SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant X
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
X Preliminary Proxy Statement [ ] Confidential, for Use of
the Commission Only
(as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SOGEN FUNDS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
X No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identity the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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PRELIMINARY COPY
IMPORTANT NEWS
SOGEN FUNDS, INC.
SOGEN INTERNATIONAL FUND
SOGEN OVERSEAS FUND
SOGEN GOLD FUND
While we encourage you to read the full text of the enclosed proxy
statement, here's a brief overview of some matters affecting SoGen International
Fund, SoGen Overseas Fund, and SoGen Gold Fund (each a "Fund" and collectively,
the "Funds") which require a shareholder vote.
Q & A: QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. Societe Generale Asset Management, S.A., ("SGAM S.A."), the parent
company of Societe Generale Asset Management Corp. ("SGAM Corp."), the
investment adviser for SoGen Funds, Inc. (the "Company"), and its
president, a director and minority shareholder of SGAM Corp., Jean-Marie
Eveillard, have entered into a stock purchase agreement (the "Purchase
Agreement") with Liberty Financial Companies, Inc. ("Liberty") dated as
of August 13, 1998 providing for the sale of all of the outstanding
shares of SGAM Corp. to Liberty (the "Acquisition"). The Purchase
Agreement anticipates that each Fund will be reorganized into a
newly-created series of Colonial Trust II (the "Colonial Trust") that
has the same investment objective as, and substantially similar policies
to, the corresponding Fund (the "Reorganization"). The Colonial Trust is
an open-end investment company consisting of six separate investment
portfolios for which Colonial Management Associates, Inc. ("Colonial
Management"), an indirect subsidiary of Liberty, serves as the
Administrator. If the Reorganization is approved, and the Acquisition
takes place, SGAM Corp., under a new name, would continue to serve as
the investment adviser to your Fund.
Q. WHAT AM I BEING ASKED TO APPROVE?
A. As explained in the attached proxy materials, you are being asked to
approve an Agreement and Plan of Reorganization (the "Plan") for each
Fund in which you are a shareholder. By approving the Plan, you would
also be approving the following related actions.
First, as a result of the Acquisition and the contemplated
Reorganization, each Fund would be required to enter into a new
investment management agreement with SGAM Corp. This action is necessary
because, as a result of the Acquisition, there will be a change in
control of SGAM Corp. The federal Investment Company Act of 1940 (the
"1940 Act"), which governs the activities of mutual funds, requires
shareholder approval of a management agreement whenever there is a
change in control of a fund's investment adviser. In addition, in case
the Reorganization is approved by shareholders, but does not occur until
after the Acquisition takes place, an Interim Management Agreement,
substantially identical to the current advisory agreement, would also be
approved as part of the Reorganization.
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Second, the Reorganization would also result in the adoption of a new
plan of distribution pursuant to Rule 12b-1 of the 1940 Act ("Rule 12b-1
Plan") for the Class A shareholders of each Fund.
Third, as a result of the Reorganization, you would also be voting in
favor of the conversion of your Fund from operating as part of a
corporation organized under the laws of Maryland (a "Maryland
corporation") to operating as part of a business trust organized under
the laws of Massachusetts (a "Massachusetts business trust"). Under this
arrangement, the Colonial Trust's current Board of Trustees would
oversee the Funds, instead of the Company's Board of Directors, as is
presently the case.
Q. HOW WILL LIBERTY'S ACQUISITION OF SGAM CORP. AFFECT ME AS A FUND
SHAREHOLDER?
A. Your Fund's investment objective and investment program would not change
as a result of the Acquisition or the Reorganization. You will still own
the same number of shares in the reorganized Fund. The terms of the new
investment management agreement will be substantially similar in all
material respects as those in the current investment management
agreement, except with respect to administrative services, which will be
provided under a separate administration agreement described in the
enclosed Proxy Statement. You would continue to receive investment
advisory services from SGAM Corp.
Q. WHAT WILL HAPPEN IF THE REORGANIZATION IS NOT APPROVED BY A FUND'S
SHAREHOLDERS?
A. If shareholder approval of a Fund's Reorganization is not obtained,
Liberty may, at its option, elect either to (i) terminate the Purchase
Agreement and not purchase all of the outstanding shares of SGAM Corp.,
in which case the existing investment management agreement and
distribution plan for that Fund would remain in effect and the current
directors of the Company would continue to serve until further notice,
or (ii) complete the purchase of all of the outstanding shares of SGAM
Corp. and seek exemptive relief from the Securities and Exchange
Commission in order to permit SGAM Corp. to continue to serve as that
Fund's investment adviser under a new investment management agreement,
the terms of which would be substantially the same as the terms of the
current investment management agreement (except as discussed more fully
in the enclosed Proxy Statement), for a period of time while that Fund
continues to solicit proxies. In either case, or if the Reorganization
is not approved by the shareholders, the Company's Board of Directors
will take such action with respect to the future management of each Fund
as it deems to be in the best interests of that Fund and its
shareholders.
Q. WILL THE INVESTMENT ADVISORY FEES BE THE SAME?
A. Yes, the fees paid by your Fund for investment advisory services under
the current contract will remain the same after the Reorganization.
However, as discussed below, after the Reorganization, each reorganized
Fund will enter into an administration agreement with Colonial
Management under which that Fund will pay a separate fee (which will be
waived for a period of at least two years after the Reorganization) for
administrative services.
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Q. WILL I INCUR ANY ADDITIONAL FEES OR EXPENSES AS A RESULT OF THE
ACQUISITION?
A. As a result of the Reorganization, each Fund will adopt a Rule 12b-1
Plan under which the Class A shares of that Fund could be assessed a fee
of up to 0.35% (although that fee would be voluntarily reduced to 0.25%
for at least two years) of average net assets per year for
distribution-related activities. If the voluntary reduction is reduced
or eliminated, the maximum fee that could be paid under this plan would
reflect an increase of up to 0.10% over the maximum amount that can be
paid under the current Class A Rule 12b-1 plan of the Funds. Class I
shares of SoGen International Fund and SoGen Overseas Fund will continue
to not be subject to any fees related to a Rule 12b-1 Plan.
In addition, each reorganized Fund will enter into an administration
agreement with Colonial Management that will cover services that were
previously provided under its investment management agreement with SGAM
Corp., and each Fund will be responsible for providing a separate fee to
Colonial Management under that agreement (although that fee would be
voluntarily waived for a period of at least two years following the
Reorganization). See Exhibit C to the enclosed Proxy Statement for the
specific administration fee for each Fund.
Liberty and SGAM Corp. have agreed to waive certain management,
administration, transfer agency, and other fees so that the total
operating expenses of your Fund will not exceed the current total
operating expenses of the Fund during the first two years after the new
investment management agreements become effective.
Q. HOW DO THE BOARD MEMBERS OF MY FUND SUGGEST THAT I VOTE?
A. After careful consideration, the Board of Directors, on behalf of each
Fund, including a majority of those directors who are not affiliated
with the Funds or SGAM Corp., recommends that you vote in favor of the
proposal on the enclosed proxy card.
Q. WHOM DO I CALL FOR MORE INFORMATION ABOUT THE ACQUISITION AND THE
PROPOSED REORGANIZATION?
A. Please call (800) 334-2143.
ABOUT THE PROXY CARD
Because each Fund must vote separately, you are being sent a proxy card
for each Fund account that you have. If you have accounts with more than one
Fund in your name at the same address, you will receive separate proxy cards for
each account but only one proxy statement for the Funds. Please vote all issues
shown on each proxy card that you receive. In addition to voting by returning
your proxy card in the enclosed envelope, you may also submit your vote by
telephone, facsimile, or over the Internet (www.proxyvote.com).
THANK YOU FOR SUBMITTING YOUR VOTE PROMPTLY.
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SOGEN FUNDS, INC.
1221 Avenue of the Americas
New York, New York 10020
1-800-___-____
November __, 1998
To the Shareholders:
A Special Meeting of Shareholders (the "Special Meeting") of SoGen
International Fund, SoGen Overseas Fund, and SoGen Gold Fund (each a "Fund" and
collectively, the "Funds"), each of which is a series of SoGen Funds, Inc. (the
"Company"), is to be held at 3:00 p.m., Eastern time, on Friday, December 18,
1998, at the offices of Societe Generale Asset Management Corp. ("SGAM Corp."),
the investment adviser for the Funds, 1221 Avenue of the Americas, 8th Floor,
New York, New York 10020. Shareholders who are unable to attend the Special
Meeting are strongly encouraged to vote by proxy, which is customary in
corporate meetings of this kind. A Proxy Statement regarding the Special
Meeting, a proxy card for your vote at the Special Meeting and an envelope
postage prepaid - in which to return your proxy card are enclosed.
As described in the Questions and Answers on the outside cover, Societe
Generale Asset Management S.A. ("SGAM S.A."), the parent company of SGAM Corp.,
and I, have entered into a stock purchase agreement (the "Purchase Agreement")
with Liberty Financial Companies, Inc. ("Liberty"), providing for the sale of
all of the outstanding shares of SGAM Corp. to Liberty (the "Acquisition").
Liberty is a publicly traded, diversified asset management organization
headquartered in Boston, Massachusetts. (More information about Liberty can be
found inside the Proxy Statement.)
The Purchase Agreement anticipates that each Fund will be reorganized
into a newly-created series of Colonial Trust II (the "Colonial Trust") which
will have the same investment objective and substantially similar policies as
the corresponding Fund (the "Reorganization"). The Colonial Trust is an open-end
investment company currently consisting of six separate investment portfolios
for which Colonial Management Associates, Inc., an indirect subsidiary of
Liberty, serves as the Administrator. If the Reorganization is approved, and the
Acquisition takes place, SGAM Corp., under a new name, would continue to serve
as the investment adviser to each of the Funds.
At the Special Meeting, you will be asked to approve the Reorganization
for each Fund in which you are a Shareholder, the details of which are described
in the attached Proxy Statement. By approving the Reorganization, you would also
be approving a series of related matters, including: (1) a new investment
management agreement (as well as an interim investment management agreement)
between the Funds and SGAM Corp., the approval of which is required under
federal securities laws in light of Liberty's acquisition of SGAM Corp.; (2)
with respect to current Class A shareholders of the Funds, a Rule 12b-1 Plan
under which the Class A shares of the Funds could be assessed an annual fee of
up to 0.35% of average net assets for distribution related activities (as
opposed to a maximum charge of 0.25% of average net assets under the existing
plan of distribution), although that fee would be voluntarily reduced to 0.25%
of average net assets for a period of at least two years; and (3) the conversion
of the Funds from operating as part of a corporation organized under the laws of
Maryland to operating as a part of a business trust organized under the laws of
Massachusetts.
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AS YOU REVIEW THESE MATERIALS, PLEASE KEEP IN MIND THAT, IF THE
REORGANIZATION IS APPROVED, YOUR FUND'S INVESTMENT OBJECTIVE AND INVESTMENT
PROGRAM WILL REMAIN THE SAME AND SGAM CORP. WILL CONTINUE TO MANAGE THE ASSETS
OF THE FUND. IN ADDITION, FOR A PERIOD OF AT LEAST TWO YEARS FOLLOWING THE
REORGANIZATION, YOUR FUND WILL NOT EXPERIENCE AN INCREASE IN ITS EXPENSE RATIO
BEYOND THE ANNUALIZED LEVEL FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 30, 1998.
The Board of Directors of the Company recommends that you vote in favor
of the Reorganization.
Respectfully,
Jean-Marie Eveillard
President
SHAREHOLDERS ARE URGED TO SIGN THE PROXY CARD AND MAIL IT IN THE POSTAGE PREPAID
ENVELOPE SO AS TO ENSURE A QUORUM AT THE SPECIAL MEETING. YOU MAY ALSO SUBMIT
YOUR VOTE ON THE PROPOSAL BY TELEPHONE, FACSIMILE, OR OVER THE INTERNET
(www.proxyvote.com). TO VOTE BY TELEPHONE, PLEASE CALL (800) 690-6903. YOUR
PROXY MAY BE SENT BY FACSIMILE BY DIALING (________________) BETWEEN THE HOURS
OF 9:00 A.M. AND 5:00 P.M. EASTERN TIME. IT IS IMPORTANT TO VOTE WHETHER YOU OWN
FEW OR MANY SHARES.
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SOGEN FUNDS, INC.
Notice of Special Meeting of Shareholders
To the Shareholders of
SoGen International Fund,
SoGen Overseas Fund and
SoGen Gold Fund
Please take notice that a Special Meeting of Shareholders (the "Special
Meeting") of SoGen International Fund, SoGen Overseas Fund, and SoGen Gold Fund
(each a "Fund" and collectively, the "Funds"), each a series of SoGen Funds,
Inc. (the "Company"), is to be held at the offices of Societe Generale Asset
Management Corp. ("SGAM Corp."), the investment adviser for the Funds, 1221
Avenue of the Americas, 8th Floor, New York, New York 10020, on Friday, December
18, 1998, at 3:00 p.m., Eastern time, for the following purposes:
(1) To approve an Agreement and Plan of Reorganization
("Reorganization") for each Fund. Under the Reorganization, (i) all of
the assets and liabilities of each Fund would be transferred to a new
series of Colonial Trust II, a Massachusetts business trust (the
"Colonial Trust"); (ii) shareholders of each Fund would receive an equal
number of shares of a comparable class of the corresponding series of
the Colonial Trust in exchange for their shares of the Fund; and (iii)
each Fund would then be liquidated and dissolved.
(2) To transact any other business that may properly be presented at the
Special Meeting or any adjournment or postponement of the Special
Meeting.
The appointed proxies will vote on any other business as may properly
come before the Special Meeting or any adjournments or postponements thereof.
Holders of record of shares of common stock of each Fund at the close of
business on [October 30], 1998 are entitled to vote at the Special Meeting and
at any adjournments or postponements thereof.
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Special
Meeting with respect to the Company or any Fund, the persons named as proxies
may propose one or more adjournments of the Special Meeting in accordance with
applicable law, to permit further solicitation of proxies. The persons named as
proxies will vote in favor of such adjournment those proxies which have been
voted in favor of the proposal and will vote against any such adjournment those
proxies which have been voted against the proposal.
By Order of the Board of Directors,
Philip J. Bafundo
Secretary
November [ ], 1998
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IMPORTANT -- We urge you to sign and date the enclosed proxy card and return it
in the enclosed addressed envelope which requires no postage and is intended for
your convenience. You may also submit your vote on the proposal by telephone,
facsimile, or over the Internet (www.proxyvote.com). To vote via telephone,
please call (800) 690-6903.
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Your proxy may be sent by facsimile by dialing (________________) between the
hours of 9:00 a.m. and 5:00 p.m. Eastern Time. If you can attend the Special
Meeting and wish to vote your shares in person at that time, you will be able to
do so.
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SOGEN FUNDS, INC.
1221 Avenue of the Americas
New York, New York 10020
PROXY STATEMENT
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General
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of SoGen Funds, Inc. (the
"Company"), on behalf of SoGen International Fund, SoGen Overseas Fund, and
SoGen Gold Fund (each a "Fund" and collectively, the "Funds"), for use at a
Special Meeting of Shareholders, to be held at the offices of Societe Generale
Asset Management Corp. ("SGAM Corp."), the investment adviser for the Funds,
1221 Avenue of the Americas, 8th Floor, New York, New York 10020, on Friday,
December 18, 1998 at 3:00 p.m., Eastern time, and at any and all adjournments or
postponements thereof (the "Special Meeting"). (In the descriptions of the
proposals below, the word "fund" is sometimes used to mean an investment company
or a series thereof in general, and not the Funds whose proxy statement this
is.)
This Proxy Statement, the Notice of Special Meeting and the proxy card
are first being mailed to shareholders on or about November [ ], 1998 or as soon
as practicable thereafter. Any shareholder giving a proxy has the power to
revoke it by mail (addressed to the Secretary of the Company at its principal
executive offices at 1221 Avenue of the Americas, New York, New York 10020),
[facsimile, telephone, via the Internet,] or in person at the Special Meeting,
by executing a superseding proxy or by submitting a notice of revocation to the
Company. All properly executed proxies received in time for the Special Meeting
will be voted as specified in the proxy or, if no specification is made, FOR the
reorganization as described in the Proxy Statement.
The presence at any shareholders' meeting, in person or by proxy, of the
holders of a majority of the shares of the Funds entitled to be cast shall be
necessary and sufficient to constitute a quorum for the transaction of business.
In the event that the necessary quorum to transact business or the vote required
to approve any proposal is not obtained at the Special Meeting with respect to
one or more of the Funds, the persons named as proxies may propose one or more
adjournments of the Special Meeting to permit further solicitation of proxies.
Any such adjournment as to a matter will require the affirmative vote of the
holders of a majority of the Fund's shares present in person or by proxy at the
Special Meeting. The persons named as proxies will vote in favor of such
adjournment those proxies which they are entitled to vote in favor of the
proposal and will vote against any such adjournment those proxies to be voted
against the proposal. If no shareholder entitled to vote is present in person or
by proxy, any officer present to preside or act at the Special Meeting as
Secretary may also adjourn the meeting For purposes of determining the presence
of a quorum for transacting business at the Special Meeting, abstentions will be
treated as shares that are present but which have not been voted.
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Abstentions will have the effect of a "no" vote on Proposal 1, which
requires the vote of a majority of each Fund's outstanding voting securities.
The following table summarizes the voting requirements for Proposal 1:
<TABLE>
<CAPTION>
<S> <C> <C>
Shareholders Entitled to Vote Vote Required for Approval
Proposal 1 Shareholders of each Fund vote The vote of a majority of each
(Approval of Agreement and Plan separately Fund's outstanding voting
of Reorganization) securities.
