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 Preferred Dividend Fund, a Massachusetts
business trust and registered closed end management
investment company, File No. 811-21671 (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
Hospitality and Real Estate Fund, a registered
closed end management investment company, File No.
811-21502, (iii) RMR F.I.R.E. Fund, a registered
closed end management investment company, File No.
811-21616, 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) "Payment Agreement" shall mean the Payment
Agreement, dated the date hereof, by and between the
Target Fund and the Advisor.
(t) "Proxy Statement/Prospectus" shall have the
meaning assigned to such term in Section 2(j).
(u) "Registration Statement" shall have the meaning
assigned to such term in Section 2(j).
(v) "Reorganization" shall have the meaning assigned
to such term in Section 4(a).
(w) "RIC" means a regulated investment company under
Section 851 of the Code.
(x) "RMR Fund" or "RMR Funds" shall have the meaning
assigned to such terms in the recitals.
(y) "Shareholder Meeting" shall have the meaning
assigned to such term in Section 2(j).
(z) "Skadden" means Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP.
(aa) "Target Fund" shall have the meaning assigned
to such term in the preamble.
(bb) "Target Fund Closing Financial Statements"
shall have the meaning assigned to such term in Section 3(e).
(cc) "Target Fund Common Shares" shall have the
meaning assigned to such term in Section 3(m).
(dd) "Target Fund Investments" means (i) the
investments of the Target Fund shown on the schedule of its
investments as of the Valuation Date furnished to the
Acquiring Fund and (ii) all other assets owned by the Target
Fund or liabilities incurred as of the Valuation Date.
(ee) "Target Fund Preferred Shares" shall have the
meaning assigned to such term in Section 3(m).
(ff) "Valuation Date" shall be 4:00 p.m., Eastern
Time, on June 23, 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"), 2,663,977 shares of which are
outstanding on the date hereof, and an unlimited number
of preferred shares of beneficial interest (the "Target
Fund Preferred Shares"), 64 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 M. 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 M, the aggregate liquidation preference of
which will equal the aggregate liquidation preference
of the Target Fund Preferred Shares, determined as
set forth in this Section 5 and the terms of which
will be substantially the same as the terms of the
Target Fund Preferred Shares.
(b) The net asset value of each of the Funds
and the liquidation preference of each of the Funds'
preferred shares shall be determined in accordance
with the regular procedures of the Acquiring Fund,
and no formula will be used to adjust the net asset
value so determined of any Fund to take into account
differences in realized and unrealized gains and
losses. The value of the Target Fund Investments
to be transferred to the Acquiring Fund shall be
determined pursuant to the regular procedures of the
Acquiring Fund. Values in all cases shall be
determined as of the Valuation Date.
(c) The net asset value per share of the
Target Fund Common Shares and the liquidation preference
per share of the Target Fund Preferred Shares shall
be determined in accordance with this Section 5 on
the Valuation Date, and the net asset value per share
of the Acquiring Fund Common Shares and the liquidation
preference per share of the Acquiring Fund Preferred
Shares shall be determined in accordance with this
Section 5 immediately after giving effect to the
Reorganization. For purposes of determining the net
asset value of a Target Fund Common Share and an
Acquiring Fund Common Share, the value of the securities
held by the applicable Fund plus any cash or other
assets (including interest accrued but not yet received)
minus all liabilities (including accrued and incurred
expenses as allocated pursuant to Section 6 hereof)
and the aggregate liquidation value of the outstanding
shares of Target Fund Preferred Shares or Acquiring
Fund Preferred Shares, as the case may be, is divided
by the total number of Target Fund Common Shares or
Acquiring Fund Common Shares, as the case may be,
outstanding at such time.
