AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of
this 17th day of October, 2002, by and between XXXXXXX RREEF SECURITIES TRUST, a
Delaware business trust (the "Trust") on behalf of its series, XXXXXXX RREEF
Real Estate Securities Fund (the "Acquiring Fund"), and REAL ESTATE SECURITIES
FUND, INC. (the "Selling Fund"), a Maryland corporation.
Where appropriate, references to the Acquiring Fund mean to the Trust,
on behalf of the Acquiring Fund.
This Agreement is intended to be and is adopted as a "plan of
reorganization" within the meaning of Treasury Regulations Section 1.368-2(g),
for a reorganization under Section 368(a)(1) of the Internal Revenue Code of
1986, as amended (the "Code"). The reorganization ("Reorganization") will
consist of the transfer to the Acquiring Fund of substantially all of the assets
of the Selling Fund in exchange for the assumption by the Acquiring Fund of all
stated liabilities of the Selling Fund and the issuance by the Acquiring Fund of
shares of beneficial interest, with no par value (the "Acquiring Fund Shares"),
to be distributed, after the Closing Date hereinafter referred to, to the
shareholders of the Selling Fund in liquidation of the Selling Fund as provided
herein, all upon the terms and conditions hereinafter set forth in this
Agreement.
In consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:
1. THE REORGANIZATION AND LIQUIDATION OF THE SELLING FUND
1.1 Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Selling Fund
agrees to assign, deliver and otherwise transfer the Selling Fund Assets (as
defined in paragraph 1.2) to the Acquiring Fund and the Acquiring Fund agrees in
exchange therefor to assume all of the Selling Fund stated liabilities on the
Closing Date as set forth in paragraph 1.3(a) and to deliver to the Selling Fund
the number of Acquiring Fund Shares, including fractional shares, determined in
the manner set forth in paragraph 2.3. Such transactions shall take place at the
closing provided for in paragraph 3.1 ("Closing").
1.2(a) The "Selling Fund Assets" shall consist of all property,
including without limitation, all cash (other than the "Cash Reserve" (as
defined in paragraph 1.3(b)), cash equivalents, securities and dividend and
interest receivables owned by the Selling Fund, and any deferred or prepaid
expenses shown as an asset on the Selling Fund's books on the Valuation Date.
(b) On or prior to the Valuation Date, the Selling Fund will provide
the Acquiring Fund with a list of all of assets to be assigned, delivered and
otherwise transferred to the Acquiring Fund and of the stated liabilities to be
assumed by the Acquiring Fund pursuant to this Agreement. The Selling Fund
reserves the right to sell any of the securities on such list but will not,
without the prior approval of the Acquiring Fund, acquire any additional
securities other than securities of the type in which the Acquiring Fund is
permitted to invest and in amounts agreed to in writing by the Acquiring Fund.
The Acquiring Fund will, within a reasonable time prior to the Valuation Date,
furnish the Selling Fund with a statement of its investment objectives, policies
and restrictions and a list of the securities, if any, on the list referred to
in the first sentence of this paragraph that do not conform to the Acquiring
Fund's investment objective, policies and restrictions. In the event that the
Selling Fund holds any investments that the Acquiring Fund is not permitted to
hold, the Selling Fund will dispose of such securities on or prior to the
Valuation Date. In addition, if it is determined that the portfolios of the
Selling Fund and the Acquiring Fund, when aggregated, would contain investments
exceeding certain percentage limitations imposed upon the Acquiring Fund with
respect to such investments, the Selling Fund if requested by the Acquiring Fund
will, on or prior to the Valuation Date, dispose of and/or reinvest a sufficient
amount of such investments as may be necessary to avoid violating such
limitations as of the Closing Date (as defined in paragraph 3.1).
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1.3(a) The Selling Fund will endeavor to discharge all of its
liabilities and obligations on or prior to the Valuation Date. The Acquiring
Fund will assume all stated liabilities, which include, without limitation, all
expenses, costs, charges and reserves reflected on an unaudited Statement of
Assets and Liabilities of the Selling Fund prepared by the Treasurer of the
Selling Fund, as of the Valuation Date in accordance with generally accepted
accounting principles consistently applied from the prior audited period.
(b) On the Valuation Date, the Selling Fund may establish a cash
reserve, which shall not exceed 5% of the Selling Fund's net assets as of the
close of business on the Valuation Date ("Cash Reserve") to be retained by the
Selling Fund and used for the payment of its liabilities not discharged prior to
the Valuation Date and for the expenses of dissolution.
1.4 In order for the Selling Fund to comply with Section 852(a)(1) of
the Code and to avoid having any investment company taxable income or net
capital gain (as defined in Sections 852(b)(2) and 1222(11) of the Code,
respectively) in the short taxable year ending with its dissolution, the Selling
Fund will on or before the Valuation Date (a) declare a dividend in an amount
large enough so that it will have declared dividends of all of its investment
company taxable income and net capital gain, if any, for such taxable year
(determined without regard to any deduction for dividends paid) and (b)
distribute such dividend.
