SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE DEF14A 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:
|_| Preliminary Proxy Statement |_| Confidential, for use of
the Commission Only (as
permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Nations Fund Portfolios, 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 identify 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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NATIONS FUND PORTFOLIOS, INC.
One Bank of America Plaza
101 South Tryon Street
Charlotte, North Carolina 28255
TELEPHONE: 800-790-6347
June 28, 1999
Dear Shareholder:
On behalf of the Board of Directors of Nations Fund Portfolios, Inc. (the
"Company"), we are pleased to invite you to a special meeting of shareholders of
the Company's Nations Emerging Markets Fund (the "Fund") to be held at 10:00
a.m. (Eastern time) on August 13, 1999, at One Bank of America Plaza, 33rd
Floor, Charlotte, North Carolina (the "Meeting"). At the Meeting, you will be
asked to approve the proposed reorganization (the "Reorganization") of your Fund
into a successor mutual fund in Nations Institutional Reserves, another
registered investment company within the Nations Funds family.
YOUR NEW MUTUAL FUND (THE "SUCCESSOR FUND") WILL HAVE THE SAME NAME,
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND INVESTMENT RISKS AS
THOSE OF YOUR CURRENT FUND, and the Reorganization will not result in any change
to the investment adviser or sub-adviser who currently manage your Fund. In
addition, the Reorganization will not result in any change to the total
operating expense ratios (before or after voluntary waivers and/or
reimbursements) of the various classes of shares. Similarly, the features and
services that are available to you today will continue to be available to you as
a Successor Fund shareholder after the Reorganization.
The Reorganization offers several benefits. First, the Reorganization is
one part of a broader initiative to streamline the operations of the Nations
Funds family, which currently consists of several registered investment
companies. Streamlining the Nations Funds family may allow it to achieve cost
savings by reducing certain accounting, legal and securities registration costs.
Also, the Successor Fund will be part of a Massachusetts business trust, which
generally has more flexibility in its operations than a Maryland corporation
like the Company. Finally, the Successor Fund also will have more flexibility in
its investment policies, including policies that permit it to adopt a
"master-feeder" structure. A master-feeder structure, if adopted in the future,
would allow the Successor Fund to combine its assets with those of other similar
funds, thereby potentially achieving economies of scale and other benefits that
come from greater asset size.
If shareholder approval is obtained and the other conditions to the
Reorganization are satisfied, it is anticipated that your Fund would be
reorganized into the Successor Fund on or about August 20, 1999, when your Fund
shares would be exchanged for shares of the same class of shares of the
Successor Fund of equal dollar value. The exchange of shares in the
Reorganization is expected to be tax-free under federal law.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO
APPROVE THE PROPOSED REORGANIZATION.
The formal Notice of Special Meeting, a Proxy Statement and a Proxy Ballot
are enclosed. The proposed Reorganization and the reasons for the unanimous
recommendation of the Company's Board are discussed in more detail in the
enclosed materials, which you should read carefully. If you have any questions
about the Reorganization, please do not hesitate to contact the Company at the
toll-free number set forth above.
We look forward to your attendance at the Meeting or receiving your Proxy
Ballot(s) so that your shares may be voted at the Meeting.
Sincerely,
A. Max Walker
President and Chairman of the Board of Directors
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YOUR VOTE IS IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU OWN.
PLEASE VOTE BY RETURNING YOUR PROXY BALLOT TODAY, EITHER IN THE ENCLOSED
POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE AT (704) 388-2641. YOU MAY ALSO SUBMIT
YOUR PROXY BY A TOLL-FREE PHONE CALL OR BY VOTING ON-LINE, AS INDICATED BELOW.
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Two Quick And Easy Ways To Submit Your Proxy
As a valued Fund shareholder, your proxy vote is important to us. That's why
we've made it faster and easier to submit your proxy at your convenience, 24
hours a day. After reviewing the enclosed Proxy Statement, select one of the
following quick and easy methods to submit your proxy - accurately and quickly.
On-Line By Toll-Free Phone Call
1. Read the enclosed Proxy Statement 1. Read the enclosed Proxy Statement
and have your Proxy Ballot(s)* at and have your Proxy Ballot(s)* at
hand. hand.
2. Go to Web site www.proxyvote.com 2. Call toll-free 1-800-690-6903.
3. Enter the 12-digit Control Number 3. Enter the 12-digit Control Number
found on your Proxy Ballot(s). found on your Proxy Ballot(s).
4. Submit your proxy using the 4. Submit your proxy using the
easy-to-follow instructions. easy-to-follow instructions.
* Do not mail the Proxy Ballot(s) if submitting your proxy by Internet or
telephone.
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NATIONS FUND PORTFOLIOS, INC.
One Bank of America Plaza
101 South Tryon Street
Charlotte, North Carolina 28255
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held On August 13, 1999
To Nations Emerging Markets Fund Shareholders:
PLEASE TAKE NOTE THAT a special meeting of the shareholders (the
"Meeting") of Nations Emerging Markets Fund (the "Fund") of Nations Fund
Portfolios, Inc. (the "Company") will be held at 10:00 a.m., Eastern time, on
August 13, 1999, at One Bank of America Plaza, 33rd Floor, Charlotte, North
Carolina, for purpose of considering and voting upon:
ITEM 1. A proposed Agreement and Plan of Reorganization, dated as of June
15, 1999 (the "Reorganization Agreement"), by and between the Company, on
behalf of the Fund, and Nations Institutional Reserves, on behalf of a
corresponding mutual fund (the "Successor Fund"). The Reorganization
Agreement provides for the transfer of the assets and liabilities of the
Fund to the Successor Fund, in exchange for shares of equal value of
designated classes of the Successor Fund, and the deregistration and
dissolution of the Company.
ITEM 2. Such other business as may properly come before the Meeting or any
adjournment(s).
Item 1 is described in the attached Proxy Statement.
YOUR DIRECTORS UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF THE
PROPOSAL.
Shareholders of record as of the close of business on May 13, 1999 are
entitled to notice of, and to vote at, the Meeting or any adjournment(s)
thereof.
SHAREHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE EACH ACCOMPANYING PROXY BALLOT, WHICH IS BEING SOLICITED BY
THE COMPANY'S BOARD OF DIRECTORS. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE
MEETING. SHAREHOLDERS ALSO MAY SUBMIT PROXIES: 1) BY FACSIMILE AT (704)
388-2641; 2) BY DIALING (800) 690-6903; OR 3) ON-LINE AT WEBSITE
WWW.PROXYVOTE.COM. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED
BY SUBMITTING TO THE COMPANY A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY
DATED PROXY OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
By Order of the Board of Directors,
Richard H. Blank, Jr.
Secretary and Treasurer
June 28, 1999
<PAGE>
PROXY STATEMENT
Dated June 28, 1999
NATIONS FUND PORTFOLIOS, INC.
One Bank of America Plaza
101 South Tryon Street
Charlotte, North Carolina 28255
1-800-790-6347
This proxy statement (the "Proxy") is furnished in connection with the
solicitation of proxies by the Board of Directors of Nations Fund Portfolios,
Inc. (the "Company") at a Special Meeting of Shareholders of the Company's
Nations Emerging Markets Fund (the "Fund") to be held August 13, 1999 at 10:00
a.m. (Eastern time) at One Bank of America Plaza, 101 South Tryon Street, 33rd
Floor, Charlotte, North Carolina. This Special Meeting and any adjournment(s)
are referred to as the "Meeting." The Meeting has been called to consider the
following proposal:
A proposed Agreement and Plan of Reorganization, dated as of June
15, 1999 (the "Reorganization Agreement"), by and between the
Company, on behalf of the Fund, and Nations Institutional Reserves,
on behalf of a corresponding mutual fund (the "Successor Fund"). The
Reorganization Agreement provides for the transfer of the assets and
liabilities of the Fund to the Successor Fund, in exchange for
shares of equal value of the Successor Fund, and the deregistration
and dissolution of the Company (the "Reorganization").
The Successor Fund is referred to as the "successor" because it was
created to receive the assets and liabilities and to continue the operations of
the Fund. While there are some differences between the Fund and its Successor
Fund, which are discussed below, an investment in the Successor Fund is
considered substantially the same as an investment in the Fund.
Additional information about the Fund is available in the:
o Prospectuses for the Fund;
o Statement of Additional Information, or SAI, for the Fund; and
o The Fund's annual report to shareholders, including audited financial
statements.
All of this information is in documents filed with the Securities and
Exchange Commission (the "SEC"). The financial statements contained in the
annual reports are legally deemed to be part of this Proxy and are incorporated
by reference. The annual reports to shareholders for the fiscal year ended March
31, 1999 have previously been mailed to shareholders. Additional copies are
available without charge by writing the address given above or by calling
1-800-321-7854. These documents also are available on the website of the SEC at
www.sec.gov.