</TABLE>
Holders of record of the shares of common stock of each Fund at the
close of business on [October 30], 1998 (the "Record Date"), as to any matter on
which they are entitled to vote, will be entitled to one vote per share on all
business of the Special Meeting. The table below sets forth the number of shares
outstanding for each Fund as of [October 30], 1998.
Number of Shares Outstanding
Name of Fund as of [October 30], 1998 (Record Date)
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Class A Shares Class I Shares
SoGen International Fund
SoGen Overseas Fund
SoGen Gold Fund --------
[As of [October 30], 1998, the Directors and officers of the Company as
a group owned less than 1% of the shares of the Company. The Company knows of no
person who beneficially owns more than 5% of the capital stock of the Company.]
The information contained in this Proxy Statement relating to Liberty
Financial Companies, Inc. ("Liberty") and Colonial Management Associates, Inc.
("Colonial Management") has been provided by them.
The Company provides periodic reports of a Fund to all shareholders of
that Fund which highlight relevant information including investment results and
a review of portfolio changes. You may receive a copy of the most recent annual
report for each Fund and a copy of any more recent semi-annual report, if any,
without charge, by calling 800-___-[___] or writing the Fund, at 1221 Avenue of
the Americas, New York, New York 10020.
PROPOSAL 1: APPROVAL OF AGREEMENT
AND PLAN OF REORGANIZATION
I. Introduction
Societe Generale Asset Management, S.A., ("SGAM S.A."), the holder of
all the
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outstanding shares of Class A common stock of SGAM Corp., a Delaware corporation
and the investment adviser for the Funds, Jean-Marie Eveillard ("Eveillard"),
the president and a director of SGAM Corp. and holder of all of the outstanding
shares of Class B common stock of SGAM Corp. (SGAM S.A. and Eveillard are
sometimes referred to collectively as the "Sellers") and Liberty have entered
into a stock purchase agreement (the "Purchase Agreement") dated August 13,
1998, providing for a sale of all of the outstanding shares of SGAM Corp. to
Liberty (the "Acquisition"). For purposes of this Proxy Statement, following the
Acquisition, SGAM Corp. shall be referred to as "Successor SGAM Corp."
The Purchase Agreement contemplates that the Company would enter into an
Agreement and Plan of Reorganization (the "Plan") on behalf of each Fund, under
which each Fund would be reorganized into a newly-created series (each, a
"Successor Fund" and collectively, the "Successor Funds") of Colonial Trust II
(the "Colonial Trust"), a Massachusetts business trust currently consisting of
six separate investment portfolios, that will have the same investment objective
and substantially similar policies as the corresponding Fund (the
"Reorganization"). The Purchase Agreement also contemplates that SGAM Corp. will
continue to serve as the investment adviser to each Fund. The Reorganization
requires approval by each Fund's shareholders.
After the Reorganization, Colonial Management, an indirect subsidiary of
Liberty, would provide the administrative services for each Fund pursuant to an
administration agreement. In addition, the Funds would enter into new agreements
with affiliates of Colonial Management for the provision of distribution,
transfer agency and other services, and would change its legal counsel to those
of the Colonial Trust.
At a special meeting of the Board of the Company held on October 19,
1998 the Board, acting on behalf of each Fund, including a majority of the
disinterested Directors (as defined below), approved the Reorganization and
determined to recommend to the shareholders of each Fund that they approve a
Plan for each Fund.
This Proxy Statement seeks the approval or disapproval of the
Reorganization by the shareholders of each Fund. Such approval is a condition to
Liberty's obligation under the Purchase Agreement to purchase the outstanding
shares of SGAM Corp. In the event that shareholder approval of a Fund's
Reorganization is not obtained, Liberty may, at its option, elect either to (i)
terminate the Purchase Agreement and not purchase the shares of SGAM Corp., in
which case the existing investment management agreements and distribution plans
for all the Funds would remain in effect and the current directors of the
Company would continue to serve until further notice, or (ii) complete the
purchase of the stock of SGAM Corp. and seek exemptive relief from the
Securities and Exchange Commission (the "SEC") in order to permit SGAM Corp. to
continue to serve as that Fund's investment adviser under a new investment
management agreement, the terms of which would be substantially the same as the
terms of the current advisory agreement, for a period of time while such Fund
continues to solicit proxies, in which case the new investment management
agreement with Successor SGAM Corp. for that Fund would take effect and the
current directors of the Company would continue to serve until such shareholder
approval is obtained and the Reorganization of that Fund is completed. There can
be no assurance that any exemptive relief would be granted by the SEC.
Regardless of the option chosen by Liberty, or, if the Reorganization is not
approved by the shareholders, the Board will take such action with respect to
the future management of the Funds as it deems to be in the best interest of
each Fund and its shareholders.
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II. Board of Directors Recommendation
On October 19, 1998, the Board of Directors of the Company, including a
majority of the Directors who are not parties to such agreement or "interested
persons" (as defined under the Investment Company Act of 1940 (the "1940 Act"))
of any such party (the "disinterested Directors"), voted to approve the Plan for
each Fund and to recommend approval of each Plan to the shareholders. One of the
disinterested Directors abstained from this vote.
For information about the Board's deliberations and the reasons for its
recommendation, please see "Board of Directors Evaluation" below.
The Board of Directors of the Company recommends that the shareholders
vote in favor of the approval of the Plan for each Fund.
III. Board of Directors Evaluation
Prior to its scheduled meeting held on April 24, 1998, the Board of
Directors of the Company was informed that SGAM S.A. had determined to seek a
buyer for SGAM Corp. At the April 24, 1998 meeting, the disinterested Directors
reviewed the scope of their responsibilities should a sale by SGAM Corp. be
officially proposed by SGAM S.A., and discussed the advisability of retaining
separate independent counsel to advise them in the event SGAM S.A. was
successful in finding a buyer for SGAM Corp. The Board noted that although the
prospect of a sale did not alter their responsibilities with respect to matters
brought to their attention during the meeting (including the continuation of the
investment management agreement with SGAM Corp.), it did raise the issue of
whether SGAM Corp.'s operations might be disrupted as a result of staff
uncertainty. Representatives of SGAM Corp. who were present at that meeting
responded that they had been informed of SGAM S.A.'s decision and that based on
conversations with the senior personnel, management expected SGAM Corp.'s team
of portfolio managers and senior administrative personnel to remain on the job
throughout the process.
The disinterested Directors retained independent counsel who requested
certain information for the Board to review in connection with any proposed
transaction, including, with respect to any potential acquiring entity, (i) a
history of its compliance with applicable regulations, (ii) its performance
record (including the background of its investment personnel and the resources
available to support them), (iii) detailed financial statements, (iv) any plans
it may have to change the way any Fund is managed or distributed, and (v) the
consideration being paid.
On August 13, 1998, following the signing of the Purchase Agreement,
representatives of SGAM Corp. and Liberty met with the Company's Board of
Directors to discuss the Reorganization. At the meeting, the overall terms of
the proposed Reorganization, as well as the perceived benefits for SGAM Corp.
and for its investment advisory clients, were described. In addition, the
background and capabilities of Liberty and its affiliates were enumerated. The
Board was presented with the opportunity to ask questions of representatives of
both SGAM Corp. and Liberty. On or about September 7, 1998, the disinterested
Directors were supplied with information in response to the request of their
independent counsel.
At a subsequent meeting of the Company's Board of Directors held on
September 17, 1998, the Board considered in depth the Reorganization and Plan
relating to each Fund, and
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requested a report on the management resources that would be available to the
Funds after the Acquisition and satisfaction of certain other outstanding
issues. At that meeting, the Board discussed the materials presented by Liberty
and raised a number of issues relating to the terms of the Reorganization and
each Plan, as well as to the terms of the Acquisition of SGAM Corp.
Representatives of SGAM Corp. and Liberty were present at the meeting to respond
to the Board's inquiries. Among other things, the Board requested elaboration on
(i) the level of fees to which each Fund would be subject following the
Reorganization, (ii) the level of management services that Liberty would provide
to each Fund following the Reorganization, and (iii) Liberty's financial ability
both to pay the purchase price of the Acquisition given current market
conditions and to continue to devote adequate resources to the Funds.
Liberty agreed that, for a period of two years after the new investment
management agreements become effective, Liberty and its affiliates would waive
or reimburse all fees and expenses relating to each Fund to the extent that
those fees or expenses would cause the expense ratio of a Fund to exceed the
annualized expense ratio of that Fund for the six month period ended September
30, 1998. After further discussion, the Board and Liberty agreed that the
expense cap would remain in place for a minimum of two years, but that it would
be extended if, during those two years, in connection with any other
acquisition, Liberty agreed to a similar expense cap for a period of more than
two years. Under those circumstances, Liberty has agreed to extend the Funds'
expense caps by the amount of time that any such similar expense cap exceeds two
years so that the Funds will get the benefit of the caps for that longer period
of time.
The Board sought assurances from Liberty that there would be no
diminution in the level of services provided to each Fund after the
Reorganization. Liberty responded that the level of services provided to the
Funds after the Reorganization would not be diminished and, as evidence of such,
noted that (i) each of Jean-Marie Eveillard, Charles de Vaulx, and Elizabeth
Tobin, who hold senior positions in the management of each Fund, either had
entered into a long-term employment contract with SGAM Corp. or had indicated an
intention to do so, (ii) there would be substantial continuity of employment of
the other persons on the current portfolio management team of each Fund, and
(iii) in managing each Fund, SGAM Corp. will have access to the considerable
resources of Liberty and its affiliates.
Finally, the Board inquired into Liberty's ability to pay for the
purchase of SGAM Corp. in light of then current market conditions. In response,
Liberty reviewed with the Board its financial resources. Liberty assured the
Board that it was in sound financial health and that it had the ability to pay
the purchase price of the Acquisition and to continue to devote adequate
resources to the management of the Funds.
In addition to these areas of inquiry, the Board reviewed the terms of
the proposed investment advisory and other service agreements relating to each
Fund. After discussion, the Board concluded that the services to be provided
under the proposed new agreements in the aggregate were not materially different
than those required to be provided under the current agreements.
At additional meetings held in late September and October, the Board met
to further review the Reorganization. At these meetings, Liberty and SGAM Corp.
provided to the Board additional information relating to the issues raised at
the September 17 meeting. The Board
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considered the additional information and was given the opportunity to ask
questions to representatives of Liberty and SGAM Corp.
The Board approved the Reorganization at a meeting held on October 19,
1998. In addition to the matters described above, the Board also considered the
following factors in approving the proposed Reorganization and the Plan for each
Fund. First, the Reorganization does not contemplate any changes in the manner
in which each Fund's investments are managed. Accordingly, it is not expected
that the primary investment personnel responsible for providing the day-to-day
investment management on behalf of the Funds will change as a result of the
Reorganization.
Second, the Board considered the ability under the Reorganization for
Class A shareholders to have exchange privileges that would permit an investment
in a Fund to be exchanged, without initial or deferred sales charges, into Class
A shares of 38 of the other open-end funds that are part of the Colonial
Management family of mutual funds and that have a variety of investment
objectives and policies. The Board considered the enhanced exchange privileges
available as a result of the Reorganization to be a benefit to the shareholders
of each Fund.
Third, Colonial Management's wholesaling, marketing, and distribution
system is more extensive than that of SGAM Corp. While growth of a fund does not
always result in economies of scale or other benefits to shareholders, sales of
fund shares on a continuous basis can result in a positive cash flow, or a
reduction of net outflow, of investor dollars into the fund, enabling the fund
to meet expenses and pay redemptions without the need to sell its investments at
what may be inappropriate times. Shares of the reorganized Funds will be
marketed alongside the other Colonial Management funds through more than 25,000
investment executives associated with broker-dealers with whom the distributor
for the Colonial Management funds has selling agreements and approximately 300
investment executives employed by Liberty Securities Corporation, a subsidiary
of Liberty that sells mutual funds, variable annuities, and other investment
products primarily through offices located in banks and other financial
institutions.
Fourth, the Board considered that the Acquisition of SGAM Corp. by
Liberty will enable Eveillard to devote more of his attention to managing the
assets of SGAM Corp.'s clients, including the Funds. The Board believes that
this focus of attention should benefit each Fund and its shareholders.
Finally, because each Fund shareholder will receive shares of the
corresponding Successor Fund having an equal aggregate net asset value to their
Fund shares and will not directly or indirectly bear any costs of the
Reorganization, the Board determined that the shareholders will not suffer any
dilution as a result of the Reorganization.
In reviewing the terms of each Plan, the disinterested Directors of the
Company were advised and represented by independent counsel.
The Board believes that the proposed arrangements are in the best
interests of the shareholders of the Funds and recommends that the shareholders
of each Fund vote "FOR" the Reorganization.
IV. The Acquisition
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A. Background
SGAM S.A. and Eveillard began discussions in mid-1998 regarding the sale
of SGAM Corp. to Liberty or one of its affiliates. SGAM S.A.'s principal goal in
considering the possible sale of SGAM Corp. was to focus its resources on global
institutional asset management services. Discussions culminated in the execution
of the Purchase Agreement on August 13, 1998.
Liberty is a publicly traded, diversified asset management organization
headquartered in Boston, Massachusetts. Through its affiliates, it provides
fixed, indexed and variable annuities, mutual funds, private wealth management
and institutional money management services. At the end of its last fiscal year,
Liberty and its affiliates had assets under management in excess of $51 billion.
Affiliates of Liberty, including Colonial Management, Stein Roe & Farnham
Incorporated, Newport Pacific Management, Inc., and Crabbe Huson, act as
investment advisers to more than 90 mutual funds.
SGAM S.A. and Liberty believe that the proposed transaction will result
in an allocation of resources that should benefit the shareholders of the Funds.
Liberty, through Colonial Management and its subsidiaries, has the size and
resources to provide efficient administration, shareholder servicing and legal
support to mutual funds, and effective promotion and sales of mutual fund
shares. Liberty believes that, by utilizing Colonial Management's management,
distribution, compliance and legal resources, it can enhance the quality of
shareholder services, introduce operational efficiencies and create an
opportunity to achieve economies of scale.
Current shareholders of the Funds will be provided with expanded
investment options and, after the Reorganization, will be allowed to exchange
their shares in the Funds for shares of 38 of the other mutual funds managed by
Liberty affiliates at net asset value without payment of a sales charge. The
parties to the Purchase Agreement believe that the management and distribution
strength of Liberty and its affiliates will allow SGAM Corp. to concentrate its
efforts and resources on portfolio management for the Funds, which it will
continue to perform following the Acquisition.
B. Summary of the Purchase Agreement
The Purchase Agreement provides that, upon the closing of the
Acquisition, SGAM S.A. will transfer to Liberty all of the outstanding shares of
SGAM Corp. At the closing, SGAM S.A. will also provide Liberty with all stock
certificates, stock books, stock transfer ledgers, minute books and corporate
seals of SGAM Corp., together with the resignations of those directors and
officers of SGAM Corp. specified by Liberty. In return, Liberty will pay SGAM
S.A. a purchase price of $170 million. Under the Purchase Agreement, Eveillard
will receive $35 million in exchange for his holdings in SGAM Corp. (20% of
which is to be paid in shares of Liberty common stock). He will also be eligible
to receive an additional amount up to a maximum of $11 million (20% of which is
to be payable in shares of Liberty common stock) over six years if SGAM Corp.'s
earnings before interest, taxes, depreciation, and amortization ("EBITDA")
during that period exceed certain levels. The amounts payable to SGAM S.A. and
Eveillard are subject to adjustment in the event of certain changes in SGAM
Corp.'s annualized advisory fee revenues between August 10, 1998 and the
closing. As of October [ ], 1998, such annualized advisory fee revenues may have
decreased sufficiently to cause the amounts payable under the Purchase Agreement
to be readjusted to lower figures.
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Liberty has also agreed in the Purchase Agreement to cause SGAM Corp. to adopt
an incentive compensation plan providing for bonuses to SGAM Corp. employees
other than Eveillard of up to a maximum of $25 million over five years based on
SGAM Corp.'s EBITDA over that period. Eveillard has signed a four year
employment contract with SGAM Corp. and Charles de Vaulx and Elizabeth Tobin
have indicated an intention to sign five year employment contracts with SGAM
Corp., all effective on the closing date of the Acquisition.
The Purchase Agreement prohibits Liberty or any of its affiliates from
using "SoGen" and certain derivations of "SoGen" in the name of any of the
Funds. Liberty has agreed to use its best efforts to cause each of the Funds to
change its name before the first anniversary of the closing date of the
Acquisition. Following such name change and for a period of one year thereafter,
the Funds will be permitted to disclose their prior name in their prospectuses
and advertising material.
The closing of the Acquisition is presently scheduled for December 31,
1998 subject to satisfaction of conditions to closing. The Purchase Agreement
may be terminated at any time prior to the closing by the mutual written consent
of the parties, or by any party if the closing has not occurred on or before
March 31, 1999.
Liberty has agreed to bear the costs to the Funds of the Reorganization,
including, but not limited to, the cost of preparing, printing and mailing the
proxy materials for the meeting of the shareholders of the Funds.
