AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan"), is made as of this
1st day of May, 2001, by and between Franklin Xxxxxxxxx Global Trust ("Global
Trust"), a business trust created under the laws of the State of Delaware in
1996 with its principal place of business at 000 Xxxxxxxx Xxxxxx Xxxxxxxxx, Xxx
Xxxxx, Xxxxxxxxxx 00000, on beha1f of its series, Franklin Xxxxxxxxx Global
Currency Fund ("Global Currency Fund"), and Xxxxxxxxx Income Trust ("Income
Trust"), a business trust created under the laws of the Commonwealth of
Massachusetts in 1986 with its principal place of business at 000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000, on beha1f of its series, Xxxxxxxxx
Global Bond Fund ("Global Bond Fund").
PLAN OF REORGANIZATION
The reorganization (hereinafter referred to as the "Plan of Reorganization")
will consist of (i) the acquisition by Income Trust on behalf of Global Bond
Fund, of substantially all of the property, assets and goodwill of Global
Currency Fund in exchange solely for full and fractional shares of beneficial
interest, par value $0.01 per share, of Global Bond Fund - Class A ("Global Bond
Fund Shares"); (ii) the distribution of Global Bond Fund Shares to the
shareholders of Global Currency Fund ("Global Currency Fund Shares") according
to their respective interests in complete liquidation of Global Currency Fund;
and (iii) the dissolution of Global Currency 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 this Plan hereinafter set
forth.
AGREEMENT
In order to consummate the Agreement and 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 GLOBAL
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CURRENCY FUND.
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(a)Subject to the terms and conditions of this Plan, and in reliance on
the representations and warranties of Income Trust on behalf of Global Bond Fund
herein contained, and in consideration of the delivery by Income Trust of the
number of Global Bond Fund Shares hereinafter provided, Global Trust on behalf
of Global Currency Fund agrees that it will convey, transfer and deliver to
Income Trust at the Closing all of Global Currency 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) pay the costs and
expenses of carrying out this Plan (including, but not limited to, fees of
counsel and accountants, and expenses of its liquidation and dissolution
contemplated hereunder), which costs and expenses shall be established on Global
Currency Fund's books as liability reserves; (ii) 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 (iii) pay such contingent liabilities as the Board of Trustees of
Income Trust shall reasonably deem to exist against Global Currency Fund, if
any, at the Closing Date, for which contingent and other appropriate liability
reserves shall be established on Global Currency Fund's books (hereinafter "Net
Assets"). Global Currency 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 this Plan, and in reliance on the
representations and warranties of Global Trust on behalf of Global Currency Fund
herein contained, and in consideration of such sale, conveyance, transfer, and
delivery, Income Trust agrees at the Closing to deliver to Global Trust the
number of Global Bond Fund Shares, determined by dividing the net asset value
per share of the Global Currency Fund Shares by the net asset value per share of
Global Bond Fund Shares, and multiplying the result thereof by the number of
outstanding Global Currency Fund Shares, as of 1:00 p.m. Pacific time on the
Closing Date. All such values shall be determined in the manner and as of the
time set forth in Section 2 hereof.
(c) Immediately following the Closing, Global Trust shall dissolve Global
Currency Fund and distribute pro rata to its shareholders of record as of the
close of business on the Closing Date, Global Bond Fund Shares received by
Global Currency Fund pursuant to this Section 1. Such liquidation and
distribution shall be accomplished by the establishment of accounts on the share
records of Global Currency 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 Global Bond 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 Global Currency Fund shall be entitled to surrender the same to the
transfer agent for Global Bond Fund in exchange for the number of Global Bond
Fund Shares into which the Global Currency Fund Shares theretofore represented
by the certificate or certificates so surrendered shall have been converted.
Certificates for Global Bond 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 Global Currency Fund shall be deemed for all Global Bond
Fund's purposes to evidence ownership of the number of Global Bond Fund Shares
into which the Global Currency Fund Shares (which prior to the Closing were
represented thereby) have been converted.
2. VALUATION.
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(a)The value of Global Currency Fund's Net Assets to be acquired by Global
Bond Fund, hereunder shall be computed as of 1:00 p.m. Pacific time on the
Closing Date using the valuation procedures set forth in Global Currency Fund's
currently effective prospectus.
(b)The net asset value of a share of beneficial interest of Global Currency
Fund Shares shall be determined to the fourth decimal place as of 1:00 p.m.
Pacific time on the Closing Date using the valuation procedures set forth in
Global Currency Fund's currently effective prospectus.
(c)The net asset value of a share of beneficial interest of Global Bond Fund
Shares shall be determined to as of 1:00 p.m. Pacific time on the Closing Date
using the valuation procedures set forth in Global Bond Fund's currently
effective prospectus.
3. CLOSING AND CLOSING DATE. The Closing Date shall be June 7, 2001, or such
------------------------- later date as the parties may mutually agree. The
Closing shall take place at the principal office of Global Trust at 2:00 p.m.,
Pacific time, on the Closing Date. Global Trust on behalf of Global Currency
Fund shall have provided for delivery as of the Closing those Net Assets of
Global Currency Fund to be transferred to the account of Global Bond Fund's
Custodian, The Chase Manhattan Bank, MetroTech Center, Xxxxxxxx, Xxx Xxxx 00000.
Also, Global Trust on behalf of Global Currency Fund shall deliver at the
Closing a list of names and addresses of the shareholders of record of its
Global Currency Fund Shares and the number of full and fractional shares of
beneficial interest of Global Currency Fund Shares owned by each such
shareholder, indicating thereon which such shares are represented by outstanding
certificates and which by book-entry accounts, all as of 1:00 p.m. Pacific time
on the Closing Date, certified by its transfer agent or by its President to the
best of its or his knowledge and belief. Income Trust on behalf of Global Bond
Fund shall issue and deliver a certificate or certificates evidencing the shares
of beneficial interest of Global Bond Fund to be delivered to the account of
Global Currency Fund at said transfer agent registered in such manner as the
officers of Global Trust on behalf of Global Currency Fund may request, or
provide evidence satisfactory to Global Trust that such Global Bond Fund Shares
have been registered in an account on the books of Global Bond Fund in such
manner as the officers of Global Trust on behalf of Global Currency Fund may
request.
4. REPRESENTATIONS AND WARRANTIES BY INCOME TRUST ON BEHALF OF GLOBAL BOND
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FUND.
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Income Trust, on behalf of Global Bond Fund, represents and warrants to
Global Trust that:
(a)Global Bond Fund is a series of Income Trust, a business trust created
under the laws of the Commonwealth of Massachusetts on June 16, 1986, and is
validly existing under the laws of that commonwealth. Income Trust is duly
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end, management investment company and all of the Global Bond
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 the required initial capital.
(b)Income Trust is authorized to issue an unlimited number of shares of
beneficial interest of Global Bond Fund Shares, par value $0.01 per share, each
outstanding share of which is fully paid, non-assessable, freely transferable
and has full voting rights. Global Bond Fund is further divided into three
classes of shares of which Global Bond Fund Shares is one, and an unlimited
number of shares of beneficial interest, par value $0.01 per share, have been
allocated and designated to Global Bond Fund Shares.
(c)The financial statements appearing in the Global Bond Fund's Annual
Report to Shareholders for the fiscal year ended August 31, 2000, audited by
PricewaterhouseCoopers, LLP, copies of which have been delivered to Global
Trust, fairly present the financial position of Global Bond Fund as of such
dates and the results of its operations for the period indicated in conformity
with generally accepted accounting principles applied on a consistent basis.
(d)The books and records of Global Bond Fund accurately summarize the
accounting data represented and contain no material omissions with respect to
the business and operations of Global Bond Fund.
(e)Income Trust has the necessary power and authority to conduct Global Bond
Fund's business as such business is now being conducted.
(f)Income Trust, on behalf of Global Bond Fund, is not a party to or
obligated under any provision of its Declaration of Trust, as amended
("Declaration of Trust") 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 this
Plan.
(g) Income Trust has elected to treat Global Bond 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"),
Global Bond Fund 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) Global Bond 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) Global Bond Fund does not have any unamortized or unpaid organizational
fees or expenses.
5. REPRESENTATIONS AND WARRANTIES BY GLOBAL TRUST ON BEHALF OF GLOBAL
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CURRENCY FUND.
