SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SoGen Variable Funds, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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IMPORTANT NEWS
SOGEN VARIABLE FUNDS, INC.
SOGEN OVERSEAS VARIABLE FUND
While we encourage you to read the full text of the enclosed proxy
statement, here's a brief overview of some matters affecting SoGen Overseas
Variable Fund (the "Fund") which require a shareholder vote.
Q & A: QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. Societe Generale Asset Management, S.A., ("SGAM S.A."), the parent
company of Societe Generale Asset Management Corp. ("SGAM Corp."), the
investment adviser for SoGen Variable Funds, Inc. (the "Company"), and
its president, a director and minority shareholder of SGAM Corp.,
Jean-Marie Eveillard, have entered into a stock purchase agreement (the
"Purchase Agreement") with Liberty Financial Companies, Inc.
("Liberty") dated as of August 13, 1998 providing for the sale of all
of the outstanding shares of SGAM Corp. to Liberty (the "Acquisition").
The Purchase Agreement anticipates that the Fund will be reorganized
into a newly-created series of Liberty Variable Investment Trust
("Liberty Trust") that has the same investment objective as, and
substantially similar policies to, the Fund (the "Reorganization").
Liberty Trust is an open-end investment company consisting of nine
active separate investment portfolios that serve as funding vehicles
for variable annuity contracts and variable life insurance policies. If
the Reorganization is approved, and the Acquisition takes place, SGAM
Corp., under a new name, would serve as the sub-adviser to the Fund and
would continue to be responsible for the Fund's investment decisions.
Q. WHAT AM I BEING ASKED TO APPROVE?
A. As explained in the attached proxy materials, you are being asked to
approve an Agreement and Plan of Reorganization (the "Plan") for the
Fund. By approving the Plan, you would also be approving the following
related actions.
First, if the Reorganization is approved, the current investment
advisory agreement between the Fund and SGAM Corp. would automatically
terminate by virtue of the change of control in SGAM Corp., as required
under the federal Investment Company Act of 1940 (the "1940 Act"),
which governs the activities of mutual funds. As a new series of
Liberty Trust, the Fund would enter into an investment management
agreement with Liberty Advisory Services Corp. ("LASC"), under which
LASC, among other things, would be authorized to hire a subadviser to
manage the Fund's assets. LASC, in turn, would enter into a subadvisory
agreement with SGAM Corp. and the Fund, under which SGAM Corp. would
continue to make investment decisions on behalf of the Fund. In
addition, in case the Reorganization is approved by shareholders, but
does not occur until after the Acquisition takes place, an Interim
Investment Management Agreement, substantially identical to the current
investment management agreement, would also be approved as part of the
Reorganization.
Second, the Reorganization would also result in the adoption of a new
plan of distribution pursuant to Rule 12b-1 of the 1940 Act (a "Rule
12b-1 Plan") for the Fund.
Third, as a result of the Reorganization, you would also be voting in
favor of the conversion of your Fund from operating as part of a
corporation organized under the laws of Maryland (a "Maryland
corporation") to operating as part of a business trust organized under
the laws of Massachusetts (a "Massachusetts business trust"). Under
this arrangement, Liberty Trust's Board of Trustees would oversee the
Fund, instead of the Company's Board of Directors, as is presently the
case.
Q. HOW WILL LIBERTY'S ACQUISITION OF SGAM CORP. AFFECT ME?
A. The Fund's investment objective and investment program would not
change as a result of the Acquisition or the Reorganization. Your
investment in the related variable annuity contract or variable life
insurance policy will be unchanged and you will still indirectly own
the same number of shares in the reorganized Fund. The terms of the new
investment management agreement with LASC, and the subadvisory
agreement with LASC and SGAM Corp., will be substantially similar in
all material respects as the Fund's investment management agreement.
You would continue to receive investment advisory services from SGAM
Corp.
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Q. WHAT WILL HAPPEN IF THE REORGANIZATION IS NOT APPROVED?
A. If shareholder approval of the Reorganization of the Fund or any of
the other SoGen Funds managed by SGAM Corp. is not obtained, Liberty
may, at its option, elect either to (i) terminate the Purchase
Agreement and not purchase all of the outstanding shares of SGAM Corp.,
in which case the existing investment management agreement and
distribution plan would remain in effect and the current directors of
the Company would continue to serve until further notice, or (ii)
complete the purchase of all of the outstanding shares of SGAM Corp.,
upon which the investment management agreement in effect would, by
action of law, terminate. In either case, the Company's Board of
Directors will take such action with respect to the future management
of the Fund as it deems to be in the best interests of the Fund and its
shareholders.
Q. WILL THE INVESTMENT ADVISORY FEES BE THE SAME?
A. Yes, the investment management fees paid by the Fund under the current
contract will remain the same after the Reorganization.
Q. WILL I INCUR ANY ADDITIONAL FEES OR EXPENSES AS A RESULT OF THE
ACQUISITION?
A. No, for the first two years after the new investment management
agreement and subadvisory agreement become effective, LASC, SGAM Corp.,
and their affiliates will, to the extent necessary, waive management,
administrative, and transfer agency fees so that the total operating
expenses of the Fund do not exceed the Fund's current total operating
expenses. This voluntary fee waiver, however, does not apply to any new
increased fees or expenses that may be imposed under the variable
annuity contract or variable life insurance policy that you own. Please
refer to your Policy's prospectus for more information.
Q. HOW DO THE BOARD MEMBERS OF MY FUND SUGGEST THAT I VOTE?
A. After careful consideration, the Board of Directors, on behalf of the
Fund, including a majority of those directors who are not affiliated
with the Fund or SGAM Corp., recommends that you vote in favor of the
proposal on the enclosed proxy card.
Q. WHOM DO I CALL FOR MORE INFORMATION ABOUT THE ACQUISITION AND THE
PROPOSED REORGANIZATION?
A. Please call (800) 334-2143.
ABOUT THE PROXY CARD
If you have more than one account in the Fund in your name at the same
address, you will receive separate proxy statements and proxy cards for each
account. Please vote all issues shown on each proxy card that you receive. You
may vote by returning your proxy card in the enclosed envelope. You may also
submit your vote by telephone, facsimile, or over the Internet
(www.proxyvote.com).
THANK YOU FOR SUBMITTING YOUR VOTE PROMPTLY.
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SOGEN VARIABLE FUNDS, INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
1-800-334-2143
December 9, 1998
To the Shareholders:
A Special Meeting of Shareholders (the "Special Meeting") of SoGen
Overseas Variable Fund (the "Fund"), a series of SoGen Variable Funds, Inc.
(the "Company"), is to be held at 3:00 p.m., Eastern time, on Friday, December
18, 1998, at the offices of Societe Generale Asset Management Corp. ("SGAM
Corp."), the investment adviser for the Fund, 1221 Avenue of the Americas, 8th
Floor, New York, New York 10020. Shareholders who are unable to attend the
Special Meeting are strongly encouraged to vote by proxy, which is customary in
corporate meetings of this kind. A Proxy Statement regarding the Special
Meeting, a proxy card for your vote at the Special Meeting and an envelope --
postage prepaid -- in which to return your proxy card are enclosed.
As described in the Questions and Answers on the outside cover, Societe
Generale Asset Management S.A. ("SGAM S.A."), the parent company of SGAM Corp.,
and I have entered into a stock purchase agreement (the "Purchase Agreement")
with Liberty Financial Companies, Inc. ("Liberty"), providing for the sale of
all of the outstanding shares of SGAM Corp. to Liberty (the "Acquisition").
Liberty is a publicly traded, diversified asset management organization
headquartered in Boston, Massachusetts. (More information about Liberty can be
found inside the Proxy Statement.)
The Purchase Agreement anticipates that the Fund will be reorganized into
a newly-created series of Liberty Variable Investment Trust ("Liberty Trust")
which will have the same investment objective and substantially similar
policies as the Fund (the "Reorganization"). Liberty Trust is an open-end
investment company currently consisting of nine separate investment portfolios
that serve as funding vehicles for variable annuity contracts and variable life
insurance policies offered by separate accounts of life insurance companies. If
the Reorganization is approved, and the Acquisition takes place, SGAM Corp.
would serve as the sub-adviser to the Fund and would continue to be responsible
for the Fund's investment decisions.
At the Special Meeting, you will be asked to approve the Reorganization,
the details of which are described in the attached Proxy Statement. By
approving the Reorganization, you would also be approving a series of related
matters, including: (1) a new investment management agreement between the Fund
and Liberty Advisory Services Corp. ("LASC") and a new subadvisory agreement
between the Fund, LASC, and SGAM Corp. (as well as an interim investment
management agreement between the Fund and SGAM Corp.), the approval of which is
required under federal securities laws in light of Liberty's acquisition of
SGAM Corp.; (2) a plan of distribution adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (a "Rule 12b-1 Plan"); and (3) the conversion of
the Fund from operating as part of a corporation organized under the laws of
Maryland to operating as a part of a business trust organized under the laws of
Massachusetts.
AS YOU REVIEW THESE MATERIALS, PLEASE KEEP IN MIND THAT, IF THE
REORGANIZATION IS APPROVED, YOUR FUND'S INVESTMENT OBJECTIVE AND INVESTMENT
PROGRAM WILL REMAIN THE SAME AND SGAM CORP. WILL CONTINUE TO MANAGE THE ASSETS
OF THE FUND. IN ADDITION, FOR A PERIOD OF AT LEAST TWO YEARS FOLLOWING THE
REORGANIZATION, THE FUND WILL NOT EXPERIENCE AN INCREASE IN ITS EXPENSE RATIO
BEYOND THE ANNUALIZED LEVEL AS OF THE DATE OF THE CLOSING OF THE ACQUISITION.
The Board of Directors of the Company recommends that you vote in favor of
the Reorganization.
Respectfully,
Jean-Marie Eveillard
President
SHAREHOLDERS ARE URGED TO SIGN THE PROXY CARD AND MAIL IT IN THE POSTAGE
PREPAID ENVELOPE SO AS TO ENSURE A QUORUM AT THE SPECIAL MEETING. YOU MAY ALSO
SUBMIT YOUR VOTE ON THE PROPOSAL BY TELEPHONE, FACSIMILE, OR OVER THE INTERNET
(WWW.PROXYVOTE.COM). TO VOTE BY TELEPHONE, PLEASE CALL (800) 690-6903. YOUR
PROXY MAY BE SENT BY FACSIMILE BY DIALING (800) 733-1885 BETWEEN THE HOURS OF
9:00 A.M. AND 5:00 P.M., EASTERN TIME. IT IS IMPORTANT TO VOTE WHETHER IT IS
WITH RESPECT TO FEW OR MANY SHARES.
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SOGEN VARIABLE FUNDS, INC.
----------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
----------------------------------------
TO THE SHAREHOLDERS OF
SOGEN OVERSEAS VARIABLE FUND
Please take notice that a Special Meeting of Shareholders (the "Special
Meeting") of SoGen Overseas Variable Fund (the "Fund"), a series of SoGen
Variable Funds, Inc. (the "Company"), is to be held at the offices of Societe
Generale Asset Management Corp. ("SGAM Corp."), the investment adviser for the
Fund, 1221 Avenue of the Americas, 8th Floor, New York, New York 10020, on
Friday, December 18, 1998, at 3:00 p.m., Eastern time, for the following
purposes:
(1) To approve an Agreement and Plan of Reorganization (the
"Reorganization") for the Fund. Under the Reorganization, (i) all of the
assets and liabilities of the Fund would be transferred to a new series
of Liberty Variable Investment Trust, a Massachusetts business trust
("Liberty Trust"); (ii) the Fund's shareholders would receive an equal
number of shares in the new series of Liberty Trust in exchange for their
shares of the Fund; and (iii) the Fund would then be liquidated and
dissolved.
(2) To transact any other business that may properly be presented at the
Special Meeting or any adjournment or postponement of the Special
Meeting.
Holders of record of shares of common stock of the Fund at the close of
business on October 30, 1998 are entitled to vote at the Special Meeting and at
any adjournments or postponements thereof.
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Special
Meeting, the persons named as proxies may propose one or more adjournments of
the Special Meeting in accordance with applicable law, to permit further
solicitation of proxies. The persons named as proxies will vote in favor of
such adjournment those proxies which have been voted in favor of the proposal
and will vote against any such adjournment those proxies which have been voted
against the proposal.
By Order of the Board of Directors,
Philip J. Bafundo
SECRETARY
December 9, 1998
IMPORTANT -- WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT
IN THE ENCLOSED ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE AND IS INTENDED
FOR YOUR CONVENIENCE. YOU MAY ALSO SUBMIT YOUR VOTE ON THE PROPOSAL BY
TELEPHONE, FACSIMILE, OR OVER THE INTERNET (WWW.PROXYVOTE.COM). TO VOTE VIA
TELEPHONE, PLEASE CALL (800) 690-6903. YOUR PROXY MAY BE SENT BY FACSIMILE BY
DIALING (800) 733-1885 BETWEEN THE HOURS OF 9:00 A.M. AND 5:00 P.M., EASTERN
TIME. IF YOU CAN ATTEND THE SPECIAL MEETING AND WISH TO VOTE YOUR SHARES IN
PERSON AT THAT TIME, YOU WILL BE ABLE TO DO SO.
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SOGEN VARIABLE FUNDS, INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
---------------
PROXY STATEMENT
---------------
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of SoGen Variable Funds, Inc.
(the "Company"), on behalf of SoGen Overseas Variable Fund (the "Fund") for use
at a Special Meeting of Shareholders, to be held at the offices of Societe
Generale Asset Management Corp. ("SGAM Corp."), the investment adviser for the
Fund, 1221 Avenue of the Americas, 8th Floor, New York, New York 10020, on
Friday, December 18, 1998 at 3:00 p.m., Eastern time, and at any and all
adjournments or postponements thereof (the "Special Meeting"). (In the
descriptions of the proposals below, the word "fund" is sometimes used to mean
an investment company or a series thereof in general, and not the Fund.)
This Proxy Statement, the Notice of Special Meeting and the proxy card are
first being mailed to shareholders on or about December 9, 1998 or as soon as
practicable thereafter. Any shareholder giving a proxy has the power to revoke
it by mail (addressed to the Secretary of the Company at its principal
executive offices at 1221 Avenue of the Americas, New York, New York 10020),
facsimile, telephone, via the Internet, or in person at the Special Meeting, by
executing a superseding proxy or by submitting a notice of revocation to the
Company. All properly executed proxies received in time for the Special Meeting
will be voted as specified in the proxy or, if no specification is made, FOR
the reorganization as described in the Proxy Statement.
