FORM OF AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this 15th day of January, 2001 by and between Nations Fund, Inc. (the
"Company"), a Maryland corporation, for itself and on behalf of its Nations U.S.
Government Bond Fund and Nations Government Securities Fund, and Nations Funds
Trust (the "Trust"), a Delaware business trust, for itself and on behalf of its
Nations Government Securities Fund.
WHEREAS, the Company and the Trust are open-end management investment
companies registered with the Securities and Exchange Commission (the "SEC")
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the parties desire that the Fund Assets and Liabilities (as
defined below) of the Company's Nations U.S. Government Bond Fund and Nations
Government Securities Fund (each an "Acquired Fund" and together, the "Acquired
Funds") be conveyed to and be acquired and assumed, by the Trust's Nations
Government Securities Fund (the "Acquiring Fund") in exchange for shares of
equal U.S. dollar value of such Acquiring Fund which shall thereafter promptly
be distributed to the shareholders of the Acquired Funds in connection with
their liquidation as described in this Agreement and set forth in Schedule A
attached hereto (each such acquisition and assumption of the Acquired Fund's
Fund Assets and Liabilities by the Acquiring Fund a "Reorganization," and,
together, the "Reorganizations"); and
WHEREAS, the parties intend that each Reorganization qualify as a
"reorganization," within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and that the Acquiring Fund and the
Acquired Funds will each be a "party to a reorganization," within the meaning of
Section 368(b) of the Code, with respect to each respective Reorganization.
NOW, THEREFORE, in accordance with the terms and conditions described
herein, the Acquired Funds and Acquiring Fund shall be consolidated as follows:
1. Conveyance of Fund Assets and Liabilities of the Acquired Funds.
---------------------------------------------------------------
(a) Except as provided below, at the Effective Time of the
Reorganization (as defined in Section 8) all assets of every
kind, and all interests, rights, privileges and powers of the
Acquired Funds (the "Fund Assets"), subject to all liabilities
of the Acquired Funds existing as of the Effective Time of the
Reorganization (the "Liabilities"), shall be transferred by
each Acquired Fund to the Acquiring Fund and shall be accepted
and assumed by the Acquiring Fund, as more particularly set
forth in this Agreement, such that at and after the Effective
Time of the Reorganization: (i) all Fund Assets of each
Acquired Fund shall become the assets of the Acquiring Fund;
and (ii) all Liabilities of each Acquired Fund shall attach to
the Acquiring Fund, enforceable against each Acquiring Fund to
the same extent as if originally incurred by such Acquiring
Fund.
(b) It is understood and agreed that the Fund Assets shall include
all property and assets of any nature whatsoever, including,
without limitation, all cash, cash equivalents, securities,
claims (whether absolute or contingent, known or unknown,
accrued or unaccrued) and receivables (including dividend and
interest receivables) owned or exercisable by an Acquired
Fund, and any deferred or prepaid expenses shown as an asset
on such Acquired Fund's books, that the Liabilities of an
Acquired Fund shall include all liabilities, whether known or
unknown, accrued or unaccrued, absolute or contingent, in all
cases, existing at the Effective Time of the Reorganization.
(c) At least fifteen (15) business days prior to the Closing Date
(as defined in Section 8), each Acquired Fund will provide to,
or cause to be provided to, the Acquiring Fund, a schedule of
its securities, other assets and its known liabilities. It is
understood and agreed that each such Acquired Fund may sell
any of the securities or other assets shown
1
<PAGE>
on such schedule prior to the Effective Time of the
Reorganization but will not, without the prior approval of the
Acquiring Fund, acquire any additional securities other than
securities that the Acquiring Fund is permitted to purchase in
accordance with its stated investment objective and policies. At
least ten (10) business days prior to the Closing Date, the
Acquiring Fund will advise each Acquired Fund of any investments
of each such Acquired Fund shown on such schedule that the
Acquiring Fund would not be permitted to hold, pursuant to its
stated investment objective and policies or otherwise. Each
Acquired Fund, if requested by the Acquiring Fund, will dispose
of any such securities prior to the Closing Date to the extent
practicable and consistent with applicable legal requirements.