(d) The Acquiring Fund shall issue to the Target
Fund separate certificates or evidence of book entry
for the Acquiring Fund Common Shares and the Acquiring
Fund Preferred Shares, each registered in the names
provided by the Target Fund or in the name of the Target
Fund. The Target Fund shall then distribute the
Acquiring Fund Common Shares and the Acquiring Fund
Preferred Shares to the holders of Target Fund Common
Shares and Target Fund Preferred Shares (i) by delivering
the Acquiring Fund Common Shares to Xxxxx Fargo Bank, N.A.,
as the transfer agent and registrar for the Acquiring
Fund Common Shares, for distribution to the holders of
Target Fund Common Shares on the basis of such holder's
proportionate interest in the aggregate net asset value
of the Target Fund Common Shares and (ii) by delivering
the Acquiring Fund Preferred Shares to The Bank of New York,
as the transfer agent and registrar for the Acquiring
Fund Preferred Shares, for distribution to the holders
of Target Fund Preferred Shares on the basis of such
holder's proportionate interest in the aggregate
liquidation preference of the Target Fund Preferred
Shares. All issued and outstanding Target Fund Common
Shares and Target Fund Preferred Shares will be cancelled
on the books of the Target Fund and will be null and void
as of the Closing Date.
6. PAYMENT OF EXPENSES.
(a) Each of the Acquiring Fund and the Target Fund
will pay its own expenses incurred in connection with the
Reorganization, whether or not consummated. With respect
to expenses incurred in connection with the Reorganization
and the reorganizations of any RMR Fund with the Acquiring
Fund that are attributable to the Target Fund and such RMR
Funds, such expenses shall be allocated in proportion to
the net asset values attributable to the common shares of
the Target Fund and the applicable RMR Funds. Neither the
Funds, the RMR Funds, nor the Advisor will pay any expenses
of shareholders arising out of or in connection with the
Reorganization.
(b) Notwithstanding anything herein to the contrary,
if for any reason the Reorganization is not consummated,
except for the payment of expenses as provided in this
Section 6, no party shall be liable to any other party for
any damages resulting therefrom, including, without
limitation, consequential damages.
7. COVENANTS OF THE FUNDS.
(a) The Target Fund covenants to operate its business
as presently conducted between the date hereof and the
Closing Date. The Acquiring Fund covenants not to commence
business operations (except to the extent contemplated herein
or necessary or appropriate to consummate the purposes and
intent of this Agreement and the separate agreements and
plans of reorganization that it has entered into with the
RMR Funds) prior to the completion of the Reorganization
on the Closing Date.
(b) The Acquiring Fund will file the Registration
Statement with the Commission and will use its reasonable
best efforts to cause the Registration Statement to become
effective as promptly as practicable. Each Fund agrees to
cooperate fully with the other, and each will furnish to
the other the information relating to itself to be set
forth in the Registration Statement as required by
the 1933 Act, the 1934 Act and the 1940 Act, and the
rules and regulations thereunder and any applicable
state securities laws.
(c) The Acquiring Fund shall use its reasonable
best efforts to cause the Acquiring Fund Common Shares
to be issued in the Reorganization to be approved
for listing on NYSE Amex prior to the Closing Date.
(d) The Target Fund shall mail to its shareholders
of record entitled to vote at the Shareholder Meeting,
in sufficient time to comply with requirements as to
notice thereof, the Proxy Statement/Prospectus.
(e) The Target Fund shall duly take all lawful
action to call, give notice of, convene and hold the
Shareholder Meeting on a date determined in accordance
with the mutual agreement of the Funds for the purpose
of obtaining the requisite shareholder vote with respect
to this Agreement and the Reorganization and shall take
all lawful action to solicit the approval and adoption
of this Agreement and the Reorganization by its
shareholders.
(f) Each of the Funds agrees that, by the Closing
Date, all of its federal and other tax returns and
reports required to be filed on or before such date shall
have been filed and all taxes shown on said returns to
be due and owing either shall have been paid or adequate
liability reserves shall have been provided for the
payment of such taxes.