The presence at any shareholders' meeting, in person or by proxy, of the
holders of a majority of the shares of the Fund entitled to be cast shall be
necessary and sufficient to constitute a quorum for the transaction of
business. In the event that the necessary quorum to transact business or the
vote required to approve any proposal is not obtained at the Special Meeting,
the persons named as proxies may propose one or more adjournments of the
Special Meeting to permit further solicitation of proxies. Any such adjournment
as to a matter will require the affirmative vote of the holders of a majority
of the Fund's shares present in person or by proxy at the Special Meeting. The
persons named as proxies will vote in favor of such adjournment those proxies
which they are entitled to vote in favor of the proposal and will vote against
any such adjournment those proxies to be voted against the proposal. If no
shareholder entitled to vote is present in person or by proxy, any officer
present to preside or act at the Special Meeting as Secretary may also adjourn
the meeting. For purposes of determining the presence of a quorum for
transacting business at the Special Meeting, abstentions will be treated as
shares that are present but which have not been voted.
Abstentions will have the effect of a "no" vote on Proposal 1, which
requires the vote of a majority of the Fund's outstanding voting securities.
Holders of record of the shares of common stock of the Fund at the close
of business on October 30, 1998 (the "Record Date"), as to any matter on which
they are entitled to vote, will be entitled to one vote per share on all
business of the Special Meeting. As of October 30, 1998, the Fund had
411,400.768 shares outstanding.
All shares were owned of record by sub-accounts of separate accounts
("Separate Accounts") of life insurance companies (the "Participating Insurance
Companies") established to fund benefits under variable annuity contracts and
variable life insurance policies issued by the Participating Insurance
Companies. The Participating Insurance Companies are Continental Assurance
Company, Valley Forge Life Insurance Company, and IL Annuity And Insurance
Company.
The Participating Insurance Companies are mailing copies of this proxy
material to the holders of these contracts and policies who, by completing and
signing the accompanying proxy cards, will instruct the Separate Accounts how
they wish the shares of the Fund to be voted. The Separate Accounts will vote
shares of the Fund as instructed on the proxy cards by their contract or policy
holders. If no instructions are specified on a proxy returned by a contract or
policy holder, the Separate Accounts will vote the shares of the Fund
represented thereby "FOR" the proposal. The Separate Accounts intend to vote
shares for which no proxies are returned in the same proportions as the shares
for which instructions are received.
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As of October 30, 1998, the Directors and officers of the Company as a
group beneficially owned less than 1% of the shares of the Company. The Company
knows of no person who beneficially owns more than 5% of the capital stock of
the Company.
The information contained in this Proxy Statement relating to Liberty
Financial Companies, Inc. ("Liberty") and Colonial Management Associates, Inc.
("Colonial Management") has been provided by them.
THE COMPANY PROVIDES PERIODIC REPORTS TO ALL SHAREHOLDERS WHICH HIGHLIGHT
RELEVANT INFORMATION INCLUDING INVESTMENT RESULTS AND A REVIEW OF PORTFOLIO
CHANGES. YOU MAY RECEIVE A COPY OF THE MOST RECENT ANNUAL REPORT FOR THE FUND
AND A COPY OF A MORE RECENT SEMI-ANNUAL REPORT, IF ANY, WITHOUT CHARGE, BY
CALLING 800-334-2143 OR WRITING THE FUND AT 1221 AVENUE OF THE AMERICAS, NEW
YORK, NEW YORK 10020.
CERTAIN INFORMATION REGARDING
THE INVESTMENT ADVISER AND THE PRINCIPAL UNDERWRITER
The Company has retained Societe Generale Asset Management Corp., a
Delaware corporation, with offices at 1221 Avenue of the Americas, New York,
New York 10020, to serve as its investment adviser. SGAM Corp. is an indirect,
majority-owned subsidiary of Societe Generale, which is one of France's largest
banks. The Company has retained the services of SG Cowen Securities
Corporation, with offices at 1221 Avenue of the Americas, New York, New York
10020, to serve as its principal underwriter.
PROPOSAL 1: APPROVAL OF AGREEMENT
AND PLAN OF REORGANIZATION
I. INTRODUCTION
Societe Generale Asset Management, S.A., ("SGAM S.A."), the holder of all
the outstanding shares of Class A common stock of SGAM Corp., a Delaware
corporation and the investment adviser for the Fund, Jean-Marie Eveillard, the
president and a director of SGAM Corp. and holder of all of the outstanding
shares of Class B common stock of SGAM Corp. (SGAM S.A. and Mr. Eveillard are
sometimes referred to collectively as the "Sellers") and Liberty have entered
into a stock purchase agreement (the "Purchase Agreement") dated August 13,
1998, providing for a sale of all of the outstanding shares of SGAM Corp. to
Liberty (the "Acquisition"). For purposes of this Proxy Statement, following
the Acquisition, SGAM Corp. shall be referred to as "Successor SGAM Corp."
The Purchase Agreement contemplates that the Company would enter into an
Agreement and Plan of Reorganization (the "Plan") on behalf of the Fund, under
which the Fund would be reorganized into a newly-created series (the "Successor
Fund") of Liberty Variable Investment Trust ("Liberty Trust"), a Massachusetts
business trust currently consisting of nine separate investment portfolios,
that will have the same investment objective and substantially similar policies
as the Fund (the "Reorganization"). Liberty Trust is the funding vehicle for
variable annuity contracts and variable life insurance policies (the "Variable
Product") offered by the separate accounts of life insurance companies. The
Purchase Agreement also contemplates that SGAM Corp. will serve as the
sub-adviser to the Successor Fund and would continue to be responsible for the
Successor Fund's investment decisions. Both of these contemplated items,
however, require approval by the Fund's shareholders.
After the Reorganization, Liberty Advisory Services Corp. ("LASC"), an
indirect subsidiary of Liberty, would be responsible for the provision of
administrative services for the Successor Fund pursuant to a management
agreement. In addition, the Successor Fund would enter into new agreements with
Colonial Management for the provision of distribution, transfer agency and
other services, and its Trustees, accountants and legal counsel would be those
of Liberty Trust.
At a special meeting of the Board of the Company held on October 19, 1998,
the Board, acting on behalf of the Fund, including a majority of the
disinterested Directors (as defined below), approved the Reorganization and
determined to recommend to the shareholders of the Fund that they approve a
Plan for the Fund.
This Proxy Statement seeks the approval of the Reorganization by the
shareholders of the Fund. Such approval is a condition to Liberty's obligation
under the Purchase Agreement to purchase the outstanding shares of SGAM Corp.
In the event that shareholder approval of the Reorganization of the Fund or any
of the other SoGen Funds is not obtained, Liberty may, at its option, elect
either to (i) terminate the Purchase Agreement and not purchase the shares of
SGAM Corp., in which case the existing investment management agreement and
distribution plan for the Fund would remain in effect and the current directors
of the Company would continue to serve until further notice, or (ii) complete
the purchase of the stock of
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SGAM Corp., upon which the investment management agreement in effect would, by
action of law, terminate. Regardless of the option chosen by Liberty, the Board
will take such action with respect to the future management of the Fund as it
deems to be in the best interest of the Fund and its shareholders.
II. BOARD OF DIRECTORS RECOMMENDATION
On October 19, 1998, the Board of Directors of the Company, including a
majority of the Directors who are not parties to the Plan or "interested
persons" (as defined under the Investment Company Act of 1940 ("1940 Act") of
any such party (the "disinterested Directors"), voted to approve the Plan for
the Fund and to recommend the approval of the Plan to shareholders. One of the
disinterested Directors abstained from this vote.
For information about the Board's deliberations and the reasons for its
recommendation, please see "Board of Directors Evaluation" below.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS
VOTE IN FAVOR OF THE APPROVAL OF THE PLAN FOR THE FUND.
III. BOARD OF DIRECTORS EVALUATION
Prior to its scheduled meeting held on April 24, 1998, the Board of
Directors of the Company was informed that SGAM S.A. had determined to seek a
buyer for SGAM Corp. At the April 24, 1998 meeting, the disinterested Directors
reviewed the scope of their responsibilities should a sale by SGAM Corp. be
officially proposed by SGAM S.A., and discussed the advisability of retaining
separate independent counsel to advise them in the event SGAM S.A. was
successful in finding a buyer for SGAM Corp. The Board noted that although the
prospect of a sale did not alter their responsibilities with respect to matters
brought to their attention during the meeting (including the continuation of
the investment management agreement with SGAM Corp.), it did raise the issue of
whether SGAM Corp.'s operations might be disrupted as a result of staff
uncertainty. Representatives of SGAM Corp. who were present at that meeting
responded that they had been informed of SGAM S.A.'s decision and that based on
conversations with the senior personnel, management expected SGAM Corp.'s team
of portfolio managers and senior administrative personnel to remain on the job
throughout the process.
The disinterested Directors retained independent counsel who requested
certain information for the Board to review in connection with any proposed
transaction, including, with respect to any potential acquiring entity, (i) a
history of its compliance with applicable regulations, (ii) its performance
record (including the background of its investment personnel and the resources
available to support them), (iii) detailed financial statements, (iv) any plans
it may have to change the way the Fund is managed or distributed, and (v) the
consideration being paid.
On August 13, 1998, following the signing of the Purchase Agreement,
representatives of SGAM Corp. and Liberty met with the Company's Board of
Directors to discuss the Reorganization. At the meeting, the overall terms of
the proposed Reorganization, as well as the perceived benefits for SGAM Corp.
and for its investment advisory clients, were described. In addition, the
background and capabilities of Liberty and its affiliates were enumerated. The
Board was presented with the opportunity to ask questions of representatives of
both SGAM Corp. and Liberty. On or about September 7, 1998, the disinterested
Directors were supplied with information in response to the request of their
independent counsel.
At a subsequent meeting of the Company's Board of Directors held on
September 17, 1998, the Board considered in depth the Reorganization and Plan
relating to the Fund, and requested a report on the management resources that
would be available to the Fund after the Acquisition and satisfaction of
certain other outstanding issues. At that meeting, the Board discussed the
materials presented by Liberty and raised a number of issues relating to the
terms of the Reorganization and the Plan, as well as to the terms of the
Acquisition of SGAM Corp. Representatives of SGAM Corp. and Liberty were
present at the meeting to respond to the Board's inquiries. Among other things,
the Board requested elaboration on (i) the level of fees to which the Fund
would be subject following the Reorganization, (ii) the level of management
services that Liberty would provide to the Fund following the Reorganization,
and (iii) Liberty's financial ability both to pay the purchase price of the
Acquisition given current market conditions and to continue to devote adequate
resources to the Fund.
Liberty agreed that, for a period of two years after the new investment
management agreement become effective, Liberty and its affiliates would waive
or reimburse all fees and expenses relating to the Fund to the extent that
those fees or expenses would cause the expense ratio of the Fund (giving effect
to voluntary fee waivers) to exceed the annualized expense ratio of that Fund
as of the date of the closing of the Acquisition. After further discussion, the
Board and Liberty agreed that the expense cap would remain in place for a
minimum of two years, but that it would be extended if, during those two years,
in connection with any other acquisition, Liberty agreed to a similar expense
cap for a period of more than two years. Under
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those circumstances, Liberty has agreed to extend the Fund's expense caps by
the amount of time that any such similar expense cap exceeds two years so that
the Fund will get the benefit of the cap for that longer period of time. It is
important to note that this voluntary fee waiver does not apply to any new
increased fees or expenses that may be imposed by the variable annuity contract
or variable life insurance policy that is owned by a shareholder. You are urged
to refer to your Policy's prospectus for more information.
The Board sought assurances from Liberty that there would be no diminution
in the level of services provided to the Fund after the Reorganization. Liberty
responded that the level of services provided to the Fund after the
Reorganization would not be diminished and, as evidence of such, noted that (i)
each of Jean-Marie Eveillard, Charles de Vaulx, and Elizabeth Tobin, who hold
senior positions in the management of the Fund, had entered into or has
indicated an intent to enter into a long-term employment contract with SGAM
Corp., (ii) there would be substantial continuity of employment of the other
persons on the current portfolio management team of the Fund, and (iii) in
managing the Fund, SGAM Corp. will have access to the considerable resources of
Liberty and its affiliates.
Finally, the Board inquired into Liberty's ability to pay for the purchase
of SGAM Corp. in light of then current market conditions. In response, Liberty
reviewed with the Board its financial resources. Liberty assured the Board that
it was in sound financial health and that it had the ability to pay the
purchase price of the Acquisition and to continue to devote adequate resources
to the management of the Fund.
In addition to these areas of inquiry, the Board reviewed the terms of the
proposed investment management and other service agreements relating to the
Successor Fund. After discussion, the Board concluded that the services to be
provided under the proposed new agreements in the aggregate were not materially
different than those required to be provided under the current agreements.
At additional meetings held in late September and October, the Board met
to further review the Reorganization. At these meetings, Liberty and SGAM Corp.
provided to the Board additional information relating to the issues raised at
the September 17 meeting. The Board considered the additional information and
was given the opportunity to ask questions to representatives of Liberty and
SGAM Corp.
The Board approved the Reorganization at a meeting held on October 19,
1998. In addition to the matters described above, the Board also considered the
following factors in approving the proposed Reorganization and the Plan for
each Fund. First, the Reorganization does not contemplate any changes in the
manner in which the Fund's investments are managed. As discussed herein, if the
Reorganization is consummated, the Successor Fund's primary investment manager
would be LASC. However, as the subadviser to the Successor Fund, SGAM Corp.
would still be responsible for making investment decisions on behalf of the
Fund. Accordingly, it is not expected that the primary investment personnel
responsible for providing the day-to-day investment management on behalf of the
Fund will change as a result of the Reorganization.
Second, Colonial Management's wholesaling, marketing, and distribution
system is more extensive than that of SGAM Corp. While growth of a fund does
not always result in economies of scale or other benefits to shareholders,
sales of fund shares on a continuous basis can result in a positive cash flow,
or a reduction of net outflow, of investor dollars into the fund, enabling the
fund to meet expenses and pay redemptions without the need to sell its
investments at what may be inappropriate times. Shares of the reorganized Fund
will be marketed alongside the other Colonial Management funds through more
than 25,000 investment executives associated with broker-dealers with whom the
distributor for the Colonial Management funds has selling agreements and
approximately 300 investment executives employed by Liberty Securities
Corporation, a subsidiary of Liberty that sells mutual funds, variable
annuities, and other investment products primarily through offices located in
banks and other financial institutions.
Third, the Board considered that the Acquisition of SGAM Corp. by Liberty
will enable Eveillard to devote more of his attention to managing the assets of
SGAM Corp.'s clients, including the Fund. The Board believes that this focus of
attention should benefit the Fund and its shareholders.
Finally, because each Fund shareholder will receive shares of the
corresponding Successor Fund having an equal aggregate net asset value to their
Fund shares and will not directly or indirectly bear any costs of the
Reorganization, the Board determined that the shareholders will not suffer any
dilution as a result of the Reorganization.
In reviewing the terms of the Plan, the disinterested Directors of the
Company were advised and represented by independent counsel.
The Board believes that the proposed arrangements are in the best
interests of the shareholders of the Fund and recommends that the shareholders
of the Fund vote "FOR" the Reorganization.
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IV. THE ACQUISITION
A. BACKGROUND
SGAM S.A. and Eveillard began discussions in mid-1998 regarding the sale
of SGAM Corp. to Liberty or one of its affiliates. SGAM S.A.'s principal goal
in considering the possible sale of SGAM Corp. was to focus its resources on
global institutional asset management services. Discussions culminated in the
execution of the Purchase Agreement on August 13, 1998.