In addition, if it is determined that the investment portfolios
of the Acquired Funds and Acquiring Fund, when aggregated, would
contain investments exceeding certain percentage limitations
applicable to the Acquiring Fund, an Acquired Fund, if requested
by the Acquiring Fund, will dispose of a sufficient amount of
such investments as may be necessary to avoid violating such
limitations as of the Effective Time of the Reorganization.
(d) The Fund Assets shall be transferred and conveyed to the
Acquiring Fund on the following basis:
(1) In exchange for the transfer of the Fund Assets, the
Acquiring Fund shall simultaneously issue to each Acquired
Fund at the Effective Time of the Reorganization full and
fractional Shares of the Acquiring Fund, as set forth in
Schedule A attached hereto, having an aggregate net asset
value equal to the net value of the Fund Assets minus
Liabilities so conveyed and assumed, all determined in
accordance with this Agreement. In this regard, the number
of full and fractional shares of the Acquiring Fund
delivered to each Acquired Fund shall be determined by
dividing the value of the Fund Assets minus Liabilities,
computed in the manner and as of the time and date set
forth in this Agreement, by the net asset value of one
Acquiring Fund share of such designated class, computed in
the manner and as of the time and date set forth in this
Agreement.
(2) The net asset value of shares to be delivered by the
Acquiring Fund, and the net value of the Fund Assets minus
Liabilities to be conveyed by each Acquired Fund and
assumed by the Acquiring Fund, shall, in each case, be
determined as of the Valuation Time as defined in Section
3. The net asset value of Shares of the Acquiring Fund
shall be computed in accordance with its then current
valuation procedures. In determining the value of the Fund
Assets, each security to be included in the Fund Assets
shall be priced in accordance with the Acquiring Fund's
then current valuation procedures.
2. Liquidation of Each Acquired Fund. At the Effective Time of the
Reorganization, each Acquired Fund shall make a liquidating
distribution to its shareholders as follows: Shareholders of
record of an Acquired Fund shall be credited with full and
fractional shares of the respective Shares that are issued by
the Acquiring Fund in connection with the Reorganization
corresponding to the Acquired Fund shares that are held of
record by the shareholder at the Effective Time of the
Reorganization. Each such shareholder also shall have the right
to receive any unpaid dividends or other distributions which
were declared before the Effective Time of the Reorganization
with respect to the Acquired Fund shares that are held of record
by the shareholder at the Effective Time of the Reorganization,
and the Trust shall record on its books the ownership of the
Acquiring Fund shares by such shareholders (the "Transferor
Record Holders"). All of the issued and outstanding shares of an
Acquired Fund at the Effective Time of the Reorganization shall
be redeemed and canceled on the books of the Company at such
time. As soon as reasonably possible after the Effective Time of
the Reorganization, the Company shall wind up the affairs of
each Acquired Fund
2
<PAGE>
and shall file any final regulatory reports, including but not
limited to any Form N-SAR and Rule 24f-2 filings, with respect
to each Acquired Fund, and also shall take all other steps as
are necessary and proper to effect the termination or
declassification of the Acquired Funds in accordance with all
applicable laws.
3. Valuation Time. The "Valuation Time" shall be the time as of
which the net asset value of each class of shares of the
Acquired Funds and the Acquiring Fund is determined pursuant to
their respective valuation procedures on the Closing Date or
such earlier or later time as may be mutually agreed to in
writing by the parties hereto.
4. Certain Representations, Warranties and Agreements of the
Company on behalf of the Acquired Funds. The Company, on behalf
of itself and, where appropriate, each Acquired Fund, represents
and warrants to, and agrees with, the Trust, on behalf of the
Acquiring Fund as follows, with such representations, warranties
and agreements made on behalf of the Acquired Funds on a several
(and not joint, or joint and several) basis:
(a) The Company is a corporation, duly incorporated, validly
existing and in good standing under the laws of the State of
Maryland. The Company is registered with the SEC as an
open-end management investment company under the 1940 Act,
and such registration is in full force and effect.
