THE EBI FUNDS, INC.
RELATIVE RETURN BOND PORTFOLIO
1315 Peachtree Street, N.E.
Atlanta, Georgia 30309
November 1, 1995
Dear Shareholder:
The Board of Directors of The EBI Funds, Inc. (the "Fund")
has recently reviewed and unanimously endorsed a proposal for
reorganization of the Relative Return Bond Portfolio (the
"Portfolio"), a series of the Fund, which they judge to be in the
best interests of its shareholders. This proposal calls for
combining the assets of the Portfolio with Income Portfolio, a
separate series of the Fund, which has similar investment
objectives.
We have therefore called a Special Meeting of Shareholders to
be held on December 14, 1995 to consider this transaction. WE
STRONGLY INVITE YOUR PARTICIPATION BY ASKING YOU TO REVIEW,
COMPLETE AND RETURN YOUR PROXY AS SOON AS POSSIBLE.
As a result of this transaction, your Portfolio would be
combined with Income Portfolio, and you would become a
shareholder of Income Portfolio, receiving shares of Income
Portfolio having an aggregate net asset value equal to the
aggregate net asset value of your investment in the Portfolio.
No sales charge will be imposed in the transaction and the
Closing of the transaction will be conditioned upon receiving an
opinion of counsel to the effect that the proposed transaction
will qualify as a tax-free reorganization for Federal income tax
purposes.
Detailed information about the proposed transaction and the
reasons for it are contained in the enclosed materials. Please
exercise your right to vote by completing, dating and signing the
enclosed proxy card. A self-addressed, postage-paid envelope has
been enclosed for your convenience. IT IS VERY IMPORTANT THAT
YOU VOTE AND THAT YOUR VOTING INSTRUCTIONS BE RECEIVED NO LATER
THAN DECEMBER 13, 1995.
NOTE: You may receive more than one proxy package if you
hold Portfolio shares in more than one account. You must return
separate proxy cards for separate holdings. We have provided a
postage-paid return envelope for each, which requires no postage
if mailed in the United States.
Sincerely,
Hubert L. Harris, Jr.
President
<PAGE>
THE EBI FUNDS, INC.
RELATIVE RETURN BOND PORTFOLIO
1315 Peachtree Street, N.E.
Atlanta, Georgia 30309
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on December 14, 1995
To the shareholders of
Relative Return Bond Portfolio
of The EBI Funds, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of
Shareholders of Relative Return Bond Portfolio (the "Portfolio"),
a series of The EBI Funds, Inc. (the "Fund"), will be held at the
offices of the Fund at 1315 Peachtree Street, N.E., Atlanta,
Georgia 30309, at 10:00 a.m.(local time), on December 14, 1995,
for the following purposes:
1. To consider and vote on an Agreement and Plan of
Reorganization providing for the acquisition of all or
substantially all of the assets of the Portfolio by Income
Portfolio, in exchange for shares of Income Portfolio and the
assumption by Income Portfolio of certain identified liabilities
of the Portfolio, and for the distribution of such Income
Portfolio shares to shareholders of the Portfolio and the
subsequent termination and dissolution of the Portfolio; and
2. To transact such other business as may properly come
before the meeting, or any adjournment or adjournments thereof.
The Board of Directors of the Fund has fixed the close of
business on October 31, 1995 as the record date for determination
of shareholders entitled to notice of, and to vote at, the
meeting.
EACH SHAREHOLDER WHO DOES NOT EXPECT TO ATTEND THE MEETING
IN PERSON IS REQUESTED TO DATE, FILL IN, SIGN AND RETURN PROMPTLY
THE ENCLOSED FORM OF PROXY IN THE ENCLOSED ENVELOPE, WHICH NEEDS
NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
TONY D. GREEN
Secretary
YOUR PROMPT ATTENTION TO THE ENCLOSED FORM OF PROXY WILL
HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
November 1, 1995
<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be
of assistance to you and may help avoid the time and expense
involved in validating your vote if you fail to sign your proxy
card properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it
appears in the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of
the party signing should conform exactly to a name shown in the
registration.
3. ALL OTHER ACCOUNTS: The capacity of the individual
signing the proxy card should be indicated unless it is reflected
in the form of registration. For example:
Registration Valid Signature
____________ _______________
Corporate Accounts
(1) ABC Corp. . . . . . . . . . . . . . . . John Doe,
Treasurer
(2) ABC Corp. c/o John Doe . . . . . . . . . John Doe,
Treasurer
(3) ABC Corp. Profit Sharing Plan . . . . . John Doe,
Trustee
Trust Accounts
(1) ABC Trust . . . . . . . . . . . . . . . Jane B. Doe,
Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78 . . . . . . . . . . . . . Jane B. Doe,
Trustee
Custodial or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr., UGMA . . . . . John B. Smith
(2) John B. Smith . . . . . . . . . . . . . John B. Smith,
Jr., Executor
<PAGE>
THE EBI FUNDS, INC.
RELATIVE RETURN BOND PORTFOLIO
1315 Peachtree Street, N.E.
Atlanta, Georgia 30309
PROXY STATEMENT/PROSPECTUS
November 1, 1995
This Proxy Statement/Prospectus is being furnished to
shareholders of Relative Return Bond Portfolio (the "Portfolio"),
a series of The EBI Funds, Inc. (the "Fund"), in connection with
a proposed reorganization (the "Reorganization") in which all or
substantially all of the assets of the Portfolio would be
acquired by Income Portfolio, a separate series of the Fund, in
exchange for shares of Income Portfolio and the assumption of
certain identified liabilities of the Portfolio. The shares of
Income Portfolio thereby received would then be constructively
distributed to shareholders of the Portfolio, and the Portfolio
would be completely liquidated and dissolved. As a result of the
Reorganization, each shareholder of the Portfolio would receive
that number of full and fractional shares of Income Portfolio
having an aggregate net asset value equal to the aggregate net
asset value of such shareholder's shares of the Portfolio held as
of the close of business on the closing date of the
Reorganization. No sales charge will be imposed on the
transaction.
The EBI Funds, Inc. is an open-end, diversified management
investment company organized as a Maryland corporation. The
investment objective of Income Portfolio is to achieve a high
total return on investment through capital appreciation and
current income, without regard to Federal income tax
considerations. During normal market conditions at least 65% of
Income Portfolio's assets will consist of income producing
securities. Securities in which Income Portfolio invests consist
primarily of U.S. Government obligations and carefully selected
fixed income corporate obligations. The Income Portfolio may
invest up to 35% of its assets in mortgage-backed securities.
There can be no assurance that the investment objective of Income
Portfolio will be achieved.
The investment objective, policies and restrictions of
Income Portfolio (and consequently, the risks of investing in it)
are substantially the same as those of the Portfolio, but differ
in certain respects. For a comparative discussion of these
differences, see "Comparison of Investment Policies and
Restrictions, and Risk Factors" in this Proxy
Statement/Prospectus.
This Proxy Statement/Prospectus, which should be retained
for future reference, sets forth concisely certain information
about Income Portfolio that a prospective investor should know
before investing. For a more detailed discussion of the
investment objectives, policies and restrictions of the Portfolio
and Income Portfolio, and the risks of investing in either, see
the prospectus for the Fund, dated May 1, 1995, as supplemented
October 1, 1995 and October 25, 1995, which is included herewith
and incorporated herein by reference. The Fund's 1994 Annual
Report is also included herewith and incorporated herein by
reference. A Statement of Additional Information dated November
1, 1995, containing additional information about the
Reorganization and the parties thereto has been filed with the
Securities and Exchange Commission and is incorporated by
reference into this Proxy Statement/Prospectus. A copy of such
Statement is available upon request and without charge by writing
to the Fund at the address above or by calling the Fund at
1-800-972-9030.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Acquisition of the assets of
RELATIVE RETURN BOND PORTFOLIO
by and in exchange for shares of
INCOME PORTFOLIO
Proxy Statement/Prospectus
November 1, 1995
TABLE OF CONTENTS
1. Synopsis
2. Fees and Expenses
3. Comparison of Investment Policies and
Restrictions, and Risk Factors
4. Information About the Reorganization
5. Comparative Information on
Shareholder Rights
6. Information About the Portfolios
Other Business
Voting Information
Appendix A: Agreement and Plan of Reorganization
Appendix B: Proxy
<PAGE>
1. Synopsis.
The following is a summary of certain information contained
in this Proxy Statement/Prospectus. This summary is qualified by
reference to the more complete information contained elsewhere in
this Proxy Statement/Prospectus, the prospectus of the Fund and
the Agreement and Plan of Reorganization attached to this Proxy
Statement/Prospectus as Appendix A.
The Proposed Reorganization. The Board of Directors of the
Fund, including the Directors who are not "interested persons" of
the Fund (the "Independent Directors"), as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), has
unanimously approved an Agreement and Plan of Reorganization (the
"Plan") providing for the acquisition of all or substantially all
of the assets of the Portfolio by Income Portfolio, in exchange
for shares of Income Portfolio and the assumption by Income
Portfolio of certain identified liabilities of the Portfolio.
See "Information About the Reorganization" regarding details of
the transaction. The Board of Directors of the Fund recommends
approval of the Plan effecting the Reorganization, and therefore
has submitted the Reorganization for approval by shareholders of
the Portfolio at a Special Meeting of Shareholders to be held on
December 14, 1995 (the "Meeting").
Approval of the Reorganization with respect to the Portfolio
requires the vote of a majority of the Portfolio's outstanding
shares. See "Voting Information."
