<PAGE>
PEACHTREE FUNDS
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
TELEPHONE: (800) 626-2275
August 5, 1996
Dear Shareholder of the Peachtree Prime Money Market Fund:
On behalf of the Board of Trustees of Peachtree Funds
("Peachtree Funds"), we are pleased to invite you to a Special Meeting of the
Shareholders of Peachtree Funds to be held on September 23, 1996.
As you may recall, Bank South Corporation ("Bank South
Corporation") recently merged into NationsBank Corporation. Prior to the merger,
Bank South Corporation was the parent of Bank South, N.A. ("Bank South"), the
prior investment adviser to Peachtree Funds. Because this merger automatically
terminated Bank South's investment advisory agreement with Peachtree Funds, a
special meeting of shareholders of Peachtree Funds was held on January 9, 1996.
At that meeting, the shareholders of Peachtree Funds, among other things,
approved a new investment advisory agreement between Peachtree Funds and
NationsBanc Advisors, Inc. ("NBAI") and a new sub-advisory agreement between
NBAI and its affiliate, TradeStreet Investment Associates, Inc. ("TSIA").
In light of the merger, certain additional changes to the
structure of Peachtree Funds have been proposed. In this regard, the September
23, 1996 Special Meeting is being called to consider an Agreement and Plan of
Reorganization ("Plan") for the Peachtree Prime Money Market Fund (the "Fund").
Under the Plan, the Fund's assets would be acquired by Nations Prime Fund of
Nations Fund, Inc. (the "Company").
The Nations Prime Fund of the Company is sometimes referred to
herein as the "Acquiring Fund." Under the Plan, you would become a shareholder
of the Acquiring Fund and receive shares of the Acquiring Fund equal in value at
the time of issuance to your Fund shares. Shareholders of the Fund will receive
Primary A Shares of the Acquiring Fund. The shares you receive will be free of
commissions and sales loads, and there will be no adverse federal income tax
consequences. You may wish to separately consider any state or local tax
consequences in consultation with your tax advisor.
The primary purpose of combining the Fund and the Acquiring
Fund is to seek to achieve certain economies of scale and eliminate certain
costs associated with operating the Fund and the Acquiring Fund separately,
although no such assurances can be made. The Fund and Acquiring Fund have
substantially similar investment objectives and policies. In this regard:
<PAGE>
(BULLET) the Peachtree Prime Money Market Fund, which seeks to
achieve current income consistent with stability of
principal and liquidity, and the Nations Prime Fund, which
seeks the maximization of current income to the extent
consistent with the preservation of capital and the
maintenance of liquidity, both seek to achieve their
objectives by investing in a portfolio of high quality
money market instruments with remaining maturities of 397
days or less.
Although certain differences exist between the investment
policies and restrictions of the Fund and the Acquiring Fund, these differences
are not expected to appreciably increase the level of risk associated with an
investment in the Fund. There also are certain differences between the fee
levels paid by the Fund and the Acquiring Fund. For a discussion of these
differences, see "Summary Comparison of Investment Objectives and Policies" and
"Summary Comparison of Service Arrangements and Fees" in the accompanying
Combined Prospectus/Proxy Statement.
THE BOARD OF TRUSTEES OF PEACHTREE FUNDS HAS UNANIMOUSLY
APPROVED THE PLAN AND RECOMMENDS THAT SHAREHOLDERS OF THE FUND VOTE FOR THE
PLAN. The accompanying Combined Prospectus/Proxy Statement provides details
about the Plan and the Acquiring Fund.
Attached are the formal Notice of Special Meeting and a
Combined Prospectus/Proxy Statement, together with a Proxy Card for you to mark,
sign, date and return to us. Please return your Proxy Card to us so that your
vote will be counted even if you do not attend the Special Meeting in person.
If you are also a shareholder of another portfolio of
Peachtree Funds, you will receive separately proxy materials, including a Proxy
Card, relating to each of those other portfolios. PLEASE REMEMBER TO COMPLETE
AND RETURN EACH PROXY CARD YOU RECEIVE FROM PEACHTREE FUNDS.
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF
SHARES THAT YOU OWN. PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY CARD TODAY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.
If you have any questions regarding the enclosed materials or
the Special Meeting, please call (800) 626-2275. We look forward to receiving
your completed Proxy Card very soon.
Sincerely,
Edward C. Gonzales
President
2
<PAGE>
PEACHTREE FUNDS
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
TELEPHONE: (800) 626-2275
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
PEACHTREE PRIME MONEY MARKET FUND
TO BE HELD ON SEPTEMBER 23, 1996
TO THE SHAREHOLDERS of the Peachtree Prime Money Market Fund
(the "Fund") of Peachtree Funds ("Peachtree Funds"):
PLEASE TAKE NOTE that a SPECIAL MEETING OF SHAREHOLDERS of
Peachtree Funds will be held on Monday, September 23, 1996, at 2:00 p.m.
(Eastern time) at the offices of Peachtree Funds, Federated Investors Tower,
19th Floor, 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779 (the
"Special Meeting"). The Special Meeting, with respect to the Fund, is being
called for the purposes of considering and voting upon:
(1) A proposal to approve an Agreement and Plan of
Reorganization (the "Plan") for the Fund, and the
transactions contemplated thereby, which include (a)
the transfer of all of the assets of the Peachtree
Prime Money Market Fund of Peachtree Funds to Nations
Prime Fund of Nations Fund, Inc. (the "Acquiring
Fund") in exchange for shares of the Acquiring Fund,
and the assumption by the Acquiring Fund of stated
liabilities of the Fund; and (b) the distribution of
shares of the Acquiring Fund to shareholders of the
Fund.
(2) Such other business as may properly come before the
Special Meeting, or any adjournment(s) thereof,
including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
YOUR TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR
OF THIS PROPOSAL.
The Board of Trustees of Peachtree Funds has fixed the close
of business on July 25, 1996, as the record date for the determination of Fund
shareholders entitled to receive notice of and to vote at the Special Meeting or
any adjournment(s) thereof. The enclosed Combined Prospectus/Proxy Statement
contains further information regarding the Special Meeting and the proposal to
be considered. The enclosed Proxy Card is intended to permit you to vote even if
you do not attend the meeting in person.
1
<PAGE>
IN ORDER TO HAVE A QUORUM FOR ACTION ON THE PROPOSAL, THE
HOLDERS OF MORE THAN ONE-HALF OF THE FUND'S SHARES OUTSTANDING ON THE RECORD
DATE MUST BE PRESENT IN PERSON OR BY PROXY. THEREFORE, YOUR PROXY IS VERY
IMPORTANT TO US. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. SIGNED BUT UNMARKED PROXY CARDS WILL BE COUNTED IN DETERMINING WHETHER
A QUORUM IS PRESENT AND WILL BE VOTED IN FAVOR OF THE PROPOSAL.
By Order of the Board of Trustees
John W. McGonigle
Secretary
August 5, 1996
===============================================================================
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU
OWN. PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY CARD IMMEDIATELY. ALSO
REMEMBER TO COMPLETE AND RETURN EACH PROXY CARD YOU RECEIVE FROM PEACHTREE FUNDS
FOR ANY PORTFOLIO OF WHICH YOU ARE A SHAREHOLDER.
================================================================================
2
<PAGE>
COMBINED PROSPECTUS/PROXY STATEMENT
August 5, 1996
Peachtree Funds
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Telephone: (800) 626-2275
Nations Fund, Inc.
111 Center Street
Little Rock, Arkansas 72201
Telephone: (800) 626-2275
-----------------
====================================================================
SHARES OF NATIONS FUND, INC. ("THE COMPANY")
ARE NOT DEPOSITS OR OTHER OBLIGATIONS
OF, OR ISSUED, ENDORSED OR GUARANTEED BY, NATIONSBANK, N.A.
("NATIONSBANK") OR ANY OF ITS AFFILIATES. SUCH SHARES
ARE NOT INSURED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THE
ACQUIRING FUND INVOLVES CERTAIN RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
NATIONSBANK AND CERTAIN OF ITS AFFILIATES PROVIDE CERTAIN OTHER
SERVICES TO NATIONS FUND, FOR WHICH THEY ARE COMPENSATED.
STEPHENS INC., WHICH IS NOT AFFILIATED WITH NATIONSBANK, IS THE
SPONSOR AND ADMINISTRATOR AND SERVES AS THE DISTRIBUTOR FOR THE
PRIMARY A SHARES OF THE COMPANY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
This Combined Prospectus/Proxy Statement is being furnished to
shareholders of the Peachtree Prime Money Market Fund (the "Fund") of Peachtree
Funds ("Peachtree Funds") in connection with the solicitation of proxies by the
Board of Trustees of Peachtree Funds, to be used at a Special Meeting of
Shareholders of Peachtree Funds ("Special Meeting") to be held on Monday,
September 23, 1996 at the offices of the Peachtree Funds, Federated Investors
Tower,
1
<PAGE>
19th Floor, 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779,
beginning at 2:00 p.m. (Eastern time).
The Trustees are seeking your approval of an Agreement and
Plan of Reorganization (the "Plan"), which contemplates that:
Nations Prime Fund of the Company will acquire all of the
assets of the Peachtree Prime Money Market Fund in exchange
for Primary A shares of Nations Prime Fund and the assumption
by Nations Prime Fund of stated liabilities of the Peachtree
Prime Money Market Fund.
Nations Prime Fund is sometimes referred to herein as the
"Acquiring Fund." Following such exchange, the shares of the Acquiring Fund
received by the Fund will be distributed to the Fund shareholders and the Fund
will be dissolved and liquidated. This exchange and distribution transaction is
sometimes referred to herein as the "Reorganization."
As a result of the Reorganization, you will receive full and
fractional Primary A shares of the Acquiring Fund equal in value when issued to
the shares of the Fund owned by you immediately prior to the transaction. No
commissions or sales loads will be charged in connection with the Reorganization
and there will be no federal income tax consequences. You may wish to consider
separately any state or local tax consequences in consultation with your tax
advisor.
As discussed in detail herein, the investment objective and
policies of the Acquiring Fund is substantially similar to those of the Fund.
However, there are some differences between investment strategies, as well as
differences in fee levels, which are described in detail below.
AN INVESTMENT IN THE NATIONS PRIME FUND IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT; AND THERE CAN BE NO ASSURANCE THAT THE
NATIONS PRIME FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00
PER SHARE.
This Combined Prospectus/Proxy Statement, which should be
retained for future reference, sets forth concisely the information about the
Acquiring Fund that a prospective investor, including shareholders of the Fund,
should know before investing. Additional information about the Reorganization is
contained in a separate Statement of Additional Information which has been filed
with the Securities and Exchange Commission (the "SEC") and is available without
charge by calling Nations Fund toll free at (800) 626-2275. The Statement of
Additional Information bears the same date as this Combined Prospectus/Proxy
Statement and is incorporated by reference herein.
The Prospectus of the Acquiring Fund relating to its Primary A
Shares, dated July 31, 1996, is incorporated by reference into this Combined
Prospectus/Proxy Statement. In addition, a copy of the Acquiring Fund's
Prospectus relating to its Primary A Shares, accompanies this Combined
Prospectus/Proxy Statement. A copy of the Acquiring Fund's
2
<PAGE>
Annual Report for the fiscal period ended March 31, 1996, also accompanies this
Combined Prospectus/Proxy Statement.
The following documents containing additional information
about the Fund have been filed with the SEC and are incorporated by reference
herein: the Fund's Prospectus dated November 30, 1995, the Fund's Statement of
Additional Information dated November 30, 1995, and the Semi-Annual Report for
the fiscal period ended March 31, 1996.
Copies of the documents referenced may be obtained without
charge by calling Nations Fund at (800) 626-2275.
3
<PAGE>
TABLE OF CONTENTS
PAGE
FEE TABLE.............................................................. 5
SUMMARY OF REORGANIZATION ............................................. 6
RISK CONSIDERATIONS ................................................... 16
THE PROPOSED TRANSACTION .............................................. 17
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES....................... 22
ADDITIONAL COMPARATIVE INFORMATION .................................... 25
MISCELLANEOUS ......................................................... 26
EXHIBIT A -- AGREEMENT AND PLAN OF REORGANIZATION
4
<PAGE>
FEE TABLE
The following table a) compares the current fees and expenses
for the respective Fund and its corresponding Acquiring Fund, and b) shows the
estimated fees and expenses for the corresponding Acquiring Fund on a pro forma
basis after giving effect to the Reorganization. The purposes of this table is
to assist shareholders in understanding the various costs and expenses that
investors in these portfolios will bear as shareholders. The Example shows the
cumulative expenses attributable to a hypothetical $1,000 investment in the Fund
and its corresponding Acquiring Fund over specified periods.
<TABLE>
<CAPTION>
PEACHTREE PRIME MONEY MARKET FUND/
NATIONS PRIME FUND
PEACHTREE
PRIME MONEY NATIONS
MARKET FUND PRIME FUND
<S> <C> <C> <C>
FUND SHARES/PRIMARY A SHARES PRO FORMA
Shareholder Transaction Expenses for Fund Shares/Primary A Shares Maximum
Sales Load Imposed on Purchase of a Share (as a percentage of
Offering Price)*.................................................. None None None
Annual Fund Operating Expenses for Fund Shares/Primary A Shares (as a
percentage of average net assets):
Management Fees (after waivers and/or reimbursements)**........... 0.19% 0.14% 0.14%
Shareholder Servicing Fees........................................ None None None
12b-1 Fees........................................................ None None None
Other Expenses (after waivers and/or reimbursements)**............ 0.31% 0.16% 0.16%
----- ----- -----
Total Fund Operating Expenses (after waivers and/or reimbursements)**
0.50% 0.30% 0.30%
===== ===== =====
</TABLE>
- -------------------
* There are no sales loads or fees imposed on purchases, reinvested dividends
or redemption of shares.
** Absent fee waivers and expense reimbursements,
"Management Fees," and "Total Operating Expenses" for Shares of the Peachtree
Prime Money Market Fund would have been: 0.50% and 0.81%, respectively. Absent
fee waivers and expense reimbursements, "Management Fees," "Other Expenses" and
"Total Operating Expenses" for Primary A Shares of the Nations Prime Fund would
have been: 0.20%, 0.17% and 0.37%, respectively.
Example:
You would pay the following expenses on a $1,000 investment assuming
(1) a 5% annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Peachtree Prime Money Market Fund $5 $16 $28 $63
Nations Prime Fund (Primary A Shares) $3 $10 $17 $38
</TABLE>
5
<PAGE>
SUMMARY OF REORGANIZATION
QUESTION AND ANSWER SUMMARY
Q. How will the Reorganization affect me?
A. The assets of the Fund will be combined with those of the
Acquiring Fund and you will become a shareholder of the Acquiring Fund. You
will receive Primary A Shares of the Acquiring Fund equal in value at the time
of issuance to the shares of the Fund that you held immediately prior to the
Reorganization.