The intention of the parties is that the transaction
contemplated by this Agreement will qualify as
a "reorganization" within the meaning of Section 368(a)
of the Code. Neither Fund shall take any action or cause
any action to be taken (including, without limitation,
the filing of any tax return) that is inconsistent with
such treatment or results in the failure of the transaction
to qualify as a reorganization within the meaning of
Section 368(a) of the Code. At or prior to the Closing
Date, each Fund will take such action, or cause such action
to be taken, as is reasonably necessary to enable Skadden,
as special U.S. federal income tax counsel to the
Acquiring Fund, to render the tax opinion required herein
(including, without limitation, each party's execution
of representations reasonably requested by and addressed
to Skadden).
In connection with this covenant, the Funds agree
to cooperate with each other in filing any tax return,
amended return or claim for refund, determining a liability
for taxes or a right to a refund of taxes or participating
in or conducting any audit or other proceeding in respect
of taxes. The Acquiring Fund agrees to retain for a period
of 10 years following the Closing Date all returns,
schedules and work papers and all material records or
other documents relating to tax matters of the Target Fund
for the taxable period first ending after the Closing
Date and for all prior taxable periods.
After the Closing Date, the Target Fund shall
prepare, or cause its agents to prepare, any federal,
state or local tax returns required to be filed by such
Fund with respect to its final taxable year ending with
its complete liquidation and dissolution and for any prior
periods or taxable years and further shall cause such tax
returns to be duly filed with the appropriate taxing
authorities.
(g) The Target Fund agrees that following the
consummation of the Reorganization, it will terminate its
organization and dissolve and liquidate in accordance with
Massachusetts law and any other applicable law, it will
not make any distributions of any Acquiring Fund Common
Shares or Acquiring Fund Preferred Shares other than to its
shareholders as provided herein and without first paying or
adequately providing for the payment of all of its respective
liabilities not assumed by the Acquiring Fund, if any,
and on and after the Closing Date it shall not conduct
any business except in connection with its termination
or as otherwise expressly provided herein.
(h) The Target Fund undertakes that if the
Reorganization is consummated, it will file an application
pursuant to Section 8(f) of the 1940 Act for an order
declaring that the Target Fund has ceased to be a registered
investment company.
(i) Following the consummation of the Reorganization,
the Acquiring Fund will conduct its business as a
non-diversified, closed end management investment company
registered under the 1940 Act.
8. CLOSING DATE.
(a) Delivery of the Target Fund Investments and the
Acquiring Fund Common Shares and Acquiring Fund Preferred
Shares to be issued as provided in this Agreement, shall
be made at such place and time as the Funds shall mutually
agree on the Valuation Date, the date and time upon which
such delivery is to take place being referred to herein as
the "Closing Date." To the extent that any Target Fund
Investments, for any reason, are not transferable on
the Closing Date, the Target Fund shall cause such
Target Fund Investments to be transferred to the
Acquiring Fund's account with its custodian at the
earliest practicable date thereafter.
(b) The Target Fund will deliver to the
Acquiring Fund on the Closing Date confirmation or
other adequate evidence as to the tax basis of the
Target Fund Investments delivered to the Acquiring
Fund hereunder.
(c) As soon as practicable after the close of
business on the Closing Date, the Target Fund shall
deliver to the Acquiring Fund a list of the names and
addresses of all of the shareholders of record of the
Target Fund on the Closing Date and the number of Target
Fund Common Shares and Target Fund Preferred Shares owned
by each such shareholder, certified to the best of its
knowledge and belief by the transfer agent for the Target
Fund or by its President.
9. CONDITIONS TO EACH FUND'S OBLIGATION TO EFFECT THE
REORGANIZATION.
The respective obligations of each Fund to
consummate the Reorganization shall be subject to the
satisfaction of each of the following conditions:
(a) That this Agreement shall have been adopted,
and the Reorganization shall have been approved, by the
affirmative vote of the holders of a "majority of the
outstanding" (as defined in the 1940 Act) Target Fund
Common Shares and Target Fund Preferred Shares, voting
together as a single class, and by the affirmative vote
of the holders of a majority of the outstanding Target
Fund Preferred Shares, voting as a separate class.
(b) That the board of trustees of the Acquiring
Fund shall have approved the issuance of additional
Acquiring Fund Common Shares and Acquiring Fund Preferred
Shares in an amount determined in accordance with
Section 5 of this Agreement and the Acquiring Fund Common
Shares shall have been approved for listing on NYSE Amex.