Investment Objectives, Policies and Restrictions. The
investment objective of the Income Portfolio is to achieve a high
total return on investment through capital appreciation and
current income, without regard to federal income tax
considerations. Total return includes a combination of interest
income from the portfolio's underlying securities, appreciation
in the value of these securities and gains realized upon the sale
of such securities.
The investment objective of the Portfolio is to achieve a
high total return on investment through current income and
capital appreciation, without regard to federal income tax
considerations.
While the investment objectives, policies and restrictions
of the Portfolio and Income Portfolio (and consequently, the
attendant risk of investing in either the Portfolio or Income
Portfolio) are substantially the same, there are certain
differences between the Portfolio and Income Portfolio, which are
outlined herein. See "Comparison of Investment Policies and
Restrictions, and Risk Factors." For further discussion of the
investment objectives, policies, and restrictions applicable to
the Portfolio and Income Portfolio, see "Investment Objectives
and Policies" in the accompanying prospectus of the Fund.
Purchase, Redemption and Exchange Procedures. Shares of
Income Portfolio and the Portfolio are offered at net asset value
without a sales charge, but are subject to a contingent deferred
sales charge ("CDSC") of a set percentage of the dollar amount
subject thereto during the first year after purchase. The set
percentage for the Income Portfolio is 0.60%, and for the
Portfolio is 0.50%. Shares of the Income Portfolio
constructively distributed for shares of the Portfolio upon the
reorganization contemplated herein will retain a CDSC rate of
0.50%. Purchases of both Income Portfolio and the Portfolio may
be made through a professional financial consultant whose firm
has a Selling/Servicing Agreement with INVESCO Services, Inc.
Shares of Income Portfolio and the Portfolio may be redeemed
through a broker-dealer, by mail, or by telephone in accordance
with procedures described in the Fund's prospectus.
Investors in the Portfolio and Income Portfolio may exchange
shares of their respective portfolio held for at least 15 days
for shares of the other portfolios of the Fund without payment of
a CDSC; the sales charge will be assessed, if applicable, when
the shareholder redeems such shares or has them repurchased
without a corresponding purchase of shares in another portfolio.
The exchange privilege is limited to residents of states in which
the shares of the portfolio being acquired are registered for
sale.
The Portfolio and Income Portfolio each requires a minimum
initial investment of at least $25,000. Subsequent purchases of
shares of the Portfolio and Income Portfolio are subject to a
minimum investment requirement of $1,000 ($250 for an IRA
Account). For further discussion on purchases, redemptions and
exchange procedures, see "The EBI Funds, Inc. Shareholder
Services Guide" in the accompanying prospectus.
Tax Consequences. As a condition of closing, the Portfolio
and Income Portfolio will obtain an opinion of counsel, based on
certain facts, assumptions and representations made by the
Portfolio and Income Portfolio, to the effect that the
Reorganization will qualify as a tax-free reorganization for
Federal income tax purposes. See "Information About the
Reorganization."
Dividend Policy. Both the Portfolio and Income Portfolio
usually make monthly distributions of net investment income
(including any net short-term capital gains), and an annual
distribution of net realized capital gains during the month of
December.
Management of the Fund. INVESCO Services, Inc. ("ISI"), a
Georgia corporation having its principal office at 1315 Peachtree
Street, N.E., Atlanta, Georgia 30309, serves as the Investment
Adviser, Manager, and Distributor of the Fund, including the
Portfolio and Income Portfolio. ISI has been engaged in the
investment advisory business since 1983, and is a wholly-owned
subsidiary of INVESCO Capital Management, Inc. ("ICM").
ICM is the sub-adviser to the Income Portfolio and INVESCO
Management & Research, Inc. ("IMR"), formerly Gardner and Preston
Moss, Inc., is the sub-adviser to the Portfolio. For further
discussion of the management of the Portfolios, see "Management
of the Fund" in the accompanying prospectus of the Fund.
2. Fees and Expenses.
For services to be rendered and the expenses to be assumed
by ISI under the Investment Advisory Agreement, the Portfolio and
the Income Portfolio each pay to ISI an advisory fee which is
computed daily and paid as of the last day of each month on the
basis of each Portfolio's daily net asset value, using for each
daily calculation the most recently determined net asset value of
the applicable Portfolio. On an annual basis, the advisory fee
is equal to 0.65% of the average net asset value of the Income
Portfolio, and 0.50% of the average net asset value of the
Portfolio. For a minimum of three years beginning October 1,
1995, ISI has agreed to waive that portion of its advisory fees
with respect to Income Portfolio in excess of 0.40%.
As manager to the Fund, ISI also provides operating services
pursuant to an Operating Services Agreement with the Fund. Under
the Operating Services Agreement, each portfolio, including
Income Portfolio and the Portfolio, pays to ISI an annual fee of
0.50% of daily net assets of the portfolio for providing or
arranging to provide accounting, legal (except litigation),
dividend disbursing, transfer agent, registrar, custodial,
shareholder reporting, sub-accounting and recordkeeping services
and functions. The agreement provides that ISI pays all fees and
expenses associated with these and other functions, including,
but not limited to, registration fees, shareholder meeting fees,
and proxy statement and shareholder report expenses.
Pursuant to Rule 12b-1, the Portfolio and the Income
Portfolio, as well as certain other portfolios of the Fund, have
adopted a plan of distribution (the "Plan of Distribution") which
provides that each portfolio may incur certain distribution and
maintenance fees which may not exceed a maximum amount equal to
0.50% per annum of the average net assets of the Portfolio, and
0.60% of the average annual net assets of Income Portfolio. This
expense includes the payment of 0.25% of average annual net
assets to broker-dealers as a "service fee" for providing account
maintenance or personal service to existing shareholders.
The combined effect of the Advisory Agreement, Operating
Services Agreement, and Plan of Distribution of the Fund is to
place a cap or ceiling on the total expenses of each portfolio of
the Fund, other than brokerage commissions, interest, taxes,
litigation, directors' fees and expenses, and other extraordinary
expenses. ISI has voluntarily agreed to adhere to maximum
expense ratios for the portfolios. To the extent that expenses
exceed the amounts listed below, ISI will waive its fees or
reimburse the portfolio to assure that expenses do not exceed the
designated maximum amounts. In any calendar year, the expenses
of the Portfolio and Income Portfolio may not exceed 1.50% and
1.75%, respectively, of average net assets. For a minimum of
three years beginning October 1, 1995, ISI has agreed to waive
that portion of its fees with respect to Income Portfolio such
that expenses may not exceed 1.50%.
<PAGE>
Shareholder Transaction Expenses:
Maximum Sales Charge Imposed on Purchases
of Shares None
(as a percentage of offering price) . . .
Contingent Deferred Sales Charge Income Portfolio,
(as a percentage of original 0.60% first year;
purchase price, or redemption Portfolio 0.50%*
price, whichever is lower . . . . . . . . first year; Both
Portfolios, 0%
after first year
* Shares of the Income Portfolio constructively distributed
for shares of the Portfolio upon the reorganization contemplated
herein will retain a CDSC rate of 0.50%.
The table below compares the Portfolio's annual fund
operating expenses for the fiscal year ended December 31, 1994
(restated to reflect current fees) with Income Portfolio's
operating expenses for the same period (restated to reflect
current fees).
Annual Operating Expenses After Expense Reimbursement, (as a
percentage of average net assets):
<PAGE>
Total
Advisory 12b-1 Other Operating
Portfolio Fees Fees(1) Expenses Expenses
_________ ________ _____ ________ _________
Income
Portfolio(2) 0.40% 0.60% 0.50% 1.50%
The Portfolio 10.50% 0.50% 0.50% 1.50%
(1) Under rules of the NASD, a 12b-1 fee may be treated as
a sales charge for certain purposes under those rules. Because
the 12b-1 fee is an annual fee charged against the assets of a
portfolio, long-term shareholders may indirectly pay more in
total sales charges than the economic equivalent of the maximum
front-end sales charge permitted by rules of the NASD.
(2) ISI has voluntarily agreed to limit certain of its fees
with respect to Income Portfolio for a minimum of three years
beginning October 1, 1995. But for ISI's waiver of expenses, the
fees paid by Income Portfolio (restated to reflect current fees)
would have been as follows: advisory fees, 0.65%; 12b-1 fees,
0.60%; other expenses, 0.50%; total operating expenses, 1.75%.
Example of Portfolio Expenses:
<PAGE>
A shareholder would pay the following expenses on a $1,000
investment, assuming (1) a hypothetical 5% annual return, and (2)
redemption at the end of each time period:
1 year 3 years 5 years 10 years
______ _______ _______ ________
Income Portfolio $21 $47 $82 $179
The Portfolio $20 $47 $82 $179
A shareholder would pay the following expenses on the same
investment, assuming no redemption:
1 year 3 years 5 years 10 years
_____ ______ _______ ________
Income Portfolio $15 $47 $82 $179
The Portfolio $15 $47 $82 $179
The foregoing table is intended to assist investors in
understanding the costs and expenses that a shareholder in the
applicable Portfolios will bear directly or indirectly. The
Examples should not be considered a representation of past or
future expenses, and actual expenses may be more or less than
those assumed for purposes of the Examples. The assumed 5%
return is hypothetical and should not be considered a
representation of past or future annual returns.
3. Comparison of Investment Policies and Restrictions, and Risk
Factors.
Although the investment objectives, policies and
restrictions of the Portfolios are similar, there are certain
differences between them. This section will discuss and compare
the investment policies of the Portfolios and will discuss and
compare the risks associated with investing the Portfolios.
There can be no assurance that either the Portfolio or Income
Portfolio will achieve its stated investment objective.
