AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), made as
of this 8th day of February 2008, by and between Delaware Group Adviser Funds, a
statutory trust created under the laws of the State of Delaware, with its
principal place of business at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx
00000, on behalf of its series, Delaware U.S. Growth Fund ("Acquiring Fund"),
and Delaware Group Equity Funds IV, a statutory trust created under the laws of
the State of Delaware, with its principal place of business also at 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, on behalf of its series, Delaware
Large Cap Growth Fund ("Acquired Fund").
PLAN OF REORGANIZATION
The reorganization (hereinafter referred to as the "Plan") will
consist of: (i) the acquisition by Delaware Group Adviser Funds on behalf of
Acquiring Fund of substantially all of the property, assets and goodwill of
Acquired Fund in exchange solely for (a) shares of beneficial interest, without
par value, of Acquiring Fund - Class A ("Acquiring Fund Class A Shares"), (b)
shares of beneficial interest, without par value, of Acquiring Fund - Class B
("Acquiring Fund Class B Shares"), (c) shares of beneficial interest, without
par value, of Acquiring Fund - Class C ("Acquiring Fund Class C Shares"), and
(d) shares of beneficial interest, without par value, of Acquiring Fund -
Institutional Class ("Acquiring Fund Institutional Class Shares"); (ii) the
distribution of (a) Acquiring Fund Class A shares to the holders of Acquired
Fund - Class A shares ("Acquired Fund Class A Shares"), (b) Acquiring Fund Class
B Shares to the holders of Acquired Fund - Class B shares ("Acquired Fund Class
B Shares"), (c) Acquiring Fund Class C Shares to the holders of Acquired Fund -
Class C shares ("Acquired Fund Class C Shares"), and (d) Acquiring Fund
Institutional Class shares to the holders of Acquired Fund - Institutional Class
shares ("Acquired Fund Institutional Class Shares"), according to their
respective interests in complete liquidation of Acquired Fund; and (iii) the
dissolution of Acquired Fund as soon as practicable after the closing (as
referenced in Section 3 hereof, hereinafter called the "Closing"), all upon and
subject to the terms and conditions of this Agreement hereinafter set forth.
AGREEMENT
In order to consummate the Plan and in consideration of the premises
and of the covenants and agreements hereinafter set forth, and intending to be
legally bound, the parties hereto covenant and agree as follows:
1. Sale and Transfer of Assets, Liquidation and Dissolution of Acquired
Fund
(a) Subject to the terms and conditions of this Agreement, and in
reliance on the representations and warranties of Delaware Group Adviser Funds
herein contained, and in consideration of the delivery by Delaware Group Adviser
Funds, on behalf of Acquiring Fund, of the number of its shares of beneficial
interest of Acquiring Fund hereinafter provided, Delaware Group Equity Funds IV,
on behalf of Acquired Fund, agrees that it will sell, convey, transfer and
deliver to Delaware Group Adviser Funds, on behalf of Acquiring Fund, at the
Closing provided for in Section 3, all of the then existing assets of Acquired
Fund as of the close of business
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(which hereinafter shall be, unless otherwise noted, the regular close of
business of the New York Stock Exchange, Inc. ("NYSE")) ("Close of Business") on
the valuation date (as defined in Section 3 hereof, hereinafter called the
"Valuation Date"), free and clear of all liens, encumbrances, and claims
whatsoever (other than shareholders' rights of redemption and such restrictions
as might arise under the Securities Act of 1933, as amended (the "1933 Act"),
with respect to privately placed or otherwise restricted securities that
Acquired Fund may have acquired in the ordinary course of business), except for
cash, bank deposits, or cash equivalent securities in an estimated amount
necessary (1) to pay Acquired Fund's costs and expenses of carrying out this
Agreement (including, but not limited to, fees of counsel and accountants, and
expenses of its liquidation and dissolution contemplated hereunder), which costs
and expenses shall be established on the books of Acquired Fund as liability
reserves, (2) to discharge all of Acquired Fund's Liabilities (as defined below)
on its books at the Close of Business on the Valuation Date including, but not
limited to, its income dividends and capital gains distributions, if any,
payable for any period prior to, and through, the Close of Business on the
Valuation Date, and (3) to pay such contingent liabilities as the trustees of
Delaware Group Equity Funds IV shall reasonably deem to exist against Acquired
Fund, if any, at the Close of Business on the Valuation Date, for which
contingent and other appropriate liability reserves shall be established on the
books of Acquired Fund (hereinafter "Net Assets"). Delaware Group Equity Funds
IV, on behalf of Acquired Fund, shall also retain any and all rights that it may
have over and against any person that may have accrued up to and including the
Close of Business on the Valuation Date. Delaware Group Equity Funds IV agrees
to use commercially reasonable efforts to identify all of Acquired Fund's
liabilities, debts, obligations and duties of any nature, whether accrued,
absolute, contingent or otherwise ("Liabilities") prior to the Valuation Date
and to discharge all such known Liabilities on or prior to the Valuation Date.
In no event will Acquiring Fund assume or otherwise be responsible for any
Liabilities of Acquired Fund.