(c) That there shall not be any material litigation
pending with respect to the matters contemplated by this
Agreement.
(d) That the Registration Statement shall have
become effective under the 1933 Act, and no stop order
suspending such effectiveness shall have been instituted
or, to the knowledge of the Acquiring Fund, be
contemplated by the Commission.
(e) That the shareholders of RMR Real Estate Fund
shall have approved the reorganization of RMR Real Estate
Fund with the Acquiring Fund and that such reorganization
shall have been consummated.
10. CONDITIONS TO THE TARGET FUND'S OBLIGATION TO EFFECT
THE REORGANIZATION.
The obligations of the Target Fund to consummate
the Reorganization shall be subject to the satisfaction
of each of the following additional conditions:
(a) That the Acquiring Fund shall have delivered
to the Target Fund a copy of the resolution duly adopted
by its board of trustees approving this Agreement,
certified by its Secretary.
(b) That the Acquiring Fund shall have delivered
to the Target Fund a copy of the resolution duly adopted
by its board of trustees approving the issuance of
additional Acquiring Fund Common Shares and Acquiring Fund
Preferred Shares pursuant to this Agreement, certified
by its Secretary.
(c) That the Acquiring Fund shall have furnished
to the Target Fund the Acquiring Fund Closing Financial
Statements, certified on the Acquiring Fund's behalf by
its President (or any Vice President) or its Treasurer.
(d) That the Acquiring Fund shall have furnished
to the Target Fund a certificate signed by the Acquiring
Fund's President (or any Vice President) or its Treasurer,
dated as of the Closing Date, certifying that, as of the
Valuation Date and as of the Closing Date, all representations
and warranties of the Acquiring Fund made in this
Agreement that are not qualified by materiality are true
and correct in all material respects or, if qualified
by materiality, are true and correct in all respects, in
each case, with the same effect as if made at and as of
such dates, and that the Acquiring Fund has complied with
all of the agreements and satisfied all of the conditions
on its part to be performed or satisfied at or prior to
such dates.
(e) That the Target Fund shall have obtained an
opinion from Skadden, special U.S. federal income tax
counsel for the Acquiring Fund, dated as of the Closing
Date, addressed to the Target Fund, that the consummation
of the transactions set forth in this Agreement complies
with the requirements of a reorganization as described in
Section 368(a) of the Code.
(f) That the Advisor and the Target Fund shall
have entered into a Payment Agreement in substantially
the form attached hereto as Exhibit A and such agreement
shall be in full force and effect on the Closing Date.
11. CONDITIONS TO THE ACQUIRING FUND'S OBLIGATION TO
EFFECT THE REORGANIZATION.
The obligations of the Acquiring Fund hereunder
shall be subject to the following additional conditions:
(a) That the Target Fund shall have delivered to
the Acquiring Fund a copy of the resolution duly adopted
by its board of trustees approving this Agreement, and a
certificate setting forth the vote of the holders of
Target Fund Common Shares and Target Fund Preferred Shares
obtained at the Shareholder Meeting, each certified by
its Secretary.
(b) That the Target Fund shall have furnished to
the Acquiring Fund the Target Fund Closing Financial
Statements, certified on the Target Fund's behalf by its
President (or any Vice President) or its Treasurer, and
a certificate signed by such Fund's President (or any
Vice President) or its Treasurer, dated as of the
Closing Date, certifying that as of the Valuation
Date and as of the Closing Date there has been no
material adverse change in the financial position of
the Target Fund since the date of such Fund's most
recent Annual Report or Semi-Annual Report, as applicable,
other than changes in the Target Fund Investments
since that date or changes in the market value of the
Target Fund Investments.
