AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan"), is made as of this
25th day of April, 2007, by and between Templeton Global Investment Trust (the
"Trust"), a statutory trust created under the laws of the State of Delaware,
with its principal place of business at 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000,
Xxxx Xxxxxxxxxx, Xxxxxxx 00000-0000, on behalf of its series, Xxxxxxxxx
International (Ex EM) Fund ("International Fund"), and Xxxxxxxxx Funds, Inc.
(the "Company"), a corporation organized under the laws of the State of
Maryland, with its principal place of business at 000 Xxxx Xxxxxxx Xxxxxxxxx,
Xxxxx 0000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000-0000, on behalf of its series,
Xxxxxxxxx Foreign Fund ("Xxxxxxxxx Fund").
PLAN OF REORGANIZATION
The reorganization (hereinafter referred to as the "Plan of
Reorganization") will consist of (i) the acquisition by the Company, on behalf
of Xxxxxxxxx Fund, of substantially all of the property, assets and goodwill of
International Fund in exchange solely for full and fractional Class A, Class C
and Advisor Class shares of common stock, par value $1.00 per share, of
Xxxxxxxxx Fund ("Xxxxxxxxx Fund Shares"); (ii) the distribution of Xxxxxxxxx
Fund Shares to the shareholders of Class A, Class C and Advisor Class shares of
International Fund (the "International Fund Shares"), respectively, according to
their respective interests in International Fund in complete liquidation of
International Fund; and (iii) the dissolution of International Fund as soon as
is practicable after the closing (as defined in Section 3, hereinafter called
the "Closing"), all upon and subject to the terms and conditions of the Plan
hereinafter set forth.
AGREEMENT
In order to consummate the Plan of Reorganization and in consideration of
the premises and of the covenants and agreements hereinafter set forth, and
intending to be legally bound, the parties hereto covenant and agree as follows:
1. SALE AND TRANSFER OF ASSETS, LIQUIDATION AND DISSOLUTION OF INTERNATIONAL
FUND.
(a) Subject to the terms and conditions of the Plan, and in reliance on
the representations and warranties of the Company, on behalf of Xxxxxxxxx Fund,
herein contained, and in consideration of the delivery by the Company of the
number of Xxxxxxxxx Fund Shares hereinafter provided, the Trust on behalf of
International Fund agrees that it will convey, transfer and deliver to the
Company, for the benefit of Xxxxxxxxx Fund, at the Closing all of International
Fund's then existing assets, free and clear of all liens, encumbrances, and
claims whatsoever (other than shareholders' rights of redemption), except for
cash, bank deposits, or cash equivalent securities in an estimated amount
necessary to: (i) discharge its unpaid liabilities on its books at the closing
date (as defined in Section 3, hereinafter called the "Closing Date"),
including, but not limited to, its income dividends and capital gains
distributions, if any, payable for the period prior to, and through, the Closing
Date and excluding those liabilities that would otherwise be discharged at a
later date in the ordinary course of business; and (ii) pay such contingent
liabilities as the Board of Trustees of the Trust shall reasonably deem to exist
against International Fund, if any, at the Closing Date, for which contingent
and other appropriate liability reserves shall be established on International
Fund's books (hereinafter "Net Assets"). Neither the Company nor Xxxxxxxxx Fund
shall assume any liability of International Fund or the Trust, and International
Fund shall use its reasonable best efforts to discharge all of its known
liabilities, so far as may be possible, from the cash, bank deposits and cash
equivalent securities described above. International Fund shall also retain any
and all rights that it may have over and against any person that may have
accrued up to and including the close of business on the Closing Date.
(b) Subject to the terms and conditions of the Plan, and in reliance on
the representations and warranties of the Trust, on behalf of International
Fund, herein contained, and in consideration of such sale, conveyance, transfer,
and delivery, the Company agrees at the Closing to deliver to the Trust the
number of Xxxxxxxxx Fund Shares, determined by dividing the net asset value per
share of each of Class A, Class C and Advisor Class shares of International Fund
by the net asset value per share of each of Class A, Class C and Advisor Class
shares of Xxxxxxxxx Fund, respectively, and separately multiplying the result
thereof by the number of outstanding Class A, Class C and Advisor Class shares,
respectively, of International Fund, as of 4:00 p.m., Eastern Time, on the
Closing Date. The Xxxxxxxxx Fund Shares delivered to the Trust at the Closing
shall have an aggregate net asset value equal to the value of the International
Fund's Net Assets, all determined as provided in Section 2 of this Plan and as
of the date and time specified herein.
(c) Immediately following the Closing, the Trust shall dissolve
International Fund and distribute pro rata to International Fund's shareholders
of record as of the close of business on the Closing Date, Xxxxxxxxx Fund Shares
received by International Fund pursuant to this Section 1. Such dissolution and
distribution shall be accomplished by the establishment of accounts on the share
records of Xxxxxxxxx Fund of the type and in the amounts due such shareholders
based on their respective holdings as of the close of business on the Closing
Date. Fractional Xxxxxxxxx Fund Shares shall be carried to the third decimal
place. As promptly as practicable after the Closing, each holder of any
outstanding certificate or certificates representing shares of beneficial
interest of International Fund shall be entitled to surrender the same to the
transfer agent for Xxxxxxxxx Fund in exchange for the number of Xxxxxxxxx Fund
Shares of the same class into which the International Fund Shares theretofore
represented by the certificate or certificates so surrendered shall have been
converted. Certificates for Xxxxxxxxx Fund Shares shall not be issued, unless
specifically requested by the shareholders. Until so surrendered, each
outstanding certificate which, prior to the Closing, represented shares of
beneficial interest of International Fund shall be deemed for all Xxxxxxxxx Fund
purposes to evidence ownership of the number of Xxxxxxxxx Fund Shares into which
the International Fund Shares (which prior to the Closing were represented
thereby) have been converted.
(d) At the Closing, each shareholder of record of International Fund as
of the record date (the "Distribution Record Date") with respect to any unpaid
dividends and other distributions that were declared prior to the Closing,
including any dividend or distribution declared pursuant to Section 8(e) hereof,
shall have the right to receive such unpaid dividends and distributions with
respect to the shares of International Fund that such person had on such
Distribution Record Date.
(e) All books and records relating to International Fund, including all
books and records required to be maintained under the Investment Company Act of
1940, as amended (the "1940 Act"), and the rules and regulations thereunder,
shall be available to the Company from and after the date of this Plan, and
shall be turned over to the Company on or prior to the Closing.
2. VALUATION.
(a) The net asset value of Xxxxxxxxx Fund Shares and International Fund
Shares and the value of International Fund's Net Assets to be acquired by
Xxxxxxxxx Fund hereunder shall in each case be computed as of 4:00 p.m., Eastern
Time, on the Closing Date unless on such date (a) the New York Stock Exchange
("NYSE") is not open for unrestricted trading or (b) the reporting of trading on
the NYSE or elsewhere is disrupted or (c) any other extraordinary financial
event or market condition occurs (all such events described in (a), (b) or (c)
are each referred to as a "Market Disruption"). The net asset value per share of
Xxxxxxxxx Fund Shares and International Fund Shares and the value of
International Fund's Net Assets shall be computed in accordance with the
valuation procedures set forth in the respective prospectuses of Xxxxxxxxx Fund
and International Fund.
(b) In the event of a Market Disruption on the proposed Closing Date so
that an accurate appraisal of the net asset value of Xxxxxxxxx Fund Shares or
International Fund Shares or the value of International Fund's Net Assets is
impracticable, the Closing Date shall be postponed until the first business day
when regular trading on the NYSE shall have been fully resumed and reporting
shall have been restored and other trading markets are otherwise stabilized.
(c) All computations of value regarding the net asset value of Xxxxxxxxx
Fund Shares and International Fund Shares and the value of International Fund's
Net Assets shall be made by the administrator to Xxxxxxxxx Fund; provided,
however, that all computations of value shall be subject to review by
International Fund.
3. CLOSING AND CLOSING DATE.
The Closing Date shall be April 25 , 2007 or such later date as the parties
may mutually agree. The Closing shall take place at the principal office of the
Trust at 5:00 p.m., Eastern Time, on the Closing Date. The Trust on behalf of
International Fund shall have provided for delivery as of the Closing of those
Net Assets of International Fund to be transferred to the account of Xxxxxxxxx
Fund's Custodian, JPMorgan Chase Bank, Network Management, 0 Xxxxx XxxxxXxxx
Xxxxxx--00xx Xxxxx, Xxxxxxxx, XX 00000. Also, the Trust, on behalf of
International Fund, shall deliver at the Closing a list of names and addresses
of the shareholders of record of each class of International Fund Shares and the
number of full and fractional shares of beneficial interest owned by each such
shareholder, indicating thereon which such shares are represented by outstanding
certificates and which by book-entry accounts, all as of 4:00 p.m., Eastern
Time, on the Closing Date, certified by its transfer agent or by its President
to the best of its or his knowledge and belief. The Company on behalf of
Xxxxxxxxx Fund shall issue and deliver a certificate or certificates evidencing
Xxxxxxxxx Fund Shares to be delivered to the account of International Fund at
said transfer agent registered in such manner as the officers of the Trust on
behalf of International Fund may request, or provide evidence satisfactory to
the Trust that such Xxxxxxxxx Fund Shares have been registered in an account on
the books of Xxxxxxxxx Fund in such manner as the officers of the Trust on
behalf of International Fund may reasonably request.
4. REPRESENTATIONS AND WARRANTIES BY THE COMPANY ON BEHALF OF XXXXXXXXX FUND.
The Company, on behalf of Xxxxxxxxx Fund, represents and warrants to the
Trust that:
(a) Xxxxxxxxx Fund is a series of the Company, a corporation organized
under the laws of the State of Maryland on August 15, 1977, and is validly
existing under the laws of that State. The Company is duly registered under the
1940 Act as an open-end, management investment company and all of the Xxxxxxxxx
Fund Shares sold were sold pursuant to an effective registration statement filed
under the Securities Act of 1933, as amended (the "1933 Act"), except for those
shares sold pursuant to the private offering exemption for the purpose of
raising initial capital as required by the 1940 Act.
(b) The Company is authorized to issue three billion nine hundred million
shares of common stock of Xxxxxxxxx Fund, par value $1.00 per share, each
outstanding share of which is, and each share of which when issued pursuant to
and in accordance with the Plan will be, fully paid, non-assessable, and has or
will have full voting rights. The Company currently issues shares of two (2)
series, including Xxxxxxxxx Fund. Xxxxxxxxx Fund is further divided into five
classes of shares of which Xxxxxxxxx Fund Shares represent three classes: Class
A, Class C and Advisor Class shares of common stock. No shareholder of the
Company shall have any option, warrant or preemptive right of subscription or
purchase with respect to Xxxxxxxxx Fund Shares.
(c) The financial statements appearing in Xxxxxxxxx Fund's Annual Report
to Shareholders for the fiscal year ended August 31, 2006, audited by
PricewaterhouseCoopers LLP, copies of which have been delivered to the Trust,
and any interim unaudited financial statements, copies of which may be furnished
to the Trust, fairly present the financial position of Xxxxxxxxx Fund as of
their respective dates and the results of Xxxxxxxxx Fund's operations for the
period indicated in conformity with generally accepted accounting principles
applied on a consistent basis.
(d) The books and records of Xxxxxxxxx Fund accurately summarize the
accounting data represented and contain no material omissions with respect to
the business and operations of Xxxxxxxxx Fund.
(e) The Company has the power to own all of its properties and assets, to
perform its obligations under the Plan and to consummate the transactions
contemplated herein. The Company has all necessary federal, state and local
authorizations, consents and approvals required to own all of its properties and
assets and to conduct Xxxxxxxxx Fund's business as such business is now being
conducted and to consummate the transactions contemplated herein.
(f) The Company, on behalf of Xxxxxxxxx Fund, is not a party to or
obligated under any provision of its Articles of Incorporation, as amended
("Articles of Incorporation") or Amended and Restated By-laws ("By-laws"), or
any contract or any other commitment or obligation and is not subject to any
order or decree that would be violated by its execution of or performance under
the Plan, and no consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Xxxxxxxxx Fund or the
Company of the transactions contemplated by the Plan, except for the
registration of Xxxxxxxxx Fund Shares under the 1933 Act, the 1940 Act, or as
may otherwise be required under the federal and state securities laws or the
rules and regulations thereunder.
(g) The Company has elected to treat Xxxxxxxxx Fund as a regulated
investment company ("RIC") for federal income tax purposes under Part I of
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
Xxxxxxxxx Fund is a "fund" as defined in Section 851(g)(2) of the Code, has
qualified as a RIC for each taxable year since its inception, and will qualify
as a RIC as of the Closing Date, and consummation of the transactions
contemplated by the Plan will not cause it to fail to be qualified as a RIC as
of the Closing Date.
(h) Xxxxxxxxx Fund is not under jurisdiction of a Court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
(i) Xxxxxxxxx Fund does not have any unamortized or unpaid organizational
fees or expenses.
(j) All information to be furnished by the Company to the Trust for use in
preparing any prospectus, proxy materials and other documents which may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete and shall comply in all material respects with federal
securities and other laws and regulations thereunder applicable thereto.
(k) Xxxxxxxxx Fund does not have any known liabilities, costs or expenses
of a material amount, contingent or otherwise, other than those incurred in the
ordinary course of business as an investment company.
(l) There is no intercorporate indebtedness existing between International
Fund and Xxxxxxxxx Fund that was issued, acquired or will be settled at a
discount.
(m) Xxxxxxxxx Fund does not own, directly or indirectly, nor has it owned
during the past five (5) years, directly or indirectly, any shares of
International Fund.
(n) Except for a certain proposed redomestication of the Company to a
Delaware statutory trust, the Company has no plan or intention to issue
additional shares of Xxxxxxxxx Fund following the reorganization except for
shares issued in the ordinary course of Xxxxxxxxx Fund's business as a series of
an open-end investment company; nor does the Company have any plan or intention
to redeem or otherwise reacquire any shares of Xxxxxxxxx Fund issued pursuant to
the Plan of Reorganization, either directly or through any transaction,
agreement, or arrangement with any other person, other than in the ordinary
course of its business or to the extent necessary to comply with its legal
obligation under Section 22(e) of the 0000 Xxx.
(o) Xxxxxxxxx Fund is in the same line of business as International Fund
before the Plan of Reorganization and did not enter into such line of business
as part of the reorganization. Xxxxxxxxx Fund will actively continue
International Fund's business in substantially the same manner that
International Fund conducted that business immediately before the Plan of
Reorganization and has no plan or intention to change such business. On the
Closing Date, Xxxxxxxxx Fund expects that at least 33 (1)/3% of International
Fund's portfolio assets will meet the investment objectives, strategies,
policies, risks and restrictions of Xxxxxxxxx Fund. Xxxxxxxxx Fund has no plan
or intention to change any of its investment objectives, strategies, policies,
risks and restrictions after the reorganization. Xxxxxxxxx Fund has no plan or
intention to sell or otherwise dispose of any of the former assets of
International Fund, except for dispositions made in the ordinary course of its
business or dispositions necessary to maintain its qualification as a RIC,
although in the ordinary course of its business, Xxxxxxxxx Fund will
continuously review its investment portfolio (as International Fund did before
the Closing) to determine whether to retain or dispose of particular stocks or
securities, including those included among the former assets of International
Fund.
(p) The registration statement on Form N-14 referred to in Section 7(g)
hereof (the "Registration Statement"), and any prospectus or statement of
additional information of Xxxxxxxxx Fund contained or incorporated therein by
reference, and any supplement or amendment to the Registration Statement or any
such prospectus or statement of additional information, on the effective and
clearance dates of the Registration Statement, on the date of the Special
Meeting of International Fund shareholders, and on the Closing Date: (a) shall
comply in all material respects with the provisions of the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), the 1940 Act, the
rules and regulations thereunder, and all applicable state securities laws and
the rules and regulations thereunder; and (b) shall 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 the statements were made, not misleading.
(q) The Prospectus for Class A, Class C and Advisor Class shares of
Xxxxxxxxx Fund, dated January 1, 2007, and the corresponding Statement of
Additional Information, dated January 1, 2007, as amended to date, do not
contain any untrue statement of a material fact or omit to state a 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 any
amended, revised, or new prospectus or statement of additional information of
Xxxxxxxxx Fund or any supplement thereto, that is hereafter filed with the U.S.
Securities and Exchange Commission ("SEC") (copies of which documents shall be
provided to the Trust promptly after such filing), shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
5. REPRESENTATIONS AND WARRANTIES BY THE TRUST ON BEHALF OF INTERNATIONAL FUND.
The Trust, on behalf of International Fund, represents and warrants to the
Company that:
(a) International Fund is a series of the Trust, a statutory trust created
under the laws of the State of Delaware on December 21, 1993, and is validly
existing under the laws of the State of Delaware. The Trust is duly registered
under the 1940 Act as an open-end, management investment company and all of the
Trust's International Fund Shares sold were sold pursuant to an effective
registration statement filed under the 1933 Act, except for those shares sold
pursuant to the private offering exemption for the purpose of raising the
required initial capital, as required by the 1940 Act.
(b) The Trust is authorized to issue an unlimited number of shares of
beneficial interest of International Fund, par value $0.01 per share, each
outstanding share of which is fully paid, non-assessable, and has full voting
rights. The Trust issues shares of four (4) series, including International
Fund. International Fund has three classes of shares: Class A, Class C and
Advisor Class, and an unlimited number of shares of beneficial interest of the
Trust have been allocated and designated to each class of International Fund. No
shareholder of the Trust has or will have any option, warrant or preemptive
rights of subscription or purchase with respect to International Fund Shares.
(c) The financial statements appearing in International Fund's Annual
Report to Shareholders for the fiscal year ended March 31, 2006, audited by
PricewaterhouseCoopers LLP, copies of which have been delivered to the Company,
and any interim financial statements for the Trust which may be furnished to the
Company, fairly present the financial position of International Fund as of their
respective dates and the results of International Fund's operations for the
period indicated in conformity with generally accepted accounting principles
applied on a consistent basis.
(d) The books and records of International Fund accurately summarize the
accounting data represented and contain no material omissions with respect to
the business and operations of International Fund.
(e) The Trust has the power to own all of its properties and assets, to
perform its obligations under the Plan and to consummate the transactions
contemplated herein. The Trust is not required to qualify to do business in any
jurisdiction in which it is not so qualified or where failure to qualify would
subject it to any material liability or disability. The Trust has all necessary
federal, state and local authorizations, consents and approvals required to own
all of its properties and assets and to conduct International Fund's business as
such business is now being conducted and to consummate the transactions
contemplated herein.
(f) The Trust, on behalf of International Fund, is not a party to or
obligated under any provision of its Second Amended and Restated Agreement and
Declaration of Trust ("Trust Instrument") or Bylaws, or any contract or any
other commitment or obligation, and is not subject to any order or decree, that
would be violated by its execution of or performance under the Plan. The Trust
has furnished the Company with copies or descriptions of all material agreements
or other arrangements to which International Fund is a party or to which its
assets are subject. International Fund has no material contracts or other
commitments (other than the Plan or agreements for the purchase of securities
entered into in the ordinary course of business and consistent with its
obligations under this Plan) which will not be terminated by International Fund
in accordance with their terms at or prior to the Closing Date, or which will
result in a penalty or additional fee to be due or payable by International
Fund.
(g) The Trust has elected to treat International Fund as a RIC for federal
income tax purposes under Part I of Subchapter M of the Code. International Fund
is a "fund" as defined in Section 851(g)(2) of the Code, has qualified as a RIC
for each taxable year since its inception, and will qualify as a RIC as of the
Closing Date, and consummation of the transactions contemplated by the Plan will
not cause it to fail to be qualified as a RIC as of the Closing Date.
(h) International Fund is not under jurisdiction of a Court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.
(i) International Fund does not have any unamortized or unpaid
organization fees or expenses.
(j) The Prospectus for Class A, Class C and Advisor Class shares of
International Fund, dated August 1, 2006, and the corresponding Statement of
Additional Information, dated August 1, 2006, as amended to date, do not contain
any untrue statement of a material fact or omit to state a 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 any
amended, revised, or new prospectus or statement of additional information of
International Fund or any supplement thereto, that is hereafter filed with the
SEC (copies of which documents shall be provided to the Company promptly after
such filing), shall not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
(k) International Fund does not have any known liabilities, costs or
expenses of a material amount, contingent or otherwise, other than those
reflected in the financial statements referred to in Section 5(c) hereof and
those incurred in the ordinary course of business as an investment company and
of a nature and amount similar to, and consistent with, those shown in such
financial statements since the dates of those financial statements. On the
Closing Date, the Trust shall advise the Company in writing of all International
Fund's known liabilities, contingent or otherwise, whether or not incurred in
the ordinary course of business, existing or accrued at such time.
(l) Since September 30, 2006 there has not been any material adverse
change in International Fund's financial condition, assets, liabilities, or
business other than changes occurring in the ordinary course of its business.
(m) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by International Fund or
the Trust of the transactions contemplated by the Plan, except the necessary
International Fund shareholder approval, or as may otherwise be required under
the federal or state securities laws or the rules and regulations thereunder.
(n) All information to be furnished by the Trust or International Fund for
use in preparing the Registration Statement, and the combined proxy statement
and prospectus to be included in the Registration Statement, proxy materials and
other documents which may be necessary in connection with the transactions
contemplated hereby, shall be accurate and complete and shall comply in all
material respects with federal securities and other laws and regulations
thereunder applicable thereto.
(o) There is no intercorporate indebtedness existing between International
Fund and Xxxxxxxxx Fund that was issued, acquired or will be settled at a
discount.
(p) During the five-year period ending on the Closing Date, (i)
International Fund has not acquired, and will not acquire, International Fund
Shares with consideration other than Xxxxxxxxx Fund Shares or International Fund
Shares, except for redemptions in the ordinary course of International Fund's
business or to the extent necessary to comply with its legal obligation under
Section 22(e) of the 1940 Act, and (ii) no distributions have been made with
respect to International Fund Shares (other than regular, normal dividend
distributions made pursuant to the International Fund's historic dividend paying
practice), either directly or through any transaction, agreement, or arrangement
with any other person, except for distributions described in Sections 852 and
4982 of the Code.
(q) As of the Closing Date, International Fund will not have outstanding
any warrants, options, convertible securities, or any other type of rights
pursuant to which any person could acquire shares of International Fund, except
for the right of investors to acquire its shares at the applicable stated
offering price in the normal course of its business as an open-end management
investment company operating under the 1940 Act.
(r) Throughout the five-year period ending on the Closing Date,
International Fund will have conducted its historic business within the meaning
of Section 1.368-1(d) of the Income Tax Regulations under the Code.
International Fund did not enter into (or expand) a line of business as part of
the reorganization. International Fund will not alter its investment portfolio
in connection with the reorganization.
6. REPRESENTATIONS AND WARRANTIES BY THE TRUST AND THE COMPANY.
The Trust, on behalf of International Fund, and the Company, on behalf of
Xxxxxxxxx Fund, each represents and warrants to the other that:
(a) The statement of assets and liabilities to be furnished by it as of
4:00 p.m., Eastern Time, on the Closing Date for the purpose of determining the
number of Xxxxxxxxx Fund Shares to be issued pursuant to Section 1 of the Plan,
will accurately reflect each Fund's Net Assets and outstanding shares, as of
such date, in conformity with generally accepted accounting principles applied
on a consistent basis.
(b) Except as disclosed in its currently effective prospectus relating to
International Fund, in the case of the Trust, and Xxxxxxxxx Fund, in the case of
the Company, there is no material suit, judicial action, or legal or
administrative proceeding pending or threatened against it. Neither the Company
nor the Trust is a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and adversely
affects Xxxxxxxxx Fund's or International Fund's business or their ability to
consummate the transactions herein contemplated.
(c) There are no known actual or proposed deficiency assessments with
respect to any taxes payable by it.
(d) The execution, delivery, and performance of the Plan have been duly
authorized by all necessary action of its Board of Trustees/Directors, as the
case may be, and the Plan, subject to the approval of International Fund's
shareholders in the case of the Trust, constitutes a valid and binding
obligation enforceable in accordance with its terms, subject as to enforcement
to bankruptcy, insolvency, reorganization arrangement, moratorium, and other
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(e) It anticipates that consummation of the Plan will not cause either
International Fund, in the case of the Trust, or Xxxxxxxxx Fund, in the case of
the Company, to fail to conform to the requirements of Subchapter M of the Code
for federal income taxation qualification as a RIC at the end their respective
fiscal years.
7. COVENANTS OF THE TRUST AND THE COMPANY.
(a) The Trust, on behalf of International Fund, and the Company, on behalf
of Xxxxxxxxx Fund, each covenants to operate their respective businesses as
presently conducted between the date hereof and the Closing, it being understood
that such ordinary course of business will include the distribution of customary
dividends and distributions and any other distribution necessary or desirable to
minimize federal income or excise taxes.
(b) The Trust, on behalf of International Fund, undertakes that it will
not acquire Xxxxxxxxx Fund Shares for the purpose of making distributions
thereof to anyone other than International Fund's shareholders.
(c) The Trust, on behalf of International Fund, undertakes that, if the
Plan is consummated, it will liquidate and dissolve International Fund.
(d) The Trust, on behalf of International Fund, and the Company, on behalf
of Xxxxxxxxx Fund, each agree that, by the Closing, all of their federal and
other tax returns and reports required by law to be filed on or before such date
shall have been filed, and all federal and other taxes shown as due on said
returns shall have either been paid or adequate liability reserves shall have
been provided for the payment of such taxes, and to the best of their knowledge
no such tax return is currently under audit and no tax deficiency or liability
has been asserted with respect to such tax returns or reports by the Internal
Revenue Service or any state or local tax authority.
(e) At the Closing, the Trust, on behalf of International Fund, will
provide Xxxxxxxxx Fund a copy of the shareholder ledger accounts, certified by
International Fund's transfer agent or its President to the best of its or his
knowledge and belief, for all the shareholders of record of International Fund
Shares as of 4:00 p.m., Eastern Time, on the Closing Date who are to become
shareholders of Xxxxxxxxx Fund as a result of the transfer of assets that is the
subject of the Plan.
(f) The Board of Trustees of the Trust shall call and the Trust shall
hold, a Special Meeting of International Fund's shareholders to consider and
vote upon the Plan (the "Special Meeting") and the Trust shall take all other
actions reasonably necessary to obtain approval of the transactions contemplated
herein. The Trust agrees to mail to each shareholder of record of International
Fund entitled to vote at the Special Meeting at which action on the Plan is to
be considered, in sufficient time to comply with requirements as to notice
thereof, a combined Prospectus/Proxy Statement that complies in all material
respects with the applicable provisions of the 1933 Act, Section 14(a) of the
1934 Act and Section 20(a) of the 1940 Act, and the rules and regulations,
respectively, thereunder.
(g) The Company has filed with the SEC the Registration Statement and
will use its best efforts to provide that the Registration Statement becomes
effective as promptly as is practicable. At the time it becomes effective, the
Registration Statement will (i) comply in all material respects with the
applicable provisions of the 1933 Act, and the rules and regulations promulgated
thereunder; and (ii) not contain any untrue statement of material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading. At the time the Registration Statement
becomes effective, at the time of the Special Meeting, and at the Closing Date,
the prospectus and statement of additional information included in the
Registration Statement will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(h) Subject to the provisions of this Plan, the Company and the Trust
each shall take, or cause to be taken, all action, and do or cause to be done,
all things reasonably necessary, proper or advisable to consummate the
transactions contemplated by this Plan.
(i) The Trust shall deliver to the Company at the Closing Date
confirmation or other adequate evidence as to the tax costs and holding periods
of the assets and property of International Fund transferred to the Company in
accordance with the terms of this Plan.
8. CONDITIONS PRECEDENT TO BE FULFILLED BY THE TRUST AND THE COMPANY.
The consummation of the Plan hereunder shall be subject to the following
respective conditions:
(a) That: (i) all the representations and warranties of the other party
contained herein shall be true and correct as of the Closing with the same
effect as though made as of and at such date; (ii) the other party shall have
performed all obligations required by this Plan to be performed by it prior to
the Closing; and (iii) the other party shall have delivered to such party a
certificate signed by the President and by the Secretary or equivalent officer
to the foregoing effect.
(b) That each party shall have delivered to the other party a copy of the
resolutions approving the Plan adopted and approved by the appropriate action of
the Board of Directors/Trustees certified by its Secretary or equivalent officer
of each of the Funds.
(c) That the SEC shall have declared effective the Registration Statement
and not have issued an unfavorable management report under Section 25(b) of the
1940 Act or instituted or threatened to institute any proceeding seeking to
enjoin consummation of the Plan under Section 25(c) of the 1940 Act. And,
further, no other legal, administrative or other proceeding shall have been
instituted or threatened that would materially affect the financial condition of
either party or would prohibit the transactions contemplated hereby.
(d) That the Plan and the Plan of Reorganization contemplated hereby
shall have been adopted and approved by the appropriate action of the
shareholders of International Fund at a meeting or any adjournment thereof.
(e) That a distribution or distributions shall have been declared for
International Fund prior to the Closing Date that, together with all previous
distributions, shall have the effect of distributing to its shareholders (i) all
of its ordinary income and all of its capital gain net income, if any, for the
period from the close of its last fiscal year to 4:00 p.m. Eastern time on the
Closing Date; and (ii) any undistributed ordinary income and capital gain net
income from any prior period to the extent not otherwise declared for
distribution. Capital gain net income has the meaning given such term by Section
1222(9) of the Code.
(f) That all required consents of other parties and all other consents,
orders, and permits of federal, state and local authorities (including those of
the SEC and of state Blue Sky securities authorities, including any necessary
"no-action" positions or exemptive orders from such federal and state
authorities) to permit consummation of the transaction contemplated hereby shall
have been obtained, except where failure to obtain any such consent, order, or
permit would not involve a risk of material adverse effect on the assets and
properties of International Fund or Xxxxxxxxx Fund.
(g) That there shall be delivered to the Trust, on behalf of International
Fund, and the Company, on behalf of Xxxxxxxxx Fund, an opinion in form and
substance satisfactory to them, from the law firm of Xxxxxxxx Ronon Xxxxxxx &
Xxxxx, LLP, counsel to the Company and the Trust, to the effect that, provided
the transaction contemplated hereby is carried out in accordance with the Plan,
the laws of the State of Delaware and the State of Maryland, and based upon
certificates of the officers of the Trust and the Company with regard to matters
of fact:
(1) The acquisition by Xxxxxxxxx Fund of substantially all the
assets of International Fund as provided for herein in exchange for
Xxxxxxxxx Fund Shares followed by the distribution by International Fund
to its shareholders of Xxxxxxxxx Fund Shares in complete liquidation of
International Fund will qualify as a reorganization within the meaning of
Section 368(a)(1) of the Code, and International Fund and Xxxxxxxxx Fund
will each be a "party to the reorganization" within the meaning of Section
368(b) of the Code;
(2) No gain or loss will be recognized by International Fund upon
the transfer of substantially all of its assets to Xxxxxxxxx Fund in
exchange solely for voting shares of Xxxxxxxxx Fund (Sections 361(a) and
357(a) of the Code);
(3) Xxxxxxxxx Fund will recognize no gain or loss upon the receipt
of substantially all of the assets of International Fund in exchange
solely for voting shares of Xxxxxxxxx Fund (Section 1032(a) of the Code);
(4) No gain or loss will be recognized by International Fund upon
the distribution of Xxxxxxxxx Fund Shares to its shareholders in
liquidation of International Fund (in pursuance of the Plan) (Section
361(c)(1) of the Code);
(5) The basis of the assets of International Fund received by
Xxxxxxxxx Fund will be the same as the basis of such assets to
International Fund immediately prior to the Plan of Reorganization
(Section 362(b) of the Code);
(6) The holding period of the assets of International Fund received
by Xxxxxxxxx Fund will include the period during which such assets were
held by International Fund (Section 1223(2) of the Code);
(7) No gain or loss will be recognized by the shareholders of
International Fund upon the exchange of their shares in International Fund
for voting shares of Xxxxxxxxx Fund including fractional shares to which
they may be entitled (Section 354(a) of the Code);
(8) The basis of Xxxxxxxxx Fund Shares received by the shareholders
of International Fund shall be the same as the basis of the International
Fund Shares exchanged therefor (Section 358(a)(1) of the Code);
(9) The holding period of Xxxxxxxxx Fund Shares received by
shareholders of International Fund (including fractional shares to which
they may be entitled) will include the holding period of International
Fund Shares surrendered in exchange therefor, provided that International
Fund Shares were held as a capital asset on the effective date of the
exchange (Section 1223(1) of the Code); and
(10) Xxxxxxxxx Fund will succeed to and take into account as of the
date of the transfer (as defined in Section 1.381(b)-1(b) of the
regulations issued by the United States Treasury ("Treasury Regulations"))
the items of International Fund described in Section 381(c) of the Code,
subject to the conditions and limitations specified in Sections 381, 382,
383 and 384 of the Code and the Treasury Regulations.
(h) That there shall be delivered to the Company, on behalf of Xxxxxxxxx
Fund, an opinion in form and substance satisfactory to it from Xxxxxxxx Ronon
Xxxxxxx & Xxxxx, LLP, counsel to the Trust, on behalf of International Fund, to
the effect that, subject in all respects to the effects of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws
now or hereafter affecting generally the enforcement of creditors' rights:
(1) International Fund is a series of the Trust and that the Trust
is a validly existing statutory trust in good standing under the laws of
the State of Delaware;
(2) The Trust is authorized to issue an unlimited number of shares
of beneficial interest, par value $0.01 per share, of International Fund.
Three classes of shares of International Fund (Class A, Class C and
Advisor Class) have been designated as International Fund Shares, and an
unlimited number of shares of beneficial interest of the Trust have been
allocated to International Fund Shares. Assuming that the initial shares
of beneficial interest of International Fund were issued in accordance
with the 1940 Act and the Trust Instrument and Bylaws of the Trust, and
that all other outstanding shares of International Fund were sold, issued
and paid for in accordance with the terms of International Fund's
prospectus in effect at the time of such sales, each such outstanding
share is validly issued, fully paid and non-assessable;
(3) The Trust is an open-end investment company of the management
type registered as such under the 1940 Act;
(4) The execution and delivery of the Plan and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary trust action on the part of the Trust on behalf of International
Fund; and
(5) To the knowledge of such counsel, neither the execution,
delivery, nor performance of this Plan by the Trust, on behalf of
International Fund, violates any provision of its Trust Instrument or
By-laws, or the provisions of any agreement or other instrument filed by
the Trust as an exhibit to its Registration Statement on Form N-1A; this
Plan is the legal, valid and binding obligation of the Trust, on behalf of
International Fund, and is enforceable against the Trust, on behalf of
International Fund, in accordance with its terms.
In giving the opinions set forth above, this counsel may state that it is
relying on certificates of the officers of the Trust with regard to matters of
fact, and certain certifications and written statements of governmental
officials with respect to the good standing of the Trust.
(i) That there shall be delivered to the Trust, on behalf of
International Fund, an opinion in form and substance satisfactory to it from
the law firm of Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP, counsel to the Company, on
behalf of Xxxxxxxxx Fund, to the effect that, subject in all respects to the
effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other laws now or hereafter affecting generally the enforcement
of creditors' rights:
(1) Xxxxxxxxx Fund is a series of the Company and the Company is a
validly existing corporation in good standing under the laws of the State
of Maryland;
(2) The Company is authorized to issue three billion nine hundred
million shares of common stock, par value $1.00 per share of Xxxxxxxxx
Fund. Xxxxxxxxx Fund is further divided into five (5) classes of shares of
which Xxxxxxxxx Fund Shares constitute Class A, Class C and Advisor Class
shares, par value $1.00 per share;
(3) The Company is an open-end investment company of the management
type registered as such under the 1940 Act;
(4) Xxxxxxxxx Fund Shares to be issued pursuant to the terms of this
Plan have been duly authorized and, when issued and delivered as provided
in the Plan and the Registration Statement, will have been validly issued
and fully paid and will be non-assessable by the Company, on behalf of
Xxxxxxxxx Fund;
(5) The execution and delivery of this Plan and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company, on behalf of
Xxxxxxxxx Fund;
(6) To the knowledge of such counsel, neither the execution,
delivery, nor performance of this Plan by the Company, on behalf of
Xxxxxxxxx Fund, violates any provision of its Articles of Incorporation or
By-laws, or the provisions of any agreement or other instrument filed by
the Company as an exhibit to its Registration Statement on Form N-1A; this
Plan is the legal, valid and binding obligation of the Company, on behalf
of Xxxxxxxxx Fund, and is enforceable against the Company, on behalf of
Xxxxxxxxx Fund, in accordance with its terms; and
(7) The registration statement of the Company, of which the
prospectus dated January 1, 2007 of Xxxxxxxxx Fund is a part (the
"Prospectus") is, at the time of the signing of this Plan, effective under
the 1933 Act, and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of such registration statement has been
issued, and no proceedings for such purpose have been instituted or are
pending before or threatened by the SEC under the 1933 Act.
In giving the opinions set forth above, this counsel may state that it is
relying on certificates of the officers of the Company with regard to matters of
fact, and certain certifications and written statements of governmental
officials with respect to the good standing of the Company, and an opinion of
local Maryland counsel as to matters of Maryland law.
(j) That International Fund shall have received a certificate from the
President or any Vice President and the Secretary or any Assistant Secretary of
the Company, on behalf of Xxxxxxxxx Fund, to the effect that the statements
contained in the Prospectus, at the time the Prospectus became effective and at
the date of the signing of this Plan, did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(k) That the Company's Registration Statement with respect to Xxxxxxxxx
Fund Shares to be delivered to International Fund's shareholders in accordance
with this Plan shall have become effective, and no stop order suspending the
effectiveness of the Registration Statement or any amendment or supplement
thereto, shall have been issued prior to the Closing Date or shall be in effect
at Closing, and no proceedings for the issuance of such an order shall be
pending or threatened on that date.
(l) That Xxxxxxxxx Fund Shares to be delivered hereunder shall be eligible
for sale with each state commission or agency with which such eligibility is
required in order to permit Xxxxxxxxx Fund Shares lawfully to be delivered to
each holder of International Fund Shares.
(m) That, at the Closing, there shall be transferred to the Company, on
behalf of Xxxxxxxxx Fund, aggregate Net Assets of International Fund comprising
at least 90% in fair market value of the total net assets and 70% of the fair
market value of the total gross assets recorded on the books of International
Fund on the Closing Date.
(n) That there be delivered to the Company, on behalf of Xxxxxxxxx Fund,
information concerning the tax basis of International Fund in all securities
transferred to Xxxxxxxxx Fund, together with shareholder information including
the names, addresses, and taxpayer identification numbers of the shareholders of
International Fund as of the Closing Date, the number of shares held by each
shareholder, the dividend reinvestment elections applicable to each shareholder,
and the backup withholding and nonresident alien withholding certifications,
notices or records on file with International Fund with respect to each
shareholder.
9. EXPENSES.
The expenses of entering into and carrying out the provisions of this Plan
shall be borne as follows: Xxxxxxxxx Global Advisors Limited will pay 50% of the
expenses, including the costs of the proxy solicitation, and International Fund
and Xxxxxxxxx Fund will each pay 25% of the such expenses.
10. TERMINATION; POSTPONEMENT; WAIVER; ORDER.
(a) Anything contained in the Plan to the contrary notwithstanding, the
Plan may be terminated and the Plan of Reorganization abandoned at any time
(whether before or after approval thereof by the shareholders of International
Fund) prior to the Closing, or the Closing may be postponed as follows:
(1) by mutual consent of the Trust, on behalf of International
Fund, and the Company, on behalf of Xxxxxxxxx Fund;
(2) by the Company, on behalf of Xxxxxxxxx Fund, if any condition of
its obligations set forth in Section 8 has not been fulfilled or waived
and it reasonably appears that such condition or obligation will not or
cannot be met; or
(3) by the Trust, on behalf of International Fund, if any conditions
of its obligations set forth in Section 8 has not been fulfilled or waived
and it reasonably appears that such condition or obligation will not or
cannot be met.
(b) If the transactions contemplated by this Plan have not been
consummated by December 31, 2007, the Plan shall automatically terminate on that
date, unless a later date is agreed to by both the Company and the Trust.
(c) In the event of termination of the Plan prior to consummation of the
Plan of Reorganization pursuant to the provisions hereof, the same shall become
void and have no further effect, and neither the Trust, the Company,
International Fund nor Xxxxxxxxx Fund, nor their directors, trustees, officers,
or agents or the shareholders of International Fund or Xxxxxxxxx Fund shall have
any liability in respect of this Plan, but all expenses incidental to the
preparation and carrying out of the Plan shall be paid as provided in Section 9
hereof.
(d) At any time prior to the Closing, any of the terms or conditions of
this Plan may be waived by the party who is entitled to the benefit thereof if,
in the judgment of such party, such action or waiver will not have a material
adverse effect on the benefits intended under this Plan to its shareholders, on
behalf of whom such action is taken.
(e) The respective representations and warranties contained in Sections 4
to 6 hereof shall expire with and be terminated by the Plan on the Closing Date,
and neither the Trust nor the Company, nor any of their officers, directors,
trustees, agents or shareholders shall have any liability with respect to such
representations or warranties after the Closing Date.
(f) If any order or orders of the SEC with respect to the Plan shall be
issued prior to the Closing and shall impose any terms or conditions that are
determined by action of the Board of Trustees of the Trust, on behalf of
International Fund, or the Board of Directors of the Company, on behalf of
Xxxxxxxxx Fund, to be acceptable, such terms and conditions shall be binding as
if a part of the Plan without further vote or approval of the shareholders of
International Fund, unless such terms and conditions shall result in a change in
the method of computing the number of Xxxxxxxxx Fund Shares to be issued to
International Fund in which event, unless such terms and conditions shall have
been included in the proxy solicitation material furnished to the shareholders
of International Fund prior to the meeting at which the transactions
contemplated by this Plan shall have been approved, this Plan shall not be
consummated and shall terminate unless the Trust shall promptly call a special
meeting of the shareholders of International Fund at which such conditions so
imposed shall be submitted for approval.
11. LIABILITY OF THE COMPANY AND THE TRUST.
(a) Each party acknowledges and agrees that all obligations of the Company
under this Plan are binding only with respect to Xxxxxxxxx Fund; that any
liability of the Company under this Plan with respect to the Company, or in
connection with the transactions contemplated herein with respect to Xxxxxxxxx
Fund, shall be discharged only out of the assets of Xxxxxxxxx Fund; that no
other series of the Company shall be liable with respect to this Plan or in
connection with the transactions contemplated herein; and that neither the Trust
nor International Fund shall seek satisfaction of any such obligation or
liability from the shareholders of the Company, the directors, officers,
employees or agents of the Company, or any of them.
(b) Each party acknowledges and agrees that all obligations of the Trust
under this Plan are binding only with respect to International Fund; that any
liability of the Trust under this Plan with respect to International Fund, or in
connection with the transactions contemplated herein with respect to
International Fund, shall be discharged only out of the assets of International
Fund; that no other series of the Trust shall be liable with respect to this
Plan or in connection with the transactions contemplated herein; and that
neither the Company nor Xxxxxxxxx Fund shall seek satisfaction of any such
obligation or liability from the shareholders of the Trust, the trustees,
officers, employees or agents of the Trust, or any of them.
12. ENTIRE AGREEMENT AND AMENDMENTS.
The Plan embodies the entire agreement between the parties and there are
no agreements, understandings, restrictions, or warranties relating to the
transactions contemplated by the Plan other than those set forth herein or
herein provided for. The Plan may be amended only by mutual consent of the
parties in writing. Neither the Plan nor any interest herein may be assigned
without the prior written consent of the other party.
13. COUNTERPARTS.
The Plan may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts together shall
constitute but one instrument.
14. NOTICES.
Any notice, report, or demand required or permitted by any provision of
this Plan shall be in writing and shall be deemed to have been given if
delivered or mailed, first class postage prepaid, addressed to Xxxxxxxxx Fund,
at Xxxxxxxxx Funds, Inc., 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxxx
Xxxxxxxxxx, Xxxxxxx 00000, Attention: Secretary, or International Fund, at
Templeton Global Investment Trust, 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxxx
Xxxxxxxxxx, Xxxxxxx 00000, Attention: Secretary, as the case may be.
15. GOVERNING LAW.
This Plan shall be governed by and carried out in accordance with the laws
of the State of Delaware.
IN WITNESS WHEREOF, the Trust, on behalf of International Fund, and the
Company, on behalf of Xxxxxxxxx Fund, have each caused this Plan to be executed
on its behalf by its duly authorized officers, all as of the date and year
first-above written.
XXXXXXXXX FUNDS, INC.,
on behalf of XXXXXXXXX
FOREIGN FUND
By:/s/XXXXXX X. XXXXXXXX
---------------------------------
Xxxxxx X. Xxxxxxxx, Secretary
TEMPLETON GLOBAL INVESTMENT
TRUST, on behalf of XXXXXXXXX
INTERNATIONAL (EX EM) FUND
By:/s/XXXXXX X. XXXXXXXX
-------------------------------
Xxxxxx X. Xxxxxxxx, Secretary