Q. Why is the Reorganization being recommended?
A. The primary purposes of the proposed Reorganization are to
seek to achieve future economies of scale and eliminate certain costs
associated with operating the Fund and the Acquiring Fund separately. The Fund
and the Acquiring Fund have similar investment objectives and policies, as
described in detail below. The Reorganization will result in combining the
assets of the Fund and the Acquiring Fund and consolidating their operations.
Combining the assets of the Fund and the Acquiring
Fund is intended to provide various benefits to shareholders of the Fund who
become shareholders of the Acquiring Fund (as well as to existing and future
investors in the Acquiring Fund). For example, higher asset levels should enable
the Acquiring Fund to spread fixed and relatively fixed costs, such as
accounting, legal and printing expenses, over a larger asset base, thereby
reducing per-share expense levels. Higher asset levels also should benefit
portfolio management by permitting larger individual portfolio investments (such
as "round-lots" or other quantities that may result in reduced transaction costs
and/or more favorable pricing) and by providing the opportunity for greater
portfolio diversity. In addition, consolidating the operations of the Fund and
the Acquiring Fund should generally benefit the Fund by promoting more efficient
operations on a more cost-effective basis. These benefits, in turn, should have
a favorable effect on the performance of the Acquiring Fund. Finally,
shareholders of the Fund will benefit from the lower total expense ratio of the
Acquiring fund as compared to the Fund.
The completion of the Reorganization is subject to
the satisfaction of a number of conditions (such as approval by the Fund's
shareholders), which are summarized below in "The Proposed Transaction --
Agreement and Plan of Reorganization" section. These conditions are stated in
the Plan, which is attached as Exhibit A to this Combined Prospectus/Proxy
Statement. There can be no assurance that the benefits described here can be
achieved.
Q. Will I have to pay any sales load, commission or other
transactional fee in connection with the Reorganization?
6
<PAGE>
A. No. The full value of your shares of the Fund will be
exchanged for Primary A Shares of the Acquiring Fund without any sales load,
commission or other transactional fee being imposed. NationsBanc Advisors, Inc.
("NBAI"), a wholly owned subsidiary of NationsBank and the Fund's and Acquiring
Fund's investment adviser, or Stephens Inc. ("Stephens"), the sponsor,
distributor and administrator of the Acquiring Fund, will bear the costs
associated with the Plan, such as printing and mailing costs and other expenses
associated with the Special Meeting. Of course, you may redeem your shares in
the Fund at any time before the effective date of the Reorganization, but
shareholders will not have dissenters' or appraisal rights.
Q. How will the fees paid by the Acquiring Fund compare to
those payable by the Fund?
A. Both before and after fee waivers and/or reimbursements,
the total per share operating expenses of the Primary A Shares of the Acquiring
Fund will be lower than the total per share operating expenses of the Fund.
Q. Who will advise the Acquiring Fund and provide other
services?
A. NBAI provides advisory services to the Acquiring Fund
under arrangements that are substantially identical to those in effect prior to
January 8, 1996 between the Fund and NBAI. TradeStreet Investment Associates,
Inc. ("TSIA"), an affiliate of NBAI and the Fund's sub-adviser, provides
sub-advisory services to the Acquiring Fund, under arrangements substantially
similar to those currently in effect between the Fund and NBAI and between NBAI
and TSIA. The contractual advisory fees payable by the Acquiring Fund are no
higher than the advisory fees payable by the Fund. Stephens serves as
distributor of the Acquiring Fund's shares and is the administrator for the
Acquiring Fund. In addition, First Data Investor Services Group, Inc. ("First
Data"), a wholly owned subsidiary of First Data Corporation, serves as
co-administrator of the Acquiring Fund and NationsBank of Texas, N.A.
("NationsBank Texas") is the custodian of the Acquiring Fund. With the
exception of NBAI and TSIA each of these service providers differs from the
current service providers of the Fund.
Q. Will I have to pay any federal income taxes as a result of
the Reorganization?
A. No. As a condition to the Reorganization, the Fund will
receive an opinion of counsel to the effect that the Reorganization will not
result in any gain or loss for federal income tax purposes to the Fund or its
shareholders under the Internal Revenue Code of 1986, as amended (the "Code").
In addition, such opinion will indicate that the federal income tax basis and
holding period of your Fund shares will carry over to the shares of the
Acquiring Fund that you receive in exchange therefor. Such opinion will also
indicate that the federal income tax holding period of your Fund shares will
carry over to the shares of the Acquiring Fund that you receive in the
exchange, unless you did not hold your Fund shares as a capital asset. You may
wish to consider separately any state and local tax consequences in
consultation with your tax adviser.
7
<PAGE>
Q. Is the Acquiring Fund part of a family of funds?
A. Yes. The Acquiring Fund is part of Nations Fund, Inc.,
which in turn, is part of the Nations Fund Family, which includes all funds of
the Company, Nations Fund Trust, Nations Fund Portfolios, Inc. and Nations
Institutional Reserves. Each is a separate investment company registered under
the Investment Company Act of 1940 (the "1940 Act"). There are more than 40
separate investment portfolios in the Nations Fund Family.
APPROVAL AND CONSUMMATION OF THE PROPOSED TRANSACTION
The Board of Trustees of Peachtree Funds unanimously
determined that the Reorganization is in the best interests of the Fund and that
the interests of the existing shareholders of the Fund will not be diluted as a
result of the Reorganization. Similarly, the Board of Directors of the Company
unanimously determined that the Reorganization is in the best interests of the
Acquiring Fund and that the interests of existing shareholders of the Acquiring
Fund will not be diluted as a result of the Reorganization. Management of
Peachtree Funds believes that the proposed Reorganization of the Fund into the
Acquiring Fund should allow the Acquiring Fund to achieve future economies of
scale and to eliminate certain costs associated with operating the Fund and the
Acquiring Fund separately, although no such assurances can be made. In this
regard, the Company anticipates that the aggregate fees and expenses of the
Acquiring Fund will be reduced over time. Finally, shareholders of the Fund will
benefit immediately from the lower total expense ratio of the Acquiring fund as
compared to the Fund. See "The Proposed Transaction -- Reasons for the Proposed
Transaction."
Shareholders of record of the Fund at the close of business on
July 25, 1996 ("Record Date"), will be entitled to notice of and to vote at the
Special Meeting or any adjournments thereof. As of the Record Date, there were
100,670,554 outstanding shares of all portfolios of Peachtree Funds. Of these
shares, the following constituted shares of the Fund:
Total Number of
Fund Shares Outstanding
Peachtree Prime Money Market Fund 51,386,738
Each shareholder of the Fund will be entitled to one vote for
each share, and a fractional vote for each fractional share, held by such
shareholder. Shareholders holding a majority of the outstanding shares of the
Fund at the close of business on the Record Date will be deemed to constitute a
quorum for the transaction of business regarding the Plan at the Special
Meeting. To be approved with respect to the Fund, the Plan will require the
affirmative vote of the holders of a "majority of the outstanding voting
securities," as defined below, of the Fund eligible to vote on the matter. The
Reorganization with respect to the Fund is not contingent on the approval of the
Reorganization with respect to any other funds of Peachtree Funds. If a
8
<PAGE>
Fund's shareholders do not approve the proposed Reorganization, Peachtree Funds'
Board of Trustees will consider what other alternatives would be in the
shareholders' best interest.
SUMMARY COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The investment objective, policies and strategies of the Fund
are substantially similar to those of the Acquiring Fund. The investment
objective of the Fund is fundamental, which means that it cannot be changed
without a vote of the Fund's shareholders. The investment objective of the
Acquiring Fund is non-fundamental and may be changed by the Board of Directors
of the Company.
PEACHTREE PRIME MONEY MARKET FUND/NATIONS PRIME FUND
The Peachtree Prime Money Market Fund's investment objective
is to achieve current income consistent with stability of principal and
liquidity. The Peachtree Prime Money Market Fund seeks to achieve this objective
by investing in a portfolio of high quality money market instruments maturing in
13 months or less. It may invest in domestic issues of corporate debt
obligations, including variable rate demand notes, commercial paper (including
Canadian Commercial Paper and Europaper), certificates of deposit, demand and
time deposits, bankers' acceptances and other instruments of domestic and
foreign banks and other depository institutions, short-term credit facilities,
asset-backed securities, including commercial paper, obligations issued or
guaranteed as to payment of principal and interest by the U.S. Government or one
of its agencies or instrumentalities, and other money market instruments.
However, the Peachtree Prime Money Market Fund will invest only in instruments
denominated and payable in U.S. dollars. It may also invest in repurchase
agreements, securities issued by other investment companies and may lend its
portfolio securities to qualified institutional investors. The average maturity
of the securities in the Peachtree Prime Money Market Fund, computed on a
dollar-weighted basis, will be 90 days or less.
The Nations Prime Fund's investment objective is to seek the
maximization of current income to the extent consistent with the preservation of
capital and maintenance of liquidity. The Nations Prime Fund may invest in U.S.
Treasury obligations and other obligations issued or guaranteed as to payment of
principal and interest by the U.S. Government, its agencies or
instrumentalities. It may also invest in bank and commercial instruments
available in the money markets, high quality short-term taxable obligations
issued by state and local governments, their agencies and instrumentalities and
repurchase agreements relating to U.S. Government obligations. The Nations Prime
Fund may also purchase securities issued by other investment companies,
consistent with the Acquiring Fund's investment objectives and policies, and may
engage in reverse repurchase agreements. It may also invest in guaranteed
investment contracts and in instruments issued by certain trusts. It may also
lend its portfolio securities to qualified institutional investors.
For more information on the investment objectives, policies
and restrictions of the Fund and the Acquiring Fund, see "Comparison of
Investment Objectives and Policies" below.
9
<PAGE>
SUMMARY COMPARISON OF SERVICE ARRANGEMENTS AND FEES
The Fund and the Acquiring Fund have the same investment
advisers and sub-advisers but currently have different distributors,
administrators, custodians and transfer agents. However, these different
entities provide substantially similar services to the Fund and the Acquiring
Fund.
INVESTMENT ADVISORY SERVICES
Investment Adviser. NBAI serves as investment adviser to both
the Fund and Acquiring Fund. Subject to the general supervision of Peachtree's
Board of Trustees and Nations Fund Inc.'s Board of Directors, and in accordance
with the investment policies of the Fund and Acquiring Fund, NBAI formulates
guidelines and lists of approved investments for the Fund and Acquiring Fund,
makes decisions with respect to and places orders for the Fund's and Acquiring
Fund's purchases and sales of portfolio securities and maintains records
relating to such purchases and sales. From time to time, to the extent
consistent with their investment objectives, policies and restrictions, the Fund
and Acquiring Fund may invest in securities of companies with which NationsBank
has a lending relationship.
Effective January 9, 1996, Peachtree Funds entered into an
Investment Advisory Contract with NBAI. The Advisory Contract provides that in
the absence of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the obligations or duties of NBAI under the Advisory Contract, NBAI
and its affiliates shall not be liable to Peachtree Funds or to any shareholder
for any act or omission in the course of, or connected in any way with,
rendering services or for any losses that may be sustained in the purchase,
holding, or sale of any security. The Advisory Contract will continue for two
years from January 9, 1996, unless terminated, and may be continued from year to
year thereafter by the Board of Trustees. The continuation of the Advisory
Contract must be approved by a majority vote of the Trustees, including a
majority of the Non-Interested Trustees, cast in person at a meeting called for
that purpose. NBAI will have the right, in any year, to notify Peachtree Funds
in writing at least 60 days before the Advisory Contract anniversary date that
it does not desire a renewal of the Advisory Contract. The Trustees, or a
majority of the outstanding voting shares of Peachtree Funds, may terminate the
Advisory Contract at any time without penalty by giving NBAI 60 days' written
notice. The Advisory Contract may not be assigned by NBAI and will terminate
automatically in the event of an assignment. The Advisory Contract provides that
it may be amended by a vote of both a majority of the Trustees, including a
majority of the Non-Interested Trustees, and on behalf of a Fund by the holders
of a majority of the outstanding voting shares of such Fund.
In return for its advisory services to the Funds, NBAI is entitled to a
monthly fee calculated at the indicated annual rate of the Fund's average daily
net assets:
10
<PAGE>
INVESTMENT ADVISORY
FUND RATE OF COMPENSATION
Peachtree Prime Money Market Fund 0.50%
For the fiscal period ended March 31, 1996, after waivers, the Fund
paid advisory fees at the annual rate of 0.19% of the Fund's average daily net
assets. NBAI and the Fund's administrator may terminate this voluntary fee
waiver at any time.
As of March 31, 1996, the Fund had $139,076,628 in total net assets.
NBAI also serves as investment adviser to the Acquiring Fund. In return
for its advisory services to the Acquiring Fund, NBAI is entitled to a monthly
fee calculated at the indicated annual rate of the Acquiring Fund's average
daily net assets:
INVESTMENT ADVISORY
ACQUIRING FUND RATE OF COMPENSATION
Nations Prime Fund 0.20%
For its advisory services provided, NBAI is entitled to receive an
advisory fee at the annual rate of 0.25% of the first $250 million of the
combined average daily net assets of the Acquiring Fund, plus 0.20% of the
combined average daily net assets of the Acquiring Fund in excess of $250
million.
Under its agreement with the Acquiring Fund, NBAI may waive (either
voluntarily or pursuant to applicable state limitations) advisory fees payable
by the Acquiring Fund. For the fiscal period ended March 31, 1996, after
waivers, the Acquiring Fund paid advisory fees at the annual rate of 0.14% of
the Acquiring Fund's average daily net assets.
As of March 31, 1996, the Acquiring Fund had total net assets of
$4,101,773,361.
Investment Sub-Adviser. Effective January 9, 1996, and pursuant to a
sub-advisory agreement, between NBAI and TSIA, and approved by the Peachtree
Funds' Shareholders at the January 8, 1996 Joint Meeting of Shareholders (the
"Peachtree Sub-Advisory Agreement"), TSIA will act as Sub-Adviser to the Funds.
The Peachtree Sub-Advisory Agreement provides that TSIA will furnish
NBAI investment advice, statistical and other factual information, as may be
requested by NBAI. The Peachtree Sub-Advisory Agreement may be terminated by the
Trustees of the Peachtree Funds or by a vote of a majority of the outstanding
voting securities of the Fund on sixty days' written notice to the NBAI or TSIA.
TSIA shall not be liable to the NBAI, the Company, or to any of the
11
<PAGE>
Funds or to any shareholder for any act or omission except due to willful
misfeasance, bad faith, gross negligence, or reckless disregard of the
obligations or duties under the Peachtree Sub-Advisory Agreement.
In return for its sub-advisory services to the Funds, TSIA is
entitled to receive from NBAI sub-advisory fees, computed daily and payable
monthly at the annual rates listed below as a percentage of the average daily
net assets of the Funds.
