Exhibit No. EX-99.4.c
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), made as
of this 13th day of July 2006, by and between Delaware Group Tax-Free Fund, 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 Tax-Free USA Fund ("Acquiring Fund"),
and Delaware Investments Municipal Trust, 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 Tax-Free Oregon Insured Fund ("Acquired Fund").
PLAN OF REORGANIZATION
The reorganization (hereinafter referred to as the "Plan") will
consist of: (i) the acquisition by Delaware Group Tax-Free Fund 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"), and (c) shares of beneficial interest,
without par value, of Acquiring Fund - Class C ("Acquiring Fund Class C
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"), and (c) Acquiring Fund Class C Shares to the
holders of Acquired Fund - Class C Shares ("Acquired Fund Class C 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 Tax-Free Fund
herein contained, and in consideration of the delivery by Delaware Group
Tax-Free Fund of the number of its shares of beneficial interest of Acquiring
Fund hereinafter provided, Delaware Investments Municipal Trust, on behalf of
Acquired Fund, agrees that it will sell, convey, transfer and deliver to
Delaware Group Tax-Free Fund, 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 (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 Investments Municipal Trust 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 Investments
Municipal Trust, 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 Investments
Municipal Trust 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 the Acquired Fund.
(b) Subject to the terms and conditions of this Agreement, and in
reliance on the representations and warranties of Delaware Investments Municipal
Trust on behalf of Acquired Fund herein contained, and in consideration of such
sale, conveyance, transfer, and delivery, Delaware Group Tax-Free Fund agrees at
the Closing to deliver to Delaware Investments Municipal Trust 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; and
(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. 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 Investments
Municipal Trust 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
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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 a share of beneficial interest of Acquiring Fund Class A
Shares, Acquiring Fund Class B Shares and Acquiring Fund Class C 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 a share of beneficial interest of Acquired Fund Class A Shares,
Acquired Fund Class B Shares and Acquired Fund Class C 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.
3. Closing and Valuation Date
The Valuation Date shall be July 14, 2006, or such later date as the
parties may mutually agree. The Closing shall take place at the principal office
of Delaware Group Tax-Free Fund, 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
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elsewhere shall be disrupted so that, in the judgment of Delaware Group Tax-Free
Fund or Delaware Investments Municipal Trust, 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 Tax-Free Fund and Delaware Investments Municipal Trust. Delaware
Investments Municipal Trust shall have provided for delivery as of the Closing
of those Net Assets of Acquired Fund to be transferred to Delaware Group
Tax-Free Fund's Custodian, JPMorgan Xxxxx Xxxx, 0 Xxxxx Xxxxxxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxx, 00000. Also, Delaware Investments Municipal Trust 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 Tax-Free Fund shall issue and deliver a certificate or
certificates evidencing the shares of Acquiring Fund to be delivered at the
Closing to said transfer agent registered in such manner as Delaware Investments
Municipal Trust may request, or provide evidence satisfactory to Delaware
Investments Municipal Trust in such manner as Delaware Investments Municipal
Trust may 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 Investments Municipal Trust
Delaware Investments Municipal Trust represents and warrants to
Delaware Group Tax-Free Fund that:
(a) Delaware Investments Municipal Trust is a statutory trust created
under the laws of the State of Delaware on October 26, 2004, and is validly
existing and in good standing under the laws of that State. Delaware Investments
Municipal Trust, 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 and all of its shares sold have been sold pursuant to an effective
registration statement filed under the 1933 Act, except for any shares sold
pursuant to the private offering exemption for the purpose of raising initial
capital.
(b) Delaware Investments Municipal Trust 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 Annual Report
to Shareholders for the fiscal year ended August 31, 2005, audited by Xxxxxx &
Xxxxx, LLP, copies of which have been delivered to Delaware Group Tax-Free Fund,
and any unaudited financial statements, copies of which may be furnished to
Delaware Group Tax-Free Fund, fairly present the financial position of Acquired
Fund as of the date indicated, and the results of its operations
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for the period indicated, in conformity with generally accepted accounting
principles applied on a consistent basis.
(d) The books and records of Acquired Fund made available to Delaware
Group Tax-Free Fund 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 Investments Municipal Trust 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, 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 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 Investments Municipal Trust has the necessary trust power
and authority to conduct its business and the business of Acquired Fund as such
businesses are now being conducted.
(h) Delaware Investments Municipal Trust 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 Investments Municipal Trust has full trust power and
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 Investments Municipal Trust 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").
(k) Delaware Investments Municipal Trust does not have any unamortized
or unpaid organizational fees or expenses.
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(l) Delaware Investments Municipal Trust 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 Tax-Free Fund
Delaware Group Tax-Free Fund represents and warrants to Delaware
Investments Municipal Trust that:
(a) Delaware Group Tax-Free Fund 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 Tax-Free Fund,
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 or will be in full force and
effect as of the Closing and all of its shares sold have been sold pursuant to
an effective registration statement filed under the 1933 Act, except for any
shares sold pursuant to the private offering exemption for the purpose of
raising initial capital.
