AGREEMENT AND DECLARATION OF TRUST
OF
FRANKLIN MUTUAL RECOVERY FUND
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. OWNERSHIP OF SHARES ...................................6
SECTION 3. SALE OF SHARES ........................................7
SECTION 4. STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY ..7
SECTION 5. POWER OF BOARD OF TRUSTEES TO MAKE TAX STATUS ELECTION..7
SECTION 6. ESTABLISHMENT AND DESIGNATION OF SERIES AND CLASSES ....7
SECTION 7. SEPARATE AND DISTINCT SERIES ..........................8
(a) ASSETS HELD WITH RESPECT TO A PARTICULAR SERIES ...8
(b) LIABILITIES HELD WITH RESPECT TO A PARTICULAR
SERIES OR CLASS ...................................8
(c) DIVIDENDS, DISTRIBUTIONS AND REPURCHASES ..........9
(d) VOTING .........................................10
(e) EQUALITY ........................................10
(f) FRACTIONS ........................................10
(g) EXCHANGE PRIVILEGE ...............................10
(h) COMBINATION OF SERIES ............................10
(i) DISSOLUTION OR TERMINATION .......................10
SECTION 8. INDEMNIFICATION OF SHAREHOLDERS .....................11
ARTICLE IV. THE BOARD OF TRUSTEES .....................................11
SECTION 1. NUMBER, ELECTION, TERM, REMOVAL AND RESIGNATION .......11
SECTION 2. TRUSTEE ACTION BY WRITTEN CONSENT WITHOUT A MEETING ...12
SECTION 3. POWERS; OTHER BUSINESS INTERESTS; QUORUM AND REQUIRED
VOTE .................................................12
(a) POWERS .........................................12
(b) OTHER BUSINESS INTERESTS ........................13
(c) QUORUM AND REQUIRED VOTE ........................13
SECTION 4. PAYMENT OF EXPENSES BY THE TRUST .....................13
SECTION 5. PAYMENT OF EXPENSES BY SHAREHOLDERS ..................14
SECTION 6. OWNERSHIP OF TRUST PROPERTY ..........................14
SECTION 7. SERVICE CONTRACTS ...................................14
ARTICLE V. SHAREHOLDERS' VOTING POWERS AND MEETINGS ..................15
SECTION 1. VOTING POWERS ........................................15
SECTION 2. QUORUM AND REQUIRED VOTE ............................15
SECTION 3. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A
MEETING .............................................16
SECTION 4. RECORD DATES ........................................16
SECTION 5. ADDITIONAL PROVISIONS ...............................17
ARTICLE VI. NET ASSET VALUE; DISTRIBUTIONS; REPURCHASES;
TRANSFERS ...............................................17
SECTION 1. DETERMINATION OF NET ASSET VALUE, NET INCOME AND
DISTRIBUTIONS .......................................17
SECTION 2. REPURCHASE OF SHARES WITH SHAREHOLDER CONSENT .......18
SECTION 3. REPURCHASE OF SHARES WITHOUT SHAREHOLDER CONSENT .....19
SECTION 4. TRANSFER OF SHARES. SHARES SHALL BE TRANSFERABLE IN
ACCORDANCE WITH THE PROVISIONS OF THE BY-LAWS .......19
ARTICLE VII. LIMITATION OF LIABILITY AND INDEMNIFICATION OF AGENT19
SECTION 1. LIMITATION OF LIABILITY ............................19
SECTION 2. INDEMNIFICATION .....................................20
(a) INDEMNIFICATION BY TRUST ........................20
(b) EXCLUSION OF INDEMNIFICATION ....................20
(c) REQUIRED APPROVAL ..............................20
(d) ADVANCEMENT OF EXPENSES .........................21
(e) OTHER CONTRACTUAL RIGHTS ........................21
(f) FIDUCIARIES OF EMPLOYEE BENEFIT PLAN ...........21
SECTION 3. INSURANCE ............................................21
SECTION 4. DERIVATIVE ACTIONS ...................................21
ARTICLE VIII. APPROVAL OF CERTAIN TRANSACTIONS ......................22
SECTION 1. VOTE REQUIRED .......................................22
SECTION 2. DISSOLUTION OF TRUST OR SERIES .....................22
SECTION 3. MERGER OR CONSOLIDATION; CONVERSION; REORGANIZATION ..23
(a) MERGER OR CONSOLIDATION .........................23
(b) CONVERSION ....................................23
(c) REORGANIZATION .................................24
SECTION 4. RECLASSIFICATION OF THE TRUST ........................24
SECTION 5. PRINCIPAL HOLDER TRANSACTIONS ........................25
ARTICLE IX. AMENDMENTS ...............................................26