(b) The Company has the power to own all of its properties and
assets and to consummate the transactions contemplated
herein, and has all necessary federal, state and local
authorizations to carry on its business as now being
conducted and to consummate the transactions contemplated by
this Agreement.
(c) This Agreement has been duly authorized by the Board of
Directors of the Company on behalf of each Acquired Fund,
and has been executed and delivered by duly authorized
officers of the Company, and represents a valid and binding
contract, enforceable in accordance with its terms, subject
as to enforcement to bankruptcy, insolvency, reorganization,
arrangement, moratorium, and other similar laws of general
applicability relating to or affecting creditors' rights and
to general equity principles. The execution and delivery of
this Agreement does not, and, subject to the approval of
shareholders referred to in Section 7, the consummation of
the transactions contemplated by this Agreement will not,
violate the Articles of Incorporation or the By-Laws of the
Company, or any material agreement or arrangement to which
the Company is a party or by which it is bound.
(d) Each Acquired Fund has elected to qualify and has qualified
as a regulated investment company under Part I of Subchapter
M of Subtitle A, Chapter 1, of the Code, as of and since its
first taxable year; each has been a regulated investment
company under such Part of the Code at all times since the
end of its first taxable year when it so qualified; and each
qualifies and shall continue to qualify as a regulated
investment company for its taxable year ending upon its
liquidation.
(e) The Company has valued, and will continue to value, the
portfolio securities and other assets of the Acquired Funds
in accordance with applicable legal requirements.
(f) The combined proxy statement/prospectus and form of proxy
included within the Trust's registration statement on Form
N-14 (the "N-14 Registration Statement"), from its effective
date with the SEC through the time of the shareholders
meeting referred to in Section 6 and the Effective Time of
the Reorganization, insofar as they relate to the Company,
or the Acquired Funds (i) shall comply in all material
respects with the provisions of the Securities Act of 1933,
as amended (the "1933 Act"), the Securities Exchange Act of
1934, as amended (the "1934 Act") and the 1940 Act, the
rules and regulations thereunder, and applicable state
securities laws, and (ii) shall not contain any
3
<PAGE>
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements made therein not misleading.
(g) All of the issued and outstanding shares of the Company's
Acquired Funds have been validly issued and are fully paid
and non-assessable, and were offered for sale and sold in
conformity with the registration requirements of all
applicable federal and state securities laws.
(h) The Company shall operate the business of the Acquired Funds
in the ordinary course between the date hereof and the
Effective Time of the Reorganization, except that the
Company shall complete all measures in respect of the
Acquired Funds prior to the Effective Time of the
Reorganization to ensure that each Reorganization qualifies
as a "reorganization" within the meaning of Section 368(a)
of the Code, regardless of whether such measures are in the
ordinary course. It is understood that such ordinary course
of business will include the declaration and payment of
customary dividends and distributions and any other
dividends and distributions deemed advisable in anticipation
of the Reorganizations. Notwithstanding anything herein to
the contrary, the Company shall take all appropriate action
necessary in order for the Company to receive the opinion
provided for in Sections 9(f), (g) and (h).
(i) At the Effective Time of the Reorganization, the Company's
Acquired Funds will have good and marketable title to the
Fund Assets and full right, power and authority to assign,
deliver and otherwise transfer such assets.
(j) At the Effective Time of the Reorganization, all federal and
other tax returns and reports of the Acquired Funds required
by law to have been filed by such time shall have been
filed, and all federal and other taxes shall have been paid
so far as due, or provision shall have been made for the
payment thereof and, to the best knowledge of management of
the Company, no such return or report shall be currently
under audit and no assessment shall have been asserted with
respect to such returns or reports.