1.5 On the Closing Date or as soon as practicable thereafter, the
Selling Fund will distribute the Acquiring Fund Shares received by the Selling
Fund pursuant to paragraph 1.1 pro rata to its shareholders of record determined
as of the close of business on the Valuation Date ("Selling Fund Shareholders").
Class A Shareholders of the Selling Fund will receive Class A Shares of the
Acquiring Fund. Class B Shareholders of the Selling Fund will receive Class B
Shares of the Acquiring Fund. Institutional Class shareholders of the Selling
Fund will receive Institutional Class Shares of the Acquiring Fund. Such
distribution will be accomplished by an instruction, signed by the Secretary of
the Selling Fund to transfer Acquiring Fund Shares then credited to the Selling
Fund's account on the books of the Acquiring Fund, to open accounts on the books
of the Acquiring Fund in the names of the Selling Fund Shareholders and
representing the respective pro rata number of Acquiring Fund Shares due to such
Selling Fund Shareholders. All issued and outstanding shares of the Selling Fund
simultaneously will be canceled on the Selling Fund's books; however, share
certificates representing interests in the Selling Fund will represent a number
of Acquiring Fund Shares after the Closing Date as determined in accordance with
paragraph 2.3. The Acquiring Fund will issue certificates representing the
Acquiring Fund Shares in connection with such exchange only upon the written
request of a Selling Fund Shareholder.
1.6 Ownership of Acquiring Fund Shares will be shown on the books of
the Acquiring Fund's transfer agent. The Acquiring Fund Shares will be issued in
the manner described in the Acquiring Fund's current Prospectus and Statement of
Additional Information.
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1.7 Any transfer taxes payable upon issuance of the Acquiring Fund
Shares in a name other than the registered holder of the Acquiring Fund Shares
on the Selling Fund's books as of the close of business on the Valuation Date
shall, as a condition of such issuance and transfer, be paid by the person to
whom the Acquiring Fund Shares are to be issued and transferred.
1.8 Any reporting responsibility of the Selling Fund, is and shall
remain the responsibility of the Selling Fund up to and including the date on
which the Selling Fund is dissolved pursuant to paragraph 1.9.
1.9 Within one year after the Closing Date, the Selling Fund shall pay
or make provision for the payment of all its liabilities and taxes, and
distribute to the shareholders of the Selling Fund as of the close of business
on the Valuation Date any remaining amount of the Cash Reserve (as reduced by
the estimated cost of distributing it to shareholders). If and to the extent
that any trust, escrow account, or other similar entity continues after the
close of such one-year period in connection either with making provision for
payment of liabilities or taxes or with distributions to shareholders of the
Selling Fund, such entity shall either (i) qualify as a liquidating trust under
Section 7701 of the Code (and applicable Treasury Regulations thereunder) or
other entity which does not constitute a continuation of the Selling Fund for
federal income tax purposes, or (ii) be subject to a waiver under Section
368(a)(2)(G)(ii) of the complete distribution requirement of Section
368(a)(2)(G)(i) of the Code. The Selling Fund shall be dissolved promptly
following the making of all distributions pursuant to paragraph 1.5 (and, in any
event, within one year after the Closing Date).
1.10 Copies of all books and records maintained on behalf of the
Selling Fund in connection with its obligations under the Investment Company Act
of 1940, as amended (the "1940 Act"), the Code, state blue sky laws or otherwise
in connection with this Agreement will promptly after the Closing be delivered
to officers of the Acquiring Fund or their designee and the Acquiring Fund or
its designee shall comply with applicable record retention requirements to which
the Selling Fund is subject under the 1940 Act.
2. VALUATION
2.1 The value of the Selling Fund Assets shall be the value of such
assets computed as of 4:00 p.m. on the New York Stock Exchange on the day of the
receipt of the requisite approval by shareholders of the Selling Fund of this
Agreement or at such later date after such approval as may be mutually agreed
upon in writing (such time and date being hereinafter called the "Valuation
Date"), using the valuation procedures set forth in the Selling Fund's then
current Prospectus and Statement of Additional Information.
2.2 The net asset value of an Acquiring Fund Share shall be the net
asset value per share computed on the Valuation Date, using the valuation
procedures set forth in the Acquiring Fund's then current Prospectus and
Statement of Additional Information.
2.3 The number of Acquiring Fund Shares (including fractional shares,
if any) to be issued hereunder shall be determined, with respect to each class,
by dividing the aggregate net asset value of the applicable class of Selling
Fund shares (calculated in accordance with paragraph 2.1) by the net asset value
per share of the applicable class of shares of the Acquiring Fund. For purposes
of this paragraph, the aggregate net asset value of the shares of the Selling
Fund shall not include the amount of the Cash Reserve.
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2.4 All computations of value shall be made by Investment Company
Capital Corporation in accordance with its regular practice in pricing the
Acquiring Fund. The Acquiring Fund shall cause Investment Company Capital
Corporation to deliver a copy of its valuation report at the Closing.