Liberty is a publicly traded, diversified asset management organization
headquartered in Boston, Massachusetts. Through its affiliates, it provides
fixed, indexed and variable annuities, mutual funds, private wealth management
and institutional money management services. At the end of its last fiscal
year, Liberty and its affiliates had assets under management in excess of $51
billion. Affiliates of Liberty, including Colonial Management, Stein Roe &
Farnham Incorporated, Newport Pacific Management, Inc., and Crabbe Huson, act
as investment advisers to more than 90 mutual funds.
SGAM S.A. and Liberty believe that the proposed transaction will result in
an allocation of resources that should benefit the shareholders of the Fund.
Liberty, through Colonial Management and its subsidiaries, has the size and
resources to provide efficient administration, shareholder servicing and legal
support to mutual funds, and effective promotion and sales of mutual fund
shares, that serve as funding vehicles for Variable Products. Liberty believes
that, by utilizing Colonial Management's management, distribution, compliance
and legal resources, it can enhance the quality of shareholder services,
introduce operational efficiencies and create an opportunity to achieve
economies of scale.
B. SUMMARY OF THE PURCHASE AGREEMENT
The Purchase Agreement provides that, upon the closing of the Acquisition,
SGAM S.A. will transfer to Liberty all of the outstanding shares of SGAM Corp.
At the closing, SGAM S.A. will also provide Liberty with all stock
certificates, stock books, stock transfer ledgers, minute books and corporate
seals of SGAM Corp., together with the resignations of those directors and
officers of SGAM Corp. specified by Liberty. In return, Liberty will pay SGAM
S.A. a purchase price of $170 million. Under the Purchase Agreement, Mr.
Eveillard will receive $35 million in exchange for his holdings in SGAM Corp.
(20% of which is to be paid in shares of Liberty common stock). He will also be
eligible to receive an additional amount up to a maximum of $11 million (20% of
which to be payable in shares of Liberty common stock) over six years if SGAM
Corp.'s earnings before interest, taxes, depreciation, and amortization
("EBITDA") during that period exceed certain levels. The amounts payable to
SGAM S.A. and Mr. Eveillard are subject to adjustment in the event of certain
changes in SGAM Corp.'s annualized advisory fee revenues between August 10,
1998 and the closing. As of October 30, 1998, such annualized advisory fee
revenues may have decreased sufficiently to cause the amounts payable under the
Purchase Agreement to be readjusted to lower figures. Liberty has also agreed
in the Purchase Agreement to cause SGAM Corp. to adopt an incentive
compensation plan providing for bonuses to SGAM Corp. employees other than Mr.
Eveillard of up to a maximum of $25 million over five years based on SGAM
Corp.'s EBITDA over that period. Mr. Eveillard has signed a four year
employment contract with SGAM Corp. and Charles de Vaulx and Elizabeth Tobin
have indicated an intent to sign five year employment contracts with SGAM
Corp., all effective on the closing date of the Acquisition.
The Purchase Agreement prohibits Liberty or any of its affiliates from
using "SoGen" and certain derivations of "SoGen" in the name of the Fund.
Liberty has agreed to use its best efforts to cause the Fund to change its name
before the first anniversary of the closing date of the Acquisition. Following
such name change and for a period of one year thereafter, the Fund will be
permitted to disclose its prior name in its prospectus and advertising
material.
The closing of the Acquisition is presently scheduled for December 31,
1998 subject to satisfaction of conditions to closing. The Purchase Agreement
may be terminated at any time prior to the closing by the mutual written
consent of the parties, or by any party if the closing has not occurred on or
before March 31, 1999.
Liberty has agreed to bear the costs to the Fund of the Reorganization,
including, but not limited to, the cost of preparing, printing and mailing the
proxy materials for the meeting of the shareholders of the Fund.
C. COMPLIANCE WITH SECTION 15(F) OF THE 1940 ACT
Section 15(f) of the 1940 Act provides that an investment adviser to a
registered investment company may receive any amount or benefit in connection
with a sale of an interest in such adviser which results in an assignment of an
investment management agreement if two conditions are satisfied. The first
condition is that, for a period of three years after such assignment, at least
75% of the board of directors of the investment company must not be "interested
persons" (as defined in the 1940 Act) of the new investment adviser or its
predecessor. The second condition is that no "unfair burden" may be
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imposed on the investment company as a result of the assignment or any express
or implied terms, conditions or undertakings applicable thereto. An "unfair
burden" on an investment company exists if, during the two-year period after
any such transaction occurs, the investment adviser or its predecessor or
successor, or any interested person of such adviser, predecessor or successor,
receives or is entitled to receive any compensation from any person in
connection with the purchase or sale of securities or other property from or on
behalf of the investment company, or from the investment company or its
shareholders, other than for bona fide underwriting, investment advisory or
other services.
Liberty has agreed to use reasonable efforts to assure that both
conditions of Section 15(f) will be satisfied. Effective December 17, 1998, the
Board of Trustees of Liberty Trust will consist of 13 individuals, none of whom
are "interested persons" of SGAM Corp., one of whom will be an "interested
person" of Successor SGAM Corp., and an additional one of whom will be an
"interested person" because of his affiliation with a registered broker-dealer.
In addition, Liberty has agreed that, for a period of a minimum of two years
after the new investment management agreement becomes effective, Liberty and
its affiliates will waive or reimburse fees and expenses relating to the Fund
to the extent that those fees or expenses would cause the expense ratio of the
Fund to exceed the annualized expense ratio of the Fund as of the date of the
closing of the Acquisition. This voluntary fee waiver, however, does not does
not apply to any new increased fees or expenses that may be imposed by the
variable annuity contract or variable life insurance policy that you own.
Please refer to your Policy's prospectus for more information.
V. THE REORGANIZATION
As mentioned above, the Acquisition contemplates that the Fund will enter
into the Plan (attached as Exhibit A). It is anticipated that the procedure for
the Reorganization under the Plan will be as follows:
o The Fund will transfer all of its assets, including, but not limited to,
its portfolio securities to the Successor Fund, a newly-created series of
Liberty Trust.
o The Successor Fund, in exchange for the Fund's assets, will assume all the
liabilities and obligations of the Fund, including liability arising out
of indemnification and related payment or reimbursement of expenses
obligations pursuant to the bylaws or charter of the Company.
o Liberty Trust will issue to the Fund a number of full and fractional
shares of beneficial interest in the Successor Fund equal to the number of
shares of the Fund then outstanding.
o The Fund will distribute to its shareholders a number of full and
fractional shares of the Successor Fund equal to the number of full and
fractional Fund shares held by that shareholder.
o After the Reorganization is complete, the Company will dissolve and
liquidate.
Upon consummation of the Reorganization, an open account will be
established on the records of Liberty Trust in the name of each record
shareholder of the Fund (such record shareholder being accounts of the Separate
Accounts of the Participating Insurance Companies) representing the number of
shares of the Successor Fund that the Separate Account holds for the benefit of
the holders of variable products issued by the Participating Insurance Company.
As promptly as practicable after the consummation of the Reorganization,
the Company will be terminated pursuant to the laws of the State of Maryland.
After the closing date, the Company will not conduct any business except in
connection with the Fund's liquidation and dissolution. The Fund has been
advised by Liberty that, beginning May 1, 1999, Liberty Trust will offer shares
of the Successor Fund to Variable Product separate accounts for which the
existing series of Liberty Trust serve as funding vehicles.
The shares that will be issued to shareholders of the Fund pursuant to the
Reorganization will be subject to an asset-based service and distribution fee
of up to 0.25% per annum, but shares issued to such shareholders will not be
subject to any sales charge, either upon issuance or on redemption.
If the Plan is approved by shareholders, it is expected that the
Reorganization will be made effective during the first calendar quarter of 1999
(the "Closing Date"). At any time before the Reorganization is effective,
Liberty Trust and the Fund may agree to terminate the Plan, and, if the
Reorganization has not been made effective by March 31, 1999, the Plan will
automatically terminate on that date unless a later date is agreed to by both
Liberty Trust and the Fund.
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If the Plan is not approved by the shareholders of the Fund, the Board
will use its best efforts to make new advisory arrangements with SGAM Corp.,
its successor, or with another investment adviser for the Fund. In the event
that the Board is not able to retain an investment adviser on terms which are
in the best interests of the shareholders, the Board will liquidate the Fund.
VI. ACTIONS RELATED TO THE REORGANIZATION
As set forth below, if approved by shareholders, the Reorganization will
result in several other changes concerning the structure and operations of the
Fund as the Successor Fund. Because of the manner in which the transfer of
assets from the Fund to the Successor Fund will take place under the
Reorganization, you are not being asked to approve directly or adopt these
additional matters. Specifically, after shareholder approval of the
Reorganization but prior to the issuance of the shares of the Successor Fund to
the shareholders of the Fund, one share of the Successor Fund will be issued to
the Fund. As the then-sole shareholder of the Successor Fund, the Fund will
approve or adopt the following matters on behalf of the Successor Fund:
o Approval of the new investment management agreement between the Successor
Fund and LASC and the new subadvisory agreement between the Successor
Fund, LASC, and Successor SGAM Corp. (see APPROVAL OF INVESTMENT
MANAGEMENT AGREEMENT below);
o Adoption of a new plan of distribution for shareholders of the Successor
Fund (see ADOPTION OF PLAN OF DISTRIBUTION below);
o Conversion of the Fund from operating as part of a Maryland corporation
to operating as part of a Massachusetts business trust (see CONVERSION TO
A MASSACHUSETTS BUSINESS TRUST below);
Finally, approval of the Reorganization with respect to the Fund will also
include approval of an interim investment management agreement between the Fund
and Successor SGAM Corp. This agreement, which is substantially identical to
the Fund's current investment management agreement with SGAM Corp., will cover
the period, if any, between the consummation of the Acquisition and the closing
of the Reorganization (see, "Approval Of The Interim Investment Management
Agreement" below).
A. APPROVAL OF THE NEW INVESTMENT MANAGEMENT AGREEMENT
1. WHY APPROVAL OF A NEW INVESTMENT MANAGEMENT AGREEMENT IS NECESSARY
By virtue of the Acquisition, which would be deemed an "assignment" under
the 1940 Act, the Fund's investment management agreement with SGAM Corp. will
automatically terminate. Under the terms of the Reorganization, the Successor
Fund would have two investment advisers: LASC, which currently serves as
Liberty Trust's primary investment manager; and Successor SGAM Corp., which
would serve as the subadviser responsible for the Successor Fund's daily
investment decisions. Consequently, as a result of the Reorganization, LASC
would enter into an advisory agreement with Liberty Trust, acting on behalf of
the Successor Fund, and Successor SGAM Corp. would enter into a subadvisory
agreement with LASC and the Successor Fund.
By voting in favor of the Plan, shareholders of the Fund will be
authorizing the Fund, as sole shareholder of the new series of Liberty Trust
prior to the Reorganization, to vote such shares of the Successor Fund in favor
of approval of the advisory and subadvisory agreements with LASC and Successor
SGAM Corp. to take effect with the closing of the Reorganization.
SGAM Corp., and the Board have determined that it is in the best interests
of the Fund and its shareholders to reorganize the Fund into a new separate
series of Liberty Trust. After the Reorganization, LASC would serve as
investment adviser, and Successor SGAM Corp. would serve as subadviser, to the
Successor Fund, under a new investment management agreement and subadvisory
agreement, respectively.
The form of the management agreement with LASC (the "LASC Agreement") and
form of the subadvisory agreement with LASC and Successor SGAM Corp. (the
"Subadvisory Agreement"), each to be effective with the closing of the
Reorganization, are attached as Exhibits B and C, respectively.
2. CERTAIN INFORMATION CONCERNING THE CURRENT INVESTMENT MANAGEMENT AGREEMENT.
The Current Investment Management Agreement, dated August 16, 1996, was
submitted to the initial shareholder of the Fund for approval prior to the
inception of operations of the Fund. For the period from February 3, 1997
(inception of
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operations of the Fund) through December 31, 1997, all fees incurred by the
Fund pursuant to the Current Investment Management Agreement were waived by
SGAM Corp. If the fees had not been waived, the Fund would have owed SGAM Corp.
$5,742.
3. COMPARISON OF THE CURRENT INVESTMENT MANAGEMENT AGREEMENT AND THE LASC
AGREEMENT AND THE SUBADVISORY AGREEMENT (COLLECTIVELY, THE "NEW
AGREEMENTS").
Although the New Agreements for the Fund are different in form than the
current investment management agreement (the "Current Investment Management
Agreement") between the Fund and SGAM Corp., the agreements are substantially
the same in all material respects with respect to the responsibilities of the
parties.
A. PROVISION OF INVESTMENT MANAGEMENT AND ADMINISTRATIVE SERVICES
The Current Investment Management Agreement requires that SGAM Corp.
provide the Fund with investment research, advice, and supervision and furnish
continuously an investment program that is consistent with the Fund's
investment objective, policies and restrictions as described in the Company's
prospectus and statement of additional information. Under this agreement, SGAM
Corp. determines the securities that should be purchased and sold for the Fund
and the percentage of the assets of the Fund that will remain uninvested.
Even though the Fund would have two investment managers as a result of the
Reorganization, the collective responsibilities of LASC and Successor SGAM
Corp. under their respective investment management agreements would be
substantially the same as those of SGAM Corp. under the Current Investment
Management Agreement.
The LASC Agreement calls for LASC to provide certain investment advisory
and administrative services to the Fund. Some of the investment advisory
services, however, can be -- and in fact would be -- delegated to a subadviser,
including the responsibility for the day-to-day management and investment of
the assets of the Successor Fund. LASC also would be responsible for
compensating Successor SGAM Corp. out of the payments it receives from Liberty
Trust.
In managing the Successor Fund's assets under the provisions of the
Subadvisory Agreement, Successor SGAM Corp. would (i) evaluate economic,
statistical and financial information and undertake any investment research
that it believes is advisable; (ii) purchase and sell investment securities on
behalf of the Successor Fund in accordance with its investment objectives and
policies; and (iii) report the results to LASC and the Board of Trustees.
The administrative services to be provided by LASC under the agreement
would include (i) the maintenance of the corporate books and records of Liberty
Trust; (ii) administration of all dealings and relationships with the trustees
for meetings of the Board; (iii) preparation of proxy materials for Liberty
Trust, as necessary; and (iv) certain other compliance-oriented developments on
behalf of Liberty Trust and the Successor Fund. These functions are not
specifically identified in the Fund's Current Investment Management Agreement,
but have been provided by SGAM Corp. under the current arrangements.
B. COMPENSATION
In return for its services rendered under the Current Investment
Management Agreement, SGAM Corp. is paid by the Fund at an annual rate of 0.75
of 1% of the Fund's average daily net assets. Payment under this agreement is
made on a monthly basis.
Under the LASC Agreement, the Successor Fund will pay LASC at the same
annual rate as under the Current Investment Management Agreement. Accordingly,
shareholders will not experience an increase or decrease in management expenses
as a result of the Reorganization. Under the Subadviser Agreement, Successor
SGAM Corp. will be compensated by LASC at a rate of 0.55 of 1% of the Successor
Fund's average daily net assets.