SUB-ADVISORY
FUND RATE OF COMPENSATION
Peachtree Prime Money Market Fund 0.055%
On January 1, 1996 NBAI, TSIA and the Company entered into a
sub-advisory agreement (the "Sub-Advisory Agreement") wherein TSIA would be
appointed Sub-Adviser to the Acquiring Fund. The Sub-Advisory Agreement provides
that subject to the supervision of NBAI and the Board of Trustees, TSIA will
provide a continuous investment program for each Fund, including investment
research and management. The investment activities of TSIA shall be subject to
any directives of the Board of Trustees. And the services furnished by TSIA are
not exclusive and TSIA shall be free to furnish similar services to others so
long as its services under the Sub-Advisory Agreement would not be impaired.
TSIA will pay all expenses incurred by it in connection with its activities
under the Sub-Advisory Agreement other than the cost of securities, commodities
and other investments, including transaction charges. Further, TSIA will not be
liable in connection with it performance, except where a loss results from
willful misfeasance, bad faith or gross negligence on the part of TSIA.
In return for its sub-advisory services to the Acquiring Fund,
TSIA is entitled to receive from NBAI sub-advisory fees, computed daily and
payable monthly at the annual rate listed below as a percentage of average daily
net assets.
SUB-ADVISORY
ACQUIRING FUND RATE OF COMPENSATION
Nations Prime Fund 0.055%
NBAI is a wholly owned subsidiary of NationsBank. NBAI has its
principal offices at One NationsBank Plaza, Charlotte, North Carolina 28225.
TSIA is a wholly owned banking subsidiary of NationsBank, which in turn
is a wholly owned banking subsidiary of NationsBank Corporation, a bank holding
company organized as a North Carolina Corporation. TSIA has its principal
offices at One NationsBank Plaza, Charlotte, North Carolina 28255.
12
<PAGE>
DISTRIBUTION AND SHAREHOLDER SERVICING ARRANGEMENTS
Shares of the Fund are distributed by Federated Securities Corp.
("FSC"), a registered broker-dealer. FSC, a subsidiary of Federated Investors,
has its principal offices at Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779. The Fund has adopted a distribution plan (the "Distribution Plan")
pursuant to Rule 12b-1 under the 1940 Act which permits the Fund to reimburse
FSC up to 0.25% of the Fund's average daily net assets for actual expenses
incurred by FSC in connection with the distribution of Fund shares. The Fund
currently does not reimburse FSC for such expenses. In addition, under a
Shareholder Servicing Plan, the Fund may pay up to 0.25% as a shareholder
services fee to certain financial institutions to compensate financial
institutions which provide administrative and/or distribution related services.
The Fund is not currently paying any shareholder services fees.
Shares of the Acquiring Fund are distributed by Stephens, a full
service broker-dealer, pursuant to a distribution agreement. Stephens has its
principal offices at 111 Center Street, Little Rock, Arkansas 72201. Stephens
receives no compensation in connection with the distribution of the Primary A
Shares of the Acquiring Fund.
OTHER SERVICES
Administrative Services. Administrative services, which may include
providing general oversight of other service providers, office space, utilities
and various legal and administrative services in connection with the
satisfaction of various regulatory requirements, are provided to the Fund by
Federated Administrative Services ("FAS"). FAS, a subsidiary of Federated
Investors, has its principal offices at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. For its services, FAS is entitled to receive a fee at
the annual rate of 0.15% of the combined average daily net assets of all
portfolios of Peachtree Funds up to $250 million; 0.125% of the next $250
million of the combined average daily net assets; 0.10% of the next $250 million
of the combined average daily net assets; and 0.075% of the combined average net
assets in excess of $750 million. The fee is allocated among all portfolios of
Peachtree Funds based on their relative net assets. The administrative fee
received during any fiscal year shall be at least $100,000 per Fund.
Stephens, First Data, and NationsBank serve as administrator,
co-administrator, and sub-administrator, respectively, of the Acquiring Fund
under agreements with the Company. First Data, a wholly owned subsidiary or
First Data Corporation, has its principal offices at One Exchange Place, Boston,
Massachusetts 02109. The administrative services provided by Stephens, First
Data and NationsBank are substantially identical to those provided by the
administrator of the Fund. In return for providing administrative services to
the Acquiring Fund and the other funds of the Company, Stephens and First Data
are entitled to a combined fee at the annual rate of 0.10% of the aggregate
average daily net assets of the Acquiring Fund and NationsBank is entitled to a
monthly fee from Stephens based on an annual rate of 0.01% of the Acquiring
Fund's average daily net assets.
13
<PAGE>
Custodian, Transfer Agent and Other Service Providers. The Bank of New
York serves as the Fund's custodian and is located at 48 Wall Street, New York,
New York 10286. The Bank of New York maintains custody of the Fund's securities,
cash and other property in accordance with the 1940 Act. For such services, the
Bank of New York receives transaction fees and an annual fee from each Fund
based on the market value of the Fund's assets.
For the fiscal period ended March 31, 1996, the total annualized
operating expenses per share of the Fund was as follows:
<TABLE>
<CAPTION>
PEACHTREE FUND ANNUALIZED OPERATING EXPENSE RATIO
<S> <C>
Peachtree Government Money Market Fund 0.50% of average net assets (0.81% before waiver)
</TABLE>
In addition, FSC provides transfer agency services to the Fund under
its administration agreement with the Fund.
NationsBank Texas serves as the Acquiring Fund's custodian. As such,
among other things, NationsBank Texas maintains custody of the securities, cash
and other property of the Acquiring Fund; delivers securities against payment
upon sale and pays for securities against delivery upon purchase; makes payments
on behalf of the Acquiring Fund for payments of dividends, distributions and
redemptions; endorses and collects on behalf of the Acquiring Fund all checks;
and receives all dividends and other distributions made on securities owned by
the Acquiring Fund. For such services, NationsBank Texas receives an asset-based
fee and transaction charges from the Acquiring Fund.
First Data serves as transfer agent for Primary A Shares of the
Acquiring Fund. For its services, First Data receives a monthly fee based on the
number of shareholder accounts it maintains and is reimbursed for its
out-of-pocket expenses.
For the fiscal year ended March 31, 1996, the total annualized expenses
per share of the Primary A Shares of the Acquiring Fund, after waivers, were as
follows:
<TABLE>
<CAPTION>
ACQUIRING FUND ANNUALIZED OPERATING EXPENSE RATIO
<S> <C>
Nations Prime Fund 0.30% of average daily net assets (0.36% before waiver)
</TABLE>
Legal Counsel and Independent Accountants.
Houston, Houston & Donnelly, Pittsburgh, Pennsylvania, and Dickstein,
Shapiro & Morin, L.L.P., Washington, D.C., serve as counsel to Peachtree Funds.
Ernst & Young LLP, Pittsburgh, Pennsylvania, serves as the independent
accountants for Peachtree Funds, and, as such, has audited the financial
statements of Peachtree Funds.
14
<PAGE>
Morrison & Foerster LLP, 2000 Pennsylvania Avenue, N.W., Suite 5500,
Washington, D.C. 20006, is counsel to Nations Fund and special counsel to
NationsBank.
Price Waterhouse LLP, serves as independent accountant to Nations Fund.
Its address is 160 Federal Street, Boston, Massachusetts 02110.
For a complete description of these arrangements, see the section in
the relevant Acquiring Fund's Prospectus entitled "How the Funds Are Managed --
Other Service Providers."
SUMMARY COMPARISON OF PURCHASE, REDEMPTION AND EXCHANGE PROCEDURES
PURCHASES. Shares of the Peachtree Prime Money Market Fund are offered
at net asset value, without a sales load, to all investors. Purchases of Fund
shares may be made on any day on which the New York Stock Exchange and Federal
Reserve Wire System are open for business. The minimum initial investment in the
Fund by an investor is $1,000 ($500 for individual retirement accounts) and the
minimum subsequent investment is $100.
Primary A Shares of the Acquiring Fund are offered at net asset value
to financial institutions (including NationsBank and its affiliated and
correspondent banks) and fee-based planners acting on behalf of their customers,
employee benefit plans, charitable foundations and endowments. Primary A Shares
may, at times, be sold to other similar categories of investors. There is a
minimum initial investment in Primary A Shares of $1,000 per record holder, but
there is no minimum subsequent investment. Primary A Shares may be purchased on
any day on which the Federal Reserve Bank of New York is open for business.
REDEMPTIONS. Redemption orders for the Fund must be placed with the
Fund prior to 4:00 p.m. (Eastern time) in order for the order to be accepted on
that day. Shares may be redeemed on any day that the Fund computes its net asset
value. The Fund computes its net asset value at 12:00 noon (Eastern time) and
4:00 p.m. (Eastern time), Monday through Friday, except on: (i) days on which
changes (if any) in the value of the Fund's portfolio securities do not
materially affect its net asset value; (ii) days during which no shares are
tendered for redemption and no orders to purchase shares are received; and (iii)
the following holidays: New Year's Day, Martin Luther King Day, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veteran's
Day, Thanksgiving Day and Christmas Day. The Fund does not impose a redemption
fee.
Primary A Shares of the Acquiring Fund may be redeemed in accordance
with the instructions and limitations pertaining to the shareholder's account at
his or her institution. The Company may redeem a shareholder's Primary A Shares
if the investor's account drops below $500 as a result of redemptions and the
investor does not increase the balance to $500 on 60 days' written notice.
Redemption orders for shares of the Acquiring Fund may be placed before 4:00
p.m. (Eastern time) on any day that the Acquiring Fund is open for business.
Similarly, no fee is imposed on the redemption of Primary A Shares of the
Acquiring Fund.
EXCHANGES. Shares of a Fund may be exchanged for shares of the other
funds of Peachtree Funds or certain other funds designated by Bank South, which
are distributed by FSC,
15
<PAGE>
but are not advised by Bank South. However, if shares of the Fund are exchanged
for shares of another fund with a higher front-end sales load than the Fund
being exchanged, then the shareholder generally must pay the difference between
the maximum front-end sales charge applicable to the shares being exchanged and
those being acquired. The shares exchanged must have an aggregate value of at
least $1,000. The Fund imposes a $10 service charge on each exchange.
Primary A Shares of the Acquiring Fund may be exchanged for Primary A
Shares of any other fund of the Nations Fund Family which offer Primary A
Shares. For a listing of the funds of the Nations Fund Family, see the Question
and Answer Summary at the beginning of this Combined Prospectus/Proxy Statement.
An exchange of Primary A Shares for Primary A Shares of another fund is made on
the basis of the next calculated net asset value per share of each fund after
the exchange order is received. The Acquiring Fund and each of the other funds
of Nations Fund may limit the number of times this exchange feature may be
exercised by a shareholder within a specified period of time.
SUMMARY COMPARISON OF DIVIDEND POLICIES
The Fund declares dividends from net investment income daily and pays
the dividends monthly. Substantially all capital gains, if any, are distributed
at least annually by the Fund. Dividends and distributions are automatically
reinvested in additional shares unless the shareholder has elected to receive
such payment in cash.
The Acquiring Fund declares dividends from net investment income daily
and pays the dividends monthly. The Acquiring Fund's net short-term capital
gains, if any, are distributed at least annually. Dividends and distributions of
the Acquiring Fund are paid in cash within five business days after the end of
the month. The institutions through which Primary A Shares are purchased may
provide for the reinvestment of dividends and distributions made by the
Acquiring Fund.
SUMMARY OF STRUCTURE AND ORGANIZATION
The Fund is part of Peachtree Funds, a Massachusetts business trust
registered as an open-end management investment company. Peachtree Funds
currently consists of five separate portfolios. The Acquiring Fund is part of
Nations Fund, Inc., a Maryland corporation, which was incorporated in 1983 and
which currently consists of five separate portfolios. The number of portfolios
of Peachtree Funds and the Company is subject to change.
RISK CONSIDERATIONS
Because the investment objective, policies, strategies and restrictions
of the Fund and the Acquiring Fund are substantially similar, the overall level
of investment risk should not materially change as a result of the
Reorganization. For additional information, see "Comparison of Investment
Objectives and Policies" and "Additional Comparative Information" below.
16
<PAGE>
The following risk considerations that an investor should consider are
relevant to both the Fund and the Acquiring Fund (collectively the "funds" or
"fund"). Although NBAI will seek to achieve the investment objective of the
funds, there is no assurance that it will be able to do so. In addition, an
investment in either the Peachtree Prime Money Market Fund or Nations Prime Fund
is neither insured nor guaranteed by the U.S. Government and there can be no
assurance that either fund will be able to maintain a stable net asset value of
$1.00 per share.
No single fund should be considered, by itself, to provide a complete
investment program for any investor. Investments in the funds are not insured
against loss of principal.
The funds' investments may constitute derivative securities, which are
securities whose value is derived, at least in part, from an underlying index or
reference rate. There are certain types of derivative securities that can, under
certain circumstances, significantly increase a purchaser's exposure to market
or other risks. NBAI, however, only purchases derivative securities in
circumstances where it believes such purchases are consistent with such funds'
investment objectives and do not unduly increase the funds' exposure to market
or other risks.
The funds' investments also may constitute U.S. dollar-denominated
securities of foreign issuers. Such securities are subject to different risks
than domestic obligations of domestic banks or corporations. Examples of these
risks include international economic and political developments, foreign
governmental restrictions that may adversely affect the payment of principal or
interest, foreign withholding and taxes on interest income, difficulties in
obtaining or enforcing a judgment against the issuing entity, and the possible
impact of interruptions in the flow of international currency transactions.
Risks may also exist for such securities because the banks issuing these
instruments, or their branches, are not necessarily subject to the same
regulatory requirements that apply to domestic banks, such as reserve
requirements, loan limitations, examinations, accounting, auditing,
recordkeeping, deposit insurance and the public availability of information.
These factors will be carefully considered by NBAI in selecting investments for
the funds.
THE PROPOSED TRANSACTION
AGREEMENT AND PLAN OF REORGANIZATION
The Plan provides that all of the assets of the Fund as of the Closing
Date will be transferred to the Acquiring Fund in exchange for Primary A Shares
of the Acquiring Fund and the assumption by the Acquiring Fund of stated
liabilities of the Fund. The Closing Date is expected to be on or about
September 27, 1996. A copy of the Plan is attached as Exhibit A to this Combined
Prospectus/Proxy Statement. Although portions of the Plan are summarized below,
this summary is qualified in its entirety by reference to the Plan.
Promptly after the Closing Date, the Fund will distribute the Primary A
Shares of the Acquiring Fund to the Fund's respective shareholders of record as
of the close of business on the Closing Date. The Primary A Shares of the
Acquiring Fund which will be issued for distribution to the Fund's shareholders
will be equal in value to the shares of the Fund held as of the Closing
17
<PAGE>
Date. Peachtree Funds will then take all necessary steps to terminate the
qualification, registration and classification of the Fund. All issued and
outstanding shares of the Fund will be redeemed and canceled on the Fund's books
in exchange for shares of the Acquiring Fund. Primary A Shares of the Acquiring
Fund will be represented only by book entries; no share certificates will be
issued unless expressly requested in writing. Certificates are not issued for
fractional shares.