Investment restrictions for the Portfolios are listed in the
Statement of Additional Information, under "Investment
Restrictions."
Income Portfolio invests primarily in U.S. Government
obligations and fixed income corporate obligations which ICM
considers to be of investment grade quality. It may also invest
in mortgage-backed securities, including mortgage pass-through
securities and collateralized mortgage obligations ("CMOs"), and
may enter into contracts for the future delivery of fixed income
securities commonly referred to as "interest rate futures
contracts". The Income Portfolio also may use options to
purchase or sell covered interest rate futures contracts or debt
securities and may write covered call options and cash secured
puts. Covered call options and cash secured puts will not exceed
25% of total assets. The Income Portfolio may use financial
futures contracts and related options only for "bona fide
hedging" purposes. For further discussion on the Income
Portfolio's investment policies and restrictions, see "Investment
Objectives and Policies" and "Risk Factors and Policies Relevant
to the Portfolios" in the accompanying prospectus of the Fund.
The Portfolio invests primarily in a diversified portfolio
of U.S. Government obligations and corporate debt securities. It
may also invest in mortgage- and asset-backed securities, CMOs,
zero-coupon bonds, municipal obligations, dollar-denominated
obligations of U.S. branches of foreign banks ("Yankee Bonds"),
foreign currency denominated securities and foreign fixed income
securities. Additionally, the Portfolio may invest in interest
rate futures contracts and options thereon, commodity futures
contracts and options, and foreign currency futures contracts and
options. The Portfolio may use financial futures contracts and
related options only for "bona fide hedging" purposes. For
further discussion on the Portfolio's investment policies and
restrictions, see "Investment Objectives and Policies" and "Risk
Factors and Policies Relevant to the Portfolios" in the
accompanying prospectus of the Fund.
The following section discusses the only investment policy
permitted by Income Portfolio which is not permitted by the
Portfolio, and the associated risk factors of the policy:
Income Portfolio may invest in mortgage pass-through
securities which are securities representing interests in "pools"
or mortgage loans in which payments of both interest and
principal on the securities are generally made monthly, in effect
"passing through" monthly payments made by the individual on the
mortgage loans which underlie the securities (net of fees paid to
the issuer or guarantor of the securities).
Payment of principal and interest on some mortgage
pass-through securities may be guaranteed by the full faith and
credit of the U.S. Government (in the case of securities
guaranteed by the Government National Mortgage Association
("GNMA")); or guaranteed by agencies or instrumentalities of the
U.S. Government (in the case of securities guaranteed by the
Federal National Mortgage Association ("FNMA") or the Federal
Home Loan Mortgage Corporation ("FHLMC"), which are supported
only by the discretionary authority of the U.S. Government to
purchase the agency's obligations). For more information on GNMA
certificates and FNMA and FHLMC mortgage-backed obligations, see
"Mortgage- Related Securities" in the Statement of Additional
Information.
Risks of mortgage-related securities. Investment in
mortgage-backed securities poses several risks, including
prepayment, market, and credit risk. Prepayment risk reflects
the risk that borrowers may prepay their mortgages faster than
expected, thereby affecting the investment's average life and
perhaps its yield. Whether or not a mortgage loan is prepaid is
almost entirely controlled by the borrower. Borrowers are most
likely to exercise prepayment options at the time when it is
least advantageous to investors, generally prepaying mortgages as
interest rates fall, and slowing payments as interest rates rise.
Besides the effect of prevailing interest rates, the rate of
prepayment and refinancing of mortgages may also be affected by
home value appreciation, ease of the refinancing process and
local economic conditions.
Market risk reflects the risk that the price of the security
may fluctuate over time. The price of mortgage-backed securities
may be particularly sensitive to prevailing interest rates, the
length of time the security is expected to be outstanding, and
the liquidity of the issue. In a period of unstable interest
rates, there may be decreased demand for certain types of
mortgage-backed securities, and a fund invested in such
securities wishing to sell them may find it difficult to find a
buyer, which may in turn decrease the price at which they may be
sold.
Credit risk reflects the risk that a Portfolio may not
receive all or part of its principal because the issuer or credit
enhancer has defaulted on its obligations. Obligations issued by
U.S. government-related entities are guaranteed as to the payment
of principal and interest, but are not backed by the full faith
and credit of the U.S. government. The performance of private
label mortgage-backed securities, issued by private institutions,
is based on the financial health of those institutions. With
respect to GNMA certificates, although GNMA guarantees timely
payment even if homeowners delay or default, tracking the
"pass-through" payments may, at times, be difficult.
For further information, see the Statement of Additional
Information. The following section discusses the investment
policies of the Income Portfolio, which are more restrictive than
comparable policies of the Portfolio:
(1) The Income Portfolio may enter into interest rate
futures contracts and options if, immediately after such a
commitment, the sum of the then aggregate futures market prices
of financial instruments required to be delivered under open
futures contract sales and the aggregate purchase prices under
future contract purchases would not exceed 30% of total assets.
The Portfolio has no such restriction.
(2) The Income Portfolio may lend up to 10% of its
securities to broker-dealers or other institutional investors.
The Portfolio may lend up to 40% of its assets.
(3) The Income Portfolio may not invest in non-income
producing securities if, immediately after such investment, more
than 35% of the value of its total assets would be invested in
such securities. This is a fundamental policy of the Income
Portfolio. As an operating policy, however, the Income Portfolio
does not intend to invest in non-income producing securities.
The Portfolio has no such policy.
(4) The Income Portfolio may not, with respect to 100% of
the Income Portfolio's assets, invest in the securities of any
one issuer, other than obligations of, or guaranteed by, the U.S.
Government, its agencies, authorities or instrumentalities if,
immediately after such investment, more than 5% of the value of
the Portfolio's total assets, taken at market value, would be
invested in such issuer; or more than 10% of such issuer's
outstanding voting securities would be owned by Income Portfolio.
In contrast, the Portfolio may not, with respect to 75% of the
Portfolio's assets, invest in the securities of any one issuer,
other than obligations of, or guaranteed by, the U.S.
Government, its agencies, authorities or instrumentalities if,
immediately after such investment, more than 5% of the value of
the Portfolio's total assets, taken at market value, would be
invested in such issuer; or more than 10% of such issuer's
outstanding voting securities would be owned by the Income
Portfolio.
The following discusses the investment policies not
permitted by the Income Portfolio which are permitted by the
Portfolio:
Unlike Income Portfolio, the Portfolio may invest up to 10%
of its assets in corporate bonds rated below Baa by Moody's or
BBB by S&P but rated at least Ba by Moody's or BB by S&P at the
time of purchase. Income Portfolio invests only in those
corporate obligations which ICM considers to be of investment
grade quality, that is, those corporate obligations which in
ICM's opinion have the investment characteristics described by
Moody's in rating corporate obligations within its four highest
ratings of Aaa, Aa, A and Baa and by S&P in rating corporate
obligations within its four highest ratings of AAA, AA, A and
BBB. Furthermore, Income Portfolio may not invest in corporate
securities not considered to be investment grade quality (as
defined in the prospectus to the Fund), asset-backed securities,
zero-coupon bonds, municipal obligations, Yankee Bonds, foreign
currency-denominated securities, foreign fixed income securities,
commodity futures contracts and options, and foreign currency
futures contracts and options.
During normal market conditions, Income Portfolio's overall
average maturity will be in the 2.0 to 15.0 year range and is
expected to average at approximately 7 years over a market cycle.
During normal market conditions, the Portfolio's overall average
maturity will be in the 3.5 to 6.5 year range and is expected to
average at approximately 5 years over a market cycle.
Portfolio Transactions and Brokerage. ISI, ICM or IMR
arrange for the placement of orders and the execution of
portfolio transactions for the Portfolios. Various brokerage
firms may be used to carry out securities transactions. ISI, ICM
and IMR have agreed to give primary consideration to the broker's
or dealer's ability to provide the best execution of the
transaction at prices most favorable to the Portfolios. Subject
to primary consideration of best execution at prices most
favorable to the Portfolios, ISI, ICM or IMR may, in the
allocation of such investment transaction business, consider the
general research and investment information and other services
provided by the brokers and dealers, although they have adopted
no formula for such allocation. These research and investment
information services make available to ISI, ICM and IMR the views
and information of individuals and research staffs of many
securities firms for ISI's, ICM's or IMR's analysis and
consideration. Although such information may be a useful
supplement to ISI's, ICM's and IMR's own investment information,
the value of such research and services is not expected to reduce
materially the expenses of ISI, ICM or IMR in the performance of
its services under the Advisory Agreements and will not reduce
the advisory fee payable to ISI by the Portfolios. In
recognition of the value of the above-described brokerage and
research services provided by certain brokers, ISI, ICM and IMR,
consistent with the standard of seeking to obtain the best
execution on securities transactions, may place orders with such
brokers for the execution of transactions for the Portfolios on
which the commissions or discounts are in excess of those which
other brokers might have charged effecting the same transactions.
Further information on portfolio transactions and brokerage is
discussed in the Statement of Additional Information.
4. Information About the Reorganization.
Reasons for and Purposes of the Reorganization.
The Reorganization has been recommended by the Board of
Directors of the Fund as a means of combining similar
portfolios of the Fund with similar investment
objectives and policies in order to attempt to achieve
enhanced investment performance and economies
of scale. Achievement of this goal cannot, of
course, be assured.