C. ALLOCATION OF CHARGES AND EXPENSES
The Current Investment Management Agreement requires that SGAM Corp. pay
the compensation and expenses of all officers of the Company and the Company's
rent and ordinary office expenses. SGAM Corp. also is required to provide
investment advisory, research, and statistical facilities and all clerical
services relating to research, statistical, and investment work. Under the LASC
Agreement, LASC provides a variety of administrative functions on behalf of
Liberty Trust, including providing office space, equipment and facilities as
necessary, and maintaining the headquarters of Liberty Trust.
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D. LIABILITY OF THE ADVISER
Under the Current Investment Management Agreement, SGAM Corp. is not
liable for any loss suffered by the Company in connection with the rendering of
investment advisory services to the Fund, unless the loss resulted from willful
misfeasance, bad faith or gross negligence by SGAM Corp. in the performance of
its duties or from a reckless disregard by SGAM Corp. of its obligations and
duties under the agreement. The New Agreements contain substantially similar
provisions.
LASC, Successor SGAM Corp. and other service providers for Liberty Trust
have agreed to waive collection of management, administration, transfer agency,
and other fees payable by the Successor Fund during the two years following the
approval of the New Agreements so that the total operating expenses of the
Successor Fund, as a percentage of net assets of the Successor Fund, do not
exceed the total annualized operating expenses of the Fund as of the date of
the closing of the Acquisition. Please see Exhibit D for a comparison of the
Fund's total expenses and the proposed total expenses of the Successor Fund.
B. ADOPTION OF PLAN OF DISTRIBUTION
The Fund currently maintains a Rule 12b-1 Plan (the "Current 12b-1 Plan")
under which the Fund pays a distribution-related fee on the first business day
of each quarter at an annual rate not to exceed 0.25% of average daily net
assets to SG Cowen Securities Corporation ("SGCS"), the principal underwriter
of the Fund's shares. Under the terms of the Current 12b-1 Plan, the Fund is
authorized to make payments to SGCS for remittance to an insurance company that
is the issuer of a Variable Product invested in shares of the Fund in order to
pay or reimburse such insurance company for distribution or shareholder
servicing-related expenses incurred or paid by such insurance company. The
Current 12b-1 Plan is intended to compensate SGCS for expenses incurred in
connection with the distribution of the Fund's shares.
As a result of the Reorganization, the Fund will adopt a similar Rule
12b-1 Plan (the "New 12b-1 Plan"). Unlike the Current 12b-1 Plan, however,
which provides that fees paid may be used only to reimburse SGCS for actual
expenses incurred in providing distribution-related services, the New 12b-1
Plan will provide that if the distribution fee exceeds actual distribution
expenses, the difference may be retained by the distributor as additional
compensation. Under the New 12b-1 Plan, the distribution fee will be paid to
the principal underwriters of the Successor Fund (which are affiliates of
LASC), for remittance to Participating Insurance Companies or for other
distribution related purposes. Please see Exhibit D for a comparison of the
fees and expenses of the Fund, and other service providers for Liberty Trust
and the Successor Fund.
As noted above, however, LASC, Successor SGAM Corp., and other service
providers for Liberty Trust have agreed to waive certain fees otherwise payable
by the Successor Fund for a period of two years following the approval of the
New Agreements, so that the total operating expenses of the Successor Fund do
not exceed the total annualized operating expenses of the Fund as of the date
of the closing of the Acquisition
C. CONVERSION TO MASSACHUSETTS BUSINESS TRUST
If the Reorganization is approved, the Fund will become a separate series
of Liberty Trust and, as a result, will be converted from a series of a
Maryland corporation to a series of a Massachusetts business trust. Below is a
comparison of these two forms of organization, together with a summary of
related sections of each entity's charter and by-laws. For the full text of the
Company's Charter and Liberty Trust's Declaration of Trust, reference is made
to each entity's charter on file with the Securities and Exchange Commission.
1. LIABILITY OF SHAREHOLDERS
For Maryland corporations, the personal liability of individual
shareholders is limited by statute. Under certain circumstances, shareholders
of Massachusetts business trusts may be held personally liable as partners for
the obligations of the trust. To protect its shareholders, Liberty Trust's
charter expressly disclaims the liability of its shareholders for acts or
obligations of Liberty Trust and provides for indemnification and reimbursement
of expenses out of Liberty Trust's property for any shareholder held personally
liable for the obligations of Liberty Trust. The charter also provides that
Liberty Trust shall maintain appropriate insurance (for example, fidelity
bonding and errors and omissions insurance) for the protection of Liberty
Trust, its shareholders, trustees, officers, employees and agents covering
possible tort and other liabilities. Thus, the risk of shareholders incurring
financial loss on account of shareholder liability is limited to circumstances
in which both inadequate insurance exists and Liberty Trust itself was unable
to meet its obligations.
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2. ELECTION OF BOARD MEMBERS; SHAREHOLDER MEETINGS
Neither Massachusetts business trust law nor Maryland corporate law
requires investment companies to hold annual meetings of shareholders. The
ability of shareholders to elect directors/trustees from time to time will not
change as a result of the Reorganization.
3. TERMS OF BOARD MEMBERS
Liberty Trust's Declaration of Trust provides that, except in the event of
death, resignation, or removal, each trustee elected by shareholders or by the
trustees shall serve until the next meeting of shareholders called for the
purpose of electing trustees. The Company's by-laws provide that each director
shall hold office until his successor is elected and qualified, or until his
earlier death, resignation or removal.
4. REMOVAL OF BOARD MEMBERS
Under Liberty Trust's Declaration of Trust, a trustee can be removed, with
or without cause, (i) by a majority vote of the trustees then in office, (ii)
at any meeting called for that purpose, by a vote of the holders of two-thirds
of Liberty Trust's outstanding shares or (iii) by the holders of two-thirds of
the outstanding shares by declaration in writing filed with the custodian of
the Fund's securities. Under the Company's by-laws, at any shareholder meeting
at which a quorum is present, the affirmative vote of the holders of a majority
of the votes entitled to be cast for the election of directors is needed to
remove a director from office, with or without cause.
5. VOTING RIGHTS OF SHAREHOLDERS
Liberty Trust's Declaration of Trust grants shareholders the power to vote
only with respect to: (i) the election or removal of trustees; (ii) the
approval of any investment advisory contract; (iii) the termination of Liberty
Trust or any series thereof; (iv) any amendments to the charter; (v) whether or
not a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of Liberty Trust or a
series thereof; or (vi) any matters relating to Liberty Trust as may be
required by the 1940 Act, the Declaration of Trust, the by-laws, or any
registration of Liberty Trust with the Securities and Exchange Commission, or
as the Board of Trustees may consider necessary or desirable. The Company's
charter does not specify instances under which shareholders have the right to
vote, but as a Maryland corporation that is a registered investment company
pursuant to the 1940 Act, shareholders have the right to vote with respect to
substantially the same items as is the case for Liberty Trust.
6. SPECIAL MEETINGS OF SHAREHOLDERS
The Company's by-laws provide that the Company's Secretary must call a
shareholder meeting (i) when one or more matters are required to be acted on by
shareholders under the 1940 Act or the General Corporation Law of the State of
Maryland, and (ii) at the request in writing of the Chairman of the Board, the
President, a majority of the Board of Directors or shareholders holding at
least ten percent of the shares of stock of the Company outstanding and
entitled to vote at a meeting.
The Declaration of Trust of Liberty Trust provides that shareholder
meetings of Liberty Trust or of any series or class may be called by the
Trustees, the President, the Executive Vice President, any Vice President, or
such other person or persons as may be specified in the by-laws and held from
time to time for the purpose of taking action upon any matter requiring the
vote or the authority of the shareholders of Liberty Trust or any series or
class or upon any other matter deemed by the Trustees to be necessary or
desirable. The Declaration of Trust also provides that shareholders are
entitled to at least seven days' written notice of any meeting of shareholders.
7. LIABILITY OF TRUSTEES AND OFFICERS; INDEMNIFICATION
The Company's charter provides that, to the full extent that limitations
on the liability of directors and officers are permitted by the Maryland
General Corporation Law, no director or officer of the Company will have any
liability to the Company or its shareholders for damages. The charter further
provides that the limitation on liability applies to events occurring at the
time a person serves as a director or officer of the Company whether or not
that person is a director or officer at the time of any proceeding in which
liability is asserted. The Declaration of Trust for Liberty Trust provides that
the Trustees will not be responsible or liable in any event for any neglect or
wrongdoing of any officer, agent, employee, adviser or principal underwriter of
Liberty Trust, nor will any Trustee be responsible for the act or omission of
any other Trustee, but nothing herein contained shall protect any Trustee. The
Declaration of Trust further provides that a Trustee is not protected
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against any liability to which he or she would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office. Finally, the charter
provides that every note, bond, contract, instrument, certificate, share or
undertaking and every other act or thing whatsoever executed or done by or on
behalf of Liberty Trust or the Trustees or any of them in connection with
Liberty Trust will be conclusively deemed to have been executed or done only in
or with respect to their or his or her capacity as Trustees of Liberty Trust
executed or done by or on behalf of Liberty Trust or the Trustees, and such
Trustees or Trustee will not be personally liable thereon.
The Company's charter provides that the Company will indemnify and advance
expenses to its currently acting and its former directors to the full extent
permitted by Maryland General Corporation Law. The charter further states that
the Company will indemnify and advance expenses to its officers to the same
extent as its directors and may do so to such further extent as is consistent
with the law. The by-laws for the Company provide that the Company will
indemnify each person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative ("Proceeding"), by reason of
the fact that he is or was a Director, officer, employee or agent of the
Company or is or was serving at the request of the Company as Director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against all judgments, penalties, fines, settlements
and reasonable expenses, including attorneys' fees, actually incurred by him in
connection with such Proceeding and the amount of every such judgment, penalty,
fine settlement and reasonable expense so incurred by such person will be paid
by the Company or, if paid by such person, will be paid by Company to the
fullest extent permitted by law, subject to certain conditions and limitations.
Liberty Trust's Declaration of Trust provides that Liberty Trust will
indemnify each of its Trustees and officers (including persons who serve at the
request of Liberty Trust as directors, officers or trustees of another
organization in which Liberty Trust has any interest as a shareholder, creditor
or otherwise) (hereinafter referred to as a "Covered Person") against all
liabilities and expenses, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees reasonably incurred by any Covered Person in connection with the defense
or disposition of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or legislative body, in which such
Covered Person may be or may have been involved as a party or otherwise or with
which such person may be or may have been threatened, while in office or
thereafter, by reason of being or having been such a Trustee or officer, except
that no Covered Person shall be indemnified against any liability to the
Colonial Trust or its shareholders to which such Covered Person would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's officer.
With respect to the Successor Fund, the Successor Fund has agreed to
assume the Company's indemnification and related payment or reimbursement of
expenses obligations pursuant to the Company's by-laws and charter for a period
of five years after the Closing Date with respect to events occurring at any
time up to and including the Closing Date, including events contemplated by the
Plan, up to an amount equal to the assets of the Successor Fund. Further,
Liberty has agreed, at its sole expense, to extend "directors and officers"
insurance coverage to the disinterested Directors for a period of five years
after the Closing Date.
D. APPROVAL OF INTERIM INVESTMENT MANAGEMENT AGREEMENT
Finally, by voting in favor of the Reorganization, you will also be voting
in favor of an interim investment management agreement between the Fund and
Successor SGAM Corp. (the "Interim Investment Management Agreement"). As
described above, the Acquisition will result in an "assignment" of the Fund's
current investment management agreement with SGAM Corp., thus terminating that
agreement as a matter of law. The Acquisition is currently scheduled to occur
on December 31, 1998. In the event that the Reorganization is approved by the
shareholders of the Fund, but is not completed on or before December 31, 1998,
the Fund would be without an investment management agreement from that date
until the closing of the Reorganization. To cover this possibility, approval of
the Reorganization would also include approval of an Interim Investment
Management Agreement, the terms of which are substantially identical to those
of the Current Investment Management Agreement with SGAM Corp., which are
described above. This interim agreement would take effect only if the
Reorganization is not finalized prior to the consummation of the Acquisition,
and would remain in effect only until the earlier of the closing date of the
Reorganization or March 31, 1999. At a meeting held on October 22, 1998, the
Board of the Company approved the Interim Investment Management Agreement with
respect to the Fund. The proposed Interim Investment Management Agreement is
attached to this Proxy Statement as Exhibit F.
11
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VII. TAX CONSEQUENCES
In the opinion of Ropes & Gray, based on certain facts, assumptions, and
representations of the parties, for Federal income tax purposes, the
transaction contemplated by the Reorganization will constitute a tax-free
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). While the Company is not aware of any
state or local tax consequences of the proposed Reorganization, it has not made
any investigation as to such consequences, and shareholders should consult
their own tax advisors with respect to such matters.
VIII. REQUIRED VOTE
Approval of the Proposal will require the vote of a majority of the Fund's
outstanding voting securities. THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE
IN FAVOR OF PROPOSAL 1.
ADDITIONAL INFORMATION
GENERAL
The cost of preparing, printing and mailing the enclosed proxy,
accompanying notice and proxy statement and all other costs in connection with
the solicitation of proxies will be paid by Liberty (and not the Company or the
Fund), including any additional solicitation made by letter, telephone or
telegraph. In addition to solicitation by mail, certain officers and
representatives of the Company, officers and employees of SGAM Corp. and
certain financial services firms and their representatives, who will receive no
extra compensation for their services, may solicit proxies by telephone,
telegram or personally.
Shareholder Communications Corporation ("SCC") has been engaged to assist
in the solicitation of proxies. As the Special Meeting date approaches, certain
shareholders of the Fund may receive a telephone call from a representative of
SCC if their vote has not yet been received. Authorization to permit SCC to
execute proxies may be obtained by telephonic or electronically transmitted
instructions from shareholders of the Fund. Proxies that are obtained
telephonically will be recorded in accordance with the procedures set forth
below. The Directors believe that these procedures are reasonably designed to
ensure that the identity of the shareholder casting the vote is accurately
determined and that the voting instructions of the shareholder are accurately
determined. The cost of this assistance is expected to be approximately $1,035
and, as stated above, will not be borne by the Fund or the Company.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask for each shareholder's full name, address, social security
or employer identification number, title (if the shareholder is authorized to
act on behalf of an entity, such as a corporation), and the number of shares
owned and to confirm that the shareholder has received the proxy statement card
in the mail. If the information solicited agrees with the information provided
to SCC, then the SCC representative has the responsibility to explain the
process, read the proposals listed on the proxy card, and ask for the
shareholder's instructions on each proposal. The SCC representative, although
he or she is permitted to answer questions about the process, is not permitted
to recommend to the shareholder how to vote, other than to read any
recommendation set forth in the proxy statement. SCC will record the
shareholder's instructions on the card. Within 72 hours, SCC will send the
shareholder a letter or mailgram to confirm his or her vote and asking the
shareholder to call SCC immediately if his or her instructions are not
correctly reflected in the confirmation.