The Successor Fund is not yet an operating mutual fund and does not yet
have a prospectus that has been declared effective by the SEC. Copies of the
effective prospectus will be provided to shareholders at the time the
Reorganization is consummated. Shareholders may, after the Reorganization,
obtain a copy of the Statement of Additional Information relating to the
Successor Fund without charge by calling 1-800-321-7854 or by writing Nations
Institutional Reserves at: Nations Institutional Reserves, c/o Stephens Inc.,
One Bank of America Plaza, 33rd Floor, Charlotte, North Carolina 28255.
It is expected that this Proxy will be mailed to shareholders on or about
June 28, 1999.
I. Description of the Reorganization
The Company's Board of Directors has called the Meeting to ask
shareholders to consider and vote on one proposal -- approval of the
Reorganization Agreement. Please be sure to read the entire Proxy to determine
how the Reorganization will affect your investment before casting your vote.
<PAGE>
Description of the Proposal
At meetings held in March and May 1999, the Company's Board of Directors
(including a majority of the independent Board members, meaning those who are
not "interested persons" under the Investment Company Act of 1940 (the "1940
Act")), voted to approve the Reorganization. At the Meeting, the shareholders of
the Fund will be asked to approve the Reorganization. If shareholder approval is
obtained, and the other conditions to the closing of the Reorganization (the
"Closing") are met, shareholders will receive shares of the Successor Fund equal
in value to their holdings of Fund shares immediately before the Reorganization.
The Fund will then be terminated and liquidated, and the Company will be
dissolved under Maryland law and de-registered under the 1940 Act.
The dollar value and class of the Successor Fund shares received by Fund
shareholders in the Reorganization will be identical to the dollar value and
class of the Fund shares owned by each Fund shareholder immediately before the
Reorganization. The Successor Fund will have the same investment objective,
principal investment strategies and investment risks as the Fund, and the
Reorganization will not result in any change to the investment adviser and
investment sub-adviser who currently manage the Fund. Similarly, the features
and services that are available to Fund shareholders today will continue to be
available to Successor Fund shareholders after the Reorganization. However, the
Successor Fund differs in some respects from the Fund, and these differences are
described in more detail below.
It is possible that a majority of the Fund's shareholders entitled to vote
do not approve the Reorganization. In such a case, shareholders will retain
their shares in the Fund and the Board of Directors will contemplate what
further action is appropriate.
The Meeting is scheduled for August 13, 1999, and the Reorganization, if
approved, is expected to occur on or about August 20, 1999.
Description of the Reorganization Agreement
The Reorganization Agreement is the governing document of the
Reorganization. Among other things, it provides for (i) the transfer of all of
the assets and liabilities of the Fund to the Successor Fund in exchange for
shares of equal value of designated classes of the Successor Fund; and (ii) the
distribution of such Successor Fund shares to shareholders of the Fund in
liquidation of the Fund. The completion of the Reorganization is conditioned
upon the Company and Nations Institutional Reserves receiving an opinion from
counsel that the exchange contemplated by the Reorganization will be tax-free
under federal law. The Reorganization Agreement includes a number of other
conditions to completion of the Reorganization, sets forth representations and
warranties of the parties and describes the mechanics of the transaction.
Although the Reorganization Agreement provides that the Fund will bear the
expenses of the Reorganization, the Fund's investment adviser (and/or its
affiliates) effectively will bear these expenses because of an existing
voluntary fee waiver and expense reimbursement arrangement limiting the total
operating expense ratios of all of the classes of the Fund.
The Reorganization may be abandoned at any time before the Closing upon
the mutual consent of the Company and Nations Institutional Reserves. At any
time before or after approval (to the extent permitted by law) of the agreement
by the shareholders of the Fund (i) the parties may, by written agreement
authorized by the Company's Board of Directors and Nations Institutional
Reserves' Board of Trustees and with or without the approval of their
shareholders, amend any of the provisions of the Reorganization Agreement and
(ii) either party may waive any default by the other party or the failure to
satisfy any of the conditions to its obligations (the waiver to be in writing
and authorized by an appropriate officer of the relevant party).
The Reorganization Agreement, which contemplates the dissolution under
Maryland law of the Company, must be approved by a vote of a majority of all of
the shareholders of the Fund, which is currently the only operating series of
the Company. Accordingly, a vote for the Reorganization Agreement includes a
vote
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for the dissolution of the Company. Copies of the Reorganization Agreement
are available upon request by writing or calling the Company at the toll-free
number listed above or at the SEC's website (www.sec.gov).
The Company's Board of Directors unanimously recommends that Fund
shareholders vote FOR the Reorganization Agreement.
II. The Purpose of the Reorganization
The Reorganization offers several benefits to Fund shareholders:
o The Reorganization is one part of a broader initiative to streamline the
operations of the Nations Funds family, which currently consists of
several registered investment companies. Multiple mutual funds can be
operated as multiple legal entities (typically either trusts or
corporations) called "registered investment companies," or as discreet
series of a single registered investment company. Nations
Institutional Reserves currently operates multiple series and the
Reorganization is designed, in effect, to convert the Fund from the
only series of a separate corporation to one of many series within a
registered investment company. Because the Fund is the Company's only
operating series, the Reorganization would allow management to
deregister and dissolve the Company. As a result, the Reorganization
will permit management to operate the same number of mutual funds with
one less registered investment company, a change which management
believes should provide efficiencies and benefits to shareholders over
the long term. These benefits may include, among other things, cost
savings relating to the reduction of certain accounting, legal and
securities registration costs. If the Reorganization is not approved
and management is unable to dissolve and deregister the Company, Fund
shareholders would not enjoy the expected efficiencies and benefits of
operating the Fund as part of a registered investment company with many
discreet mutual funds.
o The Successor Fund will be part of a Massachusetts business trust,
which generally has more flexibility in its operations than a Maryland
corporation like the Company. For example, for certain voting
proposals, such as the dissolution of a company, Maryland requires that
a majority of all outstanding securities must approve, while
Massachusetts allows a business trust the flexibility to set such
voting requirements in its Declaration of Trust and By-Laws.
o The Successor Fund will have more flexibility in its investment
policies, including policies that permit it to adopt a "master-feeder"
structure. A master-feeder structure, if adopted in the future, would
allow the Successor Fund to combine its assets with those of other
similar funds, thereby potentially achieving economies of scale and
other benefits that come from greater asset size.
o Although the Reorganization Agreement provides that the Fund will bear
the expenses of the Reorganization, the Fund's investment adviser
(and/or its affiliates) effectively will bear these expenses because of
an existing voluntary fee waiver and expense reimbursement arrangement
limiting the total operating expense ratios of all of the classes of
the Fund.
The Reorganization will not result in any change to the investment adviser
or sub-adviser who currently manage your Fund. In addition, the Reorganization
will not result in any change to the total operating expense ratios (before or
after voluntary waivers and/or reimbursements) of the various classes. For more
information about fees and expenses, see "IV. Other Information About the
Reorganization--Comparison of Fees and Expenses." Similarly, the features and
services that are available to Fund shareholders today will also be available to
Successor Fund shareholders after the Reorganization. The exchange of shares in
the Reorganization is expected to be tax-free under federal law.
III. The Effects of the Reorganization
As noted above, there are some differences between the Fund and the
Successor Fund, which are summarized below:
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o After the Reorganization, Fund shareholders will hold shares in a
series of Nations Institutional Reserves, a registered investment
company in the Nations Funds family. Unlike the Company, which is a
Maryland corporation, Nations Institutional Reserves is a Massachusetts
business trust.
o The Fund and the Successor Fund will have somewhat different
fundamental and non-fundamental investment policies. For example, the
Successor Fund will have the ability under its fundamental policies to
invest all of its assets in a master portfolio rather than in
individual securities.
Comparison of Business Structures
Federal securities laws largely govern the way that mutual funds operate,
but they do not cover every aspect of a fund's existence and operation. State
law and a fund's governing documents fill in most of the gaps and typically
create additional operational rules and restrictions that funds follow. As
noted, the Company is a Maryland corporation, and the proposed Reorganization
would reorganize the Fund into a series of Nations Institutional Reserves, which
is a Massachusetts business trust. For Fund shareholders, the "move" to
Massachusetts would be largely on paper; the Successor Fund would continue to be
advised by NationsBanc Advisors, Inc., sub-advised by Gartmore Global Partners
and distributed by Stephens Inc., as the Fund is currently. The Fund's other
service providers would also be unchanged after the Reorganization.
Generally, under Massachusetts business trust law, a mutual fund's
governing instrument, called a Declaration of Trust, may establish the way it
will operate with few state law requirements or prohibitions. Thus, mutual funds
generally have more flexibility in their operations and certainty about any
operational restrictions because the restrictions are written in the fund's
declaration of trust. The following discussion outlines some differences between
the state law and documents currently governing the Company's Fund and that
which will apply to the Successor Fund as a series of Nations Institutional
Reserves.
o The Board of Trustees. Maryland corporations are governed by a Board of
Directors. The Successor Fund, as part of a business trust, instead
will be governed by a Board of Trustees. The Board of Nations
Institutional Reserves will have ten Trustees, all ten of whom
currently serve as Directors of the Company.
o Governing Documents. Maryland corporations are governed by
organizational documents called Articles of Incorporation (or sometimes
called a Charter) and By-Laws. Massachusetts business trusts are
governed by a Declaration of Trust and By-Laws. These governing
documents are generally similar, although there are some differences.