The consummation of the proposed Reorganization is subject to the
satisfaction of a number of conditions set forth in the Plan, including
shareholder approval. The Fund may waive certain conditions at any time before
or after approval of the Plan by the shareholders. The Plan also may be
terminated and the Reorganization abandoned at any time by the mutual written
consent of the Fund and the Acquiring Fund; by either such party without
liability to the other party (unless such party is otherwise in default or in
breach of the Plan) if the closing does not occur within a specified time
period; or by either party without liability to the other party if the other
party materially breaches any of its representations, warranties or covenants or
does not fulfill a condition precedent under the Plan. The Reorganization also
is subject to the condition, which cannot be waived, of obtaining an opinion of
counsel to the effect that the Reorganization constitutes a tax-free
reorganization for federal income tax purposes. NBAI or Stephens will be liable
for the expenses incurred in connection with the Plan, whether or not the
proposed Reorganization is consummated.
Shareholders of the Fund will have no dissenters' rights or appraisal
rights. All shareholders of the Fund as of the Closing Date, including those
that voted against the approval of the Plan, will receive Primary A Shares of
the Acquiring Fund. All shareholders of the Fund have the right at any time up
to the next business day preceding the Closing Date to redeem their shares at
net asset value according to the procedures set forth in the Fund's prospectus.
This summary does not purport to be a complete description of the Plan
and is subject to the terms and conditions of the Plan set forth in Exhibit A.
REASONS FOR THE PROPOSED TRANSACTION
Currently, the Fund and the Acquiring Fund are investment portfolios of
separate mutual fund companies. Although the Fund and the Acquiring Fund have
substantially similar investment objectives, policies and restrictions, each
must separately bear the costs of its operations. Consolidating their separate
operations should generally benefit the Fund's shareholders by promoting more
efficient operations on a more cost-effective basis. In particular, the
Acquiring Fund currently operates and is expected to continue to operate
following consummation of the Reorganization, with a lower overall expense ratio
than the Fund. Because the Funds and the Acquiring Funds receive investment
advisory services from the same investment adviser, NBAI, and because of the
similarities between the Fund and the Acquiring Fund, the considerations and
risks involved with an investment in the Acquiring Fund are expected to be
comparable to those associated with an investment in the Fund.
The transactions contemplated by the Plan were presented to the Board
of Trustees of Peachtree Funds for consideration at a Board meeting held on
February 29, 1996. The Board of
18
<PAGE>
Trustees of Peachtree Funds concluded unanimously that the Reorganization is in
the best interests of the Fund and that the interests of its existing
shareholders will not be diluted by the Reorganization.
The Board of Trustees of Peachtree Funds, in reaching this conclusion,
considered the costs resulting from the separate operations of the Fund and the
Acquiring Fund in light of their substantially similar investment objectives,
policies and restrictions. The Board of Trustees also considered the potential
expense savings, reduced per-share expenses, and benefits to the portfolio
management process that could result from combining the assets and operations of
the Fund and the Acquiring Fund. In this regard, the Board reviewed information
provided by the investment adviser, distributors and administrators of the Fund
and the Acquiring Fund, relating to the anticipated cost savings to the
shareholders of the Fund as a result of the Reorganization.
In particular, the Board determined that the elimination of duplicative
operations and the increase in asset levels of the Acquiring Fund after the
Reorganization should result in the following benefits for investors, although
there can be no assurances, of course, in this regard:
(1) ACHIEVEMENT OF REDUCED PER-SHARE EXPENSES. Combining
the assets of the Fund with the assets of the Acquiring Fund also
should lead to reduced expenses, on a per-share basis to the
shareholders of the Fund. Any significant reductions in expenses on a
per-share basis should have, in turn, a favorable effect on the total
return of the Acquiring Fund.
(2) BENEFITS TO THE PORTFOLIO MANAGEMENT PROCESS. Higher
asset levels also should enable the Acquiring Fund to purchase larger
individual portfolio investments (such as "round-lots" or other
quantities that may result in reduced transaction costs and/or other
more favorable pricing) and provide the opportunity for greater
portfolio diversity.
The Board based its decision to recommend the proposed transaction on
the consideration of a number of factors, including, among other things:
(1) the terms and conditions of the Reorganization and
the fact that it would not result in a dilution of the existing
shareholders' interests;
(2) the compatibility of the Fund's investment
objective, strategy, policies and restrictions with those of the
Acquiring Fund, as well as the views of the investment adviser to the
Fund and the Acquiring Fund that any differences between the investment
policies and restrictions of the Fund and the Acquiring Fund should not
appreciably increase investment risks;
(3) the experience and resources of NBAI and its
affiliates with respect to providing investment management services and
the similarity between the Fund's and the Acquiring Fund's respective
distribution, administrative, transfer agency, shareholder service and
custody arrangements;
19
<PAGE>
(4) the current and projected expense ratios, and
information regarding fees and expenses of the Fund, the Acquiring Fund
and other similar funds;
(5) the conditioning of the Reorganization on the
receipt of a legal opinion confirming the absence of any adverse
federal income tax consequences to the Fund or their shareholders
resulting from the Reorganization; and
(6) other factors deemed relevant.
In particular, the Board considered per share operating expense ratios
(total operating expenses expressed as a percentage of average net assets) both
before and after fee waivers and expense reimbursements for the single class of
shares of the Fund and the Primary A Shares of the Acquiring Fund, and on a pro
forma basis after giving effect to the Reorganization. As of November 30, 1995
these expense ratios, after waivers and reimbursements, were:
ESTIMATED OPERATING EXPENSE RATIOS
PEACHTREE PRIME MONEY MARKET FUND / NATIONS PRIME FUND
<TABLE>
<CAPTION>
Peachtree Prime
Money Market Fund Nations Prime Fund Pro Forma (reflects waivers)
<S> <C> <C>
0.49% 0.30% 0.30%
(Fund Shares) (Primary A Shares) (Fund Shares/Primary A Shares)
</TABLE>
DESCRIPTION OF THE SECURITIES TO BE ISSUED
The Acquiring Fund consists of 4,102,230,903 shares of common stock,
par value of $.001 per share of the Company, which is an open-end series
management investment company incorporated as a Maryland corporation on December
13, 1983. Shares of the Acquiring Fund are divided into the following six
classes of shares: Primary A Shares, Primary B Shares, Investor A Shares,
Investor B Shares, Investor C Shares and Investor D Shares. Shareholders are
entitled to one vote for each share held, and a fractional vote for fractional
shares held on matters on which they are entitled to vote. See "Additional
Comparative Information."
Shareholders of the Fund are offered Primary A Shares of the Acquiring
Fund because of the similarities between the distribution and servicing
arrangements of such shares. Information regarding the Primary B, Investor A,
Investor B, Investor C and Investor D Shares of the Acquiring Fund is contained
in the prospectus for the Acquiring Fund which accompanies this Combined
Prospectus/Proxy Statement.
FEDERAL INCOME TAX CONSEQUENCES
As a condition to the closing of the Reorganization, Peachtree Funds
and the Company must receive a favorable opinion from Morrison & Foerster LLP,
counsel to the Company, substantially to the effect that, for federal income tax
purposes: (a) the Reorganization will
20
<PAGE>
constitute a "tax-free" reorganization within the meaning of Section
368(a)(1)(C) of the Code; (b) no gain or loss will be recognized by the
Acquiring Fund or the Fund as a result of the Reorganization; (c) no gain or
loss will be recognized by shareholders of the Fund upon the exchange of their
Fund shares for shares of the Acquiring Fund; (d) the federal income tax basis
of the Acquiring Fund shares received by a Fund shareholder pursuant to the
Reorganization will be the same as the basis of the shareholder's Fund shares
exchanged; (e) the holding period of the Acquiring Fund shares so received will
include the period during which the Fund shareholder held shares of the Fund,
provided such shares were held as a capital asset; (f) the federal income tax
basis of the Fund's assets acquired by the Acquiring Fund will be the same as
the federal income tax basis of such assets immediately prior to the
Reorganization; (g) the holding period of each Fund's assets acquired by the
corresponding Acquiring Fund; and (h) the Acquiring Fund will succeed to the
Fund's tax attributes described in Section 381(c) of the Code as of the end of
the Closing Date will include the period during which those assets were held by
the Fund. Peachtree Funds and the Company do not intend to seek a private letter
ruling with respect to the tax effects of the Reorganization.
RELATED PROPOSALS OF INTEREST TO FUND SHAREHOLDERS
Peachtree Government Money Market Fund, Peachtree Equity Fund,
Peachtree Bond Fund and Peachtree Georgia Tax-Free Income Fund also are
considering the approval of a reorganization with the following respective
portfolios of Nations Fund Trust, Nations Government Money Market Fund, Nations
Capital Growth Fund, Nations Strategic Fixed Income Fund and Nations Georgia
Intermediate Municipal Bond Fund. This matter will be considered by the
shareholders of the Peachtree Government Money Market Fund, Peachtree Equity
Fund, Peachtree Bond Fund and Peachtree Georgia Tax-Free Income Fund at the
Special Meeting. The consummation of the Plan with respect to the Fund is not
contingent on the approval of this matter by the Peachtree Government Money
Market Fund, Peachtree Equity Fund, Peachtree Bond Fund and/or Peachtree Georgia
Tax-Free Income Fund
CAPITALIZATION
The following table shows the capitalization of the Acquiring Fund and
the Fund as of March 31, 1996 and on a pro forma basis as of that date after
giving effect to the Reorganization:
PEACHTREE PRIME MONEY MARKET FUND/NATIONS PRIME FUND
<TABLE>
<CAPTION>
Pro Forma Combined
(Fund Shares/All
Peachtree Prime Classes of Acquiring
Money Market Fund Nations Prime Fund Pro Forma Combined Fund Shares)
<S> <C> <C> <C> <C>
Net assets $139,076,628 $2,472,468,796 $2,611,545,424 $4,240,849,989
(Fund Shares) (Primary A Shares) (Fund Shares/Primary A
Shares)
21
<PAGE>
Pro Forma Combined
(Fund Shares/All
Peachtree Prime Classes of Acquiring
Money Market Fund Nations Prime Fund Pro Forma Combined Fund Shares)
Net asset per share $1.00 $1.00 $1.00 N/A
Shares outstanding 139,078,958 2,472,744,594 2,611,823,552 N/A
(Fund Shares) (Primary A Shares) (Fund Shares/Primary A
Shares)
Shares authorized Unlimited 10,000,000,000 10,000,000,000 N/A
</TABLE>
As of July 31, 1996, the net assets of the Fund equaled less than 10%
of the assets of the Acquiring Fund, and therefore, pro forma financial
statements are not provided for the Fund.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVES AND POLICIES
The investment objective and policies of the Fund are substantially
similar to those of the Acquiring Fund. However, the investment objective of the
Fund is "fundamental" which means that it may not be changed without the consent
of a majority of the Fund's outstanding shares, as defined in the 1940 Act. The
investment objective of the Acquiring Fund is "non-fundamental," which means
that it may be changed without a vote of the Acquiring Fund's shareholders.
The Fund's investment objective is to achieve current income consistent
with stability of principal and liquidity. Similarly, the Acquiring Fund's
investment objective is to seek the maximization of current income to the extent
consistent with the preservation of capital and the maintenance of liquidity.
The Fund pursues its investment objective by investing in a portfolio
of high quality money market instruments maturing in 13 months or less. The
average maturity of money market instruments in the Fund's portfolio, computed
on a dollar-weighted basis, is 90 days or less. The Fund may invest in domestic
issues of corporate debt obligations, including variable rate demand notes;
commercial paper; certificates of deposit, demand and time deposits, bankers'
acceptances and other instruments of domestic and foreign banks and other
depository institutions; short-term credit facilities; asset-backed securities,
including commercial paper; U.S. Government obligations; and other money market
instruments.
Similarly, in pursuing its investment objective, the Acquiring Fund may
invest in U.S. Treasury bills, notes and bonds and other instruments issued
directly by the U.S. Government; bank and commercial instruments available in
the money markets, high quality short-term
22
<PAGE>
taxable obligations issued by state and local governments, their agencies and
instrumentalities and repurchase agreements relating to U.S. Government
obligations; securities issued by other investment companies consistent with the
Acquiring Fund's investment objective and policies; and reverse repurchase
agreements. In addition, the Acquiring Fund may lend its portfolio securities to
qualified institutional investors. As with the Fund, the average maturity of
money market instruments in the Acquiring Fund's portfolio, computed on a
dollar-weighted basis, is 90 days or less.
INVESTMENT RESTRICTIONS
The fundamental investment restrictions of the Fund and the Acquiring
Fund are substantially identical except for the following differences:
1. The Acquiring Fund may not borrow money or issue senior securities
as defined in the 1940 Act except that (a) it may borrow money from banks for
temporary purposes in amounts up to one-third of the value of its total assets
at the time of the borrowing, provided that borrowings in excess of 5% of the
value of its total assets will be repaid prior to the purchase of additional
portfolio securities, (b) it may enter into commitments to purchase securities
in accordance with its investment program, including delayed delivery and
when-issued securities which may be considered to be the issuance of senior
securities, (c) it may issue multiple classes of shares in accordance with SEC
regulations or exemptions under the 1940 Act, and (d) the purchase and sale of
futures contracts and related options shall not be considered to involve the
borrowing of money or the issuance of senior securities. The Fund has similar
investment restrictions except that exceptions (b) and (d) are not included.
Furthermore, the Fund's restriction provides that the Fund will not borrow money
for investment leverage, but rather as a temporary, extraordinary, or emergency
measure to facilitate management of the portfolio by enabling the Fund to meet
redemption requests when the liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous.
2. The Acquiring Fund and the Fund may not sell securities short, but
the Acquiring Fund may sell short "against the box." A short sale is the sale of
a security that the fund does not own. A short sale is "against the box" if at
all times when the short position is open, the fund owns an equal amount of
securities convertible into, or exchangeable without further consideration for,
securities of the same issuer as the securities sold short.
In addition, the Acquiring Fund has the following non-fundamental
investment restrictions. Except as noted below, these non-fundamental investment
restrictions are substantially similar to fundamental investment restrictions of
the Fund. As discussed above, fundamental restrictions of the Fund may not be
changed without a vote of a majority of the outstanding voting securities of the
Fund; non-fundamental policies may be changed without a shareholder vote.
1. The Acquiring Fund may not purchase securities for the purpose of
exercising control.
23
<PAGE>
2. The Acquiring Fund may not purchase oil, gas or mineral leases or
other interests, except that the Acquiring Fund may purchase and sell the
securities of companies engaged in the exploration, development, production,
refining, transporting and marketing of oil, gas or minerals.
3. The Acquiring Fund may not invest in warrants valued at the lower of
cost or market, in excess of 5% of the value of its assets, and no more than 2%
of the value of its assets may be invested in warrants that are not listed on
the New York or American Stock Exchange.