If the shareholder wishes to participate in the Special Meeting, but does
not wish to give his or her proxy by telephone, the shareholder may still
submit the proxy card originally sent with the proxy statement or attend in
person. Should shareholders require additional information regarding the proxy
or replacement proxy cards, they may call toll-free at (800) 334-2143. Any
proxy given by a shareholder, whether in writing or by telephone, is revocable.
PROPOSALS OF SHAREHOLDERS
Shareholders wishing to submit proposals for inclusion in a proxy
statement for a shareholder meeting subsequent to the Special Meeting, if any,
should send their written proposals to the Secretary of the Company, 1221
Avenue of the Americas, New York, New York 10020, within a reasonable time
before the solicitation of proxies for such meeting. Pursuant to its by-laws,
the Company does not generally, and has no present intention to, hold annual
meetings of shareholders. The timely submission of a proposal does not
guarantee its inclusion.
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
The Board of Directors is not aware of any matters that will be presented
for action at the Special Meeting other than the matters set forth herein.
Should any other matters requiring a vote of shareholders arise, the proxy in
the accompanying form will confer upon the person or persons entitled to vote
the shares represented by such proxy the discretionary authority to vote the
shares as to any such other matters in accordance with their best judgment in
the interest of the Fund.
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PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS,
PHILIP J. BAFUNDO
SECRETARY
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EXHIBIT A
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION made this day of ,
1998 by and between SoGen Variable Funds, Inc. (the "SoGen Trust"), a Maryland
corporation, on behalf of SoGen Overseas Variable Fund a series of the SoGen
Trust (the "SoGen Fund"), and Liberty Variable Investment Trust (the "Liberty
Trust"), a Massachusetts business trust, on behalf of [name of successor SoGen
Fund,] a series of the Liberty Trust (the "New SoGen Fund").
WHEREAS, the parties hereto intend to provide for the reorganization of
the SoGen Fund through the acquisition by the New SoGen Fund of all of the
assets, subject to all of the liabilities, of the SoGen Fund in exchange for
shares of beneficial interest, without par value, of the New SoGen Fund (the
"New SoGen Fund Shares"), the distribution to shareholders of the SoGen Fund of
such New SoGen Fund Shares, and the liquidation of the SoGen 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) The SoGen Trust, on behalf
of the SoGen Fund, shall assign, sell, convey, transfer and deliver to the New
SoGen Fund at the closing provided for in Section 2 (hereinafter called the
"Closing") all of the then existing assets of the SoGen Fund of every kind and
nature. In consideration therefor, the Liberty Trust, on behalf of the New
SoGen Fund, shall at the Closing (i) assume all of the SoGen Fund's liabilities
and obligations of any kind whatsoever, whether absolute, accrued, contingent
or otherwise, including any liability arising out of indemnification and
related payment or reimbursement of expenses obligations pursuant to the
By-Laws or Articles of Incorporation of the SoGen Trust (the "Obligations"),
each as in effect on the date hereof (collectively, the "SoGen Charter") with
respect to events occurring at any time up to and including the Closing Date
(as defined in Section 2 hereof), including events contemplated by this
Agreement and (ii) deliver to the SoGen Fund (A) a number of full and
fractional New SoGen Fund Shares (as described in Section 4(g) below) equal to
the number of full and fractional shares of the SoGen Fund ("SoGen Fund
Shares") then outstanding which are held by holders of SoGen Fund Shares
("SoGen Fund Shareholders"). The numbers of SoGen Fund Shares issued and
outstanding and the numbers of New SoGen Fund Shares to be issued to the SoGen
Fund shall be determined by the transfer agent of the SoGen Fund (the "Transfer
Agent"), as of the close of business on the New York Stock Exchange on the
Closing Date. The determination of the Transfer Agent shall be conclusive and
binding on the SoGen Fund, the New SoGen Fund and their respective
shareholders. Notwithstanding any other provisions hereof, the Obligations
shall be binding for five years after the Closing Date upon the New SoGen Fund.
In the event that the New SoGen Fund shall be reorganized or merged into
another registered investment company at any time prior to the expiration of
five years from the Closing Date, proper provision shall be made so that the
successor registered investment company of the New SoGen Fund shall continue to
honor the Obligations. Further, the Obligations shall not be terminated or
modified in such a manner as to adversely affect any director to whom the
Obligations apply without the consent of such affected director (it being
expressly agreed that the directors to whom the Obligations apply shall be
third party beneficiaries of this Section 1 with respect to the Obligations).
(b) Upon consummation of the transactions described in paragraph (a) of
this Section 1, the SoGen Trust, on behalf of the SoGen Fund, shall distribute,
in complete liquidation of the SoGen Fund, (A) pro rata to the SoGen Fund
Shareholders of record as of the Closing Date the New SoGen Fund Shares
received by the SoGen Fund. Such distribution shall be accomplished by the
establishment, at the expense of the New SoGen Fund, (A) of an open account on
the records of the New SoGen Fund in the name of each SoGen Fund Shareholder
representing a number of New SoGen Fund Shares equal to the number of shares of
the SoGen Fund owned of record by such shareholder at the Closing Date.
Certificates, if any, for shares of the SoGen Fund issued prior to the
reorganization and held by SoGen Fund Shareholders shall represent the same
number of outstanding New SoGen Fund Shares, respectively, following the
reorganization. In the interest of economy and convenience, certificates
representing the New SoGen Fund Shares will not be physically issued.
(c) As promptly as practicable after the Closing Date, the SoGen Fund
shall be terminated pursuant to the provisions of the laws of the State of
Maryland, and, after the Closing Date, the SoGen Fund shall not conduct any
business except in connection with its dissolution and liquidation.
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2. CLOSING AND CLOSING DATE. The Closing shall occur at the offices of the
Liberty Trust, One Financial Center, 12th floor, Boston, Massachusetts 02111 at
9:00 a.m. Boston time on , 199 or such other date agreed to between
the parties and after the required approval by the shareholders of the SoGen
Fund specified in Section 4(c) hereof and the fulfillment (to the extent not
waived) of the other conditions precedent set forth in Section 4, 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. COVENANTS. The Liberty Trust, on behalf of the New SoGen Fund, and the
SoGen Trust, on behalf of the SoGen Fund, each hereby covenants and agrees with
the other as follows:
3.1 The SoGen Fund will call a meeting of its shareholders to be held
prior to the Closing Date to consider and act upon this Agreement and take all
other reasonable action necessary to obtain the required shareholder approval
of the transactions contemplated hereby.
3.2 In connection with the SoGen Fund shareholders' meeting referred to in
Section 3.1, the SoGen Fund will prepare a proxy statement (the "Proxy
Statement") for such meeting, to be distributed to the SoGen Fund shareholders
pursuant hereto, all in compliance with the Securities Exchange Act of 1934
(the "1934 Act") and the Investment Company Act of 1940 (the "1940 Act").
3.3 The information to be furnished by the Liberty Trust and SoGen Trust
for use in the Proxy Statement referred to in Section 3.2 shall be accurate and
complete in all material respects and shall comply with federal securities and
other laws and regulations applicable thereto.
4. CONDITIONS PRECEDENT. The obligation of the SoGen Trust and the Liberty
Trust to effect the transactions contemplated hereunder shall be subject to the
satisfaction of each of the following conditions:
(a) The SoGen Trust and the Liberty Trust shall have received an opinion
of Ropes & Gray substantially to the effect that for federal income tax
purposes: (i) no gain or loss will be recognized by the SoGen Fund upon the
occurrence of each of the following events (a) the exchange of any of its
assets solely for New SoGen Fund Shares and the assumption by the New SoGen
Fund of any of the liabilities of the SoGen Fund and (b) upon the distribution
to the SoGen Fund Shareholders of the New SoGen Fund Shares; (ii) the tax basis
of all of the assets of the SoGen Fund received by the New SoGen Fund will be,
in each instance, the same as the tax basis of such assets in the hands of the
SoGen Fund immediately prior to the transfer; (iii) the New SoGen Fund's
holding period in all of the assets acquired from the SoGen Fund will include,
in each instance, the periods during which such assets were held by the SoGen
Fund; (iv) no gain or loss will be recognized by the New SoGen Fund upon the
receipt of any of the assets of the SoGen Fund solely in exchange for New SoGen
Fund Shares and the assumption by the New SoGen Fund of any of the liabilities
of the SoGen Fund; (v) no gain or loss will be recognized by the shareholders
of the SoGen Fund upon the receipt of the New SoGen Fund Shares solely in
exchange for their shares in the SoGen Fund as part of the transaction; (vi)
the basis of the New SoGen Fund Shares received by the shareholders of the
SoGen Fund will be, in each instance, the same as the basis of the shares of
the SoGen Fund exchanged therefor; and (vii) the holding period of the New
SoGen Fund Shares received by the shareholders of the SoGen Fund will include,
in each instance, the holding period of the shares of the SoGen Fund exchanged
therefor, provided that at the time of the exchange the shares of the SoGen
Fund were held as capital assets; and as to such other matters as the SoGen
Trust and the Liberty 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
SoGen Trust and by the Board of Trustees of the Liberty Trust, and shall have
been recommended for approval to the shareholders of the SoGen Fund by the
Board of Directors of the SoGen Trust;
(c) This Agreement and Plan of Reorganization and the reorganization
contemplated hereby shall have been adopted and approved by the affirmative
vote of the holders of a majority of the outstanding shares of the SoGen Fund;
(d) The Liberty Trust on behalf of the New SoGen Fund shall have entered
into a Management Agreement with Liberty Advisory Services Corp. ("LASC"), and
a Sub-Advisory Agreement with LASC and [New SGAM Corp.], and such Agreements
shall have been approved by the Board of Trustees of the Liberty Trust and, to
the extent required by law, by the Board of Trustees of the Liberty Trust who
are not "interested persons" of the Liberty Trust as defined in the 1940 Act
(the "Independent Trustees"), as well as by the shareholders of the New SoGen
Fund (it being understood that the SoGen Fund, as sole shareholder of the New
SoGen Fund prior to the consummation of the reorganization, hereby agrees and
is authorized to vote for such approval);
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(e) The Liberty Trust, on behalf of the New SoGen Fund, shall have entered
into a Distributor's Contract with Liberty Funds Distributor, Inc., and Keyport
Financial Services Corp. and the Board of Trustees and, to the extent required
by law, the independent Trustees of the Liberty Trust shall have approved such
Distributor's Contract and a distribution plan pursuant to Rule 12b-1 under the
1940 Act;
(f) The Liberty Trust, on behalf of the New SoGen Fund, shall have entered
into a Transfer Agency Agreement with Liberty Funds Services, Inc., and such
Agreement shall have been approved by the Board of Trustees of the Liberty
Trust and, to the extent required by law, by the Independent Trustees of the
Liberty Trust; and
(g) The representations and warranties set forth in Section 5 of this
Agreement shall be accurate and complete in all material respects on the
Closing Date.
(h) On the Closing Date no action, suit or proceeding shall be pending
before any court or governmental agency in which it is sought to restrain or
prohibit, or obtain damages or other relief in connection with, this Agreement
or the transactions contemplated hereby.
(i) The transactions contemplated by the Stock Purchase Agreement dated as
of August 13, 1998 among Societe Generale Asset Management S.A., Jean-Marie
Eveillard and Liberty Financial Companies, Inc. shall have been consummated.
At any time prior to the Closing, any of the foregoing conditions other
than that set forth in (i) above may be waived jointly by the Board of
Directors of the SoGen Trust and the Board of Trustees of the Liberty Trust if,
in their judgment, such waiver will not have a material adverse effect on the
interests of the shareholders of the SoGen Fund and the New SoGen Fund.
5. REPRESENTATIONS AND WARRANTIES.
5.1 SoGen Trust, on behalf of SoGen Fund, represents and warrants as
follows to the Liberty Trust and the New SoGen Fund as of the date hereof and
agrees to confirm the continuing accuracy and completeness in all material
respects of the following on the Closing Date:
(a) SoGen Trust is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland;
(b) SoGen Trust is a duly registered investment company classified as a
management company of the open-end type and its registration with the
Securities and Exchange Commission as an investment company under the 1940 Act,
is in full force and effect, and SoGen Fund is a separate series thereof duly
designated in accordance with the applicable provisions of the Articles of
Incorporation of SoGen Trust and the 1940 Act;
(c) SoGen Trust or any person whom the SoGen Trust may be obligated to
indemnify is not in violation in any material respect of any provision of its
Articles of Incorporation or By-Laws or of any agreement, indenture,
instrument, contract, lease or other undertaking to which SoGen Trust is a
party or by which SoGen Fund is bound, and the execution, delivery and
performance of this Agreement will not result in any such violation;
(d) SoGen Trust has no material contracts or other commitments (other than
this Agreement and such other contracts as may be entered into in the ordinary
course of its investment business) which if terminated, may result in material
liability to SoGen Fund or under which (whether or not terminated) any material
payments for periods subsequent to the Closing Date will be due from SoGen
Fund;
(e) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or threatened
against SoGen Fund, any of its properties or assets, or any person whom the
SoGen Trust may be obligated to indemnify except as previously disclosed in
writing to New SoGen Fund. SoGen Fund knows of no facts which might form the
basis for the institution of such proceedings, and is not a party to or subject
to the provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability to
consummate the transactions contemplated hereby;
(f) The statement of assets and liabilities, the statement of operations,
the statement of changes in net assets, and the schedule of investments as at
December 31, 1997 and the period from February 3, 1997 (commencement of
operations) to that date of SoGen Fund, audited by KPMG Peat Marwick LLP,
copies of which have been furnished to New SoGen Fund, fairly reflect the
financial condition and results of operations of SoGen Fund as of such date and
for the period then ended in accordance with generally accepted accounting
principles consistently applied, and SoGen Fund has no known liabilities
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of a material amount, contingent or otherwise, other than those shown on the
statements of assets referred to above or those incurred in the ordinary course
of its business since December 31, 1997;
(g) Since December 31, 1997, there has not been any material adverse
change in SoGen Fund's financial condition, assets, liabilities or business
other than changes occurring in the ordinary course of business, or any
incurrence by SoGen Fund of indebtedness, except as disclosed in writing to New
SoGen Fund. For the purposes of this subparagraph (g), distributions of net
investment income and net realized capital gains, changes in portfolio
securities, changes in the market value of portfolio securities or net
redemptions shall be deemed to be in the ordinary course of business;
(h) By the Closing Date, all federal and other tax returns and reports of
SoGen Fund required by law to have been filed by such date (giving effect to
extensions) shall have been filed, and all federal and other taxes shown to be
due on said returns and reports shall have been paid so far as due, or
provision shall have been made for the payment thereof, and to the best of
SoGen Fund's knowledge no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(i) For all taxable years and all applicable quarters of such years from
the date of its inception, SoGen Fund has met the requirements of subchapter M
of the Code, for treatment as a "regulated investment company" within the
meaning of Section 851(a) of the Code and the requirements of Section 817(h) of
the Code. Neither SoGen Trust nor SoGen Fund has at any time since its
inception been liable for and is now liable for any material excise tax
pursuant to Section 4982 of the Code. SoGen Fund has duly filed all federal,
state, local and foreign tax returns which are required to have been filed, and
all taxes of SoGen Fund which are due and payable have been paid except for
amounts that alone or in the aggregate would not reasonably be expected to have
a material adverse effect. SoGen 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
capital stock and to withholding in respect of dividends and other
distributions to shareholders, and is not liable for any material penalties
which could be imposed thereunder.