For example, in order for the Company to dissolve under Maryland law,
its Articles of Incorporation and By-Laws provide (and Maryland law
requires) that a majority of all outstanding shares of the Company must
approve such a dissolution. The Declaration of Trust and By-Laws of
Nations Institutional Reserves provides that only a majority of the
shares voted at a meeting is needed to approve a similar dissolution.
In general, however, the attributes of a share of common stock are
comparable to those of a share of beneficial interest, i.e., shares of
both are entitled to one vote per share held and fractional votes for
fractional shares held, and will vote in the aggregate and not by
portfolio or class except as otherwise required by law or when class
voting is permitted by its Board.
o Shareholder Liability. Under Maryland law, shareholders are not
personally liable for the debts of the Fund. By contrast, under
Massachusetts law, interestholders of a Massachusetts business trust
like Nations Institutional Reserves could, under certain circumstances,
be held personally liable for the obligations of the trust. However,
Nations Institutional Reserves has provisions in its Declarations of
Trust that are intended to protect shareholders from such liability.
Thus, the risk of an interestholder incurring a financial loss on
account of interestholder liability is limited to circumstances in
which the trust itself is unable to meet its obligations (e.g., in the
event its liabilities exceed its assets). This is a highly unlikely
event.
Modernized and Streamlined Investment Policies and Restrictions
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The Fund's investment objective, principal investment strategies and
investment risks will not change as a result of the Reorganization. However, the
Successor Fund will have a more modernized and streamlined set of fundamental
and non-fundamental investment policies and restrictions. Some of the Fund's
current investment policies and restrictions may limit its portfolio manager
from investing in a security that is both consistent with the investment
objective of the Fund and also a good investment. One reason for changing some
of these investment policies is to remove restrictions that unnecessarily hamper
the portfolio manager's investment discretion. Many of these restrictions were
put in place by the Fund as a result of the directives of various state
securities commissions. Recent changes to federal securities laws have
superseded these directives. Another reason is the desire to migrate towards
uniform investment policies for similarly managed funds in the Nations Funds
family.
One of the differences between the Successor Fund's fundamental policies
and those of the Fund is that the Successor Fund will have the ability under its
fundamental policies to invest all of its assets in a master portfolio rather
than in individual securities. Such a master/feeder structure, if adopted by the
Successor Fund in the future, would allow it and other collective investment
vehicles (including other mutual funds) that have the same investment objective
and principal investment strategies to invest their assets in a single master
portfolio thereby achieving certain economies of scale. If the Successor Fund
converts to this structure, the master portfolio in which it invests may have
opportunities to pursue other distribution channels--such as offshore fund
investors--that would not otherwise be available. If the Successor Fund does
convert to this structure, shareholders will not be asked to vote separately on
such a conversion, but they would be informed by way of a supplement or
amendment to the Successor Fund's prospectus. It is management's current
intention to seek to obtain necessary Board approval to convert the Successor
Fund to a "feeder" in a master/feeder structure within the next year.
For a detailed comparison of the fundamental investment policies and
limitations of the Fund and the Successor Fund see Appendix I to this Proxy.
IV. Other Information About the Reorganization
Investment Adviser and Other Service Providers. The Fund and Successor
Fund have the same service providers. Upon completion of the Reorganization,
these service providers will continue to serve the Successor Fund in the
capacities indicated below.
Service Providers for the Fund and the Successor Fund
Investment Adviser NationsBanc Advisors, Inc.
Investment Sub-Adviser Gartmore Global Partners
Distributor Stephens Inc.
Co-Administrator NationsBanc Advisors, Inc.
Co-Administrator Stephens Inc.
Sub-Administrator The Bank of New York
Custodian The Bank of New York
Transfer Agent First Data Investor Services
Group, Inc.
Sub-Transfer Agent NationsBank, N.A. (for Primary
A and B shares only)
Independent Auditors PricewaterhouseCoopers LLP
Comparison of Fees and Expenses. The Reorganization will not result in any
change to the total operating expense ratios (before or after voluntary waivers
and/or reimbursements) of the various classes. As noted above, it is
management's current intention to seek necessary Board approval to convert the
Successor
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Fund to a "feeder" in a master/feeder structure within the next year. The
Successor Fund would only be converted to a feeder if one or more additional
mutual funds or collective investment vehicles were expected to become
additional feeders to the corresponding master portfolio. In such a case, the
resulting higher asset levels in the master portfolio could lead to various
benefits, including economies of scale (and possibly cost savings), for
investors in the master portfolio, including the Successor Fund. However, if one
or more additional feeders were not established, and the Successor Fund remained
the sole investor in a master/feeder structure, expenses could be higher than
they would be for a fund that invests directly in securities. If this were to
occur, the Board of Trustees of Reserves would most likely consider what further
action would be appropriate, including converting the Successor Fund back into a
fund that invests directly in securities.
Sales Loads, Shareholder Transactions and Services. Shares of the Fund and
Successor Fund have both identical front-end or contingent deferred sales
charges, if any, and identical dividend policies. Other features, such as
exchange and redemption policies, of the classes of the Fund and Successor Fund
are substantially similar.
Accounting Treatment of the Reorganization. The Successor Fund will become
the accounting successor of the Fund as of the Closing, which means that the
financial statements and performance history of the Fund and its classes will
become those of the Successor Fund and its corresponding classes as though such
financial statements and performance history were the Successor Fund's own.
Federal Income Tax Consequences. The Fund and Successor Fund each intend
to qualify, as of the Closing, as a separate "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly,
the Fund and the Successor Fund have been, and expect to continue to be,
relieved of federal income tax liability.
Consummation of the Reorganization with respect to the Fund and the
Successor Fund is subject to the condition that the Company and Nations
Institutional Reserves receive an opinion from Morrison & Foerster LLP
substantially to the effect that, for federal income tax purposes: (i) the
transfer of all of the assets and liabilities of the Fund to the Successor Fund
in exchange for the Successor Fund shares, and the distribution of those shares
to shareholders of the Fund, will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and the Fund and the Successor Fund will
each be a "party to a reorganization" within the meaning of Section 368(b) of
the Code in respect of the Reorganization; (ii) no gain or loss will be
recognized by the Fund upon the transfer of its assets and liabilities to the
Successor Fund solely in exchange for the Successor Fund shares; (iii) no gain
or loss will be recognized by the Successor Fund upon the receipt of the assets
and assumption of liabilities of the Fund solely in exchange for the Successor
Fund shares; (iv) the basis of the Fund's assets received by the Successor Fund
pursuant to the Reorganization will be the same as the basis of those assets in
the hands of the Fund immediately prior to the Reorganization; (v) the holding
period of the Fund's assets in the hands of the Successor Fund will include the
period for which such assets have been held by the Fund; (vi) no gain or loss
will be recognized by the Fund on the distribution to its shareholders of the
Successor Fund shares; (vii) no gain or loss will be recognized by the
shareholders of the Fund upon their receipt of the Successor Fund shares in
exchange for such shareholders' shares of the Fund; (viii) the basis of the
Successor Fund shares received by the shareholders of the Fund will be the same
as the basis of the Fund shares surrendered by such shareholders pursuant to the
Reorganization; (ix) the holding period for the Successor Fund shares received
by the Fund shareholders will include the period during which such shareholders
held the Fund shares surrendered in exchange therefor, provided that such Fund
shares are held as capital assets in the hands of the Fund shareholders on the
date of the exchange; and (x) each Successor Fund will succeed to and take into
account the tax attributes described in Section 381(c) of the Code of the Fund
as of the Closing date, subject to the conditions and limitations specified in
the Code. Shareholders of the Fund should note, however, that the sale of
securities by the Fund prior to the Closing whether in the ordinary course of
business or in anticipation of the Closing, could result in a taxable capital
gains distribution to them by the Fund taxable as net capital gain prior to the
Closing.
