EXHIBIT NO. 1
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, made as of this
22nd day of September, 1995, by and between DFA Investment
Dimensions Group Inc. ("DFAIDG"), a corporation organized under
the laws of the State of Maryland, with its principal place of
business at 0000 Xxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxxxx and
Dimensions Emerging Markets Fund Inc. ("DEM"), a corporation
organized under the laws of the State of Maryland with its
principal place of business at 0000 Xxxxx Xxxxxx, Xxxxx Xxxxxx,
Xxxxxxxxxx.
PLAN OF REORGANIZATION
The reorganization (hereinafter referred to as the
"Plan of Reorganization") will consist of (i) the acquisition by
the Emerging Markets Portfolio ("EMP") of DFAIDG of substantially
all of the property and assets of DEM in exchange solely for
shares of common stock of EMP par value, (ii) the distribution of
such shares to the shareholders of DEM according to their
respective interests, and (iii) the dissolution of DEM as soon as
practicable and not later than one year after the closing (as
defined in Section 3, 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 of Reorganization 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 DEM
(a) Subject to the terms and conditions of this
Agreement, and in reliance on the representations and warranties
of DFAIDG herein contained, and in consideration of the delivery
by DFAIDG of the number of EMP shares of hereinafter provided,
DEM agrees that it will convey, transfer and deliver to DFAIDG
for the account of EMP at the Closing substantially all of the
then existing property and assets of DEM, as set forth on
Schedule 1 hereto, free and clear of all liens, encumbrances, and
claims whatsoever except for cash, bank deposits, and cash
equivalents in an estimated amount necessary (1) to pay its 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 DEM as
liability reserves, (2) to discharge its unpaid liabilities of
DEM on its books at the closing date (as defined in Section 3,
hereinafter called the "Closing Date"), including, but not
limited to, its income dividends and capital gains distributions,
if any, payable for any period prior to, and through, the Closing
Date, and (3) to pay such contingent liabilities of DEM as the
board of directors shall reasonably determine to exist, if any,
at the Closing Date, for which appropriate liability reserves
shall be established on the books of DEM. DEM shall also retain
any and all rights which it may have over and against any person
which may have accrued up to and including the close of business
on the Closing Date.
(b) Subject to the terms and conditions of this
Agreement, and in reliance on the representations and warranties
of the DEM herein contained, and in consideration of such sale,
conveyance, transfer, and delivery, DFAIDG agrees at the Closing
to issue and deliver to DEM the number of shares of common stock
of EMP ($.01 par value) determined by dividing the aggregate
assets of DEM transferred on the Closing Date by the net asset
value per share of EMP as of the close of business on the Closing
Date; such values to be determined in the manner as set forth in
Section 2 hereof.
(c) Immediately following the Closing DEM shall
distribute pro rata to its shareholders of record as of the close
of business on the Closing Date the shares of EMP received by the
DEM pursuant to this Section 1. Such distribution shall be
accomplished by the establishment of share accounts on the
records of DFAIDG of the type and in the amounts due such
shareholders, based on their respective holdings as of the close
of business on the Closing Date. Fractional shares of EMP shall
be carried to the third decimal place. The shares of stock of
EMP delivered hereunder to DEM and thence to the shareholders of
DEM will not be registered under the Securities Act of 1933, and
shall be issued in reliance upon the exemption from registration
set forth in section 4(2) under said Act and shall not be
registered under the Georgia Securities Act of 1933, in reliance
on the exemptions set forth in paragraphs (7) and (12) of section
10-5-9 of said Georgia Act. Said shares shall not be sold,
transferred or assigned by the shareholder of DEM in absence of
registration of such shares under the Securities Act of 1933 and
under any other applicable law providing for the registration of
securities, except in a transaction which, in the opinion of
counsel acceptable to DFAIDG, is exempt from the registration
requirements of applicable law. and the unissued share accounts
established pursuant to this Agreement, and any certificates for
shares issued in respect thereof shall be subject to, and shall
bear a restrictive legend to the foregoing effect.
2
2. VALUATION
The value of the assets to be acquired by DFAIDG and
the net asset value per share of EMP hereunder shall be computed
as of the close of the New York Stock Exchange on the Closing
Date using the valuation procedures set forth in DFAIDG's
currently effective prospectus.
3. CLOSING AND CLOSING DATE
The Closing Date shall be December 1, 1995, or such
later date as the parties may mutually agree. The Closing shall
take place at the principal office of DFAIDG at 10:00 a.m.
Pacific Coast Time. DEM shall have provided for delivery as of
the Closing of the assets to be transferred to DFAIDG's
Custodian, Chase Manhattan Bank, N.A., 4 Metrotech Center,
Brooklyn, New York. Also, DEM shall deliver at the Closing a
list of names and addresses of the shareholders of record of the
DEM and the number of shares of common stock of DEM 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 Closing Date,
certified by its Transfer Agent, or by a duly authorized officer
of DEM to the best of their knowledge and belief. DFAIDG shall
instruct its Transfer Agent to create an unissued share account
for the shares of common stock of EMP to be delivered to DEM with
instruction to transfer such shares to an account or accounts
registered in the names of such shareholders of DEM as DEM shall
request in writing. The accounts so registered and any
certificates of EMP issued in respect thereof shall be subject to
the restriction on transfer as provided.
4. REPRESENTATIONS AND WARRANTIES BY THE DEM
DEM represents and warrants to DFAIDG that:
(a) DEM is a corporation duly organized under the laws
of the State of Maryland, and is validly existing and in good
standing under the laws of that state. DEM is a diversified
closed-end investment company duly registered under the
Investment Company Act of 1940, as amended, as an open-end,
management investment company and all its outstanding shares have
been sold to, and are currently held by, a shareholder which is
an "accredited investor" as provided in reg. section 230.501(a)
under the 0000 Xxx.
(b) Each outstanding share of DEM was duly and validly
issued and is fully paid, non-assessable, and has full voting
rights.
(c) The financial statements appearing in DEM's Annual
Report to Shareholders for the fiscal year ended November 30,
3
1994, audited by Coopers & Xxxxxxx, L.L.P., and the unaudited
financial statements OF DEM as of subsequent dates, copies of
which have been delivered to DFAIDG, fairly present the financial
position of DEM as of the respective dates indicated, in
conformity with generally accepted accounting principles applied
on a consistent basis.
(d) The books and records of DEM made available to
DFAIDG are true and correct and contain no material omissions
with respect to the business and operations of DEM.
(e) The assets transferred by DEM to DFAIDG hereunder
are not subject to any lien, charge or encumbrance.
5. REPRESENTATIONS AND WARRANTIES BY DFAIDG
DFAIDG represents and warrants to DEM that:
(a) DFAIDG is a corporation under the laws of the
State of Maryland, and is validly existing and in good standing
under the laws of that state. DFAIDG, of which the EMP is a
diversified separate series of shares, is duly registered under
the Investment Company Act of 1940, as amended, as an open-end,
management investment company and all its shares sold have been
sold pursuant to an effective registration statement filed under
the Securities Act of 1933, as amended, except for those shares
sold pursuant to section 4(2) of the 1933 Act to its investment
advisor and (ii) as otherwise provided herein.
(b) DFAIDG is authorized to issue 100,000,000 shares
of common stock, par value $.01 per share of EMP. Each
outstanding share is fully paid, non-assessable, and has full
voting rights. The shares of common stock of EMP issued pursuant
to this Agreement will be validly issued, fully paid, non-
assessable, outstanding shares of common stock of EMP.
(c) The financial statements appearing in DFAIDG's
Annual Report to Shareholders for the fiscal year ended November
30, 1994, audited by Coopers & Xxxxxxx L.L.P. and the financial
statements of DFAIDG of subsequent dates, copies of which have
been delivered to DEM, fairly present the financial position of
EMP as of the respective dates indicated and the results of its
operations for the periods indicated in conformity with generally
accepted accounting principles applied on a consistent basis.
6. REPRESENTATIONS AND WARRANTIES BY DFAIDG AND DEM
DFAIDG and DEM each represents and warrants to the
other that:
(a) The statement of assets and liabilities to be
furnished by it as of the close of business on the Closing Date
4
for the purpose of determining the number of shares of common
stock of EMP to be issued hereunder will be true and correct as
of such date and prepared in conformity with generally accepted
accounting principles applied on a consistent basis.
(b) At the Closing, it will have good and marketable
title to all of the securities and other assets shown on the
statement of assets and liabilities referred to in paragraph (a)
above, free and clear of all liens or encumbrances of any nature
whatever except such imperfections of title or encumbrances as do
not materially detract from the value or use of the assets
subject thereto, or materially affect title thereto.
(c) Except as disclosed in writing to the other party
by this agreement, there is no material suit, or legal or
administrative proceeding pending or threatened against it.
(d) There are no known actual or proposed deficiency
assessments with respect to any taxes payable by it.
(e) The execution, delivery and performance of this
Agreement have been duly authorized by all necessary action of
its board of directors and this Agreement constitutes its valid
and binding obligation enforceable in accordance with its terms,
subject to approval by a majority of the outstanding common stock
of DEM.
(f) It anticipates that consummation of this Agreement
will not cause it to fail to conform to the requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), for Federal income taxation as a regulated
investment company at the end of its fiscal year.
7. COVENANTS OF DEM AND DFAIDG
(a) DEM and DFAIDG each covenant to operate their
respective businesses as presently conducted between the date
hereof and the Closing.
(b) DEM undertakes that it will not acquire the EMP
shares for the purpose of making distributions thereof other than
to DEM's shareholders.
(c) DEM and DFAIDG each agree that by the Closing, all
of its Federal and other tax returns and reports required by law
to be filed on or before such date shall have been filed and all
Federal and other taxes shown as due on said returns shall have
either been paid or adequate liability reserves shall have been
provided for the payment of such taxes.
(d) DEM at the Closing will provide DFAIDG with a copy
of the shareholder ledger accounts for all the shareholders of
5
record of DEM as of the close of business on the Closing Date,
who are to become shareholders of EMP as a result of the transfer
of assets which is the subject of this Agreement, certified by
its Transfer Agent or duly authorized officer to the best of
their knowledge and belief.
(e) DEM agrees to present this agreement and the
transactions contemplated herein for approval by its stockholder
without soliciting any proxy, consent or authorization.
(f) DFAIDG shall provide DEM, its representatives and
stockholders, and DEM will provide its stockholders, with such
information and assistance regarding this Agreement, and the
transaction contemplated herein, as may be necessary or desirable
to assist such stockholders to make an informed decision
regarding whether or not to approve this Agreement.
(g) DEM agrees to liquidate any remaining assets and
dissolve as soon after the Closing Date as practicable, but not
more than one year thereafter.
(h) DEM and EMP shall pay dividends of any
undistributed net investment income and net capital gains for the
period through the Closing Date immediately prior to such Date.
8. CONDITIONS PRECEDENT TO BE FULFILLED BY DEM AND DFAIDG
The obligations of DEM and DFAIDG to effectuate this
Agreement shall be subject to the following conditions:
(a) That (1) all the representations and warranties of
the other party contained herein shall be true and correct as of
the Closing with the same effect as though made as of and at such
date; (2) the other party shall have performed all obligations
required by this Agreement to be performed by it prior to the
Closing.
(b) That the Securities and Exchange Commission shall
not have issued an unfavorable management report under Section
25(b) of the Investment Company Act of 1940, as amended, nor
instituted nor threatened to institute any proceeding seeking to
enjoin consummation of the Plan of Reorganization under Section
25(c) of the Investment Company Act of 1940, as amended, and no
other legal, administrative or other proceeding shall be
instituted or threatened which would materially affect the
financial condition of either party or would prohibit the
transactions contemplated hereby.
(c) That the adoption of this Agreement and the Plan
of Reorganization contemplated hereby shall have been duly and
validly approved by the stockholders of DEM, as provided herein.
6
(d) That each party shall have declared a distribution
or distributions prior to the Closing Date which, 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 Closing
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(9) of the Code.
(e) That prior to or at the Closing, DFAIDG shall
receive either a private letter ruling from the U.S. Internal
Revenue Service or, in the alternative, an opinion from Messrs.
Stradley, Ronon, Xxxxxxx & Xxxxx, to the effect that provided the
acquisition contemplated hereby is carried out in accordance with
this Agreement and the applicable provisions of the Maryland
General Corporation Law: No gain or loss will be recognized by
EMP upon the receipt of substantially all of the assets of DEM in
exchange solely for the EMP shares of DFAIDG (Section 1032(a)).
In giving the opinion set forth above, counsel may
state that they are relying on certificates of the officers of
DEM and DFAIDG with regard to certain facts and circumstances of,
and the intentions of the parties to, the Reorganization.
9. BROKERAGE FEES AND EXPENSES
(a) DEM and DFAIDG each represents and warrants to the
other that there are no broker or finders fees payable by it in
connection with the transactions provided for herein.
(b) The expenses of each party of entering into and
carrying out the provisions of this Agreement shall be borne by
such party.
10. TERMINATION; WAIVER; ORDER
(a) Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated and
the Plan of Reorganization abandoned at any time (whether before
or after adoption thereof by the shareholders of DEM) prior to
the Closing by either party by majority vote of its board of
directors.
(b) If any order or orders of the U.S. Securities and
Exchange Commission with respect to this Agreement shall be
issued prior to the Closing and shall impose any terms or
conditions which are determined by action of the boards of
directors of DFAIDG and of DEM to be acceptable, such terms and
conditions shall be binding as if contained herein without
further vote or approval of the shareholders of DEM, unless such
terms and conditions shall result in a change in the method of
7
computing the number of shares of EMP to be issued hereunder in
which event, unless such terms and conditions shall are approved
by the stockholders of DEM in the same manner provided for
approval of this Agreement.
11. 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.
12. 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.
13. 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 DFAIDG or DEM as the case may be at
0000 Xxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxxxx 00000, Attention:
Xxxxx X. Xxxxxxx.
14. GOVERNING LAW
This Agreement shall be governed by and carried out in
accordance with the laws of the State of Maryland.
IN WITNESS WHEREOF, DFAIDG and DEM have each caused
this Agreement and Plan of Reorganization to be executed on its
8
behalf by its duly authorized officers, all as of the day and
year first above written.
DFA INVESTMENT DIMENSIONS GROUP
INC.
Attest:
Xxxxx Xxxxx By: Xxxxx X. Xxxxxxx
------------------------ ----------------------------
Assisant Secretary Vice-President
DIMENSIONAL EMERGING MARKETS FUND
INC.
Attest:
Xxxxx X. Xxxxxxx By: Xxxxx X. Xxxxx
------------------------ -----------------------------
Secretary President
9