(b) Delaware Group Tax-Free Fund 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 Tax-Free Fund 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 Tax-Free 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 (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.
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(f) Delaware Group Tax-Free Fund has the necessary trust power and
authority to conduct its business and the business of Acquiring Fund as such
businesses are now being conducted.
(g) Delaware Group Tax-Free Fund 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 Tax-Free Fund has full trust power and 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 Tax-Free Fund 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 made available to Delaware
Investments Municipal Trust 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 Tax-Free Fund has elected to treat Acquiring Fund
as a regulated investment company ("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 Investments
Municipal Trust and Delaware Group Tax-Free Fund
Delaware Investments Municipal Trust and Delaware Group Tax-Free Fund
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.
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(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 (as defined below) 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 Investments Municipal Trust
by Delaware Group Tax-Free Fund, and by Delaware Investments Municipal Trust to
Delaware Group Tax-Free Fund, for inclusion in, or transmittal with, the
Combined Proxy Statement and 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 Investments Municipal Trust with
respect to the approval of Acquired Fund's shareholders of the 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 Investments Municipal Trust
(a) Delaware Investments Municipal Trust covenants to operate the
business of Acquired Fund as presently conducted between the date hereof and the
Closing.
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(b) Delaware Investments Municipal Trust 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 Investments Municipal Trust 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 Investments Municipal Trust will at the Closing provide
Delaware Group Tax-Free Fund 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's shares 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.
(e) The Board of Trustees of Delaware Investments Municipal Trust
shall call, and Delaware Investments Municipal Trust shall hold, a Special
Meeting of Acquired Fund's shareholders to consider and vote upon this Agreement
(the "Special Meeting") and Delaware Investments Municipal Trust shall take all
other actions reasonably necessary to obtain approval of the transactions
contemplated herein. Delaware Investments Municipal Trust 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 and 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 Investments Municipal Trust shall supply to Delaware
Group Tax-Free Fund, 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.
8. Covenants of Delaware Group Tax-Free Fund
(a) Delaware Group Tax-Free Fund 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-
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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 Tax-Free Fund covenants to operate the business of
Acquiring Fund as presently conducted between the date hereof and the Closing.
(c) Delaware Group Tax-Free Fund 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 Tax-Free Fund shall supply to Delaware Investments
Municipal Trust, 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 Tax-Free Fund 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 Investments Municipal
Trust and Delaware Group Tax-Free Fund
The obligations of Delaware Investments Municipal Trust and Delaware
Group Tax-Free Fund to effectuate this Agreement and the Plan hereunder shall be
subject to the following respective conditions:
(a) That (1) 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; (2) the
other party shall have performed all obligations 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.
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(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 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 and all of its capital gain net income, 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 and capital gain net
income 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 Investments Municipal
Trust and Delaware Group Tax-Free Fund shall receive an opinion from Xxxxxxxx
Ronon Xxxxxxx & Xxxxx, LLP ("SRSY") to the effect that, provided the acquisition
contemplated hereby is carried out in accordance with this Agreement and in
accordance with customary representations provided by Delaware Investments
Municipal Trust and Delaware Group Tax-Free Fund 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 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
11
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.
(h) That Delaware Group Tax-Free Fund shall have received an
opinion in form and substance reasonably satisfactory to it from SRSY, counsel
to Delaware Investments Municipal Trust, 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
12
laws of general applicability relating to or affecting creditor's rights and to
general equity principles:
(1) Delaware Investments Municipal Trust was created as a
statutory trust under the laws of the State of Delaware on October 26,
2004, and is validly existing and in good standing under the laws of
the State of Delaware;
(2) Delaware Investments Municipal Trust is authorized to issue
an unlimited number of shares of beneficial interest, without par
value, of Delaware Investments Municipal Trust and of Acquired Fund.
Assuming that the initial shares of beneficial interest of Acquired
Fund were issued in accordance with the 1940 Act, and the Agreement
and Declaration of Trust and By-Laws of Delaware Investments Municipal
Trust, and that all other such outstanding shares of Acquired Fund
were sold, issued and paid for in accordance with the terms of
Acquired Fund prospectus in effect at the time of such sales, each
such outstanding share is validly issued, fully paid and
non-assessable;
(3) Delaware Investments Municipal Trust 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 Investments Municipal Trust, the unfavorable outcome of which
would materially and adversely affect Delaware Investments Municipal
Trust 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 Investments Municipal
Trust 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 Investments Municipal Trust 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 Investments Municipal Trust is a party or by
which Delaware Investments Municipal Trust is otherwise bound; and
(7) This Agreement has been validly authorized, executed and
delivered by Delaware Investments Municipal Trust and represents the
legal, valid and binding obligation of Delaware Investments Municipal
Trust and is enforceable against Delaware Investments Municipal Trust
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 Investments Municipal Trust
with regard to matters of
13
fact and certain certifications and written statements of governmental officials
with respect to the good standing of Delaware Investments Municipal Trust.