5. Certain Representations, Warranties and Agreements of Funds
Trust on behalf of the Acquiring Fund. The Trust, on behalf of
itself and where appropriate, the Acquiring Fund, represents and
warrants to, and agrees with, the Company on behalf of each
Acquired Fund as follows, with such representations, warranties
and agreements made on behalf of the Acquiring Fund on a several
(and not joint, or joint and several) basis:
(a) The Trust is a business trust duly created, validly existing
and in good standing under the laws of the State of Delaware
and is registered with the SEC as an open-end management
investment company under the 1940 Act and such registration
is in full force and effect.
(b) The Trust has the power to own all of its properties and
assets and to consummate the transactions contemplated
herein, and has all necessary federal, state and local
authorizations to carry on its business as now being
conducted and to consummate the transactions contemplated by
this Agreement.
(c) This Agreement has been duly authorized by the Board of
Trustees of the Trust on behalf of the Acquiring Fund, and
executed and delivered by duly authorized officers of the
Trust, and represents a valid and binding contract,
enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights and
to general equity principles. The execution and delivery of
this Agreement does not, and the consummation of the
transactions contemplated by this Agreement will not,
violate the Amended and Restated Declaration of Trust of the
Trust or any material agreement or arrangement to which it
is a party or by which it is bound.
4
<PAGE>
(d) The Acquiring Fund has elected to qualify and has qualified
as a regulated investment company under Part I of Subchapter
M of Subtitle A, Chapter 1, of the Code, as of and since its
first taxable year; has been a regulated investment company
under such Part of the Code at all times since the end of
its first taxable year when it so qualified; and qualifies
and shall continue to qualify as a regulated investment
company for its current taxable year.
(e) The Trust has valued, and will continue to value, the
portfolio securities and other assets of the Acquiring Fund
in accordance with applicable legal requirements.
(f) The N-14 Registration Statement, from its effective date
with the SEC through the time of the shareholders meeting
referred to in Section 7 and at the Effective Time of the
Reorganization, insofar as it relates to the Trust, or the
Acquiring Fund, or the Primary A Shares, Investor A Shares,
Investor B Shares or Investor C Shares of the Acquiring Fund
to be issued pursuant thereto (i) shall comply in all
material respects with the provisions of the 1933 Act, the
1934 Act and the 1940 Act, the rules and regulations
thereunder, and state securities laws, and (ii) shall not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements made therein not
misleading.
(g) The shares of the Acquiring Fund to be issued and delivered
to the Acquired Funds for the account of the shareholders of
each Acquired Fund, pursuant to the terms hereof, shall have
been duly authorized as of the Effective Time of the
Reorganization and, when so issued and delivered, shall be
duly and validly issued, fully paid and non-assessable, and
no shareholder of the Acquiring Fund shall have any
preemptive right of subscription or purchase in respect
thereto.
(h) All of the issued and outstanding shares of the Acquiring
Fund have been validly issued and are fully paid and
non-assessable, and were offered for sale and sold in
conformity with the registration requirements of all
applicable federal and state securities laws.
(i) The Trust shall operate the business of the Acquiring Fund
in the ordinary course between the date hereof and the
Effective Time of the Reorganization, it being understood
that such ordinary course of business will include the
declaration and payment of customary dividends and
distributions and any other dividends and distributions
deemed advisable in anticipation of the Reorganizations.
Notwithstanding anything herein to the contrary, the Trust
shall take all appropriate action necessary in order for the
Trust to receive the opinion provided for in Sections 10(d),
(e) and (f).
(j) At the Effective Time of the Reorganization, all federal and
other tax returns and reports of the Acquiring Fund required
by law to have been filed by such time shall have been
filed, and all federal and other taxes shall have been paid
so far as due, or provision shall have been made for the
payment thereof and, to the best knowledge of management of
the Trust, no such return or report shall be currently under
audit and no assessment shall have been asserted with
respect to such returns or reports.
6. Regulatory Filings. As soon as practicable, the Trust shall file
the N-14 Registration Statement with the SEC, and, where
required, with appropriate state securities regulatory
authorities.
