AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, dated as of June 4, 2009
(this"Agreement"), is made by and between RMR F.I.R.E. Fund, a Massachusetts
business trust and registered closed end management investment company, File
No. 811-21616 (the "Target Fund"), and RMR Real Estate Income Fund, a
Delawarestatutory trust and registered closed end management investment
company, FileNo. 811-22234 (the "Acquiring Fund" and together with
the "Target Fund", the"Funds" and each individually, a "Fund").
WHEREAS, the Acquiring Fund has proposed to enter into the
Reorganization (as defined below) with the Target Fund;
WHEREAS, the Boards of Trustees of the Funds have determined that
participation in the Reorganization is in the best interests of each
respective Fund;
WHEREAS, the parties intend that the transaction contemplated
by this Agreement qualify as a "reorganization" within the meaning of
Section 368(a) of the Code (as defined below); and
WHEREAS, the Acquiring Fund is also proposing to enter into a
reorganization with each of (i) RMR Real Estate Fund, a registered closed
end management investment company, File No. 811-21241, (ii) RMR Hospitality
and Real Estate Fund, a registered closed end management investment company,
File No. 811-21502, (iii) RMR Preferred Dividend Fund, a registered closed
end management investment company, File No. 811-21671, and (iv) RMR Dividend
Capture Fund, a registered closed end management investment company, File No.
811-22079 (the funds identified in clauses (i) through (iv) above being
referred to individually as an "RMR Fund" and collectively as the "RMR
Funds"), pursuant to a separate agreement and plan of reorganization in
connection with each such reorganization;
NOW, THEREFORE, in order to consummate the Reorganization, and in
consideration of the respective representations, warranties, covenants and
agreements hereinafter set forth, and intending to be legally bound, each
Fund hereby agrees as follows:
1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(c) "1940 Act" means the Investment Company Act of 1940, as amended.
(d) "Acquiring Fund" shall have the meaning assigned to such term in
the preamble.
(e) "Acquiring Fund Closing Financial Statements" shall have the
meaning assigned to such term in Section 2(d).
(f) "Acquiring Fund Common Shares" shall have the meaning assigned
to such term in Section 2(k).
(g) "Acquiring Fund Preferred Shares" shall have the meaning assigned
to such term in Section 2(k).
(h) "Advisor" means RMR Advisors, Inc.
(i) "Agreement" shall have the meaning assigned to such term in the
preamble.
(j) "Closing Date" shall have the meaning assigned to such term in
Section 8(a).
(k) "Code" means the Internal Revenue Code of 1986, as amended.
(l) "Commission" means the Securities and Exchange Commission.
(m) "Fund" or "Funds" shall have the meaning assigned to such terms
in the preamble.
(n) "GAAP" means United States generally accepted accounting
principlesand practices as in effect from time to time and applied
consistently throughout the periods involved.
(o) "Indemnified Party" shall have the meaning assigned to such
term in Section 13(a).
(p) "Indemnitor" shall have the meaning assigned to such term in
Section 13(a).
(q) "Loss" or "Losses" shall have the meanings assigned to such
terms in Section 13(a).
(r) "NYSE Amex" means NYSE Amex LLC.
(s) "Payment Agreement" shall mean the Payment Agreement, dated the
date hereof, by and between the Target Fund and the Advisor.
(t) "Proxy Statement/Prospectus" shall have the meaning assigned to
such term in Section 2(j).
(u) "Registration Statement" shall have the meaning assigned to such
term in Section 2(j).
(v) "Reorganization" shall have the meaning assigned to such term in
Section 4(a).
(w) "RIC" means a regulated investment company under Section 851 of
the Code.
(x) "RMR Fund" or "RMR Funds" shall have the meaning assigned to
such terms in the recitals.
(y) "Shareholder Meeting" shall have the meaning assigned to such
term in Section 2(j).
(z) "Skadden" means Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP.
(aa) "Target Fund" shall have the meaning assigned to such term in
the preamble.
(bb) "Target Fund Closing Financial Statements" shall have the
meaning assigned to such term in Section 3(e).
(cc) "Target Fund Common Shares" shall have the meaning assigned to
such term in Section 3(m).
(dd) "Target Fund Investments" means (i) the investments of the
Target Fund shown on the schedule of its investments as of the Valuation
Date furnished to the Acquiring Fund and (ii) all other assets owned by the
Target Fund or liabilities incurred as of the Valuation Date.
(ee) "Target Fund Preferred Shares" shall have the meaning
assigned to such term in Section 3(m).
(ff) "Valuation Date" shall be 4:00 p.m., Eastern Time, on
June 18, 2009, or such earlier or later day and time as may be mutually
agreed upon in writing by the parties hereto.
2. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING FUND.
The Acquiring Fund represents and warrants to, and agrees with, the
Target Fund that:
(a) The Acquiring Fund is a trust, with transferable shares, duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has the power and authority to own all
of its assets and to carry out this Agreement. The Acquiring Fund has all
necessary federal, state and local authorizations to carry on its business
as it is now being conducted or proposed to be conducted and to carry out
this Agreement.
(b) The Acquiring Fund is duly registered under the 1940 Act as a
non-diversified, closed end management investment company and such
registration has not been revoked or rescinded and is in full force and
effect.
(c) The Acquiring Fund has full power and authority to enter into and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
action of its board of trustees, and this Agreement constitutes a valid and
binding contract enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto.
(d) An unaudited statement of assets, liabilities and capital of the
Acquiring Fund and an unaudited schedule of investments of the Acquiring Fund,
in each case, with values determined as provided in Section 5 of this
Agreement, each as of the Valuation Date (together, the "Acquiring Fund
Closing Financial Statements"), will be furnished to the Target Fund, at or
prior to the Closing Date, for the purpose of determining the number of
Acquiring Fund Common Shares and Acquiring Fund Preferred Shares to be
issued to the Target Fund pursuant to Section 5 hereof; the Acquiring Fund
Closing Financial Statements will fairly present the financial position of
the Acquiring Fund as of the Valuation Date in conformity with GAAP.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of the Acquiring Fund, threatened against it
which assert liability on the part of the Acquiring Fund or which materially
affect its financial condition or its ability to consummate the Reorganization.
The Acquiring Fund is not charged with nor, to the best of its knowledge, does
any person presently intend to charge it with, or to recommend that it be
charged with, any violation of any provisions of any federal, state or local
law or regulation or administrative ruling to which it is bound.
(f) There are no material contracts outstanding to which the Acquiring
Fund is a party that have not been disclosed in the Registration Statement or
that have not otherwise been disclosed to the Target Fund.
(g) The execution, delivery and performance of this Agreement by the
Acquiring Fund do not, and the consummation of the transactions contemplated
hereby will not, constitute or result in a breach or violation of, or a
default under, (i) the governing documents of the Acquiring Fund, (ii) any
contract or other commitment or obligation binding upon the Acquiring Fund,
after giving effect to any agreement of the Funds to amend such contract or
other commitment or obligation to cure any potential violation as a condition
precedent to the Reorganization or (iii) any order or decree binding upon the
Acquiring Fund.
(h) The Acquiring Fund has no known liabilities of a material amount,
contingent or otherwise, other than those shown on the Acquiring Fund Closing
Financial Statements, those incurred in the ordinary course of its business as
an investment company, and those incurred in connection with the
Reorganization. As of the Valuation Date, the Acquiring Fund will advise the
Target Fund in writing of all known liabilities, contingent or otherwise,
whether or not incurred in the ordinary course of business, existing or
accrued as of such time, not otherwise disclosed in the Acquiring Fund Closing
Financial Statements.
(i) No consent, approval, authorization or order of any court or
government authority is required for the consummation by the Acquiring Fund of
the Reorganization, except such as may be required under the 1933 Act, the
1934 Act and the 1940 Act or state securities laws (which term as used herein
shall include the laws of the District of Columbia and Puerto Rico).
(j) The registration statement filed by the Acquiring Fund on Form N-14,
which includes the proxy statement of the Target Fund with respect to the
transactions contemplated herein (the "Proxy Statement/Prospectus"), and any
documents included or incorporated by reference therein and any supplement or
amendment thereto (collectively, as so amended or supplemented, the
"Registration Statement"), on the effective date of the Registration Statement,
at the time of the special meeting of the shareholders of the Target Fund
called to vote on this Agreement and the Reorganization (the "Shareholder
Meeting") and at the Closing Date (i) complied or will comply in all material
respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act
and the rules and regulations thereunder and (ii) did not or will not contain
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; and
the Proxy Statement/Prospectus included therein did not or will not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that no
representation or warranty is made by the Acquiring Fund with respect to
statements made or incorporated by reference in the Registration Statement or
Proxy Statement/Prospectus based on information supplied by the Target Fund
or any RMR Fund for inclusion or incorporation by reference therein, or based
on information which is not included or incorporated by reference in such
documents but which should have been disclosed pursuant to Section 3(l).
(k) The Acquiring Fund is authorized to issue an unlimited number of
common shares of beneficial interest, par value $.001 per share (the
"Acquiring Fund Common Shares"), and an unlimited number of preferred
shares of beneficial interest ("Acquiring Fund Preferred Shares").
(l) The Acquiring Fund Common Shares and the Acquiring Fund Preferred
Shares to be issued to the Target Fund pursuant to this Agreement will have
been duly authorized and, when issued and transferred pursuant to this
Agreement, will be legally and validly issued and will be fully paid,
nonassessable and will have full voting rights, and no shareholder of the
Acquiring Fund will have any preemptive right of subscription or purchase in
respect thereof.
(m) The Acquiring Fund, subject to the Registration Statement having
been declared effective and the filing of the Proxy Statement/Prospectus
under Rule 497, has taken all required action under the 1933 Act, the 1934
Act and the 1940 Act and the rules and regulations thereunder to make the
public offering and consummate the sale of the Acquiring Fund Common Shares
as contemplated by this Agreement.
(n) At or prior to the Closing Date, the Acquiring Fund will have
obtained any and all regulatory, trustee and shareholder approvals necessary
to issue the Acquiring Fund Common Shares and the Acquiring Fund Preferred
Shares to the Target Fund.
(o) The Acquiring Fund has filed, or intends to file, or has obtained
extensions to file, all federal, state and local tax returns which are
required to be filed by it, and has paid or has obtained extensions to pay,
all federal,state and local taxes shown on said returns to be due and owing
and all assessments received by it, up to and including the taxable year in
which the Closing Date occurs. All tax liabilities of the Acquiring Fund
have been adequately provided for on its books, and no tax deficiency or
liability of the Acquiring Fund has been asserted and no question with respect
thereto has been raised by the Internal Revenue Service or by any state or
local tax authority for taxes in excess of those already paid, up to and
including the taxable year in which the Closing Date occurs.
(p) The Acquiring Fund has (i) elected to qualify and has qualified
as a RIC as of and since its inception, (ii) been a RIC at all times since
the end of its first taxable year when it so qualified, (iii) qualifies and
will continue to qualify as a RIC and (iv) satisfied the distribution
requirements imposed by the Code for each of its taxable years.
(q) The Acquiring Fund has no plan or intention to sell or otherwise
dispose of the Target Fund Investments, except for dispositions made in the
ordinary course of business.
3. REPRESENTATIONS AND WARRANTIES OF THE TARGET FUND.
The Target Fund represents and warrants to, and agrees with, the
Acquiring Fund that:
(a) The Target Fund is a trust, with transferable shares, duly
organized,validly existing and in good standing under the laws of the
jurisdiction of its organization, and has the power and authority to own all
of its assets and to carry out this Agreement. The Target Fund has all
necessary federal, state and local authorizations to carry on its business
as it is now being conducted and to carry out this Agreement.
(b) The Target Fund is duly registered under the 1940 Act as a
diversified, closed end management investment company, and such registration
has not been revoked or rescinded and is in full force and effect.
(c) The Target Fund has full power and authority to enter into and
perform its obligations under this Agreement, subject, in the case of
consummation of the Reorganization, to the approval and adoption of this
Agreement and the Reorganization by the shareholders of the Target Fund as
described in Section 9(a) hereof. The execution, delivery and performance of
this Agreement has been duly authorized by all necessary action of its board
of trustees and this Agreement constitutes a valid and binding contract
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, moratorium, fraudulent conveyance and similar laws relating to or
affecting creditors' rights generally and court decisions with respect thereto.
(d) The Target Fund has furnished the Acquiring Fund with the Target
Fund's Annual Report to Shareholders for the year ended December 31, 2008, and
the audited financial statements appearing therein fairly present the financial
position of the Target Fund as of the respective dates indicated, in
conformity with GAAP.
(e) An unaudited statement of assets, liabilities and capital of the
Target Fund and an unaudited schedule of investments of the Target Fund
(which shall include dates of acquisition and tax costs), in each case, with
values determined as provided in Section 5 of this Agreement, each as of the
Valuation Date (together, the "Target Fund Closing Financial Statements"), will
be furnished to the Acquiring Fund at or prior to the Closing Date for the
purpose of determining the number of Acquiring Fund Common Shares and Acquiring
Fund Preferred Shares to be issued to the Target Fund pursuant to Section 5
hereof; the Target Fund Closing Financial Statements will fairly present the
financial position of the Target Fund as of the Valuation Date in conformity
with GAAP.
(f) Other than as disclosed in the Registration Statement, there are no
material legal, administrative or other proceedings pending or, to the
knowledge of the Target Fund, threatened against it which assert liability
on the part of the Target Fund or which materially affect its financial
condition or its ability to consummate the Reorganization. The Target
Fund is not charged with nor, to the best of its knowledge, does any
person presently intend to charge it with, or to recommend that it be
charged with, any violation of any provisions of any federal, state or
local law or regulation or administrative ruling to which it is bound.
(g) There are no material contracts outstanding to which the Target Fund
is a party that have not been disclosed in the Registration Statement or that
have not otherwise been disclosed to the Acquiring Fund.
(h) The execution, delivery and performance of this Agreement by the
Target Fund do not, and the consummation of the transactions contemplated
hereby will not, constitute or result in a breach or violation of, or a default
under, (i) the governing documents of the Target Fund, (ii) any contract or
other commitment or obligation binding upon the Target Fund or (iii) any order
or decree binding upon the Target Fund.
(i) Other than as disclosed in the Registration Statement, the Target
Fund has no known liabilities of a material amount, contingent or otherwise,
other than those shown on the Target Fund Closing Financial Statements, those
incurred in the ordinary course of its business as an investment company and
those incurred in connection with the Reorganization. As of the Valuation Date,
the Target Fund will advise the Acquiring Fund in writing of all known
liabilities, contingent or otherwise, whether or not incurred in the ordinary
course of business, existing or accrued as of such time, not otherwise
disclosed in the Target Fund Closing Financial Statements.
(j) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Target Fund of
the Reorganization, except such as may be required under the 1933 Act, the
1934 Act and the 1940 Act or state securities laws (which term as used herein
shall include the laws of the District of Columbia and Puerto Rico).
(k) At both the Valuation Date and the Closing Date, the Target Fund
will have full right, power and authority to sell, assign, transfer and deliver
the Target Fund Investments. At the Closing Date, subject only to the
obligation to deliver the Target Fund Investments as contemplated by this
Agreement, the Target Fund will have good and marketable title to all of
the Target Fund Investments, and the Acquiring Fund will acquire all of the
Target Fund Investments free and clear of any encumbrances, liens or security
interests and without any restrictions upon the transfer thereof (except
those imposed by the federal or state securities laws and those imperfections
of title or encumbrances as do not materially detract from the value or
use of the Target Fund Investments or materially affect title thereto).
(l) The Registration Statement, on the effective date of the
Registration Statement, at the time of the Shareholder Meeting and on the
Closing Date (i) complied or will comply in all material respects with the
provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder and (ii) did not or will not contain 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; and the Proxy
Statement/Prospectus included therein did not or will not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that no representation or
warranty is made by the Target Fund with respect to statements made or
incorporated by reference in the Registration Statement or Proxy
Statement/Prospectus based on information supplied by the Acquiring Fund or
any RMR Fund for inclusion or incorporation by reference therein, or based on
information which is not included or incorporated by reference in such
documents but which should have been disclosed pursuant to Section 2(j).
(m) The Target Fund is authorized to issue an unlimited number of
common shares of beneficial interest, par value $.001 per share
(the "Target Fund Common Shares"), 1,484,000 shares of which are outstanding
on the date hereof, and an unlimited number of preferred shares of beneficial
interest (the "Target Fund Preferred Shares"), 47 shares of which are
outstanding on the date hereof. Each of the outstanding Target Fund
Preferred shares has a par value of $.0001 per share, liquidation preference
of $25,000 per share plus an amount equal to accumulated but unpaid
distributions thereon (whether or not earned or declared), and is designated
as Series W. Each outstanding Target Fund Common
Share and Target Fund Preferred Share is duly
authorized, validly issued, fully paid, nonassessable, and has full voting
rights, subject, in the case of the nonassessability of such shares, to
certain decisions of the Supreme Judicial Court of The Commonwealth of
Massachusetts holding that shareholders of a Massachusetts business trust may,
in certain circumstances, be assessed or held
personally liable as partners for
the obligations of a Massachusetts business trust.
Other than the outstanding
Target Fund Common Shares and Target Fund Preferred Shares, there are no
outstanding (i) shares of capital stock or other voting securities of the
Target Fund, (ii) stock appreciation rights, phantom stock units, restricted
stock grants or contingent stock grants which grant awards of any of the
foregoing, (iii) bonds, debentures, notes or other indebtedness of the Target
Fund having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which shareholders of
the Target Fund may vote, (iv) securities of the
Target Fund convertible into
or exchangeable for shares of capital stock or
voting securities of the Target
Fund, (v) options or other rights to acquire from the Target Fund, or
obligations of the Target Fund to issue any,
capital stock, voting securities
or securities convertible into or exchangeable for capital stock or voting
securities of the Target Fund or (vi) equity equivalent interests in the
ownership or earnings of the Target Fund.
(n) All of the issued and outstanding Target Fund Common Shares and
Target Fund Preferred Shares were offered for sale and sold in conformity
with all applicable federal and state securities laws.
(o) The Target Fund has filed, or intends to file, or has obtained
extensions to file, all federal, state and local
tax returns which are required
to be filed by it, and has paid or has obtained
extensions to pay, all federal,
state and local taxes shown on said returns to be due and owing and all
assessments received by it, up to and including the
taxable year in which the
Closing Date occurs. All tax liabilities of the Target Fund have been
adequately provided for on its books, and no tax deficiency or liability of
the Target Fund has been asserted and no question with respect thereto has
been raised by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid, up to and including the
taxable year in which the Closing Date occurs.
(p) The Target Fund (i) has elected to qualify
and has qualified as a
RIC as of and since its inception, (ii) has been a
RIC at all times since the
end of its first taxable year when it so qualified, (iii) qualifies and will
continue to qualify as a RIC for its taxable year
ending upon its liquidation
and dissolution and (iv) has satisfied the distribution requirements imposed
by the Code for each of its taxable years.
(q) The books and records of the Target Fund made available to the
Acquiring Fund and/or its counsel are substantially true and correct and
contain no material misstatements or omissions with respect to the operations
of the Target Fund.
(r) The Target Fund will not sell or otherwise dispose of any of the
Acquiring Fund Common Shares or Acquiring Fund Preferred Shares to be received
in the Reorganization, except for the distribution to the shareholders of the
Target Fund, as provided in this Agreement.
4. THE REORGANIZATION.
(a) Subject to the receipt of the requisite
approvals of the shareholders
of the Target Fund, and to the other terms and
conditions contained herein, the
Target Fund agrees to convey, transfer and deliver
to the Acquiring Fund and the
Acquiring Fund agrees to acquire from the Target Fund, 3
on the Closing Date, all
of the Target Fund Investments (including interest accrued as of the Valuation
Date on debt instruments), and assume all of the
liabilities of the Target Fund,
in exchange for that number and type of Acquiring Fund Common Shares and
Acquiring Fund Preferred Shares determined as provided in Section 5 of this
Agreement (the "Reorganization"). On the Closing Date, the Target Fund Common
Shares and the Target Fund Preferred Shares shall be cancelled on the books of
the Target Fund, will be null and void, and shall
represent only the right to
receive, subject to the terms and conditions of this Agreement, Acquiring Fund
Common Shares, Acquiring Fund Preferred Shares and, if not paid prior to the
Reorganization, any dividends payable with respect to such Target Fund Common
Shares and Target Fund Preferred Shares pursuant to Section 4(c) herein.
Pursuant to this Agreement, as soon as practicable after the Closing Date, the
Target Fund will distribute (or cause to be distributed) all Acquiring Fund
Common Shares and Acquiring Fund Preferred Shares it has received pursuant to
the terms of this Agreement to its shareholders pro rata in exchange for their
Target Fund Common Shares and Target Fund
Preferred Shares. Such distributions
shall be accomplished by the opening of shareholder
accounts on the share ledger
records of the Acquiring Fund in the names of and in the amounts due to the
holders of Target Fund Common Shares and holders
of Target Fund Preferred Shares
based on their respective holdings in the Target
Fund as of the Valuation Date.
(b) If it is mutually determined by the parties hereto that the
portfolios of the Target Fund and the Acquiring Fund, when aggregated, would
contain investments exceeding certain percentage limitations set forth in the
Acquiring Fund's investment policies and restrictions, the Target Fund, if
requested by the Acquiring Fund, will dispose of a sufficient amount of such
investments as may be necessary to avoid violating such limitations as of the
Closing Date. Notwithstanding the foregoing, (i) nothing herein will require
the Target Fund to dispose of any portfolio securities or other investments,
if, in the reasonable judgment of the Target Fund's board of trustees or
investment advisor, such disposition would create more than an insignificant
risk that the Reorganization would not be treated as a "reorganization"
described in Section 368(a) of the Code for federal income tax purposes or
would otherwise not be in the best interests of the Target Fund and (ii)
nothing will permit the Target Fund to dispose of any portfolio securities
or other investments if, in the reasonable judgment of the Acquiring Fund's
board of trustees or investment advisor, such disposition would create more
than an insignificant risk that the Reorganization would not be treated as a
"reorganization" described in Section 368(a) of the Code for federal income
tax purposes or would otherwise not be in the best interests of the Acquiring
Fund.
(c) Prior to the Closing Date, the Target Fund shall declare and pay on
or immediately before the Closing Date a dividend or dividends which, together
with all such previous dividends, shall have the effect of distributing to its
shareholders all of its net investment company taxable income to and including
the Closing Date, if any (computed without regard
to any deduction for dividends
paid), and all of its net capital gain, if any, realized to and including the
Closing Date.
(d) The Target Fund will promptly pay or cause to be paid to the
Acquiring Fund any interest the Target Fund receives on or after the Closing
Date with respect to any of the Target Fund Investments transferred to the
Acquiring Fund hereunder.
(e) Recourse for liabilities assumed from the Target Fund by the
Acquiring Fund in the Reorganization will be
limited to the net assets acquired
by the Acquiring Fund. The known liabilities of the Target Fund, as of the
Valuation Date, shall be confirmed to the Acquiring Fund pursuant to Section
3(i) of this Agreement.
(f) The Target Fund will cause its existence to be terminated following
the Closing Date by (i) terminating its registration under the 1940 Act, (ii)
delisting from NYSE Amex, (iii) terminating its organization and voluntarily
dissolving and liquidating in accordance with Massachusetts law and (iv)
withdrawing its authority to do business in any state where it is required to
do so.
5. ISSUANCE AND VALUATION OF ACQUIRING FUND COMMON SHARES AND ACQUIRING FUND
PREFERRED SHARES IN THE REORGANIZATION.
(a) On the Closing Date, Acquiring Fund Common Shares and Acquiring
Fund Preferred Shares shall be issued by the
Acquiring Fund to the Target Fund
in exchange for such assets of the Target Fund as follows: on the Closing Date,
the Acquiring Fund will issue to the Target
Fund (i) a number of Acquiring Fund
Common Shares, the aggregate net asset value of which will equal the aggregate
net asset value of the Target Fund Common Shares, determined as set forth in
this Section 5 and (ii) a number of Acquiring Fund Preferred Shares, to be
designated Series W, the aggregate liquidation preference of which will equal
the aggregate liquidation preference of the Target Fund Preferred Shares,
determined as set forth in this Section 5 and the terms of which will be
substantially the same as the terms of the Target Fund Preferred Shares.
(b) The net asset value of each of the Funds and the liquidation
preference of each of the Funds' preferred shares shall be determined in
accordance with the regular procedures of the Acquiring Fund, and no formula
will be used to adjust the net asset value so determined of any Fund to take
into account differences in realized and unrealized gains and losses. The
value of the Target Fund Investments to be transferred to the Acquiring Fund
shall be determined pursuant to the regular procedures of the Acquiring Fund.
Values in all cases shall be determined as of the Valuation Date.
(c) The net asset value per share of the Target Fund Common Shares and
the liquidation preference per share of the Target
Fund Preferred Shares shall
be determined in accordance with this Section 5 on the Valuation Date, and the
net asset value per share of the Acquiring Fund Common Shares and the
liquidation preference per share of the Acquiring Fund Preferred Shares shall
be determined in accordance with this Section 5 immediately after giving effect
to the Reorganization. For purposes of determining the net asset value of a
Target Fund Common Share and an Acquiring Fund Common Share, the value of the
securities held by the applicable Fund plus any
cash or other assets (including
interest accrued but not yet received) minus all
liabilities (including accrued
and incurred expenses as allocated pursuant to Section 6 hereof) and the
aggregate liquidation value of the outstanding shares of Target Fund Preferred
Shares or Acquiring Fund Preferred Shares, as the case may be, is divided by
the total number of Target Fund Common Shares or Acquiring Fund Common Shares,
as the case may be, outstanding at such time.
(d) The Acquiring Fund shall issue to the Target Fund separate
certificates or evidence of book entry for the Acquiring Fund Common Shares
and the Acquiring Fund Preferred Shares, each registered in the names provided
by the Target Fund or in the name of the Target Fund. The Target Fund shall
then distribute the Acquiring Fund Common Shares and the Acquiring Fund
Preferred Shares to the holders of Target Fund Common Shares and Target Fund
Preferred Shares (i) by delivering the Acquiring Fund Common Shares to Xxxxx
Fargo Bank, N.A., as the transfer agent and registrar for the Acquiring Fund
Common Shares, for distribution to the holders of Target Fund Common Shares on
the basis of such holder's proportionate interest in the aggregate net asset
value of the Target Fund Common Shares and (ii) by
delivering the Acquiring Fund
Preferred Shares to The Bank of New York, as the transfer agent and registrar
for the Acquiring Fund Preferred Shares, for distribution to the holders of
Target Fund Preferred Shares on the basis of such holder's proportionate
interest in the aggregate liquidation preference of the Target Fund Preferred
Shares. All issued and outstanding Target Fund Common Shares and Target Fund
Preferred Shares will be cancelled on the books of the Target Fund and will be
null and void as of the Closing Date.
6. PAYMENT OF EXPENSES.
(a) Each of the Acquiring Fund and the Target Fund will pay its own
expenses incurred in connection with the Reorganization, whether or not
consummated. With respect to expenses incurred in connection with the
Reorganization and the reorganizations of any RMR Fund
with the Acquiring Fund
that are attributable to the Target Fund and such RMR Funds, such expenses
shall be allocated in proportion to the net asset values attributable to the
common shares of the Target Fund and the applicable RMR Funds. Neither the
Funds, the RMR Funds, nor the Advisor will pay any expenses of shareholders
arising out of or in connection with the Reorganization.
(b) Notwithstanding anything herein to the contrary, if for any reason
the Reorganization is not consummated, except for the payment of expenses as
provided in this Section 6, no party shall be liable to any other party for
any damages resulting therefrom, including, without limitation, consequential
damages.
7. COVENANTS OF THE FUNDS.
(a) The Target Fund covenants to operate its business as presently
conducted between the date hereof and the Closing Date. The Acquiring Fund
covenants not to commence business operations
(except to the extent contemplated
herein or necessary or appropriate to consummate
the purposes and intent of this
Agreement and the separate agreements and plans of reorganization that it has
entered into with the RMR Funds) prior to the completion of the Reorganization
on the Closing Date.
(b) The Acquiring Fund will file the Registration Statement with the
Commission and will use its reasonable best efforts to cause the Registration
Statement to become effective as promptly as practicable. Each Fund agrees to
cooperate fully with the other, and each will furnish to the other the
information relating to itself to be set forth in the Registration Statement as
required by the 1933 Act, the 1934 Act and the 1940 Act, and the rules and
regulations thereunder and any applicable state securities laws.
(c) The Acquiring Fund shall use its
reasonable best efforts to cause the
Acquiring Fund Common Shares to be issued in the Reorganization to be approved
for listing on NYSE Amex prior to the Closing Date.
(d) The Target Fund shall mail to its shareholders of record entitled to
vote at the Shareholder Meeting, in sufficient time to comply with requirements
as to notice thereof, the Proxy Statement/Prospectus.
(e) The Target Fund shall duly take all lawful action to call, give
notice of, convene and hold the Shareholder Meeting on a date determined in
accordance with the mutual agreement of the Funds for the purpose of obtaining
the requisite shareholder vote with respect to this Agreement and the
Reorganization and shall take all lawful action to solicit the approval and
adoption of this Agreement and the Reorganization by its shareholders.
(f) Each of the Funds agrees that, by the Closing Date, all of its
federal and other tax returns and reports required to be filed on or before
such date shall have been filed and all taxes shown on said returns to be due
and owing either shall have been paid or adequate
liability reserves shall have been provided for the payment of such taxes.
The intention of the parties is that
the transaction contemplated by this
Agreement will qualify as a "reorganization" within the meaning of
Section 368(a) of the Code. Neither Fund shall take any action or cause any
action to be taken (including, without limitation,
the filing of any tax return)
that is inconsistent with such treatment or results in the failure of the
transaction to qualify as a reorganization
within the meaning of Section 368(a)
of the Code. At or prior to the Closing Date, each
Fund will take such action,
or cause such action to be taken, as is reasonably
necessary to enable Skadden,
as special U.S. federal income tax counsel to the
Acquiring Fund, to render the
tax opinion required herein (including, without limitation, each party's
execution of representations reasonably requested by and addressed to Skadden).
In connection with this covenant, the Funds
agree to cooperate with each
other in filing any tax return, 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. The Acquiring Fund
agrees to retain for a period of 10 years following
the Closing Date all returns,
schedules and work papers and all material records
or other documents relating
to tax matters of the Target Fund for the taxable
period first ending after the
Closing Date and for all prior taxable periods.
After the Closing Date, the Target Fund shall prepare, or cause its
agents to prepare, any federal, state or local tax
returns required to be filed
by such Fund with respect to its final taxable year ending with its complete
liquidation and dissolution and for any prior periods or taxable years and
further shall cause such tax returns to be duly filed with the appropriate
taxing authorities.
(g) The Target Fund agrees that following the consummation of the
Reorganization, it will terminate its organization
and dissolve and liquidate
in accordance with Massachusetts law and any other applicable law, it will
not make any distributions of any Acquiring Fund Common Shares or Acquiring
Fund Preferred Shares other than to its shareholders as provided herein and
without first paying or adequately providing for the payment of all of its
respective liabilities not assumed by the Acquiring Fund, if any, and on and
after the Closing Date it shall not conduct any
business except in connection
with its termination or as otherwise expressly provided herein.
(h) The Target Fund undertakes that if the Reorganization is
consummated, it will file an application pursuant to Section 8(f) of the
1940 Act for an order declaring that the Target Fund has ceased to be a
registered investment company.
(i) Following the consummation of the Reorganization, the Acquiring
Fund will conduct its business as a non-diversified, closed end management
investment company registered under the 1940 Act.
8. CLOSING DATE.
(a) Delivery of the Target Fund Investments and the Acquiring Fund
Common Shares and Acquiring Fund Preferred Shares to be issued as provided
in this Agreement, shall be made at such place and time as the Funds shall
mutually agree on the Valuation Date, the date and time upon which such
delivery is to take place being referred to
herein as the "Closing Date." To
the extent that any Target Fund Investments, for any reason, are not
transferable on the Closing Date, the Target Fund shall cause such Target
Fund Investments to be transferred to the Acquiring Fund's account with its
custodian at the earliest practicable date thereafter.
(b) The Target Fund will deliver to the
Acquiring Fund on the Closing
Date confirmation or other adequate evidence as to
the tax basis of the Target
Fund Investments delivered to the Acquiring Fund hereunder.
(c) As soon as practicable after the close of business on the Closing
Date, the Target Fund shall deliver to the Acquiring Fund a list of the names
and addresses of all of the shareholders of record of the Target Fund on the
Closing Date and the number of Target Fund Common Shares and Target Fund
Preferred Shares owned by each such shareholder, certified to the best of its
knowledge and belief by the transfer agent for the Target Fund or by its
President.
9. CONDITIONS TO EACH FUND'S OBLIGATION TO EFFECT THE REORGANIZATION.
The respective obligations of each Fund to
consummate the Reorganization
shall be subject to the satisfaction of each of the following conditions:
(a) That this Agreement shall have been
adopted, and the Reorganization
shall have been approved, by the affirmative vote
of the holders of a "majority
of the outstanding" (as defined in the 1940 Act)
Target Fund Common Shares and
Target Fund Preferred Shares, voting together as a single class, and by the
affirmative vote of the holders of a majority of the outstanding Target Fund
Preferred Shares, voting as a separate class.
(b) That the board of trustees of the
Acquiring Fund shall have approved
the issuance of additional Acquiring Fund Common Shares and Acquiring Fund
Preferred Shares in an amount determined in accordance with Section 5 of this
Agreement and the Acquiring Fund Common Shares shall have been approved for
listing on NYSE Amex.
(c) That there shall not be any material litigation pending with respect
to the matters contemplated by this Agreement.
(d) That the Registration Statement shall
have become effective under
the 1933 Act, and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of the Acquiring Fund, be contemplated by the
Commission.
(e) That the shareholders of RMR Real Estate Fund shall have approved
the reorganization of RMR Real Estate Fund with the Acquiring Fund and that
such reorganization shall have been consummated.
10. CONDITIONS TO THE TARGET FUND'S OBLIGATION TO EFFECT THE REORGANIZATION.
The obligations of the Target Fund to consummate the Reorganization
shall be subject to the satisfaction of each of the following additional
conditions:
(a) That the Acquiring Fund shall have delivered to the Target Fund a
copy of the resolution duly adopted by its board of trustees approving this
Agreement, certified by its Secretary.
(b) That the Acquiring Fund shall have delivered to the Target Fund a
copy of the resolution duly adopted by its board of trustees approving the
issuance of additional Acquiring Fund Common Shares and Acquiring Fund
Preferred Shares pursuant to this Agreement, certified by its Secretary.
(c) That the Acquiring Fund shall have
furnished to the Target Fund the
Acquiring Fund Closing Financial Statements,
certified on the Acquiring Fund's
behalf by its President (or any Vice President) or its Treasurer.
(d) That the Acquiring Fund shall have furnished to the Target Fund a
certificate signed by the Acquiring Fund's President (or any Vice President)
or its Treasurer, dated as of the Closing Date, certifying that, as of the
Valuation Date and as of the Closing Date, all representations and warranties
of the Acquiring Fund made in this Agreement that are not qualified by
materiality are true and correct in all material respects or, if qualified by
materiality, are true and correct in all
respects, in each case, with the same
effect as if made at and as of such dates, and that the Acquiring Fund has
complied with all of the agreements and
satisfied all of the conditions on its
part to be performed or satisfied at or prior to such dates.
(e) That the Target Fund shall have obtained an opinion from Skadden,
special U.S. federal income tax counsel for the Acquiring Fund, dated as of
the Closing Date, addressed to the Target Fund, that the consummation of the
transactions set forth in this Agreement complies with the requirements of a
reorganization as described in Section 368(a) of the Code.
(f) That the Advisor and the Target Fund shall have entered into a
Payment Agreement in substantially the form attached hereto as Exhibit A and
such agreement shall be in full force and effect on the Closing Date.
11. CONDITIONS TO THE ACQUIRING FUND'S OBLIGATION TO EFFECT THE REORGANIZATION.
The obligations of the Acquiring Fund hereunder shall be subject to the
following additional conditions:
(a) That the Target Fund shall have delivered to the Acquiring Fund a
copy of the resolution duly adopted by its board of trustees approving this
Agreement, and a certificate setting forth the vote of the holders of Target
Fund Common Shares and Target Fund Preferred
Shares obtained at the Shareholder
Meeting, each certified by its Secretary.
(b) That the Target Fund shall have furnished to the Acquiring Fund the
Target Fund Closing Financial Statements, certified on the Target Fund's behalf
by its President (or any Vice President) or its Treasurer, and a certificate
signed by such Fund's President (or any Vice President) or its Treasurer, dated
as of the Closing Date, certifying that as of the Valuation Date and as of the
Closing Date there has been no material adverse change in the financial
position of the Target Fund since the date of such Fund's most recent
Annual Report or Semi-Annual Report, as applicable, other than changes in the
Target Fund Investments since that date or changes in the market value of the
Target Fund Investments.
(c) That the Target Fund shall have furnished to the Acquiring Fund a
certificate signed by such Fund's President (or any Vice President) or its
Treasurer, dated the Closing Date, certifying that, as of the Valuation Date
and as of the Closing Date, all representations and warranties of the Target
Fund made in this Agreement that are not qualified by materiality are true and
correct in all material respects or, if qualified by materiality, are true and
correct in all respects, in each case, with the same effect as if made at and
as of such dates, and that the Target Fund has complied with all of the
agreements and satisfied all of the conditions on its part to be performed or
satisfied at or prior to such dates.
(d) That the Acquiring Fund shall have obtained an opinion from Skadden,
as special U.S. federal income tax counsel for the Acquiring Fund, dated as of
the Closing Date, addressed to the Acquiring Fund, that the consummation of the
transactions set forth in this Agreement complies with the requirements of a
reorganization as described in Section 368(a) of the Code.
12. TERMINATION, POSTPONEMENT AND WAIVERS.
(a) Notwithstanding anything contained in this
Agreement to the contrary,
this Agreement may be terminated and the Reorganization abandoned at any time
(whether before or after adoption thereof by the shareholders of the
Target Fund) prior to the Closing Date, or the Closing Date may be postponed,
(i) by mutual written consent of the Boards of Trustees of the Funds, (ii) by
the board of trustees of the Target Fund if any condition of the Target Fund's
obligations set forth in Section 10 of this Agreement has not been fulfilled or
waived by such board; or (iii) by the board of trustees of the Acquiring Fund
if any condition of the Acquiring Fund's obligations set forth in Section 11 of
this Agreement has not been fulfilled or waived by such board.
(b) If the transactions contemplated by this Agreement have not been
consummated by December 31, 2009, this Agreement automatically shall terminate
on that date, unless a later date is mutually
agreed to in writing by the Boards of Trustees of the Funds.
(c) In the event this Agreement is
terminated 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 any Fund or its respective directors,
trustees, officers, agents or shareholders in respect of this Agreement, except
that the provisions of Section 6, this Section 12, Section 13 and Section 14
shall survive such termination.
(d) At any time prior to the Closing Date, any of
the terms or conditions
of this Agreement may be waived by the board of trustees of any Fund (whichever
is entitled to the benefit thereof), if, in the judgment of such board after
consultation with its counsel, such waiver will not have a material adverse
effect on the benefits to the shareholders of such Fund intended under this
Agreement.
(e) The respective representations and warranties contained in
Sections 2 and 3 of this Agreement shall expire with, and be terminated by,
the consummation of the Reorganization, and neither Fund nor any of its
respective officers, trustees, agents or shareholders shall have any liability
with respect to such representations or warranties after the Closing Date. This
provision shall not protect any officer, trustee,
agent or shareholder of either
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 otherwise would be subject by
reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of his or her 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 Date that impose any terms or
conditions that are determined by action of the Boards of Trustees of the Funds
to be acceptable, such terms and conditions shall be binding as if a part of
this Agreement without further vote or approval of the shareholders of the
Target Fund, unless such terms and conditions shall result in a change in the
method of computing the number of Acquiring Fund
Common Shares or Acquiring Fund
Preferred Shares to be issued to the Target Fund, as applicable, in which
event, unless such terms and conditions shall
have been included in the proxy
solicitation materials furnished to the shareholders of the Target Fund prior
to the Shareholder Meeting, this Agreement shall not be consummated and shall
terminate unless the Target Fund promptly shall call a special meeting of
shareholders at which such conditions so imposed
shall be submitted for approval.
13. INDEMNIFICATION.
(a) Each party (an "Indemnitor") shall indemnify and hold the other and
its officers, trustees, agents and persons controlled by or controlling any of
them (each an "Indemnified Party") harmless from
and against any and all losses,
damages, liabilities, claims, demands, judgments, settlements, deficiencies,
taxes, assessments, charges, costs and expenses of any nature whatsoever
(including reasonable attorneys' fees) including amounts paid in satisfaction
of judgments, in compromise or as fines and penalties, and counsel fees
reasonably incurred by such Indemnified Party in connection with the defense or
disposition of any claim, action, suit or other proceeding, whether civil or
criminal, before any court or administrative or investigative body in which
such Indemnified Party may be or may have been involved as a party or otherwise
or with which such Indemnified Party may be or may have been threatened (each,
a "Loss" and collectively, "Losses") arising out of or related to any claim of
a breach of any covenant made herein by the Indemnitor, provided, however, that
no Indemnified Party shall be indemnified hereunder against any Losses arising
directly from such Indemnified Party's (i) willful misfeasance, (ii) bad faith,
(iii) gross negligence or (iv) reckless disregard of the duties involved in the
conduct of such Indemnified Party's position.
(b) The Indemnified Party shall use its reasonable best efforts to
minimize any liabilities, damages, deficiencies,
claims, judgments, assessments,
costs and expenses in respect of which indemnity may be sought hereunder. The
Indemnified Party shall give written notice to Indemnitor within the earlier of
10 days of receipt of written notice to Indemnified Party or 30 days from
discovery by Indemnified Party of any matters which may give rise to a claim
for indemnification or reimbursement under this Agreement. The failure to give
such notice shall not affect the right of Indemnified Party to indemnity
hereunder unless such failure has materially and adversely affected the rights
of the Indemnitor. At any time after 10 days from the giving of such notice,
Indemnified Party may, at its option, resist, settle or otherwise compromise,
or pay such claim unless it shall have received notice from Indemnitor that
Indemnitor intends, at Indemnitor's sole cost and expense, to assume the
defense of any such matter, in which case Indemnified Party shall have the
right, at no cost or expense to Indemnitor, to participate in such defense.
If Indemnitor does not assume the defense of such matter, and in any event
until Indemnitor states in writing that it will
assume the defense, Indemnitor
shall pay all costs of Indemnified Party arising out of the defense until the
defense is assumed; provided, however, that Indemnified Party shall consult
with Indemnitor and obtain Indemnitor's prior written consent to any payment or
settlement of any such claim. Indemnitor shall keep Indemnified Party fully
apprised at all times as to the status of the defense. If Indemnitor does not
assume the defense, Indemnified Party shall keep Indemnitor apprised at all
times as to the status of the defense. Following indemnification as provided
for hereunder, Indemnitor shall be subrogated to all rights of Indemnified
Party with respect to all third parties, firms or corporations relating to the
matter for which indemnification has been made.
14. OTHER MATTERS.
(a) All covenants, agreements, representations
and warranties made under
this Agreement and any certificates delivered pursuant to this Agreement shall
be deemed to have been material and relied upon by each of the parties,
notwithstanding any investigation made by them or on their behalf.
(b) All notices hereunder shall be sufficiently given for all purposes
hereunder if in writing and delivered personally or sent by registered mail or
certified mail, postage prepaid. Notice to the Target Fund shall be addressed
to the Target Fund c/o RMR Funds, 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, Attention: General Counsel, or at such other address as the Target Fund
may designate by written notice to the Acquiring Fund. Notice to the Acquiring
Fund shall be addressed to the Acquiring Fund x/x XXX Xxxxx, 000 Xxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: General Counsel, or at such other
address and to the attention of such other person as the Acquiring Fund may
designate by written notice to the Target Fund. Any notice shall be deemed to
have been served or given as of the date such notice is delivered personally
or mailed as provided herein.
(c) This Agreement supersedes all previous correspondence and oral
communications between the Funds regarding the Reorganization, constitutes
the only understanding with respect to the Reorganization, may not be changed
except in a writing executed by each Fund and shall be governed by and
construed in accordance with the laws of the State of Delaware (without giving
effect to choice of law principles thereof).
(d) This Agreement may be amended or modified by the parties hereto
prior to the Closing Date, by action taken or authorized by their respective
boards of trustees, at any time before or after adoption of this Agreement
and approval of the Reorganization by the Target Fund's shareholders, but,
after any such adoption and approval, no amendment or modification shall be
made which by law requires further approval by such shareholders without such
further approval. This Agreement may not be amended or modified except by an
instrument in writing signed on behalf of each of the parties hereto.
(e) This Agreement is not intended to confer upon any person other
than the parties hereto (or their respective
successors and assigns) any rights,
remedies, obligations or liabilities hereunder. If any provision of this
Agreement shall be held or made invalid by a statute, rule, regulation,
decision of a tribunal or otherwise, the remainder of this Agreement shall not
be affected thereby and, to such extent, the
provisions of this Agreement shall
be deemed severable, provided that, this Agreement shall be deemed modified to
give effect to the fullest extent permitted under applicable law to the
intentions of the parties as reflected by this Agreement prior to the
invalidity of such provision.
(f) It is expressly agreed that the obligations of the Funds hereunder
shall not be binding upon any of their respective trustees, shareholders,
nominees, officers, agents, or employees personally, but shall bind only the
trust property of the respective Fund as provided in such Fund's Agreement and
Declaration of Trust. The execution and delivery of this Agreement has been
authorized by the board of trustees of each Fund and signed by authorized
officers of each 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, but shall bind only the trust property of each Fund as
provided in such Funds' Agreement and Declaration of Trust.
(g) This Agreement may be executed in any number of counterparts, each
of which, when executed and delivered, shall be deemed to be an original but
all such counterparts together shall constitute but one instrument.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to
be executed and delivered by their duly authorized officers as of the day and
year first written above.
RMR F.I.R.E. FUND
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Trustee, President and
Principal Executive Officer
RMR REAL ESTATE INCOME FUND
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Trustee, President and
Principal Executive Officer
EXHIBIT A
Form of Payment Agreement
PAYMENT AGREEMENT
THIS AGREEMENT, dated as of June 4, 2009 (this "Agreement"), is made by
and between RMR F.I.R.E. Fund, a Massachusetts business trust (the "Fund"), and
RMR Advisors, Inc., a Massachusetts corporation (the "Advisor").
WHEREAS, the Fund and the Advisor are parties to an Investment Advisory
Agreement, dated May 16, 2005 (the "Investment Advisory Agreement"), which
provides, among other things, for the payment of fees by the Fund to the
Advisor and for a waiver of a portion of such fees until November 22, 2009;
WHEREAS, the Fund is party to an Agreement and Plan of Reorganization,
dated as of June 4, 2009, which provides for, among other things, the
reorganization (the "Reorganization") of the Fund with RMR Real Estate Income
Fund ("New RMR"), whereby the shareholders of the Fund will become shareholders
of New RMR (the "Reorganization Agreement");
WHEREAS, in connection with the Reorganization, New RMR will enter into
a new investment advisory agreement with the Advisor with terms that are
substantively the same as the Investment Advisory Agreement, but which will not
include a fee waiver provision;
WHEREAS, all of the Trustees of the Fund who
are not "interested persons"
of the Fund (as defined in Section 2(a)(19) of the Investment Company Act
of 1940, as amended) ("Independent Trustees") have determined that shareholders
of the Fund should not in principle be deprived of the benefits intended by the
fee waiver, and that the Advisor should not experience an economic wind-fall as
a result of the Reorganization;
WHEREAS, the Independent Trustees are requiring that the Advisor make a
payment to the Fund in an amount intended to reflect
the value of the fee waiver
which would have applied in the absence of the Reorganization;
WHEREAS, the Board of Trustees of the Fund, including all of the Fund's
Independent Trustees, have approved the method for determining the amount of
the payment to be paid to the Fund as provided for herein; and
WHEREAS, capitalized terms used and not defined herein shall have the
meanings ascribed to such terms in the Reorganization Agreement;
NOW, THEREFORE, in consideration of the foregoing and the agreements
hereinafter set forth, and intending to be legally bound, the Advisor and the
Fund hereby agree as follows:
1. Calculation and Payment of Fee Waiver Adjustment Payment.
The Advisor hereby agrees to pay to the Fund, immediately prior to the
consummation of the Reorganization, an amount in cash equal to the product of:
(a) the product of (i) a discount factor of 7% and (ii) the quotient
obtained by dividing (A) the number of days, if any, by which the expiration
date of the fee waiver in the Investment Advisory Agreement exceeds the closing
date of the Reorganization, by (B) 365; and
(b) the product of (i) the Fund's managed assets as of the Valuation
Date, (ii) 0.25% and (iii) the quotient obtained by dividing (A) the number of
days, if any, by which the expiration date of the fee waiver in the Investment
Advisory Agreement exceeds the closing date of the Reorganization, by (B) 365.
Such amount in cash as determined pursuant to this Section 1 shall be referred
to as the "Fee Waiver Adjustment Payment".
2. Treatment of Fee Waiver Adjustment Payment.
The Fund will, subject to applicable legal and tax requirements, either
retain all or a portion of the Fee Waiver Adjustment Payment or distribute all
or a portion of the Fee Waiver Adjustment Payment to its shareholders
immediately prior to the consummation of the Reorganization. To the extent
the Fund retains any portion of the Fee Waiver Adjustment Payment, the amount
retained will be included as part of the Fund's net assets attributable to
common shares for purposes of determining the number of New RMR shares to be
issued to the Fund in the Reorganization in accordance with the Reorganization
Agreement.
3. Miscellaneous.
(a) Waiver and Amendment. Any provision of this Agreement may be waived
at any time by the party that is entitled to the benefits of such provision.
This Agreement may not be modified, amended, altered or supplemented except
upon the execution and delivery of a written agreement executed by the parties
hereto. Any waiver shall be effective only in the specific instance and for the
specific purpose for which given and shall not constitute a waiver to any
subsequent or other exercise of any right, remedy, power or privilege hereunder.
(b) Entire Agreement; No Third-Party Beneficiaries; Severability. This
Agreement between the Fund and the Advisor constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or government entity to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
(c) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware (without giving effect
to choice of law principles thereof).
(d) Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be deemed to
be an original but all such counterparts together shall constitute but one
instrument.
(e) Non-Liability of Shareholders, Trustees, Etc. of the Fund. With
respect to the Fund, this Agreement is executed on behalf of the Fund, by
the Trustees or by an officer or officers of the Fund in their capacity as
such and not individually, and neither the shareholders nor the Fund's
Trustees nor any officers, employees or agents shall be liable thereunder and
the Advisor shall look solely to the Fund's estate for the payment of any
claim hereunder or for the performance of the Fund's duties created by this
Agreement.
[Remainder of Page Intentionally Blank]
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be executed and delivered by their duly authorized officers as of
the day and year first written above.
RMR F.I.R.E. FUND
By: _________________________
Name: Xxxx X. Xxxxxxx
Title: Trustee, President and Principal Executive Officer
RMR ADVISORS, INC.
By: __________________________
Name: Xxxx X. Xxxxxxx
Title: Director, President and Principal Executive Officer
20
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