3. CLOSING AND CLOSING DATE
3.1 The Closing shall take place on the next business day following the
Valuation Date (the "Closing Date"). The Closing shall be held as of 5:00 p.m.
Eastern time, or at such other time as the parties may agree. The Closing shall
be held in a location mutually agreeable to the parties hereto. All acts taking
place at the Closing shall be deemed to take place simultaneously as of 5:00
p.m. Eastern time on the Closing Date unless otherwise provided.
3.2 Portfolio securities held by the Selling Fund and represented by a
certificate or other written instrument shall be presented by it or on its
behalf to Deutsche Bank Trust Company Americas (the "Custodian"), as custodian
for the Acquiring Fund, for examination no later than five business days
preceding the Valuation Date. Such portfolio securities (together with any cash
or other assets) shall be delivered by the Selling Fund to the Custodian for the
account of the Acquiring Fund on or before the Closing Date in conformity with
applicable custody provisions under the 1940 Act and duly endorsed in proper
form for transfer in such condition as to constitute good delivery thereof in
accordance with the custom of brokers. The portfolio securities shall be
accompanied by all necessary Federal and state stock transfer stamps or a check
for the appropriate purchase price of such stamps. Portfolio securities and
instruments deposited with a securities depository (as defined in Rule 17f-4
under the 0000 Xxx) shall be delivered on or before the Closing Date by
book-entry in accordance with customary practices of such depository and the
Custodian. The cash delivered shall be in the form of a Federal Funds wire,
payable to the order of "Deutsche Bank Trust Company Americas," Custodian for
the Acquiring Fund.
3.3 In the event that on the Valuation Date, (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be restricted or
(b) trading or the reporting of trading on such Exchange or elsewhere shall be
disrupted so that, in the judgment of both the Selling Fund and Acquiring Fund,
accurate appraisal of the value of the net assets of the Acquiring Fund or the
Selling Fund Assets 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 and reporting shall have been
restored.
3.4 If requested, the Selling Fund shall deliver to the Acquiring Fund
or its designee (a) at the Closing, a list, certified by the Secretary of the
Selling Fund, of the names, addresses and taxpayer identification numbers of the
Selling Fund Shareholders and the number and percentage ownership of outstanding
Selling Fund shares owned by each such Selling Fund Shareholder, all as of the
Valuation Date, and (b) as soon as practicable after the Closing, all original
documentation (including Internal Revenue Service forms, certificates,
certifications and correspondence) relating to the Selling Fund's taxpayer
identification numbers and their liability for or exemption from back-up
withholding. The Acquiring Fund shall issue and deliver to such Secretary a
confirmation evidencing delivery of Acquiring Fund Shares to be credited on the
Closing Date to the Selling Fund or provide evidence satisfactory to the Selling
Fund that such Acquiring Fund Shares have been credited to the Selling Fund's
account on the books of the Acquiring Fund. At the Closing, each party shall
deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as such other party or its
counsel may reasonably request.
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4. COVENANTS OF THE SELLING FUND AND ACQUIRING FUND
4.1 Except as otherwise expressly provided herein with respect to the
Selling Fund, the Acquiring Fund and the Selling Fund each will operate its
business in the ordinary course between the date hereof and the Closing Date, it
being understood that such ordinary course of business will include customary
dividends and other distributions.
4.2 The Trust, will prepare and file with the Securities and Exchange
Commission ("Commission") a registration statement on Form N-14 under the
Securities Act of 1933, as amended ("1933 Act"), relating to the Acquiring
Shares ("Registration Statement"). The Selling Fund will provide the Trust with
the Proxy Materials as described in paragraph 4.3 below, for inclusion in the
Registration Statement. The Selling Fund will further provide the Trust with
such other information and documents relating to the Selling Fund as are
reasonably necessary for the preparation of the Registration Statement.
4.3 The Selling Fund will call a meeting of the Selling Fund
shareholders to consider and act upon this Agreement and to take all other
action necessary to obtain approval of the transactions contemplated herein. The
Selling Fund will prepare the notice of meeting, form of proxy and proxy
statement (collectively, "Proxy Materials") to be used in connection with such
meeting; provided that the Trust will furnish the Selling Fund with the
Acquiring Fund's currently effective prospectus for inclusion in the Proxy
Materials and with such other information relating to the Acquiring Fund as is
reasonably necessary for the preparation of the Proxy Materials.
4.4 The Selling Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of Selling Fund Shares.
4.5 Subject to the provisions of this Agreement, the Selling Fund and
the Acquiring Fund will each take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
4.6 The Selling Fund shall furnish or cause to be furnished to the
Acquiring Fund within 30 days after the Closing Date a statement of the Selling
Fund's assets and liabilities as of the Closing Date, which statement shall be
certified by the Treasurer of the Selling Fund and shall be in accordance with
generally accepted accounting principles consistently applied. As promptly as
practicable, but in any case within 60 days after the Closing Date, the Selling
Fund shall furnish the Acquiring Fund, in such form as is reasonably
satisfactory to the Acquiring Fund, a statement certified by the Treasurer of
the Selling Fund of earnings and profits of the Selling Fund for Federal income
tax purposes that will be carried over to the Acquiring Fund pursuant to Section
381 of the Code.