(b) Subject to the terms and conditions of this Agreement, and in
reliance on the representations and warranties of Delaware Group Equity Funds IV
on behalf of Acquired Fund herein contained, and in consideration of such sale,
conveyance, transfer, and delivery, Delaware Group Adviser Funds agrees at the
Closing to deliver to Delaware Group Equity Funds IV, on behalf of Acquired
Fund: (i) the number of Acquiring Fund Class A Shares determined by dividing the
net asset value per share of Acquired Fund Class A Shares as of the Close of
Business on the Valuation Date by the net asset value per share of Acquiring
Fund Class A Shares as of Close of Business on the Valuation Date, and
multiplying the result by the number of outstanding Acquired Fund Class A Shares
as of Close of Business on the Valuation Date; (ii) the number of Acquiring Fund
Class B Shares determined by dividing the net asset value per share of Acquired
Fund Class B Shares as of Close of Business on the Valuation Date by the net
asset value per share of Acquiring Fund Class B Shares as of Close of Business
on the Valuation Date, and multiplying the result by the number of outstanding
Acquired Fund Class B Shares as of Close of Business on the Valuation Date;
(iii) the number of Acquiring Fund Class C Shares determined by dividing the net
asset value per share of Acquired Fund Class C Shares as of Close of Business on
the Valuation Date by the net asset value per share of Acquiring Fund Class C
Shares as of Close of Business on the Valuation Date, and multiplying the result
by the number of outstanding Acquired Fund Class C Shares as of Close of
Business on the Valuation Date; and (iv) the number of Acquiring Fund
Institutional Class Shares determined by dividing the net asset value per share
of Acquired Fund Institutional Class Shares as of Close of Business on the
Valuation Date by the net asset value per share of Acquiring Fund Institutional
Class
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Shares as of Close of Business on the Valuation Date, and multiplying the result
by the number of outstanding Acquired Fund Institutional Class Shares as of
Close of Business on the Valuation Date. All such values shall be determined in
the manner and as of the time set forth in Section 2 hereof.
(c) As soon as practicable following the Closing, Delaware Group
Equity Funds IV shall dissolve Acquired Fund and distribute pro rata to Acquired
Fund's shareholders of record as of the Close of Business on the Valuation Date,
the shares of beneficial interest of Acquiring Fund received by Acquired Fund
pursuant to this Section 1. Such dissolution and distribution shall be
accomplished by the establishment of accounts on the share records of Acquiring
Fund of the type and in the amounts due such shareholders pursuant to this
Section 1 based on their respective holdings of shares of Acquired Fund as of
the Close of Business on the Valuation Date. Fractional shares of beneficial
interest of Acquiring Fund shall be carried to the third decimal place. No
certificates representing shares of beneficial interest of Acquiring Fund will
be issued to shareholders of Acquired Fund shares irrespective of whether such
shareholders hold their shares in certificated form.
(d) At the Closing, each outstanding certificate that, prior to
Closing, represented shares of beneficial interest of Acquired Fund, shall be
cancelled and shall no longer evidence ownership thereof.
(e) At the Closing, each shareholder of record of Acquired Fund as of
the record date (the "Distribution Record Date") with respect to any unpaid
dividends and other distributions that were declared prior to the Closing,
including any dividend or distribution declared pursuant to Section 9(e) hereof,
shall have the right to receive such unpaid dividends and distributions with
respect to the shares of Acquired Fund that such person had on such Distribution
Record Date.
2. Valuation
(a) The value of Acquired Fund's Net Assets to be acquired by
Acquiring Fund hereunder shall be computed as of Close of Business on the
Valuation Date using the valuation procedures set forth in Acquired Fund's
currently effective prospectus and statement of additional information.
(b) The net asset value of Acquiring Fund Class A Shares, Acquiring
Fund Class B Shares, Acquiring Fund Class C Shares, and Acquiring Fund
Institutional Class Shares shall be determined to the nearest full cent as of
the Close of Business on the Valuation Date using the valuation procedures set
forth in Acquiring Fund's currently effective prospectus and statement of
additional information.
(c) The net asset value of Acquired Fund Class A Shares, Acquired Fund
Class B Shares, Acquired Fund Class C Shares, and Acquired Fund Institutional
Class Shares shall be determined to the nearest full cent as of the Close of
Business on the Valuation Date, using the valuation procedures as set forth in
Acquired Fund's currently effective prospectus and statement of additional
information.
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3. Closing and Valuation Date
The Valuation Date shall be February 8, 2008, or such later date as the
parties may mutually agree. The Closing shall take place at the principal office
of Delaware Group Adviser Funds, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx
00000 at approximately 9:00 a.m., Eastern Time, on the first business day
following the Valuation Date. Notwithstanding anything herein to the contrary,
in the event that on the Valuation Date (a) the NYSE shall be closed to trading
or trading thereon shall be restricted or (b) trading or the reporting of
trading on such exchange or elsewhere shall be disrupted so that, in the
judgment of Delaware Group Adviser Funds or Delaware Group Equity Funds IV,
accurate appraisal of the value of the net assets of Acquired Fund or Acquiring
Fund is impracticable, the Valuation Date shall be postponed until the first
business day after the day when trading shall have been fully resumed without
restriction or disruption, reporting shall have been restored and accurate
appraisal of the value of the net assets of Acquired Fund and Acquiring Fund is
practicable in the judgment of Delaware Group Adviser Funds and Delaware Group
Equity Funds IV. Delaware Group Equity Funds IV shall have provided for delivery
as of the Closing of those Net Assets of Acquired Fund to be transferred to
Delaware Group Adviser Funds' Custodian, Mellon Bank, Xxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, XX 00000. Also, Delaware Group Equity Funds IV shall deliver at the
Closing a list (which may be in electronic form) of names and addresses of the
shareholders of record of its Acquired Fund shares, and the number of full and
fractional shares of beneficial interest of such classes owned by each such
shareholder, indicating thereon which such shares are represented by outstanding
certificates and which by book-entry accounts, all as of the Close of Business
on the Valuation Date, certified by its transfer agent, or by its President or
Vice-President to the best of their knowledge and belief. Delaware Group Adviser
Funds shall provide evidence satisfactory to Delaware Group Equity Funds IV in
such manner as Delaware Group Equity Funds IV may reasonably request that such
shares of beneficial interest of Acquiring Fund have been registered in an open
account on the books of Acquiring Fund.
4. Representations and Warranties by Delaware Group Equity Funds IV
Delaware Group Equity Funds IV represents and warrants to Delaware Group
Adviser Funds that:
(a) Delaware Group Equity Funds IV is a statutory trust created under
the laws of the State of Delaware on December 17, 1998, and is validly existing
and in good standing under the laws of that State. Delaware Group Equity Funds
IV, of which Acquired Fund is a separate series, is duly registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company. Such registration is in full force and effect as
of the date hereof and will be in full force and effect as of the Closing.