7. Shareholder Action. After the effective date of the N-14
Registration Statement the Company shall hold a meeting(s) of
the shareholders of each Acquired Fund for the purpose of
considering and voting upon:
(a) approval of this Agreement and the Reorganization
contemplated hereby; and
5
<PAGE>
(b) such other matters as may be determined by the Board of
Directors of the Company.
8. Closing Date, Effective Time of the Reorganization. The "Closing
Date" shall be June 8, 2001, or such earlier or later date as
may be mutually agreed in writing by the parties hereto.
Delivery of the Fund Assets and the shares of the Acquiring Fund
to be issued pursuant to Section 1 and the liquidation of the
Acquired Funds pursuant to Section 2 shall occur on the day
following the Closing Date, whether or not such day is a
business day, or on such other date, and at such place and time,
as may be mutually agreed in writing, by the parties hereto. The
date and time at which such actions are taken are referred to
herein as the "Effective Time of the Reorganization." To the
extent any Fund Assets are, for any reason, not transferred at
the Effective Time of the Reorganization, the Company shall
cause such Fund Assets to be transferred in accordance with this
Agreement at the earliest practicable date thereafter.
9. Conditions to the Trust's Obligations on Behalf of the Acquiring
Fund. The obligations of the Trust hereunder shall be subject to
the following conditions precedent:
(a) This Agreement and the Reorganization shall have been
approved by the Board of Directors of the Company and by a
requisite vote of the shareholders of the Acquired Funds in
the manner required by the Company's Articles of
Incorporation, By-Laws, applicable law and this Agreement.
(b) All representations and warranties of the Company made in
this Agreement shall be true and correct in all material
respects as if made at and as of the Valuation Time and the
Effective Time of the Reorganization.
(c) The Company shall have delivered to the Trust a statement of
assets and liabilities of each Acquired Fund, showing the
tax basis of such assets for federal income tax purposes by
lot and the holding periods of such assets, as of the
Valuation Time.
(d) The Company shall have duly executed and delivered to the
Trust such bills of sale, assignments, certificates and
other instruments of transfer ("Transfer Documents") as the
Trust may deem necessary or desirable to transfer all of the
Acquired Funds' rights, title and interest in and to the
Fund Assets.
(e) The Company shall have delivered a certificate executed in
its name by an appropriate officer, in a form reasonably
satisfactory to the Trust and dated as of the Closing Date,
to the effect that the representations and warranties of the
Company on behalf of each Acquired Fund made in this
Agreement are true and correct at and as of the Valuation
Time and that, to the best of its knowledge, the Fund Assets
include only assets which the Acquiring Fund may properly
acquire under its investment objectives, policies and
limitations and may otherwise be lawfully acquired by such
Acquiring Fund.
(f) The Company shall have received an opinion of Morrison &
Foerster LLP, as counsel to the Company in form reasonably
satisfactory to the Trust and dated the Closing Date,
substantially to the effect that (i) the Company is a
corporation duly created and validly existing under the laws
of the State of Maryland; (ii) the Agreement has been duly
authorized, executed and delivered by the Company and such
execution and delivery of the Agreement did not, and the
consummation of the transactions contemplated by this
Agreement will not, violate the Articles of Incorporation or
By-Laws of the Company or any material contract known to
such counsel to which the Company is a party or by which it
is bound; and (iii) no consent, approval, authorization or
order of any court or governmental authority is required for
the consummation by the Company of the transactions
contemplated by this Agreement, except such as have been
obtained under the 1933 Act, the 1934 Act, the 1940 Act, the
rules and regulations under those Acts and such as may be
required under the state
6
<PAGE>
securities laws or such as may be required subsequent to the
Effective Time of the Reorganization.