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Global Trust, on behalf of Global Currency Fund, represents and warrants to
Income Trust that:
(a)Global Currency Fund is a series of Global Trust, a business trust
created under the laws of the State of Delaware on October 1, 1996, and is
validly existing under the laws of that state. Global Trust is duly registered
under the 1940 Act as an open-end, management investment company and all of
Global Trust's Global Currency 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.
(b)Global Trust is authorized to issue an unlimited number of shares of
beneficial interest of Global Currency Fund, par value $0.01 per share, each
outstanding share of which is fully paid, non-assessable, freely transferable,
and has full voting rights and currently issues shares of three (3) series
including Global Currency Fund. One class of shares of Global Currency Fund has
been designated as the Global Currency Fund-Class A Shares, and an unlimited
number of shares of beneficial interest of Global Trust, par value $0.01 per
share, have been allocated to Global Currency Fund Shares.
(c)The financial statements appearing in the Global Trust's Annual Report to
Shareholders for the fiscal year ended October 31, 2000, audited by
PricewaterhouseCoopers, LLP, copies of which have been delivered to Income
Trust, fairly present the financial position of Global Currency Fund as of such
date and the results of its operations for the period indicated in conformity
with generally accepted accounting principles applied on a consistent basis.
(d) The books and records of Global Currency Fund accurately summarize the
accounting data represented and contain no material omissions with respect to
the business and operations of Global Currency Fund.
(e) Global Trust has the necessary power and authority to conduct Global
Currency Fund's business as such business is now being conducted.
(f) Global Trust on behalf of Global Currency Fund is not a party to or
obligated under any provision of its Agreement and Declaration of Trust or
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 this Plan.
(g) Global Trust has elected to treat Global Currency Fund as a RIC for
federal income tax purposes under Part I of Subchapter M of the Code, Global
Currency Fund 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) Global Currency 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) Global Currency Fund does not have any unamortized or unpaid
organization fees or expenses.
6. REPRESENTATIONS AND WARRANTIES BY GLOBAL TRUST AND INCOME TRUST.
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Global Trust, on behalf of Global Currency Fund, and Income Trust, on behalf
of Global Bond Fund, each represents and warrants to the other that:
(a)The statement of assets and liabilities to be furnished by it as of 1:00
p.m. Pacific time on the Closing Date for the purpose of determining the number
of Global Bond Fund Shares to be issued pursuant to Section 1 of this Plan, will
accurately reflect each Fund's Net Assets and outstanding shares of beneficial
interest, as of such date, in conformity with generally accepted accounting
principles applied on a consistent basis.
(b)At the Closing, it will have good and marketable title to all of the
securities and other assets shown on the statement of assets and liabilities
referred to in (a) above, free and clear of all liens or encumbrances of any
nature whatsoever, except such imperfections of title or encumbrances as do not
materially detract from the value or use of the assets subject thereto, or
materially affect title thereto.
(c)Except as disclosed in its currently effective prospectus relating to the
Global Currency Fund, in the case of Global Trust, and Global Bond Fund, in the
case of Income Trust, there is no material suit, judicial action, or legal or
administrative proceeding pending or threatened against it.
(d) There are no known actual or proposed deficiency assessments with
respect to any taxes payable by it.
(e) The execution, delivery, and performance of this Plan have been duly
authorized by all necessary action of its Board of Trustees, and this Plan
constitutes a valid and binding obligation enforceable in accordance with its
terms.
(f) It anticipates that consummation of this Plan will not cause Global
Currency Fund, in the case of Global Trust, and Global Bond Fund, in the case of
Income Trust, to fail to conform to the requirements of Subchapter M of the Code
for federal income taxation as a RIC at the end of its fiscal year.
(g) It has the necessary power and authority to conduct the business on
behalf of its Fund, as such business is now being conducted.
7. COVENANTS OF GLOBAL TRUST AND INCOME TRUST.
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(a) Global Trust, on behalf of Global Currency Fund, and Income Trust, on
behalf of Global Bond Fund, each covenant to operate their respective
businesses, as presently conducted between the date hereof and the Closing.
(b) Global Trust, on behalf of Global Currency Fund, undertakes that it will
not acquire Global Bond Fund Shares for the purpose of making distributions
thereof to anyone other than Global Currency Fund's shareholders.
(c) Global Trust, on behalf of Global Currency Fund, undertakes that, if
this Plan is consummated, it will liquidate and dissolve Global Currency Fund.
(d) Global Trust, on behalf of Global Currency Fund, and Income Trust, on
behalf of Global Bond Fund, each agree that, by the Closing, all of the 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.
(e) At the Closing, Global Trust, on behalf of Global Currency Fund, will
provide Global Bond Fund a copy of the shareholder ledger accounts, certified by
Global Currency Fund's transfer agent or its President to the best of its or his
knowledge and belief, for all the shareholders of record of Global Currency Fund
Shares as of 1:00 p.m. Pacific time on the Closing Date who are to become
shareholders of Global Bond Fund as a result of the transfer of assets that is
the subject of this Plan.
(f) Global Trust agrees to mail to each shareholder of record of Global
Currency Fund entitled to vote at the meeting of its shareholders at which
action on this Plan is to be considered, in sufficient time to comply with
requirements as to notice thereof, a combined Prospectus and Proxy Statement
that complies in all material respects with the applicable provisions of Section
14(a) of the Securities Exchange Act of 1934, as amended, and Section 20(a) of
the 1940 Act, and the rules and regulations, respectively, thereunder.
(g) Income Trust will file with the U.S. Securities and Exchange Commission
a registration statement on Form N-14 under the 1933 Act relating to Global Bond
Fund Shares issuable hereunder ("Registration Statement"), and will use its best
efforts to provide that the Registration Statement becomes effective as promptly
as 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 Global Currency Fund's shareholders' 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.
8. CONDITIONS PRECEDENT TO BE FULFILLED BY GLOBAL TRUST AND INCOME TRUST.
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The consummation of this 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 Trustees certified by its Secretary or equivalent officer of each
of the Funds.
(c) That the U.S. Securities and Exchange Commission shall 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 this Plan and the Plan of Reorganization contemplated hereby shall
have been adopted and approved by the appropriate action of the shareholders of
Global Currency Fund at an annual or special meeting or any adjournment thereof.
(e) That a distribution or distributions shall have been declared for Global
Currency 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 1:00 p.m. Pacific time on the
Closing Date; and (ii) any undistributed ordinary income and capital gain net
income from any period to the extent not otherwise declared for distribution.
Capital gain net income has the meaning given such term by Section 1222(a) of
the Code.
(f) That there shall be delivered to Global Trust, on behalf of Global
Currency Fund, and Income Trust, on behalf of Global Bond Fund, an opinion from
Messrs. Stradley, Ronon, Xxxxxxx & Xxxxx, LLP, counsel to Global Trust and
Income Trust, to the effect that, provided the acquisition contemplated hereby
is carried out in accordance with this Plan and based upon certificates of the
officers of Global Trust and Income Trust with regard to matters of fact:
(1) The acquisition by Global Bond Fund of substantially all the assets
of Global Currency Fund as provided for herein in exchange for Global Bond Fund
Shares followed by the distribution by Global Currency Fund to its shareholders
of Global Bond Fund Shares in complete liquidation of Global Currency Fund will
qualify as a reorganization within the meaning of Section 368(a)(1) of the Code,
and Global Currency Fund and Global Bond 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 Global Currency Fund upon the
transfer of substantially all of its assets to Global Bond Fund in exchange
solely for voting shares of Global Bond Fund (Sections 361(a) and 357(a) of the
Code). No opinion, however, will be expressed as to whether any accrued market
discount will be required to be recognized as ordinary income pursuant to
Section 1276 of the Code;
(3) No gain or loss will be recognized by Global Bond Fund upon the
receipt of substantially all of the assets of Global Currency Fund in exchange
solely for voting shares of Global Bond Fund (Section 1032(a) of the Code);
(4) No gain or loss will be recognized by Global Currency Fund upon the
distribution of Global Bond Fund Shares to its shareholders in liquidation of
Global Currency Fund (in pursuance of the Plan) (Section 361(c)(1) of the Code);
(5) The basis of the assets of Global Currency Fund received by Global
Bond Fund will be the same as the basis of such assets to Global Currency Fund
immediately prior to the reorganization (Section 362(b) of the Code);
(6) The holding period of the assets of Global Currency Fund received by
Global Bond Fund will include the period during which such assets were held by
Global Currency Fund (Section 1223(2) of the Code);
(7) No gain or loss will be recognized to the shareholders of Global
Currency Fund upon the exchange of their shares in Global Currency Fund for
voting shares of Global Bond Fund including fractional shares to which they may
be entitled (Section 354(a) of the Code);
(8) The basis of Global Bond Fund Shares received by shareholders of
Global Currency Fund shall be the same as the basis of the Global Currency Fund
Shares exchanged therefor (Section 358(a)(1) of the Code);
(9) The holding period of Global Bond Fund Shares received by
shareholders of Global Currency Fund (including fractional shares to which they
may be entitled) will include the holding period of the Global Currency Fund
Shares surrendered in exchange therefor, provided that the Global Currency Fund
Shares were held as a capital asset on the effective date of the exchange
(Section 1223(1) of the Code); and
(10) Global Bond 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
Global Currency 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 thereunder.
(g) That there shall be delivered to Income Trust on behalf of Global Bond
Fund an opinion in form and substance satisfactory to it from Messrs. Stradley,
Ronon, Xxxxxxx & Young, LLP, counsel to Global Trust on behalf of Global
Currency 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) Global Currency Fund is a series of Global Trust, a business trust
organized under the laws of the State of Delaware on October 1, 1996, and is a
validly existing business trust and in good standing under the laws of that
state;
(2) Global Trust is authorized to issue an unlimited number of shares of
beneficial interest, par value $0.01 per share of Global Currency Fund. One
class of shares of Global Currency Fund has been designated as the Global
Currency Fund-Class A Shares, and an unlimited number of shares of beneficial
interest of the Trust has been allocated to Global Currency Fund Shares.
Assuming that the initial shares of beneficial interest of Global Currency Fund
were issued in accordance with the 1940 Act and the Agreement and Declaration of
Trust and By-laws of Global Trust, and that all other outstanding shares of
Global Currency Fund were sold, issued and paid for in accordance with the terms
of Global Currency Fund's prospectus in effect at the time of such sales, each
such outstanding share is fully paid, non-assessable, freely transferable and
has full voting rights;
(3) Global Currency Fund is an open-end investment company of the
management type registered as such under the 1940 Act;
(4) Except as disclosed in Global Currency Fund's currently effective
prospectus, such counsel does not know of any material suit, action, or legal or
administrative proceeding pending or threatened against Global Currency Fund,
the unfavorable outcome of which would materially and adversely affect Global
Trust or Global Currency Fund;
(5) All actions required to be taken by Global Trust on behalf of Global
Currency Fund to authorize this Plan and to effect the Plan contemplated hereby
have been duly authorized by all necessary action on the part of Global Trust on
behalf of Global Currency Fund; and
(6) Neither the execution, delivery, nor performance of this Plan by
Global Trust on behalf of Global Currency Fund violates any provision of its
Agreement and Declaration of Trust or By-laws, or the provisions of any
agreement or other instrument known to such counsel to which Global Trust is a
party or by which Global Trust is otherwise bound; this Plan is the legal, valid
and binding obligation of Global Trust on behalf of Global Currency Fund and is
enforceable against Global Trust on behalf of Global Currency 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 Global Trust with regard to matters
of fact, and certain certifications and written statements of governmental
officials with respect to the good standing of Global Trust.
(h) That there shall be delivered to Global Trust on behalf of Global
Currency Fund an opinion in form and substance satisfactory to it from Messrs.
Stradley, Ronon, Xxxxxxx & Xxxxx, LLP, counsel to Income Trust on behalf of
Global Bond 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) Global Bond Fund is a series of Income Trust, a business trust
organized under the laws of the Commonwealth of Massachusetts on June 16, 1986
and is a validly existing business trust and in good standing under the laws of
that commonwealth;
(2) Income Trust is authorized to issue an unlimited number of shares of
beneficial interest, par value $0.01 per share of Global Bond Fund. Global Bond
Fund is further divided into three classes of shares of which Global Bond Fund -
Class A Shares is one, and an unlimited number of shares of beneficial interest,
par value $0.01 per share, has been allocated and designated to Global Bond Fund
Shares. Assuming that the initial shares of beneficial interest of Global Bond
Fund were issued in accordance with the 1940 Act, and the Declaration of Trust
and By-laws of Income Trust, and that all other outstanding shares of Global
Bond Fund were sold, issued and paid for in accordance with the terms of Global
Bond Fund's prospectus in effect at the time of such sales, each such
outstanding share of Global Bond Fund is fully paid, non-assessable, freely
transferable and has full voting rights;
(3) Global Bond Fund is an open-end investment company of the
management type registered as such under the 1940 Act;
(4) Except as disclosed in Global Bond Fund's currently effective
prospectus, such counsel does not know of any material suit, action, or legal or
administrative proceeding pending or threatened against Global Bond Fund, the
unfavorable outcome of which would materially and adversely affect Income Trust
or Global Bond Fund;
(5) Global Bond Fund Shares to be issued pursuant to the terms of this
Plan have been duly authorized and, when issued and delivered as provided in
this Plan, will have been validly issued and fully paid and will be
non-assessable by Income Trust on behalf of Global Bond Fund;
(6) All actions required to be taken by Income Trust on behalf of Global
Bond Fund to authorize this Plan and to effect the Plan of Reorganization
contemplated hereby have been duly authorized by all necessary action on the
part of Income Trust on behalf of Global Bond Fund;
(7) Neither the execution, delivery, nor performance of this Plan by
Income Trust on behalf of Global Bond Fund violates any provision of its
Declaration of Trust or By-laws, or the provisions of any agreement or other
instrument known to such counsel to which Income Trust is a party or by which
Income Trust is otherwise bound; this Plan is the legal, valid and binding
obligation of Income Trust on behalf of Global Bond Fund and is enforceable
against Income Trust on behalf of Global Bond Fund in accordance with its terms;
and
(8) The registration statement of Income Trust, of which the prospectus
dated January 1, 2001 of Global Bond 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 U.S. Securities
and Exchange Commission under the 1933 Act, and nothing has come to counsel's
attention that causes it to believe that, at the time the Prospectus became
effective, or at the time of the signing of this Plan, or at the Closing, such
Prospectus (except for the financial statements and other financial and
statistical data included therein, as to which counsel need not express an
opinion), contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading; and such counsel knows of no legal or
government proceedings required to be described in the Prospectus, or of any
contract or document of a character required to be described in the Prospectus
that is not described as required.
In giving the opinions set forth above, this counsel may state that it is
relying on certificates of the officers of Income Trust with regard to matters
of fact, and certain certifications and written statements of governmental
officials with respect to the good standing of Income Trust.
(i) That Global Currency Fund shall have received a certificate from the
President and Secretary of Income Trust on behalf of Global Bond Fund to the
effect that the statements contained in the Prospectus, at the time the
Prospectus became effective, at the date of the signing of this Plan, and at the
Closing, 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.
(j) That Income Trust's Registration Statement with respect to Global Bond
Fund Shares to be delivered to Global Currency 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.
(k) That Global Bond 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 Global Bond Fund Shares lawfully to be delivered to
each holder of Global Currency Fund Shares.
(l) That, at the Closing, there shall be transferred to Income Trust on
behalf of Global Bond Fund, aggregate Net Assets of Global Currency 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 Global
Currency Fund on the Closing Date.
(m) That there be delivered to Income Trust on behalf of Global Bond Fund
information concerning the tax basis of Global Currency Fund in all securities
transferred to Global Bond Fund, together with shareholder information including
the names, addresses, and taxpayer identification numbers of the shareholders of
Global Currency 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 Global Currency Fund respect to each
shareholder.
9. BROKERAGE FEES AND EXPENSES.
----------------------------
(a) Global Trust on behalf of Global Currency Fund and Income Trust on
behalf of Global Bond Fund each represents and warrants to the other that there
are no broker or finders' fees payable by it in connection with the transactions
provided for herein.
(b) The expenses of entering into and carrying out the provisions of this
Plan shall be borne one-quarter by Global Bond Fund, one-quarter by Global
Currency Fund, and one-quarter by Franklin Advisers, Inc. and one-quarter by
Xxxxxxxxx Investment Counsel, LLC.
10. TERMINATION; POSTPONEMENT; WAIVER; ORDER.
-----------------------------------------
(a) Anything contained in this Plan to the contrary notwithstanding, this
Plan may be terminated and the Plan of Reorganization abandoned at any time
(whether before or after approval thereof by the shareholders of Global Currency
Fund) prior to the Closing, or the Closing may be postponed as follows:
(1) by mutual consent of Global Trust on behalf of Global Currency
Fund and Income Trust on behalf of Global Bond Fund;
(2) by Income Trust on behalf of Global Bond Fund if any condition
of its obligations set forth in Section 8 has not been fulfilled
or waived; or
(3) by Global Trust on behalf of Global Currency Fund if any
conditions of its obligations set forth in Section 8 has not
been fulfilled or waived.
An election by Income Trust or Global Trust to terminate this Plan and to
abandon the Plan of Reorganization shall be exercised respectively, by the Board
of Trustees of either Income Trust or Global Trust.
(b) If the transactions contemplated by this Plan have not been consummated
by October 31, 2001, the Plan shall automatically terminate on that date, unless
a later date is agreed to by both Income Trust and Global Trust.
(c) In the event of termination of this Plan pursuant to the provisions
hereof, the same shall become void and have no further effect, and neither
Global Trust, Income Trust, Global Currency Fund nor Global Bond Fund, nor their
trustees, officers, or agents or the shareholders of Global Currency Fund or
Global Bond Fund shall have any liability in respect of this Plan.
(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 by action
taken by that party's Board of Trustees if, in the judgment of such Board of
Trustees, 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 of Reorganization, and
neither Global Trust nor Income Trust, nor any of their officers, trustees,
agents or shareholders shall have any liability with respect to such
representations or warranties after the Closing. This provision shall not
protect any officer, trustee, agent or shareholder of Global Trust or Income
Trust 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 would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties in
the conduct of such office.
(f) If any order or orders of the U.S. Securities and Exchange Commission
with respect to this 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 Global Trust on behalf of Global Currency Fund or Income Trust on behalf of
Global Bond Fund to be acceptable, such terms and conditions shall be binding as
if a part of this Plan without further vote or approval of the shareholders of
Global Currency Fund, unless such terms and conditions shall result in a change
in the method of computing the number of Global Bond Fund Shares to be issued to
Global Currency Fund in which event, unless such terms and conditions shall have
been included in the proxy solicitation material furnished to the shareholders
of Global Currency 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 Global Trust shall promptly call a
special meeting of the shareholders of Global Currency Fund at which such
conditions so imposed shall be submitted for approval.
11. ENTIRE AGREEMENT AND AMENDMENTS.
--------------------------------
This Plan embodies the entire agreement between the parties and there are no
agreements, understandings, restrictions, or warranties relating to the
transactions contemplated by this Plan other than those set forth herein or
herein provided for. This Plan may be amended only by mutual consent of the
parties in writing. Neither this Plan nor any interest herein may be assigned
without the prior written consent of the other party.
12. COUNTERPARTS.
-------------
This 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.
13. 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 Franklin Xxxxxxxxx Global
Trust, at 000 Xxxxxxxx Xxxxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, Attention:
Secretary, or Templeton Income Trust, at 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxx
Xxxxxxxxxx, Xxxxxxx 00000, Attention: Secretary, as the case may be.
14. GOVERNING LAW.
--------------
This Plan shall be governed by and carried out in accordance with the laws
of the State of Delaware.
IN WITNESS WHEREOF, Global Trust, on behalf of Global Currency Fund, and Income
Trust, on behalf of Global Bond 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.
FRANKLIN XXXXXXXXX GLOBAL TRUST, ON BEHALF OF
FRANKLIN XXXXXXXXX GLOBAL CURRENCY FUND
Attest:
/s/ XXXXXX X. XXXXXXX By: /s/ XXXXX X. XXXX
-------------------------- -----------------
Xxxxxx X. Xxxxxxx Xxxxx X. Xxxx
Secretary Vice President
TEMPLETON INCOME TRUST, ON
BEHALF OF XXXXXXXXX GLOBAL BOND FUND
Attest:
/s/ XXXXXXX X. XXXXX By: /s/ XXXXX X. XXXX
------------------------- -----------------
Xxxxxxx X. Xxxxx Xxxxx X. Xxxx
Secretary Vice President