(j) The authorized capital of SoGen Trust consists of 1,000,000,000 shares
of authorized stock with a par value of one tenth of one cent (0.001) per share
of such number of different series or classes as designated in SoGen Trust's
Articles of Incorporation, one series of which (the SoGen Fund) is currently
authorized and outstanding. All issued and outstanding shares of SoGen Fund
are, and at the Closing Date will be, duly and validly issued and outstanding,
fully paid and (except as set forth in SoGen Fund's Prospectus) non-assessable
by SoGen Fund and will have been issued in compliance with all applicable
registration or qualification requirements of federal and state securities
laws. No options, warrants or other rights to subscribe for or purchase, or
securities convertible into or exchangeable for, any shares of beneficial
interest of SoGen Fund are outstanding and none will be outstanding on the
Closing Date;
(k) At the Closing Date, SoGen Fund will have good and marketable title to
its assets to be transferred to New SoGen Fund pursuant to paragraph 1, and
full right, power, and authority to sell, assign, transfer and deliver such
assets as contemplated hereby, and upon delivery and payment for such assets
New SoGen Fund will acquire good and marketable title thereto, subject to no
restrictions on the full transfer thereof, including such restrictions as might
arise under the Securities Act of 1933, as amended (the "1933 Act");
(l) The SoGen Fund's investment operations from inception to the date
hereof have been in compliance with the investment policies and investment
restrictions set forth in its prospectus and statement of additional
information as in effect from time to time, except as previously disclosed in
writing to New SoGen Fund;
(m) The execution, delivery and performance of this Agreement has been
duly authorized by the Directors of SoGen Trust, and, upon approval thereof by
the required majority of the shareholders of SoGen Fund, this Agreement will
constitute the valid and binding obligation of SoGen Fund enforceable in
accordance with its terms; and
(n) The New SoGen Shares to be issued to SoGen Fund pursuant to paragraph
1 will not be acquired for the purpose of making any distribution thereof other
than to the SoGen Fund Shareholders as provided in paragraph 1.
5.2 Liberty Trust, on behalf of New SoGen Fund, represents and warrants
the following to the SoGen Trust and the SoGen Fund and agrees to confirm the
accuracy and completeness in all material respects of the following on the
Closing Date:
(a) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of Liberty Trust, and this
Agreement constitutes the valid and binding obligation of Liberty Trust and New
SoGen Fund enforceable in accordance with its terms;
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(b) The New SoGen Shares to be issued and delivered to SoGen Fund pursuant
to the terms of this Agreement will at the Closing Date have been duly
authorized and, when so issued and delivered, will be duly and validly issued
shares of beneficial interest in New SoGen Fund, and will be fully paid and
non-assessable (except as set forth in New SoGen Fund's Statement of Additional
Information) by Liberty Trust, and no shareholder of Liberty Trust will have
any preemptive right of subscription or purchase in respect thereof; and
(c) New SoGen Fund will use all reasonable efforts to obtain the approvals
and authorizations required by the 1933 Act, the 1940 Act and such of the state
Blue Sky or securities laws as it may deem appropriate in order to continue its
operations after the Closing Date.
6. AMENDMENT. This Agreement may be amended at any time by the joint
action of the Board of Directors of the SoGen Trust and the Board of Trustees
of the Liberty Trust, notwithstanding approval thereof by the shareholders of
the SoGen Fund, provided that no amendment shall have a material adverse effect
on the interests of the shareholders of the SoGen Fund or the New SoGen Fund.
7. TERMINATION. The Board of Directors of the SoGen Trust and the Board of
Trustees of the Liberty Trust may jointly terminate this Agreement and abandon
the reorganization contemplated hereby, notwithstanding approval thereof by the
shareholders of the SoGen Fund, at any time prior to the Closing, if
circumstances should develop that, in their judgment, make proceeding with the
Agreement inadvisable. If the transactions contemplated by this Agreement and
Plan of Reorganization have not been substantially completed by March 31, 1999,
this Agreement and Plan of Reorganization shall automatically terminate on that
date unless a later date is agreed to by both the SoGen Trust and the Liberty
Trust acting by their respective Boards.
8. NO BROKER'S OR FINDER'S FEE. The SoGen Trust and the Liberty 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 SoGen Trust or the Liberty Trust arising out of the
transactions contemplated by this Agreement and Plan of Reorganization.
9. 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 Sections 1, 3.3, 9, 11, 12 and 13.
10. 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.
11. NOTICES. All notices required or permitted under this Agreement and
Plan of Reorganization shall be given in writing (i) to the SoGen Trust at 1221
Avenue of the Americas, New York, New York 10020, as well as to Fried, Frank,
Harris, Shriver & Jacobson, One New York Plaza, New York, New York 10004,
Attention: Charles M. Nathan, Esq. and (ii) to the Liberty Trust at One
Financial Center, Boston, Massachusetts 02111, 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.
12. EXPENSES. The SoGen Fund and the New SoGen 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 SoGen Fund, to the extent
not paid by others, shall be assumed and borne by the New SoGen Fund.
13. 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 Liberty 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 (i) any of the Trustees, officers or shareholders of the
Liberty Trust individually, but only upon the assets of the New SoGen Fund and
(ii) any of the directors, officers or shareholders of the SoGen Trust
individually, but only upon the assets of the SoGen Fund.
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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.
SOGEN VARIABLE FUND, INC.
(on behalf of SoGen Overseas Variable Fund)
By:_____________________________________
NAME:
TITLE:
LIBERTY VARIABLE INVESTMENT TRUST
(On behalf [Successor Fund])
By:________________________________________
NAME:
TITLE:
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EXHIBIT B
FORM OF NEW INVESTMENT MANAGEMENT AGREEMENT WITH
LIBERTY ADVISORY SERVICES CORP.
LIBERTY VARIABLE INVESTMENT TRUST
[SOGEN] OVERSEAS FUND, VARIABLE SERIES
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT ("Agreement"), made this day of January, 1999,
between LIBERTY VARIABLE INVESTMENT TRUST, a business trust organized under the
laws of The Commonwealth of Massachusetts (the "Trust"), on its own behalf and
on behalf of the [SoGen] Overseas Fund, Variable Series (the "Fund"), and
LIBERTY ADVISORY SERVICES CORP., a corporation organized under the laws of The
Commonwealth of Massachusetts (the "Manager").
WHEREAS, the Trust has been organized as an open-end management investment
company registered as such under the Investment Company Act of 1940, as amended
("Investment Company Act"), and is authorized to issue shares of beneficial
interest in one or more separate series (each representing interests in a
separate portfolio of securities and other assets), including the Fund, which
shares are to be issued and sold to and held by various separate accounts of
Keyport Life Insurance Company ("Keyport"), Independence Life & Annuity Company
("Independence") and Liberty Life Assurance Company of Boston ("Liberty Life")
or separate accounts of other insurance companies that are affiliated or are
not affiliated with Keyport (collectively, "Participating Insurance
Companies");
WHEREAS, the Trust heretofore has created nine other separate funds which
are covered by Management Agreements among the Trust, on its own behalf and on
behalf of such other funds, and the Manager; and the Trust may in the future
create additional fund(s) that may be covered by other separate agreements;
WHEREAS, the Trust desires the Manager to render certain administrative
services and to render total investment management services to the Trust and
the Fund, all in the manner and on the terms and conditions hereinafter set
forth;
WHEREAS, the Trust authorizes the Manager to enter into sub-advisory
agreements with one or more firms registered as investment advisers under the
Investment Advisors Act of 1940, as amended (the "Investment Adviser's Act"),
or qualifying as a "bank" within the meaning of the Investment Adviser's Act
and thereby exempted from the requirement to be so registered, to manage all or
a portion of a Fund's assets, as determined by the Manager from time to time (a
"Sub-Adviser"); and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Adviser's Act, and desires to provide services to the Trust and the
Fund in consideration of and on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the Trust, on its own behalf and on behalf of the Fund,
and the Manager hereby agree as follows:
1. EMPLOYMENT OF THE INVESTMENT ADVISER.
The Trust hereby employs the Manager (i) to provide certain administrative
and limited oversight services and (ii) to provide investment management and
related services to the Trust and the Fund, all in the manner set forth in
Section 2 of this Agreement, subject to the direction of the Trustees, and for
the period, in the manner, and on the terms set forth hereinafter. The Manager
hereby accepts such employment and agrees during such period to render the
services and to assume the obligations herein set forth. The Manager shall for
all purposes herein be deemed to be an independent contractor and, except as
expressly provided or authorized (whether herein or otherwise), shall have no
authority to act for or represent the Trust in any way or otherwise be deemed
an agent of the Trust.
2. OBLIGATIONS OF, AND SERVICES TO BE PROVIDED BY, THE MANAGER.
The Manager undertakes to provide the services hereinafter set forth and
to assume the following obligations:
A. ADMINISTRATIVE SERVICES.
(a) The Manager will provide general administrative services as
hereinafter set forth ("Administrative Services"), all subject to the overall
direction and control of the Board of Trustees of the Trust (the "Board").
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(b) Such Administrative Services shall not include investment advisory,
custodian, underwriting and distribution, transfer agency or pricing and
bookkeeping services, but shall include; (i) provision of office space,
equipment and facilities necessary in connection with the services to be
performed hereunder and the maintenance of the headquarters of the Trust; (ii)
maintenance of the corporate books and records of the Trust (other than those
of its records maintained by the Sub-Advisers referred to in paragraph 2(B)(c)
below, the transfer agent, the custodian and the pricing and bookkeeping
agent); (iii) administration of all dealings and relationships with the
Trustees for meetings of the Board, the scheduling of such meetings and the
conduct thereof; (iv) preparation and filing of proxy materials and
administration of arrangements for meetings of shareholders or beneficial
owners of the Fund; (v) preparation and filing of all required reports and all
updating and other amendments to the Trust's Registration Statement under the
Investment Company Act, the Securities Act of 1933, as amended (the "Securities
Act"), and the rules and regulations thereunder; (vi) calculation of
distributions required or advisable under the Investment Company Act and the
Internal Revenue Code of 1986, as amended (the "Code"); (vii) periodic
computation and reporting to the Trustees of the Fund's compliance with
diversification and other portfolio requirements of the Investment Company Act
and the Code; (viii) development and implementation of general shareholder and
beneficial owner correspondence and communications relating to the Fund,
including the preparation and filing of shareholder and beneficial owner
reports as are required or deemed advisable; and (ix) general oversight of the
custodial, net asset value computation, portfolio accounting, financial
statement preparation, legal, tax and accounting services performed for the
Trust or the Fund by others.
It is understood that the Manager may, in its discretion and at its
expense, delegate some or all of its administrative duties and responsibilities
under this subsection 2A to its affiliate, Liberty Financial Companies, Inc.
("LFC"), or any majority or greater owned subsidiaries of LFC.
B. INVESTMENT ADVISORY SERVICES.
(a) The Manager shall have responsibility for the management and
investment of the assets of the Fund, subject to and in accordance with the
separate investment objectives, policies and limitations of the Fund, as
provided in the Trust's Prospectus and Statement of Additional Information and
governing instruments, as amended from time to time, and any directions and
policies which the Trustees may issue to the Manager from time to time.
(b) The Manager shall provide a continuous investment program for the
Fund, shall revise each such program as necessary, and shall monitor
implementation of the program.
(c) The Manager may delegate its investment responsibilities under
paragraph 2B(a) with respect to the Fund to one or more persons or companies
registered as investment advisers under the Investment Adviser's Act or
qualifying as a "bank" within the meaning of the Investment Adviser's Act and
thereby exempted from the requirement to be so registered ("Sub-Advisers")
pursuant to an agreement among the Trust on behalf of the Fund, the Manager and
each Sub-Adviser ("Sub-Advisory Agreement"). Each Sub-Advisory Agreement may
provide that the Sub-Adviser, subject to the control and supervision of the
Trustees and the Manager, shall have full investment discretion for the Fund
and shall make all determinations with respect to the investment of the Fund's
assets or any portion thereof specified by the Manager. Any delegation of
duties pursuant to this paragraph shall comply with any applicable provisions
of Section 15 of the Investment Company Act, except to the extent permitted by
any exemptive order of the Securities and Exchange Commission or similar
relief.
(d) The Manager shall be solely responsible for paying the fees of each
Sub-Adviser from the fees it collects as provided in paragraph 6 below.
(e) The Manager shall evaluate possible Sub-Advisers and shall advise the
Trustees of the candidates which the Manager believes are best suited to invest
the assets of each Fund; shall monitor and evaluate the investment performance
of each Sub-Adviser; shall recommend changes of or additions of Sub-Advisers
when appropriate; and shall coordinate the investment activities of the
Sub-Advisers.
(f) It is understood that the Manager may seek advice with respect to the
performance of any or all of its duties under paragraphs 2B(b) and (c) from a
person or company ("Consultant") pursuant to an agreement among the Manager,
the Trust and the Consultant (a "Fund Consulting Agreement"). A Fund Consulting
Agreement may provide that the Consultant, subject to the control and
supervision of the Trustees and the Manager, shall provide assistance to the
Manager with respect to each Fund's investment program, the selection,
monitoring and evaluation of Sub-Advisers and the allocation of each Fund's
assets to the Sub-Advisers.
(g) The Trust shall be solely responsible for paying the fees of any
Consultant.
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(h) The Manager shall render regular reports to the Trustees relating to
the performance of its duties specified in paragraphs 2B(a), (b) and (c).
C. EXPENSES BORNE BY MANAGER.
To the extent necessary to perform its obligations under this Agreement,
the Manager, at its own expense, shall furnish executive and other personnel
and office space, equipment and facilities, and shall pay any other expenses
incurred by it, in connection with the performance of its duties hereunder,
except that the Trust or the Fund, as appropriate, shall reimburse the Manager
for its out-of-pocket costs, including telephone, postage and supplies,
incurred by it in connection with communications with shareholders and
beneficial owners of the Fund. The Manager shall pay all salaries, fees and
expenses of Trustees or officers of the Trust who are employees of the Manager.
The Manager shall not be obligated to bear any other expenses incidental to the
operations and business of the Trust. The Manager shall not be required to pay
or provide any credit for services provided by the Trust's custodian, transfer
agent or other agents.
D. PROVISION OF INFORMATION NECESSARY FOR PREPARATION OF REGISTRATION
STATEMENT AMENDMENTS AND OTHER MATERIALS.
The Manager will make available and provide such information as the Trust
may reasonably request for use in the preparation of its Registration
Statement, reports and other documents required by federal laws and any
securities and insurance laws of the other states and other jurisdictions in
which the Trust's shares are sold.