The opinion of Morrison & Foerster LLP with respect to federal income tax
consequences described above will be based upon facts, representations and
assumptions set forth or referred to in the opinion. These representations
include factual representations to be made in certificates delivered to Morrison
& Foerster LLP by the management of the Company and Reserves. Morrison &
Foerster LLP will neither verify, audit or
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otherwise confirm the validity of such facts, representations and assumptions
and its opinion may be jeopardized if any of these facts, representations and
assumptions are incorrect in any material respect. In addition, the Company and
Reserves have not sought and will not seek, a private ruling from the Internal
Revenue Service ("IRS") with respect to the federal income tax consequences of
the Reorganization. The opinion of Morrison & Foerster LLP is not binding on the
IRS and does not preclude the IRS from adopting a contrary position. Such a
contrary position could be sustained by a court. If the opinion of Morrison &
Foerster LLP cannot be relied upon or the IRS adopts a contrary position which
is sustained, the Fund and its shareholders might have adverse tax consequences,
including the taxable receipt of shares of the Successor Fund and a new holding
period in such shares. However, the Company and Reserves believe that this
possibility is remote and that the exchange of the Successor Fund's shares for
Fund shares is expected to be tax-free under federal income tax law.
Shareholders of the Fund should consult their own advisers concerning the
potential tax consequences of the Reorganization to them, including any
applicable foreign, state or local income tax consequences.
Board Consideration. The Company's Board of Directors unanimously voted to
approve the Reorganization Agreement at meetings held in March and May 1999. In
reviewing the proposed Reorganization, the Board considered the potential impact
of the Reorganization on the Fund's shareholders. The Board (with the advice and
assistance of independent counsel) reviewed and took into account, among other
things: (1) the Reorganization as part of a broader initiative to streamline the
operations of the Nations Funds family; (2) the fact that Nations Fund
Portfolios, Inc. has only one series and that Company expenses spread across a
registered investment company with more than one series could result in future
efficiencies and benefits to Fund shareholders; (3) the investment objective,
principal investment strategies, investment risks, and policies and limitations
of the Fund, and their compatibility with those of the Successor Fund; (4) the
anticipated tax-free nature of the exchange contemplated by the Reorganization;
(5) the fact that total operating expense ratios (before and after voluntary
waivers and/or reimbursements) would be the same for each class of the Fund and
the corresponding class of the Successor Fund; (6) the fact that the expenses
associated with the Reorganization would not be borne by Fund shareholders after
giving effect to voluntary fee waiver and expense reimbursement arrangements;
and (7) that shareholders would remain invested in the Fund, and the Company
would not dissolve and de-register, if shareholders did not approve the
Reorganization. Based upon its evaluation of these factors, and its
consideration of the expected benefits of the Reorganization (discussed under
"II--The Purpose of the Reorganization"), and in light of their fiduciary duties
under federal and state law, the Company's Board of Directors, including all of
the non-interested members of the Board, determined that the proposed
Reorganization is in the best interests of the shareholders of the Fund and that
the interests of the shareholders of the Fund will not be diluted as a result of
the Reorganization.
The Company's Board of Directors unanimously recommends that shareholders
vote FOR the Reorganization Agreement.
V. Voting Information
General Information. This Proxy is being furnished in connection with the
solicitation of proxies for the Meeting by the Company's Board of Directors. It
is expected that the solicitation of proxies will be primarily by mail. Officers
and agents of the Company also may solicit proxies by telephone, telegraph or
personal interview. The expenses of the Reorganization, including any expenses
associated with retaining a third party to assist in the solicitation of
proxies, will be borne by Fund shareholders. However, after giving effect to
voluntary fee waiver and expense reimbursement arrangements, the Fund's
investment adviser (and/or its affiliates) effectively will bear these expenses.
Any shareholder giving a proxy may revoke it at any time before it is exercised
(i) by submitting to the Company a written notice of revocation, (ii) by
submitting to the Company a subsequently dated proxy or by attending the Meeting
and voting in person.
Only shareholders of record at the close of business on May 13, 1999, will
be entitled to vote at the Meeting. On that date, the following number of shares
of the Fund were outstanding and entitled to be voted: 2,549,452. Each whole and
fractional share is entitled to a whole or fractional vote. If the accompanying
proxy ballot is executed and returned in time for the Meeting, the shares
covered thereby will be voted in accordance with the proxy on all matters that
may properly come before the Meeting.
8
<PAGE>
Significant Shareholders. As of May 13, 1999, the officers and Directors
of the Company as a group owned less than 1% of the Fund. The tables below show
the name, address and share ownership of each person known to each Company to
have beneficial or record ownership with respect to 5% or more of a class of the
Fund as of May 13, 1999.
<TABLE>
<CAPTION>
Class;
Amount of
Shares
Owned; Percentage
Type of Percentage Percentage of Fund
Name and Address Ownership of Class of Fund Post-Closing
- ---------------- --------- -------- -------- ------------
<S> <C> <C> <C> <C>
NationsBank, N.A. Primary A 99.62% 87.48% 87.48%
Attn: Tony Farrer 2,230,337.35;
1401 Elm Street, 11th Floor record
Dallas, TX 75202-2911
Stephens, Inc. Primary B 100% 0.00% 0.00%
Attn: Cindy Cole 1.80; record
111 Center Street
Little Rock, AR 72201
Walter J. Nott Investor A 7.42% 0.31% 0.31%
8320 Fulham Court 7,871.05; record
Richmond, VA 23227
Hi-Tech Communications Inc. Investor C 66.28% 0.28% 0.28%
401(K) Plan 7,136.72; record
PO Box 1569
League City, TX
77574-1569
Stephens Inc. for the Exclusive Investor C 14.35% 0.06% 0.06%
Benefit of Our Customers 1,544.75; record
111 Center Street
Little Rock, AR 72201
NFSC FEBO #W17-648345 Investor C 5.58% 0.02% 0.02%
NFSC/FMTC IRA 600.74; record
FBO Carroll L. Terrell
6502 Woodrow Terrace
Richmond, VA 23228
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. Accordingly, to the extent that a
shareholder identified in the foregoing table is identified as the beneficial
holder of more than 25% of a class, or is identified as the holder of record of
more than 25% of a class and has voting and/or investment power, it may be
presumed to control such class.
Quorum. In the event that a quorum is not present at the Meeting, or in
the event that a quorum is present at the Meeting but sufficient votes to
approve the Reorganization Agreement are not received, one or more
adjournment(s) may be proposed to permit further solicitation of proxies. Any
adjourned session or sessions may be held, after the date set for the original
Meeting without notice except announcement at the Meeting, but, under Maryland
law, no more than 120 days after the record date. If any adjournment is
proposed, the persons named as proxies will vote those proxies in their sole
discretion.
A quorum is constituted with respect to the Fund by the presence in person
or by proxy of the holders of more than one-third of the outstanding shares of
the Fund entitled to vote at the Meeting. For purposes of determining the
presence of a quorum for transacting business at the Meeting, abstentions will
be treated as shares that are present at the Meeting but which have not been
voted. Abstentions will have the effect of a "no" vote for purposes of obtaining
the requisite approvals of the Reorganization Agreement. Broker "non-votes"
(that is, proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owners or other persons entitled to
vote shares on a particular matter with respect to which the brokers or nominees
do not have discretionary power) will be treated the same way as abstentions.
9
<PAGE>
Annual Meetings and Shareholder Meetings. Because the Company does not
hold annual meetings, there is no stated deadline for submitting shareholder
proposals for inclusion in any future proxy statement of the Company. Subject to
certain conditions, which are set forth in the Company's Articles of
Incorporation and By-Laws, holders of at least 10% of the outstanding shares of
the Fund may have the right to call a meeting of shareholders for the purpose of
voting upon the question of removal of Directors. In such a case, shareholders
will be assisted by the Company in shareholder communications.
Shareholder Approval. The Reorganization Agreement is being submitted for
approval at the Meeting by the Fund's shareholders pursuant to the Company's
Articles of Incorporation and By-Laws, and was unanimously approved by the
Company's Boards of Directors. The Reorganization Agreement must be approved by
a majority of the outstanding shares of the Fund.
A vote of the shareholders of the Successor Fund is not being solicited,
since their approval or consent is not necessary for the Reorganization.
Other Business. The Company's Board knows of no other business to be
brought before the Meeting. However, if any other matters come before the
Meeting, it is the intention that proxies which do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
How to Obtain Additional Information About the Fund. Additional
information about the Fund is included in its most recent prospectuses and
statement of additional information. You may obtain a prospectus or statement of
additional information without charge by calling 1-800-321-7854 or by writing
the Company at: Nations Fund Portfolios, Inc., c/o Stephens Inc., NationsBank,
One Bank of America Plaza, 33rd Floor, Charlotte, North Carolina 28255.
Reports and other information filed by the Company can be inspected and
copied at the Public Reference Facilities maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the offices of Nations listed above.
In addition, these materials can be inspected and copied at the SEC's Regional
Offices at 7 World Trade Center, Suite 1300, New York, New York 10048, and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials also can be obtained from the Public
Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20549, at prescribed rates.
In addition, the SEC maintains a web site (www.sec.gov) that contains reports,
other information and proxy statements filed by the Company.
Financial Statements. The audited financial statements and financial
highlights for the Fund for the fiscal year ended March 31, 1999, and the
independent accountants report thereon, are incorporated by reference into this
Proxy.
Shareholder Inquiries. For additional information call 1-800-321-7854 or
write to the Company at the address on the cover page of this Proxy.