4.7 As soon after the Closing Date as is reasonably practicable, the
Selling Fund (a) shall prepare and file all Federal and other tax returns and
reports of the Selling Fund required by law to be filed with respect to all
periods ending on or before the Closing Date but not theretofore filed and (b)
shall pay all Federal and other taxes shown as due thereon and/or all Federal
and other taxes that were unpaid as of the Closing Date, including without
limitation, all taxes for which the provision for payment was made as of the
Closing Date (as represented in paragraph 5.2(k)).
4.8 The Trust agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act and the 1940 Act and to
make such filings required by the state Blue Sky and securities laws as it may
deem appropriate in order to continue its operations after the Closing Date.
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5. REPRESENTATIONS AND WARRANTIES
5.1 The Trust represents and warrants to the Selling Fund, on behalf of
the Acquiring Fund, as follows:
(a) The Trust is a validly existing Delaware business trust
with full power to carry on its business as presently conducted;
(b) The Trust is a duly registered, open-end, management
investment company, and its registration with the Commission as an investment
company under the 1940 Act and the registration of its shares under the 1933 Act
are in full force and effect;
(c) All of the issued and outstanding shares of the Acquiring
Fund have been offered and sold in compliance in all material respects with
applicable registration requirements of the 1933 Act and state securities laws.
Shares of the Acquiring Fund are registered in all jurisdictions in which they
are required to be registered under state securities laws and other laws, and
said registrations, including any periodic reports or supplemental filings, are
complete and current, all fees required to be paid have been paid, and the
Acquiring Fund is not subject to any stop order and is fully qualified to sell
its shares in each state in which its shares have been registered;
(d) The current Prospectus and Statement of Additional
Information of the Acquiring Fund conforms in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the regulations
thereunder and do not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(e) The Trust is not in, and the execution, delivery and
performance of this Agreement will not result in a material violation of any
provision of the Trust's Declaration of Trust or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the Trust
is a party or by which it is bound;
(f) No litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or, to its knowledge, threatened against the Acquiring Fund or any of its
properties or assets which, if adversely determined, would materially and
adversely affect its financial condition or the conduct of its business; and the
Trust knows of no facts that might form the basis for the institution of such
proceedings and is not a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body which materially and
adversely affects, or is reasonably likely to materially and adversely effect,
its business or its ability to consummate the transactions herein contemplated;
(g) The Statement of Assets and Liabilities, Statement of
Operations, Statement of Changes in Net Assets and Financial Highlights for the
year ended November 30, 2001, of the Trust audited by Deloitte & Touche (copies
of which have been furnished to the Selling Fund) fairly present, in all
material respects, the Acquiring Fund's financial condition as of such date in
accordance with generally accepted accounting principles, and its results of
such operations, changes in its net assets and financial highlights for such
period, and as of such date there were no known liabilities of the Acquiring
Fund (contingent or otherwise) not disclosed therein that would be required in
accordance with generally accepted accounting principles to be disclosed
therein;
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(h) All issued and outstanding Acquiring Fund Shares are, and
at the Closing Date will be, duly and validly issued and outstanding, fully paid
and nonassessable with no personal liability attaching to the ownership thereof,
except as set forth in the Acquiring Fund's current Prospectus incorporated by
reference in the Registration Statement. The Acquiring Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any of its shares;
(i) The execution, delivery and performance of this Agreement
have been duly authorized by all necessary action on the part of the Trust, and
this Agreement constitutes a valid and binding obligation of the Trust
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles. No other consents,
authorizations or approvals are necessary in connection with the Trust's
performance of this Agreement;
(j) The Acquiring Fund Shares to be issued and delivered to
the Selling Fund, for the account of the Selling Fund Shareholders, pursuant to
the terms of this Agreement will at the Closing Date have been duly authorized
and, when so issued and delivered, will be duly and validly issued Acquiring
Fund Shares, and will be fully paid and non-assessable with no personal
liability attaching to the ownership thereof, except as set forth in the Trust's
current Statement of Additional Information incorporated by reference in the
Statement of Additional Information to this Registration Statement;
(k) All material Federal and other tax returns and reports of
the Trust required by law to be filed on or before the Closing Date have been
filed and are correct, and all Federal and other taxes shown as due or required
to be shown as due on said returns and reports have been paid or provision has
been made for the payment thereof, and to the best of the Trust's knowledge, no
such return is currently under audit and no assessment has been asserted with
respect to any such return;
(l) For each taxable year since its inception, the Trust has
met the requirements of Subchapter M of the Code for qualification and treatment
as a "regulated investment company" and neither the execution or delivery of nor
the performance of its obligations under this Agreement will adversely affect,
and no other events are reasonably likely to occur which will adversely affect
the ability of the Trust to continue to meet the requirements of Subchapter M of
the Code;
(m) Since its inception there has been no change by the Trust
in accounting methods, principles, or practices, including those required by
generally accepted accounting principles;
(n) The information furnished or to be furnished by the Trust
for use in registration statements, proxy materials and other documents which
may be necessary in connection with the transactions contemplated hereby shall
be accurate and complete in all material respects and shall comply in all
material respects with Federal securities and other laws and regulations
applicable thereto; and
(o) The Proxy Materials to be included in the Registration
Statement (only insofar as they relate to the Acquiring Fund) will, on the
effective date of the Registration Statement and on the Closing Date, 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, in
light of the circumstances under which such statements were made, not materially
misleading.
