FORM OF AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this 20th day of January, 2001 by and between The Capital Mutual Funds (doing
business as Nations Reserves) ("Reserves"), a Massachusetts business trust, for
itself and on behalf of its Nations Asset Allocation Fund, Nations Marsico
Growth & Income Fund and Nations Marsico Focused Equities Fund, and Nations
Funds Trust (the "Trust"), a Delaware business trust, for itself and on behalf
of its Nations Asset Allocation Fund, Nations Marsico Growth & Income Fund and
Nations Marsico Focused Equities Fund.
WHEREAS, Reserves and the Trust are open-end management investment
companies registered with the Securities and Exchange Commission (the "SEC")
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the parties desire that the Fund Assets and Liabilities (as
defined below) of Reserves's Nations Asset Allocation Fund, Nations Marsico
Growth & Income Fund and Nations Marsico Focused Equities Fund (each an
"Acquired Fund" and collectively, the "Acquired Funds") be conveyed to and, be
acquired and assumed, respectively, by the Trust's Nations Asset Allocation
Fund, Nations Marsico Growth & Income Fund and Nations Marscio Focused Equities
Fund (each an "Acquiring Fund" and collectively, the "Acquiring Funds") in
exchange for shares of equal U.S. dollar value of such Acquiring Fund which
shall thereafter promptly be distributed to the shareholders of the Acquired
Fund in connection with their liquidation as described in this Agreement and set
forth in Schedule A attached hereto (each such acquisition and assumption of an
Acquired Fund's Fund Assets and Liabilities by the corresponding Acquiring Fund
a "Reorganization," and collectively the "Reorganizations"); and
WHEREAS, the parties intend that each Reorganization qualify as a
"reorganization," within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and that each Acquiring Fund and
corresponding Acquired Fund will each be a "party to a reorganization," within
the meaning of Section 368(b) of the Code, with respect to each respective
Reorganization.
NOW, THEREFORE, in accordance with the terms and conditions described
herein, the Acquired Funds and Acquiring Funds shall be consolidated as follows:
1. Conveyance of Fund Assets and Liabilities of the Acquired
Funds.
(a) Except as provided below, at the Effective Time of the
Reorganization (as defined in Section 8) all assets of every
kind, and all interests, rights, privileges and powers of the
Acquired Funds (the "Fund Assets"), subject to all liabilities
of the Acquired Funds existing as of the Effective Time of the
Reorganization (the "Liabilities"), shall be transferred by
each Acquired Fund to each corresponding Acquiring Fund and
shall be accepted and assumed by such Acquiring Fund, as more
particularly set forth in this Agreement, such that at and
after the Effective Time of the Reorganization: (i) all Fund
Assets of each Acquired Fund shall become the assets of the
corresponding Acquiring Fund; and (ii) all Liabilities of each
Acquired Fund shall attach to the corresponding Acquiring
Fund, enforceable against each Acquiring Fund to the same
extent as if originally incurred by such Acquiring Fund.
(b) It is understood and agreed that the Fund Assets shall include
all property and assets of any nature whatsoever, including,
without limitation, all cash, cash equivalents, securities,
claims (whether absolute or contingent, known or unknown,
accrued or unaccrued) and receivables (including dividend and
interest receivables) owned or exercisable by an Acquired
Fund, and any deferred or prepaid expenses shown as an asset
on such Acquired Fund's books, that the Liabilities of an
Acquired Fund shall include all liabilities, whether known or
unknown, accrued or unaccrued, absolute or contingent, in all
cases, existing at the Effective Time of the Reorganization.