* * *
YOUR VOTE IS IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU OWN.
PLEASE VOTE BY RETURNING YOUR PROXY BALLOT TODAY, EITHER IN THE ENCLOSED
POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE AT (704) 388-2641. YOU MAY ALSO SUBMIT
YOUR PROXY BY A TOLL-FREE PHONE CALL OR BY VOTING ON-LINE, AS INDICATED BELOW.
- --------------------------------------------------------------------------------
Two Quick And Easy Ways To Submit Your Proxy
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
As a valued Fund shareholder, your proxy vote is important to us. That's why
we've made it faster and easier to submit your proxy at your convenience, 24
hours a day. After reviewing the enclosed Proxy Statement, select one of the
following quick and easy methods to submit your proxy - accurately and quickly.
On-Line By Toll-Free Phone Call
1. Read the enclosed Proxy Statement 1. Read the enclosed Proxy Statement
and have your Proxy Ballot(s)* at and have your Proxy Ballot(s)* at
hand. hand.
2. Go to Web site www.proxyvote.com 2. Call toll-free 1-800-690-6903.
3. Enter the 12-digit Control Number 3. Enter the 12-digit Control Number
found on your Proxy Ballot(s). found on your Proxy Ballot(s).
4. Submit your proxy using the 4. Submit your proxy using the
easy-to-follow instructions. easy-to-follow instructions.
* Do not mail the Proxy Ballot(s) if submitting your proxy by Internet or
telephone.
- --------------------------------------------------------------------------------
11
<PAGE>
APPENDIX I
Comparison of Fundamental Policies and Limitations of the Fund
and the Successor Fund
Fundamental Investment Policies and
Limitations
The Fund may not: The Successor Fund may not:
1. Underwrite securities issued by any 1. Underwrite any issue of securities
other person, except to the extent within the meaning of the 1933 Act
that the purchase of securities and except when it might technically be
the later disposition of such deemed to be an underwriter
securities in accordance with the either (a) in connection with the
Fund's investment program may be disposition of a portfolio
deemed an underwriting. This security, or (b) in connection
restriction shall not limit the with the purchase of securities
Fund's ability to invest in directly from the issuer thereof
securities issued by other in accordance with its investment
registered investment companies. objective. This restriction shall
not limit the Fund's ability to
invest in securities issued by
other registered investment
companies.
2. Invest in real estate or real 2. Purchase or sell real estate,
estate limited partnership except a Fund may purchase
interests. (A Fund may, however, securities of issuers which deal
purchase and sell securities or invest in real estate and may
secured by real estate or interests purchase securities which are
therein or issued by issuers which secured by real estate or
invest in real estate or interests interests in real estate.
therein.) This restriction does
not apply to real estate limited
partnerships listed on a national
stock exchange (e.g., the New York
Stock Exchange).
3. Purchase or sell commodity 3. Purchase or sell commodities,
contracts except that each Fund except that a Fund may to the
may, to the extent appropriate extent consistent with its
under its investment policies, investment objective, invest in
purchase publicly traded securities securities of companies that
of companies engaging in whole or purchase or sell commodities or
in part in such activities, may which invest in such programs, and
enter into futures contracts and purchase and sell options, forward
related options, may engage in contracts, futures contracts, and
transactions on a when-issued or options on futures contracts.
forward commitment basis, and may This limitation does not apply to
enter into forward currency foreign currency transactions
contracts in accordance with its including without limitation
investment policies. forward currency contracts.
I-1
<PAGE>
4. Purchase any securities which would 4. Purchase any securities which would
cause 25% or more of the value of cause 25% or more of the value of its
the Fund's total assets at the time total assets at the time of purchase
of such purchase to be invested in to be invested in the securities of
the securities of one or more one or more issuers conducting their
issuers conducting their principal principal business activities in the
activities in the same industry, same industry, provided that: (a)
provided that this limitation does there is no limitation with respect
not apply to investments in U.S. to obligations issued or guaranteed
Government Obligations. by the U.S. government, any state or
territory of the United States, or
any of their agencies,
instrumentalities or political
subdivisions, and (b)
notwithstanding this limitation or
any other fundamental investment
limitation, assets may be invested
in the securities of one or more
diversified management investment
companies to the extent permitted
by the 1940 Act and the rules and
regulations thereunder.
5. Make loans, except that a Fund may 5. Make loans, except to the extent
purchase and hold debt instruments permitted by the 1940 Act.
(whether such instruments are part
of a public offering or privately
placed), may enter into repurchase
agreements and may lend portfolio
securities in accordance with its
investment policies.
6. Borrow money or issue senior 6. Borrow money, issue senior
securities as defined in the securities or mortgage, pledge or
Investment Company Act of 1940, as hypothecate its assets except to
amended (the "1940 Act") except the extent permitted under the
that (a) a Fund may borrow money 1940 Act.
from banks for temporary purposes
in amounts up to one-third of the
value of such Fund's total assets
at the time of borrowing, provided
that borrowings in excess of 5% of
the value of such Fund's total
assets will be repaid prior to the
purchase of additional portfolio
securities by such Fund, (b) a Fund
may enter into commitments to
purchase securities in accordance
with the Fund's investment program,
including delayed delivery and
when-issued securities, which
commitments may be considered the
issuance of senior securities, and
(c) a Fund may issue multiple
classes of shares in accordance
with SEC regulations or exemptions
under the 1940 Act. The purchase
or sale of futures contracts and
related options shall not be
considered to involve the borrowing
of money or issuance of senior
securities. Each Fund may enter
into reverse repurchase agreements
or dollar roll transactions. The
purchase or sale of futures
contracts and related options shall
not be considered to involve the
borrowing of money or issuance of
senior securities.
I-2
<PAGE>
7. Purchase securities of any one 7. Purchase securities (except
issuer (other than U.S. Government securities issued or guaranteed by
Obligations) if, immediately after the U.S. Government, its agencies
such purchase, more than 5% of the or instrumentalities) of any one
value of such Fund's total assets issuer if, as a result, more than
would be invested in the securities 5% of its total assets will be
of such issuer, except that up to invested in the securities of such
25% of the value of the Fund's issuer or it would own more than
total assets may be invested 10% of the voting securities of
without regard to these limitations such issuer, except that (a) up to
and with respect to 75% of such 25% of its total assets may be
Fund's assets, such Fund will not invested without regard to these
hold more than 10% of the voting limitations and (b) a Fund's
securities of any issuer. assets may be invested in the
securities of one or more
diversified management investment
companies to the extent permitted
by the 1940 Act.
8. Purchase any securities on margin
(except for such short-term credits
as are necessary for the clearance of
purchases and sales of portfolio
securities) or sell any securities
short (except against the box.) For
purposes of this restriction, the
deposit or payment by the Fund of
initial or maintenance margin
connection with futures contracts
and related options and options on
securities is not considered to be
the purchase of a security on margin.
I-3
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this 28th day of June, 1999 by and between Nations Fund Portfolios, Inc. (the
"Company"), a Maryland corporation, for itself and on behalf of its Nations
Emerging Markets Fund, and Nations Institutional Reserves ("Reserves"), a
Massachusetts business trust, for itself and on behalf of its Nations Emerging
Markets Fund.
WHEREAS, the Company and Reserves are open-end management investment
companies registered with the Securities and Exchange Commission (the "SEC")
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the parties desire that the Fund Assets and Liabilities (as
defined below) of the Company's Nations Emerging Markets Fund (the "Acquired
Fund") be conveyed to and be acquired and assumed, respectively, by Reserves'
Nations Emerging Markets Fund (the "Acquiring Fund") in exchange for shares of
equal U.S. dollar value of the Acquiring Fund which shall thereafter promptly be
distributed to the shareholders of the Acquired Fund in connection with its
liquidation as described in this Agreement and set forth in Schedule A attached
hereto (the "Reorganization"); and
WHEREAS, the parties intend that the Reorganization qualify as a
"reorganization," within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and that the Acquiring Funds and the
Acquired Funds will each be a "party to a reorganization," within the meaning of
Section 368(b) of the Code, with respect to the Reorganization.
NOW, THEREFORE, in accordance with the terms and conditions described
herein, the Acquired Funds and Acquiring Funds shall be consolidated as follows:
1. Conveyance of Fund Assets and Liabilities of the Acquired Funds.
(a)Except as provided below, at the Effective Time of the
Reorganization (as defined in Section 8) all assets of every kind,
and all interests, rights, privileges and powers of the Acquired
Funds (the "Fund Assets"), subject to all liabilities of the
Acquired Funds existing as of the Effective Time of the
Reorganization (the "Liabilities"), shall be transferred by each
Acquired Fund to each corresponding Acquiring Fund and shall be
accepted and assumed by such Acquiring Fund, as more particularly
set forth in this Agreement, such that at and after the Effective
Time of the Reorganization: (i) all Fund Assets of the Acquired
Funds shall become the assets of the Acquiring Funds; and (ii) all
Liabilities of the Acquired Funds shall attach to the Acquiring
Funds, enforceable against the Acquiring Funds to the same extent as
if originally incurred by it.
