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 Hospitality and Real Estate
Fund, a Massachusetts business trust and registered closed end management
investment company, File No. 811-21502 (the "Target Fund"), and RMR Real
Estate Income Fund, a Delaware statutory trust and registered closed end
management investment company, File No. 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 F.I.R.E. Fund,
a registered closed end management investment company, File No. 811-21616,
(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 principles
and 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) Reserved.
(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 19, 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"), 2,485,000 shares of which are outstanding
on the date hereof, and an unlimited number of preferred shares of beneficial
interest (the "Target Fund Preferred Shares"), 91 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 Th. 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, 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 Th, 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 A
cquiring 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.
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 HOSPITALITY AND REAL ESTATE 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
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