(g) The Company shall have received an opinion of Richards,
Layton & Finger P.A., as special Delaware counsel to the
Company, in form and substance reasonably satisfactory to
the Trust and dated as of the Closing Date, substantially to
the effect that this Agreement has been duly authorized by
the Trust, and, assuming due authorization, execution and
delivery of this Agreement by the Company, represents a
legal, valid and binding contract, enforceable in accordance
with its terms, subject to the effect of bankruptcy,
insolvency, moratorium, fraudulent conveyance and transfer
and similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto, and
further subject to the application of equitable principles
in any proceeding whether at law or in equity or with
respect to the enforcement of provisions of the Agreement
and the effect of judicial decisions which have held that
certain provisions are unenforceable when their enforcement
would violate an implied covenant of good faith and fair
dealing or would be commercially unreasonable or when
default under the Agreement is not material. In rendering
such opinion, such counsel may (i) make assumptions
regarding the authenticity, genuineness and/or conformity of
documents and copies thereof without independent
verification thereof, (ii) limit such opinion to applicable
state law, and (iii) rely on certificates officers or
Directors of the Company.
(h) The Company shall have received an opinion of Morrison &
Foerster LLP, upon which the Acquiring Fund and its
shareholders may rely, based upon representations made in
certificates provided by the Company, and/or its affiliates
and/or principal shareholders of the Acquired Funds to
Morrison & Foerster LLP, addressed to the Company in a form
reasonably satisfactory to it, and dated as of the Closing
Date, substantially to the effect that, for federal income
tax purposes, each Reorganization will qualify as a
"reorganization" within the meaning of Section 368(a) of the
Code, and the Acquired Funds and the Acquiring Fund will be
a party to a "reorganization," within the meaning of Section
368(b) of the Code, with respect to the Reorganizations.
(i) The N-14 Registration Statement shall have become effective
under the 1933 Act and no stop order suspending the
effectiveness shall have been instituted, or to the
knowledge of the Company, contemplated by the SEC.
(j) No action, suit or other proceeding shall be threatened or
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 herein.
(k) The SEC shall not have issued any unfavorable advisory
report under Section 25(b) of the 1940 Act nor instituted
any proceeding seeking to enjoin consummation of the
transactions contemplated by this Agreement under Section
25(c) of the 1940 Act.
(l) The Company on behalf of each Acquired Fund shall have
performed and complied in all material respects with each of
its agreements and covenants required by this Agreement to
be performed or complied with by it prior to or at the
Valuation Time and the Effective Time of the Reorganization.
(m) The Company shall have received a duly executed instrument
whereby the Acquiring Fund assumes all of the liabilities of
the Company's Acquired Funds.
(n) Prior to the Valuation Time, each Acquired Fund shall have
declared a dividend or dividends, with a record date and
ex-dividend date prior to the Valuation Time, which,
together with all previous dividends, shall have the effect
of distributing to its shareholders all of its "net
investment company taxable income" (as defined in the
7
<PAGE>
Code and computed without regard to any deduction for
dividends paid), if any, for all taxable periods or years
ending on or before the Effective Time of the
Reorganization, and all of its net capital gain, if any,
realized in taxable periods of years ending on or before
Effective Time of the Reorganization.
10. Conditions to the Company's Obligations on behalf of the
Acquired Funds. The obligations of the Company hereunder shall
be subject to the following conditions precedent:
(a) This Agreement and the Reorganization shall have been
approved by the Board of Trustees of the Trust on behalf of
the Acquiring Fund and by a vote of the shareholders of the
Acquired Funds in the manner required by its Amended and
Restated Declaration of Trust, applicable law and this
Agreement.
(b) All representations and warranties of the Trust made in this
Agreement shall be true and correct in all material respects
as if made at and as of the Valuation Time and the Effective
Time of the Reorganization.
(c) The Trust shall have delivered a certificate executed in its
name by an appropriate officer, in a form reasonably
satisfactory to the Company and dated as of the Closing
Date, to the effect that the representations and warranties
of the Acquiring Fund made in this Agreement are true and
correct at and as of the Valuation Time.