4. The Acquiring Fund may not purchase securities of any one issuer
(other than U.S. Government obligations and repurchase agreements fully
collateralized by such obligations) if, immediately after such purchase, more
than 5% of the value of the Fund's assets would be invested in the securities of
such issuer. However, up to 25% of the Fund's total assets may be invested for a
period of three business days in the securities of a single issuer without
regard to such 5% limitation.
5. The Acquiring Fund may not invest more than 10% of the value of its
net assets in illiquid securities, including repurchase agreements, time
deposits and guaranteed investment contracts with maturities in excess of seven
days, illiquid restricted securities and other securities that are not readily
marketable. For purposes of this restriction, illiquid securities do not include
securities which may be resold under Rule 144A or Section 4(2) under the
Securities Act of 1933 and which are deemed liquid under guidelines adopted by
the Company's Board of Directors.
6. The Acquiring Fund may not pledge, mortgage or hypothecate any
assets except to secure permitted borrowings and then only in an amount up to
33-1/3% of the value of the Acquiring Fund's total assets at the time of the
borrowing. The Fund's substantively identical fundamental restriction limits
such permitted actions to 15% of the value of the Fund's total assets at the
time of the borrowing.
7. The Acquiring Fund may not purchase puts, calls, straddles, spreads
and any combination thereof if by reason thereof the value of it aggregate
investment in such securities will exceed 5% of its total assets. Such
restriction does not apply to (i) the purchase of standby commitments and
futures contracts and related options, and (ii) short-term credits necessary for
the clearance of portfolio securities transactions.
* * * * *
It is not anticipated that the above-mentioned differences in
investment policies and restrictions will, individually or in the aggregate,
result in an appreciable variation between the level of investment risks
associated with an investment in the Fund. For a more complete description of
the Acquiring Fund's investment policies and restrictions, see "Objectives" and
"How Objectives Are Pursued" in the Acquiring Fund's Prospectus and "Additional
Information on Fund Investments" in the Acquiring Fund's Statement of Additional
Information. For a more complete description of the Fund's investment policies
and restrictions, including relevant risk factors, see "Investment Objective,"
"Investment Policies," and "Certain Borrowing and
24
<PAGE>
Investment Limitations" in the Fund's Prospectus and "Investment Objective and
Policies" in the Fund's Statement of Additional Information.
ADDITIONAL COMPARATIVE INFORMATION
COMPARISON OF RIGHTS OF SECURITY HOLDERS
The Peachtree Funds is a Massachusetts business trust,
registered under the 1940 Act as an open-end series management investment
company. The Company is a Maryland corporation, registered under the 1940 Act as
an open-end series management investment company. Peachtree Funds was
established under a Declaration of Trust dated September 22, 1993. The Company
was incorporated in Maryland on December 13, 1983. Peachtree Funds is authorized
to issue an unlimited number of shares which may be divided into separate funds
and portfolios and separate classes of shares. The Company has authorized
capital stock of 270,000,000,000 shares of common stock, par value of $.001 per
share, which are divided into series or funds each of which consists of separate
class of shares.
Each share of Peachtree Funds represents an equal
proportionate interest in that portfolio with each other share. Shares are
entitled upon liquidation to a pro rata share in the net assets of the
portfolios. Shareholders of Peachtree Funds have no preemptive rights. The
Declaration of Trust provides that the Trustees of Peachtree Funds may create
additional portfolios or classes of shares. All consideration received by
Peachtree Funds for shares of any additional series and all assets in which such
consideration is invested would belong to that portfolio and would be subject to
the liabilities related thereto.
Shares of the Acquiring Fund represent an equal proportionate
interest in the related fund with other shares of the same class, and are
entitled to such dividends and distributions out of the income earned on the
assets belonging to the Acquiring Fund as are declared in the discretion of the
Company's Board of Directors. Once properly issued and outstanding, each share
is fully paid and nonassessable, has only such conversion or exchange rights as
the Board of Directors grants in its discretion, and has no preemptive rights.
Shareholders of the Company do not have cumulative voting rights, and therefore,
the holders of more than 50% of the outstanding shares of all funds voting
together for election of directors may elect all of the members of the Board of
Directors of the Company. The Company normally does not hold annual meetings of
shareholders, except as required under the 1940 Act.
Shares of each class of the Acquiring Fund have equal rights
with respect to voting, except that the holders of shares of a particular class
will have the exclusive right to vote on matters affecting only the rights of
the holders of such class. In the event of dissolution or liquidation, holders
of each class will receive pro rata, subject to the rights of creditors, (a) the
proceeds of the sale of that portion of the assets allocated to that class held
in the respective fund of the Company less (b) the liabilities of the Company
attributable to the respective fund or class or allocated among the funds or
classes based on the respective liquidation value of each fund or class.
25
<PAGE>
For a complete description of the attributes of the Fund's
shares, including how to purchase, redeem or exchange shares and certain
restrictions thereon, taxation of the Fund and its shareholders, and dividend
and distribution policies, see the sections in the Fund's Prospectus entitled
"Investing in the Fund," "Redeeming Shares," "Shareholder Information," and "Tax
Information." Additional information about the Fund is included in the Fund's
Prospectus, dated November 30, 1995, which is incorporated by reference herein,
and in the Fund's Statement of Additional Information, dated November 30, 1995.
Copies of the Statement of Additional Information may be obtained without charge
by calling Peachtree Funds at (800) 626-2275.
For a more complete description of the attributes of the
Acquiring Fund's shares, including how to purchase, redeem or exchange shares,
see the sections in the Acquiring Fund's Prospectus entitled "Organization and
History," "How to Buy Shares," "How to Redeem Shares," "How to Exchange Shares"
and "How Dividends and Distributions are Made; Tax Information." Additional
information about the Acquiring Fund is included in its Prospectus dated July
31, 1996, and Statement of Additional Information dated July 31, 1996, copies of
which may be obtained without charge by calling Nations Fund at (800) 626-2275.
Additional information regarding the Reorganization is
contained in the Statement of Additional Information, dated August 5, 1996, to
this Combined Prospectus/Proxy Statement. The Statement of Additional
Information is incorporated by reference herein and may be obtained by calling
Nations Fund at (800) 626-2275.
MISCELLANEOUS
ADDITIONAL INFORMATION
The Company and Peachtree Funds are each subject to the
informational requirements of the 1940 Act, and in accordance therewith each
files reports, proxy materials and other information with the SEC. Such reports,
proxy materials and other information may be inspected and copied at the public
reference facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549. Copies of such materials can be obtained from the Public Reference
Branch, Office of Consumer Affairs and Information Services, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
VOTING MATTERS
As defined by the 1940 Act, a "majority of the outstanding
voting securities" of the Fund means the vote of (i) 67% or more of the Fund's
outstanding shares present at the Special Meeting, if the holders of more than
50% of the outstanding shares of the Fund or class are present or represented by
proxy at the Special Meeting, or (ii) more than 50% of the Fund's or class'
outstanding shares, whichever is less. Any proxy which is properly executed and
received in time to be voted at the Special Meeting will be counted in
determining whether a quorum is present and will be voted in accordance with the
instructions marked thereon. In the absence of any instructions, such proxy will
be voted in favor of the approval of the Plan. If the Plan is approved at the
Special Meeting, the effective date of the Reorganization ("Closing
26
<PAGE>
Date") is expected to be on or about September 27, 1996. Abstentions and "broker
non-votes" (i.e., proxies from brokers or nominees indicating that such persons
have not received instructions from the beneficial owners or other persons
entitled to vote shares as to a particular matter with respect to which the
brokers or nominees do not have discretionary power to vote) will not be counted
for or against any proxy to which they relate, but will be counted for purposes
of determining whether a quorum is present and will be counted as votes present
for purposes of determining a "majority of the outstanding voting securities"
present at the Special Meeting. For this reason, abstentions and broker
non-votes will have the effect of a vote against the proposals.
The duly appointed Proxies may, in their discretion, vote upon such other
matters as properly may come before the Special Meeting or any adjournment(s)
thereof, including any proposal to adjourn a meeting at which a quorum is
present to permit the continued solicitation of proxies in favor of the
Reorganization. In case any such adjournment is proposed with respect to any
item, the duly appointed proxies will vote those proxies which they are entitled
to vote for such item in favor of adjournment, and will vote those proxies
required to be voted against such item against adjournment. A shareholder vote
may be taken on one of the items described in this Combined Prospectus/Proxy
Statement prior to any such adjournment if sufficient votes have been received
and it is otherwise appropriate. A shareholder of the Fund may revoke his or her
proxy at any time prior to its exercise by delivering written notice of
revocation or by executing and delivering a later-dated proxy to the Secretary
of Peachtree Funds, Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779, or by attending the Special Meeting in person to vote the shares of
the Fund held by such shareholder. The date of the first mailing of this
Combined Prospectus/Proxy Statement to shareholders is approximately August 5,
1996.
SOLICITATION OF PROXIES AND PAYMENT OF EXPENSES
The cost of soliciting proxies for the Special Meeting,
consisting principally of printing and mailing expenses, together with the costs
of any supplementary solicitation and proxy soliciting services provided by
third parties, will be borne by NationsBank or Stephens. Proxies will be
solicited in the initial, and any supplemental, solicitation by mail and may be
solicited in person, by telephone, telegraph, or other electronic means by
officers of Peachtree Funds.
PEACHTREE FUNDS -- 5% OWNERSHIP AS OF JULY 25, 1996
<TABLE>
<CAPTION>
Amount % of Fund
Peachtree Fund Name and Address of Shares % of Fund Post-Closing
- -------------- ---------------- --------- --------- ------------
<S> <C> <C> <C>
Prime Money HORTON HOMES ESOP 3,619,452.42 6.57% 0.09%
Market Fund P.O. Box 581
Eatonton, GA 31024
I/A Atlanta Historical 4,234,558.84 7.69% 0.10%
Society
130 West Paces Ferry Rd, NW
Atlanta,GA 30305-1366
27
<PAGE>
Haverty Furniture Co. Inc. 4,964,179.95 9.01% 0.12%
Ren Plan
600 Peach Tree Street, NE
7th Fl - Perf. Measmt
Atlanta, GA 30308
</TABLE>
As of the close of business on July 25, 1996, there were no
persons known to the Company to be owners of record of 5% or more of the
outstanding shares of any fund of the Company, except as indicated below. Unless
otherwise indicated, the address for each recordholder of Primary A Shares is
Attention: 1401 Elm Street, 11th Floor, Dallas, Texas 75202.
As of the close of business on July 25, 1996, the officers and
Directors of the Company as a group beneficially owned less than 1% of the
outstanding shares of the Company. As of the same date, NationsBank and its
affiliates possessed or shared power to dispose or vote with respect to more
than 25% of the outstanding shares of the Company and therefore could be
considered a controlling person of the Company for purposes of the 1940 Act.
DOCUMENTS INCORPORATED BY REFERENCE
The Prospectus of the Acquiring Fund relating to its Primary A
Shares, dated July 31, 1996, is incorporated by reference into this Combined
Prospectus/Proxy Statement. In addition, the Fund's Prospectus dated November
30, 1995, is incorporated by reference into this Combined Prospectus/Proxy
Statement and may be obtained by calling Nations Fund at (800) 626-2275. Copies
of documents requested will be sent by first-class mail to the requesting
shareholder within one business day of receipt of the request.
OTHER BUSINESS
The Board of Trustees of the Peachtree Funds knows of no other
business to be brought before the Special Meeting. However, if any other matters
come before the Special Meeting, including any proposal to adjourn the meeting
to permit the continued solicitation of proxies in favor of any of the
proposals, it is their intention that Proxies which do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed Proxy Card.
FUTURE SHAREHOLDER PROPOSALS
Pursuant to rules adopted by the SEC under the Securities
Exchange Act of 1934 (the "1934 Act"), investors may request inclusion in the
Board's proxy statement for shareholder meetings certain proposals for action
which they intend to introduce at such meeting. Any shareholder proposals must
be presented within a reasonable time before the proxy materials for the next
meeting are sent to shareholders. The submission of a proposal does not
guarantee its inclusion in Peachtree Funds' proxy statement and is subject to
limitations under the 1934 Act. It is not presently anticipated that the Company
or Peachtree Funds will hold regular meetings of investors, and no anticipated
date of the next meeting can be provided.
28
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement")
is made as of this 1st day of August, 1996, by and between Nations Fund, Inc.
("Nations Fund"), a Maryland corporation, for itself and on behalf of the
Nations Prime Fund (the "Acquiring Fund"), a portfolio of Nations Fund, and
Peachtree Funds ("Peachtree Funds"), a Massachusetts business trust, for itself
and on behalf of the Peachtree Prime Fund (the "Acquired Fund"), a portfolio of
Peachtree Funds.
In accordance with the terms and conditions set forth in this
Agreement, the parties desire that all of the assets of the Acquired Fund be
transferred to the Acquiring Fund, as set forth in the table attached hereto as
Schedule A, in exchange for Primary A Shares of common stock of the Acquiring
Fund ("Acquiring Fund Shares") and the assumption by the Acquiring Fund of the
Stated Liabilities (as defined in paragraph 1.3) of the Acquired Fund, and that
such Acquiring Fund Shares be distributed immediately after the Closing, as
defined in this Agreement, by the Acquired Fund to its shareholders in
liquidation of the Acquired Fund. This Agreement is intended to be and is
adopted as a plan of reorganization within the meaning of Section 368(a)(1)(C)
of the Internal Revenue Code of 1986, as amended (the "Code").
In consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:
1. REORGANIZATION OF 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 Acquired Fund shall assign, deliver and otherwise transfer its assets as set
forth in paragraph 1.2 (the "Fund Assets") to the Acquiring Fund, and the
Acquiring Fund shall, as consideration therefor, on the Closing Date (as defined
in paragraph 3.1), (i) deliver to the Acquired Fund full and fractional
Acquiring Fund Shares, the corresponding class and number of which shall be
determined by dividing (a) that portion of the value of the Fund Assets, net of
the Acquired Fund's Stated Liabilities, computed in the manner and as of the
time and date set forth in paragraph 2.1, representative of the shares of
beneficial interest of the Acquired Fund, by (b) the net asset value of one
share of the Acquiring Fund's corresponding class of shares identified in
Schedule A, computed in the manner and as of the time and date set forth in
paragraph 2.2, and (ii) assume the Acquired Fund's Stated Liabilities. Such
transfer, delivery and assumption shall take place at the closing(s) provided
for in paragraph 3.1 (hereinafter sometimes referred to as the "Closing(s)").
Promptly after the Closing(s), the Acquired Fund shall distribute the Acquiring
Fund Shares to the shareholders of the Acquired Fund in liquidation of the
Acquired Fund as provided in paragraph 1.4 hereof. Such transaction(s) are
hereinafter sometimes collectively referred to as the "Reorganization(s)."
<PAGE>
1.2 (a) With respect to the Acquired Fund, the Fund
Assets shall consist of all property and assets of any nature whatsoever,
including, without limitation, all cash, cash equivalents, securities, claims
and receivables (including dividend and interest receivables) owned by the
Acquired Fund, and any prepaid expenses shown as an asset on the Acquired Fund's
books on the Closing Date.