(c) That the Target Fund shall have furnished
to the Acquiring Fund a certificate signed by such
Fund's President (or any Vice President) or its
Treasurer, dated the Closing Date, certifying that,
as of the Valuation Date and as of the Closing Date,
all representations and warranties of the Target Fund
made in this Agreement that are not qualified by
materiality are true and correct in all material
respects or, if qualified by materiality, are true and
correct in all respects, in each case, with the same
effect as if made at and as of such dates, and that the
Target Fund has complied with all of the agreements
and satisfied all of the conditions on its part to be
performed or satisfied at or prior to such dates.
(d) That the Acquiring Fund shall have obtained
an opinion from Skadden, as special U.S. federal income
tax counsel for the Acquiring Fund, dated as of the
Closing Date, addressed to the Acquiring Fund, that the
consummation of the transactions set forth in this
Agreement complies with the requirements of a
reorganization as described in Section 368(a) of the
Code.
12. TERMINATION, POSTPONEMENT AND WAIVERS.
(a) Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may be
terminated and the Reorganization abandoned at any time
(whether before or after adoption thereof by the
shareholders of the Target Fund) prior to the Closing
Date, or the Closing Date may be postponed, (i) by mutual
written consent of the Boards of Trustees of the Funds,
(ii) by the board of trustees of the Target Fund if any
condition of the Target Fund's obligations set forth in
Section 10 of this Agreement has not been fulfilled or
waived by such board; or (iii) by the board of trustees
of the Acquiring Fund if any condition of the Acquiring
Fund's obligations set forth in Section 11 of this
Agreement has not been fulfilled or waived by such board.
(b) If the transactions contemplated by this
Agreement have not been consummated by December 31, 2009,
this Agreement automatically shall terminate on that date,
unless a later date is mutually agreed to in writing by
the Boards of Trustees of the Funds.
(c) In the event this Agreement is terminated
pursuant to the provisions hereof, the same shall become
void and have no further effect, and there shall not
be any liability on the part of any Fund or its respective
directors, trustees, officers, agents or shareholders in
respect of this Agreement, except that the provisions
of Section 6, this Section 12, Section 13 and Section 14
shall survive such termination.
(d) At any time prior to the Closing Date, any
of the terms or conditions of this Agreement may be
waived by the board of trustees of any Fund (whichever
is entitled to the benefit thereof), if, in the judgment
of such board after consultation with its counsel, such
waiver will not have a material adverse effect on the
benefits to the shareholders of such Fund intended under
this Agreement.
(e) The respective representations and warranties
contained in Sections 2 and 3 of this Agreement shall
expire with, and be terminated by, the consummation of
the Reorganization, and neither Fund nor any of its
respective officers, trustees, agents or shareholders
shall have any liability with respect to such
representations or warranties after the Closing Date.
This provision shall not protect any officer, trustee,
agent or shareholder of either Fund against any
liability to the entity for which that officer, trustee,
agent or shareholder so acts or to its shareholders,
to which that officer, trustee, agent or shareholder
otherwise would be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless
disregard of his or her duties in the conduct of such
office.
(f) If any order or orders of the Commission
with respect to this Agreement shall be issued prior
to the Closing Date that impose any terms or conditions
that are determined by action of the Boards of Trustees
of the Funds to be acceptable, such terms and conditions
shall be binding as if a part of this Agreement without
further vote or approval of the shareholders of the
Target Fund, unless such terms and conditions shall
result in a change in the method of computing the number
of Acquiring Fund Common Shares or Acquiring Fund
Preferred Shares to be issued to the Target Fund, as
applicable, in which event, unless such terms and
conditions shall have been included in the proxy
solicitation materials furnished to the shareholders
of the Target Fund prior to the Shareholder Meeting,
this Agreement shall not be consummated and shall
terminate unless the Target Fund promptly shall call a
special meeting of shareholders at which such conditions
so imposed shall be submitted for approval.