(b)It is understood and agreed that the Fund Assets shall include all
property and assets of any nature whatsoever, including, without
limitation, all cash, cash equivalents, securities, claims (whether
absolute or contingent, known or unknown, accrued or unaccrued) and
receivables (including dividend and interest receivables) owned or
exercisable by the Acquired Funds, and any deferred or prepaid
expenses shown as an asset on the Acquired Funds' books, that the
Liabilities of the Acquired Funds shall include all liabilities,
whether known or unknown, accrued or unaccrued, absolute or
contingent, in all cases, existing at the Effective Time of the
Reorganization.
(c)At least fifteen (15) business days prior to the Closing Date (as
defined in Section 8), the Acquired Funds will provide to, or cause
to be provided to, the Acquiring Funds, a schedule of its
securities, other assets and its known liabilities. It is understood
and agreed that the Acquired Funds may sell any of the securities or
other assets shown on such schedule prior to the Effective Time of
the Reorganization but will not, without the prior approval of the
Acquiring Funds, acquire any additional securities other than
securities that the Acquiring Funds is not permitted to purchase in
accordance with its stated investment objective and policies. At
least ten (10) business days prior to the Closing Date, the
Acquiring Funds will advise the Acquired Funds of any investments of
<PAGE>
the Acquired Funds shown on such schedule that the Acquiring Funds
would not be permitted to hold, pursuant to its stated investment
objective and policies or otherwise. The Acquired Funds, if
requested by the Acquiring Funds, will dispose of any such
securities prior to the Closing Date to the extent practicable and
consistent with applicable legal requirements. In addition, if it is
determined that the investment portfolios of the Acquired Funds and
Acquiring Funds, when aggregated, would contain investments
exceeding certain percentage limitations applicable to the Acquiring
Funds, the Acquired Funds, if requested by the Acquiring Funds, will
dispose of a sufficient amount of such investments as may be
necessary to avoid violating such limitations as of the Effective
Time of the Reorganization.
(d)The Fund Assets shall be transferred and conveyed to the Acquiring
Funds on the following basis:
(1)In exchange for the transfer of the Fund Assets, the Acquiring
Funds shall simultaneously issue to the Acquired Funds at the
Effective Time of the Reorganization full and fractional Shares
of the Acquiring Funds, as set forth in Schedule A attached
hereto, having an aggregate net asset value equal to the net
value of the Fund Assets minus Liabilities so conveyed and
assumed, all determined in accordance with this Agreement. In
this regard, the number of full and fractional shares of the
Acquiring Funds delivered to the Acquired Funds shall be
determined by dividing the value of the Fund Assets minus
Liabilities, computed in the manner and as of the time and date
set forth in this Agreement, by the net asset value of one
Acquiring Funds share of such designated class, computed in the
manner and as of the time and date set forth in this Agreement.
(2)The net asset value of shares to be delivered by the Acquiring
Funds, and the net value of the Fund Assets minus Liabilities to
be conveyed by the Acquired Funds and assumed by the Acquiring
Funds, shall, in each case, be determined as of the Valuation
Time as defined in Section 3. The net asset value of Shares of
the Acquiring Funds shall be computed in accordance with its then
current valuation procedures. In determining the value of the
Fund Assets, each security to be included in the Fund Assets
shall be priced in accordance with the Acquiring Funds' then
current valuation procedures.
2. Liquidation of the Acquired Funds. At the Effective Time of the
Reorganization, the Acquired Funds shall make a liquidating
distribution to their shareholders as follows: Shareholders of record
of the Acquired Funds shall be credited with full and fractional shares
of the respective Shares that are issued by the Acquiring Funds in
connection with the Reorganization corresponding to the Acquired Funds
shares that are held of record by the shareholder at the Effective Time
of the Reorganization. Each such shareholder also shall have the right
to receive any unpaid dividends or other distributions which were
declared before the Effective Time of the Reorganization with respect
to the Acquired Funds shares that are held of record by the shareholder
at the Effective Time of the Reorganization, and Reserves shall record
on its books the ownership of the respective Acquiring Funds shares by
such shareholders (the "Transferor Record Holders"). All of the issued
and outstanding shares of the Acquired Funds at the Effective Time of
the Reorganization shall be redeemed and canceled on the books of
Reserves at such time. As soon as reasonably possible after the
Effective Time of the Reorganization, the Company shall wind up the
affairs of the Acquired Funds and shall file any final regulatory
reports, including but not limited to any Form N-SAR and Rule 24f-2
filings, with respect to the Acquired Funds, and also shall take all
other steps as are necessary and proper to effect the termination or
declassification of the Acquired Funds in accordance with all
applicable laws.
2
<PAGE>
3. Valuation Time. The "Valuation Time" shall be the time as of which the
net asset value of each class of shares of each of the Acquired Funds
and the Acquiring Funds is determined pursuant to their respective
valuation procedures on the Closing Date or such earlier or later time
as may be mutually agreed to in writing by the parties hereto.
4. Certain Representations, Warranties and Agreements of the Company on
behalf of its Acquired Funds. The Company, on behalf of itself and,
where appropriate, its Acquired Funds, represents and warrants to, and
agrees with, Reserves on behalf of the corresponding Acquiring Funds as
follows, with such representations, warranties and agreements made on
behalf of the Acquired Funds on a several (and not joint, or joint and
several) basis:
(a) The Company is a business trust, duly created, validly existing and
in good standing under the laws of the state of Maryland. The
Company is registered with the SEC as an open-end management
investment company under the 1940 Act, and such registration is in
full force and effect.
(b) The Company has the power to own all of its properties and assets
and to consummate the transactions contemplated herein, and has all
necessary federal, state and local authorizations to carry on its
business as now being conducted and to consummate the transactions
contemplated by this Agreement.
(c) This Agreement has been duly authorized by the Board of Trustees of
the Company on behalf of its Acquiring Funds, and has been executed
and delivered by duly authorized officers of the Company, and
represents a valid and binding contract, enforceable in accordance
with its terms, subject as to enforcement to bankruptcy,
insolvency, reorganization, arrangement, moratorium, and other
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles. The execution
and delivery of this Agreement does not, and, subject to the
approval of shareholders referred to in Section 6, the consummation
of the transactions contemplated by this Agreement will not,
violate the Articles of Incorporation or the By-Laws of the
Company, or any material agreement or arrangement to which the
Company is a party or by which it is bound.
(d) The Company's Acquired Funds have elected to qualify and have
qualified as regulated investment companies under Part I of
Subchapter M of Subtitle A, Chapter 1, of the Code, as of and since
their first taxable year; have been regulated investment companies
under such Part of the Code at all times since the end of their
first taxable year when they so qualified; and qualify and shall
continue to qualify as regulated investment companies for their
taxable year ending upon its liquidation.
(e) The Company has valued, and will continue to value, the portfolio
securities and other assets of its Acquired Funds in accordance
with applicable legal requirements.
(f) The proxy statement and form of proxy (the "Proxy Statement") from
its effective date with the SEC, through the time of the
shareholders meeting referred to in Section 6 and the Effective
Time of the Reorganization, insofar as they relate to the Company,
(i) shall comply in all material respects with the provisions of
the Securities Exchange Act of 1934 as amended (the "1934 Act") and
the 1940 Act, the rules and regulations thereunder, and state
securities laws, and (ii) shall not contain any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein not
misleading.
(g) All of the issued and outstanding shares of the Company's Acquired
Funds have been validly issued and are fully paid and
non-assessable, and were offered for sale and sold in conformity
with the registration requirements of all applicable federal and
state securities laws.
3
<PAGE>
(h) The Company shall operate the business of its Acquired Funds in the
ordinary course between the date hereof and the Effective Time of
the Reorganization, it being agreed that such ordinary course of
business will include the declaration and payment of customary
dividends and distributions and any other dividends and
distributions deemed advisable in anticipation of the
Reorganization. Notwithstanding anything herein to the contrary,
the Company may take all appropriate action necessary in order for
the Company to receive the opinion provided for in Sections 9(e)
and 10(g).
(i) At the Effective Time of the Reorganization, the Company's Acquired
Funds will have good and marketable title to the Fund Assets and
full right, power and authority to assign, deliver and otherwise
transfer such assets.
(j) At the Effective Time of the Reorganization, all federal and other
tax returns and reports of the Acquired Funds required by law to
have been filed by such time shall have been filed, and all federal
and other taxes shall have been paid so far as due, or provision
shall have been made for the payment thereof and, to the best
knowledge of management of the Company, no such return or report
shall be currently under audit and no assessment shall have been
asserted with respect to such returns or reports.