(b) At least fifteen (15) business days prior to the
Closing Date, the Acquired Fund will provide the Acquiring Fund with a schedule
of its securities and other assets and its known liabilities, and the Acquiring
Fund will provide the Acquired Fund with a copy of the current investment
objective and policies applicable to the Acquiring Fund. The Acquired Fund
reserves the right to sell any of the securities or other assets shown on the
list of the Fund's Assets prior to the Closing Date but will not, without the
prior approval of the Acquiring Fund, acquire any additional securities other
than securities which the Acquiring Fund is permitted to purchase in accordance
with its stated investment objective and policies. At least ten (10) business
days prior to the Closing Date, the Acquiring Fund will advise the Acquired Fund
of any investments of the Acquired Fund shown on such schedule which the
Acquiring Fund would not be permitted to hold, pursuant to its stated investment
objective and policies or otherwise. In the event that the Acquired Fund holds
any investments that the Acquiring Fund would not be permitted to hold under its
stated investment objective or policies, the Acquired Fund, if requested by the
Acquiring Fund, will dispose of such securities prior to the Closing Date to the
extent practicable. In addition, if it is determined that the portfolios of the
Acquired Fund and the Acquiring Fund, when aggregated, would contain investments
exceeding certain percentage limitations to which the Acquiring Fund is or will
be subject with respect to such investments, the Acquired Fund, if requested by
the Acquiring Fund, will dispose of and/or reinvest a sufficient amount of such
investments as may be necessary to avoid violating such limitations as of the
Closing Date.
1.3 Acquired Fund will endeavor to discharge all of
its known liabilities and obligations prior to the Closing Date. The Acquiring
Fund will assume all liabilities and obligations reflected on an unaudited
statement of assets and liabilities of the Acquired Fund prepared by the or on
behalf of Peachtree Funds as of the Applicable Valuation Date (as defined in
paragraph 2.1), in accordance with generally accepted accounting principles
consistently applied from the prior audited period ("Stated Liabilities"). The
Acquiring Fund shall assume only the Stated Liabilities of the Acquired Fund,
and no other liabilities or obligations, whether absolute or contingent, known
or unknown, accrued or unaccrued.
1.4 Promptly after the Closing, the Acquired Fund
will distribute the Acquiring Fund Shares received by the Acquired Fund pursuant
to paragraph 1.1 pro rata to its shareholders of record determined as of the
close of business on the Closing Date ("Acquired Fund Investors") in complete
liquidation of the Acquired Fund. Such distribution will be accomplished by an
instruction, signed by an appropriate officer of Peachtree Funds, to transfer
the Acquiring Fund Shares then credited to the Acquired Fund's account on the
books of the Acquiring Fund to open accounts on the books of the Acquiring Fund
established and maintained by the Acquiring Fund's transfer agent in the names
of record of the Acquired Fund Investors and representing the respective pro
rata number of shares of the Acquiring Fund due such Acquired Fund Investor. In
exchange for Acquiring shares distributed, all issued and outstanding shares of
2
<PAGE>
beneficial interest of the Acquired Fund will be redeemed and canceled
simultaneously therewith on the Acquired Fund's books; any outstanding share
certificates representing interests in the Acquired Fund will represent the
right to receive such number of Acquiring Fund Shares after the Closing as
determined in accordance with Section 1.1.
1.5 If any request shall be made for a change of the
registration of shares of the Acquiring Fund to another person from the account
of the shareholders in which name the shares are registered in the records of
the Acquired Fund it shall be a condition of such registration of shares that
there be furnished the Acquiring Fund an instrument of transfer properly
endorsed, accompanied by appropriate signature guarantees and otherwise in
proper form for transfer and, if any of such shares are outstanding in
certificated form, the certificates representing such shares, and that the
person requesting such registration shall pay to the Acquiring Fund any transfer
or other taxes required by reason of such registration or establish to the
reasonable satisfaction of the Acquiring Fund that such tax has been paid or is
not applicable.
1.6 Following the transfer of assets by the Acquired
Fund to the Acquiring Fund, the assumption of the Acquired Fund's Stated
Liabilities by the Acquiring Fund, and the distribution by the Acquired Fund of
the Acquiring Fund Shares received by it pursuant to paragraph 1.4, Peachtree
Funds shall terminate the qualification, classification and registration of the
Acquired Fund at all appropriate federal and state agencies. Any reporting or
other responsibility of Peachtree Funds is and shall remain the responsibility
of Peachtree Funds up to and including the date on which the particular Acquired
Fund is terminated and deregistered, subject to any reporting or other
obligations described in paragraph 4.9.
2. VALUATION
2.1 With respect to the Acquired Fund, the value of
the Fund Assets shall be the value of such assets computed as of the time at
which its net asset value is calculated pursuant to the valuation procedures set
forth in the Acquiring Fund's then current Prospectus and Statement of
Additional Information on the Closing Date, or at such time on such earlier or
later date as may mutually be agreed upon in writing among the parties hereto
(such time and date being herein called the "Applicable Valuation Date").
2.2 The net asset value of each share of the
Acquiring Fund shall be the net asset value per share computed on the Applicable
Valuation Date, using the market valuation procedures set forth in the Acquiring
Fund's then current Prospectus and Statement of Additional Information.
2.3 All computations of value contemplated by this
Article 2 shall be made by the Acquiring Fund's Co-Administrator in accordance
with its regular practice as pricing agent and reviewed by its independent
accountants. The Acquiring Fund shall cause its Co-Administrator to deliver a
copy of its valuation report, reviewed by its independent accountants to
Peachtree Funds and to the Acquired Fund at the Closing.
3
<PAGE>
3. CLOSING(S) AND CLOSING DATE
3.1 The Closing for the Reorganization shall occur
on September 27, 1996, and/or on such other date(s) as may be mutually agreed
upon in writing by the parties hereto (each, a "Closing Date"). The Closing(s)
shall be held at the offices of Stephens Inc., 111 Center Street, Suite 300,
Little Rock, Arkansas 72201 or at such other location as is mutually agreeable
to the parties hereto. All acts taking place at the Closing(s) shall be deemed
to take place simultaneously as of 9:00 a.m. Eastern time on the Closing Date
unless otherwise provided.
3.2 The Acquiring Fund's 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 have been
delivered in proper form to the Acquiring Fund on the Closing Date and (b) all
necessary taxes including all applicable federal and state stock transfer
stamps, if any, have been paid, or provision for payment shall have been made,
by the Acquired Fund in conjunction with the delivery of portfolio securities.
Proper delivery of cash shall be by wire to Nations Bank of Texas, N.A., the
Acquiring Fund's Custodian, pursuant to instruction to be delivered prior to the
Closing.
3.3 Notwithstanding anything herein to the contrary,
in the event that on the Applicable Valuation Date (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be restricted or
(b) trading or the reporting of trading on such exchange or elsewhere shall be
disrupted so that, in the judgment of both Nations Fund and Peachtree Funds,
accurate appraisal of the value of the net assets of the Acquiring Fund or the
Acquired Fund is impracticable, the Applicable Valuation Date shall be postponed
until the first business day after the day when trading shall have been fully
resumed without restriction or disruption and reporting shall have been
restored.
3.4 The Acquired Fund shall provide the Acquiring
Fund and its transfer agents with immediate access from and after the Closing
Date to (a) the computer, electronic or such other forms of records containing
the names, addresses and taxpayer identification numbers of all of the Acquired
Fund Investors and the number and percentage ownership of outstanding Acquired
Fund shares owned by each such Acquired Fund Investor, all as of the Applicable
Valuation Date, and (b) all original documentation (including all applicable
Internal Revenue Service forms, certificates, certifications and correspondence)
relating to the Acquired Fund Investors' taxpayer identification numbers and
their liability for or exemption from back-up withholding. The Acquiring Fund
shall issue and deliver to the Secretary or Assistant Secretary of Peachtree
Funds, acting on behalf of the Acquired Fund, a confirmation evidencing the
Acquiring Fund Shares credited on the Closing Date or shall 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(s), each party shall deliver to the other such bills of sale,
checks, assignments, share certificates, if any, receipts or other documents of
transfer, assignment or conveyance as such other party or its counsel may
reasonably request.
3.5 Within thirty (30) days after the Closing Date,
the Acquired Fund shall deliver, in accordance with Article 1 hereof, to the
Acquiring Fund a statement of the Fund
4
<PAGE>
Assets and Stated Liabilities, together with a list of the Acquired Fund's
portfolio securities and other assets showing the respective adjusted bases and
holding periods thereof for income tax purposes, as of the Closing Date,
certified by an appropriate officer of Peachtree Funds.
4. COVENANTS WITH RESPECT TO THE ACQUIRING FUND AND THE
ACQUIRED FUND
4.1 With respect to the Acquired Fund, Peachtree
Funds has called or will call a meeting of Acquired Fund shareholders to
consider and act upon this Agreement and to take all other actions reasonably
necessary to obtain the approval of the transactions contemplated herein,
including approval for the Acquired Fund's liquidating distribution of Acquiring
Fund Shares contemplated hereby, and for Peachtree Funds to terminate the
Acquired Fund's qualification, classification and registration if requisite
approvals are obtained with respect to the Acquired Fund. Nations Fund and
Peachtree Funds, have jointly prepared the notice of meeting, form of proxy and
proxy statement (collectively, "Proxy Materials") to be used in connection with
such meeting.
4.2 Peachtree Funds, on behalf of 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.
4.3 Peachtree Funds, on behalf of the Acquired Fund,
will assist the Acquiring Fund in obtaining such information as the Acquiring
Fund reasonably requests concerning the beneficial ownership of shares of the
Acquired Fund.
4.4 Subject to the provisions hereof, Nations Fund,
on its own behalf and on behalf of the Acquiring Fund, and Peachtree Funds, on
its own behalf and on behalf of 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 herein.
4.5 Peachtree Funds, on behalf of the Acquired Fund,
shall furnish to the Acquiring Fund on the Closing Date, a final statement of
the total amount of the Acquired Fund's assets and liabilities as of the Closing
Date, which statement shall be certified by an appropriate officer of Peachtree
Funds as being determined in accordance with generally accepted accounting
principles consistently applied and as being valued in accordance with paragraph
2.1 hereof. As promptly as practicable, but in any case within sixty (60) days
after the Closing Date, Peachtree Funds, on behalf of the Acquired Fund, shall
furnish the Acquiring Fund, in such form as is reasonably satisfactory to the
Acquiring Fund, a statement certified by an officer of Peachtree Funds of the
Acquired Fund's income and gains or losses for federal income tax purposes that
will be carried over to the Acquiring Fund pursuant to Section 381 of the Code.
4.6 Nations Fund, on behalf of the Acquiring Fund,
has prepared and filed, or will prepare and file with the Securities and
Exchange Commission (the "SEC") a registration
5
<PAGE>
statement on Form N-14 under the Securities Act of 1933, as amended (the "1933
Act"), relating to the Acquiring Fund Shares (the "Registration Statement").
Peachtree Funds, on behalf of the Acquired Fund, has provided or will provide
the Acquiring Fund with the Proxy Materials for inclusion in the Registration
Statement, prepared in accordance with paragraph 4.1, and with such other
information and documents relating to the Acquired Fund as are requested by the
Acquiring Fund and as are reasonably necessary for the preparation of the
Registration Statement.
4.7 As soon after the Closing Date as is reasonably
practicable, Peachtree Funds, on behalf of the Acquired Fund: (a) shall prepare
and file all federal and other tax returns and reports of the Acquired Fund
required by law to be filed with respect to all periods ending on or before the
Closing Date but not theretofore filed and (b) shall pay all federal and other
taxes shown as due thereon and/or all federal and other taxes that were unpaid
as of the Closing Date.
4.8 With respect to the Acquiring Fund, Nations Fund
agrees to use all reasonable efforts to operate in accordance with its then
current Prospectus and Statement of Additional Information prepared in
accordance with Form N-1A, including qualifying as a regulated investment
company under Subchapter M of the Code, for at least one (1) year following the
Closing Date.
4.9 Following the transfer of assets by the Acquired
Fund to the Acquiring Fund in exchange for Acquiring Fund Shares and the
assumption of the Stated Liabilities of the Acquired Fund as contemplated
herein, Peachtree Funds will file any final regulatory reports, including but
not limited to any Form N-SAR and Rule 24f-2 filings with respect to the
Acquired Fund, promptly after the Closing Date and also will take all other
steps as are necessary and proper to effect the termination or declassification
of the Acquired Fund in accordance with the laws of the Commonwealth of
Massachusetts and other applicable requirements.
5. REPRESENTATIONS AND WARRANTIES
5.1 Nations Fund, on behalf of itself and the
Acquiring Fund, represents and warrants to the Peachtree Funds as follows:
(a) Nations Fund was duly created pursuant to its
Articles of Incorporation by the Directors for the purpose of acting as a
management investment company under the Investment Company Act of 1940 (the
"1940 Act") and is validly existing under the laws of the State of Maryland, and
the Articles of Incorporation directs the Directors to manage the affairs of
Nations Fund and grant them all powers necessary or desirable to carry out such
responsibility, including administering Nations Fund business as currently
conducted by Nations Fund and as described in the current Prospectuses of
Nations Fund; Nations Fund is registered as an investment company classified as
an open-end management company, under the 1940 Act and its registration with the
SEC as an investment company is in full force and effect;
(b) The Registration Statement, including the
current Prospectus and Statement of Additional Information of the Acquiring
Fund, conform or will conform, at all
6
<PAGE>
times up to and including the Closing Date, in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the regulations
thereunder and do not include or will 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 misleading;
(c) The Acquiring Fund is not in violation of, and
the execution, delivery and performance of this Agreement by Nations Fund for
itself and on behalf of the Acquiring Fund will not (i) violate Nations Fund's
Articles of Incorporation or By-Laws, or (ii) result in a breach or violation
of, or constitute a default under any material agreement or material instrument,
to which Nations Fund is a party or by which its properties or assets are bound.
