FORM OF AGREEMENT AND PLAN OF REORGANIZATION
Exhibit
4
In
order to consummate the reorganization contemplated herein (the "Reorganization")
and in consideration of the promises and the covenants and agreements
hereinafter set forth, and intending to be legally bound, ING Clarion Real
Estate Income Fund ("IIA"),
a registered closed-end investment company, File No. 811-21404, ING Clarion
Global Real Estate Income Fund ("IGR"),
a registered closed-end investment company, File No. 811-21465 and IGR Merger
Subsidiary, a Delaware statutory trust and a direct, wholly-owned subsidiary of
IGR ("Merger
Subsidiary", and, together with IGR, the "IGR
Parties"; the IGR Parties and IIA are collectively referred to as the
"Funds"),
each hereby agree as follows:
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1.
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REPRESENTATIONS
AND WARRANTIES OF THE
IGR
PARTIES.
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Each
of IGR and Merger Subsidiary represents and warrants to, and agrees with, IIA
that:
(a) Each of IGR and
Merger Subsidiary is a statutory trust
duly
organized, validly existing and in good standing in conformity with the
laws of the State of
Delaware, and has the power
to own all of its assets and to carry out this Agreement. Each of IGR and
Merger Subsidiary 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) IGR is duly registered
under the Investment Company Act of 1940, as amended (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closed-end management investment company and such registration has not been
revoked or rescinded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) Each of IGR and
Merger Subsidiary has full power and
authority to enter into and perform its obligations under this
Agreement. The execution, delivery and performance of this
Agreement have been duly
authorized by all necessary
action of each of
IGR's and Merger
Subsidiary's 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) IIA has been furnished
with IGR's Annual Report to
Shareholders for the fiscal year
ended December
31,
2008, and the audited
financial statements
appearing therein, having been audited by Ernst & Young
LLP,
independent registered public accounting firm, fairly present the financial
position of IGR as of the
respective dates indicated, in conformity with generally accepted accounting principles used
in the
United States applied on a consistent
basis.
(e) An unaudited
statement of assets
and liabilities of IGR and an unaudited
schedule of investments of IGR, in each
case
with values determined as provided in Section 4 of this
Agreement, each as of the
Valuation Time (as defined
in Section 3(h) herein) (together, the
"IGR
Closing Financial
1
Statements"), will be furnished
to IIA, at or prior to
the Closing Date (as defined in Section 7(a)
herein), for the purpose of determining the number of IGR Common Shares
(as
defined in Section 1(m) herein)
to be
issued to IIA shareholders
pursuant to Section
6 of this Agreement; the IGR Closing
Financial Statements will fairly
present the financial
position of IGR as of the
Valuation Time in conformity with generally accepted accounting principles
used
in the United States applied on a
consistent basis.
(f) There are no
material legal, administrative or other proceedings pending or, to
the
knowledge of either of IGR or Merger Subsidiary, threatened
against either IGR or
Merger Subsidiary which assert
liability on the part of IGR or Merger
Subsidiary or which
materially affect its financial
condition or its ability to
consummate the Reorganization. Neither IGR nor
Merger Subsidiary is not charged
with or, to the best of its knowledge,
threatened with any violation or investigation of any possible violation of any
provisions of any federal, state or local law or regulation or
administrative ruling relating to
any aspect of its
business.
(g) There are no
material contracts outstanding to which IGR or Merger
Subsidiary is a party that
have not been disclosed in the N-14 Registration Statement (as defined in
subsection (k) below) or that will not otherwise be
disclosed to IIA prior to the
Valuation Time.
(h) Neither IGR nor
Merger Subsidiary is obligated under
any provision of its charter or its
bylaws, each as amended
to the date hereof, and is not a party to any contract or other commitment
or
obligation, and is not subject to any order or decree, which would be violated
by its execution of or performance under this Agreement, except insofar as the
Funds have mutually agreed to amend such contract or other commitment or
obligation to cure any potential violation
as a condition precedent to the Reorganization.
(i) IGR has no known
liabilities of a material amount, contingent or otherwise, other than
those shown on IGR's Annual Report for
the
year ended December 31, 2008, those
incurred since the date
thereof in the ordinary
course of its business as an investment
company, and those
incurred in connection with the Reorganization. As of the Valuation
Time, IGR will
advise IIA 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, except to the
extent disclosed in the IGR Closing Financial
Statements.
(j) No consent,
approval, authorization or order of any court
or government authority is required for the consummation by IGR or Merger
Subsidiary of the
Reorganization, except such as
may be required under the Securities Act of 1933, as amended (the "1933
Act"), the Securities
Exchange Act of 1934, as amended (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) or the New York Stock Exchange
Rules.
(k) The
registration statement
filed by IGR on Form N-14, which
includes the proxy statement of IIA with respect to
the transactions contemplated herein (the "Proxy
Statement/Prospectus"), and any
supplement or amendment thereto or to the documents
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included or
incorporated by reference therein
(collectively, as so amended or
supplemented, the "N-14
Registration Statement"), on its effective
date, at the time of the shareholders meeting called to
vote on this Agreement and
on the Closing
Date, insofar as it relates to IGR, (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 the light of the
circumstances under which they were made, not misleading; provided, however, that the
representations and warranties in this subsection only shall apply to
statements in or omissions
from the N-14 Registration Statement made in reliance upon and in conformity
with information furnished by IGR for use in
the N-14 Registration Statement.
(l) IGR 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 IGR have been
adequately provided for on its books, and no tax deficiency or liability of
IGR 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.
(m) IGR is authorized to
issue an unlimited number
of common shares of beneficial
interest, par value
$0.001 per share (the
"IGR
Common Shares") and an unlimited
number of preferred shares of
beneficial interest. Each outstanding
IGR Common Share is
fully paid and nonassessable and has full voting
rights.
(n) The books and
records of IIA made available to the
IGR
Parties and/or its counsel
are substantially true and correct and contain no material misstatements or
omissions with respect to the operations of IIA.
(o) The IGR Common Shares to
be issued to IIA pursuant to this
Agreement will have been duly
authorized and, when issued and delivered pursuant to this Agreement, will be
legally and validly issued and will be fully paid and nonassessable and
will have full voting rights, and no shareholder of IGR will have any
preemptive right of subscription or purchase
in respect thereof.
(p) At or prior to the
Closing Date, the IGR Common Shares to
be transferred to IIA for distribution
to the shareholders of IIA on the Closing
Date will be duly qualified for offering to the public in all states of
the
United States in which the sale of shares of the Funds presently are qualified,
and there will be a sufficient number of such shares registered under the 1933
Act and, as may be necessary, with each pertinent state securities commission to
permit the transfers contemplated
by this Agreement to be consummated.
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(q) At or prior to the
Closing Date, IGR will have obtained
any and all regulatory, Trustee and shareholder
approvals necessary to issue the IGR Common Shares to
IIA.
(r) IGR has elected to qualify
and
has qualified as a
regulated investment company
("RIC") within the meaning
of Section 851 of the Internal Revenue Code of 1986, as
amended (the "Code") for each of its
taxable years since its
inception; and IGR has satisfied the
distribution requirements to maintain RIC
status
for each of its taxable years.
(s) Merger Subsidiary
has not elected, and will not elect, to be treated as a corporation for
U.S. federal income tax
purposes. Merger Subsidiary is a wholly owned subsidiary of
IGR. Merger Subsidiary is a disregarded
entity for U.S. federal income tax
purposes.
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2.
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REPRESENTATIONS
AND WARRANTIES OF IIA.
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IIA
represents and warrants to, and agrees with, the IGR Parties that:
(a) IIA is a statutory trust duly organized,
validly existing and in good standing in conformity
with the laws of the State of
Delaware, and has the power
to own all of its assets and to carry out this Agreement. IIA 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) IIA 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) IIA 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 IIA as described in
Section 8(b)
hereof. The execution,
delivery and performance of this
Agreement have 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 IGR Parties
have
been furnished with IIA's Annual Report to
Shareholders for the fiscal year
ended December
31,
2008, and the audited
financial statements appearing therein, having been audited by Ernst & Young
LLP,
independent registered public accounting firm, fairly present the financial
position of IIA as of the
respective dates
indicated, in conformity with generally accepted accounting
principles used in the United
States applied on a consistent basis.
(e) An unaudited
statement of assets and liabilities of IIA and an unaudited
schedule of investments of IIA in each case with
values determined as provided in Section 4 of this Agreement, each as of the
Valuation Time (together, the
"IIA
Closing Financial Statements"), will be furnished
to the IGR
Parties at or prior to the
Closing Date for the purpose of determining the number
of IGR
Common Shares to be issued to IIA pursuant to
Section 3 of
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this
Agreement; the IIA Closing
Financial Statements will fairly present
the financial position of IIA as of the
Valuation Time in conformity with generally accepted accounting
principles used in the United
States applied on a
consistent basis.
(f) There are no
material legal, administrative or other proceedings pending or, to the knowledge
of IIA, threatened
against it which assert liability on the part of IIA or
which
materially affect its financial condition or its ability to consummate the
Reorganization. IIA is not charged
with or, to the best of its knowledge, threatened with any violation or
investigation of any possible violation of any provisions of any
federal, state or local
law or regulation or administrative ruling relating to any aspect of its
business.
(g) There are no
material contracts outstanding to which IIA is a party that
have not been disclosed in the N-14 Registration Statement or will not
otherwise be disclosed to
the IGR
Parties prior to the
Valuation Time.
(h) IIA is not obligated
under any provision of its charter or its bylaws, each as amended
to the date hereof, or a party to any contract or other commitment or
obligation, and is not subject to any order or
decree, which would be violated by its execution of or performance under this
Agreement, except insofar as the Funds have mutually agreed to amend such
contract or other commitment or obligation to cure any potential violation as a
condition precedent to the
Reorganization.
(i) IIA has no known
liabilities of a material amount, contingent or otherwise, other than those
shown
in its Annual Report for
the year ended December 31, 2008, those incurred
since
the date thereof in the ordinary
course of its business as an investment company and those incurred in connection
with the Reorganization. As of the Valuation
Time, IIA will advise the
IGR
Parties 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, except to the
extent disclosed in the IIA Closing Financial
Statements.
(j) No consent,
approval, authorization or order of any court or governmental
authority is required for the consummation by IIA 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) The N-14
Registration Statement, on its effective date, at the time of the
shareholders meeting called to vote on
this Agreement and on the Closing Date, insofar as it relates to IIA (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 the light of the
circumstances under which they were made, not misleading; provided, however, that the representations and
5
warranties in this
subsection shall apply only to statements in or omissions
from the N-14 Registration Statement made in reliance upon and in conformity
with information furnished by IIA for use in
the N-14 Registration Statement.
(l) IIA 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 IIA have been
adequately provided for on its books, and no tax deficiency or liability of
IIA 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.
IIA is authorized to
issue an unlimited number of common shares of beneficial interest, par
value
$0.001 per share (the "IIA
Common Shares"),
shares
of which are outstanding on the
date hereof, and an unlimited
number of preferred shares of
beneficial interest,
shares of which are outstanding on the
date hereof. Each
outstanding IIA Common Share is
fully paid and nonassessable and has full voting
rights.
(m) The books and
records of IIA made available to
the IGR
Parties and/or its counsel
are substantially true and correct and contain no material misstatements or
omissions with respect to the
operations of IIA.
(n) IIA has elected to qualify
and has qualified as a
RIC within the meaning
of Section 851 of the Code for each of its taxable years since its
inception; and IIA has satisfied the
distribution requirements to maintain
RIC
status
for each of its taxable years.
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3.
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THE
REORGANIZATION.
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(a) Subject
to receiving
the requisite approvals of the shareholders
of IIA,
and to the other terms and conditions
contained herein,
and in accordance with the Delaware Statutory Trust Act
(the "DSTA"),
at the Effective Time (as defined
in Section 3(b))
IIA shall be merged with and into Merger Subsidiary, the separate existence of
IIA as a Delaware
statutory trust and registered investment company
shall cease and Merger Subsidiary shall continue
as the surviving entity following the Reorganization
(sometimes referred to herein as the "Surviving
Fund")
and as a subsidiary of IGR. The
existence of Merger Subsidiary shall continue unaffected and unimpaired by the
Reorganization
and, as the Surviving
Fund, it shall be governed by the DSTA.
(b) Upon the terms and
subject to the conditions of this Agreement, on the Closing
Date, the parties shall cause the Reorganization to be
consummated by filing a
certificate of merger (the
"Certificate
of Merger") with the
Secretary of State of the
State of Delaware in accordance with
the DSTA. The
Reorganization shall become
effective at such time as
the Certificate of Merger is duly filed with the Secretary of State of the State
of Delaware, or at such
subsequent date or time as
Parent and IIA shall agree and
specify in the Certificate of Merger (the "Effective
Time").
6
(c) At the Effective
Time, the effect of the Reorganization
shall
be as provided in the applicable provisions of the DSTA. Without limiting
the generality of the
foregoing, and subject thereto, at the Effective Time, except as otherwise
provided herein, all the property, rights, privileges, powers and franchises of
IIA and the Merger Subsidiary shall vest in the Surviving Fund, and all debts,
liabilities,
obligations, restrictions, disabilities and duties of IIA and the Merger
Subsidiary shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Fund.
(d) At the
Effective Time,
the
Agreement and Declaration of Trust and
the Bylaws of the
Merger Subsidiary in effect immediately prior to the Effective Time shall
continue to be the Agreement and Declaration of Trust and the Bylaws of the
Surviving Fund, until thereafter amended in accordance with their respective terms and
applicable law.
(e) From and after the
Effective Time, the directors and officers of Merger Subsidiary shall be the
directors and officer of the Surviving Fund, and such
directors and officers shall serve until
their successors have been duly elected or
appointed and qualified or unit their death, resignation or removal in
accordance with the Agreement and Declaration of Trust and the Bylaws of the
Surviving Fund.
(f) Pursuant to this
Agreement, as soon as practicable, and in no event
more
than 48 hours, exclusive of Sundays and holidays, after the
Effective Time,
IGR
will distribute IGR Common Shares
to
IIA
shareholders in exchange for their IIA Common Shares. Such
distributions shall be accomplished by the opening of shareholder
accounts on the share
ledger records of IGR in the names of
and in the amounts due to the shareholders of IIA based on their respective
holdings in IIA as of the
Valuation Time.
(g) IIA and IGR covenant and agree
to dispose of certain
assets prior to the Closing Date, but only if
and to the extent necessary,
so that at Closing, when IIA's
assets
are added to IGR's portfolio, the
resulting portfolio will meet IGR's investment
objective, policies and restrictions, as set forth in IGR's Prospectus, a
copy of which has been delivered
to IIA. Notwithstanding the
foregoing, nothing herein will require IIA to dispose of any
portion of its assets if, in the
reasonable judgment of IIA's trustees or
investment adviser, 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.
(h) Prior to the
Closing Date, IIA shall declare 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.
(i) The Valuation Time
shall be at the close of business of the New York Stock Exchange on the
business day immediately preceding the Closing Date, or such earlier
or later day and time as may be mutually agreed upon in writing (the
"Valuation
Time").
(j) Recourse for
liabilities assumed from IIA by the Surviving Fund in the
Reorganization
will
be limited to the net assets acquired by the Surviving Fund. The known
7
liabilities of
IIA, as of the
Valuation Time, shall be confirmed to the Surviving Fund pursuant
to Section 2(i) of this
Agreement.
(k) For U.S. federal income tax
purposes, this Agreement will constitute a plan of reorganization within the
meaning of U.S. Treasury Regulations Section
1.368-2(g).
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4.
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ISSUANCE AND
VALUATION OF IGR COMMON
SHARES IN THE REORGANIZATION.
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IGR
Common Shares of an aggregate net asset value equal to the aggregate net asset
value of IIA Common Shares shall be issued by IGR to shareholders of IIA in
exchange for all of the IIA Common Shares. The aggregate net asset
value of such shares shall be determined as set forth below.
The
net asset value of IIA and IGR shall be determined as of the Valuation Time in
accordance with the regular procedures of the investment adviser, 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. Values in all cases shall be determined as of the Valuation
Time. The value of IIA's portfolio securities shall be determined
pursuant to the regular procedures of the investment advisor.
Such valuation and
determination shall be made by the IGR Parties in cooperation with IIA
and shall be confirmed in writing by the IGR Parties to IIA. The net
asset value per share of the IGR Common Shares shall be determined in accordance
with such procedures and IGR shall certify the computations
involved. For purposes of determining the net asset value per share
of the IIA Common Shares and the IGR Common Shares, 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 expenses)
shall be divided by the total number of IIA Common Shares or IGR Common Shares,
as the case may be, outstanding at such time. IGR shall issue to
shareholders of IIA book entry interests for the IGR Common Shares registered in
the name of such shareholders on the basis of each holder's proportionate
interest in the aggregate net asset value of the IIA Common
Shares. With respect to any IIA shareholder holding certificates
evidencing ownership of IIA Common Shares as of the Closing Date, and subject to
IGR being informed thereof in writing by IIA, IGR will not permit such
shareholder to receive new certificates evidencing ownership of the IGR Common
Shares until notified by IIA or its agent that such shareholder has surrendered
his or her outstanding certificates evidencing ownership of IIA Common Shares
or, in the event of lost certificates, posted adequate bond. IIA, at
its own expense, will request its shareholders to surrender their outstanding
certificates evidencing ownership of IIA Common Shares or post adequate bond
therefor.
No
fractional shares of IGR Common Shares will be issued to holders of IIA Common
Shares unless such shares are held in a Dividend Reinvestment Plan
account. In lieu thereof, the IGR's transfer agent will aggregate all
fractional IGR Common Shares to be issued in connection with the Reorganization
(other than those issued to a Dividend Reinvestment Plan account) and sell the
resulting full shares on the New York Stock Exchange at the current market price
for IGR Common Shares for the account of all holders of such fractional
interests, and each such
8
holder
will receive such holder's pro rata share of the proceeds of such sale upon
surrender of such holder's certificates representing IGR Common
Shares.
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5.
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PAYMENT OF
EXPENSES.
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(a) IIA and the IGR
Parties will bear expenses
incurred in connection with the Reorganization, including but not
limited to, costs related to the preparation and distribution of materials
distributed to each Fund's Board of
Trustees, expenses
incurred in connection with the preparation of the Agreement and Plan of
Reorganization, Certificate of
Merger
and a registration statement on Form N-14, the printing and
distribution of the Proxy
Statement/Prospectus and Annual Reports, SEC
and state securities commission filing fees and legal and audit fees in
connection with the Reorganization, legal fees
incurred preparing each Fund's board materials,
attending each Fund's board meetings and
preparing the minutes, auditing fees associated with each Fund's financial
statements, stock exchange fees, transfer agency fees, rating agency fees,
portfolio transfer taxes (if any) and any similar expenses incurred in
connection with the Reorganization, which will be
borne directly by the respective Fund incurring the expense or allocated among
the Funds based upon any
reasonable methodology
approved by the
Trustees of the Funds. Neither the Funds
nor the investment adviser will pay any expenses of
shareholders arising out of or in connection with the Reorganization.
(b) If for any reason
the Reorganization is not consummated,
no party shall be liable to any other party for any damages resulting therefrom,
including, without limitation, consequential
damages, and each
Fund
shall be responsible, on
a proportionate total
assets
basis, for all expenses incurred
in connection with the Reorganization.
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6.
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COVENANTS OF THE
FUNDS.
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(a) Each Fund covenants
to operate its business as presently conducted between the
date hereof and the Closing Date.
(b) IIA 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 IIA has ceased to be a registered investment
company.
(c) IGR will file the N-14
Registration Statement with the Securities and Exchange Commission (the
"SEC") and will use its
best efforts to provide that the N-14 Registration Statement becomes 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 N-14 Registration
Statement as required by the 1933 Act, the 1934 Act and the 1940 Act, and
the rules and regulations thereunder and the state
securities laws.
(d) Each of the Funds
agrees that by the Closing Date all of its U.S. federal and other
tax returns and reports required to be filed on or before such date shall have
been filed and all taxes shown as due on said returns either have been
paid or adequate liability reserves have been provided for the payment of such
taxes.
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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 IGR nor Merger Subsidiary nor IIA 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, the IGR
Parties and IIA will take such action, or cause such action to be taken, as is
reasonably necessary to enable Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
("Skadden"),
special counsel to the Funds, 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 IGR
Parties agree to retain for a period of ten (10) years following the Closing
Date all returns, schedules and work papers and all material records or other
documents relating to tax matters of IIA for each of such Fund's taxable period
first ending after the Closing Date and for all prior taxable
periods.
After
the Closing Date, IIA shall prepare, or cause its agents to prepare, any U.S.
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. Notwithstanding the aforementioned provisions of this
subsection, any expenses incurred by IIA (other than for payment of taxes) in
connection with the preparation and filing of said tax returns after the Closing
Date shall be borne by IIA to the extent such expenses have been accrued by IIA
in the ordinary course without regard to the Reorganization; any excess expenses
shall be paid from a liability reserve established to provide for the payment of
such expenses.
(e) IIA agrees to mail to
its shareholders of record entitled
to vote at the special meeting of shareholders at which action is
to be considered regarding this Agreement, in sufficient time to comply with
requirements as to notice thereof, a combined proxy statement and prospectus
which complies in all material respects with the applicable provisions of Section
14(a) of the 1934 Act and Section 20(a) of the 1940 Act, and the rules and
regulations, respectively, thereunder.
(f) Following the
consummation of the Reorganization, IGR will continue its
business as a non-diversified,
closed-end management investment
company registered under the 1940 Act.
(g) IGR shall use its
reasonable best efforts to cause the IGR Common Shares to
be issued in the Reorganization to be approved for
listing on the New York Stock Exchange prior to the Closing
Date.
10
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7.
|
CLOSING
DATE.
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(a) The closing of the
Reorganization (the "Closing") shall occur at
10:00 a.m. at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Xxxx
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other location as may be
mutually agreed by the Funds, on the
next full business day following the Valuation Time to occur after the
satisfaction or waiver of all of the conditions set forth in Section 8 of this
Agreement (other than the conditions that relate to actions to be taken, or
documents to be delivered at the
Closing, it being understood that the occurrence of the Closing shall remain
subject to the satisfaction or waiver of such conditions at Closing), or at such
other time and date as may be mutually agreed to by the Funds (such date, the
"Closing
Date").
(b) As soon as
practicable after the close of business on the Closing Date, IIA shall deliver to
IGR a list of the
names and addresses of all of the shareholders of record of
IIA on the Closing
Date and the number of IIA Common Shares
owned
by each such shareholder, certified to the best of its knowledge and belief by
the transfer agent for IIA or by its
President.
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8.
|
CONDITIONS OF IIA.
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The
obligations of IIA hereunder shall be subject to the following
conditions:
(a) That this
Agreement shall have been
adopted, and the Reorganization shall have been
approved, by the affirmative vote of
a
majority of the members of
the Board of
Trustees of IIA and by the
affirmative vote of the holders of a majority of the outstanding IIA Common
Shares; and that
each
of the IGR
Parties shall have
delivered to IIA a copy of the
resolutions approving this
Agreement adopted by its Board of
Trustees, each certified by
its Secretary.
(b) That IIA shall have
received from IGR the IGR Closing Financial
Statements, together with a
schedule of IGR's investments, all
as of the Valuation Time,
certified on IGR's behalf by its
President (or any Vice President) or its Treasurer, and a certificate
signed by IGR's President (or any
Vice President) and its Treasurer, dated as of the Closing
Date, certifying that as of the Valuation Time and as of the Closing Date there
has been no material adverse change in the financial position of the
IGR since the date of
IGR's most recent
Annual or Semi-Annual Report, as applicable, other than changes in
its portfolio securities since that date or changes in the market
value
of its portfolio securities.
(c) That IGR shall have
furnished to IIA a certificate
signed by IGR's President (or any
Vice President) or its Treasurer, dated as of the Closing Date,
certifying that, as of the Valuation Time and as of the Closing Date, all
representations and warranties of IGR made in this
Agreement are true and correct in all material respects with the same effect as
if made at and as of such dates, and that
IGR 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 each of such
dates.
(d) That there shall
not be any material litigation pending with respect to the matters
contemplated by this
Agreement.
11
(e) That IIA shall have
received the opinion of Skadden, acting as special
counsel for each of
the IGR Parties, dated as of the
Closing Date, addressed to IIA, substantially in
the form and to the effect that:
(i) each IGR
Party
is validly existing and in good standing under
the laws of the State of Delaware;
(ii) IGR is registered as a
closed-end management investment company under the 1940
Act;
(iii) each IGR
Party
has the power and authority to execute, deliver and perform all of its obligations
under this Agreement under
the laws of the State of Delaware, the execution and
delivery and the consummation by each IGR
Party
of the transactions contemplated hereby have been duly authorized by all
requisite action of each IGR
Party under the laws of
the
State
of
Delaware, and this
Agreement has been duly executed and delivered by each IGR
Party
under the laws of the State of
Delaware;
(iv) this Agreement
constitutes a valid and binding obligation of each IGR
Party
(assuming this Agreement is a valid
and binding obligation of the other party
hereto);
(v) the execution and
delivery by each IGR
Party
of this Agreement and the performance by each IGR
Party
of its obligations under this Agreement do not conflict with the charter or the bylaws of either IGR
Party;
(vi) neither the
execution, delivery or performance by
each
IGR Party of this Agreement
nor the compliance by each IGR
Party
with the terms and provisions hereof contravene any provision of the laws of
the
State of Delaware or the
federal laws of the
United
States;
(vii) no governmental
approval, which has not been obtained or taken and is not in full force and
effect, is required to authorize, or is required in connection with, the
execution or delivery of this Agreement by each IGR Party or the
enforceability of this Agreement against each IGR
Party;
and
(viii) the IGR Common
Shares
to be issued pursuant to the Reorganization have each been
duly authorized and, upon issuance thereof in accordance with this Agreement,
each will be validly issued,
fully paid and nonassessable.
(f) That IIA shall have
obtained an opinion from Skadden, special
counsel for
IGR,
dated as of the Closing Date, addressed to IIA, 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.
(g) That all
proceedings taken by each IGR Party
and
its counsel in connection with the Reorganization and all documents
incidental thereto shall be satisfactory in form and substance to
IIA.
12
(h) That the N-14
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 each IGR
Party,
be contemplated by the SEC.
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9.
|
CONDITIONS OF THE IGR PARTIES.
|
The
obligations of the IGR Parties hereunder shall be subject to the following
conditions:
(a) That this Agreement
shall have been adopted, and the Reorganization shall have been
approved, by the Board of Trustees of each
IGR
Party;
and IIA shall have
delivered to each IGR
Party
a copy of the resolution approving this Agreement adopted by each IGR
Party's Board of
Trustees, and a certificate
setting forth the vote of the holders of IIA Common Shares
obtained, each certified by its
Secretary.
(b) That IIA shall have
furnished to the IGR
Parties the IIA Closing Financial
Statements, together with a
schedule of investments with their respective dates of acquisition and tax
costs, all as of the Valuation Time, certified on IIA's behalf by its
President (or any Vice President) or its Treasurer, and a certificate signed by
IIA's President (or any
Vice President) or its Treasurer, dated as of the Closing Date, certifying that
as of the Valuation Time and as of the Closing Date there has been no material
adverse change in the financial position of IIA since the date of
IIA's most recent
Annual Report or Semi-Annual Report, as applicable, other than changes in
its
portfolio securities since that date or
changes in the market value of the its portfolio
securities.
(c) That IIA shall have
furnished to the IGR
Parties a certificate
signed by IIA's President (or any
Vice President) or its Treasurer, dated as of the Closing Date,
certifying that as of the Valuation Time and as of the Closing Date all
representations and warranties of IIA made in this
Agreement are true and correct in all material respects with the same effect as
if made at and as of such dates and IIA 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 there shall
not be any material litigation pending with respect to the matters contemplated
by this Agreement.
(e) That the
IGR
Parties shall have
received the opinion of Skadden, acting as special
counsel for
IIA, dated as of the
Closing Date, addressed to the IGR
Parties, substantially in
the form and to the effect that:
(i) IIA is validly
existing and in good standing under
the laws of the State of Delaware;
(ii) IIA is
registered as a closed-end
management investment company under the 1940
Act;
(iii) IIA has the power and
authority to execute, deliver and perform all of its obligations under this
Agreement under the laws of the State of
Delaware, the execution and
delivery and the consummation by
IIA of the
transactions contemplated hereby have been duly authorized by all requisite
action of IIA
13
under
the laws of the State of
Delaware, and this
Agreement has been duly executed and delivered by IIA under the
laws of the State of
Delaware;
(iv) this Agreement
constitutes a valid and binding obligation of IIA (assuming this
Agreement is a valid and binding obligation of the other party
hereto);
(v) the execution and
delivery by IIA of this Agreement
and the performance by IIA of its
obligations under
this Agreement do not conflict with the charter or the
bylaws of IIA;
(vi) neither the
execution, delivery or performance by
IIA of this
Agreement nor the compliance by IIA with the
terms and provisions hereof contravene any provision of the laws of
the
State of Delaware or the
federal laws of the United States; and
(vii) no governmental
approval, which has not been obtained or taken and is not in full force and
effect, is required to authorize, or is required in connection with, the
execution or delivery of
this Agreement by IIA or the
enforceability of this Agreement against IIA.
(f) That the
IGR
Parties shall have
obtained an opinion from Skadden, special
counsel for
IIA, dated as of the
Closing Date, addressed to the IGR
Parties, 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.
(g) That all
proceedings taken by IIA and its counsel in
connection with the Reorganization and
all
documents incidental thereto shall be satisfactory in form and substance to
the
IGR Parties.
(h) That the N-14
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 IIA, be contemplated
by the SEC.
(i) That prior to the
Closing Date IIA shall have
declared 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 for the
period 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.