In reaching the decision to recommend that the shareholders
of the Portfolio vote to approve the Reorganization, the Board of
Directors concluded that the participation of the Portfolio in
the Reorganization is in the best interests of the shareholders
of the Portfolio and would not result in the dilution of
shareholders' interests. Their conclusion was based on a number
of factors, including the following:
1. The Reorganization would permit the shareholders of the
Portfolio to pursue substantially the same investment goals in a
larger fund. A larger fund should enhance the ability of the
investment adviser to effect portfolio transactions on more
favorable terms and give the investment adviser greater
investment flexibility and the ability to select a larger number
of securities transactions for the combined funds, with the
attendant ability to spread investment risks among a larger
number of securities transactions. Combining the Portfolios will
permit the reduction or elimination of certain duplicate costs
and expenses which will contribute to the strength and viability
of the surviving portfolio. In this regard, it was noted that
the Portfolio and Income Portfolio have similar management
arrangements.
2. The Board of Directors considered the qualifications
and experience of ICM in the field of investment management and
concluded that they were very well qualified to provide the
services currently provided by IMR to the Portfolio.
Plan of Reorganization. The following summary of the
proposed Plan is qualified in its entirety by reference to the
Plan attached to this Proxy Statement/Prospectus as Appendix A.
The Plan provides that Income Portfolio will acquire all or
substantially all of the assets of the Portfolio in exchange for
shares of Income Portfolio and the assumption by Income Portfolio
of certain identified liabilities of the Portfolio on December
18, 1995, (the "Closing Date"), or such later date as provided
for pursuant to the Plan. Income Portfolio will not assume any
liabilities or obligations of the Portfolio, other than those
reflected in an unaudited statement of assets and liabilities of
the Portfolio as of the normal close of business of the New York
Stock Exchange (currently 4:00 p.m., New York City time) on
December 15, 1995 (the "Valuation Date"). The number of full and
fractional shares of Income Portfolio to be issued to
shareholders of the Portfolio will be determined on the basis of
the relative net asset values per share and aggregate net assets
of Income Portfolio and the Portfolio computed as of the close of
business on the New York Stock Exchange on the Valuation Date.
The net asset value per share for both Income Portfolio and the
Portfolio will be determined by dividing their respective assets,
less liabilities, by the total number of their respective
outstanding shares. Portfolio securities of both Income
Portfolio and the Portfolio will be valued in accordance with the
valuation practices of Income Portfolio as described under "Net
Asset Value" in the current prospectus of the Fund.
The Board of Directors of the Fund has determined that the
interests of existing shareholders will not be diluted as a
result of the transactions contemplated by the Reorganization,
and that participation in the Reorganization is in the best
interests of shareholders of the Portfolio and Income Portfolio,
respectively.
Prior to the Closing Date, the Portfolio will endeavor to
discharge all of its known liabilities and obligations. The
liabilities assumed are expected to relate generally to expenses
incurred in the ordinary course of the Portfolio's operations,
such as accounts payable relating to custodian and transfer
agency fees, legal and accounting fees, and expenses of state
securities registration of the Portfolio's shares. Income
Portfolio will assume all liabilities, expenses, costs, charges
and reserves reflected on an unaudited statement of assets and
liabilities of the Portfolio as of the close of the New York
Stock Exchange on the Valuation Date prepared by Fund/Plan
Services, Inc., the Fund's transfer agent, in accordance with
generally accepted accounting principles consistently applied
from the prior audited period. Income Portfolio will assume only
those liabilities of the Portfolio reflected in that unaudited
statement of assets and liabilities and will not assume any other
liabilities.
As of or prior to the Closing Date, the Portfolio
contemplates declaring and paying a dividend or dividends which
are intended to have the effect of distributing to the
Portfolio's shareholders all of the Portfolio's net income which
has not been distributed previously.
Immediately after the Closing, the Portfolio will
constructively distribute pro rata to its shareholders of record
as of the close of business on the Valuation Date the full and
fractional shares of Income Portfolio received by the Portfolio,
and the Portfolio will then terminate. Such constructive
distribution will be accomplished by the establishment of
accounts on the shareholder records of Income Portfolio in the
name of Portfolio shareholders, each representing the respective
pro rata number of full and fractional shares of Income Portfolio
due such shareholders. After the Closing Date, any outstanding
certificates representing shares of the Portfolio will represent
shares of Income Portfolio constructively distributed to the
record holders of the Portfolio. Share certificates of the
Portfolio will, upon presentation to the Transfer Agent of the
Fund, be exchanged for shares of Income Portfolio. Certificates
for Income Portfolio shares will be issued only upon written
request.
The consummation of the Plan is subject to the conditions
set forth therein. The Plan may be terminated at any time prior
to the Closing Date, before or after approval by shareholders of
the Portfolio, by resolution of the Board of Directors of the
Fund, if circumstances should develop that, in the opinion of the
Board, make proceeding with the Reorganization inadvisable.
Approval of the Plan will require the affirmative vote of
the holders of a majority of the outstanding voting securities of
the Portfolio, as defined by the 1940 Act. If the Reorganization
is not approved by the shareholders of the Portfolio, the Board
of Directors of the Fund intends to terminate and liquidate the
Portfolio on or before December 27, 1995. The shareholders of
the Portfolio, in the event the Reorganization is not approved,
would be notified promptly by ISI of the options shareholders
would have to avail themselves of prior to liquidation. The
primary options would be (1) exchanging shares of the Portfolio
for shares of the Income Portfolio or any other portfolio of the
Fund, or (2) complete redemption of shares. Any shareholders who
had not availed themselves of options (1) or (2) prior to
December 27, 1995, would receive a liquidating distribution from
the Portfolio (option 3). All such options could involve a
taxable transaction to the shareholder.
THE BOARD OF DIRECTORS OF THE FUND UNANIMOUSLY
RECOMMENDS APPROVAL OF THE PLAN.
Description of Shares of Income Portfolio. Full and
fractional shares of common stock of Income Portfolio will be
issued to shareholders of the Portfolio in accordance with the
procedures under the plan as described above. Each share will be
fully paid and non-assessable and will be redeemable at the net
asset value per share (subject to the CDSC discussed above), and
will have no preemptive or conversion rights. See "Comparative
Information on Shareholder Rights" below for additional
information with respect to the shares of Income Portfolio.
Federal Income Tax Consequences. The Reorganization is
intended to qualify for Federal income tax purposes as a tax-free
reorganization under Section 368 (a) (1) (C) of the Internal
Revenue Code of 1986, as amended (the "Code"), with no gain or
loss recognized as a consequence of the Reorganization by Income
Portfolio, the Portfolio, or the shareholders of the Portfolio.
As a condition to the closing of the Reorganization, the Fund, on
behalf of the Portfolio and Income Portfolio, will have received
an opinion from the law firm of Dechert Price & Rhoads to that
effect. That opinion will be based in part upon representations
made by the Fund on behalf of the Portfolio and Income Portfolio
and certain facts and assumptions.
Shareholders of the Portfolio should consult their tax
advisers regarding the effect, if any, of the proposed
Reorganization in light of their individual circumstances. Since
the foregoing discussion only relates to the Federal income tax
consequences of the Reorganization, shareholders of the Portfolio
should also consult their tax advisers as to state, local, and
other tax consequences, if any, of the Reorganization.
Capitalization. The following table, which is unaudited,
shows the capitalization of the Portfolio and Income Portfolio as
of June 30, 1995, as well as the pro forma combined
capitalization of both funds assuming the Reorganization had been
approved.
<PAGE>
Income Portfolio The Portfolio Pro Forma
________________ _____________ _________
Net assets $27,584,603 $2,962,190 $30,546,793
Net asset value per
share $50.03 $39.91 $50.03
Shares outstanding 551,410 74,220 610,618
The Reorganization is being accounted for by Income
Portfolio by the method used for a tax-free reorganization of an
investment company. Under this method (sometimes referred to as
a "pooling without restatement"), the aggregate net asset value
of the Income Portfolio shares issued will equal the aggregate
net asset value of the Portfolio.
Expenses of the Transaction. The expenses relating to the
Reorganization will be borne as follows: ISI and the Portfolio
will each pay 20% and Income Portfolio will pay 60% of the
expenses incurred in connection with entering into and
consummating the transaction contemplated by the Agreement and
Plan of Reorganization.
5. Comparative Information on Shareholder Rights.
General. The Portfolio and Income Portfolio are each
governed by the Articles of Incorporation of the Fund, the Fund's
By-Laws, and applicable Maryland law.
As a result of the Reorganization, shareholders of the
Portfolio will have identical voting rights and rights upon
dissolution as they currently have with respect to the Fund. As
shareholders of Income Portfolio, shareholders of the Portfolio
will continue to have one vote for each share of stock for which
they are record owners, together with pro-rata voting rights for
any fractional shares held. The Fund is not required to hold
annual meetings unless specifically required to do so under
applicable law or regulation. If at any time, less than a
majority of the directors of the Fund then in office shall
consist of directors elected by stockholders, a meeting of
shareholders shall be called by the Fund for the purpose of
electing directors. A special meeting of the shareholders will
be called at the request of shareholders entitled to cast at
least 25% of all votes entitled to be cast at the meeting,
provided the shareholders calling such special meeting have
committed to paying the reasonably estimated cost of preparing
for and holding such meeting.
6. Information About the Portfolios.
Information concerning the operation and management of the
Portfolio and Income Portfolio is incorporated herein by
reference from the current prospectus of the Fund dated May 1,
1995, as supplemented October 1, 1995 and October 25, 1995.
Additional information is included in the Statement of Additional
Information dated May 1, 1995, as supplemented October 25, 1995,
which has been filed with the Securities and Exchange Commission.