(d) Except as previously disclosed in writing to the
Peachtree Funds, no litigation or administrative proceeding or investigation of
or before any court or governmental body is presently pending or, to Nations
Fund's knowledge, threatened against Nations Fund or its business, the Acquiring
Fund or any of its properties or assets, which, if adversely determined, would
materially and adversely affect Nations Fund or the Acquiring Fund's financial
condition or the conduct of their business, and Nations Fund knows of no facts
that might form the basis for the institution of any such proceeding or
investigation, and the Acquiring Fund 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, or is reasonably likely to materially
and adversely affect, its business or its ability to consummate the transactions
contemplated herein;
(e) All issued and outstanding shares of common
stock, including shares to be issued in connection with the Reorganization, of
each class of the Acquiring Fund will, as of the Closing Date, be duly
authorized and validly issued and outstanding, fully paid and non-assessable and
the Acquiring Fund does not have outstanding any option, warrants or other
rights to subscribe for or purchase any of its shares;
(f) The execution, delivery and performance of this
Agreement on behalf of the Acquiring Fund will have been duly authorized prior
to the Closing Date by all necessary action on the part of Nations Fund, the
Directors and the Acquiring Fund, and this Agreement will constitute a valid and
binding obligation of Nations Fund and the Acquiring Fund enforceable in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, arrangement, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles;
(g) The Acquiring Fund Shares to be issued and
delivered to the Acquired Fund for the account of the Acquired Fund Investors,
pursuant to the terms hereof, will have been duly authorized as of the Closing
Date and, when so issued and delivered, will be duly and validly issued, fully
paid and non-assessable, and the shares of each class of the Acquiring Fund
issued and outstanding prior to the Closing Date were offered and sold in
compliance with the applicable registration requirements, or exemptions
therefrom, of the 1933 Act, and all applicable state securities laws, and the
regulations thereunder;
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<PAGE>
(h) On the effective date of the Registration
Statement, at the time of the meeting of the Acquired Fund shareholders and on
the Closing Date, any written information furnished by Nations Fund with respect
to the Acquiring Fund for use in the Proxy Materials, the Registration Statement
or any other materials provided in connection with the Reorganization does not
and will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the information provided not misleading;
(i) No governmental consents, approvals,
authorizations or filings are required under the 1933 Act, the Securities
Exchange Act of 1934 (the "1934 Act"), the 1940 Act or Maryland law for the
execution of this Agreement by Nations Fund, for itself and on behalf of the
Acquiring Fund, or the performance of the Agreement by Nations Fund for itself
and on behalf of the Acquiring Fund, except for such consents, approvals,
authorizations and filings as have been made or received, and except for such
consents, approvals, authorizations and filings as may be required subsequent to
the Closing Date;
(j) The Statement of Assets and Liabilities,
Statement of Operations and Statements of Changes in Net Assets of the Acquiring
Fund as of and for the year ended May 31, 1995, audited by Price Waterhouse LLP
(copies of which have been or will be furnished to the Acquired Fund) fairly
present, in all material respects, the Acquiring Fund's financial condition as
of such date and its results of operations for such period in accordance with
generally accepted accounting principles consistently applied and as of such
dates there were no liabilities of the Acquiring Fund (contingent or otherwise)
known to Nations Fund that were not disclosed therein but that would be required
to be disclosed therein in accordance with generally accepted accounting
principles;
(k) Since the date of the most recent audited
financial statements, 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;
(l) For each full and partial taxable year from its
inception through the Closing Date, the Acquiring Fund has qualified as a
separate regulated investment company under Subchapter M of the Code and has
taken all necessary and required actions to maintain such status;
(m) All federal and other tax returns and reports of
Nations Fund and the Acquiring Fund required by law to be filed on or before the
Closing Date have been or will be filed, and all federal and other taxes owed by
Nations Fund on behalf of the Acquiring Fund have been or will be paid so far as
due, and to the best of Nations Fund's knowledge, no such return is currently
under audit and no assessment has been asserted with respect to any such return;
and
(n) At the Closing Date, the Acquiring Fund will
have good and marketable title to its assets and full right, power and authority
to assign, deliver and otherwise transfer such assets.
8
<PAGE>
5.2 Peachtree Funds, on behalf of itself and the
Acquired Fund, represents and warrants to Nations Fund as follows:
(a) Peachtree Funds was duly created pursuant to its
Declaration of Trust by the Trustees for the purpose of acting as a management
investment company under the 1940 Act and is validly existing under the laws of
the Commonwealth of Massachusetts, and the Declaration of Trust directs the
Trustees to manage the affairs of Peachtree Funds and grants them all powers
necessary or desirable to carry out such responsibility, including administering
Peachtree Funds' business as currently conducted by Peachtree Funds and as
described in the current Prospectuses of Peachtree Funds; Peachtree Funds is
registered as an investment company classified as an open-end management
company, under the 1940 Act and its registration with the SEC as an investment
company is in full force and effect;
(b) All of the issued and outstanding shares
representing units of beneficial interest of the Acquired Fund have been offered
and sold in compliance in all material respects with applicable registration
requirements of the 1933 Act and state securities laws;
(c) The Acquired Fund is not in material violation
of, and the execution and the performance of the Agreement by Peachtree Funds
for itself and on behalf of the Acquired Fund does not and will not (i) violate
Peachtree Funds' Declaration of Trust or By-Laws, or (ii) result in a breach or
violation of, or constitute a default under, any term of any material agreement
or material instrument to which Peachtree Funds is a party or by which its
properties or assets are bound;
(d) Except as previously disclosed in writing to
Nations Fund, no litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or, to Peachtree
Funds' knowledge, threatened against the Acquired Fund or any of its properties
or assets which, if adversely determined, would materially and adversely affect
the Acquired Fund's financial condition or the conduct of its business, and
Peachtree Funds knows of no facts that might form the basis for the institution
of any such proceeding or investigation, and the Acquired Fund is not a party to
or subject to the provisions of any order, decree or judgment of any court or
governmental body that materially and adversely affects, or is reasonably likely
to materially and adversely affect, its business or its ability to consummate
the transactions contemplated herein;
(e) The Statement of Assets and Liabilities,
Statement of Operations and Statement of Changes in Net Assets of the Acquired
Fund as of and for the year ended September 30, 1995, audited by Ernst & Young,
LLP (copies of which have been or will be furnished to the Acquiring Fund)
fairly present, in all material respects, the Acquired Fund's financial
condition as of such date and its results of operations for such period in
accordance with generally accepted accounting principles consistently applied,
and as of such date there were no liabilities of the Acquired Fund (contingent
or otherwise) known to Peachtree Funds that were not disclosed therein but that
would be required to be disclosed therein in accordance with generally accepted
accounting principles;
9
<PAGE>
(f) Since the date of the most recent audited
financial statements, 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 in writing to and
accepted by the Acquiring Fund, prior to the Closing Date (for the purposes of
this subparagraph (f), neither a decline in the Acquired Fund's net asset value
per share nor a decrease in the Acquired Fund's size due to redemptions shall be
deemed to constitute a material adverse change);
(g) All federal and other tax returns and reports of
Peachtree Funds and the Acquired Fund required by law to be filed, with respect
to all periods ending on or before the Closing Date, have been or will be filed,
and all federal and other taxes owed by Peachtree Funds or the Acquired Fund
have been or will be paid so far as due, and to the best of Peachtree Funds'
knowledge, no such return is currently under audit and no assessment has been
asserted with respect to any such return;
(h) For each full and partial taxable year from its
inception through the Closing Date, the Acquired Fund has qualified as a
separate regulated investment company under Subchapter M of the Code and has
taken all necessary and required actions to maintain such status;
(i) All issued and outstanding shares of the
Acquired Fund are, and on the Closing Date will be, duly authorized and validly
issued and outstanding, and fully paid and non-assessable, and all such shares
will, at the time of the Closing, be held by the persons and in the amounts set
forth in the list of Acquired Fund Investors provided to the Acquiring Fund,
pursuant to paragraph 3.4, and the Acquired Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any of its
shares, nor is there outstanding any security convertible into any of its
shares;
(j) At the Closing Date, the Acquired Fund will have
good and marketable title to its Fund Assets and full right, power and authority
to assign, deliver and otherwise transfer such Fund Assets hereunder, and upon
delivery and payment for such Fund Assets as contemplated herein, the Acquiring
Fund will acquire good and marketable title thereto, subject to no restrictions
on the ownership or transfer thereof other than such restrictions as might arise
under the 1933 Act;
(k) The execution, delivery and performance of this
Agreement on behalf of the Acquired Fund will have been duly authorized prior to
the Closing Date by all necessary action on the part of Peachtree Funds, the
Trustees and the Acquired Fund, and this Agreement will constitute a valid and
binding obligation of Peachtree Funds and the Acquired Fund enforceable in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, arrangement, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles;
(l) From the effective date of the Registration
Statement, through the time of the meeting of the Acquired Fund Investors, and
on the Closing Date, the Proxy
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<PAGE>
Materials: (i) comply in all material respects with the applicable provisions of
the 1933 Act, the 1934 Act and the 1940 Act and the regulations thereunder and
(ii) do 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 not misleading, and as of such dates and times, any written information
furnished by Peachtree Funds, on behalf of the Acquired Fund, for use in the
Registration Statement or in any other manner that may be necessary in
connection with the transactions contemplated hereby does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the information provided not misleading; and
(m) No governmental consents, approvals,
authorizations or filings are required under the 1933 Act, the 1934 Act, the
1940 Act or Massachusetts law for the execution of this Agreement by Peachtree
Funds, for itself and on behalf of the Acquired Fund, or the performance of the
Agreement by Peachtree Funds for itself and on behalf of the Acquired Fund,
except for such consents, approvals, authorizations and filings as have been
made or received, and except for such consents, approvals, authorizations and
filings as may be required subsequent to the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED FUND
The obligations of Peachtree Funds to consummate the
Reorganization with respect to the Acquired Fund shall be subject to the
performance by Nations Fund, for itself and on behalf of 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 conditions with respect to the
Acquiring Fund:
6.1 All representations and warranties of Nations
Fund with respect to the Acquiring Fund contained herein 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 herein, as of the Closing Date with
the same force and effect as if made on and as of the Closing Date.
6.2 Nations Fund, on behalf of the Acquiring Fund,
shall have delivered to the Peachtree Funds at the Closing a certificate
executed on behalf of the Acquiring Fund by Nations Fund's President, Secretary
or Assistant Secretary in a form reasonably satisfactory to the Peachtree Funds
and dated as of the Closing Date, to the effect that the representations and
warranties of Nations Fund with respect to the Acquiring Fund made herein are
true and correct at and as of the Closing Date, except as they may be affected
by the transactions contemplated herein, and as to such other matters as the
Acquired Fund shall reasonably request.
6.3 The Acquired Fund shall have received at the
Closing a favorable opinion of Morrison & Foerster LLP, counsel to Nations Fund
(based upon or subject to such representations, assumptions, limitations or
opinions of local counsel as such counsel may deem appropriate or necessary),
dated as of the Closing Date, in a form (including the representations,
assumptions, limitations or opinions of local counsel upon which it is based or
to which it is subject) reasonably satisfactory to the Acquired Fund,
substantially to the effect that:
11
<PAGE>
(a) Nations Fund is a duly registered,
open-end, management investment company, and its registration with the
SEC as an investment company under the 1940 Act is in full force and
effect; (b) the Acquiring Fund is a portfolio of Nations Fund, which is
a corporation duly created pursuant to its Articles of Incorporation, is
validly existing and in good standing under the laws of the State of
Maryland, and the Articles of Incorporation direct the Directors to
manage the affairs of Nations Fund and grant them all powers necessary
or desirable to carry out such responsibility, including administering
Nations Fund's business as described in the current Prospectuses of
Nations Fund; (c) this Agreement has been duly authorized, executed and
delivered on behalf of Nations Fund and the Acquiring Fund and, assuming
due authorization, execution and delivery of this Agreement on behalf of
the Acquiring Fund, is a valid and binding obligation of Nations Fund
enforceable against Nations Fund in accordance with its terms, subject
as to enforcement, to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; (d) the Acquiring Fund Shares to be issued to the Acquired
Fund Investors pursuant to this Agreement are duly registered under the
1933 Act on the appropriate form, and are duly authorized and upon such
issuance will be validly issued and outstanding and fully paid and
non-assessable, and no shareholder of the Acquiring Fund has any
preemptive rights to subscription or purchase in respect thereof; (e)
the Registration Statement has become effective with the SEC and, to the
best of such counsel's knowledge, no stop order suspending the
effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or threatened; (f) no
consent, approval, authorization, filing or order of any court or
governmental authority of the United States or any state is required for
the consummation by Nations Fund of the Reorganization with respect to
the Acquiring Fund; and (g) to the best knowledge of such counsel, no
litigation or administrative proceeding or investigation of or before
any court or governmental body is presently pending or threatened as to
Nations Fund or the Acquiring Fund or any of their properties or assets
and neither Nations Fund nor the Acquiring Fund is a party to or subject
to the provisions of any order, decree or judgment of any court or
governmental body that materially and adversely affects its business.
6.4 As of the Closing Date with respect to the
Reorganization of the Acquired Fund, there shall have been no material change in
the investment objective, policies and restrictions nor any material change in
the investment management fees, fee levels payable pursuant to the 12b-1 plan of
distribution, other fees payable for services provided to the Acquiring Fund,
fee waiver or expense reimbursement undertakings, or sales loads of the
Acquiring Fund from those fee amounts, undertakings and sales load amounts
described in the Prospectus of the Acquiring Fund delivered to the Acquired Fund
pursuant to paragraph 4.1 and in the Proxy Materials.
6.5 With respect to the Acquiring Fund, the Board of
Directors of Nations Fund shall have determined that the Reorganization is in
the best interests of the Acquiring Fund and that the interests of the existing
shareholders of the Acquiring Fund would not be diluted as a result of the
Reorganization.
12
<PAGE>
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING FUND
The obligations of Nations Fund to consummate the
Reorganization with respect to the Acquiring Fund shall be subject to the
performance by Peachtree Funds of all the obligations to be performed by it
hereunder, with respect to the Acquired Fund, on or before the Closing Date and,
in addition thereto, the following conditions:
7.1 All representations and warranties of Peachtree
Funds with respect to the Acquired Fund contained herein 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 Peachtree Funds, on behalf of the Acquired Fund,
shall have delivered to the Acquiring Fund at the Closing a certificate executed
on behalf of the Acquired Fund, by Peachtree Funds' President, Secretary or
Assistant Secretary, 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 Peachtree Funds with respect to the Acquired Fund made herein are
true and correct at and as of the Closing Date, except as they may be affected
by the transactions contemplated herein and as to such other matters as the
Acquiring Fund shall reasonably request.
7.3 The Acquiring Fund shall have received at the
Closing a favorable opinion from Dickstein, Shapiro & Morin, L.L.P., counsel to
Peachtree Funds (based upon or subject to such representations, assumptions,
limitations or opinions of local counsel as such counsel may deem appropriate or
necessary), dated as of the Closing Date, in a form (including the
representations, assumptions, limitations or opinions of local counsel upon
which it is based or to which it is subject) reasonably satisfactory to the
Acquiring Fund, substantially to the effect that:
(a) Peachtree Funds is a duly registered, open-end
investment company, and its registration with the SEC as an investment
company under the 1940 Act is in full force and effect; (b) the
Acquired Fund is a portfolio of Peachtree Funds, Peachtree Funds is a
business trust duly created pursuant to its Declaration of Trust, is
validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, and the Declaration of Trust directs the
Trustees to manage the affairs of Peachtree Funds and grants them all
powers necessary or desirable to carry out such responsibility,
including administering Peachtree Funds' business as described in the
current Prospectus of Peachtree Funds; (c) this Agreement has been duly
authorized, executed and delivered by Peachtree Funds on behalf of
Peachtree Funds and the Acquired Fund and, assuming due authorization,
execution and delivery of this Agreement on behalf of the Acquiring
Fund, is a valid and binding obligation of Peachtree Funds, enforceable
against Peachtree Funds in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, arrangement,
moratorium and other similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles; (d) no
consent, approval, authorization, filing or order of any court or
governmental authority of the United States or any state is required
for the consummation of the Reorganization with respect to the Acquired
Fund, except for such consents, approvals, authorizations and filings
as have been made or
13
<PAGE>
received, and except for such consents, approvals,
authorizations and filings as may be required subsequent to the Closing
Date; and (e) to the best knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to Peachtree
Funds or the Acquired Fund or any of their properties or assets and
neither Peachtree Funds nor the Acquired Fund is a party to or subject
to the provisions of any order, decree or judgment of any court or
governmental body that materially and adversely effects its business.