E. CODE OF ETHICS.
The Manager has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the Investment Company Act and has provided
the Trust with a copy of the code of ethics and evidence of its adoption.
Within forty-five (45) days of the end of the last calendar quarter of each
year while this Agreement is in effect, an executive officer of the Manager
shall verify to the Trustees that the Manager has complied with the
requirements of Rule 17j-1 during the previous year and that there has been no
violation of the Manager's code of ethics or, if such a violation has occurred,
that appropriate action was taken in response to such violation. Upon the
written request of the Trust, the Manager shall permit the Trust to examine the
reports required to be made to the Manager by Rule 17j-1(c)(1).
F. DISQUALIFICATION.
The Manager shall immediately notify the Trustees of the occurrence of any
event which would disqualify the Manager from serving as an investment adviser
of an investment company pursuant to Section 9(a) of the Investment Company Act
or any other applicable statute or regulation.
G. OTHER OBLIGATIONS AND SERVICE.
The Manager shall make its officers and employees available to the
Trustees and officers of the Trust for consulting and discussions regarding the
management of the Trust and its investment activities.
3. EXECUTION AND ALLOCATION OF PORTFOLIO BROKERAGE.
A. The Manager, subject to the control and direction of the Trustees, and
any Sub-Advisers, subject to the control and direction of the Trustees and the
Manager, shall have authority and discretion, as appropriate, to select brokers
and dealers to execute portfolio transactions for each Fund, and for the
selection of the markets on or in which the transactions will be executed.
B. In acting pursuant to paragraph 3A, the Manager and the Sub-Advisers
may place orders through such brokers and dealers in conformity with the policy
with respect to brokerage set forth in the Trust's then effective Registration
Statement.
C. It is understood that the Manager or a Sub-Adviser may, to the extent
permitted by applicable laws and regulations, aggregate securities to be sold
or purchased for a Fund and for other clients in order to obtain the most
favorable price and efficient execution. In that event, allocation of the
securities purchased or sold, as well as expenses incurred in the transaction,
will be made by the Manager or Sub-Adviser, as the case may be, in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Trust and to its other clients, and in conformity with any
applicable policies adopted by the Board of Trustees.
D. The Manager shall provide such reports as the Trustees may reasonably
request with respect to each Fund's total brokerage and the manner in which
that brokerage was allocated.
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4. EXPENSES OF THE TRUST.
It is understood that the Trust (or each of its funds (including the
Fund), where applicable) will pay, or will enter into arrangements that require
third parties to pay, all of the expenses of the Trust or such funds, other
than those expressly assumed by the Manager herein, including without
limitation:
A. Advisory, sub-advisory and administrative fees;
B. Fees for services of independent public accountants;
C. Legal and consulting fees;
D. Fees for transfer agent, custodian and portfolio recordkeeping and tax
information services;
E. Expenses of periodic calculations of the funds' net asset values and of
equipment for communication among the funds' custodian, transfer agent and
others;
F. Taxes and the preparation of the funds' tax returns;
G. Brokerage fees and commissions;
H. Interest;
I. Costs of Board of Trustees and shareholder meetings;
J. Updates and printing of prospectuses and reports to shareholders;
K. Fees for filing reports with regulatory bodies and the maintenance of
the Trust's existence;
L. Membership dues for industry trade associations;
M. Fees to federal authorities for the registration of the shares of the
funds;
N. Fees and expenses of Trustees who are not directors, officers,
employees or stockholders of the Manager of its affiliates;
O. Distribution fees of the funds under a distribution plan adopted
pursuant to Rule 12b-1 under the Investment Company Act;
P. Insurance and fidelity bond premiums; and
Q. Litigation and other extraordinary expenses of a non-recurring nature.
5. ACTIVITIES AND AFFILIATES OF THE MANAGER.
A. The Trust acknowledges that the Manager or one or more of its
affiliates may have investment or administrative responsibilities or render
investment advice to or perform other investment advisory services for other
individuals or entities, and that the Manager, its affiliates or any of its or
their directors, officers, agents or employees may buy, sell or trade in
securities for its or their respective accounts ("Affiliated Accounts").
Subject to the provisions of paragraph 3, the Trust agrees that the Manager or
its affiliates may give advice or exercise investment responsibility and take
such other action with respect to Affiliated Accounts which may differ from the
advice given or the timing or nature of action with respect to the Fund,
provided that the Manager acts in good faith. The Trust acknowledges that one
or more of the Affiliated Accounts may at any time hold, acquire, increase,
decrease, dispose of or otherwise deal with positions in investments in which
the Fund may have an interest. The Manager shall have no obligation to
recommend for the Fund a position in any investment which an Affiliated Account
may acquire, and the Trust shall have no first refusal, co-investment or other
rights in respect of any such investment, either for the Fund or otherwise.
B. Subject to and in accordance with the Declaration of Trust and By-Laws
of the Trust as currently in effect and the Investment Company Act and the
rules thereunder, it is understood that Trustees, officers and agents of the
Trust and shareholders of the Trust are or may be interested persons as defined
by the Investment Company Act ("Interested Persons") of the Manager or its
affiliates as directors, officers, agents and shareholders of the Manager or
its affiliates; that directors, officers, agents and shareholders of the
Manager or its affiliates are or may be Interested Persons of the Trust as
Trustees, officers, agents, shareholders or otherwise; that the Manager or its
affiliates may be Interested Persons of the Trust as shareholders or otherwise;
and that the effect of any such interests shall be governed by said Declaration
of Trust, By-Laws and the Investment Company Act and the rules thereunder.
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6. COMPENSATION OF THE MANAGER.
For all services to be rendered and payments made pursuant to this
Agreement, the Trust, on its own behalf and on behalf of Fund, will pay the
Manager monthly in arrears a fee at an annual rate equal to 0.75% of the net
asset value of the Fund. The fee shall be accrued for each calendar day and the
sum of the daily fee accruals shall be paid monthly on or before the tenth day
of the following calendar month. The daily accruals of the fee will be computed
by (i) multiplying the annual percentage rate referred to above by the fraction
the numerator of which is one and the denominator of which is the number of
calendar days in the year, and (ii) multiplying the product obtained pursuant
to clause (i) above by the net asset value of the Fund as determined in
accordance with the Trust's Prospectus as of the previous business day on which
the Fund was open for business. The foregoing fee shall be prorated for any
month during which this Agreement is in effect for only a portion of the month.
7. LIABILITIES OF THE MANAGER.
A. Except as provided below, in the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Manager, the Manager shall not be subject to
liability to the Trust or to any shareholder of the Trust for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.
B. The Manager shall indemnify and hold harmless the Trust from any loss,
cost, expense or damage resulting from the failure of any Sub-Advisor to comply
with (i) any statement included in the Prospectus and Statement of Additional
Information of the Trust, or (ii) instructions given by the Manager to any
Sub-Advisor for the purpose of ensuring the Trust's compliance with securities,
tax and other requirements applicable to the Trust's business and the
investment activities of its Funds; PROVIDED, HOWEVER, that the indemnification
provided in this paragraph 7B shall apply only to the extent that a Sub-Adviser
is liable to the Trust and, after demand by the Trust, is unable or refuses to
discharge its obligations to the Trust.
C. No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or the Manager, from liability in violation of
Sections 17(h) and (i) of the Investment Company Act.
8. EFFECTIVE DATE: TERM.
This Agreement shall become effective on the later of (i) the date first
written above or (ii) the date on which the offer and sale of shares of the
Fund has been registered under the Securities Act and the Investment Company
Act pursuant to an effective Registration Statement of the Trust on Form N-1A
and shall continue until January , 2001, and from year to year thereafter, but
only so long as such continuance is specifically approved at least annually by
a vote of the Trustees, including the vote of a majority of the Trustees who
are not interested persons of the Trust, cast in person at a meeting called for
the purpose of voting on such approval, or by vote of a majority of the
outstanding voting securities. The aforesaid provision shall be construed in a
manner consistent with the Investment Company Act and the rules and regulations
thereunder.
9. ASSIGNMENT.
No assignment of this Agreement shall be made by the Manager, and this
Agreement shall terminate automatically in the event of any such assignment.
The Manager shall notify the Trust in writing in advance of any proposed change
of control to enable the Trust to take the steps necessary to enter into a new
advisory contract.
10. AMENDMENT
This Agreement may be amended at any time, but only by written Agreement
between the Manager and the Trust, which is subject to the approval of the
Trustees of the Trust and the shareholders of any affected Fund in the manner
required by the Investment Company Act and the rules thereunder.
11. TERMINATION.
This Agreement:
(a) may at any time be terminated without payment of any penalty, by the
Trust (by the Board of Trustees of the Trust or by the vote of a majority of
the outstanding voting securities of the Fund) on sixty (60) days' written
notice to the Manager;
(b) shall immediately terminate in the event of its assignment; and
(c) may be terminated by the Manager on sixty (60) days written notice to
the Trust.
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12. DEFINITIONS.
As used in this Agreement, the terms "affiliated person," "assignment,"
"control," "interested person" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the Investment Company
Act and the rules and regulations thereunder, subject to any applicable orders
of exemption issued by the SEC.
13. NOTICE.
Any notice under this Agreement shall be given in writing addressed and
delivered or mailed postpaid to the other party to this Agreement at its
principal place of business.
14. SEVERABILITY.
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
15. SHAREHOLDER LIABILITY.
The Manager is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Declaration of Trust of the Trust and
agrees that obligations assumed by the Trust pursuant to this Agreement shall
be limited in all cases to the Trust and its assets, and if the liability
relates to one or more Funds, the obligations thereunder shall be limited to
the respective assets of such Funds. The Manager further agrees that it shall
not seek satisfaction of any such obligation from the shareholders of the
Funds, nor from the Trustees or any individual Trustee of the Trust.
16. GOVERNING LAW.
This Agreement shall be interpreted under, and the performance of the
Manager under this Agreement shall be consistent with, the provisions of the
Agreement and Declaration of Trust and By-Laws of the Trust, the terms of the
Investment Company Act, applicable rules and regulations thereunder, the Code
and regulations thereunder, and the Trust's Prospectus and Statement of
Additional Information, in each case as from time to time in effect. The
provisions of this Agreement shall be construed and interpreted in accordance
with the domestic substantive laws of The Commonwealth of Massachusetts without
giving effect to any choice or conflict of laws rules or provisions that would
result in the application of the domestic substantive laws of any other
jurisdiction; PROVIDED, HOWEVER, that if such law or any of the provisions of
this Agreement conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
17. USE OF MANAGER'S NAME.
The Trust may use the name "Liberty" or any other name derived from the
name "Liberty" only for so long as this Agreement (or another similar
management agreement pertaining to other series funds of the Trust) or any
extension, renewal, or amendment hereof (or thereof) remains in effect,
including any similar agreement with any organization that shall have succeeded
to the business of the Manager. At such time as this Agreement (and each other
similar agreement pertaining to such other series funds) or any extension,
renewal or amendment hereof (or thereof), or each such other similar successor
organization agreement shall no longer be in effect, the Trust will cease to
use any name derived from the name "Liberty," any name similar thereto, or any
other name indicating that it is managed by or otherwise connected with the
Manager, or with any organization which shall have succeeded to Manager's
business as investment advisor or manager.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have duly executed this agreement
on the date first above written.
ATTEST: LIBERTY VARIABLE INVESTMENT TRUST,
on its own behalf and on behalf of [SoGen] Overseas
Fund, Variable Series
_____________________ By:____________________________
TITLE: SECRETARY TITLE:
ATTEST: LIBERTY ADVISORY SERVICES CORP.
_________________________ By:____________________________
TITLE: SECRETARY TITLE:
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EXHIBIT C
FORM OF SUBADVISORY AGREEMENT
AMONG THE SUCCESSOR FUND, LIBERTY ADVISORY SERVICES CORP.,
AND SUCCESSOR SGAM CORP.
[SOGEN] OVERSEAS FUND, VARIABLE SERIES
[SOCIETE GENERALE] ASSET MANAGEMENT CORP.
SUB-ADVISORY AGREEMENT
AGREEMENT dated as of January , 1999 among LIBERTY VARIABLE INVESTMENT
TRUST, a Massachusetts business trust (the "Trust"), with respect to [SoGen]
Overseas Fund, Variable Series (the "Fund"), LIBERTY ADVISORY SERVICES CORP., a
Massachusetts corporation ("Adviser"), and [SOCIETE GENERALE] ASSET MANAGEMENT
CORP., a Delaware corporation (the "Sub-Adviser").
In consideration of the promises and covenants herein, the parties agree
as follows:
1. The Sub-Adviser will manage the investment of the assets of the Fund in
accordance with its investment objective, policies and limitations set forth in
the Trust's prospectus and statement of additional information, as amended from
time to time, and will perform the other services herein set forth, subject to
the supervision of the Adviser and the Board of Trustees of the Trust.
2. In carrying out its investment management obligations, the Sub-Adviser
shall:
(a) evaluate such economic, statistical and financial information and
undertake such investment research as it shall believe advisable;
(b) purchase and sell securities and other investments for the Fund in
accordance with the procedures described in the Trust's prospectus and
statement of additional information; and
(c) report results to the Adviser and to the Board of Trustees.
3. The Sub-Adviser shall be free to render similar services to others so
long as its services hereunder are not impaired thereby.
4. The Advisor shall pay the Sub-Adviser a monthly fee at the annual rate
of 0.55% of the average daily net assets of the Fund for managing the
investment of the assets of the Fund as provided in paragraph 1 above. Such fee
shall be paid in arrears on or before the 10th day of the next following
calendar month.
5. This Agreement shall become effective on the date first written above,
and (a) unless otherwise terminated, shall continue until January , 2001 and
from year to year thereafter so long as approved annually in accordance with
the 1940 Act; (b) may be terminated without penalty on sixty days' written
notice to the Sub-Adviser either by vote of the Board of Trustees of the Trust
or by vote of a majority of the outstanding voting securities of the Fund; (c)
shall automatically terminate in the event of its assignment; and (d) may be
terminated without penalty by the Sub-Adviser on sixty day's written notice to
the Trust.
6. This Agreement may be amended in accordance with the 1940 Act.
7. For the purpose of the Agreement, the terms "vote of a majority of the
outstanding shares," "affiliated person" and "assignment" shall have their
respective meanings defined in the 1940 Act and exemptions and interpretations
issued by the Securities and Exchange Commission under the 1940 Act.
8. In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Sub-Adviser, or reckless disregard of its obligations and
duties hereunder, the Sub-Adviser shall not be subject to any liability to the
Trust or the Fund, to any shareholder of the Trust or the Fund or to any other
person, firm or organization, for any act or omission in the course of or
connection with rendering services hereunder.
9. The Fund may use the name " ," or any other name derived from the
name " ," only for so long as this Agreement or any extension, renewal,
or amendment hereof remains in effect, including any similar agreement with any
organization that shall have succeeded to the business of the Sub-Advisor. At
such time as this Agreement or any extension, renewal or amendment hereof, or
each such other similar successor organization agreement
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shall no longer be in effect, the Fund will cease to use any name derived from
the name " ," any name similar thereto, or any other name indicating that
it is advised by or otherwise connected with the Sub-Adviser, or with any
organization which shall have succeeded to the Sub-Adviser's business as an
investment adviser.