C. Compliance with Section 15(f) of the1940 Act
Section 15(f) of the 1940 Act provides that an investment adviser to a
registered investment company may receive any amount or benefit in connection
with a sale of an interest in such adviser which results in an assignment of an
investment management agreement if two conditions are satisfied. The first
condition is that, for a period of three years after such assignment, at least
75% of the board of directors of the investment company must not be "interested
persons" (as defined in the 1940 Act) of the new investment adviser or its
predecessor. The second condition is that no "unfair burden" may be imposed on
the investment company as a result of the assignment or any express or implied
terms, conditions or undertakings applicable thereto. An "unfair burden" on an
investment company exists if, during the two-year period after any such
transaction occurs, the investment adviser or its predecessor or successor, or
any interested person of such adviser, predecessor or successor, receives or is
entitled to receive any compensation from any person in connection with the
purchase or sale of securities or other property from or on behalf of the
investment company, or from the investment company or its shareholders, other
than for bona fide underwriting, investment advisory or other services.
Liberty has agreed to use reasonable efforts to assure that both
conditions of Section 15(f) will be satisfied. The current Board of Trustees of
the Colonial Trust consists of nine individuals, none of whom are "interested
persons" of Successor SoGen Corp. The Board of Trustees of the Colonial Trust
has nominated four additional persons to the Board of Trustees, subject to the
approval of the existing shareholders of the Colonial Trust, one of whom is an
interested person of Liberty, an affiliate of Successor SoGen Corp. In addition,
Liberty has agreed that, for a period of a minimum of two years after the new
investment management agreements become effective, Liberty and its affiliates
will waive or reimburse fees and expenses relating to each Fund
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to the extent that those fees or expenses would cause the expense ratio of a
Fund to exceed the annualized expense ratio of that Fund for the six month
period ended September 30, 1998.
V. The Reorganization
As mentioned above, the Acquisition contemplates that each Fund will
enter into a Plan (attached as Exhibit A). It is anticipated that the procedure
for the Reorganization under the Plan will be as follows:
Each Fund will transfer all of its assets, including but not limited
to its portfolio securities, to the corresponding Successor Fund, a
newly-created series of the Colonial Trust.
The Colonial Trust, in exchange for those Funds' assets, will assume
all the liabilities and obligations of those Funds, including
liability arising out of indemnification and related payment or
reimbursement of expenses obligations pursuant to the bylaws or
charter of the Company.
The Colonial Trust will issue to each Fund (a) a number of full and
fractional Class A shares of beneficial interest in the corresponding
series of the Colonial Trust equal to the number of Class A shares of
that Fund then outstanding, and (b) a number of full and fractional
Class Z shares of beneficial interest, where applicable, in the
corresponding series of the Colonial Trust equal to the number of
shares of Class I shares of that Fund then outstanding.
Each Fund will distribute to its Class A shareholders a number of full
and fractional Class A shares of the corresponding series of the
Colonial Trust equal to the number of full and fractional Fund shares
held by that shareholder.
Each of SoGen International Fund and SoGen Overseas Fund will
distribute to its Class I shareholders a number of full and fractional
Class Z shares of the corresponding series of the Colonial Trust equal
to the number of full and fractional Fund shares held by that
shareholder.
After the Reorganizations are complete, the Company will dissolve and
liquidate.
Upon consummation of the Reorganization, an open account will be
established on the records of the Colonial Trust in the name of each shareholder
of the Funds representing the number of Class A shares or Class Z shares,
respectively, of the Successor Fund that the shareholder owns. Shares of the
Colonial Trust will be held in book-entry form on the books of the Colonial
Trust's transfer agent; certificates representing shares of the Colonial Trust
will not be physically issued.
As promptly as practicable after the consummation of the Reorganization,
each Fund will be terminated pursuant to the laws of the State of Maryland.
After the closing date, the Funds will not conduct any business except in
connection with their liquidation and dissolution.
The Funds have been advised by Liberty that, following the
Reorganization of each Fund,
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the Colonial Trust will offer shares of all of the reorganized Funds to new
investors. New investors in the Funds, as well as shareholders of the Funds who
wish to purchase additional shares, will have the choice of four classes of
shares, as follows:
CLASS A SHARES will be offered at net asset value plus an initial
sales charge of up to 5.75% of the offering price. Purchases of $1
million or more will not be subject to an initial sales charge, but
will be subject to a 1% contingent deferred sales charge on
redemptions within 18 months. Class A shares will be subject to a
distribution fee of 0.35% per annum of average net assets.
CLASS B SHARES will be offered at net asset value, without an initial
sales charge, subject to a distribution fee of 0.75% per annum of
average net assets for eight years (at which time the shares will
convert automatically to Class A shares), a service fee of 0.25% per
annum of average net assets, and a contingent deferred sales charge if
redeemed within six years after purchase. The amount of the contingent
deferred sales charge of the redemption price is 5% if the shares are
redeemed in the first year after their purchase and declines to zero
after the sixth year.
CLASS C SHARES will be offered at net asset value, without an initial
sales charge, subject to a distribution fee of 0.75% per annum of
average net assets, a service fee of 0.25% per annum of average net
assets, and a 1% contingent deferred sales charge if redeemed within
one year of purchase.
CLASS Z SHARES of the Successor Funds will be offered to new investors
at net asset value, without an initial sales charge or a service or
distribution fee. The minimum investment in Class Z shares will be
$5,000,000.
The Class A shares that will be issued to the shareholders of the Funds
pursuant to the Reorganization will be subject to an asset-based service and
distribution fee of up to 0.35% (that would be voluntarily waived to 0.25% for a
period of at least two years) per annum, but shares issued to such shareholders
will not be subject to any sales charge, either upon issuance or on redemption.
Dividends and distributions payable on Class A shares to those shareholders of
the Funds who elect to have such dividends and distributions reinvested would be
reinvested without sales charge in additional Class A shares. Shareholders of
each Fund will be permitted, so long as they were Class A shareholders on the
date of the Reorganization and remain Class A shareholders of the Successor
Funds, to exchange their Class A shares for Class A shares issued by any of 38
of the other Colonial Management funds. They will not be permitted to exchange
their Class A shares for other classes of shares of those funds or for other
classes of shares in other funds managed by Liberty affiliates.
The Class Z shares of the Successor Funds that will be issued to Class I
shareholders of SoGen International Fund and SoGen Overseas Fund will not be
subject to any asset-based service or distribution fee and will not be subject
to any sales charge, either upon issuance or on redemption. Dividends and
distributions payable on Class Z shares to those shareholders of the Funds who
elect to have such dividends and distributions reinvested would be reinvested
without sales charge in additional Class Z shares. Shareholders of SoGen
International Fund and SoGen Overseas Fund will be permitted, so long as they
were Class I shareholders on the date of the Reorganization and remain Class Z
shareholders of the Successor Funds, to exchange their Class
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Z shares for Class Z shares issued by any of the other Colonial Management funds
that issue Class Z shares. They will not be permitted to exchange their Class Z
shares for other classes of shares of those funds or for other classes of shares
in other funds managed by Liberty affiliates.
If the Plans are approved by shareholders, it is expected that the
Reorganization will be made effective at [time], Eastern time, on or about
[_______], 1999 or at such later time and date as the parties may mutually agree
(the "Closing Date"). At any time before the Reorganization is effective, the
Colonial Trust and any of the Funds may agree to terminate the Plan to which
they are a party, and, if any Plan has not been made effective by [March 31,
1999], that Plan will automatically terminate on that date unless a later date
is agreed to by both the Colonial Trust and such Fund.
If any Plan is not approved by the shareholders of a Fund, the Board
will use its best efforts to make new advisory arrangements with SGAM Corp., its
successor, or with another investment adviser for the Fund that is party to such
Plan. In the event that the Board is not able to retain an investment adviser on
terms which are in the best interests of the shareholders, the Board will
liquidate the Fund.
VI. Actions Related to the Reorganization
As set forth below, if approved by shareholders, the Reorganization will
result in several other changes concerning the structure and operations of the
Funds as Successor Funds. Because of the manner in which the transfer of assets
from the Funds to the Successor Funds will take place under the Reorganization,
you are not being asked to approve directly or adopt these additional matters.
Specifically, after shareholder approval of the Reorganization but prior to the
issuance of the Class A and, where applicable, Class Z shares of the Successor
Funds to the shareholders of the corresponding Funds, one Class A share of each
Successor Fund and one Class Z share of the Successor Funds corresponding to the
SoGen International Fund and the SoGen Overseas Fund will be issued to the
corresponding Fund. As the then-sole Class A or Class Z shareholder of the
Successor Funds, the corresponding Fund will approve or adopt the following
matters on behalf of each Successor Fund:
Approval of the new investment management agreement between the
Successor Fund and Successor SGAM Corp. (see APPROVAL OF INVESTMENT
MANAGEMENT AGREEMENT below);
Adoption of a new plan of distribution for Class A shareholders of the
Successor Funds (see ADOPTION OF PLAN OF DISTRIBUTION below);
Conversion of your fund from operating as part of a Maryland
corporation to operating as part of a Massachusetts business trust
(see CONVERSION TO MASSACHUSETTS BUSINESS TRUST below);
In addition, in voting on the Reorganization, you should be aware that
certain of the fundamental policies of the Funds will become non-fundamental
policies as a result of the Reorganization (see, "Change In Fundamental
Investment Policies" below).
Finally, approval of the Reorganization with respect to each Fund will
also include
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approval of an interim investment management agreement between that Fund and
Successor SGAM Corp. This agreement, which is substantially identical to the
Fund's current investment management agreement with SGAM Corp., will cover the
period, if any, between the consummation of the Acquisition and the closing of
the Reorganization (see, "Approval Of The Interim Investment Management
Agreement" below).
A. Approval of the New Investment Management Agreement
1. Why Approval of a New Investment Management Agreement is Necessary
After the Acquisition, Successor SGAM Corp. will serve as the investment
adviser to the Funds. Accordingly, you will receive the same level of investment
advisory services that you have come to expect.
Consummation of the Acquisition would constitute an "assignment" (as
that term is defined in the 1940 Act, which governs activities of mutual funds)
of the Company's current investment management agreements with SGAM Corp. (the
"Current Investment Management Agreements"). As required by the 1940 Act, the
Current Investment Management Agreements provide for their automatic termination
in the event of an assignment.
Liberty, SGAM Corp., and the Board have determined that it is in the
best interests of each Fund and its shareholders to reorganize the Funds into
new separate series of the Trust. After the Reorganization, Successor SGAM Corp.
would serve as investment adviser to each Successor Fund under a new investment
management agreement.
By voting in favor of the Plans, shareholders of the Funds will be
authorizing each Fund, as sole shareholder of the corresponding series of the
Colonial Trust prior to the Reorganization, to vote such shares of the
corresponding Successor Fund in favor of approval of a new investment management
agreement with Successor SGAM Corp. (the "New Investment Management Agreement")
to take effect with the closing of the Reorganization.
As noted above, in determining that the investment advisory services
that will be provided under the New Investment Management Agreement will not be
materially different from the services presently provided to each Fund by SGAM
Corp. (except that, as described below, certain services currently provided by
SGAM Corp. and included in the annual management fee will be covered by a
separate administrative services agreement subject to a separate annual fee,
which fee will be waived for a period of two years following the
Reorganization), the Board has reviewed the New Investment Management Agreement.
Although the Board has not been asked to approve the New Investment Management
Agreement as a part of their approval of the Reorganization, the Trustees of the
Colonial Trust have, at a meeting held on October 23, 1998, approved the New
Investment Management Agreement with respect to each Successor Fund.
The form of New Investment Management Agreement to be effective with the
closing of the Reorganization for each Successor Fund is attached as Exhibit B.
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2. Comparison of the Current Investment Management Agreements and
the New Investment Management Agreement
Although the New Investment Management Agreement for each Fund is
different in form and shorter than the Current Investment Management Agreements
between the Company, on behalf of each Fund, and SGAM Corp., they are
substantially the same in effect, except with respect to administrative services
which, as described below, would be provided to each Fund under a separate
agreement.
a. Provision of Investment Advisory Services
The Current Investment Management Agreements require that SGAM Corp.
provide the Company with investment research, advice, and supervision and
furnish continuously an investment program that is consistent with each Fund's
investment objective, policies and restrictions as described in the Company's
prospectus and statement of additional information. Under this agreement, SGAM
Corp. determines the securities that should be purchased and sold for each Fund
and the percentage of the assets of each Fund that will remain uninvested.
Successor SGAM Corp.'s advisory duties under each New Investment
Management Agreement will be substantially the same as they are presently with
respect to the provision of investment advisory services. For instance, under
the New Investment Management Agreement, Successor SGAM Corp. will manage the
investment assets of the Successor Funds in accordance with the Successor Fund's
prospectus and statement of additional information ("Successor Fund's
Registration Statement"). In this connection, Successor SGAM will be responsible
for: (a) evaluating any pertinent economic, statistical, and financial
information; (b) purchasing and selling securities and other investments for the
Successor Funds, in accordance with the Successor Fund's Registration Statement;
and (c) reporting the results to the Colonial Trust's Board of Trustees. As
described below, administrative services are not provided under the New
Investment Management Agreement.
b. Compensation of the Investment Adviser
In return for its services rendered under the Current Investment
Management Agreements, SGAM Corp. is paid by SoGen International Fund at an
annual rate of 1.00% of the Fund's average daily net assets of the first $25
million in assets and 0.75% of such amount for assets in excess of $25 million
and by each other Fund at an annual rate of 0.75% of such Fund's average daily
net assets. Payment under these agreements is made on a quarterly basis by SoGen
International Fund and on a monthly basis by SoGen Overseas Fund and SoGen Gold
Fund.
Under the New Investment Management Agreement, each Successor Fund will
pay Successor SGAM Corp. at the same annual rate as is in effect under the
Current Investment Management Agreements. Accordingly, shareholders will not
experience an increase or a decrease in fees for investment advisory services as
a result of the Reorganization. However, as described below, each Successor Fund
will enter into to an administration agreement with Colonial Management in
addition to the New Investment Management Agreement and will be responsible for
paying a separate fee for administrative services. As described below, this
administrative fee will be waived for a period of two years following the
Reorganization. See Exhibit C for a comparison of the fees between each Fund and
each Successor Fund.
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c. Allocation of Charges and Expenses
The Current Investment Management Agreements require that SGAM Corp. pay
the compensation and expenses of all officers of the Company and the Company's
rent and ordinary office expenses. SGAM Corp. also is required to provide
investment advisory, research, and statistical facilities and all clerical
services relating to research, statistical, and investment work. The New
Investment Management Agreement, together with the related administration
agreement, contains equivalent provisions.
d. Liability of the Adviser
Under the Current Investment Management Agreements, SGAM Corp. is not
liable for any loss suffered by the Company in connection with the rendering of
investment advisory services to the Funds, unless the loss resulted from willful
misfeasance, bad faith or gross negligence by SGAM Corp. in the performance of
its duties or from a reckless disregard by SGAM Corp. of its obligations and
duties under the agreement. The New Investment Management Agreement contains a
substantially similar provision.
e. Differences between the Agreements
There are, however, differences between the two agreements reflecting
matters such as the name, [organizational form], and address of the parties, the
date and periods of the agreement. The initial term of the New Investment
Management Agreement would be for two years following the closing of the
Reorganization, and from year to year thereafter if renewed in accordance with
Section 15 of the 1940 Act. In addition, whereas the Current Investment
Management Agreement provides for certain administrative services, the New
Investment Management Agreement only provides for investment advisory services.
Accordingly, each Successor Fund will also be party to an administration
agreement with Colonial Management and will be responsible for paying certain
fees under that agreement, as set forth in Exhibit C hereto. As described below,
these separate administration fees will be waived for two years following the
Reorganization.
Colonial Management and Successor SGAM Corp. have agreed to waive
collection of management, administration, transfer agency, and other fees
payable by the Successor Funds during the two years following the approval of
the New Investment Management Agreement so that the total operating expenses of
each Successor Fund, as a percentage of net assets of such Successor Fund, do
not exceed the total annualized operating expenses of the corresponding series
of the Funds for the six month period ended September 30, 1998. Please see
Exhibit C for a comparison of the Fund's total expenses and the proposed total
expenses of the Successor Funds.
B. Adoption of Plan of Distribution
The Funds currently maintain a 12b-1 Plan with respect to the Class A
shares of each Fund ("Current 12b-1 Plan") under which each Fund pays a
distribution-related fee on the first business day of each quarter at an annual
rate not to exceed 0.25% of average daily net assets to SG Cowen Securities
Corporation ("SGCS"), the principal underwriter of the Funds' shares. The
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Current 12b-1 Plan is intended to compensate SGCS for expenses incurred in
connection with the distribution of the Funds' shares.
As a result of the Reorganization, each Fund will adopt a similar Rule
12b-1 Plan for the Class A shares ("New 12b-1 Plan"), except for the following
differences. First, it is anticipated that the maximum amount to be paid under
the New 12b-1 Plan from the value of Class A shares will be 0.35% (which has
been voluntarily reduced to 0.25% for a period of at least two years) of average
daily net assets. Thus, under the New 12b-1 Plan, there could be an increase of
0.10% in the amount that can be paid by Class A shares for distribution-related
activities if the voluntary reduction were terminated. Second, the Current 12b-1
Plan provides that fees paid may be used only to reimburse SGCS for actual
expenses incurred in providing distribution-related services. In contrast, the
New 12b-1 Plan will provide that if the distribution fee exceeds actual
distribution expenses, the difference may be retained by the distributor as
additional compensation. Please see Exhibit C for a comparison of the fees and
expenses of the Funds and the Successor Funds.
As noted above, however, Colonial Management and Successor SGAM Corp.
have agreed to waive certain fees for two years following the approval of the
New Investment Management Agreement, so that the total operating expenses of the
Successor Funds do not exceed the total operating expenses of the Funds for the
six month period ended September 30, 1998.