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5.2 The Selling Fund represents and warrants to the Acquiring
Fund, as follows:
(a) The Selling Fund is a validly existing Maryland
corporation with full power to carry on its business as presently conducted;
(b) The Selling Fund is a duly registered, open-end,
management investment company, and its registration with the Commission as an
investment company under the 1940 Act and the registration of its shares under
the 1933 Act are in full force and effect;
(c) All of the issued and outstanding shares of beneficial
interest of the Selling Fund have been offered and sold in compliance in all
material respects with applicable requirements of the 1933 Act and state
securities laws. Shares of the Selling Fund are registered in all jurisdictions
in which they are required to be registered and said registrations, including
any periodic reports or supplemental filings, are complete and current, all fees
required to be paid have been paid, and the Selling Fund is not subject to any
stop order and is fully qualified to sell its shares in each state in which its
shares have been registered;
(d) The current Prospectus and Statement of Additional
Information of the Selling Fund conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the regulations
thereunder and do not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(e) The Selling Fund is not, and the execution, delivery and
performance of this Agreement will not result, in a material violation of any
provision of the Selling Fund's Articles of Incorporation or By-Laws or of any
agreement, indenture, instrument, contract, lease or other undertaking to which
the Selling Fund is a party or by which it is bound;
(f) No litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or, to its knowledge, threatened against the Selling Fund or any of its
properties or assets which, if adversely determined, would materially and
adversely affect its financial condition or the conduct of its business; and the
Selling Fund knows of no facts that might form the basis for the institution of
such proceedings and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which materially and
adversely affects, or is reasonably likely to materially and adversely effect,
its business or its ability to consummate the transactions herein contemplated;
(g) The Statement of Assets and Liabilities, Statement of
Operations, Statement of Changes in Net Assets and Financial Highlights of the
Selling Fund for the year ended December 31, 2001 audited by
PricewaterhouseCoopers LLP (copies of which have been or will be furnished to
the Trust) fairly present, in all material respects, the Selling Fund's
financial condition as of such date, and its results of operations, changes in
its net assets and financial highlights for such period in accordance with
generally accepted accounting principles, and as of such date there were no
known liabilities of the Selling Fund (contingent or otherwise) not disclosed
therein that would be required in accordance with generally accepted accounting
principles to be disclosed therein;
(h) The Selling Fund has no material contracts or other
commitments (other than this Agreement) that will be terminated with liability
to it prior to the Closing Date;
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(i) All issued and outstanding shares of the Selling Fund are,
and at the Closing Date will be, duly and validly issued and outstanding, fully
paid and nonassessable with no personal liability attaching to the ownership
thereof, as set forth in the Fund's current Statement of Additional Information
incorporated by reference in the Statement of Additional Information to this
Registration Statement. The Selling Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase any of its shares, nor is
there outstanding any security convertible to any of its shares. All such shares
will, at the time of Closing, be held by the persons and in the amounts set
forth in the list of shareholders submitted to the Acquiring Fund pursuant to
paragraph 3.4;
(j) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by all necessary action
on the part of the Selling Fund, and subject to the approval of the Selling
Fund's shareholders, this Agreement constitutes a valid and binding obligation
of the Selling Fund, enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights and to general equity principles. No
other consents, authorizations or approvals are necessary in connection with the
Selling Fund's performance of this Agreement;
(k) All material Federal and other tax returns and reports of
the Selling Fund required by law to be filed on or before the Closing Date shall
have been filed and are correct and all Federal and other taxes shown as due or
required to be shown as due on said returns and reports have been paid or
provision has been made for the payment thereof, and to the best of the Selling
Fund's knowledge, no such return is currently under audit and no assessment has
been asserted with respect to any such return;
(l) For each taxable year since its inception, the Selling
Fund, has met all the requirements of Subchapter M of the Code for qualification
and treatment as a "regulated investment company" and neither the execution or
delivery of nor the performance of its obligations under this Agreement will
adversely affect, and no other events are reasonably likely to occur which will
adversely affect, the ability of the Selling Fund to continue to meet the
requirements of Subchapter M of the Code;
(m) At the Closing Date, the Selling Fund will have good and
valid title to the Selling Fund Assets, subject to no liens (other than the
obligation, if any, to pay the purchase price of portfolio securities purchased
by the Selling Fund which have not settled prior to the Closing Date), security
interests or other encumbrances, and full right, power and authority to assign,
deliver and otherwise transfer such assets hereunder, and upon delivery and
payment for such assets, the Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof,
including any restrictions as might arise under the 1933 Act;