10. The Sub-Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Declaration of Trust of the Trust and
agrees that obligations assumed by the Trust pursuant to this Agreement shall
be limited in all cases to the assets of the Fund. The Sub-Adviser further
agrees that it shall not seek satisfaction of any such obligation from the
shareholders of the Fund, nor from the Trustees or any individual Trustee of
the Trust.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
[SOGEN] OVERSEAS FUND, VARIABLE SERIES
By: LIBERTY VARIABLE INVESTMENT TRUST
By: _____________________________________
TITLE
[SOCIETE GENERALE] ASSET MANAGEMENT CORP.
By: ______________________________________
TITLE
LIBERTY ADVISORY SERVICES CORP.
By: ______________________________________
TITLE
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EXHIBIT D
EXPENSE COMPARISON
The following table reflects the anticipated effect of the Reorganization
on the operating expenses of the Fund, based on its expenses for the fiscal year
ended December 31, 1997 and giving effect to the fee waiver agreements referred
to above. PLEASE NOTE THAT LASC, COLONIAL MANAGEMENT AND SUCCESSOR SGAM CORP.
HAVE AGREED TO WAIVE CERTAIN FEES DURING THE TWO YEARS FOLLOWING THE APPROVAL OF
THE LASC AND SUBADVISORY AGREEMENTS SO THAT THE TOTAL OPERATING EXPENSES OF THE
SUCCESSOR FUND DO NOT EXCEED THE TOTAL ANNUALIZED OPERATING EXPENSES OF THE FUND
AS OF THE DATE OF THE CLOSING OF THE ACQUISITION. THIS TABLE DOES NOT REFLECT
ANY FEES OR EXPENSES CHARGED BY YOUR VARIABLE PRODUCT OR ITS UNDERLYING SEPARATE
ACCOUNT.
COMPARATIVE FEE AND EXPENSE TABLE FOR THE FUND
(FOR THE ANNUAL PERIOD ENDED DECEMBER 31, 1997)
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
SOGEN VARIABLE OVERSEAS FUND
<TABLE>
<CAPTION>
CURRENT PROPOSED DIFFERENCE
--------- ---------- -----------
<S> <C> <C> <C>
Net Assets $1,376,066
Management Fee .............................................. 0.75% 0.75% 0.00%
Transfer Agent Fee .......................................... 0.00% 0.55% * 0.55%
Other ....................................................... 3.18% 3.30% 0.12%
---- ---- ----
Expense Ratio ............................................... 3.93% 4.60% 0.67%
==== ==== ====
Voluntary Expense Cap ....................................... 1.25% 1.25% 0.00%
12b-1 Fees .................................................. 0.25% 0.25% 0.00%
---- ---- ----
Total Fund Expenses (after reimbursement or waiver) ......... 1.50% 1.50% 0.00%
==== ==== ====
</TABLE>
- ---------
* The Successor Fund will be subject to a flat fee of $7,500.00 for transfer
agency services (Based on assets as of November 30, 1998 this represents
0.18% of the assets of the Fund).
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EXHIBIT E
TRUSTEES OF THE LIBERTY VARIABLE INVESTMENT TRUST
(EFFECTIVE DECEMBER 17, 1998)
Robert J. Birnbaum
Tom Bleasdale
John Carberry
Lora S. Collins
James E. Grinnell
Richard W. Lowry
William E. Mayer
Salvatore Macera
James L. Moody, Jr.
John J. Neuhauser
Thomas E. Stitzel
Robert L. Sullivan
Anne-Lee Verville
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EXHIBIT F
FORM OF INTERIM INVESTMENT MANAGEMENT AGREEMENT
Dear Sirs:
SoGen Variable Funds, Inc. (the "Company"), a Maryland corporation,
consisting of one portfolio, SoGen Overseas Fund (the "Fund"), is engaged in
the business of an investment company. The Company's Board of Directors has
selected you to act as the investment adviser of the Company and to provide
certain other services, as more fully set forth below, and you are willing to
act as such investment adviser and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Company agrees with you as
follows:
1. DELIVERY OF CORPORATE DOCUMENTS. The Company has furnished you with
copies properly certified or authenticated of each of the following:
(a) Articles of Incorporation of the Company, dated September 1, 1995.
(b) By-Laws of the Company as in effect on the date hereof.
(c) Resolutions of the Board of Directors of the Company selecting you as
investment adviser and approving the form of this Agreement.
The Company will furnish you from time to time with copies properly certified
or authenticated, of all amendments of or supplements to the foregoing, if any.
2. ADVISORY SERVICES. You will regularly provide the Company with
investment research, advice and supervision and will furnish continuously an
investment program for the Company's Portfolio consistent with the Portfolio's
investment objective, policies and restrictions set forth in the Company's
Registration statement under the Securities Act of 1933, as amended (as in
effect from time to time, the "Registration Statement"), and the current
prospectus and statement of additional information included therein (the
"Prospectus"). You will recommend what securities shall be purchased for the
Portfolio, what portfolio securities shall be sold by the Portfolio, and what
portion of the Portfolio's assets shall be held uninvested, subject always to
such investment objective, policies and restrictions and to the provisions of
the Company's Articles of Incorporation, By-Laws and the requirements of the
Investment Company Act of 1940, as amended (the "1940 Act"), as each of the
same shall be from time to time in effect. You shall advise and assist the
officers of the Company in taking such steps as are necessary or appropriate to
carry out the decisions of its Board of Directors and any appropriate
committees of such Board regarding the foregoing matters and general conduct of
the investment business of the Company.
3. ALLOCATION OF CHARGES AND EXPENSES. You will pay the compensation and
expenses of all officers of the Company and will furnish, without expense to
the Company, the services of such of your officers and employees as may duly be
elected officers or directors of the Company, subject to their individual
consent to serve and to any limitations imposed by law. You will pay the
Company's office rent and ordinary office expenses and will provide investment,
advisory, research and statistical facilities and all clerical services
relating to research, statistical and investment work. (It is understood that
the foregoing provision does not obligate you to pay for the maintenance of the
Company's general ledger and securities cost ledger or for daily pricing of the
Company's securities, but that it does obligate you, without expense to the
Company, to oversee the provision of such services by the Company's agent.) You
will not be required hereunder to pay any expenses of the Company other than
those above enumerated in this paragraph 3. In particular, but without limiting
the generality of the foregoing, you will not be required to pay hereunder:
brokers' commissions; legal or auditing expenses; taxes or governmental fees;
any direct expenses of issue, sale, underwriting, distribution, redemption or
repurchase of the Company's shares; the expenses of registering or qualifying
securities for sale; the cost of preparing and distributing reports and notices
to stockholders; the fees or disbursements of dividend, disbursing,
shareholder, transfer or other agent; or the fees or disbursements of
custodians of the Company's assets.
4. COMPENSATION OF THE ADVISER. For all services to be rendered and
payments made as provided in paragraphs 2 and 3 hereof, the Portfolio will
promptly pay you a monthly fee, after the last day of each month, at the annual
rate as follows: 0.75 of 1% of the average daily value of each Fund's net
assets during the month. If this Agreement is terminated with respect to the
portfolio as of any day not the last day of a month, the Portfolio's fee shall
be paid as promptly as possible after such date of termination. If this
Agreement shall be effective with respect to the Portfolio for less than the
whole of any month, such fee shall be based on the average daily value of the
net assets of the Portfolio in the part of the month for which this Agreement
shall be effective and shall be that proportion of such fee as the number of
business days (days on
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which the New York Stock Exchange is open all or part of the day for
unrestricted trading) in such period bears to the number of business days in
such month. The average daily value of the net assets of the Portfolio shall in
all cases be based only on business days for the period or month and shall be
computed in accordance with applicable provisions of the Articles of
Incorporation of the Company.
5. PURCHASE AND SALE OF SECURITIES. You shall purchase securities from or
through and sell securities to or through such persons, brokers or dealers
(including any of your affiliates) as you shall deem appropriate in order to
carry out the Company's brokerage policies as set forth from time to time in
the Registration Statement and Prospectus, or as the Board of Directors of the
Company may require from time to time. You acknowledge that you will comply
with all applicable provisions of the 1940 Act, Investment Advisers Act of
1940, as amended (the "Investment Advisers Act") and the Securities Exchange
Act of 1934, as amended, including without limitation the provisions of Section
28(e) thereof, with respect to the allocation of portfolio transactions. When
purchasing securities from or through, and selling securities to or through,
any such persons, brokers or dealers that may be affiliated with you, you shall
comply with all applicable provisions of the 1940 Act, including without
limitation Section 17 thereof and the rules and regulations thereunder, and
Section 206 of the Investment Advisers Act and the rules and regulations
thereunder.
Nothing herein shall prohibit the Board of Directors of the Company from
approving the payment by the Company of additional compensation to others for
consulting services, supplemental research and security and economic analysis.
6. SERVICES TO OTHER ACCOUNTS. The Company understands that you and your
affiliates now act, will continue to act and may in the future act as
investment adviser to fiduciary and other managed accounts, and the Company has
no objection to you and your affiliates so acting, provided that whenever the
Portfolio and one or more other accounts advised by you (the "Managed
Accounts") are prepared to purchase, or desire to sell, the same security,
available investments or opportunities for sales will be allocated in a manner
that is equitable to each entity. In such situations, you may place orders for
the portfolio and each Managed Account simultaneously, and if all such orders
are not filled at the same price, you may cause the portfolio and each Managed
Account to pay or receive the average of the prices at which the orders were
filled for the Portfolio and all Managed Accounts. If all such orders cannot be
executed fully under prevailing market conditions, you may allocate the traded
securities between the Portfolio and the Managed Accounts in a manner you
consider appropriate, taking into account the size of the order placed for the
Portfolio and each such Managed Account and, in the event of a sale, the size
of the pre-sale position of the Portfolio and each such Managed Account, as
well as any other factors you deem relevant. The Company recognizes that in
some cases this procedure may affect adversely the price paid or received by
the Portfolio or the size of the position purchased or sold by the Portfolio.
In addition, the Company understands that the persons employed by you to
provide service to the Company in connection with the performance of your
duties under this Agreement will not devote their full time to that service.
Moreover, nothing contained in this Agreement will be deemed to limit or
restrict your right or the right of any of your affiliates to engage in and
devote time and attention to other businesses or to render services of whatever
kind or nature, including serving as investment adviser to, or employee,
officer, director or trustee of, other investment companies.
7. AVOIDANCE OF INCONSISTENT POSITION. If any occasion should arise in
which you give any advice to clients of yours concerning the shares of the
Company, you will act solely as investment counsel for such clients and not in
any way on behalf of the Company. In connection with purchases or sales of
portfolio securities for the account of the Portfolio, neither you nor any of
your directors, officers or employees will act as a principal.
8. LIMITATION OF LIABILITY OF ADVISER. You shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Company in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on your part
in the performance of your duties or from reckless disregard by you of your
obligations and duties under this Agreement.
9. USE OF NAME, MARKS, AND SYMBOLS. If you cease to act as the Company's
investment adviser, or, in any event, if you so request in writing, the Company
agrees to take all necessary action to change the name of the Company and the
Portfolio to a name not including the term "SoGen". You may from time to time
make available without charge to the Company for its use such marks or symbols
not owned by you, including the logo in the form of a stylized globe or marks
or symbols containing the term "SoGen" or any variation thereof, as you may
consider appropriate. Any such marks or symbols so made available will remain
your property and you shall have the right, upon notice in writing, to require
the Company to cease the use of such mark or symbol at any time.
10. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
remain in force until the earlier of the date the Fund reorganizes as a
separate series of Liberty Variable Investment Trust and March 31, 1999. This
Agreement may, on 60 days' written notice, be terminated with respect to the
Portfolio at any time without the payment of any penalty, by the Board
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of Directors of the Company, by vote of a majority of the outstanding voting
securities of the Company, or by you. This Agreement shall automatically
terminate in the event of its assignment. In interpreting the provisions of
this paragraph 10, the definitions contained in Section 2(a) of the 1940 Act,
as amended, and any Rules thereunder (particularly the definitions of
"interested person", "assignment", "voting security" and "vote of a majority of
the outstanding voting securities") shall be applied.
11. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
12. NOTICES. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, to you or to the Company at 1221 Avenue of
the Americas, New York, New York 10020.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon, either of the parties to do anything in violation of
any applicable laws or regulations.
14. CAPTIONS; COUNTERPARTS. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
If you are in agreement with the foregoing, please sign the form of acceptance
on the accompanying counterpart of this letter and return such counterpart to
the Company, whereupon this letter shall become a binding contract.
Yours very truly,
SOGEN VARIABLE FUNDS, INC.
By:________________________________
The foregoing Agreement is hereby accepted.
SOCIETE GENERALE ASSET MANAGEMENT CORP.
By:___________________________
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************************************APPENDIX************************************
VOTE BY TOUCH TONE PHONE OR THE INTERNET
CALL TOLL FREE: 1-800-690-6903
OR VISIT OUR WEBSITE: www.proxyvote.com
(See above for further instructions to vote by phone or Internet)
SOGEN VARIABLE FUNDS, INC.
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Special Meeting of Shareholders -- December 18, 1998
The undersigned hereby appoints Jean-Marie Eveillard, Philip J. Bafundo,
and Carol Moreno, and each of them, the proxies of the undersigned, with the
power of substitution to each of them, to vote all shares of SoGen Overseas
Variable Fund (the "Fund"), a series of SoGen Variable Funds, Inc. (the
"Company") which the undersigned is entitled to vote at the Special Meeting of
Shareholders of the Company to be held at the offices of the Company, 1221
Avenue of the Americas, 8th Floor, New York, New York 10020, on Friday, December
18, 1998 at 3:00 p.m., and at any adjournments and postponements thereof (the
"Special Meeting").
Unless otherwise specified in the squares provided, the undersigned's
vote will be cast FOR each numbered item below.
The Directors of the Company recommend that you vote FOR the proposal set
forth below.
1. To approve an Agreement and Plan of Reorganization for the Fund, under
which (i) all of the assets and liabilities of the Fund would be
transferred to a new series of Liberty Variable Investment Trust, a
Massachusetts business trust, (ii) shareholders of the Fund would receive
an equal number of shares of a comparable class of the new series of
Liberty Variable Investment Trust in exchange for their shares of the
Fund, and (iii) the Fund would then be liquidated and dissolved.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly be presented at the Special Meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed on the other side.)
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(Continued from other side.)
Every properly signed proxy will be voted in the manner specified hereon and, in
the absence of specification, will be treated as GRANTING authority to vote FOR
the Proposal.
Please sign exactly as you name or names
appear. When signing as attorney, executor,
administrator, trustee or guardian, please
give your full title as such.
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(Signature of Shareholder)
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(Signature of joint owner, if any)
Dated, ______________________________, 1998
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED