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(c) At least fifteen (15) business days prior to the Closing Date
(as defined in Section 8), each Acquired Fund will provide to,
or cause to be provided to, the each corresponding Acquiring
Fund, a schedule of its securities, other assets and its known
liabilities. It is understood and agreed that such Acquired
Fund may sell any of the securities or other assets shown on
such schedule prior to the Effective Time of the
Reorganization but will not, without the prior approval of the
each corresponding Acquiring Fund, acquire any additional
securities other than securities that the Acquiring Fund is
permitted to purchase in accordance with its stated investment
objective and policies. At least ten (10) business days prior
to the Closing Date, each Acquiring Fund will advise each
Acquired Fund of any investments of such Acquired Fund shown
on such schedule that such Acquiring Fund would not be
permitted to hold, pursuant to its stated investment objective
and policies or otherwise. Each Acquired Fund, if requested by
the corresponding Acquiring Fund, will dispose of any such
securities prior to the Closing Date to the extent practicable
and consistent with applicable legal requirements. In
addition, if it is determined that the investment portfolios
of an Acquired Fund and its corresponding Acquiring Fund, when
aggregated, would contain investments exceeding certain
percentage limitations applicable to such Acquiring Fund, an
Acquired Fund, if requested by the corresponding Acquiring
Fund, will dispose of a sufficient amount of such investments
as may be necessary to avoid violating such limitations as of
the Effective Time of the Reorganization.
(d) The Fund Assets shall be transferred and conveyed to the
Acquiring Funds on the following basis:
(1) In exchange for the transfer of the Fund Assets, each
Acquiring Fund shall simultaneously issue to the
corresponding Acquired Fund at the Effective Time of the
Reorganization full and fractional Shares of the Acquiring
Funds, as set forth in Schedule A attached hereto, having
an aggregate net asset value equal to the net value of the
Fund Assets minus Liabilities so conveyed and assumed, all
determined in accordance with this Agreement. In this
regard, the number of full and fractional shares of the
Acquiring Funds delivered to each Acquired Fund shall be
determined by dividing the value of the Fund Assets minus
Liabilities, computed in the manner and as of the time and
date set forth in this Agreement, by the net asset value
of one Acquiring Fund share of such designated class,
computed in the manner and as of the time and date set
forth in this Agreement.
(2) The net asset value of shares to be delivered by each
Acquiring Fund, and the net value of the Fund Assets minus
Liabilities to be conveyed by each Acquired Fund and
assumed by the Acquiring Funds, shall, in each case, be
determined as of the Valuation Time as defined in Section
3. The net asset value of Shares of the Acquiring Funds
shall be computed in accordance with its then current
valuation procedures. In determining the value of the Fund
Assets, each security to be included in the Fund Assets
shall be priced in accordance with each Acquiring Fund's
then current valuation procedures.
2. Liquidation of Each Acquired Fund. At the Effective Time of the
Reorganization, each Acquired Fund shall make a liquidating
distribution to its shareholders as follows: Shareholders of
record of an Acquired Fund shall be credited with full and
fractional shares of the respective Shares that are issued by the
corresponding Acquiring Fund in connection with the Reorganization
corresponding to the Acquired Fund shares that are held of record
by the shareholder at the Effective Time of the Reorganization.
Each such shareholder also shall have the right to receive any
unpaid dividends or other distributions which were declared before
the Effective Time of the Reorganization with respect to the
Acquired Fund shares that are held of record by the shareholder at
the Effective Time of the Reorganization, and the
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Trust shall record on its books the ownership of the respective
Acquiring Fund shares by such shareholders (the "Transferor Record
Holders"). All of the issued and outstanding shares of the
Acquired Fund at the Effective Time of the Reorganization shall be
redeemed and canceled on the books of Reserves at such time. As
soon as reasonably possible after the Effective Time of the
Reorganization, Reserves shall wind up the affairs of each
Acquired Fund and shall file any final regulatory reports,
including but not limited to any Form N-SAR and Rule 24f-2
filings, with respect to each Acquired Fund, and also shall take
all other steps as are necessary and proper to effect the
termination or declassification of the Acquired Funds in
accordance with all applicable laws.
3. Valuation Time. The "Valuation Time" shall be the time as of which
the net asset value of each class of shares of the Acquired Funds
and the Acquiring Funds is determined pursuant to their respective
valuation procedures on the Closing Date or such earlier or later
time as may be mutually agreed to in writing by the parties
hereto.