A copy of that Statement is available upon request and without
charge by calling 1-800-972-9030. Reports and other information
filed by the Fund including charter documents, can be inspected
and copied at the Public Reference Facilities maintained by the
Securities and Exchange Commission, located at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Atlanta Regional Office
of the Securities and Exchange Commission, 3475 Lenox Road, Suite
1000, Atlanta, Georgia 30326. Copies of such material can also
be obtained from the Public Reference Branch, Office of Consumer
Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549 at prescribed rates.
Certain Affiliations
INVESCO Services, Inc., the Fund's investment adviser,
manager and distributor, INVESCO Capital Management, Inc., the
sub-adviser to Income Portfolio, and INVESCO Management &
Research, Inc., the sub-adviser to the Portfolio, each are
controlled by INVESCO PLC, an English public limited company
which is a holding company of global investment managers.
Financial Statements and Experts
The financial statements of the Fund contained in the Fund's
annual report to shareholders for the fiscal year ended December
31, 1994, included in the Statement of Additional Information to
this Proxy/Prospectus, and incorporated by reference herein, have
been included and incorporated herein in reliance on the report
of Price Waterhouse LLP, independent certified public accounts.
Legal Matters
Certain legal matters concerning the issuance of shares of
Income Portfolio will be passed upon by Kirkpatrick & Lockhart,
LLP. Dechert Price & Rhoads will render an opinion as to certain
Federal income tax consequences of the Reorganization.
THE BOARD OF DIRECTORS OF THE FUND, INCLUDING THE
INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS APPROVAL OF THE
PLAN OF REORGANIZATION, AND ANY UNMARKED PROXIES WILL BE SO
VOTED.
Shareholder Proposals for Subsequent Meetings
The Fund does not, as a general matter, hold regular annual
or other meetings of shareholders. Any shareholder who wishes to
submit proposals to be considered at a subsequent meeting of
shareholders should send such proposals to the principal
executive offices of the Fund, located at 1315 Peachtree Street,
N.E., Atlanta, Georgia 30309. It is suggested that proposals be
submitted by certified mail, return receipt requested.
Other Business
The Directors of the Fund know of no other business to be
brought before the Meeting. However, if any other matters
properly come before the Meeting, proxies will be voted in
accordance with the judgment of the Directors.
If you cannot attend the Meeting in person, please complete
and sign the enclosed proxy and return it in the envelope
provided so that the Meeting may be held and action taken on the
matters described herein with the greatest possible number of
shares participating.
Voting Information
Proxies from the shareholders of the Portfolio are being
solicited by the Board of Directors of the Fund for the Special
Meeting to be held on December 14, 1995, at the Fund's offices at
1315 Peachtree Street, N.E., Atlanta, Georgia 30309 at 10:00
a.m. (local time), or at such later time made necessary by
adjournment. A proxy may be revoked at any time at or before the
meeting by oral or written notice to the Secretary of the Fund.
Unless revoked, all valid proxies will be voted in accordance
with the specifications thereon or, in the absence of such
specifications, for approval of the Plan and the Reorganization.
Approval of the Plan and the Reorganization will require the
affirmative vote of the holders of a majority of the Fund's
outstanding voting securities. For purposes of determining the
presence of a quorum for transacting business at the Special
Meeting, abstentions and broker "non-votes" will be treated as
shares that are present, but which have not been voted. For this
reason, abstention and broker "non-votes" will have the effect of
a "no" vote for purposes of obtaining approval of the Plan of
Reorganization.
Proxies are to be solicited by mail. Additional
solicitations may be made by telephone, telegraph or personal
contact by officers, employees or agents of INVESCO Services,
Inc. and its affiliates.
Shareholders of the Portfolio of record at the close of
business on October 31, 1995 ("Record Date") will be entitled to
vote at the Special Meeting or any adjournment thereof. The
holders of one third of the shares of the Portfolio outstanding
at the close of business on the Record Date present in person or
represented by proxy will constitute a quorum for the meeting.
Shareholders are entitled to one vote for each share held and
fractional votes for fractional shares held. As of September 30,
1995, as shown on the books of the Portfolio, there were issued
and outstanding 75,823 shares of common stock of the Portfolio.
As of September 30, 1995, as shown on the books of Income
Portfolio, there were issued and outstanding 554,507 shares of
common stock of Income Portfolio.
In the event that a quorum is present at the meeting, but
sufficient votes to approve the Plan are not received, the
persons named as proxies may propose one or more adjournments of
the meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of
those shares represented at the meeting in person or by proxy.
If a quorum is present, the persons named as proxies will vote
whose proxies which they are entitled to vote FOR the Plan in
favor of such an adjournment and will vote those proxies which
they are required to vote AGAINST the Plan against any such
adjournment.
The votes of the shareholders of Income Portfolio are not
being solicited, since their approval or consent is not necessary
for the Reorganization to take place.
As of September 30, 1995, the officers and Directors of the
Fund as a group beneficially owned less than 1% of the
outstanding shares of Income Portfolio and the following persons
owned of record or beneficially 5% or more of Income Portfolio's
outstanding shares: Merrill Lynch Pierce Fenner & Smith, 4800
Deer Lake Drive, Jacksonville, FL 32216 owned 57,221 shares
(10.31%). No person presently may be deemed to control Income
Portfolio by virtue of the ownership of 25% or more of the
outstanding securities of Income Portfolio, nor is it anticipated
that any person will so control Income Portfolio after the
Reorganization.
As of September 30, 1995, the officers and Directors of the
Fund as a group beneficially owned less than 1% of the
outstanding shares of the Portfolio and the following persons of
record or beneficially owned 5% or more of the Portfolio's
outstanding shares: Home Missioners of America, P.O. Box 465618,
Cincinnati, OH 46246 owned 4,007 shares (5.28%); Henry Fischer
Builder, Inc. 2670 Chancellor Drive, Crestview Hills, KY 41017
owned 25,165 shares (33.18%); and National Financial Service
Corp., F/B/O Customers, 1 World Financial Center, 200 Liberty,
New York, NY 10281 owned 5,156 shares (6.80%). Henry Fischer
and Elaine Fischer, trustee for Henny Fischer Builder, Inc., may
be deemed to control the Portfolio by virtue of its ownership of
33.18% of the outstanding securities of the Portfolio. No
present shareholder of the Portfolio is expected to own 5% or
more of Income Portfolio following the Reorganization.
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
is made as of this 25th day of October, 1995, by and between
Income Portfolio (the "Acquiring Fund"), a series of The EBI
Funds, Inc. ("The EBI Funds"), a Maryland corporation with its
principal place of business at 1315 Peachtree Street, N.E.,
Atlanta, Georgia 30309, and Relative Return Bond Portfolio (the
"Acquired Fund"), a separate series of The EBI Funds.
This Agreement is intended to be and is adopted as a plan of
Reorganization and liquidation within the meaning of Section
368(a) of the United States Internal Revenue Code of 1986, as
amended (the "Code"). The reorganization (the "Reorganization")
will consist of the transfer of all or substantially all of the
assets of the Acquired Fund to the Acquiring Fund in exchange
solely for shares of common stock, ($0.001 par value per share),
of the Acquiring Fund (the "Acquiring Fund Shares"), the
assumption by the Acquiring Fund of certain identified
liabilities of the Acquired Fund, and the constructive
distribution of the Acquiring Fund Shares to the shareholders of
the Acquired Fund in complete liquidation of the Acquired Fund as
provided herein, all upon the terms and conditions hereinafter
set forth in this Agreement.
WHEREAS, The EBI Funds is an open-end, registered investment
company of the management type, and the Acquired Fund owns
securities which generally are assets of the character in which
the Acquiring Fund is permitted to invest;
WHEREAS, The EBI Funds is authorized to issue its shares of
common stock in separate series, including the Acquiring Fund and
the Acquired Fund, each of which maintains a separate and
distinct portfolio of assets;
WHEREAS, the Board of Directors of The EBI Funds, on behalf
of the Acquiring Fund, has determined that the exchange of all or
substantially all of the assets of the Acquired Fund for
Acquiring Fund Shares and the assumption of certain identified
liabilities of the Acquired Fund by the Acquiring Fund is in the
best interests of the Acquiring Fund and its shareholders and
that the interests of the existing shareholders of the Acquiring
Fund would not be diluted as a result of this transaction;
WHEREAS, the Board of Directors of The EBI Funds, on behalf
of the Acquired Fund, has determined that the exchange of all or
substantially all of the assets of the Acquired Fund for
Acquiring Fund Shares and the assumption of certain identified
liabilities of the Acquired Fund by the Acquiring Fund is in the
best interests of the Acquired Fund and its shareholders and that
the interests of the existing shareholders of the Acquired Fund
would not be diluted as a result of this transaction;
NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements hereinafter set forth, the parties
hereto covenant and agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING
FUND IN EXCHANGE FOR THE ACQUIRING FUND'S SHARES, THE
ASSUMPTION OF CERTAIN IDENTIFIED ACQUIRED FUND LIABILITIES
AND THE LIQUIDATION OF THE ACQUIRED FUND
1.1 Subject to the terms and conditions herein set forth
and on the basis of the representations and warranties contained
herein, The EBI Funds on behalf of the Acquired Fund agrees to
transfer all of the Acquired Fund's assets as set forth in
paragraph 1.2 to the Acquiring Fund, and The EBI Funds on behalf
of the Acquired Fund agrees in exchange therefor (i) to deliver
to the Acquired Fund the number of Acquiring Fund Shares,
including fractional Acquiring Fund Shares, determined by
dividing the value of the Acquired Fund's net assets computed in
the manner and as of the time and date set forth in paragraph 2.1
by the net asset value of one Acquiring Fund Share computed in
the manner and as of the time and date set forth in paragraph
2.2; and (ii) to assume certain identified liabilities of the
Acquired Fund, as set forth in paragraph 1.3. Such transactions
shall take place at the closing provided for in paragraph 3.1
(the "Closing").