7.4 Nations Fund, on behalf of the Acquiring Fund,
shall have received from Ernst & Young, LLP a letter addressed to Nations Fund,
on behalf of the Acquiring Fund, and dated as of the Closing Date with respect
to the Acquired Fund, in form and substance satisfactory to Nations Fund, to the
effect that:
(a) they are independent accountants with
respect to Peachtree Funds and the Acquired Fund within the meaning of the 1933
Act and the applicable regulations thereunder;
(b) in their opinion, the audited financial
statements and the Per Share Data provided in accordance with Item 3 in Form
N-1A (the "Per Share Data") of the Acquired Fund included or incorporated by
reference in the Registration Statement and Proxy Statement and previously
reported on by them comply as to form in all material aspects with the
applicable accounting requirements of the 1933 Act and the published rules and
regulations thereunder;
(c) on the basis of limited procedures agreed
upon by Nations Fund, on behalf of the Acquiring Fund and Peachtree Funds, on
behalf of the Acquired Fund, and described in such letter (but not an
examination in accordance with generally accepted auditing standards), the
information relating to the Acquired Fund appearing in the Registration
Statement and Proxy Statement that is expressed in dollars or percentages of
dollars (with the exception of performance comparisons) has been obtained from
the accounting records of the Acquired Fund or from schedules prepared by
officers of Peachtree Funds having responsibility for financial and reporting
matters and such information is in agreement with such records, schedules or
computations made therefrom.
7.5 Peachtree Funds shall have delivered to the
Acquiring Fund, pursuant to paragraph 5.2(e), copies of financial statements of
the Acquired Fund as of and for the period ended September 30, 1995, audited by
Ernst & Young, LLP.
7.6 With respect to the Acquired Fund, the Board of
Trustees of Peachtree Funds shall have determined that the Reorganization is in
the best interests of the Acquired Fund and that the interests of the existing
investors in the Acquired Fund would not be diluted as a result of the
Reorganization.
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<PAGE>
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
FUND AND THE ACQUIRED FUND
The obligations of the Acquiring Fund and of the Acquired Fund
herein are each subject to the further conditions that on or before the Closing
Date with respect to the Acquiring Fund and the Acquired Fund:
8.1 This Agreement and the transactions contemplated
herein shall have been approved by the requisite vote of the holders of the
outstanding shares of beneficial interest in the Acquired Fund in accordance
with the provisions of Peachtree Funds' Declaration of Trust and the
requirements of the 1940 Act, and certified copies of the resolutions evidencing
such approval shall have been delivered to the Acquiring Fund.
8.2 On the Closing Date, no action, suit or other
proceeding shall be pending before any court or governmental agency in which it
is sought to restrain or prohibit, or obtain damages or other relief in
connection with, this Agreement or any of the transactions contemplated herein.
8.3 All consents of other parties and all other
consents, orders, approvals and permits of federal, state and local regulatory
authorities (including, without limitation, those of the SEC and of state
securities authorities) deemed necessary by Nations Fund, on behalf of the
Acquiring Fund or by Peachtree Funds, on behalf of the Acquired Fund, to permit
consummation, in all material respects, of the transactions contemplated herein
shall have been obtained, except where failure to obtain any such consent, order
or permit would not, in the opinion of the party asserting that the condition to
closing has not been satisfied, involve a risk of a material adverse effect on
the assets or properties of the Acquiring Fund or the Acquired Fund.
8.4 The Registration Statement shall have become
effective under the 1933 Act, 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.
8.5 The Acquired Fund shall have declared a dividend
or dividends which, together with all previous such dividends, shall have the
effect of distributing to the Acquired Fund's shareholders substantially all of
the Acquired Fund's investment company taxable income for all taxable years
ending on or prior to the Closing Date (computed without regard to any deduction
for dividends paid) and substantially all of its net capital gain for all
taxable years ending on or prior to the Closing Date (after reduction for any
capital loss carry forward.)
8.6 The Acquiring Fund and the Acquired Fund shall
have received from Price Waterhouse LLP a letter dated as of the Closing Date,
in form and substance satisfactory to Nations Fund and to Peachtree Funds, to
the effect that on the basis of limited procedures agreed upon by Nations Fund,
on behalf of the Acquiring Fund and Peachtree Funds, on behalf of the Acquired
Fund, (but not an examination in accordance with generally accepted auditing
standards): (i) the data utilized in the calculations of the projected expense
ratio appearing in the Registration Statement and Proxy Materials agree with
underlying accounting records of the
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Acquiring Fund and the Acquired Fund or to written estimates by Stephens Inc.
and were found to be mathematically correct; and (ii) the calculation of net
asset value per share of the Acquired Fund as of the Valuation Date was
determined in accordance with generally accepted accounting practices and the
portfolio valuation practices of the Acquiring Fund.
8.7 Nations Fund shall have received the opinion of
Morrison & Foerster LLP addressed to both the Acquiring Fund and the Acquired
Fund substantially to the effect that, for federal income tax purposes:
(a) the transfer of all or substantially all of
the Acquired Fund assets in exchange for the Acquiring Fund Shares and the
assumption by the Acquiring Fund of certain identified liabilities of the
Acquired Fund will constitute a "reorganization" within the meaning of Sections
368(a)(1)(C) of the Code and the Acquiring Fund and the Acquired Fund will each
be a "party to a reorganization" within the meaning of Section 368(b) of the
Code; (b) no gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund solely in exchange for the Acquiring
Fund Shares and the assumption by the Acquiring Fund of certain identified
liabilities of the Acquired Fund, or upon the distribution of Acquiring Fund
Shares in exchange for their Shares of the Acquired Fund; (c) no gain or loss
will be recognized by the Acquired Fund upon the transfer of the Acquired Fund
assets to the Acquiring Fund in exchange for the Acquiring Fund Shares and the
assumption by the Acquiring Fund of certain identified liabilities of the
Acquired Fund or upon the distribution (whether actual or constructive) of the
Acquiring Fund Shares to shareholders in exchange for their shares of the
Acquired Fund; (d) no gain or loss will be recognized by the Acquired Fund
Shareholders upon the exchange of their Acquired Fund Shares for the Acquiring
Fund Shares; (e) the aggregate federal income tax basis for the Acquiring Fund
Shares received by each of the Acquired Fund Shareholders pursuant to the
Reorganization will be the same as the aggregate federal income tax basis of the
Shareholder's Acquired Fund shares exchanged thereafter; (f) the holding period
of the Acquiring Fund Shares to be received by each Acquired Fund Shareholder
will include the period during which the Acquired Fund shares exchanged therefor
were held by such shareholder (provided the Acquired Fund shares were held as
capital assets); (g) the federal income tax basis of the Acquired Fund assets
acquired by the Acquiring Fund will be same as the federal income tax basis of
such assets in the hands of the Acquired Fund immediately prior to the
Reorganization, and the holding period of the assets of the Acquired Fund
received by the Acquiring Fund will include the period during which those assets
were held by the Acquired Fund; and (h) the Acquiring Fund will succeed to the
corresponding Fund's tax attributes described in Section 381(c) of the Code as
of the end of the Closing Date.
Notwithstanding anything herein to the contrary, neither the
Acquiring Fund nor the Acquired Fund may waive the condition set forth in this
paragraph 8.7.
9. BROKERAGE FEES AND EXPENSES
9.1 Nations Fund, for itself and on behalf of the
Acquiring Fund and Peachtree Funds, for itself and on behalf of the Acquired
Fund, represent and warrant that there are no
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brokers or finders entitled to receive any payments in connection with the
transactions provided for herein.
9.2 Except as may be otherwise provided herein, the
Acquired Fund and the Acquiring Fund shall be liable for its expenses incurred
in connection with entering into and carrying out the provisions of this
Agreement, whether or not the transactions contemplated hereby are consummated.
The expenses payable by the Acquired Fund hereunder shall include (i) fees and
expenses of its counsel and independent accountants incurred in connection with
the Reorganization; (ii) all fees and expenses related to the liquidation of the
Acquired Fund; (iii) fees and expenses of the Acquired Fund's custodian and
transfer agent(s) incurred in connection with the Reorganization; and (iv) any
special pricing fees associated with the valuation of the Acquired Fund's
portfolio on the Applicable Valuation Date. The expenses payable by the
Acquiring Fund hereunder shall include (i) fees and expenses of its counsel and
independent accountants incurred in connection with the Reorganization; (ii)
expenses associated with preparing this Agreement and preparing and filing the
Registration Statement under the 1933 Act covering the Acquiring Fund Shares to
be issued in the Reorganization; (iii) registration or qualification fees and
expenses of preparing and filing such forms, if any, as are necessary under
applicable state securities laws to qualify the Acquiring Fund Shares to be
issued in connection with the Reorganization; (iv) any fees and expenses of the
Acquiring Fund's custodian and transfer agent(s) incurred in connection with the
Reorganization; and (v) any special pricing fees associated with the valuation
of the Acquiring Fund's portfolio on the Applicable Valuation Date.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 This Agreement constitutes the entire agreement
between the parties and supersedes any prior or contemporaneous understanding or
arrangement with respect to the subject matter hereof.
10.2 The representations, warranties and covenants
contained in this Agreement or in any document delivered pursuant hereto or in
connection herewith shall not survive the consummation of the transactions
contemplated herein.
11. TERMINATION
11.1 This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by the mutual written consent of Nations
Fund and the Peachtree Funds;
(b) by either Nations Fund or the Peachtree
Funds by notice to the other, without liability to the terminating party on
account of such termination (provided any such termination shall not excuse the
terminating party from any liability arising out of a default
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or breach of this Agreement by such terminating party) if such Closing shall not
have occurred on or before December 31, 1996; or
(c) by either Nations Fund or the Peachtree
Funds, in writing without liability to the terminating party on account of such
termination (provided any such termination shall not excuse the terminating
party from any liability arising out of a material default or breach of this
Agreement by such terminating party), if (i) the other party shall fail to
perform in any material respect its agreements contained herein required to be
performed prior to the Closing Date, (ii) the other party materially breaches or
shall have breached any of its representations, warranties or covenants
contained herein, or (iii) any other express condition precedent to the
obligations of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
11.2 Termination of this Agreement pursuant to
paragraphs 11.1(a) or (b) shall terminate all obligations of Peachtree Funds,
Nations Fund, the Acquired Fund and the Acquiring Fund and there shall be no
liability for damages on the part of Nations Fund, Peachtree Funds, or the
trustees, directors or officers of Nations Fund and/or Peachtree Funds, to any
other party or its trustees, directors or officers on account of termination
pursuant to paragraphs 11.1(a) or (b); provided, however, that notwithstanding
any termination of this Agreement pursuant to paragraph 11.1, such termination
shall not relieve either party of its respective obligations pursuant to Section
9.2 hereof.
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 Nations Fund, acting on behalf of the Acquiring Fund and the authorized
officers of Peachtree Funds, acting on behalf of the shareholders of the
Acquired Fund; provided, however, that following the meeting of the shareholders
of the Acquired Fund, no such amendment may have the effect of changing the
provisions for determining the number of shares of the Acquiring Fund to be
issued to the Acquired Fund Investors under this Agreement to the detriment of
such Acquired Fund Investors, or otherwise materially and adversely affecting
the Acquired Fund, without the Acquired Fund obtaining the Acquired Fund
Investors' further approval except that nothing in this paragraph 12 shall be
construed to prohibit the Acquiring Fund and the Acquired Fund from amending
this Agreement to change the Closing Date or Applicable Valuation Date by mutual
agreement.
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13. NOTICES
Any notice, report, statement or demand required or permitted
by any provision of this Agreement shall be in writing and shall be given by
prepaid telegraph, telecopy, certified mail or overnight express courier
addressed to:
For Nations Fund, on behalf of itself and the Acquiring Fund:
Richard H. Blank, Jr.
Secretary
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
With copies to:
Robert M. Kurucza, Esquire and
Marco E. Adelfio, Esquire
Morrison & Foerster LLP
2000 Pennsylvania Avenue, N.W.
Suite 5500
Washington, D.C. 20006
For Peachtree Funds, on behalf of itself and the Acquired Fund:
Grant Anderson
Corporate Counsel
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
With copies to:
Matthew G. Maloney, Esquire
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
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14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION
OF LIABILITY
14.1 The article and paragraph headings contained
herein are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. All references herein to Articles,
paragraphs, subparagraphs or Exhibits shall be construed as referring to
Articles, paragraphs or subparagraphs hereof or Exhibits hereto, respectively.
Whenever the terms hereto, hereunder, herein or hereof are used in this
Agreement, they shall be construed as referring to this entire Agreement, rather
than to any individual Article, paragraph, subparagraph or sentence.
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 be governed by and
construed in accordance with the laws of Maryland.
14.4 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 parties. 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.
14.5 It is expressly agreed that the obligations of
Nations Fund and/or Peachtree Funds hereunder shall not be binding upon any of
the Trustees or Directors, shareholders, nominees, officers, agents, or
employees of Nations Fund and/or Peachtree Funds personally, but shall bind only
the assets and the property of the Acquiring Fund of Nations Fund, as provided
in its Articles of Incorporation and the Acquired Fund of Peachtree Funds, as
provided in its Declaration of Trust. The execution and delivery by such
officers shall not 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 assets
and the property of the respective Acquiring Fund of Nations Fund as provided in
its Articles of Incorporation and the Acquired Fund of Peachtree Funds, as
provided in its Declaration of Trust.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed by its authorized officer, and attested by its
Secretary.
NATIONS FUND, INC., for itself and on
ATTEST: behalf of the Acquiring Funds
/s/ Richard H. Blank, Jr. By: /s/ A. Max Walker
Richard H. Blank, Jr. A. Max Walker
Secretary President and Chairman of the
Board of Directors
PEACHTREE FUNDS, for itself and on
ATTEST: behalf of the Acquired Funds
/s/ John W. McGonigle By: /s/ Edward C. Gonzales
John W. McGonigle Edward C. Gonzales
Secretary President
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SCHEDULE A
ACQUIRING FUND ACQUIRED FUND
Nations Prime Fund Peachtree Prime Fund
Primary A Shares
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