C. Conversion to Massachusetts Business Trust
If the Reorganization is approved, each Fund will become a separate
series of the Colonial Trust and, as a result, will be converted from a series
of a Maryland corporation to a series of a Massachusetts business trust. Below
is a comparison of these two forms of organization, together with a summary of
related sections of each entity's charter and bylaws. For the full text of the
Company's Charter and the Colonial Trust's Declaration of Trust, reference is
made to each entity's charter on file with the Securities and Exchange
Commission.
1. Liability of Shareholders
For Maryland corporations, the personal liability of individual
shareholders is limited by statute. Under certain circumstances, shareholders of
Massachusetts business trusts may be held personally liable as partners for the
obligations of the trust. To protect its shareholders, the Colonial Trust's
charter expressly disclaims the liability of its shareholders for acts or
obligations of the Colonial Trust and provides for indemnification and
reimbursement of expenses out of the Colonial Trust's property for any
shareholder held personally liable for the obligations of the Colonial Trust.
The charter also provides that the Colonial Trust shall maintain appropriate
insurance (for example, fidelity bonding and errors and omissions insurance) for
the protection of the Colonial Trust, its shareholders, trustees, officers,
employees and agents covering possible tort and other liabilities. Thus, the
risk of shareholders incurring financial loss on account of shareholder
liability is limited to circumstances in which both inadequate insurance exists
and the Colonial Trust itself was unable to meet its obligations.
2. Election of Board Members; Shareholder Meetings
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Neither Massachusetts business trust law nor Maryland corporate law
requires investment companies to hold annual meetings of shareholders. The
ability of shareholders to elect directors/trustees from time to time will not
change as a result of the Reorganization.
3. Terms of Trustees
The Colonial Trust's charter provides that, except in the event of
death, resignation, or removal, each trustee elected by shareholders or by the
trustees shall serve until the next meeting of shareholders called for the
purpose of electing trustees. The Company's bylaws provide that each director
shall hold office until his successor is elected and qualified, or until his
earlier death, resignation or removal.
4. Removal of Trustees
Under the Colonial Trust's charter, a trustee can be removed, with or
without cause, (i) by a majority vote of the trustees then in office, or (ii) at
any meeting called for that purpose, by a vote of the holders of two-thirds of
the Colonial Trust's outstanding shares. Under the Company's bylaws, at any
shareholder meeting at which a quorum is present, the affirmative vote of the
holders of a majority of the votes entitled to be cast for the election of
directors is needed to remove a director from office, with or without cause.
5. Voting Rights of Shareholders
The Colonial Trust's charter grants shareholders the power to vote only
with respect to: (i) the election of trustees; (ii) the approval of any
investment advisory contract; (iii) the termination of the Colonial Trust or any
series thereof; (iv) any amendments to the charter; (v) whether or not a court
action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Colonial Trust or a series
thereof; or (vi) any matters relating to the Colonial Trust as may be required
by law, the charter, the bylaws, or any registration of the Colonial Trust with
the Securities and Exchange Commission or any state. The Company's charter does
not specify instances under which shareholders have the right to vote, but, as a
Maryland corporation that is a registered investment company pursuant to the
1940 Act, shareholders have the right to vote with respect to substantially the
same items as is the case for the Colonial Trust.
6. Special Meetings of Shareholders
The Company's bylaws provide that the Company's Secretary must call a
shareholders' meeting (i) when one or more matters are required to be acted on
by shareholders under the 1940 Act or the General Corporation Law of the State
of Maryland, and (ii) at the request in writing of the Chairman of the Board,
the President, a majority of the Board of Directors or of shareholders holding
at least ten percent of the shares of stock of the Company outstanding and
entitle to vote at a meeting.
The Declaration of Trust of the Colonial Trust provides that
shareholders' meetings of the Colonial Trust or of any series or class may be
called by the Trustees or such other person or persons as may be specified in
the bylaws and held from time to time for the purpose of taking action upon any
matter requiring the vote or the authority of the shareholders of the Colonial
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Trust or any series or class or upon any other matter deemed by the Trustees to
be necessary or desirable. The charter also provides that shareholders are
entitled to at least seven days' written notice of any meeting of shareholders.
The bylaws of the Colonial Trust state that a meeting of the shareholders of the
Colonial Trust or of any one or more series or classes of shares may be called
at any time by the Trustees, by the president or, if the Trustees and the
president fail to call any meeting of shareholder for a period of thirty days
after written application of one or more shareholders who hold at least ten
percent of all outstanding shares of the Colonial Trust, if shareholders of all
series are required under the charter to vote in the aggregate and not by
individual series at such meeting, or of any series or class, if shareholders of
such series or class are entitled under the charter to vote by individual series
or class at such meeting, then such shareholders may call such meeting. If the
meeting is a meeting of the shareholders of one or more series or classes of
shares, but not a meeting of all shareholders of the Colonial Trust, then only
the shareholders of such one or more series or classes shall be entitled to
notice of and to vote at the meeting.
7. Liability of Trustees and Officers; Indemnification
The Company's charter provides that to the full extent that limitations
on the liability of directors and officers are permitted by the Maryland General
Corporation Law, no director or officer of the Company will have any liability
to the Company or its shareholders for damages. The charter further provides
that the limitation on liability applies to events occurring at the time a
person serves as a director or officer of the Company whether or not that person
is a director or officer at the time of any proceeding in which liability is
asserted. The charter for the Colonial Trust provides that the Trustees will not
be responsible or liable in any event for any neglect or wrongdoing of any
officer, agent, employee, adviser or principal underwriter of the Colonial
Trust, nor will any Trustee be responsible for the act or omission of any other
Trustee, but nothing herein contained shall protect any Trustee. The charter
further provides that a Trustee is not protected against any liability to which
he or she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office. Finally, the charter provides that every note,
bond, contract, instrument, certificate, share or undertaking and every other
act or thing whatsoever executed or done by or on behalf of the Colonial Trust
or the Trustees or any of them in connection with the Colonial Trust will be
conclusively deemed to have been executed or done only in or with respect to
their or his or her capacity as Trustees of the Colonial Trust executed or done
by or on behalf of the Colonial Trust or the Trustees, and such Trustees or
Trustee will not be personally liable thereon.
The Company's charter provides that the Company will indemnify and
advance expenses to its currently acting and its former directors to the full
extent permitted by Maryland General Corporation Law. The charter further states
that the Company will indemnify and advance expenses to its officers to the same
extent as its directors and may do so to such further extent as is consistent
with the law. The bylaws for the Company provide that the Company will indemnify
each person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administration or investigative ("Proceeding"), by reason of the fact
that he is or was a Director, officer, employee or agent of the Company or is or
was serving at the request of the Company as Director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against all judgments, penalties, fines, settlements and reasonable
expenses, including attorneys' fees,
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actually incurred by him in connection with such Proceeding and the amount of
every such judgment, penalty, fine, settlement and reasonable expense so
incurred by such person will be paid by the Company or, if paid by such person,
will be paid by Company to the fullest extent permitted by law, subject to
certain conditions and limitations.
The Colonial Trust's charter provides that the Colonial Trust will
indemnify each of its Trustees and officers (including persons who serve at the
request of the Colonial Trust as directors, officers or trustees of another
organization in which the Colonial Trust has any interest as a shareholder,
creditor or otherwise) (hereinafter referred to as a "Covered Person") against
all liabilities and expenses, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees reasonably incurred by any Covered Person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body, in which such Covered
Person may be or may have been involved as a party or otherwise or with which
such person may be or may have been threatened, while in office or thereafter,
by reason of being or having been such a Trustee or officer, except that no
Covered Person shall be indemnified against any liability to the Colonial Trust
or its shareholders to which such Covered Person would other wise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's officer.
With respect to each Successor Fund, the Colonial Trust has agreed to
assume the Company's indemnification and related payment or reimbursement of
expenses obligations pursuant to the Company's bylaws and charter for a period
of five years after the Closing Date with respect to events occurring at any
time up to and including the Closing Date, including events contemplated by the
Plans, up to an amount equal to the assets of such Fund. Further, Liberty has
agreed, at its sole expense, to extend the "directors and officers" insurance
coverage to the disinterested Directors for a period of five years after the
Closing Date.
D. Change in Fundamental Investment Policies
The Funds have been advised by Liberty that following the
Reorganization, each Successor Fund will continue to operate with substantially
the same investment objectives as the corresponding Fund. However, only those
policies of the Successor Funds that are required by the 1940 Act to be
fundamental (i.e., changeable only with shareholder approval) will be designated
as fundamental. All of the other policies of the Successor Funds will be
classified as non-fundamental. Following the Reorganization, the non-fundamental
policies of the Successor Funds and the investment objectives of the Successor
Funds may be changed with the approval of the Trustees of the Trust, and with
notice to the shareholders of the Successor Funds, but no shareholder approval
will be required. The investment policies (fundamental and non-fundamental) of
the Successor Funds are set forth in Exhibit E.
E. Approval of Interim Investment Management Agreement
Finally, by voting in favor of the Reorganization, you will also be
voting in favor of an interim investment management agreement between each Fund
and Successor SGAM Corp. (the "Interim Investment Management Agreement"). As
described above, the Acquisition will result in an "assignment" of each Fund's
Current Investment Management Agreement with SGAM Corp., thus terminating those
agreements as a matter of law. The Acquisition is scheduled to occur on
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<PAGE>
December [30] [31], 1998. In the event that the Reorganization is approved by
the shareholders of a Fund, but is not completed on or before December [30]
[31], 1998, the Fund would be without an investment management agreement from
that date until the closing of the Reorganization. To cover this possibility,
approval of the Reorganization would also include approval of an Interim
Investment Management Agreement, the terms of which are substantially identical
to those of the Current Investment Management Agreement with SGAM Corp., which
are described above. This interim agreement would take effect only if the
Reorganization is not finalized prior to the consummation of the Acquisition,
and would remain in effect only until the earlier of the closing date of the
Reorganization or March 31, 1999. At a meeting held on October 23, 1998, the
Board of the Company approved the Interim Investment Management Agreement with
respect to each Fund. The proposed Interim Investment Management Agreement is
attached to this Proxy Statement as Exhibit F.
VII. Tax Consequences
In the opinion of [_____________], based on certain facts, assumptions,
and representations of the parties, for Federal income tax purposes, the
transaction contemplated by the Reorganization will constitute a tax-free
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"). While the Company is not aware of any state or
local tax consequences of the proposed Reorganization, it has not made any
investigation as to such consequences, and shareholders should consult their own
tax advisors with respect to such matters.
VIII. Required Vote
Approval of the Proposal will require the vote of a majority of each
Fund's outstanding voting securities. The Board recommends that the shareholders
vote in favor of Proposal 1.
ADDITIONAL INFORMATION
General
The cost of preparing, printing and mailing the enclosed proxy,
accompanying notice and proxy statement and all other costs in connection with
the solicitation of proxies will be paid by Liberty (and not the Company or the
Funds), including any additional solicitation made by letter, telephone or
telegraph. [In addition to solicitation by mail, certain officers and
representatives of the Company, officers and employees of SGAM Corp. and certain
financial services firms and their representatives, who will receive no extra
compensation for their services, may solicit proxies by telephone, telegram or
personally.]
Shareholder Communications Corporation ("SCC") has been engaged to
assist in the solicitation of proxies. As the Special Meeting date approaches,
certain shareholders of each Fund may receive a telephone call from a
representative of SCC if their vote has not yet been received. Authorization to
permit SCC to execute proxies may be obtained by telephonic or electronically
transmitted instructions from shareholders of each Fund. Proxies that are
obtained telephonically will be recorded in accordance with the procedures set
forth below. The Directors believe that these procedures are reasonably designed
to ensure that the identity of the
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shareholder casting the vote is accurately determined and that the voting
instructions of the shareholder are accurately determined. The cost of this
assistance is expected to be approximately $[ ] and, as stated above, will not
be borne by the Funds or the Company.
In all cases where a telephonic proxy is solicited, the SCC
representative is required to ask for each shareholder's full name, address,
social security or employer identification number, title (if the shareholder is
authorized to act on behalf of an entity, such as a corporation), and the number
of shares owned and to confirm that the shareholder has received the proxy
statement card in the mail. If the information solicited agrees with the
information provided to SCC, then the SCC representative has the responsibility
to explain the process, read the proposals listed on the proxy card, and ask for
the shareholder's instructions on each proposal. The SCC representative,
although he or she is permitted to answer questions about the process, is not
permitted to recommend to the shareholder how to vote, other than to read any
recommendation set forth in the proxy statement. SCC will record the
shareholder's instructions on the card. Within 72 hours, SCC will send the
shareholder a letter or mailgram to confirm his or her vote and asking the
shareholder to call SCC immediately if his or her instructions are not correctly
reflected in the confirmation.
If the shareholder wishes to participate in the Special Meeting, but
does not wish to give his or her proxy by telephone, the shareholder may still
submit the proxy card originally sent with the proxy statement or attend in
person. Should shareholders require additional information regarding the proxy
or replacement proxy cards, they may contact SCC toll-free at (800) 794-6889.
Any proxy given by a shareholder, whether in writing or by telephone, is
revocable.
Proposals of Shareholders
Shareholders wishing to submit proposals for inclusion in a proxy
statement for a shareholder meeting subsequent to the Special Meeting, if any,
should send their written proposals to the Secretary of the Company, 1221 Avenue
of the Americas, New York, New York 10020, within a reasonable time before the
solicitation of proxies for such meeting. Pursuant to its bylaws, the Company
does not generally, and has no present intention to, hold annual meetings of
shareholders. The timely submission of a proposal does not guarantee its
inclusion.
Other Matters to Come Before the Special Meeting
The Board of Directors is not aware of any matters that will be
presented for action at the Special Meeting other than the matters set forth
herein. Should any other matters requiring a vote of shareholders arise, the
proxy in the accompanying form will confer upon the person or persons entitled
to vote the shares represented by such proxy the discretionary authority to vote
the shares as to any such other matters in accordance with their best judgment
in the interest of each Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Directors,
Philip J. Bafundo
Secretary
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Exhibit A
Form of
Agreement and Plan of Reorganization
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION made this __ day of ________, 1998 by
and between SoGen Funds, Inc. (the "SoGen Trust"), a Maryland corporation, on
behalf of [name of SoGen fund,] a series of the SoGen Trust (the "SoGen Fund"),
and Colonial Trust II (the "Colonial Trust"), a Massachusetts business trust, on
behalf of [name of successor SoGen fund,] a series of the Colonial Trust (the
"New SoGen Fund").
WHEREAS, the parties hereto intend to provide for the reorganization of the
SoGen Fund through the acquisition by the New SoGen Fund of all of the assets,
subject to all of the liabilities, of the SoGen Fund in exchange for shares of
beneficial interest, without par value, of the New SoGen Fund (the "New SoGen
Fund Shares"), the distribution to shareholders of the SoGen Fund of such New
SoGen Fund Shares, and the liquidation of the SoGen Fund, all pursuant to the
provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code").
NOW, THEREFORE, in consideration of the mutual promises herein contained, the
parties hereto agree as follows:
1. Plan of Reorganization and Liquidation. (a) The SoGen Trust, on behalf of
the SoGen Fund, shall assign, sell, convey, transfer and deliver to the
New SoGen Fund at the closing provided for in Section 2 (hereinafter
called the "Closing") all of the then existing assets of the SoGen Fund of
every kind and nature. In consideration therefor, the Colonial Trust, on
behalf of the New SoGen Fund, shall at the Closing (i) assume all of the
SoGen Fund's liabilities and obligations of any kind whatsoever, whether
absolute, accrued, contingent or otherwise, including any liability
arising out of indemnification and related payment or reimbursement of
expenses obligations pursuant to the By-Laws or Articles of Incorporation
of the SoGen Trust (the "Obligations"), each as in effect on the date
hereof (collectively, the "SoGen Charter") with respect to events
occurring at any time up to and including the Closing Date (as defined in
Section 2 hereof), including events contemplated by this Agreement and
(ii) deliver to the SoGen Fund (A) a number of full and fractional Class A
New SoGen Fund Shares (as described in Section 4(g) below) equal to the
number of full and fractional Class A shares of the SoGen Fund ("Retail
SoGen Fund Shares") then outstanding which are held by holders of Retail
SoGen Fund Shares ("Retail SoGen Fund Shareholders"), and (B) a number of
full and fractional Class Z New SoGen Fund Shares (as described in Section
4(g) below) equal to the number of full and fractional Class A shares of
the SoGen Fund ("Institutional SoGen Fund Shares") then outstanding which
are held by holders of Institutional SoGen Fund Shares ("Institutional
SoGen Fund Shareholders") other than the Retail SoGen Fund Shareholders.
The respective numbers of Retail SoGen Fund Shares and Institutional SoGen
Fund Shares issued and outstanding and the respective numbers of Class A
and Class Z New SoGen Fund Shares to be issued to the SoGen Fund shall be
determined by the transfer agent of the SoGen Fund (the "Transfer Agent"),
as of the close of business on the New York Stock Exchange on the Closing
Date. The determination of the Transfer Agent shall be conclusive and
binding on the SoGen Fund, the New
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SoGen Fund and their respective shareholders. Notwithstanding any other
provisions hereof, the Obligations shall be binding for five years after
the Closing Date upon the New SoGen Fund. In the event that the New SoGen
Fund shall be reorganized or merged into another registered investment
company at any time prior to the expiration of five years from the Closing
Date, proper provision shall be made so that the successor registered
investment company of the New SoGen Fund shall continue to honor the
Obligations. Further, the Obligations shall not be terminated or modified
in such a manner as to adversely affect any director to whom the
Obligations apply without the consent of such affected director (it being
expressly agreed that the directors to whom the Obligations apply shall be
third party beneficiaries of this Section 1 with respect to the
Obligations).