SECTION 1. AMENDMENTS GENERALLY ...............................26
SECTION 2. SPECIAL AMENDMENTS ...................................26
ARTICLE X. MISCELLANEOUS ............................................26
SECTION 1. REFERENCES; HEADINGS; COUNTERPARTS ...................26
SECTION 2. APPLICABLE LAW .....................................26
SECTION 3. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS .......26
SECTION 4. STATUTORY TRUST ONLY ................................27
SECTION 5. USE OF THE NAMES "FRANKLIN" OR "XXXXXXXXX" ..........27
AGREEMENT AND DECLARATION OF TRUST
OF
FRANKLIN MUTUAL RECOVERY FUND
AGREEMENT AND DECLARATION OF TRUST made as of this 31st day of January,
2003, by the Trustees hereunder, and by the holders of Shares to be issued by
the Trust hereunder as hereinafter provided.
WITNESSETH:
WHEREAS this Trust is being formed to carry on the business of a
closed-end management investment company as defined in the 1940 Act; and
WHEREAS this Trust is authorized to issue its Shares in separate Series,
to divide Shares of any Series into two or more classes and to issue classes of
any Series, all in accordance with the provisions hereinafter set forth; 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; and
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 This Trust shall be known as "Franklin Mutual Recovery
Fund" 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" 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 Delaware Statutory Trust Act, as amended from
time to time, 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;
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(i) "DECLARATION OF TRUST" shall mean this Agreement and
Declaration of Trust, as amended or restated from time to time;
(j) "GENERAL LIABILITIES" shall have the meaning given it in
Article III, Section 7(b) of this Declaration Trust;
(k) "INTERESTED PERSON" shall have the meaning given that term
in the 1940 Act;
(l) "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;
(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) "SERIES" shall refer to each Series of Shares established
and designated under and in accordance with the provisions of Article III hereof
and shall mean an entity such as that described in the 1940 Act;
(p) "SHAREHOLDER" shall mean a record owner of Shares pursuant
to the By-Laws;
(q) "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;
(r) "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;
(s) "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, or one or more of any Series thereof, including, without
limitation, the rights referenced in Article X, Section 5 hereof;
(t) "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
(u) "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 directly, or if
one or more Series is established hereunder, through one or more Series,
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 or one or more of its
Series. 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.
(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. 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 in accordance with the 1940 Act. The different
Series and classes shall be established and designated pursuant to Article
III, Section 6 hereof. If no separate Series or classes of Series shall be
established, the Shares shall have the rights, powers and duties provided
for herein and in Article III, Section 7 hereof to the extent relevant and
not otherwise provided for herein, and all references to Series and classes
shall be construed (as the context may require) to refer to the Trust. The
fact that a Series shall have initially been established and designated
without any specific establishment or designation of classes (i.e., that
all Shares of such Series are initially of a single class) shall not limit
the authority of the Board of Trustees to establish and designate separate
classes of said Series. The fact that a Series shall have more than one
established and designated class, shall not limit the authority of the
Board of Trustees to establish and designate additional classes of said
Series, or to establish and designate separate classes of the previously
established and designated classes.