(b) Delaware Group Equity Funds IV is authorized to issue an unlimited
number of shares of beneficial interest of Acquired Fund, with no par value.
Each outstanding share of Acquired Fund is validly issued, fully paid,
non-assessable and has full voting rights.
(c) The financial statements appearing in Acquired Fund's Annual
Report to Shareholders for the fiscal year ended September 30, 2007, audited by
Ernst & Young, LLP, copies of which have been delivered to Delaware Group
Adviser Funds, and any unaudited
4
financial statements since that date, copies of which may be furnished to
Delaware Group Adviser Funds, fairly present the financial position of Acquired
Fund as of the date indicated, and the results of its operations for the period
indicated, in conformity with generally accepted accounting principles applied
on a consistent basis.
(d) The books and records of Acquired Fund, including FIN 48 work
papers and supporting statements, made available to Delaware Group Adviser Funds
and/or its counsel are true and correct in all material respects and contain no
material omissions with respect to the business and operations of Acquired Fund.
(e) The statement of assets and liabilities to be furnished by
Delaware Group Equity Funds IV as of the Close of Business on the Valuation Date
for the purpose of determining the number of shares of beneficial interest of
Acquiring Fund to be issued pursuant to Section 1 hereof will accurately reflect
the Net Assets of Acquired Fund and outstanding shares of beneficial interest,
as of such date, in conformity with generally accepted accounting principles
applied on a consistent basis.
(f) At the Closing, Delaware Group Equity Funds IV, on behalf of
Acquired Fund, will have good and marketable title to all of the securities and
other assets shown on the statement of assets and liabilities referred to in
subsection (e) above, free and clear of all liens or encumbrances of any nature
whatsoever except such restrictions as might arise under the 1933 Act with
respect to privately placed or otherwise restricted securities that it may have
acquired in the ordinary course of business and such imperfections of title or
encumbrances as do not materially detract from the value or use of the assets
subject thereto, or materially affect title thereto.
(g) Delaware Group Equity Funds IV has the necessary trust power and
trust authority to conduct its business and the business of Acquired Fund as
such businesses are now being conducted.
(h) Delaware Group Equity Funds IV is not a party to or obligated
under any provision of its Agreement and Declaration of Trust, By-Laws, or any
material contract or any other material commitment or obligation, and is not
subject to any order or decree that would be violated by its execution of or
performance under this Agreement.
(i) Delaware Group Equity Funds IV has full trust power and trust
authority to enter into and perform its obligations under this Agreement,
subject to approval of this Agreement by Acquired Fund's shareholders. Except as
provided in the immediately preceding sentence, the execution, delivery and
performance of this Agreement have been validly authorized, and this Agreement
constitutes its legal, valid and binding obligation enforceable against it in
accordance with its terms, subject as to enforcement to the effect of
bankruptcy, insolvency, reorganization, arrangement among creditors, moratorium,
fraudulent transfer or conveyance, and other similar laws of general
applicability relating to or affecting creditor's rights and to general equity
principles.
(j) Neither Delaware Group Equity Funds IV nor Acquired Fund is under
the jurisdiction of a court in a Title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Internal Revenue Code of 1986, as amended (the
"Code").
5
(k) Delaware Group Equity Funds IV does not have any unamortized or
unpaid organizational fees or expenses.
(l) Delaware Group Equity Funds IV has elected to treat Acquired Fund
as a regulated investment company ("RIC") for federal income tax purposes under
Part I of Subchapter M of the Code, Acquired Fund is a "fund" as defined in
Section 851(g)(2) of the Code, has qualified as a RIC for each taxable year
since its inception and will qualify as a RIC as of the Closing, and
consummation of the transactions contemplated by the Plan will not cause it to
fail to be qualified as a RIC as of the Closing.
5. Representations and Warranties by Delaware Group Adviser Funds
Delaware Group Adviser Funds represents and warrants to Delaware Group
Equity Funds IV that:
(a) Delaware Group Adviser Funds is a statutory trust created under
the laws of the State of Delaware on December 17, 1998, and is validly existing
and in good standing under the laws of that State. Delaware Group Adviser Funds,
of which Acquiring Fund is a separate series of shares, is duly registered under
the 1940 Act as an open-end, management investment company, such registration is
in full force and effect as of the date hereof and will be in full force and
effect as of the Closing.
(b) Delaware Group Adviser Funds is authorized to issue an unlimited
number of shares of beneficial interest, without par value, of Acquiring Fund.
Each outstanding share of Acquiring Fund is fully paid, non-assessable and has
full voting rights. The shares of beneficial interest of Acquiring Fund to be
issued pursuant to Section 1 hereof will, upon their issuance, be validly issued
and fully paid and non-assessable and have full voting rights.
(c) At the Closing, each class of shares of beneficial interest of
Acquiring Fund to be issued pursuant to this Agreement will be eligible for
offering to the public in those states of the United States and jurisdictions in
which the corresponding class of shares of Acquired Fund are presently eligible
for offering to the public, and there are an unlimited number of shares
registered under the 1933 Act such that there is a sufficient number of such
shares to permit the transfers contemplated by this Agreement to be consummated.
(d) The statement of assets and liabilities of Acquiring Fund to be
furnished by Delaware Group Adviser Funds as of the Close of Business on the
Valuation Date for the purpose of determining the number of shares of beneficial
interest of Acquiring Fund to be issued pursuant to Section 1 hereof will
accurately reflect the net assets of Acquiring Fund and outstanding shares of
beneficial interest, as of such date, in conformity with generally accepted
accounting principles applied on a consistent basis.
(e) At the Closing, Delaware Group Adviser Funds will have good and
marketable title to all of the securities and other assets shown on the
statement of assets and liabilities referred to in subsection (d) above, free
and clear of all liens or encumbrances of any nature whatsoever except such
restrictions as might arise under the 1933 Act with respect to privately placed
or otherwise restricted securities that it may have acquired in the ordinary
course of business and such imperfections of title or encumbrances as do not
materially detract from the value or use of the assets subject thereto, or
materially affect title thereto.