(i) That Delaware Investments Municipal Trust shall have received an
opinion in form and substance reasonably satisfactory to it from SRSY, counsel
to Delaware Group Tax-Free Fund, 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 Tax-Free Fund 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 Tax-Free Fund is authorized to issue an
unlimited number of shares of beneficial interest, without par value.
Assuming that the initial shares of beneficial interest of Acquiring
Fund were issued in accordance with the 1940 Act and Delaware Group
Tax-Free Fund's Agreement and Declaration of Trust and By-Laws, and
that all other such outstanding shares of Acquiring Fund were sold,
issued and paid for in accordance with the terms of Acquiring Fund's
prospectus in effect at the time of such sales, each such outstanding
share of Acquiring Fund is validly issued, fully paid and
non-assessable;
(3) Delaware Group Tax-Free Fund 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 Tax-Free Fund, the unfavorable outcome of which would
materially and adversely affect Delaware Group Tax-Free Fund 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 Tax-Free Fund 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 Tax-Free Fund 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
14
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 Tax-Free Fund 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 Tax-Free Fund is a party or by which Delaware Group
Tax-Free Fund is otherwise bound; and
(8) This Agreement has been validly authorized, executed and
delivered by Delaware Group Tax-Free Fund and represents the legal,
valid and binding obligation of Delaware Group Tax-Free Fund and is
enforceable against Delaware Group Tax-Free Fund 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 Tax-Free Fund with
regard to matters of fact and certain certifications and written statements of
governmental officials with respect to the good standing of Delaware Group
Tax-Free Fund.
(j) That Delaware Group Tax-Free Fund's 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 Tax-Free Fund 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 Investments Municipal Trust, 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 33.33%
by Acquired Fund; 33.33% by Acquiring Fund; and 33.34% 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:
15
(1) by mutual consent of Delaware Investments Municipal Trust and
Delaware Group Tax-Free Fund;
(2) by Delaware Group Tax-Free Fund if any condition precedent to
its obligations set forth in Section 9 has not been fulfilled or
waived by Delaware Group Tax-Free Fund; or
(3) by Delaware Investments Municipal Trust if any condition
precedent to its obligations set forth in Section 9 has not been
fulfilled or waived by Delaware Investments Municipal Trust.
(b) If the transactions contemplated by this Agreement have not been
consummated by December 31, 2006, this Agreement shall automatically terminate
on that date, unless a later date is agreed to by both Delaware Investments
Municipal Trust and Delaware Group Tax-Free Fund.
(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 Investments
Municipal Trust or Delaware Group Tax-Free Fund 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 Investments Municipal Trust
or Delaware Group Tax-Free Fund, 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 Investments Municipal Trust nor Delaware Group
Tax-Free Fund, 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 Investments Municipal Trust or Delaware Group Tax-Free
Fund 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
Investments Municipal Trust or the Board of Trustees of Delaware Group Tax-Free
Fund 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 Tax-Free Fund and Delaware Investments
Municipal Trust
(a) Each party acknowledges and agrees that all obligations of
Delaware Group Tax-Free Fund under this Agreement are binding only with respect
to Acquiring Fund;
16
that any liability of Delaware Group Tax-Free Fund 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 Tax-Free Fund
shall be liable with respect to this Agreement or in connection with the
transactions contemplated herein; and that neither Delaware Investments
Municipal Trust nor Acquired Fund shall seek satisfaction of any such obligation
or liability from the shareholders of Delaware Group Tax-Free Fund, the
trustees, officers, employees or agents of Delaware Group Tax-Free Fund, or any
of them.
(b) Each party acknowledges and agrees that all obligations of
Delaware Investments Municipal Trust under this Agreement are binding only with
respect to Acquired Fund; that any liability of Delaware Investments Municipal
Trust 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 Investments Municipal Trust shall be liable with respect to this
Agreement or in connection with the transactions contemplated herein; and that
neither Delaware Group Tax-Free Fund nor Acquiring Fund shall seek satisfaction
of any such obligation or liability from the shareholders of Delaware
Investments Municipal Trust, the trustees, officers, employees or agents of
Delaware Investments Municipal Trust, or any of them.
13. Final Tax Returns and Forms 1099 of Acquired Fund
(a) After the Closing, Delaware Investments Municipal Trust 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 Investments Municipal
Trust 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 Investments Municipal Trust 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 Tax-Free Fund and Delaware Investments Municipal Trust
will provide each other and their respective representatives with such
cooperation 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 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 of Acquired
17
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.
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
Investments Municipal Trust or Delaware Group Tax-Free Fund 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.
[Signatures contained on following page.]
18
IN WITNESS WHEREOF, Delaware Investments Municipal Trust and Delaware
Group Tax-Free Fund 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 Investments Municipal Trust, on
behalf of the Delaware Tax-Free Oregon Insured
Fund
By: /s/ Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx, President and Chief Executive
Officer
Delaware Group Tax-Free Fund, on behalf of the
Delaware Tax-Free USA Fund
By: /s/ Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx, President and Chief Executive
Officer