(b) Subject to and except as otherwise provided in Section 23
of the 1940 Act, and the rules and regulations adopted thereunder, the
Board of Trustees shall have the power to issue authorized, but unissued
shares of beneficial interest of the Trust, or any Series and class
thereof, from time to time on such terms and for such consideration paid
wholly or partly in cash or securities as may be determined from time to
time by the Board of Trustees, subject to any requirements or limitations
of the 1940 Act. 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. The Board of Trustees may classify or
reclassify any unissued shares of beneficial interest or any shares of
beneficial interest of the Trust or any Series or class thereof, that were
previously issued and are reacquired, into one or more Series or classes
that may be established and designated from time to time. Notwithstanding
the foregoing, the Trust and any Series thereof may acquire, hold, sell and
otherwise deal in, for purposes of investment or otherwise, the Shares of
any other Series of the Trust or Shares of the Trust, and such Shares shall
not be deemed treasury shares or cancelled.
(c) Subject to the provisions of this Article III, each Share
shall entitle the holder to the voting rights as provided in Article V
hereof. 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 or any Series thereof. The Board of Trustees may from
time to time divide or combine the Shares of the Trust or any particular
Series thereof into a greater or lesser number of Shares of the Trust or
that Series, respectively. Such division or combination shall not
materially change the proportionate beneficial interests of the holders of
Shares of the Trust or that Series, as the case may be, in the Trust
Property at the time of such division or combination that is held with
respect to the Trust or that Series, as the case may be, or materially
affect the rights of Shares of the Trust or any other Series.
(d) 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 or any Series and class thereof, 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 or
any Series 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. OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded on the books of the Trust kept by the Trust or by a transfer or other
duly authorized agent for the Trust, which books shall be maintained
separately for the Shares of each Series and class thereof that has been
established and designated. No certificates certifying the ownership of
Shares shall be issued except as the Board of Trustees may otherwise
determine from time to time. The Board of Trustees may make such rules not
inconsistent with the provisions of the 1940 Act as it considers
appropriate for the issuance of Share certificates, the transfer of Shares
of the Trust and each Series and class thereof, if any, and similar
matters. The record books of the Trust as kept by the Trust or any transfer
or other duly authorized agent, as the case may be, shall be conclusive as
to who are the Shareholders of the Trust and each Series and class thereof
and as to the number of Shares of the Trust and each Series and class
thereof held from time to time by each such Shareholder.
Section 3. SALE OF SHARES. Subject to the 1940 Act and applicable law,
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 as
the Board of Trustees may from time to time authorize. Each sale shall be
credited to the individual purchaser's account in the form of full or
fractional Shares of the Trust or such Series thereof (and class thereof,
if any), as the purchaser may select at the net asset value per Share,
subject to Section 23 of the 1940 Act, and the rules and regulations
adopted thereunder; PROVIDED, HOWEVER, that the Board of Trustees may, in
its sole discretion, permit the Principal Underwriter to impose a sales
charge upon any such sale. 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 4. 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
and any Series thereof shall not operate to dissolve the Trust or any such
Series, 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, the Trustees or any such Series,
but entitles such representative only to the rights of said deceased,
incapacitated, dissolved, terminated or bankrupt Shareholder under this
Declaration of Trust and the By-Laws. 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 5. 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 6. ESTABLISHMENT AND DESIGNATION OF SERIES AND CLASSES. 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 (including variations in the relative rights and
preferences as between the different Series and classes 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 7. SEPARATE AND DISTINCT SERIES. Each Series shall be separate
and distinct from any other Series, separate and distinct records on the books
of the Trust shall be maintained for each Series, and the assets and liabilities
belonging to any such Series shall be held and accounted for separately from the
assets and liabilities of the Trust or any other Series. Each class of a Series
shall be separate and distinct from any other class of the Series. As
appropriate, in a manner determined by the Board of Trustees, the liabilities
belonging to any such class of the Series shall be held and accounted for
separately from the liabilities of the Trust, the Series or any other class of
the Series and separate and distinct records on the books of the Trust for the
class of the Series shall be maintained for this purpose. Subject to Article II
hereof, each such Series shall operate as a separate and distinct investment
medium, with separately defined investment objectives and policies and a
distinct investment purpose.