6
(f) Delaware Group Adviser Funds has the necessary trust power and
trust authority to conduct its business and the business of Acquiring Fund as
such businesses are now being conducted.
(g) Delaware Group Adviser Funds is not a party to or obligated under
any provision of its Agreement and Declaration of Trust, By-Laws, or any
material contract or any other material commitment or obligation, and is not
subject to any order or decree that would be violated by its execution of or
performance under this Agreement.
(h) Delaware Group Adviser Funds has full trust power and trust
authority to enter into and perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement have been validly
authorized, and this Agreement constitutes its legal, valid and binding
obligation enforceable against it in accordance with its terms, subject, as to
enforcement, to the effect of bankruptcy, insolvency reorganization,
arrangements among creditors, moratorium, fraudulent transfer or conveyance, and
other similar laws of general applicability relating to or affecting creditors
rights and to general equity principles.
(i) Neither Delaware Group Adviser Funds nor Acquiring Fund is under
the jurisdiction of a court in a Title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Code.
(j) The books and records of Acquiring Fund, including FIN 48 work
papers and supporting statements, made available to Delaware Group Equity Funds
IV and/or its counsel are true and correct in all material respects and contain
no material omissions with respect to the business and operations of Acquiring
Fund.
(k) Delaware Group Adviser Funds has elected to treat Acquiring Fund
as a RIC for federal income tax purposes under Part I of Subchapter M of the
Code, Acquiring Fund is a "fund" as defined in Section 851(g)(2) of the Code,
has qualified as a RIC for each taxable year since its inception and will
qualify as a RIC as of the Closing, and consummation of the transactions
contemplated by the Plan will not cause it to fail to be qualified as a RIC as
of the Closing.
6. Representations and Warranties by Delaware Group Equity Funds IV and
Delaware Group Adviser Funds
Delaware Group Equity Funds IV and Delaware Group Adviser Funds each
represents and warrants to the other that:
(a) Except as discussed in its currently effective prospectus, there
are no legal, administrative or other proceedings or investigations against it,
or, to its knowledge, threatened against it, that would materially affect its
financial condition or its ability to consummate the transactions contemplated
by this Agreement. It is not charged with or, to its knowledge, threatened with,
any violation or investigation of any possible violation of any provisions of
any federal, state or local law or regulation or administrative ruling relating
to any aspect of its business.
(b) There are no known actual or proposed deficiency assessments with
respect to any taxes payable by it.
7
(c) It has duly and timely filed, on behalf of Acquired Fund or
Acquiring Fund, as appropriate, all Tax (as defined below) returns and reports
(including information returns), which are required to be filed by such Acquired
Fund or Acquiring Fund, and all such returns and reports accurately state the
amount of Tax owed for the periods covered by the returns, or, in the case of
information returns, the amount and character of income required to be reported
by such Acquired Fund or Acquiring Fund. On behalf of Acquired Fund or Acquiring
Fund, as appropriate, it has paid or made provision and properly accounted for
all Taxes due or properly shown to be due on such returns and reports. The
amounts set up as provisions for Taxes in the books and records of Acquired Fund
or Acquiring Fund, as appropriate, as of the Close of Business on the Valuation
Date will, to the extent required by generally accepted accounting principles,
be sufficient for the payment of all Taxes of any kind, whether accrued, due,
absolute, contingent or otherwise, which were or which may be payable by
Acquired Fund or Acquiring Fund, as appropriate, for any periods or fiscal years
prior to and including the Close of Business on the Valuation Date, including
all Taxes imposed before or after the Close of Business on the Valuation Date
that are attributable to any such period or fiscal year. No return filed by it,
on behalf of Acquired Fund or Acquiring Fund, as appropriate, is currently being
audited by the Internal Revenue Service or by any state or local taxing
authority. As used in this Agreement, "Tax" or "Taxes" means all federal, state,
local and foreign (whether imposed by a country or political subdivision or
authority thereunder) income, gross receipts, excise, sales, use, value added,
employment, franchise, profits, property, ad valorem or other taxes, stamp taxes
and duties, fees, assessments or charges, whether payable directly or by
withholding, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority (foreign or domestic) with
respect thereto. To its knowledge, there are no levies, liens or encumbrances
relating to Taxes existing, threatened or pending with respect to the assets of
Acquired Fund or Acquiring Fund, as appropriate.
(d) All information provided to Delaware Group Equity Funds IV by
Delaware Group Adviser Funds, and by Delaware Group Equity Funds IV to Delaware
Group Adviser Funds, for inclusion in, or transmittal with, the Combined Proxy
Statement/Prospectus with respect to this Agreement pursuant to which approval
of Acquired Fund's shareholders will be sought, shall not contain any untrue
statement of a material fact, or omit to state a material fact required to be
stated therein in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(e) Except in the case of Delaware Group Equity Funds IV with respect
to the approval of Acquired Fund's shareholders of this Agreement, no consent,
approval, authorization or order of any court or governmental authority, or of
any other person or entity, is required for the consummation of the transactions
contemplated by this Agreement, except as may be required by the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), the 1940 Act, or
state securities laws or Delaware statutory trust laws (including, in the case
of each of the foregoing, the rules and regulations thereunder).
7. Covenants of Delaware Group Equity Funds IV
(a) Delaware Group Equity Funds IV covenants to operate the business
of Acquired Fund as presently conducted between the date hereof and the Closing.
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(b) Delaware Group Equity Funds IV undertakes that Acquired Fund will
not acquire the shares of beneficial interest of Acquiring Fund for the purpose
of making distributions thereof other than to Acquired Fund's shareholders.
(c) Delaware Group Equity Funds IV covenants that by the Closing, all
of Acquired Fund's federal and other Tax returns and reports required by law to
be filed on or before such date shall have been filed and all federal and other
Taxes shown as due on said returns either shall have been paid or adequate
liability reserves shall have been provided for the payment of such Taxes.
(d) Delaware Group Equity Funds IV will at the Closing provide
Delaware Group Adviser Funds with:
(1) A statement of the respective tax basis of all investments to
be transferred by Acquired Fund to Acquiring Fund.
(2) A copy (which may be in electronic form) of the shareholder
ledger accounts including, without limitation, the name, address and
taxpayer identification number of each shareholder of record, the
number of shares of beneficial interest held by each shareholder, the
dividend reinvestment elections applicable to each shareholder, and
the backup withholding and nonresident alien withholding
certifications, notices or records on file with Acquired Fund with
respect to each shareholder, for all of the shareholders of record of
Acquired Fund as of the Close of Business on the Valuation Date, who
are to become holders of Acquiring Fund as a result of the transfer of
assets that is the subject of this Agreement, certified by its
transfer agent or its President or its Vice-President to the best of
their knowledge and belief.
(3) All FIN 48 work papers and supporting statements pertaining
to the Acquired Fund.
(e) The Board of Trustees of Delaware Group Equity Funds IV shall
call, and Delaware Group Equity Funds IV shall hold, a Special Meeting of
Acquired Fund's shareholders to consider and vote upon this Agreement (the
"Special Meeting") and Delaware Group Equity Funds IV shall take all other
actions reasonably necessary to obtain approval of the transactions contemplated
herein. Delaware Group Equity Funds IV agrees to mail to each shareholder of
record entitled to vote at the Special Meeting at which action on this Agreement
is to be considered, in sufficient time to comply with requirements as to notice
thereof, a Combined Proxy Statement/Prospectus that complies in all material
respects with the applicable provisions of Section 14(a) of the 1934 Act and
Section 20(a) of the 1940 Act, and the rules and regulations promulgated
thereunder.
(f) Delaware Group Equity Funds IV shall supply to Delaware Group
Adviser Funds, at the Closing, the statement of the assets and liabilities
described in Section 4(e) of this Agreement in conformity with the requirements
described in such Section.
9
8. Covenants of Delaware Group Adviser Funds
(a) Delaware Group Adviser Funds covenants that the shares of
beneficial interest of Acquiring Fund to be issued and delivered to Acquired
Fund pursuant to the terms of Section 1 hereof shall have been duly authorized
as of the Closing and, when so issued and delivered, shall be registered under
the 1933 Act, validly issued, and fully paid and non-assessable, and no
shareholder of Acquiring Fund shall have any statutory or contractual preemptive
right of subscription or purchase in respect thereof, other than any rights
created pursuant to this Agreement.
(b) Delaware Group Adviser Funds covenants to operate the business of
Acquiring Fund as presently conducted between the date hereof and the Closing.
(c) Delaware Group Adviser Funds covenants that by the Closing, all of
Acquiring Fund's federal and other Tax returns and reports required by law to be
filed on or before such date shall have been filed and all federal and other
Taxes shown as due on said returns shall have either been paid or adequate
liability reserves shall have been provided for the payment of such Taxes.
(d) Delaware Group Adviser Funds shall supply to Delaware Group Equity
Funds IV, at the Closing, the statement of assets and liabilities described in
Section 5(d) of this Agreement in conformity with the requirements described in
such Section.
(e) Delaware Group Adviser Funds shall have filed with the United
States Securities and Exchange Commission (the "Commission") a Registration
Statement on Form N-14 under the 1933 Act ("Registration Statement"), relating
to the shares of beneficial interest of Acquiring Fund issuable hereunder, and
shall have used its best efforts to provide that such Registration Statement
becomes effective as promptly as practicable. At the time such Registration
Statement becomes effective, it (i) complied in all material respects with the
applicable provisions of the 1933 Act, the 1934 Act and the 1940 Act, and the
rules and regulations promulgated thereunder; and (ii) will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading. At
the time the Registration Statement becomes effective, at the time of Acquired
Fund's shareholders' meeting, and at the Closing, the prospectus and statement
of additional information included in the Registration Statement did not and
will not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
9. Conditions Precedent to be Fulfilled by Delaware Group Equity Funds IV
and Delaware Group Adviser Funds
The obligations of Delaware Group Equity Funds IV and Delaware Group
Adviser Funds to effectuate this Agreement and the Plan hereunder shall be
subject to the following respective conditions:
(a) That (i) all the representations and warranties of the other party
contained herein shall be true and correct in all material respects as of the
Closing with the same effect as though made as of and at such date; (ii) the
other party shall have performed all obligations
10
required by this Agreement to be performed by it at or prior to the Closing; and
(3) the other party shall have delivered to such party a certificate signed by
the President or Vice-President and by the Secretary or equivalent officer to
the foregoing effect.
(b) That the other party shall have delivered to such party a copy of
the resolutions approving this Agreement adopted by the other party's Board of
Trustees, certified by the Secretary or equivalent officer.
(c) That the Commission shall not have issued an unfavorable advisory
report under Section 25(b) of the 1940 Act, nor instituted nor threatened to
institute any proceeding seeking to enjoin the consummation of the
reorganization contemplated hereby under Section 25(c) of the 1940 Act, and no
other legal, administrative or other proceeding shall be instituted or
threatened that would materially and adversely affect the financial condition of
either party or would prohibit the transactions contemplated hereby.
(d) That this Agreement, the Plan and the transactions contemplated
hereby shall have been approved by the appropriate action of the shareholders of
Acquired Fund at an annual or special meeting or any adjournment thereof.
(e) That Acquired Fund shall have declared a distribution or
distributions on or prior to the Valuation Date that, together with all previous
distributions, shall have the effect of distributing to its shareholders (i) all
of its ordinary income, capital gain net income and net interest income
excludable under Section 103(a) of the Code, if any, for the period from the
close of its last fiscal year to the Close of Business on the Valuation Date,
and (ii) any undistributed ordinary income, capital gain net income and net
interest income excludable under Section 103(a) of the Code from any prior
period. Capital gain net income has the meaning given such term by Section
1222(g) of the Code.
(f) That all required consents of other parties and all other
consents, orders and permits of federal, state and local authorities (including
those of the Commission and of state Blue Sky securities authorities, including
any necessary "no-action" positions or exemptive orders from such federal and
state authorities) to permit consummation of the transaction contemplated hereby
shall have been obtained, except where failure to obtain any such consent, order
or permit would not involve risk of material adverse effect on the assets and
properties of Acquired Fund or Acquiring Fund.
(g) That prior to or at the Closing, Delaware Group Equity Funds IV
and Delaware Group Adviser Funds shall receive an opinion from Xxxxxxxx Ronon
Xxxxxxx & Young, LLP ("SRSY") to the effect that, provided the acquisition
contemplated hereby is carried out in accordance with the applicable laws of the
State of Delaware, this Agreement and in accordance with customary
representations provided by Delaware Group Equity Funds IV and Delaware Group
Adviser Funds in certificates delivered to SRSY:
(1) The acquisition by Acquiring Fund of substantially all of the
assets of Acquired Fund in exchange solely for Acquiring Fund shares
to be issued pursuant to Section 1 hereof, followed by the
distribution by Acquired Fund to its shareholders of Acquiring Fund
shares in complete liquidation of Acquired Fund, will qualify as a
reorganization within the meaning of Section 368(a)(1) of the
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Code, and Acquiring Fund and Acquired Fund will each be a "party to
the reorganization" within the meaning of Section 368(b) of the Code;
(2) No gain or loss will be recognized by Acquired Fund upon the
transfer of substantially all of its assets to Acquiring Fund in
exchange solely for the voting shares of Acquiring Fund (to be issued
in accordance with Section 1 hereof) under Section 361(a) and Section
357(a) of the Code;
(3) No gain or loss will be recognized by Acquiring Fund upon the
receipt by it of substantially all of the assets of Acquired Fund in
exchange solely for the voting shares of Acquiring Fund (to be issued
in accordance with Section 1 hereof) under Section 1032(a) of the
Code;
(4) No gain or loss will be recognized by Acquired Fund upon the
distribution of Acquiring Fund shares to Acquired Fund shareholders in
accordance with Section 1 hereof in liquidation of Acquired Fund under
Section 361(c)(1) of the Code.
(5) The basis of the assets of Acquired Fund received by
Acquiring Fund will be the same as the basis of such assets to
Acquired Fund immediately prior to the exchange under Section 362(b)
of the Code;
(6) The holding period of the assets of Acquired Fund received by
Acquiring Fund will include the period during which such assets were
held by Acquired Fund under Section 1223(2) of the Code;
(7) No gain or loss will be recognized by the shareholders of
Acquired Fund upon the exchange of their shares in Acquired Fund for
the voting shares (including fractional shares to which they may be
entitled) of Acquiring Fund (to be issued in accordance with Section 1
hereof) under Section 354(a) of the Code;
(8) The basis of Acquiring Fund shares received by Acquired Fund
shareholders in accordance with Section 1 hereof (including fractional
shares to which they may be entitled) will be the same as the basis of
the shares of Acquired Fund exchanged therefor under Section 358(a)(1)
of the Code;
(9) The holding period of Acquiring Fund's shares received by
Acquired Fund's shareholders in accordance with Section 1 hereof
(including fractional shares to which they may be entitled) will
include the holding period of Acquired Fund's shares surrendered in
exchange therefor, provided that Acquired Fund shares were held as a
capital asset on the date of the Reorganization under Section 1223(l)
of the Code; and
(10) Acquiring Fund will succeed to and take into account as of
the date of the transfer (as defined in Section 1.381(b)-1(b) of the
regulations issued by the United States Treasury (the "Treasury
Regulations")) the items of Acquired Fund described in Section 381(c)
of the Code, subject to the conditions and limitations specified in
Sections 381, 382, 383 and 384 of the Code, and the Treasury
Regulations.
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(h) That Delaware Group Adviser Funds shall have received an opinion
in form and substance reasonably satisfactory to it from SRSY, counsel to
Delaware Group Equity Funds IV, to the effect that, subject in all respects to
the effects of bankruptcy, insolvency, arrangement among creditors, moratorium,
fraudulent transfer or conveyance, and other similar laws of general
applicability relating to or affecting creditor's rights and to general equity
principles:
(1) Delaware Group Equity Funds IV was created as a statutory
trust (formerly known as a business trust) under the laws of the State
of Delaware on December 17, 1998, and is validly existing and in good
standing under the laws of the State of Delaware;
(2) Delaware Group Equity Funds IV is authorized to issue an
unlimited number of shares of beneficial interest, without par value,
of Acquired Fund;
(3) Delaware Group Equity Funds IV is an open-end, investment
company of the management type registered as such under the 1940 Act;
(4) Except as disclosed in Acquired Fund's currently effective
prospectus, such counsel does not know of any material suit, action,
or legal or administrative proceeding pending or threatened against
Delaware Group Equity Funds IV, the unfavorable outcome of which would
materially and adversely affect Delaware Group Equity Funds IV or
Acquired Fund;
(5) To such counsel's knowledge, no consent, approval,
authorization or order of any court, governmental authority or agency
is required for the consummation by Delaware Group Equity Funds IV of
the transactions contemplated by this Agreement, except such as have
been obtained under the 1933 Act, the 1934 Act, the 1940 Act, and
Delaware laws (including, in the case of each of the foregoing, the
rules and regulations thereunder) and such as may be required under
state securities laws;
(6) Neither the execution, delivery nor performance of this
Agreement by Delaware Group Equity Funds IV violates any provision of
its Agreement and Declaration of Trust, its By-Laws, or the provisions
of any agreement or other instrument, known to such counsel to which
Delaware Group Equity Funds IV is a party or by which Delaware Group
Equity Funds IV is otherwise bound; and
(7) This Agreement has been validly authorized by Delaware Group
Equity Funds IV and represents the legal, valid and binding obligation
of Delaware Group Equity Funds IV and is enforceable against Delaware
Group Equity Funds IV in accordance with its terms.
In giving the opinions set forth above, SRSY may state that it is
relying on certificates of the officers of Delaware Group Equity Funds IV with
regard to matters of fact and certain certifications and written statements of
governmental officials with respect to the good standing of Delaware Group
Equity Funds IV.
13
(i) That Delaware Group Equity Funds IV shall have received an opinion
in form and substance reasonably satisfactory to it from SRSY, counsel to
Delaware Group Adviser Funds, to the effect that, subject in all respects to the
effects of bankruptcy, insolvency, arrangement among creditors, moratorium,
fraudulent transfer or conveyance, and other similar laws of general
applicability relating to or affecting creditor's rights and to general equity
principles:
(1) Delaware Group Adviser Funds was created as a statutory trust
(formerly known as a business trust) under the laws of the State of
Delaware on December 17, 1998, and is validly existing and in good
standing under the laws of the State of Delaware;
(2) Delaware Group Adviser Funds is authorized to issue an
unlimited number of shares of beneficial interest, without par value,
of Acquiring Fund;
(3) Delaware Group Adviser Funds is an open-end investment
company of the management type registered as such under the 1940 Act;
(4) Except as disclosed in Acquiring Fund's currently effective
prospectus, such counsel does not know of any material suit, action,
or legal or administrative proceeding pending or threatened against
Delaware Group Adviser Funds, the unfavorable outcome of which would
materially and adversely affect Delaware Group Adviser Funds or
Acquiring Fund;
(5) The shares of beneficial interest of Acquiring Fund to be
issued pursuant to the terms of Section 1 hereof have been duly
authorized and, when issued and delivered as provided in this
Agreement, will have been validly issued and fully paid and will be
non-assessable by Delaware Group Adviser Funds or Acquiring Fund, and
to such counsel's knowledge, no shareholder has any preemptive right
to subscription or purchase in respect thereof other than any rights
that may be deemed to have been granted pursuant to this Agreement;
(6) To such counsel's knowledge, no consent, approval,
authorization or order of any court, governmental authority or agency
is required for the consummation by Delaware Group Adviser Funds of
the transactions contemplated by this Agreement, except such as have
been obtained under the 1933 Act, the 1934 Act, the 1940 Act, and
Delaware laws (including, in the case of each of the foregoing, the
rules and regulations thereunder) and such as may be required under
state securities laws;
(7) Neither the execution, delivery nor performance of this
Agreement by Delaware Group Adviser Funds violates any provision of
its Agreement and Declaration of Trust, its By-Laws, or the provisions
of any agreement or other instrument, known to such counsel to which
Delaware Group Adviser Funds is a party or by which Delaware Group
Adviser Funds is otherwise bound; and
(8) This Agreement has been validly authorized and executed by
Delaware Group Adviser Funds and represents the legal, valid and
binding
14
obligation of Delaware Group Adviser Funds and is enforceable against
Delaware Group Adviser Funds in accordance with its terms.
In giving the opinions set forth above, SRSY may state that it is
relying on certificates of the officers of Delaware Group Adviser Funds with
regard to matters of fact and certain certifications and written statements of
governmental officials with respect to the good standing of Delaware Group
Adviser Funds.
(j) That Delaware Group Adviser Funds' Registration Statement with
respect to the shares of beneficial interest of Acquiring Fund to be delivered
to Acquired Fund's shareholders in accordance with Section 1 hereof shall have
become effective, and no stop order suspending the effectiveness of the
Registration Statement or any amendment or supplement thereto, shall have been
issued prior to the Closing or shall be in effect at the Closing, and no
proceedings for the issuance of such an order shall be pending or threatened on
that date.
(k) That the shares of beneficial interest of Acquiring Fund to be
delivered in accordance with Section 1 hereof shall be eligible for sale by
Delaware Group Adviser Funds with each state commission or agency with
which such eligibility is required in order to permit the shares lawfully
to be delivered to each Acquired Fund shareholder.
(l) That at the Closing, Delaware Group Equity Funds IV, on behalf of
Acquired Fund, transfers to Acquiring Fund aggregate Net Assets of Acquired
Fund comprising at least 90% in fair market value of the total net assets
and 70% in fair market value of the total gross assets recorded on the
books of Acquired Fund at the Close of Business on the Valuation Date.
10. Fees and Expenses The expenses of entering into and carrying out the
provisions of this Agreement, whether or not consummated, shall be borne 30% by
Acquired Fund; 30% by Acquiring Fund; and 40% by Delaware Management Company, a
series of Delaware Management Business Trust.
11. Termination; Waiver; Order
(a) Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated and the Plan abandoned at any
time (whether before or after adoption thereof by the shareholders of Acquired
Fund) prior to the Closing as follows:
(1) by mutual consent of Delaware Group Equity Funds IV and
Delaware Group Adviser Funds;
(2) by Delaware Group Adviser Funds if any condition precedent to
its obligations set forth in Section 9 has not been fulfilled or
waived by Delaware Group Adviser Funds; or
(3) by Delaware Group Equity Funds IV if any condition precedent
to its obligations set forth in Section 9 has not been fulfilled or
waived by Delaware Group Equity Funds IV.
15
(b) If the transactions contemplated by this Agreement have not been
consummated by December 31, 2008, this Agreement shall automatically terminate
on that date, unless a later date is agreed to by both Delaware Group Equity
Funds IV and Delaware Group Adviser Funds.
(c) In the event of termination of this Agreement pursuant to the
provisions hereof, the same shall become void and have no further effect, and
there shall not be any liability on the part of either Delaware Group Equity
Funds IV or Delaware Group Adviser Funds or persons who are their trustees,
officers, agents or shareholders in respect of this Agreement.
(d) At any time prior to the Closing, any of the terms or conditions
of this Agreement may be waived by either Delaware Group Equity Funds IV or
Delaware Group Adviser Funds, respectively (whichever is entitled to the benefit
thereof).
(e) The respective representations, warranties and covenants contained
in Sections 4-8 hereof shall expire with, and be terminated by, the consummation
of the Plan, and neither Delaware Group Equity Funds IV nor Delaware Group
Adviser Funds, nor any of their officers, trustees, agents or shareholders shall
have any liability with respect to such representations or warranties after the
Closing. This provision shall not protect any officer, trustee, agent or
shareholder of Delaware Group Equity Funds IV or Delaware Group Adviser Funds
against any liability to the entity for which that officer, trustee, agent or
shareholder so acts or to its shareholders to which that officer, trustee, agent
or shareholder would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties in the conduct of
such office.
(f) If any order or orders of the Commission with respect to this
Agreement shall be issued prior to the Closing and shall impose any terms or
conditions that are determined by action of the Board of Trustees of Delaware
Group Equity Funds IV or the Board of Trustees of Delaware Group Adviser Funds
to be acceptable, such terms and conditions shall be binding as if a part of
this Agreement without further vote or approval of the shareholders of Acquired
Fund, unless such further vote is required by applicable law or by mutual
consent of the parties.
12. Liability of Delaware Group Adviser Funds and Delaware Group Equity
Funds IV
(a) Each party acknowledges and agrees that all obligations of
Delaware Group Adviser Funds under this Agreement are binding only with respect
to Acquiring Fund; that any liability of Delaware Group Adviser Funds under this
Agreement with respect to Acquiring Fund, or in connection with the transactions
contemplated herein with respect to Acquiring Fund, shall be discharged only out
of the assets of Acquiring Fund; that no other series of Delaware Group Adviser
Funds shall be liable with respect to this Agreement or in connection with the
transactions contemplated herein; and that neither Delaware Group Equity Funds
IV nor Acquired Fund shall seek satisfaction of any such obligation or liability
from the shareholders of Delaware Group Adviser Funds, the trustees, officers,
employees or agents of Delaware Group Adviser Funds, or any of them.
(b) Each party acknowledges and agrees that all obligations of
Delaware Group Equity Funds IV under this Agreement are binding only with
respect to Acquired Fund; that any liability of Delaware Group Equity Funds IV
under this Agreement with respect to Acquired Fund, or in connection with the
transactions contemplated herein with respect to Acquired Fund, shall be
discharged only out of the assets of Acquired Fund; that no other series of
Delaware Group Equity Funds IV shall be liable with respect to this Agreement or
in connection with the transactions contemplated herein; and that neither
Delaware Group Adviser Funds nor Acquiring Fund shall seek satisfaction of any
such obligation or liability from the shareholders of Delaware Group Equity
Funds IV, the trustees, officers, employees or agents of Delaware Group Equity
Funds IV, or any of them.
13. Final Tax Returns and Forms 1099 of Acquired Fund
(a) After the Closing, Delaware Group Equity Funds IV shall or shall
cause its agents to prepare any federal, state or local Tax returns, including
any Forms 1099, required to be filed by Delaware Group Equity Funds IV with
respect to Acquired Fund's final taxable year ending with its complete
liquidation and for any prior periods or taxable years and shall further cause
such Tax returns and Forms 1099 to be duly filed with the appropriate taxing
authorities.
(b) Notwithstanding the provisions of Section 1 hereof, any expenses
incurred by Delaware Group Equity Funds IV or Acquired Fund (other than for
payment of Taxes) in connection with the preparation and filing of said Tax
returns and Forms 1099 after the Closing, shall be borne by Acquired Fund to the
extent such expenses have been or should have been accrued by Acquired Fund in
the ordinary course without regard to the Plan contemplated by this Agreement;
any excess expenses shall be borne by Delaware Management Company, a series of
Delaware Management Business Trust, at the time such Tax returns and Forms 1099
are prepared.
14. Cooperation and Exchange of Information
Delaware Group Adviser Funds and Delaware Group Equity Funds IV will
provide each other and their respective representatives with such cooperation,
assistance and information as either of them reasonably may request of the other
in filing any Tax returns, amended return or claim for refund, determining a
liability for Taxes, or in determining the financial reporting of any tax
position, or a right to a refund of Taxes or participating in or conducting any
audit or other proceeding in respect of Taxes. Each party or their respective
agents will retain for a period of six (6) years following the Closing all
returns, schedules and work papers and all material records or other documents
relating to Tax matters and financial reporting of tax positions of Acquired
Fund and Acquiring Fund for its taxable period first ending after the Closing
and for all prior taxable periods.
15. Entire Agreement and Amendments
This Agreement embodies the entire Agreement between the parties and
there are no agreements, understandings, restrictions, or warranties between the
parties other than those set forth herein or herein provided for. This Agreement
may be amended only by mutual consent of the parties in writing. Neither this
Agreement nor any interest herein may be assigned without the prior written
consent of the other party.
17
16. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all such counterparts together
shall constitute but one instrument.
17. Notices
Any notice, report, or demand required or permitted by any provision
of this Agreement shall be in writing and shall be deemed to have been given if
delivered or mailed, first class postage prepaid, addressed to Delaware Group
Equity Funds IV or Delaware Group Adviser Funds at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxxxx, XX 00000, Attention: Secretary.
18. Governing Law
This Agreement shall be governed by and carried out in accordance with
the laws of the State of Delaware.
19. Effect of Facsimile Signature
A facsimile signature of an authorized officer of a party hereto on
this Agreement and/or any transfer document shall have the same effect as if
executed in the original by such officer.
18
IN WITNESS WHEREOF, Delaware Group Equity Funds IV and Delaware Group
Adviser Funds have each caused this Agreement and Plan of Reorganization to be
executed on its behalf by its duly authorized officers, all as of the day and
year first-above written.
Delaware Group Equity Funds IV, on behalf of
the Delaware Large Cap Growth Fund
By: /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
Chief Financial Officer
Delaware Group Adviser Funds, on behalf of the
Delaware U.S. Growth Fund
By: /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
Chief Financial Officer