13. INDEMNIFICATION.
(a) Each party (an "Indemnitor") shall indemnify
and hold the other and its officers, trustees, agents and
persons controlled by or controlling any of them (each
an "Indemnified Party") harmless from and against any
and all losses, damages, liabilities, claims, demands,
judgments, settlements, deficiencies, taxes, assessments,
charges, costs and expenses of any nature whatsoever
(including reasonable attorneys' fees) including amounts
paid in satisfaction of judgments, in compromise or as
fines and penalties, and counsel fees reasonably incurred
by such Indemnified Party in connection with the defense
or disposition of any claim, action, suit or other
proceeding, whether civil or criminal, before any court
or administrative or investigative body in which such
Indemnified Party may be or may have been involved as a
party or otherwise or with which such Indemnified Party
may be or may have been threatened (each, a "Loss"
and collectively, "Losses") arising out of or related
to any claim of a breach of any covenant made herein by
the Indemnitor, provided, however, that no Indemnified
Party shall be indemnified hereunder against any Losses
arising directly from such Indemnified Party's (i)
willful misfeasance, (ii) bad faith, (iii) gross
negligence or (iv) reckless disregard of the duties
involved in the conduct of such Indemnified Party's
position.
(b) The Indemnified Party shall use its reasonable
best efforts to minimize any liabilities, damages,
deficiencies, claims, judgments, assessments, costs
and expenses in respect of which indemnity may be sought
hereunder. The Indemnified Party shall give written
notice to Indemnitor within the earlier of 10 days of
receipt of written notice to Indemnified Party or 30 days
from discovery by Indemnified Party of any matters which
may give rise to a claim for indemnification or
reimbursement under this Agreement. The failure to give
such notice shall not affect the right of Indemnified
Party to indemnity hereunder unless such failure has
materially and adversely affected the rights of the
Indemnitor. At any time after 10 days from the giving
of such notice, Indemnified Party may, at its option,
resist, settle or otherwise compromise, or pay such claim
unless it shall have received notice from Indemnitor that
Indemnitor intends, at Indemnitor's sole cost and expense,
to assume the defense of any such matter, in which case
Indemnified Party shall have the right, at no cost or
expense to Indemnitor, to participate in such defense.
If Indemnitor does not assume the defense of such matter,
and in any event until Indemnitor states in writing that
it will assume the defense, Indemnitor shall pay all costs
of Indemnified Party arising out of the defense until
the defense is assumed; provided, however, that Indemnified
Party shall consult with Indemnitor and obtain Indemnitor's
prior written consent to any payment or settlement of any
such claim. Indemnitor shall keep Indemnified Party fully
apprised at all times as to the status of the defense. If
Indemnitor does not assume the defense, Indemnified Party
shall keep Indemnitor apprised at all times as to the
status of the defense. Following indemnification as provided
for hereunder, Indemnitor shall be subrogated to all
rights of Indemnified Party with respect to all third
parties, firms or corporations relating to the matter
for which indemnification has been made.
14. OTHER MATTERS.
(a) All covenants, agreements, representations
and warranties made under this Agreement and any
certificates delivered pursuant to this Agreement shall
be deemed to have been material and relied upon by each
of the parties, notwithstanding any investigation made by
them or on their behalf.
(b) All notices hereunder shall be sufficiently
given for all purposes hereunder if in writing and delivered
personally or sent by registered mail or certified mail,
postage prepaid. Notice to the Target Fund shall be
addressed to the Target Fund c/o RMR Funds, 000 Xxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: General
Counsel, or at such other address as the Target Fund may
designate by written notice to the Acquiring Fund. Notice
to the Acquiring Fund shall be addressed to the Acquiring
Fund x/x XXX Xxxxx, 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, Attention: General Counsel, or at such other address
and to the attention of such other person as the Acquiring
Fund may designate by written notice to the Target Fund.
Any notice shall be deemed to have been served or given as
of the date such notice is delivered personally or mailed
as provided herein.
(c) This Agreement supersedes all previous
correspondence and oral communications between the Funds
regarding the Reorganization, constitutes the only
understanding with respect to the Reorganization, may not
be changed except in a writing executed by each Fund and
shall be governed by and construed in accordance with the
laws of the State of Delaware (without giving effect to
choice of law principles thereof).