4. Certain Representations, Warranties and Agreements of Reserves on
behalf of the Acquired Funds. Reserves, for itself and, where
appropriate, on behalf of each Acquired Fund, represents and
warrants to, and agrees with, the Trust, on behalf of each
Acquiring Fund as follows, with such representations, warranties
and agreements made on behalf of the Acquired Funds on a several
(and not joint, or joint and several) basis:
(a) Reserves is a business trust, duly established, validly
existing and in good standing under the laws of the
Commonwealth of Massachusetts. Reserves is registered with the
SEC as an open-end management investment company under the
1940 Act, and such registration is in full force and effect.
(b) Reserves has the power to own all of its properties and assets
and to consummate the transactions contemplated herein, and
has all necessary federal, state and local authorizations to
carry on its business as now being conducted and to consummate
the transactions contemplated by this Agreement.
(c) This Agreement has been duly authorized by the Board of
Trustees of Reserves on behalf of each Acquired Fund, and has
been executed and delivered by duly authorized officers of
Reserves, and represents a valid and binding contract,
enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization,
arrangement, moratorium, and other similar laws of general
applicability relating to or affecting creditors' rights and
to general equity principles. The execution and delivery of
this Agreement does not, and, subject to the approval of
shareholders referred to in Section 7, the consummation of the
transactions contemplated by this Agreement will not, violate
the Declaration of Trust or the By-Laws of Reserves, or any
material agreement or arrangement to which Reserves is a party
or by which it is bound.
(d) Each Acquired Fund has elected to qualify and has qualified as
a regulated investment company under Part I of Subchapter M of
Subtitle A, Chapter 1, of the Code, as of and since its first
taxable year; each has been a regulated investment company
under such Part of the Code at all times since the end of its
first taxable year when it so qualified; and each qualifies
and shall continue to qualify as a regulated investment
company for its taxable year ending upon its liquidation.
(e) Reserves has valued, and will continue to value, the portfolio
securities and other assets of the Acquired Funds in
accordance with applicable legal requirements.
(f) The combined proxy statement/prospectus included within the
Trust's registration statement on Form N-14 (the "N-14
Registration Statement") and the proxy statement and form of
proxy included within Reserves's Schedule 14A (the "Proxy
Statement"), from its effective date with the SEC through the
time of the shareholders meeting referred to in Section 6 and
the Effective Time of the Reorganization, insofar as they
relate to Reserves, or the Acquired Funds (i) shall comply
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in all material respects with the provisions of the Securities
Act of 1933, as amended (the "1933 Act"), the Securities
Exchange Act of 1934, as amended (the "1934 Act")and the 1940
Act, the rules and regulations thereunder, and applicable
state securities laws, and (ii) shall not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements made therein not misleading.
(g) All of the issued and outstanding shares of Reserves's
Acquired Funds have been validly issued and are fully paid and
non-assessable, and were offered for sale and sold in
conformity with the registration requirements of all
applicable federal and state securities laws.
(h) Reserves shall operate the business of the Acquired Funds in
the ordinary course between the date hereof and the Effective
Time of the Reorganization, except that Reserves shall
complete all measures in respect of the Acquired Funds prior
to the Effective Time of the Reorganization to ensure that
each Reorganization qualifies as a "reorganization" within the
meaning of Section 368(a) of the Code, regardless of whether
such measures are in the ordinary course. It is understood
that such ordinary course of business will include the
declaration and payment of customary dividends and
distributions and any other dividends and distributions deemed
advisable in anticipation of the Reorganizations.
Notwithstanding anything herein to the contrary, Reserves
shall take all appropriate action necessary in order for
Reserves to receive the opinion provided for in Sections 9(f),
(g) and (h).
(i) At the Effective Time of the Reorganization, Reserves's
Acquired Funds will have good and marketable title to the Fund
Assets and full right, power and authority to assign, deliver
and otherwise transfer such assets.
(j) At the Effective Time of the Reorganization, all federal and
other tax returns and reports of the Acquired Fund required by
law to have been filed by such time shall have been filed, and
all federal and other taxes shall have been paid so far as
due, or provision shall have been made for the payment thereof
and, to the best knowledge of management of Reserves, no such
return or report shall be currently under audit and no
assessment shall have been asserted with respect to such
returns or reports.