5. Certain Representations, Warranties and Agreements of Reserves on
behalf of the Acquiring Funds. Reserves, on behalf of itself and
where appropriate, the Acquiring Funds, represents and warrants to,
and agrees with each of the Company on behalf of the Acquired Funds
as follows, with such representations, warranties and agreements
made on behalf of the Acquiring Funds on a several (and not joint,
or joint and several) basis:
(a) Reserves is a business trust duly created, validly existing and in
good standing under the laws of the Commonwealth or Massachusetts
and is registered with the SEC as an open-end management investment
company under the 1940 Act and such registration is in full force
and effect.
(b) Reserves has the power to own all of its properties and assets and
to consummate the transactions contemplated herein, and has all
necessary federal, state and local authorizations to carry on its
business as now being conducted and to consummate the transactions
contemplated by this Agreement.
(c) This Agreement has been duly authorized by the Board of Trustees of
Reserves on behalf of the Acquiring Funds, and executed and
delivered by duly authorized officers of Reserves, and represents a
valid and binding contract, enforceable in accordance with its
terms, subject as to enforcement to bankruptcy, insolvency,
reorganization, arrangement, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights
and to general equity principles. The execution and delivery of
this Agreement does not, and the consummation of the transactions
contemplated by this Agreement will not, violate the Declaration of
Trust or By-Laws of Reserves or any material agreement or
arrangement to which it is a party or by which it is bound.
(d) The Acquiring Funds has elected to qualify and has qualified as a
regulated investment company under Part I of Subchapter M of
Subtitle A, Chapter 1, of the Code, as of and since its first
taxable year; has been a regulated investment company under such
Part of the Code at all times since the end of its first taxable
year when it so qualified; and qualifies and shall continue to
qualify as a regulated investment company for its current taxable
year.
(e) Reserves has valued, and will continue to value, the portfolio
securities and other assets of the Acquiring Funds in accordance
with applicable legal requirements.
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(f) The Proxy Statement, from its effective date with the SEC through
the time of the shareholders meeting referred to in Section 6 and
at the Effective Time of the Reorganization, insofar as it relates
to Reserves, or the Acquiring Funds, or the Primary A Shares,
Primary B Shares, Investor A Shares, Investor B Shares or Investor
C Shares of the Acquiring Funds to be issued pursuant thereto (i)
shall comply in all material respects with the provisions of the
Securities Act of 1933, as amended, (the "1933 Act"), the 1934 Act
and the 1940 Act, the rules and regulations thereunder, and state
securities laws, and (ii) shall not contain any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein not
misleading.
(g) The shares of the Acquiring Funds to be issued and delivered to the
Acquired Funds for the account of the shareholders of the Acquired
Funds, pursuant to the terms hereof, shall have been duly
authorized as of the Effective Time of the Reorganization and, when
so issued and delivered, shall be duly and validly issued, fully
paid and non-assessable, and no shareholder of the Acquiring Funds
shall have any preemptive right of subscription or purchase in
respect thereto.
(h) All of the issued and outstanding shares of the Acquiring Funds
have been validly issued and are fully paid and non-assessable, and
were offered for sale and sold in conformity with the registration
requirements of all applicable federal and state securities laws.
(i) Reserves shall operate the business of the Acquiring Funds in the
ordinary course between the date hereof and the Effective Time of
the Reorganization, except that Reserves shall complete all
measures in respect of the Acquiring Funds prior to the Effective
Time of the Reorganization to ensure that the Reorganization does
not qualify as a "reorganization" within the meaning of Section 368
of the Code, regardless of whether such measures are in the
ordinary course. It is understood that such ordinary course of
business will include the declaration and payment of customary
dividends and distributions and any other dividends and
distributions deemed advisable in anticipation of the
Reorganization.
(j) At the Effective Time of the Reorganization, all federal and other
tax returns and reports of the Acquiring Funds required by law to
have been filed by such time shall have been filed, and all federal
and other taxes shall have been paid so far as due, or provision
shall have been made for the payment thereof and, to the best
knowledge of management of Reserves, no such return or report shall
be currently under audit and no assessment shall have been asserted
with respect to such returns or reports.
7. Shareholder Action. As soon as practicable after the effective date of
the Proxy Statement each the Company shall hold a meeting(s) of the
shareholders of the Acquired Funds for the purpose of considering and
voting upon:
(a) approval of this Agreement and the Reorganization contemplated
hereby; and
(b) such other matters as may be determined by the Board of Trustees of
the Company.
8. Regulatory Filings. As soon as practicable, the Company shall file a
Proxy Statement with the SEC, and, where required, with appropriate
state securities regulatory authorities.
9. Closing Date, Effective Time of the Reorganization. The "Closing Date"
shall be August 20, 1999, or such earlier or later date as may be
mutually agreed in writing by the parties hereto. Delivery of the Fund
Assets and the shares of the Acquiring Funds to be issued pursuant to
Section 1 and the liquidation of the Acquired Funds pursuant to Section
2 shall occur on the day following the Closing Date, whether or not
such day is a business day, or on such other date, and at such place
and time, as may be mutually agreed in writing, by the parties hereto.
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The date and time at which such actions are taken are referred to
herein as the "Effective Time of the Reorganization." To the extent any
Fund Assets are, for any reason, not transferred at the Effective Time
of the Reorganization, the Company shall cause such Fund Assets to be
transferred in accordance with this Agreement at the earliest
practicable date thereafter.
10.Conditions to the Company's Obligations on Behalf of its Acquired
Funds. The obligations of the Company hereunder shall be subject to the
following conditions precedent:
(a) This Agreement and the Reorganization shall have been approved by
the Board of Trustees of the Company and by a majority of the
shareholders of its Acquired Funds in the manner required by
applicable law and this Agreement.
(b) All representations and warranties of the Company made in this
Agreement shall be true and correct in all material respects as if
made at and as of the Valuation Time and the Effective Time of the
Reorganization.
(c) The Company shall have delivered a certificate executed in its name
by its President or Vice President and its Treasurer or Assistant
Treasurer, in a form reasonably satisfactory and dated as of the
Closing Date, to the effect that the representations and warranties
of the Acquiring Funds made in this Agreement are true and correct
at and as of the Valuation Time and that, to the best of its
knowledge, the Fund Assets include only assets which the Company's
Acquiring Funds may properly acquire under its investment
objectives, policies and limitations and may otherwise be lawfully
acquired by such Acquiring Funds.
(d) The Company shall have received an opinion of Morrison & Foerster
LLP, as counsel to the Company in form reasonably satisfactory to
Reserves and dated the Closing Date, substantially to the effect
that (i) the Company is a corporation duly established and validly
existing under the laws of the state of Maryland; (ii) the shares
of the corresponding Acquiring Funds to be delivered to the
Company's Acquired Funds as provided for by this Agreement are duly
authorized and upon delivery will be validly issued, fully paid and
non-assessable by the Company; (iii) this Agreement has been duly
authorized, executed and delivered by the Company, and represents a
legal, valid and binding contract, enforceable in accordance with
its terms, subject to the effect of bankruptcy, insolvency,
moratorium, fraudulent conveyance and similar laws relating to or
affecting creditors' rights generally and court decisions with
respect thereto, and such counsel shall express no opinion with
respect to the application of equitable principles in any
proceeding whether at law or in equity; (iv) the execution and
delivery of this Agreement did not, and the consummation of the
transactions contemplated by this Agreement will not, violate the
Articles of Incorporation or the By-Laws of the Company or any
material contract known to such counsel to which the Company is a
party or by which it is bound; and (v) no consent, approval,
authorization or order of any court or governmental authority is
required for the consummation by the Company of the transactions
contemplated by this Agreement, except such as have been obtained
under the 1933 Act, the 1934 Act, the 1940 Act, the rules and
regulations under those Acts and such as may be required by state
securities laws or such as may be required subsequent to the
Effective Time of the Reorganization. Such opinion may rely on the
opinion of other counsel to the extent set forth in such opinion,
provided such other counsel is reasonably acceptable to Reserves.
(e) The Company shall have received an opinion of Morrison & Foerster
LLP, based upon reasonable representations made in certificates
provided by the Company, its affiliates and/or principal
shareholders of the Company's Acquired Funds and/or the
corresponding Acquiring Funds, addressed to the Company in a form
reasonably satisfactory to them, and dated the Closing Date, with
respect to the matters specified in Subsection 11(g).
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(f) The Company shall have received (i) a memorandum addressed to the
Company, in a form reasonably satisfactory to them, prepared by
Morrison & Foerster LLP, or another person approved by the parties,
concerning the registration of shares to be issued by Company
pursuant to this Agreement under applicable state securities laws
or the exemption from registration under such laws, and (ii)
assurance reasonably satisfactory to it that all permits and other
authorizations necessary under state securities laws to consummate
the transactions contemplated by this Agreement have been obtained.
(g) The Proxy Statement shall have become effective under the 1933 Act
and no stop order suspending the effectiveness shall have been
instituted, or to the knowledge of the Company, contemplated by the
SEC.