(n) On the effective date of the Registration Statement, at
the time of the meeting of the Selling Fund's shareholders and on the Closing
Date, the Proxy Materials (exclusive of the currently effective Acquiring Fund
Prospectus contained therein) will (i) comply in all material respects with the
provisions of the 1933 Act, the Securities Exchange Act of 1934, as amended
("1934 Act") and the 0000 Xxx and the regulations thereunder and (ii) 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. Any other information furnished by the Selling Fund for use in the
Registration Statement or in any other manner that may be necessary in
connection with the transactions contemplated hereby shall be accurate and
complete and shall comply in all material respects with applicable Federal
securities and other laws and regulations thereunder;
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(o) The Selling Fund will, on or prior to the Valuation Date,
declare one or more dividends or other distributions to shareholders that,
together with all previous dividends and other distributions to shareholders,
shall have the effect of distributing to the shareholders all of its investment
company taxable income and net capital gain, if any, through the Valuation Date
(computed without regard to any deduction for dividends paid);
(p) The Selling Fund has maintained or has caused to be
maintained on its behalf all books and accounts as required of a registered
investment company in compliance with the requirements of Section 31 of the 1940
Act and the Rules thereunder; and
(q) The Selling Fund is not acquiring the Acquiring Fund
Shares to be issued hereunder for the purpose of making any distribution thereof
other than in accordance with the terms of this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLING FUND
The obligations of the Selling Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Trust on behalf of the Acquiring Fund of all the obligations to be performed by
it hereunder on or before the Closing Date and, in addition thereto, the
following conditions:
6.1 All representations and warranties of the Trust contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date.
6.2 The Trust shall have delivered to the Selling Fund, a certificate
of its President and Treasurer, in a form reasonably satisfactory to the Selling
Fund and dated as of the Closing Date, to the effect that the representations
and warranties of the Trust made in this Agreement are true and correct and
as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as the Selling Fund
shall reasonably request.
6.3 The Selling Fund shall have received a favorable opinion from
Xxxxxxx Xxxx & Xxxxxxxxx, counsel to the Trust, dated as of the Closing Date, to
the effect that:
(a) The Trust is a validly existing Delaware business trust,
and has the power to own all of its properties and assets and to carry on its
business as presently conducted (Delaware counsel may be relied upon in
delivering such opinion);
(b) the Trust is a duly registered, open-end, management
investment company, and its registration with the Commission as an investment
company under the 1940 Act is in full force and effect;
(c) this Agreement has been duly authorized, executed and
delivered by the Trust and, assuming that the Registration Statement complies
with the 1933 Act, the 1934 Act and the 1940 Act and regulations thereunder and
assuming due authorization, execution and delivery of this Agreement by the
Selling Fund, is a valid and binding obligation of the Trust enforceable against
the Trust in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
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(d) the Acquiring Fund Shares to be issued to the Selling Fund
Shareholders as provided by this Agreement are duly authorized and upon such
delivery will be validly issued, fully paid and non-assessable (except as set
forth in the Trust's Statement of Additional Information), and no shareholder of
the Trust has any preemptive rights to subscription or purchase in respect
thereof (Delaware counsel may be relied upon in delivering such opinion);
(e) the execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not, violate the
Trust's Declaration of Trust or By-Laws (Delaware counsel may be relied upon in
delivering such opinion); and
(f) to the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority of the United
States or any state is required for the consummation by Trust of the
transactions contemplated herein, except such as have been obtained under the
1933 Act, the 1934 Act and the 1940 Act and such as may be required under state
securities laws.
6.4 As of the Closing Date, there shall have been no material change in
the Acquiring Fund's investment objective, policies and restrictions nor any
increase in the investment management fees from those described in the Acquiring
Fund's Prospectus for the A and B Class shares and Prospectus for the
Institutional Class shares and the Acquiring Fund's Statement of Additional
Information, each dated September 3, 2002.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
Selling Fund, of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the Selling Fund contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date.
7.2 The Selling Fund shall have delivered to the Acquiring Fund at the
Closing a certificate of its President and its Treasurer, in form and substance
satisfactory to the Acquiring Fund and dated as of the Closing Date, to the
effect that the representations and warranties of the Selling Fund made in this
Agreement are true and correct at and as of the Closing Date, except as they may
be affected by the transactions contemplated by this Agreement, and as to such
other matters as the Trust shall reasonably request.
7.3 The Selling Fund shall have delivered to the Acquiring Fund, a
statement of the Selling Fund Assets and its liabilities, together with a list
of the Selling Fund's portfolio securities and other assets showing the
respective adjusted bases and holding periods thereof for income tax purposes,
as of the Closing Date, certified by the Treasurer of the Selling Fund.
7.4 The Selling Fund shall have delivered to the Trust within three
business days after the Closing a letter from PricewaterhouseCoopers LLP dated
as of the Closing Date stating that (a) such firm has performed a limited review
of the Federal and state income tax returns of the Selling Fund for each of the
last three taxable years and, based on such limited review, nothing came to
their attention that caused them to believe that such returns did not properly
reflect, in all material respects, the Federal and state income tax liabilities
of the Selling Fund for the periods covered thereby, (b) for the period from
January 1, 2002 to and including the Closing Date, such firm has performed a
limited review (based on unaudited financial data) to ascertain the amount of
applicable Federal, state and local taxes and has determined that same either
have been paid or reserves have been established for payment of such taxes, and,
based on such limited review, nothing came to their attention that caused them
to believe that the taxes paid or reserves set aside for payment of such taxes
were not adequate in all material respects for the satisfaction of all Federal,
state and local tax liabilities for the period from January 1, 2002 to and
including the Closing Date and (c) based on such limited reviews, nothing came
to their attention that caused them to believe that the Selling Fund would not
qualify as a regulated investment company for Federal income tax purposes for
any such year or period.
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7.5 The Trust shall have received at the Closing a favorable opinion
from Xxxxxx, Xxxxx & Bockius LLP, counsel to the Selling Fund, dated as of the
Closing Date to the effect that:
(a) The Selling Fund is a validly existing Maryland
corporation and has the power to own all of its properties and assets and to
carry on its business as presently conducted;
(b) the Selling Fund is a duly registered, open-end,
management investment company under the 1940 Act, and its registration with the
Commission as an investment company under the 1940 Act is in full force and
effect;
(c) this Agreement has been duly authorized, executed and
delivered by the Selling Fund, and, assuming that the Registration Statement
complies with the 1933 Act, the 1934 Act and the 1940 Act and the regulations
thereunder and assuming due authorization, execution and delivery of this
Agreement by the Trust on behalf of the Acquiring Fund, is a valid and binding
obligation of the Selling Fund enforceable against the Selling Fund in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights and to general equity principles;
(d) the execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not, violate the
Selling Fund's Articles of Incorporation or By-Laws; and
(e) to the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority of the United
States or any state is required for the consummation by the Selling Fund of the
transactions contemplated herein, except such as have been obtained under the
1933 Act, the 1934 Act and the 1940 Act and such as may be required under state
securities laws.
7.6 On the Closing Date, the Selling Fund Assets shall include no
assets that the Acquiring Fund, by reason of limitations of the Acquiring Fund's
Declaration of Trust or otherwise, may not properly acquire.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLING FUND AND
THE ACQUIRING FUND
The obligations of the Selling Fund and the Trust, on behalf of the
Acquiring Fund, hereunder are each subject to the further conditions that on or
before the Closing Date:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Selling Fund in accordance with the provisions of its Articles of
Incorporation, and certified copies of the resolutions evidencing such approval
shall have been delivered to the Trust.
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8.2 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities, including
"no-action" positions of and exemptive orders from such Federal and state
authorities) deemed necessary by the Selling Fund or Acquiring Fund to permit
consummation, in all material respects, of the transactions contemplated herein
shall have been obtained, except where failure to obtain any such consent, order
or permit would not involve risk of a material adverse effect on the assets or
properties of the Trust or the Selling Fund or Acquiring Fund.
8.4 The Registration Statement shall have become effective under the
1933 Act, no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 0000 Xxx.
8.5 The Selling Fund shall have declared and paid a dividend or
dividends and/or other distribution or distributions that, together with all
previous such dividends or distributions, shall have the effect of distributing
to the Selling Fund Shareholders all of the Selling Fund's investment company
taxable income (computed without regard to any deduction for dividends paid) and
all of its net capital gain (after reduction for any capital loss carry-forward
and computed without regard to any deduction for dividends paid) for all taxable
years ending on or before the Closing Date.
8.6 The parties shall have received the opinion of the law firm of
Xxxxxx, Xxxxx & Xxxxxxx LLP (based on such representations as such law firm
shall reasonably request), addressed to the Trust, on behalf of the Acquiring
Fund, and to the Selling Fund, which opinion may be relied upon by the
shareholders of the Selling Fund, substantially to the effect that, for Federal
income tax purposes:
(a) The transfer of the Selling Fund's assets in exchange for
the Acquiring Fund Shares and the assumption by the Acquiring Fund of certain
stated liabilities of the Selling Fund followed by the distribution by the
Selling Fund of Acquiring Fund Shares to the Selling Fund Shareholders in
exchange for their Selling Fund Shares pursuant to and in accordance with the
terms of the Reorganization Agreement will constitute a "reorganization" within
the meaning of Section 368(a)(1)(C) of the Code, and the Trust and the Selling
Fund will each be a "party to a reorganization" within the meaning of Section
368(b) of the Code;
(b) No gain or loss will be recognized by the Acquiring Fund
upon the receipt of the assets of the Selling Fund solely in exchange for the
Acquiring Fund Shares and the assumption by the Acquiring Fund of the stated
liabilities of the Selling Fund;
(c) No gain or loss will be recognized by the Selling Fund
upon the transfer of the assets of the Selling Fund to the Acquiring Fund in
exchange for the Acquiring Fund Shares and the assumption by the Acquiring Fund
of the stated liabilities or upon the distribution of the Acquiring Fund Shares
to the Selling Fund Shareholders in exchange for their Selling Fund Shares;
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(d) No gain or loss will be recognized by the Selling Fund
Shareholders upon the exchange of the Selling Fund Shares for Acquiring Fund
Shares;
(e) The aggregate tax basis for Acquiring Fund Shares received
by each Selling Fund Shareholder pursuant to the reorganization will be the same
as the aggregate tax basis of the Selling Fund Shares held by each such Selling
Fund Shareholder immediately prior to the Reorganization;
(f) The holding period of Acquiring Fund Shares to be received
by each Selling Fund Shareholder will include the period during which the
Selling Fund Shares surrendered in exchange therefor were held (provided such
Selling Fund Shares were held as capital assets on the date of the
Reorganization);
(g) The tax basis of the assets of Selling Fund acquired by
the Acquiring Fund will be the same as the tax basis of such assets to the
Selling Fund immediately prior to the Reorganization;
(h) The holding period of the assets of the Selling Fund in
the hands of the Acquiring Fund will include the period during which those
assets were held by the Acquiring Fund; and
(i) Notwithstanding anything herein to the contrary, neither
the Acquiring Fund nor the Selling Fund may waive the conditions set forth in
this paragraph 8.6.