1.2 The assets of the Acquired Fund to be acquired by the
Acquiring Fund shall consist of all property, including, without
limitation, all cash, cash equivalents, securities, commodities
and futures interests and dividends or interest receivables,
claims and rights of action, rights to register shares under
applicable securities laws, and books and records, which are
owned by the Acquired Fund and any deferred or prepaid expenses
shown as assets on the books of the Acquired Fund on the closing
date provided in paragraph 3.1 (the "Closing Date").
1.3 The Acquired Fund will endeavor to discharge all of its
known liabilities and obligations prior to the Closing Date. The
Acquiring Fund shall assume all liabilities, expenses, costs,
charges and reserves (expected to include expenses incurred in
the ordinary course of the Acquired Fund's operations, such as
accounts payable relating to custodian and transfer agency fees,
legal and audit fees, and expenses of state securities
registration of the Acquired Fund's shares) reflected on an
unaudited statement of assets and liabilities of the Acquired
Fund prepared by Fund/Plan Services, Inc., the transfer agent of
the Acquired Fund and the Acquiring Fund, as of the Valuation
Date (as defined in paragraph 2.1) in accordance with generally
accepted accounting principles consistently applied from the
prior audited period. The Acquiring Fund shall assume only those
liabilities of the Acquired Fund reflected on that unaudited
statement of assets and liabilities and shall not assume any
other liabilities.
1.4 Immediately after the transfer of assets provided for
in paragraph 1.1, the Acquired Fund will distribute pro rata to
the Acquired Fund's shareholders of record, determined as of
immediately after the close of business on the Closing Date (the
"Acquired Fund Shareholders"), the Acquiring Fund Shares received
by the Acquired Fund pursuant to paragraph 1.1 and will
completely liquidate. Acquired Fund shall take any further
actions in connection with its liquidation as required by
applicable law. Such distribution and liquidation will be
accomplished by the transfer of the Acquiring Fund Shares then
credited to the account of the Acquired Fund on the books of the
Acquiring Fund to open accounts on the share records of the
Acquiring Fund in the names of the Acquired Fund Shareholders.
The aggregate net asset value of Acquiring Fund Shares to be so
credited to Acquired Fund Shareholders shall be equal to the
aggregate net asset value of the Acquired Fund shares owned by
such shareholders as of immediately after the close of business
on the Valuation Date. All issued and outstanding shares of the
Acquired Fund will simultaneously be canceled on the books of the
Acquired Fund, although share certificates representing interests
in the Acquired Fund will represent a number of Acquiring Fund
Shares after the Closing Date as determined in accordance with
paragraph 2.3. The Acquiring Fund will not issue certificates
representing the Acquiring Fund Shares in connection with such
exchange except upon request by a shareholder of the Acquired
Fund.
1.5 Ownership of Acquiring Fund Shares will be shown on the
share transfer books of the Acquiring Fund. Shares of the
Acquiring Fund will be issued in the manner described in The EBI
Funds' then-current prospectus and statement of additional
information.
2. VALUATION
2.1 The value of the Acquired Fund's assets to be acquired
by the Acquiring Fund hereunder shall be the value of such assets
computed as of the normal close of business of the New York Stock
Exchange on December 15, 1995, the Valuation Date (such time and
date being hereinafter called the "Valuation Date"), using the
valuation procedures set forth in The EBI Funds' then-current
prospectus or statement of additional information.
2.2 The net asset value of an Acquiring Fund Share shall be
the net asset value per share computed as of immediately after
the close of business of the New York Stock Exchange on the
Valuation Date, using the valuation procedures set forth in The
EBI Funds' then-current prospectus or statement of additional
information.
2.3 The number of the Acquiring Fund Shares to be issued
(including fractional shares, if any) in exchange for the
Acquired Fund's assets shall be determined by dividing the value
of the net assets of the Acquired Fund determined using the same
valuation procedures referred to in paragraph 2.1 by the net
asset value of an Acquiring Fund Share determined in accordance
with paragraph 2.2.
2.4 All computations of value with respect to the Acquiring
Fund shall be made by Fund/Plan Services, Inc. in accordance with
its regular practice for the Funds.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be December 18, 1995 or such
later date as the parties may agree in writing. All acts taking
place at the Closing shall be deemed to take place simultaneously
as of immediately before the start of business on the Closing
Date unless otherwise agreed to by the parties. The start of
business on the Closing Date shall be as of 9:00 a.m., New York
time. The Closing shall be held at the offices of INVESCO
Services, Inc., Atlanta, Georgia or at such other place and time
as the parties shall mutually agree. If, immediately before the
Valuation Time, (a) the NYSE is closed to trading or trading
thereon is restricted or (b) trading or the reporting of trading
on the NYSE or elsewhere is disrupted, so that accurate appraisal
of the net asset value of Acquired Fund and the NAV per Acquiring
Fund Share is impracticable, the Effective Time shall be
postponed until the first business day after the day when such
trading shall have been fully resumed and such reporting shall
have been restored.
3.2 United Missouri Bank of Kansas City, N.A., as custodian
for The EBI Funds (the "Custodian"), shall deliver at the Closing
a certificate of an authorized officer stating that: (a) the
Acquired Fund's portfolio securities, cash, and any other assets
shall have been delivered in proper form to the Acquiring Fund;
and (b) all necessary taxes including without limitation all
applicable federal and state stock transfer stamps, if any, shall
have been paid, or provision for payment shall have been made, in
conjunction with the delivery of portfolio securities.
3.3 Fund/Plan Services, Inc. (the "Transfer Agent"), on
behalf of each of the Acquired Fund and the Acquiring Fund, shall
deliver at the Closing a certificate of an authorized officer
stating that its records contain the names and addresses of the
Acquired Fund Shareholders and the number and percentage
ownership of outstanding shares owned by each such shareholder
immediately prior to the Closing. The Acquiring Fund shall issue
and deliver a confirmation evidencing the Acquiring Fund Shares
to be credited on the Closing Date to the Acquired Fund or
provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Shares have been credited to the Acquired Fund's
account on the books of the Acquiring Fund. At the Closing each
party shall deliver to the other such bills of sale, checks,
assignments, share certificates, if any, receipts or other
documents as such other party or its counsel may reasonably
request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The EBI Funds, with respect to the Acquired Fund,
represents and warrants to the Acquiring Fund as follows:
(a) The EBI Funds is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Maryland;
(b) The EBI Funds is a registered open-end investment
company and its registration with the Securities and Exchange
Commission (the "Commission") as an investment company with
respect to each series of Shares it offers, including those of
the Acquired Fund, under the Investment Company Act of 1940 (the
"1940 Act") and the registration of its shares under the
Securities Act of 1933 (the "1933 Act") are in full force and
effect;
(c) The Acquired Fund is not, and the execution, delivery
and performance of this Agreement will not result, in a material
violation of its Articles of Incorporation or By-Laws or of any
agreement, indenture, instrument, contract, lease or other
undertaking to which the Acquired Fund or The EBI Funds is a
party or by which either is bound;
(d) The Acquired Fund has no material contracts or other
commitments (other than this Agreement) which will be terminated
with liability to it prior to the Closing Date;
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or to its knowledge threatened against the
Acquired Fund or any properties or assets held by it. The
Acquired 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 herein
contemplated;
(f) The Statement of Assets and Liabilities of the Acquired
Fund at December 31, 1994, has been audited by Price Waterhouse,
independent certified public accountants, and is in accordance
with generally accepted accounting principles consistently
applied, and such statement (a copy of which has been furnished
to the Acquiring Fund) presents fairly, in all material respects,
the financial position of the Acquired Fund as of such date, and
there are no known contingent liabilities of the Acquired Fund as
of such date not disclosed therein;
(g) Since December 31, 1994, there has not been any
material adverse change in the Acquired Fund's financial
condition, assets, liabilities or business other than changes
occurring in the ordinary course of business, or any incurrence
by the Acquired Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquiring Fund. For the
purposes of this subparagraph (g), a decline in net asset value
per share of the Acquired Fund, the discharge of Acquired Fund
liabilities, or the redemption of Acquired Fund shares by
Acquired Fund Shareholders shall not constitute a material
adverse change;
(h) At the Closing Date, all material Federal and other tax
returns and reports of the Acquired Fund required by law to have
been filed by such date shall have been filed and are or will be
correct, and all Federal and other taxes shown as due or required
to be shown as due on said returns and reports shall have been
paid or provision shall have been made for the payment thereof,
and, to the best of the Acquired Fund's knowledge no such return
is currently under audit and no assessment has been asserted with
respect to such returns;
(i) For each taxable year of its operation, the Acquired
Fund has met the requirements of Subchapter M of the Code for
qualification as a regulated investment company and has elected
to be treated as such;
(j) All issued and outstanding shares of the Acquired Fund
are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable. All of the issued
and outstanding shares of the Acquired Fund will, at the time of
Closing, be held by the persons and in the amounts set forth in
the records of the Transfer Agent, as provided in paragraph 3.3.