(h) No action, suit or other proceeding shall be threatened or pending
before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in
connection with, this Agreement or the transactions contemplated
herein.
(i) The SEC shall not have issued any unfavorable advisory report under
Section 25(b) of the 1940 Act nor instituted any proceeding seeking
to enjoin consummation of the transactions contemplated by this
Agreement under Section 25(c) of the 1940 Act.
(j) The Company on behalf of the Acquired Funds shall have performed
and complied in all material respects with each of its agreements
and covenants required by this Agreement to be performed or
complied with by it prior to or at the Valuation Time and the
Effective Time of the Reorganization.
(k) The Company shall have received a duly executed instrument whereby
the corresponding Acquiring Funds assume all of the liabilities of
the Company's Acquired Funds.
11.Conditions to Reserves's Obligations on behalf of the Acquiring Funds.
The obligations of Reserves hereunder shall be subject to the following
conditions precedent:
(a) This Agreement and the Reorganization shall have been approved by
the Board of Trustees of Reserves on behalf of the Acquiring Funds
and by a majority of the shareholders of the Acquired Funds in the
manner required by applicable law and this Agreement.
(b) Reserves shall have delivered to the Company a statement of assets
and liabilities of the Acquired Funds, showing the tax costs of
such securities by lot and the holding periods of such securities,
as of the Valuation Time, certified by the Treasurer or Assistant
Treasurer of Reserves as having been prepared in accordance with
generally accepted accounting principles consistently applied.
(c) Reserves shall have duly executed and delivered to the Company such
bills of sale, assignments, certificates and other instruments of
transfer ("Transfer Documents") as the Company may deem necessary
or desirable to transfer all of the Acquired Funds' right, title
and interest in and to the Fund Assets.
(d) All representations and warranties of Reserves made in this
Agreement shall be true and correct in all material respects as if
made at and as of the Valuation Time and the Effective Time of the
Reorganization.
(e) Reserves shall have delivered a certificate executed in its name by
its President or Vice President and its Treasurer or Assistant
Treasurer, in a form reasonably satisfactory to each of the Company
and dated as of the Closing Date, to the effect that the
7
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representations and warranties of the Acquired Funds made in this
Agreement are true and correct at and as of the Valuation Time.
(f) Reserves shall have received an opinion of Morrison & Foerster LLP,
as counsel to Reserves, in a form reasonably satisfactory to the
Company and dated the Closing Date, substantially to the effect
that (i) Reserves is a business trust duly established and validly
existing under the laws of the Commonwealth of Massachusetts; (ii)
this Agreement has been duly authorized, executed and delivered by
Reserves and represents a legal, valid and binding contract,
enforceable in accordance with its terms, subject to the effect of
bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally
and court decisions with respect thereto, and such counsel shall
express no opinion with respect to the application of equitable
principles in any proceeding, whether at law or in equity; (iii)
the execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated by this Agreement
will not, violate the Declaration of Trust or By-Laws of Reserves
or any material contract known to such counsel to which Reserves is
a party or by which it is bound; and (iv) no consent, approval,
authorization or order of any court or governmental authority is
required for the consummation by Reserves of the transactions
contemplated by this Agreement, except such as have been obtained
under the 1933 Act, the 1934 Act, the 1940 Act, the rules and
regulations under those Acts and such as may be required under the
state securities laws or such as may be required subsequent to the
Effective Time of the Reorganization. Such opinion may rely on the
opinion of other counsel to the extent set forth in such opinion,
provided such other counsel is reasonably acceptable to Reserves.
(g) Reserves shall have received an opinion of Morrison & Foerster LLP,
based upon reasonable representations made in certificates provided
by Reserves, its affiliates and/or principal shareholders of the
Acquired Funds and/or the Acquiring Funds, addressed to Reserves in
a form reasonably satisfactory to the Company, and dated the
Closing Date, substantially to the effect that, for federal income
tax purposes, the Reorganization will qualify as a
"reorganization," within the meaning of Section 368(a) of the Code,
and the Acquired Funds and the Acquiring Funds will each be a
"party to a reorganization," within the meaning of Section 368(b)
of the Code, with respect to the Reorganization.
(h) The Fund Assets to be transferred to the Acquiring Funds under this
Agreement shall include no assets which the Acquiring Funds may not
properly acquire pursuant to its investment objectives, policies or
restrictions or may not otherwise lawfully acquire.
(i) The Proxy Statement shall have become effective under the 1933 Act
and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of Reserves, contemplated by the
SEC.
(j) No action, suit or other proceeding shall be threatened or pending
before any court or governmental agency in which it is sought to
restrain or prohibit or obtain damages or other relief in
connection with this Agreement or the transactions contemplated
herein.
(k) The SEC shall not have issued any unfavorable advisory report under
Section 25(b) of the 1940 Act nor instituted any proceeding seeking
to enjoin consummation of the transactions contemplated by this
Agreement under Section 25(c) of the 1940 Act.
(l) Reserves on behalf of the Acquiring Funds shall have performed and
complied in all material respects with each of its agreements and
covenants required by this Agreement to be performed or complied
with by it prior to or at the Valuation Time and the Effective Time
of the Reorganization.
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12.Survival of Representations and Warranties. The representations and
warranties of Reserves on behalf of the Acquiring Funds set forth in
this Agreement shall survive the delivery of the Fund Assets to the
Acquiring Funds and the issuance of the shares of the Acquiring Funds
at the Effective Time of the Reorganization.
13.Termination of Agreement. This Agreement may be terminated by a party
at or, in the case of Subsection 12(c), below, at any time prior to,
the Effective Time of the Reorganization by a vote of a majority of its
Board members as provided below:
(a) By Reserves on behalf of the Acquiring Funds if the conditions set
forth in Section 10 are not satisfied as specified in said Section;
(b) By the Company on behalf of its Acquired Funds if the conditions
set forth in Section 11 are not satisfied as specified in said
Section;
(c) By mutual written consent of Reserves and the Company.
14.Governing Law. This Agreement and the transactions contemplated hereby
shall be governed, construed and enforced in accordance with the laws
of the State of Maryland, except to the extent preempted by federal
law.
15. Brokerage Fees and Expenses.
(a) Reserves represents and warrants that there are no brokers or
finders entitled to receive any payments in connection with the
transactions provided for herein.
(b) The Company and Reserves will be each be responsible, on a pro rata
basis, for the expenses related to entering into and carrying out
the provisions of this Agreement, whether or not the transactions
contemplated hereby are consummated.
16. Amendments
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the authorized officers of
the Company, acting on behalf of its Acquired Funds or Reserves, acting
on behalf of the Acquiring Funds; provided, however, that following the
meetings of the shareholders of the Acquired Funds, no such amendment
may have the effect of changing the provisions for determining the
number of shares of the Acquiring Funds to be issued to the Transferor
Record Holders under this Agreement to the detriment of such Transferor
Record Holders, or otherwise materially and adversely affecting the
Acquired Funds, without the Acquired Funds obtaining its shareholders'
further approval.
At any time prior to or (to the fullest extent permitted by law) after
approval of this Agreement by the shareholders of the Acquired Funds,
the Company on behalf of its Acquired Funds, may waive any breach by
Reserves, on behalf of the Acquiring Funds, or the failure to satisfy
any of the conditions to its obligations (such waiver to be in writing
and signed by an officer of such registered investment companies).
At any time prior to or (to the fullest extent permitted by law) after
approval of this Agreement by the shareholders of the Acquired Funds,
Reserves, on behalf of the Acquiring Funds, may waive any breach by the
Company on behalf of its Acquired Funds, or the failure to satisfy any
of the conditions to either of their obligations (such waiver to be in
writing and signed by an officer of such registered investment
companies).
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17. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers designated below as of the date first
written above.
NATIONS FUND, INC.
On behalf of its Acquired Funds identified
on Schedule A
By: /s/ Richard H. Blank, Jr.
Richard H. Blank, Jr.
Secretary and Treasurer
NATIONS INSTITUTIONAL RESERVES
On behalf of its Acquiring Funds identified
on Schedule A
By: /s/ Richard H. Blank, Jr.
Richard H. Blank, Jr.
Secretary and Treasurer
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SCHEDULE A
SHAREHOLDERS OWNING SHARES WOULD RECEIVE SHARES OF
OF THE FOLLOWING COMPANY'S THE FOLLOWING RESERVES
ACQUIRED FUNDS AND CLASSES: ACQUIRING FUNDS AND CLASSES:
Nations International Equity Fund Nations International Equity Fund
Primary A Shares Company Shares
Primary B Shares Investor Shares
Investor A Shares Market Shares
Investor B Shares Investor Shares
Investor C Shares Investor Shares
Nations International Value Fund Nations International Value Fund
Primary A Shares Company Shares
Primary B Shares Investor Shares
Investor A Shares Market Shares
Investor B Shares Investor Shares
Investor C Shares Investor Shares
11