(d) The Trust shall have received an opinion of Morrison &
Foerster LLP, as counsel to the Company in form reasonably
satisfactory to the Company and dated the Closing Date,
substantially to the effect that (i) the Trust is a business
trust duly created and validly existing under the laws of
the State of Delaware; (ii) the shares of the Acquiring Fund
to be delivered to the Company's Acquired Funds as provided
for by this Agreement are duly authorized and upon delivery
will be validly issued, fully paid and non-assessable by the
Trust; (iii) this Agreement has been duly authorized,
executed and delivered by the Trust and the authorization,
execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated by this
Agreement will not, violate the Amended and Restated
Declaration of Trust of the Trust or any material contract
known to such counsel to which the Trust is a party or by
which it is bound; and (v) no consent, approval,
authorization or order of any court or governmental
authority is required for the consummation by the Trust of
the transactions contemplated by this Agreement, except such
as have been obtained under the 1933 Act, the 1934 Act, the
1940 Act, the rules and regulations under those Acts and
such as may be required by state securities laws or such as
may be required subsequent to the Effective Time of the
Reorganization.
(e) The Trust shall have received an opinion of Richards, Layton
& Finger P.A., as special Delaware counsel to the Trust, in
form and substance reasonably satisfactory to the Company
and dated as of the Closing Date, substantially to the
effect that this Agreement has been duly authorized by the
Trust, and, assuming due authorization, execution and
delivery of this Agreement by the Company, represents a
legal, valid and binding contract, enforceable in accordance
with its terms, subject to the effect of bankruptcy,
insolvency, moratorium, fraudulent conveyance and transfer
and similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto, and
further subject to the application of equitable principles
in any proceeding whether at law or in equity or with
respect to the enforcement of provisions of the Agreement
and the effect of judicial decisions which have held that
certain provisions are unenforceable when their enforcement
would violate an implied covenant of good faith and fair
dealing or would be commercially unreasonable or when
default under the Agreement is not material. In rendering
such opinion, such counsel may (i) make assumptions
regarding the authenticity, genuineness and/or conformity of
documents
8
<PAGE>
and copies thereof without independent verification thereof,
(ii) limit such opinion to applicable state law, and (iii)
rely on certificates officers or Trustees of the Trust.
(f) The Trust shall have received an opinion of Morrison &
Foerster LLP, upon which each Acquired Fund and its
shareholders may rely, based upon representations made in
certificates provided by the Trust, and/or its affiliates
and/or principal shareholders of the Acquiring Fund to
Morrison & Foerster LLP, addressed to the Trust in a form
reasonably satisfactory to it, and dated as of the Closing
Date, substantially to the effect that, for federal income
tax purposes, each Reorganization will qualify as a
"reorganization" within the meaning of Section 368(a) of the
Code, and the Acquired Funds and the Acquiring Fund will
each be a party to a "reorganization," within the meaning of
Section 368(b) of the Code, with respect to the
Reorganizations.
(g) The N-14 Registration Statement shall have become effective
under the 1933 Act and no stop order suspending such
effectiveness shall have been instituted or, to the
knowledge of the Trust, contemplated by the SEC.
(h) No action, suit or other proceeding shall be threatened or
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 herein.
(i) The SEC shall not have issued any unfavorable advisory
report under Section 25(b) of the 1940 Act nor instituted
any proceeding seeking to enjoin consummation of the
transactions contemplated by this Agreement under Section
25(c) of the 1940 Act.
(j) The Trust on behalf of the Acquiring Fund shall have
performed and complied in all material respects with each of
its agreements and covenants required by this Agreement to
be performed or complied with by it prior to or at the
Valuation Time and the Effective Time of the Reorganization.
11. Tax Matters
(a) The Company and the Trust hereby represent and warrant and
that each shall use its best efforts to cause each
Reorganization to qualify, and will not (whether before or
after consummation of the Reorganizations) take any actions
that could prevent each Reorganization from qualifying, as a
"reorganization" under the provisions of Section 368 of the
Code.