(d) This Agreement may be amended or modified by
the parties hereto prior to the Closing Date, by action
taken or authorized by their respective boards of trustees,
at any time before or after adoption of this Agreement and
approval of the Reorganization by the Target Fund's
shareholders, but, after any such adoption and approval,
no amendment or modification shall be made which by law
requires further approval by such shareholders without such
further approval. This Agreement may not be amended or
modified except by an instrument in writing signed on behalf
of each of the parties hereto.
(e) This Agreement is not intended to confer upon
any person other than the parties hereto (or their
respective successors and assigns) any rights, remedies,
obligations or liabilities hereunder. If any provision
of this Agreement shall be held or made invalid by a
statute, rule, regulation, decision of a tribunal or
otherwise, the remainder of this Agreement shall not be
affected thereby and, to such extent, the provisions of
this Agreement shall be deemed severable, provided that,
this Agreement shall be deemed modified to give effect to
the fullest extent permitted under applicable law to the
intentions of the parties as reflected by this Agreement
prior to the invalidity of such provision.
(f) It is expressly agreed that the obligations
of the Funds hereunder shall not be binding upon any of
their respective trustees, shareholders, nominees,
officers, agents, or employees personally, but shall
bind only the trust property of the respective Fund as
provided in such Fund's Agreement and Declaration of Trust.
The execution and delivery of this Agreement has been
authorized by the board of trustees of each Fund and
signed by authorized officers of each Fund, acting as
such, and neither such authorization by such trustees,
nor such execution and delivery by such officers shall
be deemed to have been made by any of them individually
or to impose any liability on any of them personally,
but shall bind only the trust property of each Fund as
provided in such Funds' Agreement and Declaration of
Trust.
(g) This Agreement may be executed in any number
of counterparts, each of which, when executed and delivered,
shall be deemed to be an original but all such counterparts
together shall constitute but one instrument.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have hereunto
caused this Agreement to be executed and delivered by
their duly authorized officers as of the day and year
first written above.
RMR PREFERRED DIVIDEND FUND
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Trustee, President and
Principal Executive Officer
RMR REAL ESTATE INCOME FUND
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Trustee, President and
Principal Executive Officer
EXHIBIT A
Form of Payment Agreement
PAYMENT AGREEMENT
THIS AGREEMENT, dated as of June 4, 2009
(this "Agreement"), is made by and between RMR Preferred
Dividend Fund, a Massachusetts business trust (the "Fund"),
and RMR Advisors, Inc., a Massachusetts corporation
(the "Advisor").
WHEREAS, the Fund and the Advisor are parties
to an Investment Advisory Agreement, dated May 16,
2005 (the "Investment Advisory Agreement"), which
provides, among other things, for the payment of fees
by the Fund to the Advisor and for a waiver of a
portion of such fees until May 24, 2010;
WHEREAS, the Fund is party to an Agreement and
Plan of Reorganization, dated as of June 4, 2009, which
provides for, among other things, the reorganization
(the "Reorganization") of the Fund with RMR Real Estate
Income Fund ("New RMR"), whereby the shareholders of
the Fund will become shareholders of New RMR
(the "Reorganization Agreement");
WHEREAS, in connection with the Reorganization,
New RMR will enter into a new investment advisory
agreement with the Advisor with terms that are
substantively the same as the Investment Advisory Agreement,
but which will not include a fee waiver provision;
WHEREAS, all of the Trustees of the Fund who are
not "interested persons" of the Fund (as defined in
Section 2(a)(19) of the Investment Company Act of 1940,
as amended) ("Independent Trustees") have determined
that shareholders of the Fund should not in principle be
deprived of the benefits intended by the fee waiver, and
that the Advisor should not experience an economic
wind-fall as a result of the Reorganization;
WHEREAS, the Independent Trustees are requiring
that the Advisor make a payment to the Fund in an amount
intended to reflect the value of the fee waiver which
would have applied in the absence of the Reorganization;
WHEREAS, the Board of Trustees of the Fund, including
all of the Fund's Independent Trustees, have approved the
method for determining the amount of the payment to be
paid to the Fund as provided for herein; and
WHEREAS, capitalized terms used and not defined
herein shall have the meanings ascribed to such terms
in the Reorganization Agreement;
NOW, THEREFORE, in consideration of the foregoing
and the agreements hereinafter set forth, and intending
to be legally bound, the Advisor and the Fund hereby
agree as follows:
1. Calculation and Payment of Fee Waiver Adjustment
Payment.