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10.
|
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 IIA) prior to the
Closing Date, or the Closing Date may be postponed, (i) by mutual consent of the
Boards of Trustees of the Funds, (ii)
by the Board of Trustees of IIA if any condition
of IIA's obligations set forth in Section 8 of this
Agreement has not been
fulfilled or
waived
by such Board; (iii) by the
Board of Trustees of
14
IGR
if any
condition of IGR's obligations set
forth in Section 9 of this
Agreement has not been
fulfilled or waived by such Board; or
(iv) by the Board
of Trustees of Merger Subsidiary if any condition
of Merger Subsidiary's obligations set forth
in Section 9 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 by the
Boards of Trustees of the
Funds.
(c) In the event of
termination of this Agreement pursuant to the provisions hereof, the same shall
become void and have no further effect, and
there shall not be any liability on the part of any Fund or its respective
trustees,
directors, officers, agents
or shareholders in respect of this
Agreement.
(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 action or waiver will not have a
material adverse effect on the benefits intended under
this Agreement to the shareholders of their
respective Fund, on behalf of
which such action is taken.
(e) The respective
representations and warranties contained in Sections 1 and 2 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 SEC with respect
to this Agreement shall be issued prior to the Closing Date and shall
impose any terms or conditions which 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 IIA unless such
terms and conditions shall result in a change in the method of computing the
number of IGR Common Shares
to be issued to shareholders of
IIA, in which event,
unless such terms and conditions shall have been included in the proxy
solicitation
materials furnished
to the shareholders of IIA prior to the
meeting at which the
Reorganization shall have
been approved, this Agreement shall not be consummated and shall terminate
unless IIA promptly
shall call a special meeting of shareholders at which such
conditions so imposed shall be submitted for
approval.
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11.
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INDEMNIFICATION.
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(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,
15
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 (collectively, the "Losses") arising out of or
related to any claim of a breach of any representation, warranty or 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 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 ten (10)
days of receipt of written notice
to the
Indemnified Party
or thirty (30) days from discovery by the 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
the
Indemnified Party to indemnity hereunder unless such failure has materially and
adversely affected the rights of the Indemnitor; provided that in any event
such notice shall have been given prior to the expiration of the Survival
Period. At any time after
ten (10) days from the giving of such notice, the Indemnified Party
may, at its option, resist, settle or otherwise compromise, or pay such claim
unless it shall have received notice from the Indemnitor that
the
Indemnitor intends,
at the Indemnitor's sole cost and
expense, to assume the defense of any such matter, in which case the Indemnified Party
shall have the right, at no cost or expense to the Indemnitor, to
participate in such defense. If the Indemnitor does not
assume the defense of such matter,
and in any event until the Indemnitor states
in writing that it will assume the defense, the Indemnitor shall
pay all costs of the Indemnified Party
arising out of the defense until the defense is assumed; provided, however, that the Indemnified Party
shall consult with the Indemnitor and
obtain indemnitor's prior written
consent to any payment or settlement of any such claim. The Indemnitor shall
keep the Indemnified Party
fully apprised at all times as to the status of the defense. If the Indemnitor does not
assume the defense, the Indemnified Party
shall keep the Indemnitor apprised
at all times as to the status of the defense. Following
indemnification as provided for hereunder, the Indemnitor shall be
subrogated to all rights of the Indemnified Party
with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made.
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12.
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OTHER
MATTERS.
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(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,
16
postage prepaid.
Notice to
IIA shall be
addressed to IIA c/o
ING
Clarion Real Estate Securities, L.P., 000 Xxxx xx Xxxxxxx
Xxxx,
Xxxxx
000,
Xxxxxx, XX 00000, Attention:
Xxxxx
Xxxxxxxx, or at such other
address as IIA may designate
by written notice to the IGR
Parties. Notice to
the
IGR Parties shall be
addressed to the IGR
Parties c/o
ING
Clarion Real Estate Securities, L.P., 000 Xxxx xx Xxxxxxx
Xxxx,
Xxxxx
000,
Xxxxxx, XX 00000, Attention: Xxxxx
Xxxxxxxx, or at such other
address and to the attention of such other person as the IGR
Parties may
designate by
written notice to IIA. Any notice
shall be deemed to have been served or given as of the date such notice is
delivered personally or mailed.
(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 by a letter of agreement signed by each Fund and shall be
governed by and construed in accordance with the laws of the State of
New
York
applicable to agreements made and to be performed in said
state.
(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 IIA'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
Funds.
(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 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 party 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 property of
the respective Fund. 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.
(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]
17
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.
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ING
CLARION REAL ESTATE INCOME FUND
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By:
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Name:
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Title:
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By:
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Name:
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Title:
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IGR
MERGER SUBSIDIARY
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By:
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Name:
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Title:
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