(b) Except where otherwise required by law, the parties shall
not take a position on any tax returns inconsistent with the
treatment of each Reorganization for tax purposes as a
"reorganization," within the meaning of Section 368(a) of
the Code and the Acquiring Fund and each Acquired Fund will
comply with the record keeping and information filing
requirements of Section 1.368-3 of the Treasury Regulation
in accordance therewith.
12. Survival of Representations and Warranties. The representations
and warranties of the Trust on behalf of the Acquiring Fund set
forth in this Agreement shall survive the delivery of the Fund
Assets to the Acquiring Fund and the issuance of the shares of
the Acquiring Fund at the Effective Time of the Reorganization
to Acquired Fund shareholders.
13. Termination of Agreement. This Agreement may be terminated by a
party at or, in the case of Subsection 13(c), below, at any time
prior to, the Effective Time of the Reorganization by a vote of
a majority of its Board members as provided below:
(a) By the Trust on behalf of the Acquiring Fund if the
conditions set forth in Section 9 are not satisfied as
specified in said Section;
9
<PAGE>
(b) By the Company on behalf of its Acquired Funds if the
conditions set forth in Section 10 are not satisfied as
specified in said Section;
(c) By mutual written consent of the Trust and the Company.
14. Governing Law. This Agreement and the transactions contemplated
hereby shall be governed, construed and enforced in accordance
with the laws of the State of Delaware, except to the extent
preempted by federal law.
15. Brokerage Fees and Expenses.
(a) The Trust represents and warrants that there are no brokers
or finders entitled to receive any payments in connection
with the transactions provided for herein.
(b) Banc of America Advisors, Inc. and/or its affiliates will be
responsible for the expenses related to entering into and
carrying out the provisions of this Agreement, whether or
not the transactions contemplated hereby are consummated.
16. Amendments
----------
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the
authorized officers of the Company, acting on behalf of the
Acquired Funds or the Trust, acting on behalf of the Acquiring
Fund; provided, however, that following the meeting of the
shareholders of an Acquired Fund, no such amendment may have the
effect of changing the provisions for determining the number of
shares of the Acquiring Fund to be issued to the Transferor
Record Holders under this Agreement to the detriment of such
Transferor Record Holders, or otherwise materially and adversely
affecting an Acquired Fund, without such Acquired Fund obtaining
its shareholders' further approval:
(a) At any time prior to or (to the fullest extent permitted by
law) after approval of this Agreement by the shareholders of
an Acquired Fund, the Company on behalf of an Acquired Fund,
may waive any breach by the Trust, on behalf of the
Acquiring Fund, or the failure to satisfy any of the
conditions to its obligations (such waiver to be in writing
and signed by an officer of such registered investment
companies);
(b) At any time prior to or (to the fullest extent permitted by
law) after approval of this Agreement by the shareholders of
an Acquired Fund, the Trust, on behalf of the Acquiring
Fund, may waive any breach by the Company on behalf of an
Acquired Fund, or the failure to satisfy any of the
conditions to either of their obligations (such waiver to be
in writing and signed by an officer of such registered
investment companies).
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers designated below as of the date first
written above.
NATIONS FUND, INC.
On behalf of the Acquired Funds identified on Schedule A
By:____________________________________________
Richard H. Blank, Jr.
Secretary and Treasurer
NATIONS FUNDS TRUST
On behalf of the Acquiring Fund identified on Schedule A
By:____________________________________________
Richard H. Blank, Jr.
Secretary and Treasurer
11
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
<S> <C>
SHAREHOLDERS OWNING SHARES OF THE FOLLOWING WOULD RECEIVE SHARES OF THE FOLLOWING
ACQUIRED FUND AND CLASSES OF THE COMPANY: ACQUIRING FUND AND CLASSES OF THE TRUST:
Nations U.S. Government Bond Fund -> Nations Government Securities Fund
Primary A Shares Primary A Shares
Investor A Shares Investor A Shares
Investor B Shares Investor B Shares
Investor C Shares Investor C Shares
Nations Government Securities Fund ->
Primary A Shares
Investor A Shares
Investor B Shares
Investor C Shares
</TABLE>
12