5. Certain Representations, Warranties and Agreements of the Trust on
behalf of the Acquiring Funds. The Trust, on behalf of itself and
where appropriate, on behalf of each Acquiring Fund, represents
and warrants to, and agrees with, Reserves on behalf of each
Acquired Fund as follows, with such representations, warranties
and agreements made on behalf of the Acquiring Funds on a several
(and not joint, or joint and several) basis:
(a) The Trust is a business trust duly formed, validly existing
and in good standing under the laws of the State of Delaware
and is registered with the SEC as an open-end management
investment company under the 1940 Act and such registration is
in full force and effect.
(b) The Trust has the power to own all of its properties and
assets and to consummate the transactions contemplated herein,
and has all necessary federal, state and local authorizations
to carry on its business as now being conducted and to
consummate the transactions contemplated by this Agreement.
(c) This Agreement has been duly authorized by the Board of
Trustees of the Trust on behalf of the Acquiring Funds, and
executed and delivered by duly authorized officers of the
Trust, and represents a valid and binding contract,
enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights and
to general equity principles. The execution and delivery of
this Agreement does not, and the consummation of the
transactions contemplated by this
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Agreement will not, violate the Amended and Restated
Declaration of Trust of the Trust or any material agreement or
arrangement to which it is a party or by which it is bound.
(d) Each Acquiring Fund has elected to qualify and has qualified
as a regulated investment company under Part I of Subchapter M
of Subtitle A, Chapter 1, of the Code, as of and since its
first taxable year; has been a regulated investment company
under such Part of the Code at all times since the end of its
first taxable year when it so qualified; and qualifies and
shall continue to qualify as a regulated investment company
for its current taxable year.
(e) The Trust has valued, and will continue to value, the
portfolio securities and other assets of the Acquiring Fund in
accordance with applicable legal requirements.
(f) The N-14 Registration Statement and the Proxy Statement, from
their respective effective date with the SEC through the time
of the shareholders meeting referred to in Section 7 and at
the Effective Time of the Reorganization, insofar as it
relates to the Trust, or the Acquiring Funds (i) shall comply
in all material respects with the provisions of the 1933 Act,
the 1934 Act and the 1940 Act, the rules and regulations
thereunder, and state securities laws, and (ii) shall not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements made therein not misleading.
(g) The shares of the Acquiring Fund to be issued and delivered to
the corresponding Acquired Funds for the account of the
shareholders of each Acquired Fund, pursuant to the terms
hereof, shall have been duly authorized as of the Effective
Time of the Reorganization and, when so issued and delivered,
shall be duly and validly issued, fully paid and
non-assessable, and no shareholder of the Acquiring Funds
shall have any preemptive right of subscription or purchase in
respect thereto.
(h) All of the issued and outstanding shares of the Acquiring
Funds have been validly issued and are fully paid and
non-assessable, and were offered for sale and sold in
conformity with the registration requirements of all
applicable federal and state securities laws.
(i) The Trust shall operate the business of the Acquiring Funds in
the ordinary course between the date hereof and the Effective
Time of the Reorganization, it being understood that such
ordinary course of business will include the declaration and
payment of customary dividends and distributions and any other
dividends and distributions deemed advisable in anticipation
of the Reorganizations. Notwithstanding anything herein to the
contrary, the Trust shall take all appropriate action
necessary in order for the Trust to receive the opinion
provided for in Sections 10(d), (e) and (f).
(j) At the Effective Time of the Reorganization, all federal and
other tax returns and reports of the Acquiring Fund required
by law to have been filed by such time shall have been filed,
and all federal and other taxes shall have been paid so far as
due, or provision shall have been made for the payment thereof
and, to the best knowledge of management of the Trust, no such
return or report shall be currently under audit and no
assessment shall have been asserted with respect to such
returns or reports.
6. Regulatory Filings. The Trust has filed the N-14 Registration
Statement with the SEC and Reserves has filed the Proxy Statement
with the SEC.
7. Shareholder Action. After the effective date of the N-14
Registration Statement and the Proxy Statement Reserves shall hold
a meeting(s) of the shareholders of each Acquired Fund for the
purpose of considering and voting upon:
(a) approval of this Agreement and the Reorganization
contemplated hereby; and
(b) such other matters as may be determined by the Board of
Trustees of Reserves.