The Advisor hereby agrees to pay to the Fund,
immediately prior to the consummation of the Reorganization,
an amount in cash equal to the product of:
(a) the product of (i) a discount factor
of 7% and (ii) the quotient obtained by dividing (A)
the number of days, if any, by which the expiration date
of the fee waiver in the Investment Advisory Agreement
exceeds the closing date of the Reorganization,
by (B) 365; and
(b) the product of (i) the Fund's managed
assets as of the Valuation Date, (ii) 0.55% and (iii)
the quotient obtained by dividing (A) the number of days,
if any, by which the expiration date of the fee waiver in
the Investment Advisory Agreement exceeds the closing
date of the Reorganization, by (B) 365. Such amount in
cash as determined pursuant to this Section 1 shall be
referred to as the "Fee Waiver Adjustment Payment".
2. Treatment of Fee Waiver Adjustment Payment.
The Fund will, subject to applicable legal and
tax requirements, either retain all or a portion of the
Fee Waiver Adjustment Payment or distribute all or a
portion of the Fee Waiver Adjustment Payment to its
shareholders immediately prior to the consummation of
the Reorganization. To the extent the Fund retains any
portion of the Fee Waiver Adjustment Payment, the amount
retained will be included as part of the Fund's net
assets attributable to common shares for purposes of
determining the number of New RMR shares to be issued
to the Fund in the Reorganization in accordance with the
Reorganization Agreement.
3. Miscellaneous.
(a) Waiver and Amendment. Any provision of this
Agreement may be waived at any time by the party that is
entitled to the benefits of such provision. This Agreement
may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written
agreement executed by the parties hereto. Any waiver
shall be effective only in the specific instance and
for the specific purpose for which given and shall not
constitute a waiver to any subsequent or other exercise
of any right, remedy, power or privilege hereunder.
(b) Entire Agreement; No Third-Party Beneficiaries;
Severability. This Agreement between the Fund and the
Advisor constitutes the entire agreement and supersedes
all prior agreements and understandings, both written
and oral, between the parties with respect to the
subject matter hereof. If any term, provision, covenant
or restriction of this Agreement is held by a court of
competent jurisdiction or government entity to be invalid,
void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way
be affected, impaired or invalidated.
(c) Governing Law. This Agreement shall be
governed by and construed in accordance with the laws
of the State of Delaware (without giving effect to
choice of law principles thereof).
(d) Counterparts. This Agreement may be executed
in any number of counterparts, each of which, when
executed and delivered, shall be deemed to be an original
but all such counterparts together shall constitute but
one instrument.
(e) Non-Liability of Shareholders, Trustees, Etc.
of the Fund. With respect to the Fund, this Agreement
is executed on behalf of the Fund, by the Trustees or
by an officer or officers of the Fund in their capacity
as such and not individually, and neither the
shareholders nor the Fund's Trustees nor any officers,
employees or agents shall be liable thereunder and the
Advisor shall look solely to the Fund's estate for the
payment of any claim hereunder or for the performance
of the Fund's duties created by this Agreement.
[Remainder of Page Intentionally Blank]
IN WITNESS WHEREOF, the parties hereto have
hereunto caused this Agreement to be executed and
delivered by their duly authorized officers as of
the day and year first written above.
RMR PREFERRED DIVIDEND FUND
By: ________________________
Name: Xxxx X. Xxxxxxx
Title: Trustee, President and
Principal Executive Officer
RMR ADVISORS, INC.
By: ________________________
Name: Xxxx X. Xxxxxxx
Title: Director, President and
Principal Executive Officer
20
[Signature Page - Reorganization Agreement]
25
477703.01-Boston Server 1A - MSW