(b) Upon consummation of the transactions described in paragraph (a) of
this Section 1, the SoGen Trust, on behalf of the SoGen Fund, shall
distribute, in complete liquidation of the SoGen Fund, (A) pro rata to the
Retail SoGen Fund Shareholders of record as of the Closing Date the Class
A New SoGen Fund Shares received by the SoGen Fund, and (B) pro rata to
the Institutional SoGen Fund Shareholders of record as of the Closing Date
the Class Z New SoGen Fund Shares received by the SoGen Fund. Such
distribution shall be accomplished by the establishment, at the expense of
the New SoGen Fund, (A) of an open account on the records of the New SoGen
Fund in the name of each Retail SoGen Fund Shareholder representing a
number of Class A New SoGen Fund Shares equal to the number of shares of
the SoGen Fund owned of record by such shareholder at the Closing Date,
and (B) of an open account on the records of the New SoGen Fund in the
name of each Institutional SoGen Fund Shareholder representing a number of
Class Z New SoGen Fund Shares equal to the number of shares of the SoGen
Fund owned of record by such shareholder at the Closing Date.
Certificates, if any, for shares of the SoGen Fund issued prior to the
reorganization and held by Retail SoGen Fund Shareholders and
Institutional SoGen Fund Shareholders shall represent the same number of
outstanding Class A or Class Z New SoGen Fund Shares, respectively,
following the reorganization. In the interest of economy and convenience,
certificates representing the New SoGen Fund Shares will not be physically
issued.
(c) As promptly as practicable after the Closing Date, the SoGen Fund
shall be terminated pursuant to the provisions of the laws of the State of
Maryland, and, after the Closing Date, the SoGen Fund shall not conduct
any business except in connection with its dissolution and liquidation.
2. Closing and Closing Date. The Closing shall occur at the offices of the
Colonial Trust, One Financial Center, 12th floor, Boston, Massachusetts
02111 at 9:00 a.m. Boston time on _________ __, 199_ or such other date
agreed to between the parties and after the required approval by the
shareholders of the SoGen Fund specified in Section 4(c) hereof and the
fulfillment (to the extent not waived) of the other conditions precedent
set forth in Section 4, or at such later time and date as the parties may
mutually agree (the "Closing Date"). All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of business
on the Closing Date unless otherwise provided.
3. Covenants. The Colonial Trust, on behalf of the New SoGen Fund, and the
SoGen Trust, on behalf of the SoGen Fund, each hereby covenants and agrees
with the other as follows:
3.1 The SoGen Fund will call a meeting of its shareholders to be held prior to
the Closing Date to consider and act upon this Agreement and take all
other reasonable action necessary to obtain the required shareholder
approval of the transactions contemplated hereby.
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3.2 In connection with the SoGen Fund shareholders' meeting referred to in
Section 3.1, the SoGen Fund will prepare a proxy statement (the "Proxy
Statement") for such meeting, to be distributed to the SoGen Fund
shareholders pursuant hereto, all in compliance with the Securities
Exchange Act of 1934 (the "1934 Act") and the Investment Company Act of
1940 (the "1940 Act").
3.3 The information to be furnished by the Colonial Trust and SoGen Trust for
use in the Proxy Statement referred to in Section 3.2 shall be accurate
and complete in all material respects and shall comply with federal
securities and other laws and regulations applicable thereto.
4. Conditions Precedent. The obligation of the SoGen Trust and the Colonial
Trust to effect the transactions contemplated hereunder shall be subject
to the satisfaction of each of the following conditions:
(a) The SoGen Trust and the Colonial Trust shall have received an opinion
of Ropes & Gray substantially to the effect that for federal income tax
purposes: (i) no gain or loss will be recognized by the SoGen Fund upon
the occurrence of each of the following events (a) the exchange of any of
its assets solely for New SoGen Fund Shares and the assumption by the New
SoGen Fund of any of the liabilities of the SoGen Fund and (b) upon the
distribution to the SoGen Fund Shareholders of the New SoGen Fund Shares;
(ii) the tax basis of all of the assets of the SoGen Fund received by the
New SoGen Fund will be, in each instance, the same as the tax basis of
such assets in the hands of the SoGen Fund immediately prior to the
transfer; (iii) the New SoGen Fund's holding period in all of the assets
acquired from the SoGen Fund will include, in each instance, the periods
during which such assets were held by the SoGen Fund; (iv) no gain or loss
will be recognized by the New SoGen Fund upon the receipt of any of the
assets of the SoGen Fund solely in exchange for New SoGen Fund Shares and
the assumption by the New SoGen Fund of any of the liabilities of the
SoGen Fund; (v) no gain or loss will be recognized by the shareholders of
the SoGen Fund upon the receipt of the New SoGen Fund Shares solely in
exchange for their shares in the SoGen Fund as part of the transaction;
(vi) the basis of the New SoGen Fund Shares received by the shareholders
of the SoGen Fund will be, in each instance, the same as the basis of the
shares of the SoGen Fund exchanged therefor; and (vii) the holding period
of the New SoGen Fund Shares received by the shareholders of the SoGen
Fund will include, in each instance, the holding period of the shares of
the SoGen Fund exchanged therefor, provided that at the time of the
exchange the shares of the SoGen Fund were held as capital assets; and as
to such other matters as the SoGen Trust and the Colonial Trust may
reasonably request;
(b) This Agreement and Plan of Reorganization and the reorganization
contemplated hereby shall have been approved by the Board of Directors of
the SoGen Trust and by the Board of Trustees of the Colonial Trust, and
shall have been recommended for approval to the shareholders of the SoGen
Fund by the Board of Directors of the SoGen Trust;
(c) This Agreement and Plan of Reorganization and the reorganization
contemplated hereby shall have been adopted and approved by the
affirmative vote of the holders of a majority of the outstanding shares of
the SoGen Fund;
(d) The Colonial Trust on behalf of the New SoGen Fund shall have entered
into an Investment Management Agreement with [New SGAM Corp.], and such
Agreement shall have been approved by the Board of Trustees of the
Colonial Trust and, to the extent required by law, by the Board of
Trustees of
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<PAGE>
the Colonial Trust who are not "interested persons" of the Colonial Trust
as defined in the 1940 Act (the "Independent Trustees"), as well as by the
shareholders of the New SoGen Fund (it being understood that the SoGen
Fund, as sole shareholder of the New SoGen Fund prior to the consummation
of the reorganization, hereby agrees and is authorized to vote for such
approval);
(e) The Colonial Trust, on behalf of the New SoGen Fund, shall have
entered into a Distributor's Contract, including distribution plans (the
"Rule 12b-1 Plans") adopted for Class A, B and C shares of the New SoGen
Fund pursuant to Rule 12b-1 of the rules and regulations under the 1940
Act, with Liberty Funds Distributor, Inc., and such Contract (including
the Plans) shall have been approved by the Board of Trustees of the
Colonial Trust and, to the extent required by law, by the Independent
Trustees of the Colonial Trust;
(f) The Colonial Trust, on behalf of the New SoGen Fund, shall have
entered into a Transfer Agency Agreement with Liberty Funds Services,
Inc., and such Agreement shall have been approved by the Board of Trustees
of the Colonial Trust and, to the extent required by law, by the
Independent Trustees of the Colonial Trust;
(g) The Class A New SoGen Fund Shares shall have been designated by the
Board of Trustees of the Colonial Trust as a separate class of shares of
beneficial interest in the New SoGen Fund which shall be subject to an
asset-based service charge and distribution fee under the Rule 12b-1 Plan
for such Class A shares of up to 0.35% per annum and shall not be subject
to any deferred sales charge on redemption, and additional Class A shares
may be purchased by Retail SoGen Fund Shareholders at the then-current
sales charge; the Class Z New SoGen Fund Shares shall have been designated
by the Board of Trustees of the Colonial Trust as a separate class of
shares of beneficial interest in the New SoGen Fund which shall not be
subject to any asset-based service charge or distribution fee under Rule
12b-1 of the rules and regulations under the 1940 Act and shall not be
subject to any deferred sales charge on redemption, and additional Class Z
shares may be purchased by the Institutional New SoGen Fund Shareholders
without a sales charge; and
(h) The representations and warranties set forth in Section 5 of this
Agreement shall be accurate and complete in all material respects on the
Closing Date.
(i) On the Closing Date no action, suit or proceeding shall be pending
before any court or governmental agency in which it is sought to restrain
or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated hereby.
(j) The transactions contemplated by the Stock Purchase Agreement dated as
of August 13, 1998 among Societe Generale Asset Management S.A.,
Jean-Marie Eveillard and Liberty Financial Companies, Inc. shall have been
consummated.
At any time prior to the Closing, any of the foregoing conditions other than
that set forth in (j) above may be waived jointly by the Board of Directors of
the SoGen Trust and the Board of Trustees of the Colonial Trust if, in their
judgment, such waiver will not have a material adverse effect on the interests
of the shareholders of the SoGen Fund and the New SoGen Fund.
5. Representations and Warranties.
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5.1 SoGen Trust, on behalf of SoGen Fund, represents and warrants as follows
to the Colonial Trust and the New SoGen Fund as of the date hereof and
agrees to confirm the continuing accuracy and completeness in all material
respects of the following on the Closing Date:
(a) SoGen Trust is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland;
(b) SoGen Trust is a duly registered investment company classified as a
management company of the open-end type and its registration with the
Securities and Exchange Commission as an investment company under the 1940
Act, is in full force and effect, and SoGen Fund is a separate series
thereof duly designated in accordance with the applicable provisions of
the Articles of Incorporation of SoGen Trust and the 1940 Act;
(c) SoGen Trust or any person whom the SoGen Trust may be obligated to
indemnify is not in violation in any material respect of any provision of
its Articles of Incorporation or By-Laws or of any agreement, indenture,
instrument, contract, lease or other undertaking to which SoGen Trust is a
party or by which SoGen Fund is bound, and the execution, delivery and
performance of this Agreement will not result in any such violation;
(d) SoGen Trust has no material contracts or other commitments (other than
this Agreement, two Agency Agreements dated November 25, 1996 by and
between Sogen International Fund, Inc. and DST Systems, Inc. and SoGen
Funds, Inc. and DST Systems, Inc. and such other contracts as may be
entered into in the ordinary course of its investment business) which if
terminated, may result in material liability to SoGen Fund or under which
(whether or not terminated) any material payments for periods subsequent
to the Closing Date will be due from SoGen Fund;
(e) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or threatened
against SoGen Fund, any of its properties or assets, or any person whom
the SoGen Trust may be obligated to indemnify except as previously
disclosed in writing to New SoGen Fund. SoGen Fund knows of no facts which
might form the basis for the institution of such proceedings, and is not a
party to or subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely affects its
business or its ability to consummate the transactions contemplated
hereby;
(f) The statement of assets and liabilities, the statement of operations,
the statement of changes in net assets, and the schedule of investments as
at and for the two years ended March 31, 1998 of SoGen Fund, audited by
KPMG Peat Marwick LLP, copies of which have been furnished to New SoGen
Fund, fairly reflect the financial condition and results of operations of
SoGen Fund as of such dates and for the periods then ended in accordance
with generally accepted accounting principles consistently applied, and
SoGen Fund has no known liabilities of a material amount, contingent or
otherwise, other than those shown on the statements of assets referred to
above or those incurred in the ordinary course of its business since March
31, 1998;
(g) Since March 31, 1998, there has not been any material adverse change
in SoGen Fund's financial condition, assets, liabilities or business other
than changes occurring in the ordinary course of business, or
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any incurrence by SoGen Fund of indebtedness, except as disclosed in
writing to New SoGen Fund. For the purposes of this subparagraph (g),
distributions of net investment income and net realized capital gains,
changes in portfolio securities, changes in the market value of portfolio
securities or net redemptions shall be deemed to be in the ordinary course
of business;
(h) By the Closing Date, all federal and other tax returns and reports of
SoGen Fund required by law to have been filed by such date (giving effect
to extensions) shall have been filed, and all federal and other taxes
shown to be due on said returns and reports shall have been paid so far as
due, or provision shall have been made for the payment thereof, and to the
best of SoGen Fund's knowledge no such return is currently under audit and
no assessment has been asserted with respect to such returns;
(i) For all taxable years and all applicable quarters of such years from
the date of its inception, SoGen Fund has met the requirements of
subchapter M of the Code, for treatment as a "regulated investment
company" within the meaning of Section 851(a) of the Code. Neither SoGen
Trust nor SoGen Fund has at any time since its inception been liable for
and is now liable for any material excise tax pursuant to Section 4982 of
the Code. SoGen Fund has duly filed all federal, state, local and foreign
tax returns which are required to have been filed, and all taxes of SoGen
Fund which are due and payable have been paid except for amounts that
alone or in the aggregate would not reasonably be expected to have a
material adverse effect. SoGen Fund is in compliance in all material
respects with applicable regulations of the Internal Revenue Service
pertaining to the reporting of dividends and other distributions on and
redemptions of its capital stock and to withholding in respect of
dividends and other distributions to shareholders, and is not liable for
any material penalties which could be imposed thereunder.
(j) The authorized capital of SoGen Trust consists of 3,000,000,000 shares
of authorized stock with a par value of one tenth of one cent (0.001) per
share of such number of different series or classes as designated in SoGen
Trust's Articles of Incorporation, four series of which (including SoGen
Fund) are currently authorized and outstanding. All issued and outstanding
shares of SoGen Fund are, and at the Closing Date will be, duly and
validly issued and outstanding, fully paid and (except as set forth in
SoGen Fund's Prospectus) non-assessable by SoGen Fund and will have been
issued in compliance with all applicable registration or qualification
requirements of federal and state securities laws. No options, warrants or
other rights to subscribe for or purchase, or securities convertible into
or exchangeable for, any shares of beneficial interest of SoGen Fund are
outstanding and none will be outstanding on the Closing Date;
(k) At the Closing Date, SoGen Fund will have good and marketable title to
its assets to be transferred to New SoGen Fund pursuant to paragraph 1,
and full right, power, and authority to sell, assign, transfer and deliver
such assets as contemplated hereby, and upon delivery and payment for such
assets New SoGen Fund will acquire good and marketable title thereto,
subject to no restrictions on the full transfer thereof, including such
restrictions as might arise under the Securities Act of 1933, as amended
(the "1933 Act");
(l) The SoGen Fund's investment operations from inception to the date
hereof have been in compliance with the investment policies and investment
restrictions set forth in its prospectus and statement of additional
information as in effect from time to time, except as previously disclosed
in writing to New SoGen Fund;
-34-
<PAGE>
(m) The execution, delivery and performance of this Agreement has been
duly authorized by the Directors of SoGen Trust, and, upon approval
thereof by the required majority of the shareholders of SoGen Fund, this
Agreement will constitute the valid and binding obligation of SoGen Fund
enforceable in accordance with its terms; and
(n) The New SoGen Shares to be issued to SoGen Fund pursuant to paragraph
1 will not be acquired for the purpose of making any distribution thereof
other than to the SoGen Fund Shareholders as provided in paragraph 1.
5.2 Colonial Trust, on behalf of New SoGen Fund, represents and warrants the
following to the SoGen Trust and the SoGen Fund and agrees to confirm the
accuracy and completeness in all material respects of the following on the
Closing Date:
(a) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of Colonial Trust, and
this Agreement constitutes the valid and binding obligation of Colonial
Trust and New SoGen Fund enforceable in accordance with its terms;
(b) The New SoGen Shares to be issued and delivered to SoGen Fund pursuant
to the terms of this Agreement will at the Closing Date have been duly
authorized and, when so issued and delivered, will be duly and validly
issued Class A shares [and Class Z shares] of beneficial interest in New
SoGen Fund, and will be fully paid and non-assessable (except as set forth
in New SoGen Fund's Statement of Additional Information) by Colonial
Trust, and no shareholder of Colonial Trust will have any preemptive right
of subscription or purchase in respect thereof; and
(c) New SoGen Fund will use all reasonable efforts to obtain the approvals
and authorizations required by the 1933 Act, the 1940 Act and such of the
state Blue Sky or securities laws as it may deem appropriate in order to
continue its operations after the Closing Date.
6. Amendment. This Agreement may be amended at any time by the joint action
of the Board of Directors of the SoGen Trust and the Board of Trustees of
the Colonial Trust, notwithstanding approval thereof by the shareholders
of the SoGen Fund, provided that no amendment shall have a material
adverse effect on the interests of the shareholders of the SoGen Fund or
the New SoGen Fund.
7. Termination. The Board of Directors of the SoGen Trust and the Board of
Trustees of the Colonial Trust may jointly terminate this Agreement and
abandon the reorganization contemplated hereby, notwithstanding approval
thereof by the shareholders of the SoGen Fund, at any time prior to the
Closing, if circumstances should develop that, in their judgment, make
proceeding with the Agreement inadvisable. If the transactions
contemplated by this Agreement and Plan of Reorganization have not been
substantially completed by March 31, 1999, this Agreement and Plan of
Reorganization shall automatically terminate on that date unless a later
date is agreed to by both the SoGen Trust and the Colonial Trust acting by
their respective Boards.
8. No Broker's or Finder's Fee. The SoGen Trust and the Colonial Trust each
represent that there is no person who has dealt with it who by reason of
such dealings is entitled to any broker's, finder's or other similar fee
or commission from the SoGen Trust or the Colonial Trust arising out of
the transactions contemplated by this Agreement and Plan of
Reorganization.
-35-
<PAGE>
9. No Survival of Covenants and Agreements. The covenants and agreements of
the parties contained herein shall not survive the Closing Date, except
for the provisions of Sections 1, 3.3, 9, 11, 12 and 13.
10. Reliance. All covenants and agreements made under this Agreement and Plan
of Reorganization shall be deemed to have been material and relied upon by
each of the parties notwithstanding any investigation made by such party
or on its behalf.
11. Notices. All notices required or permitted under this Agreement and Plan
of Reorganization shall be given in writing (i) to the SoGen Trust at 1221
Avenue of the Americas, New York, New York 10020, as well as to Fried,
Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New York
10004, Attention: Charles M. Nathan, Esq. and (ii) to the Colonial Trust
at One Financial Center, Boston, Massachusetts 02111, or at such other
place as shall be specified in a written notice given by either party to
the other party to this Agreement and Plan of Reorganization, and shall be
validly given if mailed by first class mail, postage prepaid.
12. Expenses. The SoGen Fund and the New SoGen Fund shall each bear their own
expenses relating to the reorganization contemplated hereby to the extent
such expenses are not paid by others, provided, however, that if the
reorganization is consummated such expenses of the SoGen Fund, to the
extent not paid by others, shall be assumed and borne by the New SoGen
Fund.
13. Miscellaneous Provisions. This Agreement and Plan of Reorganization shall
bind and inure to the benefit of the parties and their respective
successors and assigns. It shall be governed by and carried out in
accordance with the laws of The Commonwealth of Massachusetts. It is
executed in several counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one agreement.
A copy of the document establishing the Colonial Trust is filed with the
Secretary of The Commonwealth of Massachusetts. This Agreement is executed
by officers not as individuals and is not binding upon (i) any of the
Trustees, officers or shareholders of the Colonial Trust individually, but
only upon the assets of the New SoGen Fund and (ii) any of the directors,
officers or shareholders of the SoGen Trust individually, but only upon
the assets of the SoGen Fund.
-36-
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto caused this Agreement and Plan of
Reorganization to be executed and delivered by their duly authorized officers as
of the day and year first written above.
SOGEN FUNDS, INC.
(on behalf of [name of Fund])
By:
-------------------------------
Name:
Title:
COLONIAL TRUST II
(On behalf name of [Successor Fund])
By:
------------------------------
Name:
Title:
-37-
<PAGE>
Exhibit B
FORM OF NEW INVESTMENT MANAGEMENT AGREEMENTS
* * *
SUCCESSOR TO SOGEN INTERNATIONAL FUND
MANAGEMENT AGREEMENT
AGREEMENT dated as of [ ], 1998 between COLONIAL TRUST II, a Massachusetts
business trust (Trust), with respect to [SOGEN] INTERNATIONAL FUND (Fund), and
SOCIETE GENERALE ASSET MANAGEMENT, CORP., a Delaware corporation (Adviser).
In consideration of the promises and covenants herein, the parties agree as
follows:
1. The Adviser will manage the investment of the assets of the Fund in
accordance with its prospectus and statement of additional information and
will perform the other services herein set forth, subject to the
supervision of the Board of Trustees of the Trust. The Adviser may
delegate its investment responsibilities to a sub-adviser. The Adviser may
also delegate any administrative services to a third party.
2. In carrying out its investment management obligations, the Adviser shall:
(a) evaluate such economic, statistical and financial information and
undertake such investment research as it shall believe advisable; (b)
purchase and sell securities and other investments for the Fund in
accordance with the procedures described in its prospectus and statement
of additional information; and (c) report results to the Board of Trustees
of the Trust.
3. The Adviser shall be free to render similar services to others so long as
its services hereunder are not impaired thereby.
4. The Fund shall pay the Adviser monthly a fee at the annual rate of 1.00%
of the first $25 million of the Fund's average daily net assets and 0.75%
in excess of $25 million of the Fund's average daily net assets.
5. If the operating expenses of the Fund for any fiscal year exceed the most
restrictive applicable expense limitation for any state in which shares
are sold, the Adviser's fee shall be reduced by the excess but not to less
than zero. Operating expenses shall not include brokerage, interest,
taxes, deferred organization expenses, Rule 12b-1 distribution fees,
service fees and extraordinary expenses, if any. The Adviser may waive its
compensation (and bear expenses of the Fund) to the extent that expenses
of the Fund exceed any expense limitation the Adviser declares to be
effective.
6. This Agreement shall become effective as of the date of its execution, and
(a) unless otherwise terminated, shall continue until two years from its
date of execution and from year to year thereafter so long as approved
annually in accordance with the 1940 Act; (b) may be terminated
-38-
<PAGE>
without penalty on sixty days' written notice to the Adviser either by
vote of the Board of Trustees of the Trust or by vote of a majority of the
outstanding shares of the Fund; (c) shall automatically terminate in the
event of its assignment; and (d) may be terminated without penalty by the
Adviser on sixty days' written notice to the Trust.
7. This Agreement may be amended in accordance with the 1940 Act.
8. For the purpose of the Agreement, the terms "vote of a majority of the
outstanding shares", "affiliated person" and "assignment" shall have their
respective meanings defined in the 1940 Act and exemptions and
interpretations issued by the Securities and Exchange Commission under the
1940 Act.
9. In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Adviser, or reckless disregard of its obligations and
duties hereunder, the Adviser shall not be subject to any liability to the
Trust or the Fund, to any shareholder of the Trust or the Fund or to any
other person, firm or organization, for any act or omission in the course
of, or connected with, rendering services hereunder.
COLONIAL TRUST II on behalf of
[SOGEN] INTERNATIONAL FUND
By:
---------------------------
[Name]
[Title]
SOCIETE GENERALE ASSET MANAGEMENT, CORP.
By:
---------------------------
[Name]
[Title]
A copy of the document establishing the Trust is filed with the Secretary of The
Commonwealth of Massachusetts. This Agreement is executed by officers not as
individuals and is not binding upon any of the Trustees, officers or
shareholders of the Trust individually but only upon the assets of the Fund.
-39-
<PAGE>
SUCCESSOR TO SOGEN OVERSEAS FUND
MANAGEMENT AGREEMENT
AGREEMENT dated as of [_______________], 1998 between COLONIAL TRUST II, a
Massachusetts business trust (Trust), with respect to [SOGEN] OVERSEAS FUND
(Fund), and SOCIETE GENERALE ASSET MANAGEMENT, CORP., a Delaware corporation
(Adviser).
In consideration of the promises and covenants herein, the parties agree as
follows:
1. The Adviser will manage the investment of the assets of the Fund in
accordance with its prospectus and statement of additional information and
will perform the other services herein set forth, subject to the
supervision of the Board of Trustees of the Trust. The Adviser may
delegate its investment responsibilities to a sub-adviser. The Adviser may
also delegate any administrative services to a third party.
2. In carrying out its investment management obligations, the Adviser shall:
(a) evaluate such economic, statistical and financial information and
undertake such investment research as it shall believe advisable; (b)
purchase and sell securities and other investments for the Fund in
accordance with the procedures described in its prospectus and statement
of additional information; and (c) report results to the Board of Trustees
of the Trust.
3. The Adviser shall be free to render similar services to others so long as
its services hereunder are not impaired thereby.
4. The Fund shall pay the Adviser monthly a fee at the annual rate of 0.75%
of the Fund's average daily net assets.
5. If the operating expenses of the Fund for any fiscal year exceed the most
restrictive applicable expense limitation for any state in which shares
are sold, the Adviser's fee shall be reduced by the excess but not to less
than zero. Operating expenses shall not include brokerage, interest,
taxes, deferred organization expenses, Rule 12b-1 distribution fees,
service fees and extraordinary expenses, if any. The Adviser may waive its
compensation (and bear expenses of the Fund) to the extent that expenses
of the Fund exceed any expense limitation the Adviser declares to be
effective.
6. This Agreement shall become effective as of the date of its execution, and
(a) unless otherwise terminated, shall continue until two years from its
date of execution and from year to year thereafter so long as approved
annually in accordance with the 1940 Act; (b) may be terminated without
penalty on sixty days' written notice to the Adviser either by vote of the
Board of Trustees of the Trust or by vote of a majority of the outstanding
shares of the Fund; (c) shall automatically terminate in the event of its
assignment; and (d) may be terminated without penalty by the Adviser on
sixty days' written notice to the Trust.
7. This Agreement may be amended in accordance with the 1940 Act.
-40-
<PAGE>
8. For the purpose of the Agreement, the terms "vote of a majority of the
outstanding shares", "affiliated person" and "assignment" shall have their
respective meanings defined in the 1940 Act and exemptions and
interpretations issued by the Securities and Exchange Commission under the
1940 Act.
9. In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Adviser, or reckless disregard of its obligations and
duties hereunder, the Adviser shall not be subject to any liability to the
Trust or the Fund, to any shareholder of the Trust or the Fund or to any
other person, firm or organization, for any act or omission in the course
of, or connected with, rendering services hereunder.
COLONIAL TRUST II on behalf of
[SOGEN] OVERSEAS FUND
By:
---------------------------
[Name]
[Title]
SOCIETE GENERALE ASSET MANAGEMENT, CORP.
By:
---------------------------
[Name]
[Title]
A copy of the document establishing the Trust is filed with the Secretary of The
Commonwealth of Massachusetts. This Agreement is executed by officers not as
individuals and is not binding upon any of the Trustees, officers or
shareholders of the Trust individually but only upon the assets of the Fund.
-41-
<PAGE>
SUCCESSOR TO SOGEN GOLD FUND
MANAGEMENT AGREEMENT
AGREEMENT dated as of [_____________], 1998 between COLONIAL TRUST II, a
Massachusetts business trust (Trust), with respect to [SOGEN] GOLD FUND (Fund),
and SOCIETE GENERALE ASSET MANAGEMENT, CORP., a Delaware corporation (Adviser).
In consideration of the promises and covenants herein, the parties agree as
follows:
1. The Adviser will manage the investment of the assets of the Fund in
accordance with its prospectus and statement of additional information and
will perform the other services herein set forth, subject to the
supervision of the Board of Trustees of the Trust. The Adviser may
delegate its investment responsibilities to a sub-adviser. The Adviser may
also delegate any administrative services to a third party.
2. In carrying out its investment management obligations, the Adviser shall:
(a) evaluate such economic, statistical and financial information and
undertake such investment research as it shall believe advisable; (b)
purchase and sell securities and other investments for the Fund in
accordance with the procedures described in its prospectus and statement
of additional information; and (c) report results to the Board of Trustees
of the Trust.
3. The Adviser shall be free to render similar services to others so long as
its services hereunder are not impaired thereby.
4. The Fund shall pay the Adviser monthly a fee at the annual rate of 0.75%
of the Fund's average daily net assets.
5. If the operating expenses of the Fund for any fiscal year exceed the most
restrictive applicable expense limitation for any state in which shares
are sold, the Adviser's fee shall be reduced by the excess but not to less
than zero. Operating expenses shall not include brokerage, interest,
taxes, deferred organization expenses, Rule 12b-1 distribution fees,
service fees and extraordinary expenses, if any. The Adviser may waive its
compensation (and bear expenses of the Fund) to the extent that expenses
of the Fund exceed any expense limitation the Adviser declares to be
effective.
6. This Agreement shall become effective as of the date of its execution, and
(a) unless otherwise terminated, shall continue until two years from its
date of execution and from year to year thereafter so long as approved
annually in accordance with the 1940 Act; (b) may be terminated without
penalty on sixty days' written notice to the Adviser either by vote of the
Board of Trustees of the Trust or by vote of a majority of the outstanding
shares of the Fund; (c) shall automatically terminate in the event of its
assignment; and (d) may be terminated without penalty by the Adviser on
sixty days' written notice to the Trust.
7. This Agreement may be amended in accordance with the 1940 Act.
-42-
<PAGE>
8. For the purpose of the Agreement, the terms "vote of a majority of the
outstanding shares", "affiliated person" and "assignment" shall have their
respective meanings defined in the 1940 Act and exemptions and
interpretations issued by the Securities and Exchange Commission under the
1940 Act.
9. In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Adviser, or reckless disregard of its obligations and
duties hereunder, the Adviser shall not be subject to any liability to the
Trust or the Fund, to any shareholder of the Trust or the Fund or to any
other person, firm or organization, for any act or omission in the course
of, or connected with, rendering services hereunder.
COLONIAL TRUST II on behalf of
[SOGEN] GOLD FUND
By:
---------------------------
[Name]
[Title]
SOCIETE GENERALE ASSET MANAGEMENT, CORP.
By:
---------------------------
[Name]
[Title]
A copy of the document establishing the Trust is filed with the Secretary of The
Commonwealth of Massachusetts. This Agreement is executed by officers not as
individuals and is not binding upon any of the Trustees, officers or
shareholders of the Trust individually but only upon the assets of the Fund.
-43-
<PAGE>
Exhibit C
Expense Comparison
The following table reflects the anticipated effect of the
Reorganization on the operating expenses of the Funds, based on their expenses
for the fiscal year ended March 31, 1998 and giving effect to the fee waiver
agreements referred to above. Please note that Colonial Management and Successor
SGAM Corp. have agreed to waive certain fees during the two years following the
approval of each New Investment Management Agreement so that the total operating
expenses of each Successor Fund do not exceed the total annualized operating
expenses of the corresponding Fund for the six month period ended September 30,
1998.
COMPARATIVE FEE AND EXPENSE TABLE FOR THE FUNDS
(FOR THE ANNUAL PERIOD ENDED MARCH 31, 1998)
Annual Fund Operating Expenses
(as a percentage of average net assets)
SOGEN INTERNATIONAL FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------ --------------------------------------------- -----------------------------------------
SoGen International Fund Class A Class I
- ------------------------------------ --------------------------------------------- -----------------------------------------
- ------------------------------------ ------------- ------------- ----------------- ----------- ------------- ---------------
Current Proposed Difference Current Proposed Difference
- ------------------------------------ ------------- ------------- ----------------- ----------- ------------- ---------------
- ------------------------------------ ------------- ------------- ----------------- ----------- ------------- ---------------
Average Assets ( as of _______)
- ------------------------------------ ------------- ------------- ----------------- ----------- ------------- ---------------
- ------------------------------------ ------------- ------------- ----------------- ----------- ------------- ---------------
Adviser's Fee 0.75% 0.75% 0% 0.75% 0.75% 0 %
- ------------------------------------ ------------- ------------- ----------------- ----------- ------------- ---------------
- ------------------------------------ ------------- ------------- ----------------- ----------- ------------- ---------------
12b-1 Fees 0.25% 0.35%* up to 0.10%** None None 0 %
- ------------------------------------ ------------- ------------- ----------------- ----------- ------------- ---------------
- ------------------------------------ ------------- ------------- ----------------- ----------- ------------- ---------------
Administrator's Fee None [ ]%*** up to [ ]%** None
- ------------------------------------ ------------- ------------- ----------------- ----------- ------------- ---------------
- ------------------------------------ ------------- ------------- ----------------- ----------- ------------- ---------------
Transfer Agent Fee, Custody Fee, 0.18% 0.18%
and Other Fees
- ------------------------------------ ------------- ------------- ----------------- ----------- ------------- ---------------
- ------------------------------------ ------------- ------------- ----------------- ----------- ------------- ---------------
Total Expenses 1.18% 0.93%
- ------------------------------------ ------------- ------------- ----------------- ----------- ------------- ---------------
- ------------------------------------ ------------- ------------- ----------------- ----------- ------------- ---------------
Total Fund Expenses (after
reimbursement or waiver)
- ------------------------------------ ------------- ------------- ----------------- ----------- ------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SOGEN OVERSEAS FUND
- ---------------------------------- ---------------------------------------------- ------------------------------------------
SoGen Overseas Fund Class A Class I
- ---------------------------------- ---------------------------------------------- ------------------------------------------
- ---------------------------------- -------------- ------------- ----------------- ------------ ------------- ---------------
Current Proposed Difference Current Proposed Difference
- ---------------------------------- -------------- ------------- ----------------- ------------ ------------- ---------------
- ---------------------------------- -------------- ------------- ----------------- ------------ ------------- ---------------
Average Assets( as of _______)
- ---------------------------------- -------------- ------------- ----------------- ------------ ------------- ---------------
- ---------------------------------- -------------- ------------- ----------------- ------------ ------------- ---------------
Adviser's Fee 0.75% 0.75% 0% 0.75% 0.75% 0
- ---------------------------------- -------------- ------------- ----------------- ------------ ------------- ---------------
- ---------------------------------- -------------- ------------- ----------------- ------------ ------------- ---------------
12b-1 Fees 0.25% 0.35%* up to 0.10%** None None 0
- ---------------------------------- -------------- ------------- ----------------- ------------ ------------- ---------------
- ---------------------------------- -------------- ------------- ----------------- ------------ ------------- ---------------
Administrator's Fee None [ ]%*** up to [ ]%** None
- ---------------------------------- -------------- ------------- ----------------- ------------ ------------- ---------------
- ---------------------------------- -------------- ------------- ----------------- ------------ ------------- ---------------
Transfer Agent Fee, Custody Fee, 0.22% 0.22%
and Other Fees
- ---------------------------------- -------------- ------------- ----------------- ------------ ------------- ---------------
- ---------------------------------- -------------- ------------- ----------------- ------------ ------------- ---------------
Total Expenses 1.22% 0.97%
- ---------------------------------- -------------- ------------- ----------------- ------------ ------------- ---------------
- ---------------------------------- -------------- ------------- ----------------- ------------ ------------- ---------------
Total Fund Expenses (after
reimbursement or waiver)
- ---------------------------------- -------------- ------------- ----------------- ------------ ------------- ---------------
</TABLE>
-44-
<PAGE>
SOGEN GOLD FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C>
-------------------------------------------------- ------------------------------------------------------------
SoGen Gold Fund Class A
-------------------------------------------------- ------------------------------------------------------------
-------------------------------------------------- ----------------- ------------------- ----------------------
Current Proposed Difference
-------------------------------------------------- ----------------- ------------------- ----------------------
-------------------------------------------------- ----------------- ------------------- ----------------------
Average Assets ( as of _______)
-------------------------------------------------- ----------------- ------------------- ----------------------
-------------------------------------------------- ----------------- ------------------- ----------------------
Adviser's Fee 0.75% 0.75% 0
-------------------------------------------------- ----------------- ------------------- ----------------------
-------------------------------------------------- ----------------- ------------------- ----------------------
12b-1 Fees 0.25% 0.35%* up to 0.10%**
-------------------------------------------------- ----------------- ------------------- ----------------------
-------------------------------------------------- ----------------- ------------------- ----------------------
Administrator's Fee None [ ]%*** up to [ ]%**
-------------------------------------------------- ----------------- ------------------- ----------------------
-------------------------------------------------- ----------------- ------------------- ----------------------
Transfer Agent Fee, Custody Fee, and Other Fees 0.55%
-------------------------------------------------- ----------------- ------------------- ----------------------
-------------------------------------------------- ----------------- ------------------- ----------------------
Total Expenses 1.55%
-------------------------------------------------- ----------------- ------------------- ----------------------
-------------------------------------------------- ----------------- ------------------- ----------------------
Total Fund Expenses (after reimbursement or
waiver)
-------------------------------------------------- ----------------- ------------------- ----------------------
</TABLE>
- -------------------------------
* The 12b-1 fee has been voluntarily reduced to 0.25% for a period of a
minimum of two years.
** If the voluntary waiver is eliminated after the two-year period.
*** The administrator's fee has been voluntarily waived for a period of a
minimum of two years.
-45-
<PAGE>
Exhibit D
TRUSTEES OF THE COLONIAL TRUST II
Robert J. Birnbaum
Tom Bleasdale
John Carberry
Lora S. Collins
James E. Grinnell
Richard W. Lowry
Salvatore Macera
William E. Mayer
James L. Moody, Jr.
John J. Neuhauser
Thomas E. Stitzel
Robert L. Sullivan
Anne-Lee Verville
-46-
<PAGE>
Exhibit E
INVESTMENT POLICIES
* * *
SUCCESSOR TO SOGEN INTERNATIONAL FUND
SUCCESSOR TO SOGEN OVERSEAS FUND
FUNDAMENTAL INVESTMENT POLICIES
The Investment Company Act of 1940 (Act) provides that a "vote of a majority of
the outstanding voting securities" means the affirmative vote of the lesser of
(1) more than 50% of the outstanding shares of each Fund, or (2) 67% or more of
the shares present at a meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy. The following fundamental
investment policies can not be changed without such a vote (except the portions
in parentheses).
Each Fund may:
1. With respect to 75% of the value of the Fund's total assets, invest more
than 5% of its total assets (valued at time of investment) in securities
of any one issuer, except securities issued or guaranteed by the
government of the United States, or any of its agencies or
instrumentalities, or acquire securities of any one issuer which, at the
time of investment, represent more than 10% of the voting securities of
the issuer;
2. Borrow money except unsecured borrowings from banks as a temporary measure
in exceptional circumstances, and such borrowings may not exceed 10% of
the Fund's net assets at the time of the borrowing. The Fund will not
purchase securities while borrowings exceed 5% of its total assets;
3. Invest more than 25% of its assets (valued at the time of investment) in
securities of companies in any one industry other than U.S. Government
Securities (Overseas Fund);
4. Make loans, but this restriction shall not prevent the Fund from (a)
buying a part of an issue of bonds, debentures, or other obligations that
are publicly distributed, or from investing up to an aggregate of 15% of
its total assets (taken at market value at the time of each purchase) in
parts of issues of bonds, debentures or other obligations of a type
privately placed with financial institutions or (b) lending portfolio
securities, provided that the Fund may not lend securities if, as a
result, the aggregate value of all securities loaned would exceed 33% of
its total assets (taken at market value at the time of such loan);*
5. Underwrite the distribution of securities of other issuers; however, the
Fund may acquire "restricted" securities which, in the event of a resale,
might be required to be registered under the 1933 Act on the grounds that
the Fund could be regarded as an underwriter as defined in the 1933 Act
with respect to such resale (Overseas Fund);
6. Purchase and sell real estate or interests in real estate, although it may
invest in marketable securities of enterprises that invest in real estate
or interests in real estate;
-47-
<PAGE>
7. Make margin purchases of securities, except for the use of such short term
credits as are needed for clearance of transactions (Overseas Fund);
8. Sell securities short or maintain a short position and in the case of the
Overseas Fund, except, short sales against-the-box; and
9. Purchase the securities of any issuer if such purchase would cause more
than 25% of the value of its total assets to be invested in securities of
any one issuer or industry, with the exception of the securities of the
United States government and its corporate instrumentalities and, under
the circumstances described below, certificates of deposit and other
short-term bank instruments. In fact, the Fund intends to diversify its
investments among various issuers and industries and will not purchase
certificates of deposit or other short-term bank instruments except to the
extent deemed appropriate for the short-term investment of cash or a
temporary defensive measure. The Fund will limit its purchases of
certificates of deposit and other short-term bank instruments to those
issued by United States banks and savings and loan associations, including
foreign branches of such banks, and United States branches or agencies of
foreign banks, which have total assets (as of the date of their most
recently published financial statements) of at least $1 billion (Global
Fund);
10. Purchase or sell its portfolio securities from or to any of its officers,
directors or employees, its investment advisor or its principal
underwriter, except to the extent that such purchase or sale may be
permitted by an order, rule or regulation of the Securities and Exchange
Commission (Global Fund); and
11. Engage in the underwriting of securities of other issuers, except to the
extent it may be deemed to be an underwriter in selling portfolio
securities as part of an offering registered under the 1933 Act.
OTHER INVESTMENT POLICIES
As non-fundamental investment policies which may be changed without a
shareholder vote, each Fund may not:
1. Invest in companies for the purpose of management or the exercise of
control;
2. Invest in oil, gas or other mineral leases or exploration or development
programs, although it may invest in marketable securities of enterprises
engaged in oil, gas or mineral exploration;
3. Invest more than 10% of its net assets (valued at time of investment) in
warrants, valued at the lower of cost or market; provided that warrants
acquired in units or attached to securities shall be deemed to be without
value for purposes of this restriction (Overseas Fund);
4. Pledge, mortgage or hypothecate its assets, except as may be necessary in
connection with permitted borrowings or in connection with short sales
(Overseas Fund);
5. Purchase or sell commodities or commodity contracts, except that it may
enter into forward contracts and may sell commodities received by it as
distributions on portfolio investments (Overseas Fund);
6. Purchase or sell put and call options on securities or on futures
contracts;
7. Purchase securities on margin (Global Fund);
8. Purchase warrants which are not offered in units or attached to other
portfolio securities if, immediately after such purchase, more than 5% of
the Fund's net assets would be invested in such unattached warrants,
valued at the lower of cost or market. The Fund will not purchase
unattached warrants not listed on the New York or American Stock Exchange
if, immediately after such purchase, more than 2% of the Fund's net assets
would be invested in such unattached, unlisted warrants (Global Fund); and
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9. Purchase illiquid securities or securities the proceeds from the sale of
which could not readily be repatriated to the United States if,
immediately after such purchase, more than 10% of the value of its net
assets would be invested in such securities (Global Fund).
SUCCESSOR TO SOGEN GOLD FUND
FUNDAMENTAL INVESTMENT POLICIES
The Investment Company Act of 1940 (Act) provides that a "vote of a majority of
the outstanding voting securities" means the affirmative vote of the lesser of
(1) more than 50% of the outstanding shares of the Fund, or (2) 67% or more of
the shares present at a meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy. The following fundamental
investment policies can not be changed without such a vote (except the portions
in parentheses).
The Fund may:
1. With respect to 75% of the value of the Fund's total assets, invest more
than 5% of its total assets (valued at time of investment) in securities
of any one issuer, except securities issued or guaranteed by the
government of the United States, or any of its agencies or
instrumentalities, or acquire securities of any one issuer which, at the
time of investment, represent more than 10% of the voting securities of
the issuer;
2. Borrow money except unsecured borrowings from banks as a temporary measure
in exceptional circumstances, and such borrowings may not exceed 10% of
the Fund's net assets at the time of the borrowing. The Fund will not
purchase securities while borrowings exceed 5% of its total assets;
3. Invest more than 25% of its assets (valued at the time of investment) in
securities of companies in any one industry other than U.S. Government
Securities, except that the Fund will, as a matter of fundamental policy,
concentrate its investments in the precious metals industry;
4. Make loans, but this restriction shall not prevent the Fund from (a)
buying a part of an issue of bonds, debentures, or other obligations that
are publicly distributed, or from investing up to an aggregate of 15% of
its total assets (taken at market value at the time of each purchase) in
parts of issues of bonds, debentures or other obligations of a type
privately placed with financial institutions or (b) lending portfolio
securities, provided that the Fund may not lend securities if, as a
result, the aggregate value of all securities loaned would exceed 33% of
its total assets (taken at market value at the time of such loan);*
5. Underwrite the distribution of securities of other issuers; however, the
Fund may acquire "restricted" securities which, in the event of a resale,
might be required to be registered under the 1933 Act on the grounds that
the Fund could be regarded as an underwriter as defined in the 1933 Act
with respect to such resale;
6. Purchase and sell real estate or interests in real estate, although it may
invest in marketable securities of enterprises that invest in real estate
or interests in real estate;
7. Make margin purchases of securities, except for the use of such short term
credits as are needed for clearance of transactions; and
- --------------------------------
* The Fund has no present intention of lending its portfolio securities.
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8. Sell securities short or maintain a short position, except, short sales
against-the-box.
OTHER INVESTMENT POLICIES
As non-fundamental investment policies which may be changed without a
shareholder vote, each Fund may not:
1. Invest in companies for the purpose of management or the exercise of
control;
2. Invest in oil, gas or other mineral leases or exploration or development
programs, although it may invest in marketable securities of enterprises
engaged in oil, gas or mineral exploration;
3. Invest more than 10% of its net assets (valued at time of investment) in
warrants, valued at the lower of cost or market; provided that warrants
acquired in units or attached to securities shall be deemed to be without
value for purposes of this restriction;
4. Pledge, mortgage or hypothecate its assets, except as may be necessary in
connection with permitted borrowings or in connection with short sales;
5. Purchase or sell commodities or commodity contracts, except that it may
enter into forward contracts and may sell commodities received by it as
distributions on portfolio investments; and
6. Purchase or sell put and call options on securities or on futures
contracts.
Notwithstanding the foregoing investment restrictions, the Fund may purchase
securities pursuant to the exercise of subscription rights, provided that such
purchase will not result in the Fund's ceasing to be a diversified investment
company. Japanese and European corporations frequently issue additional capital
stock by means of subscription rights offerings to existing shareholders at a
price substantially below the market price of the shares. The failure to
exercise such rights would result in the Fund's interest in the issuing company
being diluted. The market for such rights is not well developed in all cases
and, accordingly, the Fund may not always realize full value on the sale of
rights. The exception applies in cases where the limits set forth in the
investment restrictions would otherwise be exceeded by exercising rights or
would have already been exceeded as a result of fluctuations in the market value
of the Fund's portfolio securities with the result that the Fund would be forced
either to sell securities at a time when it might not otherwise have done so, or
to forego exercising the rights.
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Exhibit F
FORM OF INTERIM INVESTMENT MANAGEMENT AGREEMENTS
SoGen Gold Fund
SoGen Overseas Fund
Interim Investment Advisory Contract
Dear Sirs:
SoGen Funds, Inc. (the "Company"), a Maryland corporation consisting of
four portfolios, SoGen International Fund, SoGen Overseas Fund, SoGen Gold Fund
and SoGen Money Fund, is engaged in the business of an investment company. The
Company's Board of Directors has selected you to act as the investment adviser
of the Company on behalf of SoGen Overseas Fund and SoGen Gold Fund (the
"Funds") and to provide certain other services on behalf of the Funds, as more
fully set forth below, and you are willing to act as such investment adviser and
to perform such services under the terms and conditions hereinafter set forth.
Accordingly, the Company agrees with you as follows:
1. Delivery of Corporate Documents. The Company has furnished you with
copies properly certified or authenticated of each of the following:
(a) Articles of Incorporation of the Company, dated [ ], as amended.
(b) By-Laws of the Company as in effect on the date hereof.
(c) Resolutions of the Board of Directors of the Company selecting you
as investment adviser and approving the form of this Agreement.
The Company will furnish you from time to time with copies properly certified or
authenticated, of any amendments of or supplements to the foregoing, if any.
2. Advisory Services. You will regularly provide the Company with
investment research, advice and supervision and will furnish continuously an
investment program for the Funds' portfolios consistent with the Funds'
respective investment objectives, policies and restrictions set forth in the
Company's Registration Statement under the Securities Act of 1933, as amended
(the "Registration Statement"), and the current prospectus and statement of
additional information included therein (the "Prospectus"). You will recommend
what securities shall be purchased for the Funds, what portfolio securities
shall be sold by the Funds, and what portion of the Funds' assets shall be held
uninvested, subject always to such investment objective, policy and restrictions
and to the provisions of the Company's Articles of Incorporation, By-Laws,
Statement of Rules and the requirements of the Investment Company Act of 1940,
as amended (the "1940 Act"), as each of the same shall be from time to time in
effect. You shall advise and assist the officers of the Company in taking such
steps as are necessary or appropriate to carry out the decisions of its Board of
Directors and any appropriate committees of such Board regarding the foregoing
matters and general conduct of the investment business of the Company.
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<PAGE>
3. Allocation of Charges and Expenses. You will pay the compensation and
expenses of all officers of the Company and will furnish, without expense to the
Company, the services of such of your officers and employees as may duly be
elected officers or directors of the Company, subject to their individual
consent to serve and to any limitations imposed by law. You will pay the
Company's office rent and ordinary office expenses and will provide investment,
advisory, research and statistical facilities and all clerical services relating
to research, statistical and investment work. (It is understood that the
foregoing provision does not obligate you to pay for the maintenance of the
Company's general ledger and securities cost ledger or for daily pricing of the
Company's securities, but that it does obligate you, without expense to the
Company, to oversee the provision of such services by the Company's agent.) You
will not be required hereunder to pay any expenses of the Company other than
those above enumerated in this paragraph 3. In particular, but without limiting
the generality of the foregoing, you will not be required to pay hereunder:
brokers' commissions; legal or auditing expenses; taxes or governmental fees;
any direct expenses of issue, sale, underwriting, distribution, redemption or
repurchase of shares of the Company; the expenses of registering or qualifying
securities for sale; the cost of preparing and distributing reports and notices
to stockholders; the fees or disbursements of dividend, disbursing, shareholder,
transfer or other agent; or the fees or disbursements of custodians of the
Company's assets.
4. Compensation of the Adviser. For all services to be rendered and
payments made as provided in paragraphs 2 and 3 hereof, each Fund will promptly
pay you a monthly fee, after the last day of each month, at the annual rate of
0.75 of 1% of the average daily value of each Fund's net assets during the
month. If this Agreement is terminated as of any day not the last day of a
month, such fee shall be paid as promptly as possible after such date of
termination. If this Agreement shall be effective with respect to a Fund for
less than the whole of any month, such fee shall be based on the average daily
value of the net assets of each Fund in the part of the month for which this
Agreement shall be effective and shall be that proportion of such fee as the
number of business days (days on which the New York Stock Exchange is open all
or part of the day for unrestricted trading) in such period bears to the number
of business days in such month. The average daily value of the net assets of the
Fund shall in all cases be based only on business days for the period or month
and shall be computed in accordance with applicable provisions of the Articles
of Incorporation of the Company.
5. Purchase and Sale of Securities. You shall purchase securities from
or through and sell securities to or through such persons, brokers or dealers
(including any of your affiliates) as you shall deem appropriate in order to
carry out the Company's brokerage policy as set forth from time to time in the
Registration Statement and Prospectus, or as the Board of Directors of the
Company may require from time to time. When purchasing securities from or
through, and selling securities to or through, any such persons, brokers or
dealers that may be affiliated with you, you shall comply with all applicable
provisions of the 1940 Act, including without limitation Section 17 thereof and
the rules and regulations thereunder, and Section 206 of the Investment Advisers
Act of 1940, as amended (the "Investment Advisers Act") and the rules and
regulations thereunder. In providing the Company with investment management and
supervision, it is recognized that you will seek the best combination of price
(inclusive of brokerage commissions) and execution, and, consistent with such
policy, may give consideration to the research, statistical and other services
furnished by brokers or dealers as such Board may direct or authorize from time
to time.
Notwithstanding the above, it is understood that it is desirable for the
Company that you have access to research services provided by brokers who
execute brokerage transactions at a higher cost to the Company than may result
when allocating brokerage to other brokers on the basis of seeking the best
combination of price (inclusive of brokerage commissions) and execution. Such
research services include written
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reports, responses to specific inquiries, interviews with analysts, invitations
to meetings arranged by brokers with the managements of companies in the
Company's portfolio or in which the Company may invest and may include other
types of research from time to time approved by the Board of Directors of the
Company. Only research services provided to you for the benefit of the Company
will be considered in selecting brokers to effect portfolio transactions for the
Company unless otherwise authorized by such Board. You are authorized to place
orders for the purchase and sale of securities for the Company with brokers who
provide such research services, subject to review by the Board of Directors of
the Company from time to time, but not less frequently than quarterly, with
respect to the extent and continuation of this practice. It is understood that
the services provided by such brokers may be useful to you and your affiliates
in connection with their services to other clients as well as the Company. You
acknowledge that you will comply with all applicable provisions of the 1940 Act,
Investment Advisers Act and the Securities Exchange Act of 1934, as amended,
including without limitation the provisions of Section 28(e) thereof, with
respect to the allocation of portfolio transactions.