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8. Closing Date, Effective Time of the Reorganization. The "Closing
Date" shall be June 8, 2001, or such earlier or later date as may
be mutually agreed in writing by the parties hereto. Delivery of
the Fund Assets and the shares of each Acquiring Fund to be issued
pursuant to Section 1 and the liquidation of the Acquired Funds
pursuant to Section 2 shall occur on the day following the Closing
Date, whether or not such day is a business day, or on such other
date, and at such place and time, as may be mutually agreed in
writing, by the parties hereto. The date and time at which such
actions are taken are referred to herein as the "Effective Time of
the Reorganization." To the extent any Fund Assets are, for any
reason, not transferred at the Effective Time of the
Reorganization, Reserves shall cause such Fund Assets to be
transferred in accordance with this Agreement at the earliest
practicable date thereafter.
9. Conditions to the Trust's Obligations on Behalf of the Acquiring
Funds. The obligations of the Trust hereunder shall be subject to
the following conditions precedent:
(a) This Agreement and the Reorganization shall have been
approved by the Board of Trustees of Reserves and by a
requisite vote of the shareholders of the Acquired Funds in
the manner required by Reserves's Declaration of Trust,
By-Laws, applicable law and this Agreement.
(b) All representations and warranties of Reserves made in this
Agreement shall be true and correct in all material respects
as if made at and as of the Valuation Time and the Effective
Time of the Reorganization.
(c) Reserves shall have delivered to the Trust a statement of
assets and liabilities of each Acquired Fund, showing the
tax basis of such assets for federal income tax purposes by
lot and the holding periods of such assets, as of the
Valuation Time.
(d) Reserves shall have duly executed and delivered to the Trust
such bills of sale, assignments, certificates and other
instruments of transfer ("Transfer Documents") as the Trust
may deem necessary or desirable to transfer all of the
Acquired Funds' rights, title and interest in and to the
Fund Assets.
(e) Reserves shall have delivered a certificate executed in its
name executed by an appropriate officer, in a form
reasonably satisfactory to the Trust and dated as of the
Closing Date, to the effect that the representations and
warranties of Reserves on behalf of each Acquired Fund made
in this Agreement are true and correct at and as of the
Valuation Time and that, to the best of its knowledge, the
Fund Assets include only assets which the corresponding
Acquiring Fund may properly acquire under its investment
objectives, policies and limitations and may otherwise be
lawfully acquired by such Acquiring Fund.
(f) Reserves shall have received an opinion of Morrison &
Foerster LLP, as counsel to Reserves in form reasonably
satisfactory to the Trust and dated the Closing Date,
substantially to the effect that (i) Reserves is a business
trust duly established and validly existing under the laws
of the Commonwealth of Massachusetts; (ii) the Agreement has
been duly authorized, executed and delivered by Reserves and
such execution and delivery of the Agreement did not, and
the consummation of the transactions contemplated by this
Agreement will not, violate the Declaration of Trust or
By-Laws of Reserves or any material contract known to such
counsel to which Reserves is a party or by which it is
bound; and (iii) no consent, approval, authorization or
order of any court or governmental authority is required for
the consummation by Reserves of the transactions
contemplated by this Agreement, except such as have been
obtained under the 1933 Act, the 1934 Act, the 1940 Act, the
rules and regulations
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under those Acts and such as may be required under the state
securities laws or such as may be required subsequent to the
Effective Time of the Reorganization.