9. FEES AND EXPENSES
9.1. Deutsche Asset Management, Inc. and/or affiliated persons thereof
will pay all expenses associated with the Reorganization. Reorganization
expenses include, without limitation: (a) expenses associated with the
preparation and filing of the Proxy Materials; (b) postage; (c) printing; (d)
accounting fees; (e) legal fees incurred by each Fund; (f) solicitation costs of
the transaction; and (g) other related administrative or operational costs. The
Funds will not pay any of these expenses.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 This Agreement constitutes the entire agreement between the
parties.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated herein, except
that the representations, warranties and covenants of the Selling Fund hereunder
shall not survive the dissolution and complete liquidation of the Selling Fund
in accordance with Section 1.9.
11. TERMINATION
11.1 This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing:
(a) by the mutual written consent of the Selling Fund, and the
Acquiring Fund;
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(b) by either, the Selling Fund, or the Acquiring Fund, by
notice to the other, without liability to the terminating party on account of
such termination (providing the terminating party is not otherwise in material
default or breach of this Agreement) if the Closing shall not have occurred on
or before October 31, 2002; or
(c) by either the Selling Fund, or the Acquiring Fund, in
writing without liability to the terminating party on account of such
termination (provided the terminating party is not otherwise in material default
or breach of this Agreement), if (i) the other party shall fail to perform in
any material respect its agreements contained herein required to be performed on
or prior to the Closing Date, (ii) the other party materially breaches any of
its representations, warranties or covenants contained herein, (iii) the Selling
Fund shareholders fail to approve this Agreement at any meeting called for such
purpose at which a quorum was present or (iv) any other condition herein
expressed to be precedent to the obligations of the terminating party has not
been met and it reasonably appears that it will not or cannot be met.
11.2(a) Termination of this Agreement pursuant to paragraphs 11.1(a) or
(b) shall terminate all obligations of the parties hereunder and there shall be
no liability for damages on the part of the Selling Fund or the Trust, or the
directors/trustees, as the case may be, or officers of the Selling Fund or the
Trust, to any other party or its trustees or officers.
(b) Termination of this Agreement pursuant to paragraph 11.1(c) shall
terminate all obligations of the parties hereunder and there shall be no
liability for damages on the part of the Selling Fund or the Trust, or the
trustees or officers of the Selling Fund or the Trust, except that any party in
breach of this Agreement shall, upon demand, reimburse the non-breaching party
for all reasonable out-of-pocket fees and expenses incurred in connection with
the transactions contemplated by this Agreement, including legal, accounting and
filing fees.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the parties.
13. MISCELLANEOUS
13.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance
with the laws of Delaware.
13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
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13.5 The obligations and liabilities of the Trust hereunder are solely
those of the Trust. It is expressly agreed that no shareholder, nominee,
trustee, officer, agent, or employee of the Trust shall be personally liable
hereunder. The execution and delivery of this Agreement have been authorized by
the trustees of the Trust and signed by authorized officers of the Trust acting
as such, and neither such authorization by such trustees nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally.
13.6 The obligations and liabilities of the Selling Fund hereunder are
solely those of the Selling Fund. It is expressly agreed that no shareholder,
nominee, trustee, officer, agent, or employee of the Selling Fund shall be
personally liable hereunder. The execution and delivery of this Agreement have
been authorized by the directors of the Selling Fund and signed by authorized
officers of the Selling Fund acting as such, and neither such authorization by
such trustees nor such execution and delivery by such officers shall be deemed
to have been made by any of them individually or to impose any liability on any
of them personally.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by a duly authorized officer.
XXXXXXX RREEF SECURITIES TRUST, on behalf of XXXXXXX RREEF REAL
ESTATE SECURITIES FUND
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Assistant Secretary
REAL ESTATE SECURITIES FUND, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Assistant Secretary
16
