial
Trust each represent that there is no person who has dealt with it who
by reason of such dealings is entitled to any broker's, finder's or
other similar fee or commission from the Crabbe Huson Fund or the
Colonial Trust arising out of the transactions contemplated by this
Agreement and Plan of Reorganization.
7. No Survival of Covenants and Agreements. The covenants and agreements
of the parties contained herein shall not survive the Closing Date,
except for the provisions of Section 1(c).
8. Reliance. All covenants and agreements made under this Agreement and
Plan of Reorganization shall be deemed to have been material and relied
upon by each of the parties notwithstanding any investigation made by
such party or on its behalf.
9. Notices. All notices required or permitted under this Agreement and
Plan of Reorganization shall be given in writing (i) to the Crabbe
Huson Fund at ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
and (ii) to the Colonial Trust at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as shall be specified in a
written notice given by either party to the other party to this
Agreement and Plan of Reorganization, and shall be validly given if
mailed by first class mail, postage prepaid.
10. Expenses. The Crabbe Huson Fund and the New Crabbe Huson Fund shall
each bear their own expenses relating to the reorganization
contemplated hereby to the extent such expenses are not paid by others,
provided, however, that if the reorganization is consummated such
expenses of the Crabbe Huson Fund, to the extent not paid by others,
shall be assumed and borne by the New Crabbe Huson Fund.
11. Miscellaneous Provisions. This Agreement and Plan of Reorganization shall
bind and inure to the benefit of the parties and their respective
successors and assigns. It shall be governed by and carried out in
accordance with the laws of The Commonwealth of Massachusetts. It is
executed in several counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one agreement. A
copy of the document establishing the Colonial Trust is filed with the
Secretary of The Commonwealth of Massachusetts. This Agreement is executed
by officers not as individuals and is not binding upon any of the Trustees,
officers or shareholders of the Colonial Trust individually, but only upon
the assets of the New Crabbe Huson Fund.
IN WITNESS WHEREOF, the parties have hereunto caused this Agreement and Plan of
Reorganization to be executed and delivered by their duly authorized officers as
of the day and year first written above.
THE CRABBE HUSON SPECIAL FUND, INC.
By: _______________________________________________________
Name:
Title:
COLONIAL TRUST III
(on behalf of Crabbe Huson Special Fund)
By: _______________________________________________________
Name:
Title:
