AGREEMENT AND DECLARATION OF TRUST
OF
FRANKLIN XXXXXXXXX HIGH YIELD TRUST
A DELAWARE STATUTORY TRUST
TABLE OF CONTENTS
PAGE
ARTICLE I. NAME; OFFICES; REGISTERED AGENT; DEFINITIONS......1
SECTION 1. NAME..............................................1
SECTION 2. OFFICES OF THE TRUST..............................1
SECTION 3. REGISTERED AGENT AND REGISTERED OFFICE............1
SECTION 4. DEFINITIONS.......................................1
ARTICLE II. PURPOSE OF TRUST..................................3
ARTICLE III. SHARES............................................5
SECTION 1. DIVISION OF BENEFICIAL INTEREST...................5
SECTION 2. SALE OF SHARES....................................6
SECTION 3. STATUS OF SHARES AND LIMITATION OF PERSONAL
LIABILITY.........................................6
SECTION 4. POWER OF BOARD OF TRUSTEES TO MAKE TAX STATUS
ELECTION..........................................7
SECTION 5. SERIES AND CLASSES................................7
SECTION 6. INDEMNIFICATION OF SHAREHOLDERS...................7
ARTICLE IV. THE BOARD OF TRUSTEES.............................7
SECTION 1. NUMBER, CLASSES AND ELECTION, TERM, REMOVAL
AND RESIGNATION...................................7
SECTION 2. TRUSTEE ACTION BY WRITTEN CONSENT WITHOUT A
MEETING...........................................8
SECTION 3. POWERS; OTHER BUSINESS INTERESTS; QUORUM AND
REQUIRED VOTE.....................................9
SECTION 4. PAYMENT OF EXPENSES BY THE TRUST.................10
SECTION 5. PAYMENT OF EXPENSES BY SHAREHOLDERS..............10
SECTION 6. OWNERSHIP OF TRUST PROPERTY......................10
SECTION 7. SERVICE CONTRACTS................................11
ARTICLE V. SHAREHOLDERS' VOTING POWERS AND MEETINGS.........12
SECTION 1. VOTING POWERS....................................12
SECTION 2. QUORUM AND REQUIRED VOTE.........................12
SECTION 3. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT
A MEETING........................................13
SECTION 4. RECORD DATES.....................................13
SECTION 5. ADDITIONAL PROVISIONS............................14
ARTICLE VI. NET ASSET VALUE; DISTRIBUTIONS; REPURCHASES;
TRANSFERS........................................14
SECTION 1. DETERMINATION OF NET ASSET VALUE, NET INCOME
AND DISTRIBUTIONS................................14
SECTION 2. REPURCHASE OF SHARES WITH SHAREHOLDER CONSENT....14
SECTION 3. REPURCHASE OF SHARES WITHOUT SHAREHOLDER
CONSENT..........................................15
SECTION 4. TRANSFER OF SHARES...............................15
ARTICLE VII. LIMITATION OF LIABILITY AND INDEMNIFICATION
OF AGENT.........................................15
SECTION 1. LIMITATION OF LIABILITY..........................15
SECTION 2. INDEMNIFICATION..................................16
SECTION 3. INSURANCE........................................18
SECTION 4. DERIVATIVE ACTIONS...............................18
ARTICLE VIII. APPROVAL OF CERTAIN TRANSACTIONS.................18
SECTION 1. VOTE REQUIRED....................................18
SECTION 2. DISSOLUTION......................................18
SECTION 3. MERGER OR CONSOLIDATION; CONVERSION;
REORGANIZATION...................................19
SECTION 4. RECLASSIFICATION OF THE TRUST....................20
SECTION 5. PRINCIPAL HOLDER TRANSACTIONS....................20
ARTICLE IX. AMENDMENTS.......................................21
SECTION 1. AMENDMENTS GENERALLY.............................21
SECTION 2. SPECIAL AMENDMENTS...............................21
ARTICLE X. MISCELLANEOUS....................................22
SECTION 1. REFERENCES; HEADINGS; COUNTERPARTS...............22
SECTION 2. APPLICABLE LAW...................................22
SECTION 3. PROVISIONS IN CONFLICT WITH LAW OR
REGULATIONS......................................22
SECTION 4. STATUTORY TRUST ONLY.............................22
SECTION 5. USE OF THE NAMES "FRANKLIN" OR "XXXXXXXXX".......23
AGREEMENT AND DECLARATION OF TRUST
OF
FRANKLIN XXXXXXXXX HIGH YIELD TRUST
AGREEMENT AND DECLARATION OF TRUST made as of this 8th day of
May, 2003, by the Trustees hereunder, and by the holders of
Shares to be issued by the Trust hereunder as hereinafter
provided.
WITNESSETH:
WHEREAS the Trust is being formed to carry on the business
of a closed-end management investment company as defined in the
1940 Act; and
WHEREAS the Trustees have agreed to manage all property
coming into their hands as trustees of a Delaware statutory trust
in accordance with the provisions of the Delaware Statutory Trust
Act, as amended from time to time, and the provisions hereinafter
set forth;
NOW, THEREFORE, the Trustees hereby declare that they will
hold all cash, securities and other assets that they may from
time to time acquire in any manner as Trustees hereunder IN TRUST
to manage and dispose of the same upon the following terms and
conditions for the benefit of the holders from time to time of
Shares created hereunder as hereinafter set forth.
ARTICLE I
NAME; OFFICES; REGISTERED AGENT; DEFINITIONS
Section 1. NAME. The Trust shall be known as "Franklin Xxxxxxxxx
High Yield Trust" and the Board of Trustees shall conduct the
business of the Trust under that name, or any other name as it
may from time to time designate.
Section 2. OFFICES OF THE TRUST. The Board may at any time
establish offices of the Trust at any place or places where the
Trust intends to do business.
Section 3. REGISTERED AGENT AND REGISTERED OFFICE. The name of
the registered agent of the Trust and the address of the
registered office of the Trust are as set forth in the Trust's
Certificate of Trust.
Section 4. DEFINITIONS. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) "1940 ACT" shall mean the Investment Company Act of 1940 and
the rules and regulations thereunder, all as adopted or amended
from time to time;
(b) "AFFILIATE" shall have the same meaning as "affiliated
person" as such term is defined in the 1940 Act when used with
reference to a specified Person, as defined below.
(c) "BOARD OF TRUSTEES" or "BOARD" shall mean the governing body
of the Trust, that is comprised of the number of Trustees of the
Trust fixed from time to time pursuant to Article IV hereof,
having the powers and duties set forth herein;
(d) "BY-LAWS" shall mean By-Laws of the Trust, as amended or
restated from time to time in accordance with Article VIII
therein. Such By-Laws may contain any provision not inconsistent
with applicable law or this Declaration of Trust, relating to the
governance of the Trust;
(e) "CERTIFICATE OF TRUST" shall mean the certificate of trust
of the Trust to be filed with the office of the Secretary of
State of the State of Delaware as required under the DSTA to form
the Trust, as such certificate shall be amended or restated from
time to time and filed with such office;
(f) "CODE" shall mean the Internal Revenue Code of 1986 and the
rules and regulations thereunder, all as adopted or amended from
time to time;
(g) "COMMISSION" shall have the meaning given that term in the
1940 Act;
(h) "DSTA" shall mean the Delaware Statutory Trust Act (12 DEL.
C. ss. 3801, ET SEQ.), as amended from time to time;
(i) "DECLARATION OF TRUST" shall mean this Agreement and
Declaration of Trust, as amended or restated from time to time;
(j) "INTERESTED PERSON" shall have the meaning given that term
in the 1940 Act;
(k) "INVESTMENT ADVISER" or "ADVISER" shall mean a Person, as
defined below, furnishing services to the Trust pursuant to any
investment advisory or investment management contract described
in Article IV, Section 7(a) hereof;
(l) "NATIONAL FINANCIAL EMERGENCY" shall mean the whole or any
part of any period during (i) which an emergency exists as a
result of which disposal by the Trust of securities or other
assets owned by the Trust is not reasonably practicable; (ii)
which it is not reasonably practicable for the Trust fairly to
determine the net asset value of its assets; or (iii) such other
period as the Commission may by order permit for the protection
of investors;
(m) "PERSON" shall mean a natural person, partnership, limited
partnership, limited liability company, trust, estate,
association, corporation, organization, custodian, nominee or any
other individual or entity in its own or any representative
capacity, in each case, whether domestic or foreign, and a
statutory trust or a foreign statutory trust;
(n) "PRINCIPAL UNDERWRITER" shall have the meaning given that
term in the 1940 Act;
(o) "SHARES" shall mean the outstanding shares of beneficial
interest into which the beneficial interest in the Trust shall be
divided from time to time, and shall include fractional and whole
shares;
(p) "SHAREHOLDER" shall mean a record owner of Shares pursuant
to the By-Laws;
(q) "TRUST" shall mean the Delaware statutory trust formed
pursuant to this Declaration of Trust and the filing of the
Certificate of Trust with the office of the Secretary of State of
the State of Delaware;
(r) "TRUST PROPERTY" shall mean any and all property, real or
personal, tangible or intangible, which is owned or held by or
for the account of the Trust, including, without limitation, the
rights referenced in Article X, Section 5 hereof;
(s) "TRUSTEE" or "TRUSTEES" shall mean each Person that signs
this Declaration of Trust as a trustee, so long as such signatory
continues in office in accordance with the terms hereof, and all
other Persons who may, from time to time, be duly elected or
appointed, qualified and serving on the Board of Trustees in
accordance with the provisions hereof and the By-Laws. Reference
herein to a Trustee or the Trustees shall refer to such Person or
Persons in such Person's or Persons' capacity as a trustee or
trustees hereunder and under the By-Laws; and
(t) "VOTE OF A MAJORITY OF THE OUTSTANDING VOTING SECURITIES"
shall have the meaning provided under Subsection 2(a)(42) of the
1940 Act or any successor provision thereof, which Subsection, as
of the date hereof, is as follows: the vote, at a meeting of the
Shareholders, (i) of sixty-seven percent (67%) or more of the
voting securities present in person or represented by proxy at
such meeting, if the holders of more than fifty percent (50%) of
the outstanding voting securities of the Trust are present or
represented by proxy; or (ii) of more than fifty percent (50%) of
the outstanding voting securities of the Trust, whichever is the
less.
ARTICLE II.
PURPOSE OF TRUST
The purpose of the Trust is to conduct, operate and carry on
the business of a management investment company registered under
the 1940 Act, investing primarily in securities and other
financial instruments or property, and to exercise all of the
powers granted to a statutory trust formed under the DSTA,
including, without limitation, the following powers:
(a) To hold, invest and reinvest its funds, and in connection
therewith to hold part or all of its funds in cash, and to
purchase, subscribe for or otherwise acquire, hold for investment
or otherwise, to trade and deal in, write, sell, assign,
negotiate, transfer, exchange, lend, pledge or otherwise dispose
of, turn to account for, or realize upon, securities (which term
"securities" shall for the purposes of this Declaration of Trust,
without limitation of the generality thereof, be deemed to
include any stocks, shares, bonds, debentures, bills, notes,
mortgages, other obligations or evidences of indebtedness, or
financial instruments of any kind or nature, and any options,
certificates, receipts, warrants, futures contracts or other
instruments representing rights to receive, purchase or subscribe
for the same, or evidencing or representing any other rights or
interests therein or in any property or assets, and any
negotiable or non-negotiable instruments and money market
instruments, including bank certificates of deposit, finance
paper, commercial paper, bankers' acceptances and all kinds of
repurchase or reverse repurchase agreements) created or issued by
any United States or foreign issuer (which term "issuer" shall,
for the purposes of this Declaration of Trust, without limiting
the generality thereof, be deemed to include any persons, firms,
associations, partnerships, corporations, trusts, syndicates,
combinations, organizations, governments or subdivisions,
agencies or instrumentalities of any government); and to
exercise, as owner or holder of any securities, all rights,
powers and privileges in respect thereof; and to do any and all
acts and things for the preservation, protection, improvement and
enhancement in value of any and all such securities, financial
instruments or other assets.
(b) To acquire all or any part of the goodwill, rights,
property, real estate, interests in real estate and business of
any person, firm, association or corporation heretofore or
hereafter engaged in any business similar to any business which
the Trust has the power to conduct, and to hold, utilize, enjoy
and in any manner dispose of the whole or any part of the rights,
property, real estate, interests in real estate and business so
acquired, and to assume in connection therewith any liabilities
of any such person, firm, association or corporation.
(c) To apply for, obtain, purchase or otherwise acquire, any
patents, copyrights, licenses, trademarks, trade names and the
like, which may seem capable of being used for any of the
purposes of the Trust; and to use, exercise, develop, grant
licenses in respect of, sell and otherwise turn to account, the
same.
(d) To issue and sell shares of beneficial interest, securities
convertible into such shares of beneficial interest, or other
security or evidence of indebtedness, in such amounts and on such
terms and conditions, for such purposes and for such amount or
kind of consideration (including, without limitation thereto,
securities) now or hereafter permitted by the laws of the State
of Delaware, by the 1940 Act, and by this Declaration of Trust,
as the Board of Trustees may determine.
(e) To purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote of the
Shareholders) shares of beneficial interest in any manner and to
the extent now or hereafter permitted by the laws of the State of
Delaware, by the 1940 Act and by this Declaration of Trust.
(f) To conduct its business in all its branches at one or more
offices in Delaware and elsewhere in any part of the world,
without restriction, or limit as to extent.
(g) To exercise and enjoy, in Delaware and in any other states,
territories, districts and United States dependencies and in
foreign countries, all of the powers, rights and privileges
granted to, or conferred upon, statutory trusts by the DSTA now
or hereafter in force, and the enumeration of the foregoing
powers shall not be deemed to exclude any powers, rights or
privileges so granted or conferred.
(h) In general, to carry on any other business in connection
with or incidental to its trust purposes, to do everything
necessary, suitable or proper for the accomplishment of such
purposes or for the attainment of any object or the furtherance
of any power hereinbefore set forth, either alone or in
association with others, to do every other act or thing
incidental or appurtenant to, or growing out of, or connected
with, its business or purposes, objects or powers, and, subject
to the foregoing, to have and exercise all the powers, rights and
privileges conferred upon statutory trusts by the laws of the
State of Delaware as in force from time to time.
(i) The Trust shall not be limited to investing in obligations
maturing before the possible dissolution of the Trust. Neither
the Trust nor the Board of Trustees shall be required to obtain
any court order to deal with any Trust Property or take any other
action hereunder.
(j) The foregoing objects and purposes shall, except as
otherwise expressly provided, be in no way limited or restricted
by reference to, or inference from, the terms of any other clause
of this or any other Article of this Declaration of Trust, and
shall each be regarded as independent and construed as a power as
well as an object and a purpose, and the enumeration of specific
purposes, objects and powers shall not be construed to limit or
restrict in any manner the meaning of general terms or the
general powers of the Trust now or hereafter conferred by the
laws of the State of Delaware, nor shall the expression of one
thing be deemed to exclude another, though it be of like nature,
not expressed.
ARTICLE III.
SHARES
Section 1. DIVISION OF BENEFICIAL INTEREST.
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(a) The beneficial interest in the Trust shall at all times be
divided into outstanding shares of the Trust, all without par
value. The number of shares of beneficial interest in the Trust
authorized hereunder is unlimited.
(b) Subject to the 1940 Act and applicable law, the Board of
Trustees shall have the power to issue authorized but unissued
shares of beneficial interest in the Trust from time to time on
such terms and for such consideration as provided in Article III,
Section 2. The Board of Trustees, on behalf of the Trust, may
acquire and hold as treasury shares, reissue for such
consideration and on such terms as it may determine, or cancel,
at its discretion from time to time, any Shares reacquired by the
Trust.
(c) Each Share shall entitle the holder to the voting rights as
provided in Article V hereof.
(d) Shareholders shall be entitled to receive dividends and
distributions, when, if and as declared by the Board of
Trustees. Dividends may be paid in cash or in kind. No Share
shall have any priority or preference over any other Share with
respect to dividends or distributions paid in the ordinary course
of business or distributions upon dissolution of the Trust made
pursuant to Article VIII, Section 2 hereof. All dividends and
distributions from the Trust Property shall be made ratably among
all Shareholders according to the number of Shares held of record
by such Shareholders on the record date for any dividend or
distribution.
(e) Shareholders shall have no preemptive or other right to
subscribe for new or additional authorized, but unissued shares
or other securities issued by the Trust. The Board of Trustees
may from time to time divide or combine the Shares into a greater
or lesser number of Shares. Any such division or combination
shall not materially change the proportionate beneficial interest
in Trust Property of Shareholders at the time of such division or
combination or materially affect the rights of Shareholders.
(f) Any Trustee, officer or other agent of the Trust, and any
organization in which any such Person has an economic or other
interest, may acquire, own, hold and dispose of shares of
beneficial interest in the Trust, whether such shares are
authorized but unissued, or already outstanding, to the same
extent as if such Person were not a Trustee, officer or other
agent of the Trust; and the Trust may issue and sell and may
purchase such Shares from any such Person or any such
organization, subject to the limitations, restrictions or other
provisions applicable to the sale or purchase of such shares
herein and the 1940 Act.
Section 2. SALE OF SHARES. The Trust may sell its authorized but
unissued shares of beneficial interest to such Persons, at such
times, on such terms, and for such consideration paid wholly or
partly in cash or securities as the Board of Trustees may from
time to time authorize; provided, that (i) each such sale shall
be credited to the individual purchaser's account in the form of
full or fractional Shares, at the net asset value per Share,
subject to the 1940 Act, including, but not limited to, Section
23 of the 1940 Act, and the rules and regulations adopted
thereunder and (ii) the Board of Trustees may, in its sole
discretion, permit the Principal Underwriter to impose a sales
charge upon any such sale; and further provided, that each such
sale shall be subject to the 1940 Act, the rules and regulations
adopted thereunder and applicable law. Every Shareholder by
virtue of having become a Shareholder shall be deemed to have
expressly assented and agreed to the terms of this Declaration of
Trust and to have become bound as a party hereto.
Section 3. STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY.
Shares shall be deemed to be personal property giving to
Shareholders only the rights provided in this Declaration of
Trust, the By-Laws and under applicable law. Ownership of Shares
shall not entitle the Shareholder to any title in or to the whole
or any part of the Trust Property or right to call for a
partition or division of the same or for an accounting, nor shall
the ownership of Shares constitute the Shareholders as partners.
The death, incapacity, dissolution, termination, or bankruptcy of
a Shareholder during the existence of the Trust shall not operate
to dissolve the Trust, nor entitle the representative of any
deceased, incapacitated, dissolved, terminated or bankrupt
Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but shall entitle
such representative only to the rights, as a Shareholder under
this Declaration of Trust and the By-Laws, of said deceased,
incapacitated, dissolved, terminated or bankrupt Shareholder.
Neither the Trust nor the Trustees, nor any officer, employee or
agent of the Trust shall have any power to bind personally any
Shareholder, nor, except as specifically provided herein, to call
upon any Shareholder for the payment of any sum of money other
than such as the Shareholder may at any time personally agree to
pay. Each Share, when issued on the terms determined by the
Board of Trustees, shall be fully paid and nonassessable. As
provided in the DSTA, Shareholders shall be entitled to the same
limitation of personal liability as that extended to stockholders
of a private corporation organized for profit under the General
Corporation Law of the State of Delaware.
Section 4..POWER OF BOARD OF TRUSTEES TO MAKE TAX STATUS
Election. The Board of Trustees shall have the power, in its
discretion, to make such elections as to the tax status of the
Trust as may be permitted or required under the Code, without the
vote of any Shareholder.
Section 5..SERIES AND CLASSES. The Board of Trustees may
authorize the division of Shares into separate and distinct
series and the division of any series into separate classes of
Shares. The establishment and designation of any series or class
thereof shall be effective, without the requirement of
Shareholder approval, upon the adoption of a resolution by not
less than a majority of the then Board of Trustees, which
resolution shall set forth such establishment and designation and
may provide, to the extent permitted by the DSTA, for rights,
powers and duties of such series or class thereof otherwise than
as provided herein. Each such resolution shall be incorporated
herein by reference upon adoption. Any such resolution may be
amended by a further resolution of a majority of the Board of
Trustees, and if Shareholder approval would be required to make
such an amendment to the language set forth in this Declaration
of Trust, such further resolution shall require the same
Shareholder approval that would be necessary to make such
amendment to the language set forth in this Declaration of
Trust. Each such further resolution shall be incorporated herein
by reference upon adoption.
Section 6..INDEMNIFICATION OF SHAREHOLDERS. If any Shareholder or
former Shareholder shall be exposed to liability by reason of a
claim or demand relating exclusively to his or her being or
having been a Shareholder and not because of such Shareholder's
actions or omissions, such Shareholder or former Shareholder (or,
in the case of a natural person, his or her heirs, executors,
administrators, or other legal representatives or, in the case of
a corporation or other entity, its corporate or other general
successor) shall be entitled to be held harmless from and
indemnified out of the assets of the Trust against all loss and
expense arising from such claim or demand; provided, however,
such indemnity shall not cover (i) any taxes due or paid by
reason of such Shareholder's ownership of any Shares and (ii)
expenses charged to a Shareholder pursuant to Article IV, Section
5 hereof.
ARTICLE IV.
THE BOARD OF TRUSTEES
Section 1..NUMBER, CLASSES AND ELECTION, TERM, REMOVAL AND
------------------------------------------------
RESIGNATION.
-----------
(a) The initial Board of Trustees shall be comprised of the
Trustee entering into this Declaration of Trust on the date first
written above, who shall hold office until the initial holder of
a Share executes a consent in writing to elect a Board of
Trustees that is classified and holds office in accordance with
paragraph (c) of this Section 1. The initial Trustee shall (i)
execute and file or cause to be filed the Certificate of Trust
with the office of the Secretary of State of the State of
Delaware and (ii) execute a consent in writing to adopt the
By-Laws. Each person hereafter elected or appointed as Trustee
shall execute a counterpart to this Declaration of Trust.
(b) The number of Trustees constituting the entire Board of
Trustees may be fixed from time to time by the vote of a majority
of the then Board of Trustees; PROVIDED, HOWEVER, that the number
of Trustees shall in no event be less than three (3) nor more
than fifteen (15) and the percentage of Trustees who are not
Interested Persons of the Trust shall be no less than that
permitted by the 1940 Act. The number of Trustees shall not be
reduced so as to shorten the term of any Trustee then in office.
(c) The Board of Trustees (other than the initial Board of
Trustees established pursuant to paragraph (a) of this Section 1)
shall be divided into three (3) classes, with the term of office
of one class expiring each year. Upon the written consent of the
initial Shareholder, Trustees of the first class shall be elected
to hold office for a term expiring at the next succeeding annual
meeting at the time such Trustees' successors are elected and
qualified; Trustees of the second class shall be elected to hold
office for a term expiring at the second succeeding annual
meeting at the time such Trustees' successors are elected and
qualified; and Trustees of the third class shall be elected to
hold office for a term expiring at the third succeeding annual
meeting at the time such Trustees' successors are elected and
qualified. Thereafter, at each annual meeting of Shareholders,
the successors to the class of Trustees whose term shall then
expire shall be elected to hold office for a term expiring at the
third succeeding annual meeting.
(d) Each Trustee shall hold office for the applicable term set
forth in paragraph (c) of this Section 1 or until such Trustee's
earlier death, resignation, removal or inability otherwise to
serve.
(e) Any Trustee may be removed for cause by the Shareholders,
upon the vote of the holders of 75% of the Shares entitled to
vote. "Cause" for these purposes shall require willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Trustee.
(f) Any Trustee may resign at any time by giving `written notice
to the secretary of the Trust or to a meeting of the Board of
Trustees. Such resignation shall be effective upon receipt,
unless specified to be effective at some later time, but no later
than the next succeeding annual meeting of Shareholders.
Section 2. TRUSTEE ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Except as otherwise required by applicable law, any action that
may be taken at any meeting of the Board of Trustees or any
committee thereof may be taken without a meeting and without
prior written notice if a consent or consents in writing setting
forth the action so taken is signed by the Trustees having not
less than the minimum number of votes that would be necessary to
authorize or take that action at a meeting at which all Trustees
on the Board of Trustees or any committee thereof, as the case
may be, were present and voted. A consent transmitted by
electronic transmission (as defined in the DSTA) by a Trustee
shall be deemed to be written and signed for purposes of this
Section. All such consents shall be filed with the secretary of
the Trust and shall be maintained in the Trust's records.
Section 3. POWERS; OTHER BUSINESS INTERESTS; QUORUM AND REQUIRED
------------------------------------------------------
VOTE.
----
(a) POWERS. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by or under the
direction of the Board of Trustees, and such Board of Trustees
shall have all powers necessary or convenient to carry out that
responsibility. The Board of Trustees shall have full power and
authority to do any and all acts and to make and execute any and
all contracts and instruments that it may consider necessary or
appropriate in connection with the operation and administration
of the Trust. The Board of Trustees shall not be bound or
limited by present or future laws or customs with regard to
investments by trustees or fiduciaries, but, subject to the other
provisions of this Declaration of Trust and the By-Laws, shall
have full authority and absolute power and control over the
assets and the business of the Trust to the same extent as if the
Board of Trustees was the sole owner of such assets and business
in its own right, including such authority, power and control to
do all acts and things as it, in its sole discretion, shall deem
proper to accomplish the purposes of this Trust. Without
limiting the foregoing, the Board of Trustees may, subject to the
requisite vote for such actions as set forth in this Declaration
of Trust and the By-Laws: (1) adopt By-Laws not inconsistent
with applicable law or this Declaration of Trust; (2) amend,
restate and repeal such By-Laws, subject to and in accordance
with the provisions of such By-Laws; (3) fill vacancies on the
Board of Trustees in accordance with this Declaration of Trust
and the By-Laws; (4) elect and remove such officers and appoint
and terminate such agents as it considers appropriate, in
accordance with this Declaration of Trust and the By-Laws; (5)
establish and terminate one or more committees of the Board of
Trustees pursuant to the By-Laws; (6) place Trust Property in
custody as required by the 1940 Act, employ one or more
custodians of the Trust Property and authorize such custodians to
employ sub-custodians and to place all or any part of such Trust
property with a custodian or a custodial system meeting the
requirements of the 1940 Act; (7) retain a transfer agent,
dividend disbursing agent, a shareholder servicing agent or
administrative services agent, or any number thereof or any other
service provider as deemed appropriate; (8) provide for the
issuance and distribution of shares of beneficial interest in the
Trust or other securities or financial instruments directly or
through one or more Principal Underwriters or otherwise; (9)
retain one or more Investment Adviser(s); (10) repurchase Shares
on behalf of the Trust and transfer Shares pursuant to applicable
law; (11) set record dates for the determination of Shareholders
with respect to various matters, in the manner provided in
Article V, Section 4 of this Declaration of Trust; (12) declare
and pay dividends and distributions to Shareholders from the
Trust Property, in accordance with this Declaration of Trust and
the By-Laws; and (13) in general delegate such authority as it
considers desirable to any officer of the Trust, to any committee
of the Trust and to any agent or employee of the Trust or to any
such custodian, transfer, dividend disbursing, shareholder
servicing agent, Principal Underwriter, Investment Adviser, or
other service provider, to the extent authorized and in
accordance with this Declaration of Trust, the By-Laws and
applicable law. The powers of the Board of Trustees set forth in
this Section 3(a) are without prejudice to the other powers of
the Board of Trustees set forth in this Declaration of Trust and
the By-Laws. Any determination as to what is in the best
interests of the Trust and its Shareholders made by the Board of
Trustees in good faith shall be conclusive. In construing the
provisions of this Declaration of Trust, the presumption shall be
in favor of a grant of power to the Board of Trustees.
(b) OTHER BUSINESS INTERESTS. The Trustees shall devote to the
affairs of the Trust such time as may be necessary for the proper
performance of their duties hereunder, but neither the Trustees
nor the officers, directors, shareholders, partners or employees
of the Trustees, if any, shall be expected to devote their full
time to the performance of such duties. The Trustees, or any
Affiliate, shareholder, officer, director, partner or employee
thereof, or any Person owning a legal or beneficial interest
therein, may engage in, or possess an interest in, any business
or venture other than the Trust, of any nature and description,
independently or with or for the account of others. Neither the
Trust nor any Shareholder shall have the right to participate or
share in such other business or venture or any profit or
compensation derived therefrom.
(c) QUORUM AND REQUIRED VOTE. At all meetings of the Board of
Trustees, a majority of the Board of Trustees shall be present in
person in order to constitute a quorum for the transaction of
business. A meeting at which a quorum is initially present may
continue to transact business notwithstanding the departure of
Trustees from the meeting, if any action taken is approved by at
least a majority of the required quorum for that meeting.
Subject to Article III, Sections 1 and 6 of the By-Laws and
except as otherwise provided herein or required by applicable
law, the vote of not less than a majority of the Trustees present
at a meeting at which a quorum is present shall be the act of the
Board of Trustees.
Section 4. PAYMENT OF EXPENSES BY THE TRUST. An authorized
officer of the Trust shall pay or cause to be paid out of the
principal or income of the Trust, or partly out of the principal
and partly out of the income of the Trust, all expenses, fees,
charges, taxes and liabilities incurred by or arising in
connection with the maintenance or operation of the Trust, or in
connection with the management thereof, including, but not
limited to, the Trustees' compensation and such expenses, fees,
charges, taxes and liabilities associated with the services of
the Trust's officers, employees, Investment Adviser(s), Principal
Underwriter, auditors, counsel, custodian, sub-custodian,
transfer agent, dividend disbursing agent, shareholder servicing
agent, and such other agents or independent contractors and such
other expenses, fees, charges, taxes and liabilities as the Board
of Trustees may deem necessary or proper to incur.
Section 5. PAYMENT OF EXPENSES BY SHAREHOLDERS. The Board of
Trustees shall have the power, as frequently as it may determine,
to cause any Shareholder to pay directly, in advance or arrears,
for charges of the Trust's custodian or transfer, dividend
disbursing, shareholder servicing or similar agent for services
provided to such Shareholder, an amount fixed from time to time
by the Board of Trustees, by setting off such amount due from
such Shareholder from the amount of (i) declared but unpaid
dividends or distributions owed such Shareholder, or (ii)
proceeds from the repurchase by the Trust of Shares from such
Shareholder pursuant to Article VI hereof.
Section 6. OWNERSHIP OF TRUST PROPERTY. Legal title to all of the
Trust Property shall at all times be vested in the Trust, except
that the Board of Trustees shall have the power to cause legal
title to any Trust Property to be held by or in the name of any
Person as nominee, on such terms as the Board of Trustees may
determine, in accordance with applicable law.
Section 7. SERVICE CONTRACTS.
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(a) Subject to this Declaration of Trust, the By-Laws and the
1940 Act, the Board of Trustees may, at any time and from time to
time, contract for exclusive or nonexclusive investment advisory
or investment management services for the Trust with any
corporation, trust, association or other organization, including
any Affiliate; and any such contract may contain such other terms
as the Board of Trustees may determine, including without
limitation, delegation of authority to the Investment Adviser to
determine from time to time without prior consultation with the
Board of Trustees what securities and other instruments or
property shall be purchased or otherwise acquired, owned, held,
invested or reinvested in, sold, exchanged, transferred,
mortgaged, pledged, assigned, negotiated, or otherwise dealt with
or disposed of, and what portion, if any, of the Trust Property
shall be held uninvested and to make changes in the Trust's
investments, or to engage in such other activities, including
administrative services, as may specifically be delegated to such
party.
(b) Subject to this Declaration of Trust, the By-Laws and the
1940 Act, the Board of Trustees may also, at any time and from
time to time, contract with any Person, including any Affiliate,
appointing it or them as the exclusive or nonexclusive placement
agent, distributor or Principal Underwriter for the Trust's
shares of beneficial ownership or for other securities or
financial instruments to be issued by the Trust, or appointing it
or them to act as the administrator, custodian, transfer agent,
dividend disbursing agent and/or shareholder servicing agent for
the Trust.
(c) Subject to this Declaration of Trust, the By-Laws and the
1940 Act, the Board of Trustees is further empowered, at any time
and from time to time, to contract with any Persons to provide
such other services to the Trust as the Board of Trustees
determines to be in the best interests of the Trust and its
Shareholders.
(d) None of the following facts or circumstances shall affect
the validity of any of the following contracts or disqualify any
Shareholder, Trustee, employee or officer of the Trust from
voting upon or executing the same, or create any liability or
accountability to the Trust or the Shareholders, provided that
the establishment of and performance of each such contract is
permissible under the 1940 Act, and provided further that such
Person is authorized to vote upon such contract under the 1940
Act:
(i) the fact that any of the Shareholders, Trustees, employees
or officers of the Trust is a shareholder,
director, officer, partner, trustee,
employee, manager, Adviser, placement agent,
Principal Underwriter, distributor, or
Affiliate or agent of or for any Person, or
for any parent or Affiliate of any Person,
with which any type of service contract
provided for in this Article IV, Section 7
may have been or may hereafter be made, or
that any such Person, or any parent or
Affiliate thereof, is a Shareholder or has an
interest in the Trust, or
(ii) the fact that any Person with which any type of
service contract provided for in this Article
IV, Section 7 may have been or may hereafter
be made also has such a service contract with
one or more other Persons, or has other
business or interests.
(e) Every contract referred to in this Section 7 is required to
comply with this Declaration of Trust, the By-Laws, the 1940 Act,
other applicable law and any stipulation by resolution of the
Board of Trustees.
ARTICLE V.
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. VOTING POWERS. The Shareholders shall have the power
to vote only (i) for the election of Trustees and the filling of
any vacancies on the Board of Trustees as set forth herein and in
the By-Laws; (ii) for the removal of Trustees as set forth
herein; (iii) on such additional matters as may be required by
this Declaration of Trust, the By-Laws, the 1940 Act, other
applicable law and any registration statement of the Trust filed
with the Commission, the registration of which is effective; and
(iv) on such other matters as the Board of Trustees may consider
necessary or desirable. The Shareholder of record (as of the
record date established pursuant to Section 4 of this Article V)
of each Share shall be entitled to one vote for each full Share,
and a fractional vote for each fractional Share. Shareholders
shall not be entitled to cumulative voting in the election of
Trustees or on any other matter.
Section 2. QUORUM AND REQUIRED VOTE.
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(a) A majority of the Shares entitled to vote at a Shareholders'
meeting, which are present in person or represented by proxy,
shall constitute a quorum at the Shareholders' meeting, except
when a larger quorum is required by applicable law or the
requirements of any securities exchange on which Shares are
listed for trading, in which case such quorum shall comply with
such requirements. Abstentions and broker non-votes will be
included for purposes of determining whether a quorum is
present. Subject to any provision of this Declaration of Trust,
the By-Laws or applicable law that requires a different vote: (1)
in all matters other than the election of Trustees, the
affirmative "vote of a majority of the outstanding voting
securities" (as defined herein) of the Trust entitled to vote at
a Shareholders' meeting at which a quorum is present, shall be
the act of the Shareholders; and (2) Trustees shall be elected by
not less than a plurality of the votes cast of the holders of
Shares entitled to vote present in person or represented by proxy
at a Shareholders' meeting at which a quorum is present.
(b) Abstentions and broker non-votes will be treated as votes
present at a Shareholders' meeting, but will not be treated as
votes cast. Abstentions and broker non-votes, therefore, will
have no effect on proposals which require a plurality or majority
of votes cast for approval, but will have the same effect as a
vote "against" on proposals requiring any percentage of the
outstanding voting securities of the Trust for approval.
Section 3. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A
Meeting. Any action which may be taken at any meeting of
Shareholders may be taken without a meeting and without prior
notice if a consent or consents in writing setting forth the
action so taken is signed by the holders of all Shares entitled
to vote on that action and is received by the secretary of the
Trust. A consent transmitted by electronic transmission (as
defined in the DSTA) by a Shareholder or by a person or persons
authorized to act for a Shareholder shall be deemed to be written
and signed for purposes of this Section. All such consents shall
be filed with the secretary of the Trust and shall be maintained
in the Trust's records. Any Shareholder that has given a written
consent or the Shareholder's proxyholder or a personal
representative of the Shareholder or its respective proxyholder
may revoke the consent by a writing received by the secretary of
the Trust before the written consents of all Shares entitled to
vote have been received by the secretary of the Trust.
Section 4. RECORD DATES.
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(a) For purposes of determining the Shareholders entitled to
notice of, and to vote at, any meeting of Shareholders, the Board
of Trustees may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date
is adopted by the Board of Trustees, and which record date shall
not be more than one hundred twenty (120) days nor less than ten
(10) days before the date of any such meeting. For purposes of
determining the Shareholders entitled to vote on any action
without a meeting, the Board of Trustees may fix a record date,
which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of
Trustees, and which record date shall not be more than thirty
(30) days after the date upon which the resolution fixing the
record date is adopted by the Board of Trustees.
(b) If the Board of Trustees does not so fix a record date:
(i) the record date for determining Shareholders entitled to
notice of, and to vote at, a meeting of
Shareholders shall be at the close of
business on the day next preceding the day on
which notice is given or, if notice is
waived, at the close of business on the day
next preceding the day on which the meeting
is held.
(ii) the record date for determining Shareholders entitled to
vote on any action by consent in writing
without a meeting of Shareholders, (1) when
no prior action by the Board of Trustees has
been taken, shall be the day on which the
first signed written consent setting forth
the action taken is delivered to the Trust,
or (2) when prior action of the Board of
Trustees has been taken, shall be at the
close of business on the day on which the
Board of Trustees adopts the resolution
taking such prior action.
(c) For the purpose of determining the Shareholders who are
entitled to receive payment of any dividend or of any other
distribution of assets of the Trust, the Board of Trustees may
from time to time fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date
is adopted, and which record date shall not be more than sixty
(60) days before the date for the payment of such dividend or
such other distribution.
Section 5..ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes, meetings and related matters.
ARTICLE VI.
NET ASSET VALUE; DISTRIBUTIONS; REPURCHASES; TRANSFERS
Section 1. DETERMINATION OF NET ASSET VALUE, NET INCOME AND
-------------------------------------------------
DISTRIBUTIONS.
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(a) The Board of Trustees shall have the power to determine from
time to time the offering price for authorized, but unissued,
shares of beneficial interest of the Trust, subject to any
requirements or limitations of the 0000 Xxx.
(b) The Board of Trustees may, subject to the 1940 Act,
prescribe and shall set forth in the Bylaws, this Declaration of
Trust or in a resolution of the Board of Trustees such bases and
time for determining the net asset value per Share, or net income
attributable to the Shares or the declaration and payment of
dividends and distributions on the Shares, as it may deem
necessary or desirable.
(c) Before payment of any dividend there may be set aside out of
any funds of the Trust available for dividends such sum or sums
as the Board of Trustees may from time to time, in its absolute
discretion, think proper as a reserve fund to meet contingencies,
or for equalizing dividends, or for repairing or maintaining any
property of the Trust or for such other lawful purpose as the
Board of Trustees shall deem to be in the best interests of the
Trust and its Shareholders, and the Board of Trustees may abolish
any such reserve in the manner in which it was created.
Section 2. REPURCHASE OF SHARES WITH SHAREHOLDER CONSENT.
---------------------------------------------
(a) The Trust may repurchase Shares on the open market or such
Shares as are tendered by any Shareholder for repurchase pursuant
to a repurchase offer or tender offer, if any, made by the Trust
periodically or from time to time, upon the presentation by the
Shareholder of a proper instrument of transfer together with a
request directed to the Trust, its transfer agent or other duly
authorized agent, that the Trust repurchase such Shares, or in
accordance with such other procedures for repurchase as the Board
of Trustees may from time to time authorize; and the Trust will
pay therefore a price that meets the requirements of Section 23
of the 1940 Act, and the rules and regulations adopted
thereunder, and that is in accordance with the terms of such
repurchase offer, tender offer, this Declaration of Trust, the
By-Laws and other applicable law. The obligations set forth in
this Section 2 are subject to the provision that such obligations
may be suspended or postponed by the Board of Trustees (1) during
any time the New York Stock Exchange (the "Exchange") is closed
for other than weekends or holidays; (2) if permitted by the
rules of the Commission, during periods when trading on the
Exchange is restricted; or (3) during any National Financial
Emergency. The Board of Trustees may, in its discretion, declare
that the suspension relating to a National Financial Emergency
shall terminate, as the case may be, on the first business day on
which the Exchange shall have reopened or the period specified
above shall have expired (as to which, in the absence of an
official ruling by the Commission, the determination of the Board
of Trustees shall be conclusive.)
(b) The repurchase price may in any case or cases be paid wholly
or partly in kind if the Board of Trustees determines that such
payment is advisable in the interest of the remaining
Shareholders. Subject to the foregoing, the fair value,
selection and quantity of securities or other property so paid or
delivered as all or part of the repurchase price shall be
determined by or under authority of the Board of Trustees. In no
case shall the Trust be liable for any delay of any corporation
or other Person in transferring securities or other property
selected for delivery as all or part of any payment in kind.
Section 3. REPURCHASE OF SHARES WITHOUT SHAREHOLDER CONSENT. The
Trust shall have the right at its option and at any time, subject
to the 1940 Act and other applicable law, to repurchase Shares of
any Shareholder at a price that meets the requirements of Section
23 of the 1940 Act, and the rules and regulations adopted
thereunder, and that is in accordance with the terms of this
Declaration of Trust, the By-Laws and other applicable law: (a)
if at such time, such Shareholder owns Shares having an aggregate
net asset value of less than an amount determined from time to
time by the Trustees; or (b) to the extent that such Shareholder
owns Shares equal to or in excess of a percentage of the Shares
determined from time to time by the Trustees.
Section 4. TRANSFER OF SHARES. Shares shall be transferable in
accordance with the provisions of the By-Laws.
ARTICLE VII.
LIMITATION OF LIABILITY
AND INDEMNIFICATION OF AGENT
Section 1. LIMITATION OF LIABILITY.
-----------------------
(a) For the purpose of this Article, "Agent" means any Person
who is or was a Trustee, officer, employee or other agent of the
Trust or is or was serving at the request of the Trust as a
trustee, director, officer, employee or other agent of another
foreign or domestic corporation, partnership, joint venture,
trust or other enterprise; "Proceeding" means any threatened,
pending or completed action or proceeding, whether civil,
criminal, administrative or investigative; and "Expenses" include
without limitation attorneys' fees and any expenses of
establishing a right to indemnification under this Article.
(b) An Agent shall be liable to the Trust and to any Shareholder
solely for such Agent's own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of such Agent (such conduct referred to herein as
"Disqualifying Conduct"), and for nothing else.
(c) Subject to subsection (b) of this Section 1 and to the
fullest extent that limitations on the liability of Agents are
permitted by the DSTA, the Agents shall not be responsible or
liable in any event for any act or omission of any other Agent of
the Trust or any Investment Adviser or Principal Underwriter of
the Trust.
(d) No Agent, when acting in its respective capacity as such,
shall be personally liable to any Person, other than the Trust or
a Shareholder to the extent provided in subsections (b) and (c)
of this Section 1, for any act, omission or obligation of the
Trust or any Trustee thereof.
(e) The officers and Trustees may obtain the advice of counsel
or other experts with respect to the meaning and operation of
this Declaration of Trust, the By-Laws, applicable law and their
respective duties as officers or Trustees. No such officer or
Trustee shall be liable for any act or omission in accordance
with such advice and no inference concerning liability shall
arise from a failure to follow such advice. The officers and
Trustees shall not be required to give any bond hereunder, nor
any surety if a bond is required by applicable law.
(f) The failure to make timely collection of dividends or
interest, or to take timely action with respect to entitlements,
on the Trust's securities issued in emerging countries, shall not
be deemed to be negligence or other fault on the part of any
Agent, and no Agent shall have any liability for such failure or
for any loss or damage resulting from the imposition by any
government of exchange control restrictions which might affect
the liquidity of the Trust's assets or from any war or political
act of any foreign government to which such assets might be
exposed, except, in the case of a Trustee or officer, for
liability resulting from such Trustee's or officer's
Disqualifying Conduct.
(g) The limitation on liability contained in this Article
applies to events occurring at the time a Person serves as an
Agent whether or not such Person is an Agent at the time of any
Proceeding in which liability is asserted.
(h) No amendment or repeal of this Article shall adversely
affect any right or protection of an Agent that exists at the
time of such amendment or repeal.
Section 2. INDEMNIFICATION.
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(a) INDEMNIFICATION BY TRUST. The Trust shall indemnify, out of
Trust Property, to the fullest extent permitted under applicable
law, any Person who was or is a party or is threatened to be made
a party to any Proceeding by reason of the fact that such Person
is or was an Agent of the Trust, against Expenses, judgments,
fines, settlements and other amounts actually and reasonably
incurred in connection with such Proceeding if such Person acted
in good faith or in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of such Person was
unlawful. The termination of any Proceeding by judgment, order,
settlement, conviction or plea of nolo contendere or its
equivalent shall not of itself create a presumption that the
Person did not act in good faith or that the Person had
reasonable cause to believe that the Person's conduct was
unlawful.
(b) EXCLUSION OF INDEMNIFICATION. Notwithstanding any provision
to the contrary contained herein, there shall be no right to
indemnification for any liability arising by reason of the
Agent's Disqualifying Conduct. In respect of any claim, issue or
matter as to which that Person shall have been adjudged to be
liable in the performance of that Person's duty to the Trust or
the Shareholders indemnification shall be made only to the extent
that the court in which that action was brought shall determine,
upon application or otherwise, that in view of all the
circumstances of the case, that Person was not liable by reason
of that Person's Disqualifying Conduct.
(c) REQUIRED APPROVAL. Any indemnification under this Article
shall be made by the Trust if authorized in the specific case on
a determination that indemnification of the Agent is proper in
the circumstances by a majority vote of Trustees, even though
such number of Trustees shall be less than a quorum, who are not
parties to the Proceeding and have no economic or other interest
in connection with such specific case; a committee of such
Trustees designated by majority vote of such Trustees even though
such number of Trustees shall be less than a quorum; or by
independent legal counsel in a written opinion.
(d) ADVANCEMENT OF EXPENSES. Expenses incurred by an Agent in
defending any Proceeding may be advanced by the Trust before the
final disposition of the Proceeding on receipt of an undertaking
by or on behalf of the Agent to repay the amount of the advance
if it shall be determined ultimately that the Agent is not
entitled to be indemnified as authorized in this Article.
(e) OTHER CONTRACTUAL RIGHTS. Nothing contained in this Article
shall affect any right to indemnification to which Persons other
than Trustees and officers of the Trust or any subsidiary thereof
may be entitled by contract or otherwise.
(f) FIDUCIARIES OF EMPLOYEE BENEFIT PLAN. This Article does not
apply to any Proceeding against any trustee, investment manager
or other fiduciary of an employee benefit plan in that Person's
capacity as such, even though that Person may also be an Agent of
the Trust as defined in Section 1 of this Article. Nothing
contained in this Article shall limit any right to
indemnification to which such a trustee, investment manager, or
other fiduciary may be entitled by contract or otherwise which
shall be enforceable to the extent permitted by applicable law
other than this Article.
Section 3. INSURANCE. To the fullest extent permitted by
applicable law, the Board of Trustees shall have the authority to
purchase with Trust Property, insurance for liability and for all
Expenses reasonably incurred or paid or expected to be paid by an
Agent in connection with any Proceeding in which such Agent
becomes involved by virtue of such Agent's actions, or omissions
to act, in its capacity or former capacity with the Trust,
whether or not the Trust would have the power to indemnify such
Agent against such liability.
Section 4. DERIVATIVE ACTIONS. Subject to the requirements set
forth in Section 3816 of the DSTA, a Shareholder or Shareholders
may bring a derivative action on behalf of the Trust only if (i)
the Shareholder or Shareholders first make a pre-suit demand upon
the Board of Trustees to bring the subject action unless an
effort to cause the Board of Trustees to bring such action is
excused; and (ii) holders of a majority of the Shares join in the
bringing of such action. A demand on the Board of Trustees shall
only be excused if a majority of the Board of Trustees, or a
majority of any committee established to consider the merits of
such action, has a material personal financial interest in the
action at issue. A Trustee shall not be deemed to have a
material personal financial interest in an action or otherwise be
disqualified from ruling on a Shareholder demand by virtue of the
fact that such Trustee receives remuneration from his service on
the Board of Trustees of the Trust or on the boards of one or
more investment companies with the same or an affiliated
investment advisor or underwriter.
ARTICLE VIII.
APPROVAL OF CERTAIN TRANSACTIONS
Section 1. VOTE REQUIRED. Notwithstanding any other provision of
the Declaration of Trust to the contrary and subject to the
exceptions provided in this Article VIII, each of the
transactions described in this Article VIII shall require the
approval of the Board of Trustees and the affirmative vote of the
holders of 75% of the Shares entitled to vote to approve, adopt
or authorize such transaction unless such action has been
previously approved, adopted or authorized by the affirmative
vote of two-thirds (66 2/3%) of the Board of Trustees, in which
case the Shareholder vote set forth in Article V, Section 2(a)(1)
shall be required.
Section 2. DISSOLUTION.The Trust shall have perpetual existence
unless dissolved upon:
(a) The vote of the Board of Trustees and Shareholders as set
forth in Section 1 of this Article VIII; or
(b) Upon the occurrence of a dissolution or termination event
pursuant to any other provision of this Declaration of Trust or
the DSTA.
(c) Upon dissolution of the Trust, the Trustees shall (in
accordance with Section 3808 of the DSTA) pay or make reasonable
provision to pay all claims and obligations of the Trust,
including all contingent, conditional or unmatured claims and
obligations known to the Trust, and all claims and obligations
which are known to the Trust, but for which the identity of the
claimant is unknown. If the Trust has sufficient assets, such
claims and obligations shall be paid in full and any such
provisions for payment shall be made in full. If the Trust has
insufficient assets, such claims and obligations shall be paid or
provided for according to their priority and, among claims and
obligations of equal priority, ratably to the extent of assets
available therefore. Any remaining assets of the Trust
(including, without limitation, cash, securities or any
combination thereof) shall be distributed to the Shareholders
ratably according to the number of Shares held of record by the
several Shareholders on the record date for such dissolution
distribution. Upon the winding up of the Trust in accordance
with Section 3808 of the DSTA and its termination, any one (1)
Trustee shall execute, and cause to be filed, a certificate of
cancellation, with the office of the Secretary of State of the
State of Delaware in accordance with the provisions of Section
3810 of the DSTA.
Section 3. MERGER OR CONSOLIDATION; CONVERSION; REORGANIZATION.
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(a) MERGER OR CONSOLIDATION. Pursuant to an agreement of merger
or consolidation, the Board of Trustees may cause the Trust to
merge or consolidate with or into one or more statutory trusts or
"other business entities" (as defined in Section 3801 of the
DSTA) formed or organized or existing under the laws of the State
of Delaware or any other state or the United States or any
foreign country or other foreign jurisdiction. Any such merger
or consolidation shall require approval by vote of the Board of
Trustees and Shareholders as set forth in Section 1 of this
Article VIII. By reference to Section 3815(f) of the DSTA, any
agreement of merger or consolidation approved in accordance with
this Section 3(a) may, without a Shareholder vote, unless
required by the 1940 Act or the requirements of any securities
exchange on which Shares are listed for trading, effect any
amendment to this Declaration of Trust or the By-Laws or effect
the adoption of a new governing instrument if the Trust is the
surviving or resulting statutory trust in the merger or
consolidation, which amendment or new governing instrument shall
be effective at the effective time or date of the merger or
consolidation. In all respects not governed by the DSTA, the
1940 Act or other applicable law, the Board of Trustees shall
have the power to prescribe additional procedures necessary or
appropriate to accomplish a merger or consolidation, including
the power to create one or more separate statutory trusts to
which all or any part of the assets, liabilities, profits or
losses of the Trust may be transferred and to provide for the
conversion of Shares into beneficial interests in such separate
statutory trust or trusts. Upon completion of the merger or
consolidation, if the Trust is the surviving or resulting
statutory trust, any one (1) Trustee shall execute, and cause to
be filed, a certificate of merger or consolidation in accordance
with Section 3815 of the DSTA.
(b) CONVERSION. The Board of Trustees may cause (i) the Trust
to convert to an "other business entity" (as defined in Section
3801 of the DSTA) formed or organized under the laws of the State
of Delaware as permitted pursuant to Section 3821 of the DSTA;
(ii) the Shares to be converted into beneficial interests in
another statutory trust created pursuant to this Section 3 of
this Article VIII, or (iii) the Shares to be exchanged under or
pursuant to any state or federal statute to the extent permitted
by law. Any such statutory conversion, Share conversion or Share
exchange shall require approval by vote of the Board of Trustees
and Shareholders as set forth in Section 1 of this Article VIII;
PROVIDED, HOWEVER, that in all respects not governed by the DSTA,
the 1940 Act, other applicable law or the requirements of any
securities exchange on which Shares are listed for trading, the
Board of Trustees shall have the power to prescribe additional
procedures necessary or appropriate to accomplish a statutory
conversion, Share conversion or Share exchange, including the
power to create one or more separate statutory trusts to which
all or any part of the assets, liabilities, profits or losses of
the Trust may be transferred and to provide for the conversion of
Shares into beneficial interests in such separate statutory trust
or trusts.
(c) REORGANIZATION. The Board of Trustees may cause the Trust
to sell, convey and transfer all or substantially all of the
assets of the Trust to another trust, statutory trust,
partnership, limited partnership, limited liability company,
corporation or other association organized under the laws of any
state in exchange for cash, shares or other securities with such
sale, conveyance and transfer either (a) being made subject to,
or with the assumption by the transferee of, the liabilities of
the Trust, or (b) not being made subject to, or not with the
assumption of, such liabilities. Such sale, conveyance and
transfer shall require approval by vote of the Board of Trustees
and Shareholders as set forth in Section 1 of this Article VIII.
Following such sale, conveyance and transfer, the Board of
Trustees shall distribute such cash, shares or other securities
ratably among the Shareholders; and if all of the assets of the
Trust have been so sold, conveyed and transferred, the Trust
shall be dissolved. In all respects not governed by the DSTA,
the 1940 Act or other applicable law, the Board of Trustees shall
have the power to prescribe additional procedures necessary or
appropriate to accomplish a sale of assets including the power to
create one or more separate statutory trusts to which all or any
part of the assets, liabilities, profits or losses of the Trust
may be transferred and to provide for the conversion of Shares
into beneficial interests in such separate statutory trust or
trusts.
Section 4. RECLASSIFICATION OF THE TRUST. The Board of Trustees
may cause the Trust to be converted from a "closed-end company"
to an "open-end company" (as those terms are defined,
respectively, in Sections 5(a)(2) and 5(a)(1) of the 1940 Act).
Such reclassification of the Trust shall require approval by vote
of the Board of Trustees and Shareholders as set forth in Section
1 of this Article VIII.
Section 5..PRINCIPAL HOLDER TRANSACTIONS.
-----------------------------
(a) The following transactions shall require approval by vote of
the Board of Trustees and Shareholders as set forth in Section 1
of this Article VIII:
(i) Issuance of any securities of the Trust to any
Principal Holder for cash; or
(ii) Sale, lease, or exchange to the Trust, in
exchange for securities of the Trust, of any
assets of any Principal Holder (except assets
having an aggregate fair market value of less
than $1,000,000, aggregating for the purpose
of such aggregate amount, all assets sold,
leased or exchanged in any series of similar
transactions within a twelve-month period).
(b) For purposes of this Section 5, the term "Principal Holder"
shall mean any Person or group (within the meaning of Rule 13d-5
under the Securities Exchange Act of 1934, as amended (the "1934
Act")), that is the beneficial owner, directly or indirectly, of
more than ten percent (10%) of the Shares of the Trust and shall
include any affiliate or associate, as such terms are defined in
clause (2) below, of a Principal Holder, but shall not include
FRI or any affiliated person of FRI. For the purposes of this
Section 5, in addition to the Shares which a Principal Holder
beneficially owns directly, a Principal Holder shall be deemed to
be the beneficial owner of any Shares (1) which the Principal
Holder has the right to acquire pursuant to any agreement or upon
exercise of conversion rights or warrants, or otherwise or (2)
which are beneficially owned, directly or indirectly (including
Shares deemed owned through application of clause (1) above), by
any other Person or group with which the Principal Holder or its
"affiliate" or "associate," as those terms are defined in Rule
12b-2 under the 1934 Act, has any agreement, arrangement, or
understanding for the purpose of acquiring, holding, voting, or
disposing of Shares, or which is its "affiliate" or "associate"
as so defined. For purposes of this Section 5, calculation of
the total Shares of the Trust shall not include Shares deemed
owned through application of clause (1) above.
(c) The Board of Trustees shall have the power and duty to
determine for the purposes of this Section 5, on the basis of
information known to the Trust whether (i) a Person or group
beneficially owns more than ten percent (10%) of the Shares, (ii)
a corporation, person or entity is an "affiliate" or "associate"
(as defined above) of another, and (iii) the assets being
acquired or leased by or to the Trust have an aggregate fair
market value of less than $1,000,000 (as defined above). Any
such determination shall be conclusive and binding for all
purposes of this Section 5 in the absence of manifest error.
ARTICLE IX.
AMENDMENTS
Section 1. AMENDMENTS GENERALLY. Subject to the provisions of
Section 3(a) of Article VIII and Section 2 of this Article IX,
this Declaration of Trust may be restated and/or amended at any
time by the Board of Trustees, without approval of the
Shareholders. The Certificate of Trust shall be restated and/or
amended at any time by the Board of Trustees, without Shareholder
approval, to correct any inaccuracy contained therein. Any such
restatement and/or amendment of the Certificate of Trust shall be
executed by at least one (1) Trustee and shall be effective
immediately upon its filing with the office of the Secretary of
State of the State of Delaware or upon such future date as may be
stated therein.
Section 2. SPECIAL AMENDMENTS. Notwithstanding any other
provision of this Declaration of Trust or the By-Laws, the
amendment or repeal of Article IV, Sections 1, 2 and 3, Article
V, Article VII, Article VIII and this Article IX of this
Declaration of Trust shall require the approval of the Board of
Trustees and the affirmative vote of holders of at least
two-thirds (66 2/3%) of the Shares entitled to vote, unless such
action has previously been approved, adopted or authorized by the
affirmative vote of two-thirds (66 2/3%) of the Board of
Trustees, in which case the Shareholder vote set forth in Article
V, Section 2(a)(1) shall be required.
ARTICLE X.
MISCELLANEOUS
Section 1. REFERENCES; HEADINGS; COUNTERPARTS. In this
Declaration of Trust and in any such restatements and/or
amendments, references to this instrument, and all expressions of
similar effect to "herein," "hereof' and "hereunder," shall be
deemed to refer to this instrument as amended or affected by any
such restatements and/or amendments. Headings are placed herein
for convenience of reference only and shall not be taken as a
part hereof or control or affect the meaning, construction or
effect of this instrument. Whenever the singular number is used
herein, the same shall include the plural; and the neuter,
masculine and feminine genders shall include each other, as
applicable. Any references herein to specific sections of the
DSTA, the Code or the 1940 Act shall refer to such sections as
amended from time to time or any successor sections thereof.
This instrument may be executed in any number of counterparts,
each of which shall be deemed an original.
Section 2. APPLICABLE LAW. This Declaration of Trust is created
under and is to be governed by and construed and administered
according to the laws of the State of Delaware and the applicable
provisions of the 1940 Act and the Code. The Trust shall be a
Delaware statutory trust pursuant to the DSTA, and without
limiting the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a statutory trust.
Section 3. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
(a) The provisions of this Declaration of Trust are severable,
and if the Board of Trustees shall determine, with the advice of
counsel, that any of such provisions is in conflict with the 1940
Act, the Code, the DSTA, or with other applicable laws and
regulations, the conflicting provision shall be deemed not to
have constituted a part of this Declaration of Trust from the
time when such provisions became inconsistent with such laws or
regulations; PROVIDED, HOWEVER, that such determination shall not
affect any of the remaining provisions of this Declaration of
Trust or render invalid or improper any action taken or omitted
prior to such determination.
(b) If any provision of this Declaration of Trust shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Declaration
of Trust in any jurisdiction.
Section 4. STATUTORY TRUST ONLY. It is the intention of the
Trustees to create hereby a statutory trust pursuant to the DSTA,
and thereby to create the relationship of trustees and beneficial
owner within the meaning of the DSTA between, respectively, the
Trustees and each Shareholder. It is not the intention of the
Trustees to create a general or limited partnership, limited
liability company, joint stock association, corporation,
bailment, or any form of legal relationship other than a
statutory trust pursuant to the DSTA. Nothing in this
Declaration of Trust shall be construed to make the Shareholders,
either by themselves or with the Trustees, partners or members of
a joint stock association.
Section 5. USE OF THE NAMES "FRANKLIN" OR "XXXXXXXXX".(a)The Board
of Trustees expressly agrees and acknowledges that the names
"Franklin" and "Xxxxxxxxx" are the sole property of Franklin
Resources, Inc. ("FRI"). FRI has granted to the Trust a
non-exclusive license to use such names as part of the name of
the Trust now and in the future. The Board of Trustees further
expressly agrees and acknowledges that the non-exclusive license
granted herein may be terminated by FRI if the Trust ceases to
use FRI or one of its Affiliates as Investment Adviser or to use
other Affiliates or successors of FRI for such purposes. In such
event, the nonexclusive license may be revoked by FRI and the
Trust shall cease using the names "Franklin" and "Xxxxxxxxx," or
any name misleadingly implying a continuing relationship between
the Trust and FRI or any of its Affiliates, as part of its name
unless otherwise consented to by FRI or any successor to its
interests in such names.
The Board of Trustees further understands and agrees that so
long as FRI and/or any future advisory Affiliate of FRI shall
continue to serve as the Trust's Investment Adviser, other
registered closed- or open-end investment companies ("funds") as
may be sponsored or advised by FRI or its Affiliates shall have
the right permanently to adopt and to use the names "Franklin"
and "Xxxxxxxxx" in their names and in the names of any series or
class of shares of such funds.
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IN WITNESS WHEREOF, the Trustee named below does hereby make
and enter into this Agreement and Declaration of Trust as of the
date first written above.
/s/ Xxxxxxxxxxx Xxxxxxxx