Shares of each Series (and class thereof where applicable) established and
designated pursuant to Section 6, unless otherwise provided to the extent
permitted by the DSTA, in the resolution establishing and designating such
Series or class, shall have the following rights, powers and duties:
(a) ASSETS HELD WITH RESPECT TO A PARTICULAR SERIES. All
consideration received by the Trust for the issue or sale of Shares of a
particular Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof
from whatever source derived, including, without limitation, any proceeds
derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably be held with respect to
that Series for all purposes, subject only to the rights of creditors with
respect to that Series, and shall be so recorded upon the books of account
of the Trust. Such consideration, assets, income, earnings, profits and
proceeds thereof, from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or liquidation of
such assets, and any funds or payments derived from any reinvestment of
such proceeds, in whatever form the same may be, are herein referred to as
"assets held with respect to" that Series. In the event that there are any
assets, income, earnings, profits and proceeds thereof, funds or payments
which are not readily identifiable as assets held with respect to any
particular Series (collectively "General Assets"), the Board of Trustees,
or an appropriate officer as determined by the Board of Trustees, shall
allocate such General Assets to, between or among any one or more of the
Series in such manner and on such basis as the Board of Trustees, in its
sole discretion, deems fair and equitable, and any General Asset so
allocated to a particular Series shall be held with respect to that Series.
Each such allocation by or under the direction of the Board of Trustees
shall be conclusive and binding upon the Shareholders of all Series for all
purposes.
(b) LIABILITIES HELD WITH RESPECT TO A PARTICULAR SERIES OR
CLASS. The assets of the Trust held with respect to a particular Series
shall be charged against the liabilities, debts, obligations, costs,
charges, reserves and expenses of the Trust incurred, contracted for or
otherwise existing with respect to such Series. Such liabilities, debts,
obligations, costs, charges, reserves and expenses incurred, contracted for
or otherwise existing with respect to a particular Series are herein
referred to as "liabilities held with respect to" that Series. Any
liabilities, debts, obligations, costs, charges, reserves and expenses of
the Trust which are not readily identifiable as being liabilities held with
respect to any particular Series (collectively "General Liabilities") shall
be allocated by the Board of Trustees, or an appropriate officer as
determined by the Board of Trustees, to and among any one or more of the
Series in such manner and on such basis as the Board of Trustees in its
sole discretion deems fair and equitable. Each allocation of liabilities,
debts, obligations, costs, charges, reserves and expenses by or under the
direction of the Board of Trustees shall be conclusive and binding upon the
Shareholders of all Series for all purposes. All Persons who have extended
credit that has been allocated to a particular Series, or who have a claim
or contract that has been allocated to any particular Series, shall look,
and shall be required by contract to look exclusively, to the assets of
that particular Series for payment of such credit, claim, or contract. In
the absence of an express contractual agreement so limiting the claims of
such creditors, claimants and contract providers, each creditor, claimant
and contract provider shall be deemed nevertheless to have impliedly agreed
to such limitation.
Subject to the right of the Board of Trustees in its discretion to
allocate General Liabilities as provided herein, the debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to a particular Series, whether such Series is now authorized and
existing pursuant to this Declaration of Trust or is hereafter authorized and
existing pursuant to this Declaration of Trust, shall be enforceable against the
assets held with respect to that Series only, and not against the assets of any
other Series or the Trust generally and none of the debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to the Trust generally or any other Series thereof shall be enforceable
against the assets held with respect to such Series. Notice of this limitation
on liabilities between and among Series shall be set forth in the Certificate of
Trust to be filed in the Office of the Secretary of State of the State of
Delaware pursuant to the DSTA, and upon the giving of such notice in the
Certificate of Trust, the statutory provisions of Section 3804 of the DSTA
relating to limitations on liabilities between and among Series (and the
statutory effect under Section 3804 of setting forth such notice in the
Certificate of Trust) shall become applicable to the Trust and each Series.
Liabilities, debts, obligations, costs, charges, reserves and expenses
related to the distribution of, and other identified expenses that should
properly be allocated to, the Shares of a particular class may be charged to and
borne solely by such class. The bearing of expenses solely by a particular class
of Shares may be appropriately reflected (in a manner determined by the Board of
Trustees) and may affect the net asset value attributable to, and the dividend,
redemption and liquidation rights of, such class. Each allocation of
liabilities, debts, obligations, costs, charges, reserves and expenses by or
under the direction of the Board of Trustees shall be conclusive and binding
upon the Shareholders of all classes for all purposes. All Persons who have
extended credit that has been allocated to a particular class, or who have a
claim or contract that has been allocated to any particular class, shall look,
and may be required by contract to look exclusively, to that particular class
for payment of such credit, claim, or contract.
(c) DIVIDENDS, DISTRIBUTIONS AND REPURCHASES. Notwithstanding
any other provisions of this Declaration of Trust, including, without
limitation, Article VI hereof, no dividend or distribution including,
without limitation, any distribution paid upon dissolution of the Trust or
of any Series with respect to, nor any repurchase of, the Shares of any
Series or class of such Series shall be effected by the Trust other than
from the assets held with respect to such Series, nor, except as
specifically provided in this Section 7, shall any Shareholder of any
particular Series otherwise have any right or claim against the assets held
with respect to any other Series or the Trust generally except, in the case
of a right or claim against the assets held with respect to any other
Series, to the extent that such Shareholder has such a right or claim
hereunder as a Shareholder of such other Series. The Board of Trustees
shall have full discretion, to the extent not inconsistent with the 1940
Act, to determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive and
binding upon the Shareholders.
(d) VOTING. All Shares of the Trust entitled to vote on a matter
shall vote on the matter, separately by Series and, if applicable, by class,
PROVIDED THAT: (1) where the 1940 Act requires all Shares of the Trust to be
voted in the aggregate without differentiation between the separate Series
or classes, then all of the Trust's Shares shall vote in the aggregate; and
(2) if any matter affects only the interests of some but not all Series or
classes, then only the Shareholders of such affected Series or classes
shall be entitled to vote on the matter.
(e) EQUALITY. Each Share of any particular Series shall be equal
to each other Share of such Series (subject to the rights and preferences with
respect to separate classes of such Series).
(f) FRACTIONS. A fractional Share of a Series shall carry
proportionately all the rights and obligations of a whole Share of such Series,
including rights with respect to voting, receipt of dividends and distributions,
redemption of Shares and dissolution of the Trust or that Series.
(g) EXCHANGE PRIVILEGE. The Board of Trustees shall have the
authority to provide that the holders of Shares of any Series shall have the
right to exchange said Shares for Shares of one or more other Series in
accordance with such requirements and procedures as may be established by the
Board of Trustees, and in accordance with the 1940 Act.
(h) COMBINATION OF SERIES. The Board of Trustees shall have the
authority, without the approval of the Shareholders of any Series unless
otherwise required by applicable law, to combine the assets and liabilities held
with respect to any two or more Series into assets and liabilities held with
respect to a single Series; PROVIDED that upon completion of such combination of
Series, the proportionate interest of each Shareholder, in the assets and
liabilities held with respect to the combined Series shall equal the
proportionate interest of each such Shareholder in the assets and liabilities
held with respect to each Series that was combined.
(i) DISSOLUTION OR TERMINATION. Any particular Series shall be
dissolved upon the occurrence of the applicable dissolution events set forth in
Article VIII, Section 1 hereof. Upon dissolution of a particular Series, the
Trustees shall wind up the affairs of such Series in accordance with Article
VIII Section 1 hereof and thereafter, rescind the establishment and designation
thereof. The Board of Trustees shall terminate any particular class and rescind
the establishment and designation thereof upon the vote of the holders of not
less than a majority of the Shares outstanding and entitled to vote of such
class. In addition, at any time there are no Shares outstanding of a particular
class, the Board of Trustees may terminate such class and rescind the
establishment and designation thereof; PROVIDED, however, that upon the
rescission of the establishment and designation of any particular Series, every
class of such Series shall thereby be terminated and its establishment and
designation rescinded. Each resolution of the Board of Trustees pursuant to this
Section 7(i) shall be incorporated herein by reference upon adoption.
Section 8. 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 of the
Trust or a Shareholder of a particular Series thereof, 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 or out of the assets of such
Series thereof, as the case may be, 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, 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 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) shall
execute a consent or consents in writing to adopt the By-Laws. Each 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 one (1) 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) Each Trustee shall hold office for the lifetime of the Trust
or until such Trustee's earlier death, resignation, removal or inability
otherwise to serve, or, if sooner than any of such events, until the next
meeting of Shareholders called for the purpose of electing Trustees or
consent of Shareholders in lieu thereof for the election of Trustees, and
until the election and qualification of his or her successor.
(d) Any Trustee may be removed, with or without cause, by the
Shareholders, upon the vote of the holders of 75% of the Shares entitled to
vote.
(e) 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.
Section 2. TRUSTEE ACTION BY WRITTEN CONSENT WITHOUT A MEETING. 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 (including every Series thereof) 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 (including every Series thereof). 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 (including every Series thereof) 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; (13) establish and designate from time to
time, in accordance with the provisions of Article III, Section 6 hereof, any
Series or class thereof; and (14) 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 any 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 or any Series (or class) thereof 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 (including every Series thereof) 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 or any Series thereof, of any nature
and description, independently or with or for the account of others. None of the
Trust, any Series thereof or 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 any particular Series or class thereof, or partly out of the principal
and partly out of the income of the Trust or any particular Series or class
thereof, and charge or allocate the same to, between or among such one or more
of the Series or classes that may be established or designated pursuant to
Article III, Section 6 hereof, as such officer deems fair, all expenses, fees,
charges, taxes and liabilities incurred by or arising in connection with the
maintenance or operation of the Trust or a particular Series or class
thereof, 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 of the Trust, or any Shareholder of any particular Series
thereof, 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.
(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 or for any Series thereof 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 or a particular Series' investments, or to
engage in such other activities, including administrative services, as may
specifically be delegated to such party.
(b) 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 shares of beneficial interest of the Trust or
one or more of the Series or classes thereof, 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 or one or more of the
Series or classes thereof.
(c) 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 or one or more of its Series or classes, as the Board of Trustees
determines to be in the best interests of the Trust, such Series or class, 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, any Series
thereof 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. Subject to the provisions of Article III
hereof, the Shareholders shall have the power to vote only (i) for the
election 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.
Subject to Article III hereof, 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.
(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 reqired 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. When a separate vote by one or more Series or classes is required,
a majority of the Shares of each such Series or class entitled to vote at a
Shareholders' meeting of such Series or class, which are present in person or
represented by proxy, shall constitute a quorum at the Shareholders'
meeting of such Series or class, except when a larger quorum is required by
applicable law or the requirements of any securities exchange on which
Shares of such Series or class are listed for trading, in which case such
quorum shall comply with such requirements. Subject to any provision of
this Declaration of Trust, the By-Laws, the 1940 Act or other 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. Pursuant to Article III, Section 7(d) hereof,
where a separate vote by Series and, if applicable, by classes is required,
the preceding sentence shall apply to such separate votes by Series and
classes.
(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, (i) will be included for purposes
of determining whether a quorum is present, and (ii) will have no effect on
proposals which require a plurality or majority of votes cast for approval, but
(iii) 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.
(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 and 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:
(iii) 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.
(iv) 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 of the Trust
or any Series or class thereof who are entitled to receive payment of any
dividend or of any other distribution of assets of the Trust or any Series
or class thereof, 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. Nothing in this Section shall be
construed as precluding the Board of Trustees from setting different record
dates for different Series or classes.
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.
(a) Subject to Article III hereof, 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 or any
Series or class thereof, respectively, that shall yield to the Trust or
such Series or class not less than the net asset value thereof, at which
price the Shares of the Trust or such Series or class, respectively, shall
be offered for sale, subject to any other requirements or limitations of
the 1940 Act.
(b) Subject to Article III hereof, the Board of Trustees may,
subject to the 1940 Act, prescribe and shall set forth in the By-Laws, 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 of the Trust or any
Series or class thereof, or net income attributable to the Shares of the
Trust or any Series or class thereof or the declaration and payment of
dividends and distributions on the Shares of the Trust or any Series or
class thereof, as it may deem necessary or desirable.
(c) The Shareholders of the Trust or any Series or class, if
any, shall be entitled to receive dividends and distributions, when, if and
as declared by the Board of Trustees with respect thereto, provided that
with respect to classes, such dividends and distributions shall comply with
the 1940 Act. The right of Shareholders to receive dividends or other
distributions on Shares of any class may be set forth in a plan adopted by
the Board of Trustees and amended from time to time pursuant to the 1940
Act. No Share shall have any priority or preference over any other Share of
the same Series with respect to dividends or distributions paid in the
ordinary course of business or distributions upon dissolution of the Trust
or of such Series made pursuant to Article VIII, Section 1 hereof; provided
however, that if the Shares of a Series are divided into classes thereof,
no Share of a particular class shall have any priority or preference over
any other Share of the same class with respect to dividends or
distributions paid in the ordinary course of business or distributions upon
dissolution of the Trust or of such Series made pursuant to Article VIII,
Section 1 hereof. All dividends and distributions shall be made ratably
among all Shareholders of the Trust or a particular Series from the Trust
Property held with respect to the Trust or such Series thereof,
respectively, according to the number of Shares of the Trust or such Series
held of record by such Shareholders on the record date for any dividend or
distribution; provided however, that if the Shares of a Series are divided
into classes thereof, all dividends and distributions from the Trust
Property held with respect to such Series shall be distributed to each
class of such Series according to the net asset value computed for such
class and within such particular class, shall be distributed ratably to the
Shareholders of such class according to the number of Shares of such class
held of record by such Shareholders on the record date for any dividend or
distribution. Dividends may be paid in cash or in kind.
(d) Before payment of any dividend there may be set aside out of
any funds of the Trust, or the applicable Series thereof, 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 any Series thereof, or for such other lawful
purpose as the Board of Trustees shall deem to be in the best interests of
the Trust, or the applicable Series, as the case may be, 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
of the Trust set forth in this Section 2 are subject to the provision that
such obligations may be suspended or postponed under the circumstances
provided in the 1940 Act or other applicable law, and such suspension or
postponement may thereafter be terminated, by the Board of Trustees, by the
vote required under the 1940 Act or other applicable law.
(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 Trust or the applicable Series. Subject to
the foregoing, the fair value, selection and quantity of securities or
other property of the Trust or the applicable Series so paid or delivered
as all or part of the repurchase price shall be determined by or under
authority of the Board of Trustees. Subject to applicable law, the Trust or
the applicable Series shall not 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 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.
(g) 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.
(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 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. 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.
(a) Notwithstanding any other provision of this 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
(other than transactions with respect to a particular Series) 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.
(b) Notwithstanding any other provision of this Declaration of
Trust to the contrary, each of the transactions described in this Article
VIII with respect to a particular Series shall require the approval of the
Board of Trustees and the affirmative vote of the holders of 75% of the
Shares of that Series entitled to vote to approve, adopt or authorize such
transaction unless such transaction 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 "affirmative vote of a majority of the
outstanding voting securities" (as defined herein) of the particular Series
entitled to vote at a Shareholders' meeting of such Series at which a
quorum is present, shall be required.
Section 2. DISSOLUTION OF TRUST OR SERIES. The Trust and each Series
shall have perpetual existence, except that the Trust (or a particular Series)
shall be dissolved:
(a) With respect to the Trust or a particular Series, upon the
vote of the Board of Trustees and the Shareholders of the Trust or the
particular Series, as applicable, as set forth in Section 1 of this Article
VIII; or
(b) With respect to the Trust or a particular Series, upon the
occurrence of a dissolution or termination event pursuant to any other provision
of this Declaration of Trust or the DSTA; or
(c) With respect to any Series, upon any event that causes the
dissolution of the Trust.
(d) Upon dissolution of the Trust (or a particular Series, as
the case may be), 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 and/or each Series (or the particular Series, as
the case may be), 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 there are sufficient assets held with respect to the Trust
and/or each Series of the Trust (or the particular Series, as the case may
be), such claims and obligations shall be paid in full and any such
provisions for payment shall be made in full. If there are insufficient
assets held with respect to the Trust and/or each Series of the Trust (or
the particular Series, as the case may be), 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 (including, without limitation,
cash, securities or any combination thereof) held with respect to the Trust
and/or each Series of the Trust (or the particular Series, as the case may
be) shall be distributed to the Shareholders of the Trust and/or each
Series of the Trust (or the particular Series, as the case may be) ratably
according to the number of Shares of the Trust and/or such Series thereof
(or the particular Series, as the case may be) held of record by the
several Shareholders on the date for such dissolution distribution;
provided, however, that if the Shares of a Series are divided into classes
thereof, any remaining assets (including, without limitation, cash,
securities or any combination thereof) held with respect to such Series
shall be distributed to each class of such Series according to the net
asset value computed for such class and within such particular class, shall
be distributed ratably to the Shareholders of such class according to the
number of Shares of such class held of record by the several Shareholders
on the 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.
(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, 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 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 of the Trust or any
Series to be converted into beneficial interests in another statutory trust
(or series thereof) 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 the Shareholders of the Trust or the
particular Series, as applicable, 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 of the Trust or any Series thereof into beneficial interests in such
separate statutory trust or trusts (or series thereof).
(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
("sale of Trust assets") or all or substantially all of the assets
associated with any one or more Series ("sale of such Series' assets"), to
another trust, statutory trust, partnership, limited partnership, limited
liability company, corporation or other association organized under the
laws of any state, or to one or more separate series thereof, or to the
Trust to be held as assets associated with one or more other Series of the
Trust, in exchange for cash, shares or other securities (including, without
limitation, in the case of a transfer to another Series of the Trust,
Shares of such other Series) with such sale, conveyance and transfer either
(a) being made subject to, or with the assumption by the transferee of, the
liabilities associated with the Trust or the liabilities associated with
the Series the assets of which are so transferred, as applicable, or (b)
not being made subject to, or not with the assumption of, such liabilities.
Any such sale, conveyance and transfer shall require approval by vote of
the Board of Trustees and the Shareholders of the Trust or the particular
Series, as applicable, as set forth in Section 1 of this Article VIII.
Following such sale of Trust assets, the Board of Trustees shall distribute
such cash, shares or other securities ratably among the Shareholders of the
Trust (giving due effect to the assets and liabilities associated with and
any other differences among the various Series the assets associated with
which have been so sold, conveyed and transferred, and due effect to the
differences among the various classes within each such Series). Following a
sale of such Series' assets, the Board of Trustees shall distribute such
cash, shares or other securities ratably among the Shareholders of such
Series (giving due effect to the differences among the various classes
within each such Series). 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, 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 such sale, conveyance and
transfer, 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:
(v) Issuance of any securities of the Trust to any
Principal Holder for cash; or
(vi) 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 an instrument in writing, by
action of 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 restatement hereof and/or amendment hereto, references to this
instrument, and all expressions of similar effect to "herein," "hereof' and
"hereunder," shall be deemed to refer to this instrument as so restated and/or
amended. 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 trustee and beneficial owners 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.
(b) 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.
[The remainder of this page has been intentionally left blank.]
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/ Xxxxxx X. Xxxxxxx
---------------------------
Xxxxxx X. Xxxxxxx