(g) Reserves shall have received an opinion of Richards, Layton
& Finger P.A., as special Delaware counsel to Reserves, in
form and substance reasonably satisfactory to the Trust and
dated as of the Closing Date, substantially to the effect
that this Agreement has been duly authorized by the Trust,
and, assuming due authorization, execution and delivery of
this Agreement by Reserves, represents a legal, valid and
binding contract, enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, moratorium,
fraudulent conveyance and transfer and similar laws relating
to or affecting creditors' rights generally and court
decisions with respect thereto, and further subject to the
application of equitable principles in any proceeding
whether at law or in equity or with respect to the
enforcement of provisions of the Agreement and the effect of
judicial decisions which have held that certain provisions
are unenforceable when their enforcement would violate an
implied covenant of good faith and fair dealing or would be
commercially unreasonable or when default under the
Agreement is not material. In rendering such opinion, such
counsel may (i) make assumptions regarding the authenticity,
genuineness and/or conformity of documents and copies
thereof without independent verification thereof, (ii) limit
such opinion to applicable state law, and (iii) rely on
certificates of officers or Trustees of Reserves.
(h) Reserves shall have received an opinion of Morrison &
Foerster LLP, upon which each Acquiring Fund and its
shareholders may rely, based upon representations made in
certificates provided by Reserves, and/or its affiliates
and/or principal shareholders of the Acquired Funds to
Morrison & Foerster LLP, addressed to Reserves in a form
reasonably satisfactory to it, and dated as of the Closing
Date, substantially to the effect that, for federal income
tax purposes, each Reorganization will qualify as a
"reorganization" within the meaning of Section 368(a) of the
Code, and the Acquired Funds and the Acquiring Funds will be
a party to a "reorganization," within the meaning of Section
368(b) of the Code, with respect to the Reorganizations.
(i) The N-14 Registration Statement and the Proxy Statement
shall have become effective and no stop order suspending the
effectiveness shall have been instituted, or to the
knowledge of Reserves, contemplated by the SEC.
(j) No action, suit or other proceeding shall be threatened or
pending before any court or governmental agency in which it
is sought to restrain or prohibit, or obtain damages or
other relief in connection with, this Agreement or the
transactions contemplated herein.
(k) The SEC shall not have issued any unfavorable advisory
report under Section 25(b) of the 1940 Act nor instituted
any proceeding seeking to enjoin consummation of the
transactions contemplated by this Agreement under Section
25(c) of the 1940 Act.
(l) Reserves on behalf of each Acquired Fund shall have
performed and complied in all material respects with each of
its agreements and covenants required by this Agreement to
be performed or complied with by it prior to or at the
Valuation Time and the Effective Time of the Reorganization.
(m) Reserves shall have received a duly executed instrument
whereby each Acquiring Fund assumes all of the liabilities
of Reserves's corresponding Acquired Fund.
(n) Prior to the Valuation Time, each Acquired Fund shall have
declared a dividend or dividends, with a record date and
ex-dividend date prior to the Valuation Time, which,
together with all previous dividends, shall have the effect
of distributing to its shareholders all of its "net
investment company taxable income" (as defined in the Code
and computed without regard to any deduction for dividends
paid), if any, for all
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taxable periods or years ending on or before the Effective
Time of the Reorganization, and all of its net capital gain,
if any, realized in taxable periods of years ending on or
before Effective Time of the Reorganization.
10. Conditions to Reserves's Obligations on behalf of the Acquired
Funds. The obligations of Reserves hereunder shall be subject to
the following conditions precedent:
(a) This Agreement and the Reorganization shall have been
approved by the Board of Trustees of the Trust on behalf of
each Acquiring Fund.
(b) All representations and warranties of the Trust made in this
Agreement shall be true and correct in all material respects
as if made at and as of the Valuation Time and the Effective
Time of the Reorganization.
(c) The Trust shall have delivered a certificate executed in its
name by an appropriate officer, in a form reasonably
satisfactory to Reserves and dated as of the Closing Date,
to the effect that the representations and warranties of
each Acquiring Fund made in this Agreement are true and
correct at and as of the Valuation Time.