Nothing herein shall prohibit the Board of Directors of the Company from
approving the payment by the Company of additional compensation to others for
consulting services, supplemental research and security and economic analysis.
6. Services to Other Accounts. The Company understands that you and your
affiliates now act, will continue to act and may in the future act as investment
adviser to fiduciary and other managed accounts, and the Company has no
objection to you and your affiliates so acting, provided that whenever the Fund
and one or more other accounts advised by you (the "Managed Accounts") are
prepared to purchase, or desire to sell, the same security, available
investments or opportunities for sales will be allocated in a manner that is
equitable to each entity. In such situations, you may place orders for the Funds
and each Managed Account simultaneously, and if all such orders are not filled
at the same price, you may cause the Funds and each Managed Account to pay or
receive the average of the prices at which the orders were filled for the Funds
and all Managed Accounts. If all such orders cannot be executed fully under
prevailing market conditions, you may allocate the traded securities between the
Funds and the Managed Accounts in a manner you consider appropriate, taking into
account the size of the order placed for the Funds and each such Managed Account
and, in the event of a sale, the size of the pre-sale position of the Funds and
each such Managed Account, as well as any other factors you deem relevant. The
Company recognizes that in some cases this procedure may affect adversely the
price paid or received by the Funds or the size of the position purchased or
sold by the Funds. In addition, the Company understands that the persons
employed by you to provide service to the Company in connection with the
performance of your duties under this Agreement will not devote their full time
to that service. Moreover, nothing contained in this Agreement will be deemed to
limit or restrict your right or the right of any of your affiliates to engage in
and devote time and attention to other businesses or to render services of
whatever kind or natural including serving as investment adviser to, or
employee, officer, director or trustee of, other investment companies.
7. Avoidance of Inconsistent Position. If any occasion should arise in
which you give any advice to clients of yours concerning the shares of the
Funds, you will act solely as investment counsel for such clients and not in any
way on behalf of the Company except to the extent that you are acting as
principal underwriter of the Capital Stock of the Funds. In connection with
purchases or sales of portfolio securities for the account of the Funds, neither
you nor any of your directors, officers or employees will act as a principal.
8. Limitation of Liability of Adviser. You shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Company in
connection with the matters to which this Agreement relates,
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<PAGE>
except a loss resulting from willful misfeasance, bad faith or gross negligence
on your part in the performance of your duties or from reckless disregard by you
of your obligations and duties under this Agreement.
9. Use of Name. If you cease to act as the Company's investment adviser,
or, in any event, if you so request in writing, the Company agrees to take all
necessary action to change the name of the Company and the Fund to a name not
including the term "SoGen". You may from time to time make available without
charge to the Company for its use such marks or symbols not owned by you,
including the logo in the form of a stylized globe or marks or symbols
containing the term "SoGen" or any variation thereof, as you may consider
appropriate. Any such marks or symbols so made available will remain your
property and you shall have the right, upon notice in writing, to require the
Company to cease the use of such mark or symbol at any time.
10. Duration and Termination of this Agreement. This Agreement shall
remain in force until the earlier of the date the Funds reorganize as separate
series of Colonial Trust II and March 31, 1999. This Agreement may, on 60 days'
written notice, be terminated at any time without the payment of any penalty, by
the Board of Directors of the Company, by vote of a majority of the outstanding
voting securities of the Fund, or by you. This Agreement shall automatically
terminate in the event of its assignment. In interpreting the provisions of this
paragraph 9, the definitions contained in Section 2(a) of the 1940 Act, as
amended, and any Rules thereunder (particularly the definitions of "interested
person", "assignment", "voting security" and "vote of a majority of the
outstanding voting securities") shall be applied.
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the "party" against which enforcement of the change, waiver,
discharge or termination is sought.
12. Notices. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, to you or to the Company at 1221 Avenue of the
Americas, 8th Floor, New York, New York 10020.
13. Governing Law . This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon, either of the parties to do anything in violation of
any applicable laws or regulations.
14. Captions; Counterparts. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Company, whereupon this letter shall become a binding
contract.
Yours very truly,
SOGEN FUNDS, INC.
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<PAGE>
By:
---------------------
Name:
Title:
The foregoing Agreement is hereby accepted.
SOCIETE GENERALE ASSET MANAGEMENT CORP.
By:
--------------------------
Name:
Title:
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<PAGE>
SoGen International Fund
Interim Investment Advisory Contract
Dear Sirs:
SoGen Funds, Inc. (the "Company"), a Maryland corporation consisting of
four portfolios, SoGen International Fund, SoGen Overseas Fund, SoGen Gold Fund
and SoGen Money Fund, is engaged in the business of an investment company. Its
Board of Directors has selected you to act as the investment adviser of the
Company on behalf of SoGen International Fund (the "Fund") and to provide
certain other services to the Company on behalf of the Fund, as more fully set
forth below, and you are willing to act as such investment adviser and to
perform such services under the terms and conditions hereinafter set forth.
Accordingly, the Company agrees with you as follows:
1. Delivery of Corporate Documents. The Company has furnished you with
copies properly certified or authenticated of each of the following:
(a) Articles of Incorporation of the Company, dated May 3, 1985, as
amended.
(b) Articles Supplementary of the Company, dated July 24, 1998.
(c) By-Laws of the Company as in effect on the date hereof.
(d) Statement of Rules adopted by the Board of Directors of the Company
on March 2, 1970, as subsequently amended.
(e) Resolutions of the Board of Directors of the Company selecting you
as investment adviser and approving the form of this Agreement.
The Company will furnish you from time to time with copies properly certified or
authenticated, of any amendments of or supplements to the foregoing, if any.
2. Advisory Services. You will regularly provide the Company with
investment research, advice and supervision and will furnish continuously an
investment program for the Fund's portfolio consistent with the Fund's
investment objective, policy and restrictions set forth in the Company's
Registration Statement under the Securities Act of 1933, as amended (the
"Registration Statement") , and the current prospectus and statement of
additional information included therein (the "Prospectus"). You will recommend
what securities shall be purchased for the Fund, what portfolio securities shall
be sold by the Fund, and what portion of the Fund's assets shall be held
uninvested, subject always to such investment objective, policy and restrictions
and to the provisions of the Company's Articles of Incorporation, By-Laws,
Statement of Rules and the requirements of the Investment Company Act of 1940,
as amended (the "1940 Act"), as each of the same shall be from time to time in
effect. You shall advise and assist the officers of the Company in taking such
steps as are necessary or appropriate to carry out the decisions of its Board of
Directors and any appropriate committees of such Board regarding the foregoing
matters and general conduct of the investment business of the Company.
3. Allocation of Charges and Expenses. You will pay the compensation and
expenses of all officers of the Company and will furnish, without expense to the
Company, the services of such of your officers
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and employees as may duly be elected officers or directors of the Company,
subject to their individual consent to serve and to any limitations imposed by
law. You will pay the Company's office rent and ordinary office expenses and
will provide investment, advisory, research and statistical facilities and all
clerical services relating to research, statistical and investment work. (It is
understood that the foregoing provision does not obligate you to pay for the
maintenance of the Company's general ledger and securities cost ledger or for
daily pricing of the Company's securities, but that it does obligate you,
without expense to the Company, to oversee the provision of such services by the
Company's agent.) You will not be required hereunder to pay any expenses of the
Company other than those above enumerated in this paragraph 3. In particular,
but without limiting the generality of the foregoing, you will not be required
to pay hereunder: brokers' commissions; legal or auditing expenses; taxes or
governmental fees; any direct expenses of issue, sale, underwriting,
distribution, redemption or repurchase of shares of the Company; the expenses of
registering or qualifying securities for sale; the cost of preparing and
distributing reports and notices to stockholders; the fees or disbursements of
dividend, disbursing, shareholder, transfer or other agent; or the fees or
disbursements of custodians of the Company's assets.
4. Compensation of the Adviser. For all services to be rendered and
payments made as provided in paragraphs 2 and 3 hereof, the Fund will promptly
pay you a fee after the last day of March, June, September and December in each
year. The fee to be so paid each calendar Quarter shall be the sum of the
following percentages of the average daily value of the net assets of the Fund
during the three months ending on such days:
.25% of the first $25,000,000
(an annual rate of 1.0%)
.1875% of the excess over $25,000,000 (an annual rate of
.75%)
If this Agreement is terminated as of any day not the last day of a calendar
quarter, such fee shall be paid as promptly as possible after such date of
termination. If this Agreement shall be effective for less than the whole of any
quarter, such fee shall be based on the average daily value of the net assets of
the Fund in the part of the quarter for which this Agreement shall be effective
and shall be that proportion of such fee as the number of business days (days on
which the New York Stock Exchange is open all or part of the day for
unrestricted trading) in such period bears to the number of business days in
such quarter. The average daily value of the net assets of the Fund shall in all
cases be based only on business days for the period or quarter and shall be
computed in accordance with applicable provisions of the Articles of
Incorporation of the Company.
5. Purchase and Sale of Securities. You shall purchase securities from
or through and sell securities to or through such persons, brokers or dealers
(including any of your affiliates) as you shall deem appropriate in order to
carry out the Company's brokerage policy as set forth from time to time in the
Registration Statement and Prospectus, or as the Board of Directors of the
Company may require from time to time. When purchasing securities from or
through, and selling securities to or through, any such persons, brokers or
dealers that may be affiliated with you, you shall comply with all applicable
provisions of the 1940 Act, including without limitation Section 17 thereof and
the rules and regulations thereunder, and Section 206 of the Investment Advisers
Act of 1940, as amended (the "Investment Advisers Act") and the rules and
regulations thereunder. In providing the Company with investment management and
supervision, it is recognized that you will seek the best combination of price
(inclusive of brokerage commissions) and execution, and, consistent with such
policy, may give consideration to the research, statistical and other services
furnished by brokers or dealers as such Board may direct or authorize from time
to time
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Notwithstanding the above, it is understood that it is desirable for the
Company that you have access to research services provided by brokers who
execute brokerage transactions at a higher cost to the Company than may result
when allocating brokerage to other brokers on the basis of seeking the best
combination of price (inclusive of brokerage commissions) and execution. such
research services include written reports, responses to specific inquiries,
interviews with analysts, invitations to meetings arranged by brokers with the
managements of companies in the Company's portfolio or in which the Company may
invest and may include other types of research from time to time approved by the
Board of Directors of the Company. Only research services provided to you for
the benefit of the Company will be considered in selecting brokers to effect
portfolio transactions for the Company unless otherwise authorized by such
Board. You are authorized to place orders for the purchase and sale of
securities for the Company with brokers who provide such research services,
subject to review by the Board of Directors of the Company from time to time,
but not less frequently than quarterly, with respect to the extent and
continuation of this practice. It is understood that the services provided by
such brokers may be useful to you and your affiliates in connection with their
services to other clients as well as the Company. You acknowledge that you will
comply with all applicable provisions of the 1940 Act, Investment Advisers Act
and the Securities Exchange Act of 1934, as amended, including without
limitation the provisions of Section 28(e) thereof, with respect to the
allocation of portfolio transactions.
Nothing herein shall prohibit the Board of Directors of the Company from
approving the payment by the Company of additional compensation to others for
consulting services, supplemental research and security and economic analysis.
6. Services to Other Accounts. The Company understands that you and your
affiliates now act, will continue to act and may in the future act as investment
adviser to fiduciary and other managed accounts, and the Company has no
objection to you and your affiliates so acting, provided that whenever the Fund
and one or more other accounts advised by you (the "Managed Accounts") are
prepared to purchase, or desire to sell, the same security, available
investments or opportunities for sales will be allocated in a manner that is
equitable to each entity. In such situations, you may place orders for the Fund
and each Managed Account simultaneously, and if all such orders are not filled
at the same price, you may cause the Fund and each Managed Account to pay or
receive the average of the prices at which the orders were filled for the Fund
and all Managed Accounts. If all such orders cannot be executed fully under
prevailing market conditions, you may allocate the traded securities between the
Fund and the Managed Accounts in a manner you consider appropriate, taking into
account the size of the order placed for the Fund and each such Managed Account
and, in the event of a sale, the size of the pre-sale position of the Fund and
each such Managed Account, as well as any other factors you deem relevant. The
Company recognizes that in some cases this procedure may affect adversely the
price paid or received by the Fund or the size of the position purchased or sold
by the Fund. In addition, the Company understands that the persons employed by
you to provide service to the Company in connection with the performance of your
duties under this Agreement will not devote their full time to that service.
Moreover, nothing contained in this Agreement will be deemed to limit or
restrict your right or the right of any of your affiliates to engage in and
devote time and attention to other businesses or to render services of whatever
kind or natural including serving as investment adviser to, or employee,
officer, director or trustee of, other investment companies.
7. Avoidance of Inconsistent Position. If any occasion should arise in
which you give any advice to clients of yours concerning the shares of the Fund,
you will act solely as investment counsel for such clients and not in any way on
behalf of the Company except to the extent that you are acting as principal
underwriter of the Capital Stock of the Fund. In connection with purchases or
sales of portfolio securities for the account of the Fund, neither you nor any
of your directors, officers or employees will act as a principal.
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8. Limitation of Liability of Adviser. You shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Company in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on your part
in the performance of your duties or from reckless disregard by you of your
obligations and duties under this Agreement.
9. Use of Name. If you cease to act as the Company's investment adviser,
or, in any event, if you so request in writing, the Company agrees to take all
necessary action to change the name of the Company and the Fund to a name not
including the term "SoGen". You may from time to time make available without
charge to the Company for its use such marks or symbols not owned by you,
including the logo in the form of a stylized globe or marks or symbols
containing the term "SoGen" or any variation thereof, as you may consider
appropriate. Any such marks or symbols so made available will remain your
property and you shall have the right, upon notice in writing, to require the
Company to cease the use of such mark or symbol at any time.
10. Duration and Termination of this Agreement. This Agreement shall
remain in force until the earlier of the date the Funds reorganize as separate
series of Colonial Trust II and March 31, 1999. This Agreement may, on 60 days'
written notice, be terminated at any time without the payment of any penalty, by
the Board of Directors of the Company, by vote of a majority of the outstanding
voting securities of the Fund, or by you. This Agreement shall automatically
terminate in the event of its assignment. In interpreting the provisions of this
paragraph 9, the definitions contained in Section 2(a) of the 1940 Act, as
amended, and any Rules thereunder (particularly the definitions of "interested
person", "assignment", "voting security" and "vote of a majority of the
outstanding voting securities") shall be applied.
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the "party" against which enforcement of the change, waiver,
discharge or termination is sought.
12. Notices. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, to you or to the Company at 1221 Avenue of the
Americas, 8th Floor, New York, New York 10020.
13. Governing Law . This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon, either of the parties to do anything in violation of
any applicable laws or regulations.
14. Captions; Counterparts. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Company, whereupon this letter shall become a binding
contract.
Yours very truly,
SOGEN FUNDS, INC.
-59-
<PAGE>
By:
-------------------------
Name:
Title:
The foregoing Agreement is hereby accepted.
SOCIETE GENERALE ASSET MANAGEMENT CORP.
By:
---------------------------
Name:
Title:
<PAGE>
VOTE BY TOUCH TONE PHONE OR THE INTERNET
CALL TOLL FREE: 1-800-690-6903
OR VISIT OUR WEBSITE: www.proxyvote.com
(See above for further instructions to vote by phone or Internet)
SOGEN FUNDS, INC.
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Special Meeting of Shareholders --December 18, 1998
The undersigned hereby appoints Jean-Marie Eveillard, Philip J. Bafundo,
and Carol Moreno, and each of them, the proxies of the undersigned, with the
power of substitution to each of them, to vote all shares of [SoGen
International Fund] [SoGen Overseas Fund] [SoGen Gold Fund] (the "Fund"), a
series of SoGen Funds, Inc. (the "Company") which the undersigned is entitled to
vote at the Special Meeting of Shareholders of the Company to be held at the
offices of the Company, 1221 Avenue of the Americas, 8th Floor, New York, New
York 10020, on Friday, December 18, 1998 at 3:00 p.m., and at any adjournments
and postponements thereof (the "Special Meeting").
Unless otherwise specified in the squares provided, the undersigned's vote will
be cast FOR each numbered item below.
The Directors of the Company recommend that you vote FOR the proposal
set forth below.
1. To approve an Agreement and Plan of Reorganization for the Fund, under
which (i) all of the assets and liabilities of the Fund would be
transferred to a new series of Colonial Trust II, a Massachusetts
business trust, (ii) shareholders of the Fund would receive an equal
number of shares of a comparable class of the corresponding series of
Colonial Trust II in exchange for their shares of the Fund, and (iii)
the Fund would then be liquidated and dissolved.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly be presented at the Special Meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed on the other side.)
<PAGE>
(Continued from other side.)
Every properly signed proxy will be voted in the manner specified hereon and, in
the absence of specification, will be treated as GRANTING authority to vote FOR
the Proposal.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
-------------------------------------------
(Signature of Shareholder)
-------------------------------------------
(Signature of joint owner, if any)
Dated, ________________________, 1998
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED
