Exhibit No. EX-99(4)(b)
AGREEMENT AND PLAN OF ACQUISITION
THIS AGREEMENT AND PLAN OF ACQUISITION ("Plan") is made as of this 16th day
of February, 2006, by and among: (i) Delaware Investments Minnesota Municipal
Income Fund III, Inc. ("Acquired Fund"), a corporation incorporated under the
laws of the State of Minnesota and a closed-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), with its principal place of business at Xxx Xxxxxxxx Xxxxxx,
Xxxxxxxxxxxx, XX 00000; (ii) Delaware Investments Minnesota Municipal Income
Fund II, Inc. ("Acquiring Fund"), a corporation incorporated under the laws of
the State of Minnesota and a closed-end management investment company registered
under the 1940 Act, with its principal place of business at Xxx Xxxxxxxx Xxxxxx,
Xxxxxxxxxxxx, XX 00000; and (iii) Delaware Management Company ("DMC"), a series
of Delaware Management Business Trust, a statutory trust formed under the laws
of the State of Delaware, with its principal place of business at Xxx Xxxxxxxx
Xxxxxx, Xxxxxxxxxxxx, XX 00000.
ACQUISITION
The acquisition ("Acquisition") will consist of (i) the acquisition by
Acquiring Fund of substantially all of the property, assets and goodwill of
Acquired Fund in exchange solely for (a) full and fractional shares of common
stock, par value $0.01 per share, of Acquiring Fund ("Acquiring Fund Common
Shares"), and (b) shares of Municipal Income Preferred Shares, Series D, par
value $0.01 per share, of Acquiring Fund ("Acquiring Fund Preferred Shares," and
together with Acquiring Fund Common Shares, the "Acquiring Fund Shares"), (ii)
the pro rata distribution of such Acquiring Fund Shares to the shareholders of
the Acquired Fund according to their respective interests in complete
liquidation of Acquired Fund, and (iii) the dissolution of Acquired Fund as soon
as is practicable after the closing of the Acquisition (the "Closing"), all upon
and subject to the terms and conditions of this Plan hereinafter set forth.
AGREEMENT
In order to consummate this Plan and the Acquisition 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 Plan, and in reliance on
the representations and warranties of Acquiring Fund herein contained,
and in consideration of the delivery by Acquiring Fund of the number
of Acquiring Fund Shares hereinafter provided, Acquired Fund agrees
that it will convey, transfer and deliver to Acquiring Fund at the
Closing all of Acquired Fund's then existing assets, free and clear of
all liens, encumbrances and claims whatsoever (other than
shareholders' rights of redemption, if any), except for cash, bank
deposits or cash equivalent securities in an estimated amount
necessary to: (i) pay its costs and expenses of carrying out this Plan
(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 Acquired Fund's books
as liability reserves; (ii) discharge its unpaid liabilities on its
books as of the date of the Closing (the "Closing Date"), including,
but not limited to, its income dividends and capital gains
distributions, if any, payable for the period prior to, and through,
the Closing Date; and (iii) pay such contingent liabilities as the
Board of Directors of Acquired Fund (the "Acquired Fund Board") or its
officers may reasonably expect to exist against Acquired Fund, if any,
as of the Closing Date, for which contingent and other appropriate
liability reserves shall be established on Acquired Fund's books (such
assets, less the foregoing exceptions, hereinafter "Net Assets").
(b) Subject to the terms and conditions of this Plan, and in reliance on
the representations and warranties of Acquired Fund herein contained,
and in consideration of such conveyance, transfer and delivery,
Acquiring Fund agrees at the Closing to deliver to Acquired Fund: (i)
the number of Acquiring Fund Common Shares determined with respect to
Acquired Fund by (A) dividing the net asset value per share of the
common stock of Acquired Fund ("Acquired Fund Common Shares") by (B)
the net asset value per share of Acquiring Fund Common Shares, and (C)
multiplying the resulting quotient by the number of outstanding
Acquired Fund Common Shares; and (ii) 300 shares of Acquiring Fund
Preferred Shares. The liquidation preference of each Acquiring Fund
Preferred Share shall equal the liquidation preference of each
preferred share of Acquired Fund ("Acquired Fund Preferred Shares"
and, with the Acquired Fund Common Shares, "Acquired Fund Shares").
All such values of the Acquired Fund Common Shares and the Acquiring
Fund Common Shares and the liquidation preference of the Acquired Fund
Preferred Shares and the Acquiring Fund Preferred Shares shall be
determined in the manner and as of the time set forth in Section 2
hereof.
(c) Liquidating Distribution
(1) Immediately following the Closing, Acquired Fund shall liquidate
and distribute: (i) pro rata to shareholders of Acquired Fund
Common Shares of record as of the close of business on the
Closing Date, the Acquiring Fund Common Shares received by
Acquired Fund pursuant to this Section 1, in exchange for
Acquired Fund Common Shares held by such common shareholders; and
(ii) to shareholders of Acquired Fund Preferred Shares of record
as of the close of business on the Closing Date, one Acquiring
Fund Preferred Share, in exchange for each Acquired Fund
Preferred Share held by such preferred shareholders.
(2) Such liquidating distribution will be accomplished by opening
accounts on the books of Acquiring Fund in the name of each
holder of Acquired Fund Shares and transferring to each such
account: (i) in the case of a holder of Acquired Fund Common
Shares, such shareholder's pro rata share of the Acquiring Fund
Common Shares received by Acquired Fund; and (ii) in the case of
a holder of Acquired Fund Preferred Shares, a number of Acquiring
Fund Preferred Shares received by Acquired Fund equal to the
number of Acquired Fund Preferred Shares held by such preferred
shareholder.
(d) After the Closing, each holder of any outstanding certificate or
certificates representing Acquired Fund Shares shall be entitled to
surrender the same to the transfer agent for Acquiring Fund in
exchange for the respective number of applicable Acquiring Fund Shares
into which the Acquired Fund Shares theretofore represented by the
certificate or certificates so surrendered shall have been converted.
Until so surrendered, each outstanding certificate which, prior to the
Closing, represented the Acquired Fund Shares shall be deemed for all
Acquiring Fund's purposes to evidence ownership of the respective
number of the applicable Acquiring Fund Shares determined as of the
Closing Date into which the Acquired Fund Shares (which prior to the
Closing were represented thereby) have been converted.
(e) Dividends on Acquired Fund Preferred Shares shall accumulate to and
including the Closing Date and then cease to accumulate. At or prior
to the Closing, Acquired Fund will declare all accumulated but unpaid
dividends on the Acquired Fund Preferred Shares up to and including
the Closing Date, such dividends to be paid to the holders thereof on
the "Dividend Payment Date" in respect of the "Initial Dividend
Period" of Acquiring Fund Preferred Shares (as those terms are defined
in the certificate of designation of the Acquiring Fund Preferred
Shares ("Certificate of Designation")). The "Applicable Dividend Rate"
(as that term is defined in the Certificate of Designation) in respect
of the Initial Dividend Period for the Acquiring Fund Preferred Shares
shall accumulate from and including the day after the Closing Date at
the same rate borne on the Closing Date by the Acquired Fund Preferred
Shares.
(f) At or prior to the Closing, Acquired Fund will declare a dividend
and/or other distribution to be paid to the holders of Acquired Fund
Common Shares in an amount sufficient to distribute all of its
investment company taxable income (computed without regard to any
deduction for dividends paid), net tax-exempt income and realized net
capital gains, if any, earned or anticipated to be earned through the
Closing Date.
(g) Acquired Fund shall be dissolved promptly following the Closing, the
liquidating distribution of the respective Acquiring Fund Shares,
payment of any dividends or distributions and resolution of any other
contingent liabilities.
2. Valuation
(a) The value of Acquired Fund's Net Assets to be acquired by Acquiring
Fund hereunder and the net asset value per Acquired Fund Common Share
shall be determined to the third decimal place as of 4:00 p.m. Eastern
Time on the Closing Date in a manner consistent with the valuation
procedures described in Acquired Fund's registration statement on Form
N-2 filed with the U.S. Securities and Exchange Commission (the
"SEC"), as such disclosure has been amended to date by any: (i)
amendments to Acquired Fund's registration statement on Form N-2; (ii)
press releases issued on behalf of Acquired Fund; and (iii) annual or
semi-annual reports of Acquired Fund sent to shareholders pursuant to
Section 30 of the 1940 Act (together, the "Acquired Fund Disclosure
Documents"). The value of Acquired Fund's Net Assets shall be
calculated net of the liquidation preference (including accumulated
and unpaid dividends) of all outstanding Acquired Fund Preferred
Shares.
(b) The value of Acquiring Fund's net asset value per Acquiring Fund
Common Share shall be computed to the third decimal place as of 4:00
p.m. Eastern Time on the Closing Date in a manner consistent with the
valuation procedures described in Acquiring Fund's registration
statement on Form N-2 filed with the SEC, as such disclosures have
been amended to date by any: (i) amendments to Acquiring Fund's
registration statement on Form N-2; (ii) press releases issued on
behalf of Acquiring Fund; and (iii) annual or semi-annual reports of
Acquiring Fund sent to shareholders pursuant to Section 30 of the 1940
Act (together, the "Acquiring Fund Disclosure Documents"). The value
of the Acquiring Fund's net asset value per Acquiring Fund Common
Share shall be calculated net of the liquidation preference (including
accumulated and unpaid dividends) of all outstanding preferred shares
of Acquiring Fund.
(c) The liquidation preference of the Acquired Fund Preferred Shares and
the Acquiring Fund Preferred Shares is $50,000 per share.
3. Closing Date
The Closing Date shall be February 10, 2006, or such later date as the
parties may mutually agree, provided that the Closing Date shall not be a date
on which a remarketing of the Acquired Fund Preferred Shares would ordinarily
occur. The Closing shall take place at the principal office of Acquiring Fund at
5:00 p.m. Eastern Time on the Closing Date. Acquired Fund shall have provided
for delivery as of the Closing those Net Assets of Acquired Fund to be
transferred to the account of Acquiring Fund's custodian, Mellon Bank, N.A., Xxx
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000. Acquired Fund shall also deliver
at the Closing a list of names and addresses of the shareholders of record of
its Acquired Fund Shares, as well as the number of full and fractional shares of
Acquired Fund Common Shares and the number of Acquired Fund Preferred Shares
owned by each such shareholder, indicating thereon which such shares are
represented by outstanding certificates and which by book-entry accounts, all as
of 4:00 p.m. Eastern Time on the Closing Date, certified by Acquired Fund's
transfer agent or by its President or a Vice President to the best of its or his
or her knowledge and belief. Acquiring Fund shall issue and deliver a
certificate or certificates evidencing the respective Acquiring Fund Common
Shares and Acquiring Fund Preferred Shares to be delivered to the account of
Acquired Fund at said transfer agent registered in such manner as the officers
of Acquired Fund may request, or provide evidence satisfactory to Acquired Fund
in such manner as the officers of Acquired Fund may request that such Acquiring
Fund Shares have been registered in an account on the books of Acquiring Fund.
4. Representations and Warranties by Acquiring Fund
Acquiring Fund represents and warrants to Acquired Fund that:
(a) Acquiring Fund is a corporation incorporated under the laws of the
State of Minnesota on December 29, 1992, and is validly existing and
in good standing under the laws of that State. Acquiring Fund is duly
registered under the 1940 Act as a closed-end, management investment
company and all of the Acquiring Fund Shares sold were sold pursuant
to an effective registration statement filed under the Securities Act
of 1933, as amended (the "1933 Act"), except for those shares sold
pursuant to the private offering exemption for the purpose of raising
the required initial capital.
(b) The authorized capital of Acquiring Fund consists of 201,000,000
shares consisting of 200,000,000 shares of common stock, par value
$0.01 per share, and 1,000,000 shares of preferred stock, par value
$0.01. As of the date hereof, Acquiring Fund had issued and
outstanding 7,252,200 Acquiring Fund Common Shares listed on the
American Stock Exchange LLC ("AmEx"), 600 Municipal Income Fund
Preferred Shares, Series A issued and outstanding, 600 Municipal
Income Fund Preferred Shares, Series B issued and outstanding, 400
Municipal Income Fund Preferred Shares, Series C authorized and
unissued, and 300 Municipal Income Fund Preferred Shares, Series D
authorized and unissued. All issued and outstanding Acquiring Fund
Common Shares and Municipal Income Preferred Shares are, and all
Acquiring Fund Common Shares and Acquiring Fund Preferred Shares to be
issued in exchange for Net Assets of Acquired Fund pursuant to this
Plan will be when so issued, fully paid and non-assessable.
(c) The audited financial statements appearing in Acquiring Fund's Annual
Report to Shareholders for the fiscal year ended March 31, 2005,
audited by Ernst & Young, LLP, a copy of which has been delivered to
Acquired Fund, fairly present the financial position of Acquiring Fund
as of the date indicated and the results of its operations for the
periods indicated are in conformity with generally accepted accounting
principles applied on a consistent basis.
(d) The books and records of Acquiring Fund accurately summarize the
accounting data represented and contain no material omissions with
respect to the business and operations of Acquiring Fund.
(e) Acquiring Fund has the necessary corporate power and corporate
authority to conduct its business as such business is now being
conducted.
(f) Acquiring Fund is not a party to or obligated under any provision of
its Articles of Incorporation or its By-laws (together, as each has
been amended to date, the "Acquiring Fund Corporate Documents"), or
any contract or any other commitment or obligation, and is not subject
to any order or decree, that would be violated by its execution of, or
performance under, this Plan.
(g) Acquiring Fund has elected to be treated as a regulated investment
company ("RIC") for federal income tax purposes under Part I of
Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), and it has qualified as a RIC for each taxable year since its
inception and will qualify as a RIC as of the Closing Date, and
consummation of the transactions contemplated by this Plan will not
cause it to fail to be qualified as a RIC as of the Closing Date or at
the end of its fiscal year.
(h) Acquiring Fund is not under jurisdiction of a Court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
(i) At the time of effectiveness of the registration statement filed by
the Acquiring Fund with the SEC on Form N-14 under the 1933 Act
relating to Acquiring Fund Shares issuable hereunder (the "Acquiring
Fund N-14 Registration Statement"), the Acquiring Fund N-14
Registration Statement will: (i) comply in all material respects with
the applicable provisions of the 1933 Act and the rules and
regulations promulgated thereunder; and (ii) not contain any untrue
statement of material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty
shall not apply to any disclosure in the Acquiring Fund N-14
Registration Statement provided by Acquired Fund or relating to
Acquired Fund.
(j) At the time the Acquiring Fund N-14 Registration Statement becomes
effective, at the time of the Acquiring Fund's and Acquired Fund's
shareholders' meeting to consider this Plan and the Acquisition (the
"Meeting"), and at the Closing Date, the proxy statement/prospectus
("Proxy Statement/Prospectus") and statement of additional information
("SAI") included in the Acquiring Fund N-14 Registration Statement
will not contain any 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;
provided, however, that this representation and warranty shall not
apply to any disclosure in the Acquiring Fund N-14 Registration
Statement provided by Acquired Fund or relating to Acquired Fund.
5. Representations and Warranties by Acquired Fund
Acquired Fund represents and warrants to Acquiring Fund that:
(a) Acquired Fund is a corporation incorporated under the laws of the
State of Minnesota on August 4, 1993, and is validly existing and in
good standing under the laws of that State. Acquired Fund is duly
registered under the 1940 Act as a closed-end management investment
company and all of Acquired Fund's Acquired Fund Shares sold were sold
in compliance in all material respects with applicable registration
requirements of the 1933 Act.
(b) The authorized capital of Acquired Fund consists of 201,000,000 shares
consisting of 200,000,000 shares of common stock, par value $0.01 per
share, and 1,000,000 shares of preferred stock, par value $0.01. As of
the date hereof, the Acquiring Fund had issued and outstanding
1,837,200 Acquired Fund Common Shares listed on AmEx and 300 Municipal
Income Fund Preferred Shares issued and outstanding. All issued and
outstanding Acquired Fund Shares are fully paid and non-assessable.
(c) The audited financial statements appearing in Acquired Fund's Annual
Report to Shareholders for the fiscal year ended March 31, 2005,
audited by Ernst & Young, LLP, a copy of which has been delivered to
Acquiring Fund, fairly present the financial position of the Acquired
Fund as of the date indicated and the results of its operations for
the periods indicated are in conformity with generally accepted
accounting principles applied on a consistent basis.
(d) The books and records of Acquired Fund accurately summarize the
accounting data represented and contain no material omissions with
respect to the business and operations of Acquired Fund.
(e) Acquired Fund has the necessary corporate power and corporate
authority to conduct its business as such business is now being
conducted.
(f) Acquired Fund is not a party to or obligated under any provision of
its Articles of Incorporation or its Bylaws (together, as amended or
supplemented from time to time, the "the Acquired Fund Corporate
Documents"), or any contract or any other commitment or obligation,
and is not subject to any order or decree, that would be violated by
its execution of, or performance under, this Plan.
(g) Acquired Fund has elected to be treated as a RIC for federal income
tax purposes under Part I of Subchapter M of the Code, and it has
qualified as a RIC for each taxable year since its inception and will
qualify as a RIC as of the Closing Date, and consummation of the
transactions contemplated by this Plan will not cause it to fail to be
qualified as a RIC as of the Closing Date or at the end of its fiscal
year.
(h) Acquired Fund is not under jurisdiction of a Court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
(i) At the time of effectiveness of the Acquiring Fund N-14 Registration
Statement, the Acquiring Fund N-14 Registration Statement will not
contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading as to any disclosure in the
Acquiring Fund N-14 Registration Statement provided by Acquired Fund
or relating to Acquired Fund.
(j) At the time the Acquiring Fund N-14 Registration Statement becomes
effective, at the time of the Meeting, and at the Closing Date, the
Proxy Statement/Prospectus and SAI will not contain any 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 as to any
disclosure in the Acquiring Fund N-14 Registration Statement provided
by Acquired Fund or relating to Acquired Fund.
6. Representations and Warranties by Acquired Fund and Acquiring Fund
Acquired Fund and Acquiring Fund each represents and warrants to the other
that:
(a) The statement of assets and liabilities to be furnished by it as of
4:00 p.m. Eastern Time on the Closing Date, for the purpose of
determining the number of Acquiring Fund Common Shares to be issued
pursuant to Section 1 of this Plan, will accurately reflect Net Assets
in the case of Acquired Fund and the net asset value in the case of
Acquiring Fund, and the outstanding Acquired Fund Common Shares and
Acquiring Fund Common Shares, respectively, as of such date, in
conformity with generally accepted accounting principles applied on a
consistent basis.
(b) At the Closing, it 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 (a) above, free and clear of all liens or
encumbrances of any nature whatsoever, except 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
(such as pledges or segregation in connection with portfolio
transactions in the ordinary course of business).
(c) Except as has been previously disclosed in the Acquired Fund
Disclosure Documents or in the Acquiring Fund Disclosure Documents,
there is no suit, judicial action, or legal or administrative
proceeding pending or threatened against Acquired Fund or Acquiring
Fund, respectively.
(d) There are no known actual or proposed deficiency assessments with
respect to any taxes payable by it.
(e) The execution, delivery and performance of this Plan have been duly
authorized by all necessary action of the Acquired Fund Board or the
Board of Directors of Acquiring Fund (the "Acquiring Fund Board"),
respectively, and this Plan constitutes a valid and binding obligation
of such party enforceable in accordance with its terms.
7. Covenants of Acquired Fund and Acquiring Fund
(a) Acquired Fund and Acquiring Fund each covenants to operate its
respective business as presently conducted between the date hereof and
the Closing.
(b) Acquired Fund undertakes that it will not acquire Acquiring Fund
Shares for the purpose of making distributions thereof to anyone other
than the shareholders of Acquired Fund.
(c) Acquired Fund undertakes that, if this Plan is consummated, it will
dissolve its corporate existence, file an application pursuant to
Section 8(f) of the 1940 Act for an order declaring that it has ceased
to be an investment company and take the necessary actions, including
making the necessary filings, to withdraw its shares from listing on
those stock exchanges on which the Acquired Fund Shares are listed as
of the Closing Date.
(d) Acquired Fund and Acquiring Fund each agrees that, by the Closing, all
of its 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 had adequate liability reserves created for the payment of
such taxes.
(e) At the Closing, Acquired Fund shall provide Acquiring Fund the
certified copy of the shareholder ledger accounts described in Section
3 of this Plan.
(f) Acquiring Fund shall file with the SEC the Acquiring Fund N-14
Registration Statement, and shall use its best efforts to provide that
the Acquiring Fund N-14 Registration Statement becomes effective as
promptly as is practicable.
(g) Acquired Fund agrees to mail to each of its respective shareholders of
record entitled to vote at the Meeting, 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 Securities Exchange Act
of 1934, as amended (the "1934 Act") and Section 20(a) of the 1940
Act, and the rules and regulations thereunder.
(h) Acquiring Fund agrees to mail to each of its respective shareholders
of record entitled to vote at the Meeting, 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 thereunder.
8. Conditions Precedent to be Fulfilled by Acquired Fund and Acquiring Fund
The consummation of this Plan shall be subject to the conditions precedent
that:
(a) (i) All the representations and warranties of each party contained
herein shall be true and correct as of the Closing with the same
effect as though made as of and at such date; (ii) each party shall
have performed all obligations required by this Plan to be performed
by it prior to the Closing; and (iii) Acquired Fund and Acquiring Fund
shall have delivered to the other a certificate signed by its
President, a Vice President or an equivalent officer to the foregoing
effect.
(b) Acquired Fund and Acquiring Fund shall have delivered to the other a
copy of the resolutions approving the Plan adopted and approved by the
appropriate action of the Acquired Fund Board or Acquiring Fund Board,
as appropriate, certified by its President, a Vice President or an
equivalent officer of Acquired Fund or Acquiring Fund, respectively.
(c) (i) The SEC shall not have issued an unfavorable management report
under Section 25(b) of the 1940 Act or instituted or threatened to
institute any proceeding seeking to enjoin consummation of the Plan
under Section 25(c) of the 1940 Act; and (ii) no other legal,
administrative or other proceeding shall have been instituted or
threatened that would materially affect the financial condition of
either party or would prohibit the transactions contemplated hereby.
(d) This Plan shall have been adopted and approved by the appropriate
action of the shareholders of Acquired Fund and Acquiring Fund, at an
annual or special meeting of the respective shareholders thereof or
any adjournment thereof.
(e) A distribution or distributions shall have been declared for Acquired
Fund prior to the Closing Date that, together with all previous
distributions, shall have the effect of distributing to its
shareholders: (i) all of its ordinary income and all of its capital
gain net income, if any, for the period from the close of its last
fiscal year to 4:00 p.m. Eastern Time on the Closing Date; and (ii)
any undistributed ordinary income and capital gain net income from any
period to the extent not otherwise declared for distribution. Capital
gain net income has the meaning given such term by Section 1222(a) of
the Code.
(f) There shall be delivered to Acquired Fund and Acquiring Fund an
opinion from Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP, counsel to Acquired
Fund and Acquiring Fund, to the effect that, provided the Acquisition
contemplated hereby is carried out in accordance with this Plan and
the laws of the State of Minnesota, and based upon certificates of the
officers of Acquired Fund and Acquiring Fund with regard to matters of
fact and upon special counsel to Acquired Fund and Acquiring Fund with
regard to matters of Minnesota law:
(1) The acquisition by Acquiring Fund of substantially all the assets
of the Acquired Fund as provided for herein in exchange for the
respective Acquiring Fund Shares followed by the distribution by
Acquired Fund to its shareholders of such Acquiring Fund Shares
in complete liquidation of Acquired Fund will qualify as a
reorganization within the meaning of Section 368(a)(1) of the
Code, and Acquired Fund and Acquiring 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 voting shares of Acquiring Fund (Sections
361(a) and 357(a) of the Code);
(3) No gain or loss will be recognized by Acquiring Fund upon the
receipt of substantially all of the assets of Acquired Fund in
exchange solely for voting shares of Acquiring Fund (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 its shareholders in
liquidation of Acquired Fund (in pursuance of this Plan) (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 Acquisition (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 (Section 1223(2) of the Code);
(7) No gain or loss will be recognized to the shareholders of
Acquired Fund upon the exchange of their shares in Acquired Fund
for voting shares of Acquiring Fund, including fractional shares
to which they may be entitled (Section 354(a) of the Code);
(8) The basis of Acquiring Fund Shares received by the shareholders
of Acquired Fund shall be the same as the basis of the Acquired
Fund Shares exchanged therefor (Section 358(a)(1) of the Code);
(9) The holding period of Acquiring Fund Shares received by the
shareholders of Acquired Fund (including fractional shares to
which they may be entitled) will include the holding period of
the Acquired Fund Shares surrendered in exchange therefor,
provided that the Acquired Fund Shares were held as a capital
asset on the effective date of the exchange (Section 1223(1) 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 ("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.
(g) There shall be delivered to Acquiring Fund an opinion in form and
substance satisfactory to it from Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP,
counsel to Acquired Fund, to the effect that, subject in all respects
to the effects of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other laws now or hereafter affecting
generally the enforcement of creditors' rights:
(1) The Acquired Fund is a corporation incorporated under the laws of
the State of Minnesota, and is a validly existing corporation and
in good standing under the laws of that state;
(2) The authorized capital of Acquired Fund consists of 201,000,000
shares consisting of 200,000,000 shares of Acquired Fund Common
Shares, par value $0.01 per share, and 1,000,000 shares of
preferred stock, par value $0.01, of which 300 shares have been
designated as Municipal Income Preferred Shares. Assuming that
the initial Acquired Fund Shares were issued in accordance with
the 1933 Act and the Acquired Fund Corporate Documents, and that
all other outstanding Acquired Fund Shares were sold, issued and
paid for in compliance in all material respects with applicable
registration requirements of the 1933 Act, each such outstanding
Acquired Fund Share is fully paid and non-assessable and, with
respect to Acquired Fund Common Shares, freely transferable, all
in accordance with the terms of the Acquired Fund Corporate
Documents;
(3) Acquired Fund is a closed-end investment company of the
management type registered as such under the 1940 Act;
(4) Except as disclosed in the Acquired Fund Disclosure Documents,
such counsel does not know of any material suit, action or legal
or administrative proceeding pending or threatened against the
Acquired Fund, the unfavorable outcome of which would materially
and adversely affect Acquired Fund;
(5) All corporate actions required to be taken by Acquired Fund to
authorize this Plan and to effect the Acquisition contemplated
hereby have been duly authorized by all necessary action on the
part of the Acquired Fund; and
(6) The execution, delivery or performance of this Plan by Acquired
Fund will not violate any provision of the Acquired Fund
Corporate Documents, or the provisions of any agreement or other
instrument known to such counsel to which Acquired Fund is a
party or by which Acquired Fund is otherwise bound, and this Plan
is the legal, valid and binding obligation of Acquired Fund and
is enforceable against Acquired Fund in accordance with its
terms.
In giving the opinions set forth above, counsel may state that it is
relying on certificates of the officers of Acquired Fund with regard
to matters of fact, certain certifications and written statements of
governmental officials with respect to the good standing of Acquired
Fund, and the opinion of special counsel to Acquired Fund on questions
of Minnesota law.
(h) There shall be delivered to Acquired Fund an opinion in form and
substance satisfactory to it from Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP,
counsel to Acquiring Fund, to the effect that, subject in all respects
to the effects of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other laws now or hereafter affecting
generally the enforcement of creditors' rights:
(1) Acquiring Fund is a corporation incorporated under the laws of
the State of Minnesota, and is a validly existing corporation and
in good standing under the laws of that State;
(2) The authorized capital of Acquiring Fund consists of 201,000,000
shares consisting of 200,000,000 shares of Acquiring Fund Common
Shares, par value $0.01 per share, and 1,000,000 shares of
preferred stock, par value $0.01. The preferred stock is divided
into four series: Municipal Income Fund Preferred Shares, Series
A, of which there are currently 600 shares issued and
outstanding; Municipal Income Fund Preferred Shares, Series B, of
which there are currently 600 shares issued and outstanding;
Municipal Income Preferred Shares, Series C, of which there are
400 shares authorized and unissued; and Municipal Income Fund
Preferred Shares, Series D, of which there are 300 shares
authorized and unissued. Assuming that the initial shares of each
class and series of Acquiring Fund were issued in accordance in
all material respects with the 1933 Act and the Acquiring Fund
Corporate Documents, and that all other outstanding shares of
Acquiring Fund were sold, issued and paid for in accordance in
all material respects with the terms of Acquiring Fund's
prospectus in effect at the time of such sales, each such
outstanding share is fully paid and non-assessable and, with
respect to Acquiring Fund Common Shares, freely transferable, all
in accordance with the terms of the Acquiring Fund Corporate
Documents;
(3) Acquiring Fund is a closed-end investment company of the
management type registered as such under the 1940 Act;
(4) Except as disclosed in the Acquiring Fund Disclosure Documents,
such counsel does not know of any material suit, action or legal
or administrative proceeding pending or threatened against
Acquiring Fund, the unfavorable outcome of which would materially
and adversely affect Acquiring Fund;
(5) Acquiring Fund Shares to be issued pursuant to the terms of this
Plan have been duly authorized and, when issued and delivered as
provided in this Plan, will have been validly issued and fully
paid and will be non-assessable by Acquiring Fund;
(6) All corporate actions required to be taken by Acquiring Fund to
authorize this Plan and to effect the Acquisition contemplated
hereby have been duly authorized by all necessary action on the
part of Acquiring Fund;
(7) The execution, delivery or performance of this Plan by Acquiring
Fund will not violate any provision of the Acquiring Fund
Corporate Documents, or the provisions of any agreement or other
instrument known to such counsel to which Acquiring Fund is a
party or by which Acquiring Fund is otherwise bound, and this
Plan is the legal, valid and binding obligation of Acquiring Fund
and is enforceable against Acquiring Fund in accordance with its
terms; and
(8) The Acquiring Fund N-14 Registration Statement has been declared
or, by operation of rule, has become effective under the 1933
Act, and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of such Registration Statement has
been issued, and no proceedings for such purpose have been
instituted or are pending before or threatened by the SEC under
the 1933 Act, and nothing has come to counsel's attention that
causes it to believe that, at the time the Acquiring Fund N-14
Registration Statement became effective, or at the Closing, such
Registration Statement (except for the financial statements and
other financial and statistical data included therein, as to
which counsel need not express an opinion), contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and such counsel knows of no legal or
government proceedings required to be described in the Acquiring
Fund N-14 Registration Statement, or of any contract or document
of a character required to be described in the Acquiring Fund
N-14 Registration Statement, that is not described as required.
In giving the opinions set forth above, counsel may state that it is
relying on certificates of the officers of Acquiring Fund with regard
to matters of fact, and certain certifications and written statements
of governmental officials with respect to the good standing of
Acquiring Fund, and the opinion of special counsel to the Acquiring
Fund on questions of Minnesota law.
(i) Acquired Fund shall have received a certificate from the President or
a Vice President of Acquiring Fund to the effect that, except for
disclosure provided by or relating to Acquired Fund, to the best
knowledge and belief of such officer, the statements contained in the
Acquiring Fund N-14 Registration Statement, at the time the Acquiring
Fund N-14 Registration Statement became effective, at the date of the
signing of this Plan, and at the Closing, did not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading.
(j) The Acquiring Fund N-14 Registration Statement to be delivered to the
shareholders of Acquiring Fund and Acquired Fund in accordance with
this Plan shall have become effective, and no stop order suspending
the effectiveness of the Acquiring Fund N-14 Registration Statement,
or any amendment or supplement thereto, shall have been issued prior
to the Closing Date or shall be in effect at Closing, and no
proceedings for the issuance of such an order shall be pending or
threatened on that date.
(k) Acquiring Fund Shares to be delivered hereunder shall be eligible for
sale with each state commission or agency with which such eligibility
is required in order to permit Acquiring Fund Shares lawfully to be
delivered to each holder of the Acquired Fund Shares.
(l) At the Closing, there shall be transferred to Acquiring Fund the
respective aggregate Net Assets of Acquired Fund comprising at least
90% in fair market value of the total net assets and 70% of the fair
market value of the total gross assets recorded on the books of
Acquired Fund on the Closing Date.
(m) There be delivered to Acquiring Fund information concerning the tax
basis of Acquired Fund in all securities transferred to Acquiring Fund
together with shareholder information including the names, addresses
and taxpayer identification numbers of the respective shareholders of
Acquired Fund as of the Closing Date, the number of shares 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.
(n) All consents of other parties, and all other consents, orders and
permits of federal, state and local regulatory authorities (including
those of the SEC and of state Blue Sky securities authorities,
including any necessary "no-action" positions or exemptive orders from
such federal and state authorities), required to permit consummation
of the Acquisition contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would
not involve a risk of a material adverse effect on the assets or
properties of Acquired Fund or Acquiring Fund.
(o) Am Ex shall have approved the listing of the additional Acquiring Fund
Common Shares to be issued to common shareholders of Acquired Fund in
connection with the Acquisition.
(p) The preferences, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption of
the Acquiring Fund Preferred Shares as set forth in the Certificate of
Designation shall be identical in all material respects to those of
the Acquired Fund Preferred Shares.
(q) Acquiring Fund shall have obtained written confirmation from both
Xxxxx'x Investors Service, Inc. ("Moody's") and Standard & Poor's, a
division of The McGraw Hill Companies, Inc. ("S&P"), that (i)
consummation of the transactions contemplated by this Plan will not
impair the ratings assigned by such rating agencies to the existing
Municipal Income Preferred Shares, Series A and Series B, of Acquiring
Fund, and (ii) the Acquiring Fund Preferred Shares to be issued
pursuant to Section 1 of this Agreement will be rated "aaa" by Xxxxx'x
and "AAA" by S&P.
9. Fees and Expenses
(a) Acquired Fund and Acquiring Fund each represents and warrants to the
other that there are no broker or finders' fees payable by it in
connection with the transactions provided for herein.
(b) The expenses of entering into and carrying out the provisions of this
Plan shall be borne 25% by Acquiring Fund, 25% by Acquired Fund, 25%
by Voyageur Minnesota Municipal Income Fund III, Inc. and 25% by DMC.
10. Termination; Postponement; Waiver; Order
(a) Anything contained in this Plan to the contrary notwithstanding, this
Plan may be terminated and the Acquisition abandoned at any time
(whether before or after approval thereof by the shareholders of
Acquiring Fund or Acquired Fund) prior to the Closing, or the Closing
may be postponed as follows:
(1) by mutual consent of Acquired Fund and Acquiring Fund;
(2) by Acquiring Fund if any condition of its obligations set forth
in Section 8 has not been fulfilled or waived; or
(3) by Acquired Fund if any condition of its obligations set forth in
Section 8 has not been fulfilled or waived.
A Fund's Board of Directors may elect to terminate this Plan and to
abandon the Acquisition.
(b) If the transactions contemplated by this Plan have not been
consummated by December 31, 2006, this Plan shall automatically
terminate on that date, unless a later date is agreed to by both the
Acquired Fund Board and the Acquiring Fund Board.
(c) In the event this Plan is terminated pursuant to the provisions
hereof, this Plan shall become void and have no further effect, and
neither the Funds, nor their directors, officers, agents nor
shareholders shall have any liability in respect of this Plan.
(d) At any time prior to the Closing, any of the terms or conditions of
this Plan may be waived by the party who is entitled to the benefit
thereof by action taken by the Acquiring Fund Board or the Acquired
Fund Board, as the case may be, if, in the judgment of such Board,
such action or waiver will not have a material adverse effect on the
benefits intended under this Plan to its shareholders, on behalf of
whom such action is taken.
(e) The respective representations and warranties contained in Sections 4
through 6 hereof shall expire with and be terminated by the
Acquisition, and neither Acquired Fund nor Acquiring Fund, nor any of
their officers, directors, agents or shareholders shall have any
liability with respect to such representations or warranties after the
Closing. This provision shall not protect any officer, director, agent
or shareholder of Acquired Fund or Acquiring Fund against any
liability to the entity for which that officer, director, agent or
shareholder so acts or to its shareholders to which that officer,
director, 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 SEC with respect to this Plan shall be
issued prior to the Closing and shall impose any terms or conditions
that are determined by action of the Acquired Fund Board and the
Acquiring Fund Board to be acceptable, such terms and conditions shall
be binding as if a part of this Plan without further vote or approval
of the shareholders of Acquiring Fund or Acquired Fund, unless such
terms and conditions shall result in a change in the method of
computing the number of Acquiring Fund Shares to be issued to Acquired
Fund, in which event, unless such terms and conditions shall have been
included in the proxy solicitation material furnished to the
shareholders of Acquiring Fund and Acquired Fund prior to the Meeting,
this Plan shall not be consummated and shall terminate unless
Acquiring Fund and Acquired Fund shall each promptly call a special
meeting of its shareholders at which such conditions so imposed shall
be submitted for approval.
11. Entire Agreement and Amendments
This Plan embodies the entire agreement between the parties and there are
no agreements, understandings, restrictions or warranties relating to the
transactions contemplated by this Plan other than those set forth herein or
herein provided for. This Plan may be amended only by mutual consent of the
parties in writing. Neither this Plan nor any interest herein may be assigned
without the prior written consent of the other parties.
12. Counterparts
This Plan 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.
13. Notices
Any notice, report or demand required or permitted by any provision of this
Plan shall be in writing and shall be deemed to have been given to each party to
this Plan if delivered or mailed, first class postage prepaid, to the following
addresses:
If to Acquired Fund If to Acquiring Fund:
Delaware Investments Minnesota Delaware Investments Minnesota
Municipal Income Fund III, Inc. Municipal Income Fund II, Inc.
Xxx Xxxxxxxx Xxxxxx Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000 Xxxxxxxxxxxx, XX 00000
Attn: Secretary Attn: Secretary
If to DMC:
Delaware Management Company
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Secretary
14. Governing Law
This Plan shall be governed by and carried out in accordance with the laws
of the State of Minnesota.
[The remainder of this page was intentionally left blank.]
IN WITNESS WHEREOF, Acquired Fund, Acquiring Fund and DMC have each caused
this Plan to be executed on its behalf by its duly authorized officers, all as
of the date and year first-above written.
DELAWARE INVESTMENTS MINNESOTA
MUNICIPAL INCOME FUND III, INC.
Attest: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx Name: Xxxx X. Xxxxxxxx
Title: Vice President and Title: President and Chief
Assistant Secretary Executive Officer
DELAWARE INVESTMENTS MINNESOTA
MUNICIPAL INCOME FUND II, INC.
Attest: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx Name: Xxxx X. Xxxxxxxx
Title: Vice President and Title: President and Chief
Assistant Secretary Executive Officer
DELAWARE MANAGEMENT COMPANY, a
series of Delaware Management
Business Trust
Attest: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx Name: Xxxx X. Xxxxxxxx
Title: Vice President and Title: President and Chief
Assistant Secretary Executive Officer