(d) The Trust shall have received an opinion of Morrison &
Foerster LLP, as counsel to Reserves in form reasonably
satisfactory to Reserves and dated the Closing Date,
substantially to the effect that (i) the Trust is a business
trust duly created and validly existing under the laws of
the State of Delaware; (ii) the shares of each Acquiring
Fund to be delivered to Reserves's Acquired Funds as
provided for by this Agreement are duly authorized and upon
delivery will be validly issued, fully paid and
non-assessable by the Trust; (iii) this Agreement has been
duly authorized, executed and delivered by the Trust and the
authorization, execution and delivery of this Agreement did
not, and the consummation of the transactions contemplated
by this Agreement will not, violate the Amended and Restated
Declaration of Trust of the Trust or any material contract
known to such counsel to which the Trust is a party or by
which it is bound; and (v) no consent, approval,
authorization or order of any court or governmental
authority is required for the consummation by the Trust of
the transactions contemplated by this Agreement, except such
as have been obtained under the 1933 Act, the 1934 Act, the
1940 Act, the rules and regulations under those Acts and
such as may be required by state securities laws or such as
may be required subsequent to the Effective Time of the
Reorganization.
(e) The Trust shall have received an opinion of Richards, Layton
& Finger P.A., as special Delaware counsel to the Trust, in
form and substance reasonably satisfactory to Reserves and
dated as of the Closing Date, substantially to the effect
that this Agreement has been duly authorized by the Trust,
and, assuming due authorization, execution and delivery of
this Agreement by Reserves, represents a legal, valid and
binding contract, enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, moratorium,
fraudulent conveyance and transfer and similar laws relating
to or affecting creditors' rights generally and court
decisions with respect thereto, and further subject to the
application of equitable principles in any proceeding
whether at law or in equity or with respect to the
enforcement of provisions of the Agreement and the effect of
judicial decisions which have held that certain provisions
are unenforceable when their enforcement would violate an
implied covenant of good faith and fair dealing or would be
commercially unreasonable or when default under the
Agreement is not material. In rendering such opinion, such
counsel may (i) make assumptions regarding the authenticity,
genuineness and/or conformity of documents and copies
thereof without independent verification thereof, (ii) limit
such opinion to applicable state law, and (iii) rely on
certificates of officers or Trustees of the Trust.
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(f) The Trust shall have received an opinion of Morrison &
Foerster LLP, upon which each Acquired Fund and its
shareholders may rely, based upon representations made in
certificates provided by the Trust, and/or its affiliates
and/or principal shareholders of the Acquiring Funds to
Morrison & Foerster LLP, addressed to the Trust in a form
reasonably satisfactory to it, and dated as of the Closing
Date, substantially to the effect that, for federal income
tax purposes, the Reorganization will qualify as a
"reorganization" within the meaning of Section 368(a) of the
Code, and the Acquired Funds and the Acquiring Funds will
each be a party to a "reorganization," within the meaning of
Section 368(b) of the Code, with respect to the
Reorganization.
(g) The N-14 Registration Statement and Proxy Statement shall
have become effective and no stop order suspending such
effectiveness shall have been instituted or, to the
knowledge of the Trust, contemplated by the SEC.
(h) No action, suit or other proceeding shall be threatened or
pending before any court or governmental agency in which it
is sought to restrain or prohibit or obtain damages or other
relief in connection with this Agreement or the transactions
contemplated herein.
(i) The SEC shall not have issued any unfavorable advisory
report under Section 25(b) of the 1940 Act nor instituted
any proceeding seeking to enjoin consummation of the
transactions contemplated by this Agreement under Section
25(c) of the 1940 Act.
(j) The Trust on behalf of each Acquiring Fund shall have
performed and complied in all material respects with each of
its agreements and covenants required by this Agreement to
be performed or complied with by it prior to or at the
Valuation Time and the Effective Time of the Reorganization.
11. Tax Matters
(a) Reserves and the Trust hereby represent and warrant and that
each shall use its best efforts to cause the Reorganization
to qualify, and will not (whether before or after
consummation of the Reorganization) take any actions that
could prevent the Reorganization from qualifying, as a
"reorganization" under the provisions of Section 368 of the
Code.
(b) Except where otherwise required by law, the parties shall
not take a position on any tax returns inconsistent with the
treatment of each Reorganization for tax purposes as a
"reorganization," within the meaning of Section 368(a) of
the Code and each Acquiring Fund and each Acquired Fund will
comply with the record keeping and information filing
requirements of Section 1.368-3 of the Treasury Regulation
in accordance therewith.