The Acquired Fund does not have outstanding any options, warrants
or other rights to subscribe for or purchase any of the Acquired
Fund shares, nor is there outstanding any security convertible
into any of the Acquired Fund shares;
(k) At the Closing Date, the Acquired Fund will have good
and marketable title to the Acquired Fund's assets to be
transferred to the Acquiring Fund pursuant to paragraph 1.2,
subject to the shareholder approval referred to in Section 5, and
full right, power, and authority to sell, assign, transfer and
deliver such assets hereunder, and upon delivery and payment for
such assets, the Acquiring 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
1933 Act, other than as disclosed to the Acquiring Fund;
(l) The execution, delivery and performance of this
Agreement will have been duly authorized prior to the Closing
Date by all necessary action on the part of The EBI Funds'
Directors, and, subject to the approval of the Acquired Fund
Shareholders, this Agreement will constitute a valid and binding
obligation of the Acquired Fund, enforceable in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
(m) The information to be furnished by the Acquired Fund
for use in registration statements, proxy materials and other
documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete
in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations
thereunder applicable thereto; and
(n) The proxy statement of the Acquired Fund (the "Proxy
Statement") to be included in the Registration Statement referred
to in paragraph 5.6 (other than information therein that relates
to the Acquiring Fund) will, on the effective date of the
Registration Statement and on the Closing Date, 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 therein, in light of the circumstances under which
such statements are made, not materially misleading.
4.2 The EBI Funds, on behalf of the Acquiring Fund,
represents and warrants to the Acquired Fund as follows:
(a) The EBI Funds is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Maryland;
(b) The EBI Funds is a registered open-end investment
company and its registration with the Commission as an investment
company with respect to each series of shares it offers,
including those of the Acquiring Fund, under the 1940 Act, and
the registration of its shares under the 1933 Act, are in full
force and effect;
(c) The current prospectus and statement of additional
information of The EBI Funds conform in all material respects to
the applicable requirements of the 1933 Act and the 1940 Act and
the rules and regulations of the Commission thereunder and do not
include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not materially misleading;
(d) At the Closing Date, the Acquiring Fund will have good
and marketable title to the Acquiring Fund's assets;
(e) The Acquiring Fund is not, and the execution, delivery
and performance of this Agreement will not result in a material
violation of The EBI Funds' Articles of Incorporation or By-Laws
or of any agreement, indenture, instrument, contract, lease or
other undertaking to which the Acquiring Fund or The EBI Funds is
a party or by which either is bound;
(f) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or threatened against the Acquiring Fund or any
of its properties or assets. The Acquiring 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 herein contemplated;
(g) The Statement of Assets and Liabilities of the
Acquiring Fund at December 31, 1994, has been audited by Price
Waterhouse, independent certified public accountants, and is in
accordance with generally accepted accounting principles
consistently applied, and such statement (a copy of which has
been furnished to the Acquired Fund) presents fairly, in all
material respects, the financial position of the Acquiring Fund
as of such date, and there are no known contingent liabilities of
the Acquiring Fund as of such date not disclosed therein;
(h) Since December 31, 1994, there has not been any
material adverse change in the Acquiring Fund's financial
condition, assets, liabilities or business other than changes
occurring in the ordinary course of business, or any incurrence
by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred. For the purposes
of this subparagraph (h), a decline in net asset value per share
of the Acquiring Fund, the discharge of Acquiring Fund
liabilities, or the redemption of Acquiring Fund shares by
Acquiring Fund shareholders, shall not constitute a material
adverse change;
(i) At the Closing Date, all material Federal and other tax
returns and reports of the Acquiring Fund required by law to have
been filed by such date shall have been filed and are or will be
correct, and all Federal and other taxes shown as due or required
to be shown as due on said returns and reports shall have been
paid or provision shall have been made for the payment thereof,
and, to the best of the Acquiring Fund's knowledge no such return
is currently under audit and no assessment has been asserted with
respect to such returns;
(j) All issued and outstanding Acquiring Fund Shares are,
and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable by the Acquiring Fund.
The Acquiring Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase any
Acquiring Fund Shares, nor is there outstanding any security
convertible into any Acquiring Fund Shares;
(k) The execution, delivery and performance of this
Agreement will have been duly authorized prior to the Closing
Date by all necessary action, if any, on the part of the
Directors of The EBI Funds, as issuer of the Acquiring Fund, and
this Agreement will constitute a valid and binding obligation of
the Acquiring Fund enforceable in accordance with its terms,
subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
(l) The Acquiring Fund Shares to be issued and delivered to
the Acquired Fund, for the account of the Acquired Fund
Shareholders, 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 Acquiring Fund
Shares, and will be fully paid and non-assessable by the
Acquiring Fund;
(m) The information to be furnished by the Acquiring Fund
for use in registration statements, proxy materials and other
documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete
in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations
applicable thereto;
(n) The Proxy Statement to be included in the Registration
Statement (only insofar as it relates to the Acquiring Fund)
will, on the effective date of the Registration Statement and on
the Closing Date, 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 therein, in light of
the circumstances under which such statements were made, not
materially misleading;
(o) The Acquiring Fund agrees to 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 may be necessary in order to continue its operations
after the Closing Date; and
(p) For each taxable year of its operation, the Acquiring
Fund has met the requirements of Subchapter M of the Code for
qualification as a regulated investment company and has elected
to be treated as such.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 The Acquiring Fund and the Acquired Fund each will
operate its business in the ordinary course between the date
hereof and the Closing Date, it being understood that such
ordinary course of business will include the declaration and
payment of customary dividends and distributions, and any other
distributions that may be advisable.
5.2 The Acquired Fund will call a meeting of the Acquired
Fund Shareholders to consider and act upon this Agreement and to
take all other action necessary to obtain approval of the
transactions contemplated herein.
5.3 The Acquired Fund covenants that the Acquiring Fund
Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof other than in
accordance with the terms of this Agreement.
5.4 The Acquired Fund will assist the Acquiring Fund in
obtaining such information as the Acquiring Fund reasonably
requests concerning the beneficial ownership of the Acquired Fund
Shares.
5.5 Subject to the provisions of this Agreement, the
Acquiring Fund and the Acquired Fund will each take, or cause to
be taken, all actions, and do or cause to be done, all things
reasonably necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement.
5.6 The Acquired Fund will provide the Acquiring Fund with
information reasonably necessary for the preparation of a
prospectus (the "Prospectus") which will include the Proxy
Statement, referred to in paragraph 4.1(n), all to be included in
a Registration Statement on Form N-14 of the Acquiring Fund (the
"Registration Statement"), in compliance with the 1933 Act, the
Securities Exchange Act of 1934 (the "1934 Act") and the 1940 Act
in connection with the meeting of the Acquired Fund Shareholders
to consider approval of this Agreement and the transactions
contemplated herein.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the
transactions provided for herein shall be subject, at its
election, to the performance by the Acquiring Fund of all the
obligations to be performed by it hereunder on or before the
Closing Date, and, in addition thereto, the following further
conditions:
6.1 All representations and warranties of The EBI Funds on
behalf of the Acquiring Fund contained in this Agreement shall be
true and correct in all material respects as of the date hereof
and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the
same force and effect as if made on and as of the Closing Date;
6.2 The Acquiring Fund shall have delivered to the Acquired
Fund a certificate executed in its name by its President or Vice
President and its Treasurer or Assistant Treasurer, in a form
reasonably satisfactory to the Acquired Fund 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 Closing Date, except as they may be
affected by the transactions contemplated by this Agreement and
as to such other matters as the Acquired Fund shall reasonably
request; and
6.3 The Acquired Fund shall have received on the Closing
Date the opinion of Kirkpatrick & Lockhart, LLP, counsel to the
Acquired Fund, in a form reasonably satisfactory to the Acquired
Fund, and dated as of the Closing Date, that:
(a) The EBI Funds has been duly formed and is validly
existing and in good standing under the laws of the State of
Maryland; (b) the Acquiring Fund has the power to carry on its
business, including that of the Acquiring Fund, as presently
conducted; (c) the Agreement has been duly authorized, executed
and delivered by The EBI Funds on behalf of the Acquiring Fund
and constitutes a valid and legally binding obligation of The EBI
Funds on behalf of the Acquiring Fund enforceable against the
Acquiring Fund in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and laws of general applicability relating to or
affecting creditors' rights and to general equity principles; (d)
the execution and delivery of the Agreement did not and the
exchange of the Acquired Fund's assets for shares of the
Acquiring Fund pursuant to the Agreement will not violate The EBI
Funds' Articles of Incorporation or Bylaws or result in a default
under or breach of any of the agreements filed as exhibits to (or
incorporated by reference in) The EBI Funds' most recent
post-effective amendment of its registration statement on Form
N-1A; and (e) to the knowledge of such counsel, all regulatory
consents, authorizations, approvals or filings required to be
obtained or made by The EBI Funds on behalf of the Acquiring Fund
under the Federal laws of the United States or the State of
Maryland for the exchange of the Acquired Fund's assets for
shares of the Acquiring Fund, pursuant to the Agreement have been
obtained or made.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to complete the
transactions provided for herein shall be subject, at its
election, to the performance by the Acquired Fund of all of the
obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of The EBI Funds
with respect to the Acquired Fund contained in this Agreement
shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the
same force and effect as if made on and as of the Closing Date;
7.2 The Acquired Fund shall have delivered to the Acquiring
Fund a statement of the Acquired Fund's assets and liabilities,
as of the Closing Date, certified by the Treasurer of the
Acquired Fund;
7.3 The Acquired Fund shall have delivered to the Acquiring
Fund on the Closing Date a certificate executed in its name by
its President or Vice President and its Treasurer or Assistant
Treasurer, in form and substance satisfactory to the Acquiring
Fund and dated as of the Closing Date, to the effect that the
representations and warranties of The EBI Funds with respect to
the Acquired Fund made in this Agreement are true and correct at
and as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement, and as to such other
matters as the Acquiring Fund shall reasonably request; and
7.4 The Acquiring Fund shall have received on the Closing
Date the opinion of Kirkpatrick & Lockhart LLP, counsel to the
Acquiring Fund dated as of the Closing Date, that:
(a) The EBI Funds has been duly formed and is validly
existing and in good standing under the laws of the State of
Maryland; (b) The EBI Funds has the power to carry on its
business, including that of the Acquired Fund, as presently
conducted; (c) the Agreement has been duly authorized, executed
and delivered by The EBI Funds with respect to the Acquired Fund
and constitutes a valid and legally binding obligation of The EBI
Funds with respect to the Acquired Fund enforceable against the
Acquired Fund in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and laws of general applicability relating to or
affecting creditors' rights and to general equity principles; (d)
the execution and delivery of the Agreement did not and the
exchange of the Acquired Fund's assets for shares of the
Acquiring Fund pursuant to the Agreement will not violate The EBI
Funds' Articles of Incorporation or Bylaws or result in a default
under or breach of any of the agreements filed as exhibits to (or
incorporated by reference in) The EBI Funds' most recent
post-effective amendment of its registration statement on Form
N-1A; (e) to the knowledge of such counsel, all regulatory
consents, authorizations, approvals or filings required to be
obtained or made by The EBI Funds with respect to the Acquired
Fund under the Federal laws of the United States or the State of
Maryland for the exchange of the Acquired Fund's assets for
shares of the Acquiring Fund, pursuant to the Agreement have been
obtained or made; and (f) the shares of the Acquiring Fund to be
distributed to Acquired Fund stockholders under this Agreement,
assuming due authorization and delivery as contemplated by this
Agreement, will be validly issued and outstanding and fully paid
and non-assessable.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
FUND AND THE ACQUIRED FUND
If any of the conditions set forth below do not exist on or
before the Closing Date with respect to the Acquired Fund or the
Acquiring Fund, the other party to this Agreement shall, at its
option, not be required to consummate the transactions
contemplated by this Agreement:
8.1 The Agreement and the transactions contemplated herein
shall have been approved by the requisite vote of the holders of
the outstanding shares of the Acquired Fund in accordance with
the provisions of The EBI Funds' Articles of Incorporation and
By-Laws and certified copies of the resolutions evidencing such
approval shall have been delivered to the Acquiring Fund.