12. Survival of Representations and Warranties. The representations
and warranties of the Trust on behalf of each Acquiring Fund set
forth in this Agreement shall survive the delivery of the Fund
Assets to such Acquiring Fund and the issuance of the shares of
each Acquiring Fund at the Effective Time of the Reorganization to
the corresponding Acquired Fund shareholders.
13. Termination of Agreement. This Agreement may be terminated by a
party at or, in the case of Subsection 13(c), below, at any time
prior to, the Effective Time of the Reorganization by a vote of a
majority of its Board members as provided below:
(a) By the Trust on behalf of its Acquiring Funds if the
conditions set forth in Section 9 are not satisfied as
specified in said Section;
(b) By Reserves on behalf of its Acquired Funds if the conditions
set forth in Section 10 are not satisfied as specified in said
Section;
9
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(c) By mutual written consent of the Trust and Reserves.
14. Governing Law. This Agreement and the transactions contemplated
hereby shall be governed, construed and enforced in accordance
with the laws of the State of Delaware, except to the extent
preempted by federal law.
15. Brokerage Fees and Expenses.
(a) The Trust represents and warrants that there are no brokers or
finders entitled to receive any payments in connection with
the transactions provided for herein.
(b) Banc of America Advisors, Inc. and/or its affiliates will be
responsible for the expenses related to entering into and
carrying out the provisions of this Agreement, whether or not
the transactions contemplated hereby are consummated.
16. Amendments
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized
officers of Reserves, acting on behalf of the Acquired Funds or
the Trust, acting on behalf of the Acquiring Funds; provided,
however, that following the meeting of the shareholders of an
Acquired Fund, no such amendment may have the effect of changing
the provisions for determining the number of shares of the
Acquiring Funds to be issued to the Transferor Record Holders
under this Agreement to the detriment of such Transferor Record
Holders, or otherwise materially and adversely affecting an
Acquired Fund, without such Acquired Fund obtaining its
shareholders' further approval:
(a) At any time prior to or (to the fullest extent permitted by
law) after approval of this Agreement by the shareholders of
an Acquired Fund, Reserves on behalf of an Acquired Fund, may
waive any breach by the Trust, on behalf of an Acquiring Fund,
or the failure to satisfy any of the conditions to its
obligations (such waiver to be in writing and signed by an
officer of such registered investment companies);
(b) At any time prior to or (to the fullest extent permitted by
law) after approval of this Agreement by the shareholders of
an Acquired Fund, the Trust, on behalf of an Acquiring Fund,
may waive any breach by Reserves on behalf of an Acquired
Fund, or the failure to satisfy any of the conditions to
either of their obligations (such waiver to be in writing and
signed by an officer of such registered investment companies).
17. [Severability clause to come]
10
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers designated below as of the date first
written above.
NATIONS RESERVES
On behalf of the Acquired Funds identified on Schedule A
By:____________________________________________
Richard H. Blank, Jr.
Secretary and Treasurer
NATIONS FUNDS TRUST
On behalf of the Acquiring Funds identified on Schedule A
By:____________________________________________
Richard H. Blank, Jr.
Secretary and Treasurer
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SCHEDULE A
<TABLE>
<CAPTION>
<S> <C>
SHAREHOLDERS OWNING SHARES OF THE FOLLOWING WOULD RECEIVE SHARES OF THE FOLLOWING
ACQUIRED FUND AND CLASSES OF RESERVES: ACQUIRING FUND AND CLASSES OF THE TRUST:
Nations Asset Allocation Fund -> Nations Asset Allocation Fund
Primary A Shares Primary A Shares
Investor A Shares Investor A Shares
Investor B Shares Investor B Shares
Investor C Shares Investor C Shares
Nations Marsico Growth & Income Fund -> Nations Marsico Growth & Income Fund
Primary A Shares Primary A Shares
Investor A Shares Investor A Shares
Investor B Shares Investor B Shares
Investor C Shares Investor C Shares
Nations Marsico Focused Equities Fund -> Nations Marsico Focused Equities Funds
Primary A Shares Investor A Shares
Investor A Shares Investor B Shares
Investor B Shares Investor C Shares
Investor C Shares
</TABLE>
12