Notwithstanding anything herein to the contrary, neither the
Acquiring Fund nor the Acquired Fund may waive the conditions set
forth in this paragraph 8.1;
8.2 On the Closing Date, 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;
8.3 All consents of other parties and all other consents,
orders and permits of Federal, state and local regulatory
authorities deemed necessary by the Acquiring Fund or the
Acquired Fund to permit consummation, in all material respects,
of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit
would not involve a risk of a material adverse effect on the
assets or properties of the Acquiring Fund or the Acquired Fund,
provided that either party hereto may for itself waive any of
such conditions;
8.4 The Registration Statement shall have become effective
under the 1933 Act and no stop orders suspending the
effectiveness thereof shall have been issued and, to the best
knowledge of the parties hereto, no investigation or proceeding
for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act; and
8.5 The parties shall have received the opinion of Dechert
Price & Rhoads, counsel to INVESCO Services, Inc. addressed to
The EBI Funds substantially to the effect that the transaction
contemplated by this Agreement constitutes a tax-free
reorganization for Federal income tax purposes. The delivery of
such opinion is conditioned upon receipt by Dechert Price &
Rhoads of representations it shall request of the parties.
Notwithstanding anything herein to the contrary, neither the
Acquiring Fund nor the Acquired Fund may waive the condition set
forth in this paragraph 8.5.
9. BROKERAGE FEES AND EXPENSES
9.1 The EBI Funds on behalf of Acquiring Fund and The EBI
Funds on behalf of the Acquired Fund each represents and warrants
to the other that it has no obligations to pay any brokers or
finders fees in connection with the transactions provided for
herein.
9.2 The Acquired Fund shall pay 20% and the Acquiring Fund
shall pay 60% of the expenses incurred in connection with
entering into and consummating the transaction contemplated by
this Agreement.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund and the Acquired Fund agree that
neither party has made any representation, warranty or covenant
not set forth herein and that this Agreement constitutes the
entire agreement between the parties.
10.2 The representations and warranties contained in this
Agreement or in any document delivered pursuant hereto or in
connection herewith shall not survive the consummation of the
transactions contemplated hereunder.
11. TERMINATION
This Agreement and the transaction contemplated hereby may
be terminated and abandoned by either party, by mutual agreement
or by resolution of the party's Board of Directors at any time
prior to the Closing Date, if circumstances should develop that,
in the opinion of such Board, make proceeding with the Agreement
inadvisable. In the event of termination under this Section 11,
there shall be no liability for damages on the part of either
Fund, its officers, or Directors.
12. 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 Acquired Fund and the Acquiring Fund;
provided, however, that following the meeting of the Acquired
Fund Shareholders called by the Acquired Fund pursuant to
paragraph 5.2 of this Agreement, no such amendment may have the
effect of changing the provisions for determining the number of
the Acquiring Fund Shares to be issued to the Acquired Fund
Shareholders under this Agreement to the detriment of such
shareholders without their further approval.
13. NOTICES
Any notice, report, statement or demand required or
permitted by any provisions of this Agreement shall be in writing
and shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, addressed to the Acquired Fund,
1315 Peachtree Street, N.E., Atlanta, Georgia 30309, Attention:
Mark F. Moots, Jr. or to the Acquiring Fund, 1315 Peachtree
Street, N.E., Atlanta, Georgia 30309, Attention: Mark F. Moots,
Jr.
14. HEADINGS; COUNTERPARTS; ASSIGNMENT; LIMITATION OF LIABILITY
14.1 The Article and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
14.2 This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
14.3 This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns,
but no assignment or transfer hereof or of any rights or
obligations hereunder shall be made by any party without the
written consent of the other party. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give
any person, firm or corporation, other than the parties hereto
and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
14.4 It is expressly agreed that the obligations of the
Acquiring Fund hereunder shall not be binding upon any of the
Directors, shareholders, nominees, officers, agents, or employees
of The EBI Funds personally, but bind only the property of the
Acquiring Fund. The execution and delivery of this Agreement
have been authorized by the Directors of The EBI Funds and signed
by authorized officers of the Acquiring Fund acting as such, and
neither such authorization by such Directors nor such execution
and delivery by such officers shall be deemed to have been made
by any of them individually or to impose any liability on any of
them personally, but shall bind only the property of the
Acquiring Fund.
14.5 It is expressly agreed that the obligations of the
Acquired Fund hereunder shall not be binding upon any of the
Directors, shareholders, nominees, officers, agents, or employees
of The EBI Funds personally, but bind only the property of the
Acquired Fund. The execution and delivery of this Agreement have
been authorized by the Directors of The EBI Funds and signed by
authorized officers of the Acquired Fund acting as such, and
neither such authorization by such Directors nor such execution
and delivery by such officers shall be deemed to have been made
by any of them individually or to impose any liability on any of
them personally, but shall bind only the property of the Acquired
Fund.
14.6 This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland; provided that,
in the case of any conflict between such laws and the federal
securities laws, the latter shall govern.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed by its President or Vice President
and its seal to be affixed thereto and attested by its Secretary
or Assistant Secretary.
Attest: THE EBI FUNDS, INC.
on behalf of
INCOME PORTFOLIO
/s/Tony D. Green By: /s/Hubert L. Harris, Jr.
Secretary
Attest: THE EBI FUNDS, INC.
on behalf of
RELATIVE RETURN BOND PORTFOLIO
/s/Tony D. Green By: /s/Hubert L. Harris, Jr.
Secretary
<PAGE>
APPENDIX B
PROXY
THE EBI FUNDS, INC.
SPECIAL MEETING OF SHAREHOLDERS, December 14, 1995
The undersigned hereby appoints Mark. F. Moots, Jr. and Tony
D. Green, and each of them, his attorneys and proxies with full
power of substitution, to vote and act with respect to all shares
of Relative Return Bond Portfolio (the "Portfolio"), a series of
The EBI Funds, Inc. (the "Fund") of the undersigned at the
Special Meeting of Shareholders of the Portfolio to be held at
10:00 a.m., (local time) on December 14, 1995 at offices of the
Fund, 1315 Peachtree Street, N.E., Atlanta, Georgia 30309, and at
any adjournment thereof (the "Meeting"), and instructs them to
vote as indicated on the matters referred to in the Proxy
Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other
business as may properly come before the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE
FUND. The Board of Directors recommends that you vote FOR the
following proposal:
I. Approval of an Agreement and Plan of Reorganization
providing for the acquisition of all of the assets of the
Portfolio by the Income Portfolio in exchange for shares of
Income Portfolio, the distribution of such Income Portfolio
shares to shareholders of the Portfolio, and the subsequent
dissolution of the Portfolio.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
This Proxy will be voted as specified. IF NO SPECIFICATION
IS MADE, THIS PROXY WILL BE VOTE FOR THIS PROPOSAL.
Receipt of the Notice of Special Meeting and Proxy
Statement is hereby acknowledged.
DATED: _____________________, 1995
_______________________________________
_______________________________________
Signature(s) of Shareholder(s)
<PAGE>
This Proxy must be signed exactly as your name(s) appear hereon.
If as attorney, executor, guardian or in some representative
capacity or as an officer of a corporation, please add title as
such.
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE PAID ENVELOPE.
