EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan"), is made as of this
5th day of March, 2003, by and between Franklin Xxxxxxxxx International Trust
(the "Trust"), a statutory trust created under the laws of the State of
Delaware in 1991, with its principal place of business at Xxx Xxxxxxxx Xxxxxxx,
Xxx Xxxxx, Xxxxxxxxxx 00000-0000, on behalf of its series, Xxxxxxxxx Pacific
Growth Fund ("Pacific Growth Fund"), and Xxxxxxxxx Funds, Inc. (the "Company"),
a corporation organized under the laws of the State of Maryland in 1977 with
its principal place of business at 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000, on behalf of its series, Xxxxxxxxx Foreign Fund
("Foreign Fund").
PLAN OF REORGANIZATION
The reorganization (hereinafter referred to as the "Plan of Reorganization")
will consist of (i) the acquisition by the Company on behalf of Foreign Fund,
of substantially all of the property, assets and goodwill of Pacific Growth
Fund in exchange solely for full and fractional Class A, Class C and Advisor
Class shares of common stock, par value $1.00 per share, of Foreign Fund
("Foreign Fund Shares"); (ii) the distribution Foreign Fund Shares to the
shareholders of Class A, Class C and Advisor Class share of Pacific Growth Fund
(the "Pacific Growth Fund Shares"), according to their respective interests in
Pacific Growth Fund in complete liquidation of Pacific Growth Fund; and (iii)
the dissolution of Pacific Growth Fund as soon as is practicable after the
closing (as defined in Section 3, hereinafter called the "Closing"), all upon
and subject to the terms and conditions of this Plan hereinafter set forth.
AGREEMENT
In order to consummate the Plan and in consideration of the premises and of
the covenants and agreements hereinafter set forth, and intending to be legally
bound, the parties hereto covenant and agree as follows:
1. Sale and Transfer of Assets, Liquidation and Dissolution of Pacific Growth
Fund.
(a) Subject to the terms and conditions of this Plan, and in reliance on the
representations and warranties of the Company, on behalf of Foreign Fund,
herein contained, and in consideration of the delivery by the Company of the
number of Foreign Fund Shares hereinafter provided, the Trust on behalf of
Pacific Growth Fund agrees that it will convey, transfer and deliver to the
Company, for the benefit of Foreign Fund, at the Closing all of Pacific Growth
Fund's then existing assets, free and clear of all liens, encumbrances, and
claims whatsoever (other than shareholders' rights of redemption), except for
cash, bank deposits, or cash equivalent securities in an estimated amount
necessary to: (i) pay Pacific Growth Fund's share of the costs and expenses of
carrying out this Plan (including, but not limited to, fees of counsel and
accountants, and expenses of its liquidation and dissolution contemplated
hereunder), which costs and expenses shall be established on Pacific Growth
Fund's books as liability reserves; (ii) discharge its unpaid liabilities on
its books at the closing date (as defined in Section 3, hereinafter called the
"Closing Date"), including, but not limited to, its income dividends and
capital gains distributions, if any, payable for the period prior to, and
through, the Closing Date and excluding those liabilities that would otherwise
be discharged at a later date in the ordinary course of business; and (iii) pay
such contingent liabilities as the Board of Trustees of the Trust shall
reasonably deem to exist against Pacific Growth Fund, if any, at the Closing
Date, for which contingent and other appropriate liability reserves shall be
established on Pacific Growth Fund's books (hereinafter "Net Assets"). The
Company shall not assume any liability of Pacific Growth Fund and Pacific
Growth Fund shall use its reasonable best efforts to discharge all of its known
liabilities, so far as may be possible, from the cash, bank deposits and cash
equivalent securities described above. Pacific Growth Fund shall also retain
any and all rights that it may have over and against any person that may have
accrued up to and including the close of business on the Closing Date.
(b) Subject to the terms and conditions of this Plan, and in reliance on the
representations and warranties of the Trust, on behalf of Pacific Growth Fund,
herein contained, and in consideration of such sale, conveyance, transfer, and
delivery, the Company agrees at the Closing to deliver to the Trust the number
of Foreign Fund Shares, determined by dividing the net asset value per share of
each of Class A, Class C and Advisor Class shares of Pacific Growth Fund by the
net asset value per share of each of Class A, Class C and Advisor Class shares
of Foreign Fund, respectively, and separately multiplying the result thereof by
the number of outstanding Class A, Class C and Advisor Class shares,
respectively, of Pacific Growth Fund, as of 4:00 p.m. Eastern time on the
Closing Date. The number of Foreign Fund Shares delivered to the Trust shall
have an aggregate net asset value equal to the value of the Pacific Growth
Fund's Net Assets, all determined as provided in Section 2 of this Plan and as
of the date and time specified therein.
(c) Immediately following the Closing, the Trust shall dissolve Pacific
Growth Fund and distribute pro rata to Pacific Growth Fund's shareholders of
record as of the close of business on the Closing Date, Foreign Fund Shares
received by Pacific Growth Fund pursuant to this Section 1. Such dissolution
and distribution shall be accomplished by the establishment of accounts on the
share records of Pacific Growth Fund of the type and in the amounts due such
shareholders based on their respective holdings as of the close of business on
the Closing Date. Fractional Foreign Fund Shares shall be carried to the third
decimal place. As promptly as practicable after the Closing, each holder of any
outstanding certificate or certificates representing shares of beneficial
interest of Pacific Growth Fund shall be entitled to surrender the same to the
transfer agent for Foreign Fund in exchange for the number of Foreign Fund
Shares of the same class into which the Pacific Growth Fund Shares theretofore
represented by the certificate or certificates so surrendered shall have been
converted. Certificates for Foreign Fund Shares shall not be issued, unless
specifically requested by the shareholders. Until so surrendered, each
outstanding certificate which, prior to the Closing, represented shares of
beneficial interest of Pacific Growth Fund shall be deemed for all Foreign
Fund's purposes to evidence ownership of the number of Foreign Fund Shares into
which the Pacific Growth Fund Shares (which prior to the Closing were
represented thereby) have been converted.
(d) At the Closing, each shareholder of record of Pacific Growth Fund as of
the record date (the "Distribution Record Date") with respect to any unpaid
dividends and other distributions that were prepared prior to the Closing,
including any dividend or distribution declared pursuant to Section 8(e)
hereof, shall have the right to receive such unpaid dividends and distributions
with respect to the shares of Pacific Growth Fund that such person had on such
Distribution Record Date.
(e) All books and records relating to Pacific Growth Fund, including all
books and records required to be maintained under the Investment Company Act of
1940, as amended (the "1940 Act") and the rules and regulations thereunder,
shall be available to the Company from and after the date of this Agreement,
and shall be turned over to the Company on or prior to the Closing.
2. Valuation.
(a) The net asset value of Foreign Fund Shares and Pacific Growth Fund
Shares and the value of Pacific Growth Fund's Net Assets to be acquired by
Foreign Fund hereunder shall in each case be computed as of 4:00 p.m. Eastern
time on the Closing Date unless on such date (a) the New York Stock Exchange
("NYSE") is not open for unrestricted trading or (b) the reporting of trading
on the NYSE or elsewhere is disrupted or (c) any other extraordinary financial
event or market condition occurs (all such events described in (a), (b) or (c)
are each referred to as a "Market Disruption"). The net asset value per share
of the Foreign Fund Shares and Pacific Growth Fund Shares and the value of
Pacific Growth Fund's Net Assets shall be computed in accordance with the
valuation procedures set forth in the respective prospectuses of Foreign Fund
and Pacific Growth Fund.
(b) In the event of a Market Disruption on the proposed Closing Date so that
an accurate appraisal of the net asset value of Foreign Fund Shares or Pacific
Growth Fund Shares or the value of the Pacific Growth Fund's Net Assets is
impracticable, the Closing Date shall be postponed until the first business day
when regular trading on the NYSE shall have been fully resumed and reporting
shall have been restored and other trading markets are otherwise stabilized.
(c) All computations of value regarding the net asset value of the Foreign
Fund Shares and Pacific Growth Fund Shares and the value of Pacific Growth
Fund's Net Assets shall be made by the investment advisor to Foreign Fund;
provided, however, that all computations of value shall be subject to review by
Pacific Growth Fund.
3. Closing and Closing Date.
The Closing Date shall be March 9, 2003, or such later date as the parties
may mutually agree. The Closing shall take place at the principal office of the
Trust at 5:00 p.m., Eastern time, on the Closing Date. The Trust on behalf of
Pacific Growth Fund shall have provided for delivery as of the Closing of those
Net Assets of Pacific Growth Fund to be transferred to the account of Foreign
Fund's Custodian, JPMorgan Chase Bank, Network Management, 0 Xxxxx XxxxxXxxx
Xxxxxx--00xx Xxxxx, Xxxxxxxx, XX 00000. Also, the Trust, on behalf of Pacific
Growth Fund, shall deliver at the Closing a list of names and addresses of the
shareholders of record of each class of Pacific Growth Fund Shares and the
number of full and fractional shares of beneficial interest owned by each such
shareholder, indicating thereon which such shares are represented by outstanding
certificates and which by book-entry accounts, all as of 4:00 p.m. Eastern time
on the Closing Date, certified by its transfer agent or by its President to the
best of its or his knowledge and belief. The Company on behalf of Foreign Fund
shall issue and deliver a certificate or certificates evidencing the Foreign
Fund Shares to be delivered to the account of Pacific Growth Fund at said
transfer agent registered in such manner as the officers of the Trust on behalf
of Pacific Growth Fund may request, or provide evidence satisfactory to the
Trust that such Foreign Fund Shares have been registered in an account on the
books of Foreign Fund in such manner as the officers of the Trust on behalf of
Pacific Growth Fund may request.
4. Representations and Warranties by the Company on behalf of Foreign Fund.
The Company, on behalf of Foreign Fund, represents and warrants to the Trust
that:
(a) Foreign Fund is a series of the Company, a corporation organized
under the laws of the State of Maryland on August 15, 1977, and is validly
existing under the laws of that State. The Company is duly registered under
the 1940 Act, as an open-end, management investment company and all of the
Foreign Fund Shares sold were sold pursuant to an effective registration
statement filed under the Securities Act of 1933, as amended (the "1933
Act"), except for those shares sold pursuant to the private offering
exemption for the purpose of raising initial capital as required by the 1940
Act.
(b) The Company is authorized to issue two billion six hundred million
shares of common stock of Foreign Fund, par value $1.00 per share, each
outstanding share of which is fully paid, non-assessable, freely
transferable and has full voting rights, and currently issues shares of two
(2) series, including Foreign Fund. Foreign Fund is further divided into
five classes of shares of which Foreign Fund Shares represent three classes:
Class A, Class C and Advisor Class shares of beneficial interest. No
shareholder of the Company shall have any option, warrant or preemptive
right of subscription or purchase with respect to Foreign Fund Shares.
(c) The financial statements appearing in the Foreign Fund's Annual
Report to Shareholders for the fiscal year ended August 31, 2002, audited by
PricewaterhouseCoopers LLP, copies of which have been delivered to the
Trust, and any interim unaudited financial statements, copies of which may
be furnished to the Trust, fairly present the financial position of Foreign
Fund as of such date and the results of its operations for the period
indicated in conformity with generally accepted accounting principles
applied on a consistent basis.
(d) The books and records of Foreign Fund accurately summarize the
accounting data represented and contain no material omissions with respect
to the business and operations of Foreign Fund.
(e) The Company has the power to own all of its properties and assets, to
perform its obligations under this Plan and to consummate the transactions
contemplated herein. The Company is not required to qualify to do business
in any jurisdiction in which it is not so qualified or where failure to
qualify would subject it to any material liability or disability. The
Company has all necessary federal, state and local authorizations, consents
and approvals required to own all of its properties and assets and to
conduct Foreign Fund's business as such business is now being conducted and
to consummate the transactions contemplated herein.
(f) The Company, on behalf of Foreign Fund, is not a party to or
obligated under any provision of its Articles of Incorporation, as amended
("Articles of Incorporation") or Amended and Restated By-laws ("By-laws"),
or any contract or any other commitment or obligation and is not subject to
any order or decree that would be violated by its execution of or
performance under this Plan, and no consent, approval, authorization or
order of any court or governmental authority is required for the
consummation by the Company of the transactions contemplated by the Plan,
except for the registration of the Foreign Fund Shares under the 1933 Act,
the 1940 Act, or as may otherwise be required under the federal and state
securities laws or the rules and regulations thereunder.
(g) The Company has elected to treat Foreign Fund as a regulated
investment company ("RIC") for federal income tax purposes under Part I of
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"),
Foreign Fund is a "fund" as defined in Section 851(g)(2) of the Code, has
qualified as a RIC for each taxable year since its inception and will
qualify as a RIC as of the Closing Date, and consummation of the
transactions contemplated by the Plan will not cause it to fail to be
qualified as a RIC as of the Closing Date.
(h) Foreign Fund is not under jurisdiction of a Court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
(i) Foreign Fund does not have any unamortized or unpaid organizational
fees or expenses.
(j) All information to be furnished by the Company to the Trust for use
in preparing any prospectus, proxy materials and other documents which may
be necessary in connection with the transactions contemplated hereby shall
be accurate and complete and shall comply in all material respects with
federal securities and other laws and regulations applicable thereto.
(k) Foreign Fund does not have any known liabilities, costs or expenses
of a material amount, contingent or otherwise, other than those incurred in
the ordinary course of business as an investment company.
(l) There is no intercorporate indebtedness existing between Pacific
Growth Fund and Foreign Fund that was issued, acquired or will be settled at
a discount.
(m) Foreign Fund does not own, directly or indirectly, nor has it owned
during the past five (5) years, directly or indirectly, any shares of
Pacific Growth Fund.
(n) The Company has no plan or intention to issue additional shares of
Foreign Fund following the reorganization except for shares issued in the
ordinary course of its business as a series of an open-end investment
company; nor does the Company have any plan or intention to redeem or
otherwise reacquire any shares of Foreign Fund issued pursuant to the Plan
of Reorganization, other than in the ordinary course of its business or to
the extent necessary to comply with its legal obligation under Section 22(e)
of the 0000 Xxx.
(o) Foreign Fund will actively continue Pacific Growth Fund's business in
substantially the same manner that Pacific Growth Fund conducted that
business immediately before the Plan of Reorganization. Foreign Fund has no
plan or intention to sell or otherwise dispose of any of the former assets
of Pacific Growth Fund, except for dispositions made in the ordinary course
of its business or dispositions necessary to maintain its qualification as a
RIC, although in the ordinary course of its business, Foreign Fund will
continuously review its investment portfolio (as Pacific Growth Fund did
before the Plan of Reorganization) to determine whether to retain or dispose
of particular stocks or securities, including those included among the
former assets of Pacific Growth Fund.
(p) The Form N-14 Registration Statement referred to in Section 7(g)
hereof (other than the portions of such documents based on information
furnished by or on behalf of the Trust for inclusion or incorporation by
reference therein), and any Prospectus or Statement of Additional
Information of Foreign Fund contained or incorporated therein by reference,
and any supplement or amendment to the Form N-14 Registration Statement or
any such Prospectus or Statement of Additional Information, on the effective
and clearance dates of the Form N-14 Registration Statement, on the date of
the Special Meeting of Pacific Growth Fund shareholders, and on the Closing
Date: (a) shall comply in all material respects with the provisions of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), the 1940 Act,
the rules and regulations thereunder, and all applicable state securities
laws and the rules and regulations thereunder; and (b) shall not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which the statements were made, not
misleading.
5. Representations and Warranties by the Trust on behalf of Pacific Growth
Fund.
The Trust, on behalf of Pacific Growth Fund, represents and warrants to the
Company that:
(a) Pacific Growth Fund is a series of the Trust, a statutory trust
created under the laws of the State of Delaware on March 19, 1991, and is
validly existing under the laws of that State. The Trust is duly registered
under the 1940 Act as an open-end, management investment company and all of
the Trust's Pacific Growth Fund Shares sold were sold pursuant to an
effective registration statement filed under the 1933 Act, except for those
shares sold pursuant to the private offering exemption for the purpose of
raising the required initial capital, as required by the 1940 Act.
(b) The Trust is authorized to issue an unlimited number of shares of
beneficial interest of Pacific Growth Fund, par value $0.01 per share, each
outstanding share of which is fully paid, non-assessable, freely
transferable and has full voting rights, and currently issues shares of two
(2) series, including Pacific Growth Fund. Pacific Growth Fund has three
classes of shares: Class A, Class C and Advisor Class, and an unlimited
number of shares of beneficial interest of the Trust have been allocated and
designated to each class of Pacific Growth Fund. No shareholder of the Trust
has or will have any option, warrant or preemptive rights of subscription or
purchase with respect to Pacific Growth Fund Shares.
(c) The financial statements appearing in Pacific Growth Fund's Annual
Report to Shareholders for the fiscal year ended October 31, 2002, audited
by PricewaterhouseCoopers LLP, copies of which have been delivered, or will
be delivered, to the Company, and any interim financial statements for the
Trust which may be furnished to the Company, fairly present the financial
position of Pacific Growth Fund as of such date and the results of its
operations for the period indicated in conformity with generally accepted
accounting principles applied on a consistent basis.
(d) The books and records of Pacific Growth Fund accurately summarize the
accounting data represented and contain no material omissions with respect
to the business and operations of Pacific Growth Fund.
(e) The Trust has the power to own all of its properties and assets, to
perform its obligations under this Plan and to consummate the transactions
contemplated herein. The Trust is not required to qualify to do business in
any jurisdiction in which it is not so qualified or where failure to qualify
would subject it to any material liability or disability. The Trust has all
necessary federal, state and local authorizations, consents and approvals
required to own all of its properties and assets and to conduct Pacific
Growth Fund's business as such business is now being conducted and to
consummate the transactions contemplated herein.
(f) The Trust, on behalf of Pacific Growth Fund, is not a party to or
obligated under any provision of its Agreement and Declaration of Trust or
Bylaws, or any contract or any other commitment or obligation, and is not
subject to any order or decree, that would be violated by its execution of
or performance under this Plan. The Trust has furnished the Company with
copies or descriptions of all material agreements or other arrangements to
which Pacific Growth Fund is a party. Pacific Growth Fund has no material
contracts or other commitments (other than this Plan or agreements for the
purchase of securities entered into in the ordinary course of business and
consistent with its obligations under this Plan) which will not be
terminated by Pacific Growth Fund in accordance with their terms at or prior
to the Closing Date.
(g) The Trust has elected to treat Pacific Growth Fund as a RIC for
federal income tax purposes under Part I of Subchapter M of the Code.
Pacific Growth Fund is a "fund" as defined in section 851(g)(2) of the Code,
has qualified as a RIC for each taxable year since its inception, and will
qualify as a RIC as of the Closing Date, and consummation of the
transactions contemplated by the Plan will not cause it to fail to be
qualified as a RIC as of the Closing Date.
(h) Pacific Growth Fund is not under jurisdiction of a Court in a Title
11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
(i) Pacific Growth Fund does not have any unamortized or unpaid
organization fees or expenses.
(j) The Prospectuses for Class A, Class C and Advisor Class shares of
Pacific Growth Fund, dated March 1, 2003, and the corresponding Statements
of Additional Information, dated March 1, 2003, do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and any amended,
revised, or new prospectus or statement of additional information of Pacific
Growth Fund or any supplement thereto, that is hereafter filed with the SEC
(copies of which documents shall be provided to the Company promptly after
such filing), shall not contain any untrue statement of a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading.
(k) Pacific Growth Fund does not have any known liabilities, costs or
expenses of a material amount, contingent or otherwise, other than those
reflected in the financial statements referred to in Section 5(c) hereof and
those incurred in the ordinary course of business as an investment company
since the dates of those financial statements. On the Closing Date, the
Trust shall advise the Company in writing of all Pacific Growth Fund's known
liabilities, contingent or otherwise, whether or not incurred in the
ordinary course of business, existing or accrued at such time.
(l) Since October 31, 2002, there has not been any material adverse
change in Pacific Growth Fund's financial condition, assets, liabilities, or
business other than changes occurring in the ordinary course of its business.
(m) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by Pacific Growth
Fund or the Trust of the transactions contemplated by the Plan, except as
may be required under the federal or state securities laws or the rules and
regulations thereunder.
(n) The information to be furnished by the Trust or Pacific Growth Fund
for use in preparing the Form N-14 Registration Statement referred to in
Section 7(g) hereof, and the Proxy Statement/Prospectus to be included in
the Form N-14 Registration Statement, proxy materials and other documents
which may be necessary in connection with the transactions contemplated
hereby, shall be accurate and complete and shall comply in all material
respects with federal securities and other laws and regulations thereunder
applicable thereto.
(o) There is no intercorporate indebtedness existing between Pacific
Growth Fund and Foreign Fund that was issued, acquired or will be settled at
a discount.
(p) There is no plan or intention of Pacific Growth Fund shareholders who
individually own 5% or more of shares of Pacific Growth Fund and, to the
best of the Trust's knowledge, there is no plan or intention of the
remaining Pacific Growth Fund shareholders to redeem or otherwise to dispose
of any shares of Foreign Fund to be received by them in the Plan of
Reorganization (but redemptions and dispositions of shares of Foreign Fund
may occur in the future as a consequence of investment decisions unrelated
to the Plan of Reorganization). The Trust does not anticipate dispositions
of shares of Pacific Growth Fund at the time or soon after the
reorganization to exceed the usual rate and frequency of redemptions of
shares of Pacific Growth Fund as a series of an open-end investment company.
Consequently, the Trust is not aware of any plan that would cause the
percentage of shareholder interests, if any, that will be disposed of as a
result of or at the time of the Plan of Reorganization to be 1% or more of
the shares of Pacific Growth Fund outstanding as of the Closing Date.
(q) As of the Closing Date, Pacific Growth Fund will not have outstanding
any warrants, options, convertible securities, or any other type of rights
pursuant to which any person could acquire shares of Pacific Growth Fund,
except for the right of investors to acquire its shares at the applicable
stated offering price in the normal course of its business as an open-end
diversified management investment company operating under the 1940 Act.
(r) Throughout the five year period ending on the Closing Date, Pacific
Growth Fund will have conducted its historic business within the meaning of
Section 1.368-1(d) of the Income Tax Regulations under the Code.
6. Representations and Warranties by the Trust and the Company.
The Trust, on behalf of Pacific Growth Fund, and the Company, on behalf of
Foreign Fund, each represents and warrants to the other that:
(a) The statement of assets and liabilities to be furnished by it as of
4:00 p.m. Eastern time on the Closing Date for the purpose of determining
the number of Foreign Fund Shares to be issued pursuant to Section 1 of this
Plan, will accurately reflect each Fund's Net Assets and outstanding shares
of beneficial interest, as of such date, in conformity with generally
accepted accounting principles applied on a consistent basis.
(b) At the Closing, it will have good and marketable title to all of the
securities and other assets shown on the statement of assets and liabilities
referred to in (a) above, free and clear of all liens or encumbrances of any
nature whatsoever, except such imperfections of title or encumbrances as do
not materially detract from the value or use of the assets subject thereto,
or materially affect title thereto.
(c) Except as disclosed in its currently effective prospectus relating to
Pacific Growth Fund, in the case of the Trust, and Foreign Fund, in the case
of the Company, there is no material suit, judicial action, or legal or
administrative proceeding pending or threatened against it. Neither the
Company nor the Trust are a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which materially
and adversely affects Foreign Fund's or Pacific Growth Fund's business or
their ability to consummate the transactions herein contemplated.
(d) There are no known actual or proposed deficiency assessments with
respect to any taxes payable by it.
(e) The execution, delivery, and performance of this Plan have been duly
authorized by all necessary action of its Board of Trustees/Directors, as
the case may be, and this Plan, subject to the approval of Pacific Growth
Fund's shareholders in the case of the Trust, constitutes a valid and
binding obligation enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization arrangement,
moratorium, and other similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(f) It anticipates that consummation of this Plan will not cause Pacific
Growth Fund, in the case of the Trust, and Foreign Fund, in the case of the
Company, to fail to conform to the requirements of Subchapter M of the Code
for federal income taxation qualification as a RIC at the end of its fiscal
year.
7. Covenants of the Trust and the Company.
(a) The Trust, on behalf of Pacific Growth Fund, and the Company, on behalf
of Foreign Fund, each covenant to operate their respective businesses as
presently conducted between the date hereof and the Closing, it being
understood that such ordinary course of business will include customary
dividends and distributions and any other distribution necessary or desirable
to minimize federal income or excise taxes.
(b) The Trust, on behalf of Pacific Growth Fund, undertakes that it will not
acquire Foreign Fund Shares for the purpose of making distributions thereof to
anyone other than Pacific Growth Fund's shareholders.
(c) The Trust, on behalf of Pacific Growth Fund, undertakes that, if this
Plan is consummated, it will liquidate and dissolve Pacific Growth Fund.
(d) The Trust, on behalf of Pacific Growth Fund, and the Company, on behalf
of Foreign Fund, each agree that, by the Closing, all of their Federal and
other tax returns and reports required by law to be filed on or before such
date shall have been filed, and all Federal and other taxes shown as due on
said returns shall have either been paid or adequate liability reserves shall
have been provided for the payment of such taxes, and to the best of their
knowledge no such tax return is currently under audit and no tax deficiency or
liability has been asserted with respect to such tax returns or reports by the
Internal Revenue Service or any state or local tax authority.
(e) At the Closing, the Trust, on behalf of Pacific Growth Fund, will
provide Foreign Fund a copy of the shareholder ledger accounts, certified by
Pacific Growth Fund's transfer agent or its President to the best of its or his
knowledge and belief, for all the shareholders of record of Pacific Growth Fund
Shares as of 4:00 p.m. Eastern time on the Closing Date who are to become
shareholders of Foreign Fund as a result of the transfer of assets that is the
subject of this Plan.
(f) The Board of Trustees of the Trust shall call and the Trust shall hold,
a Special Meeting of Pacific Growth Fund's shareholders to consider and vote
upon this Plan (the "Special Meeting") and the Trust shall take all other
actions reasonably necessary to obtain approval of the transactions
contemplated herein. The Trust agrees to mail to each shareholder of record of
Pacific Growth Fund entitled to vote at the Special Meeting at which action on
this Plan is to be considered, in sufficient time to comply with requirements
as to notice thereof, a combined Prospectus/Proxy Statement that complies in
all material respects with the applicable provisions of Section 14(a) of the
1934 Act and Section 20(a) of the 1940 Act, and the rules and regulations,
respectively, thereunder.
(g) The Company will file with the U.S. Securities and Exchange Commission a
registration statement on Form N-14 under the 1933 Act relating to Foreign Fund
Shares issuable hereunder ("Registration Statement"), and will use its best
efforts to provide that the Registration Statement becomes effective as
promptly as is practicable. At the time it becomes effective, the Registration
Statement will (i) comply in all material respects with the applicable
provisions of the 1933 Act, and the rules and regulations promulgated
thereunder; and (ii) not contain any untrue statement of material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading. At the time the Registration Statement
becomes effective, at the time of the Special Meeting, and at the Closing Date,
the prospectus and statement of additional information included in the
Registration Statement will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(h) Subject to the provisions of this Plan, the Company and the Trust each
shall take, or cause to be taken, all action, and do or cause to be done, all
things reasonably necessary, proper or advisable to consummate the transactions
contemplated by this Plan.
(i) The Trust shall furnish to the Company on the Closing Date a Statement
of Assets and Liabilities of Pacific Growth Fund as of the Closing Date, which
statement shall be prepared in accordance with GAAP consistently applied and
shall be certified by Pacific Growth Fund's Treasurer or Assistant Treasurer.
As promptly as practicable, but in any case, within forty-five (45) days after
the Closing Date, the Trust shall furnish to the Company, in such form as is
reasonably satisfactory to the Company, a statement of the earnings and
profits of Pacific Growth Fund for federal income tax purposes, and of any
capital loss carryovers and other items that will be carried over to Foreign
Fund as a result of Section 381 of the Code, which statement shall be certified
by Pacific Growth Fund's Treasurer or Assistant Treasurer. The Trust covenants
that Pacific Growth Fund has no earnings and profits that were accumulated by
it or any acquired entity during a taxable year when it or such entity did not
qualify as a RIC under the Code, or, if it has such earnings and profits, it
shall distribute them to its shareholders prior to the Closing Date.
(j) The Trust shall deliver to the Company at the Closing Date confirmation
or other adequate evidence as to the tax costs and holding periods of the
assets and property of Pacific Growth Fund transferred to the Company in
accordance with the terms of this Plan.
8. Conditions Precedent to be Fulfilled by the Trust and the Company.
The consummation of this Plan hereunder shall be subject to the following
respective conditions:
(a) That: (i) all the representations and warranties of the other party
contained herein shall be true and correct as of the Closing with the same
effect as though made as of and at such date; (ii) the other party shall
have performed all obligations required by this Plan to be performed by it
prior to the Closing; and (iii) the other party shall have delivered to such
party a certificate signed by the President and by the Secretary or
equivalent officer to the foregoing effect.
(b) That each party shall have delivered to the other party a copy of the
resolutions approving the Plan adopted and approved by the appropriate
action of the Board of Directors/Trustees certified by its Secretary or
equivalent officer of each of the Funds.
(c) That the U.S. Securities and Exchange Commission shall not have
issued an unfavorable management report under Section 25(b) of the 1940 Act
or instituted or threatened to institute any proceeding seeking to enjoin
consummation of the Plan under Section 25(c) of the 1940 Act. And, further,
no other legal, administrative or other proceeding shall have been
instituted or threatened that would materially affect the financial
condition of either party or would prohibit the transactions contemplated
hereby.
(d) That this Plan and the Plan of Reorganization contemplated hereby
shall have been adopted and approved by the appropriate action of the
shareholders of Pacific Growth Fund at an annual or special meeting or any
adjournment thereof.
(e) That a distribution or distributions shall have been declared for
Pacific Growth Fund prior to the Closing Date that, together with all
previous distributions, shall have the effect of distributing to its
shareholders (i) all of its ordinary income and all of its capital gain net
income, if any, for the period from the close of its last fiscal year to
4:00 p.m. Eastern time on the Closing Date; and (ii) any undistributed
ordinary income and capital gain net income from any period to the extent
not otherwise declared for distribution. Capital gain net income has the
meaning given such term by Section 1222(g) of the Code.
(f) That all required consents of other parties and all other consents,
orders, and permits of federal, state and local authorities (including those
of the U.S. Securities and Exchange Commission (the "SEC") and of state Blue
Sky securities authorities, including any necessary "no-action" positions or
exemptive orders from such federal and state authorities) to permit
consummation of the transaction contemplated hereby shall have been
obtained, except where failure to obtain any such consent, order, or permit
would not involve a risk of material adverse effect on the assets and
properties of Pacific Growth Fund or Foreign Fund.
(g) That there shall be delivered to the Trust, on behalf of Pacific
Growth Fund, and the Company, on behalf of Foreign Fund, an opinion, from
Messrs. Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP, counsel to the Company, to the
effect that, provided the transaction contemplated hereby is carried out in
accordance with this Plan and based upon certificates of the officers of the
Trust and the Company with regard to matters of fact:
(1) The acquisition by Foreign Fund of substantially all the assets
of Pacific Growth Fund as provided for herein in exchange for Foreign
Fund Shares followed by the distribution by Pacific Growth Fund to its
shareholders of Foreign Fund Shares in complete liquidation of Pacific
Growth Fund will qualify as a reorganization within the meaning of
Section 368(a)(1) of the Code, and Pacific Growth Fund and Foreign Fund
will each be a "party to the reorganization" within the meaning of
Section 368(b) of the Code;
(2) No gain or loss will be recognized by Pacific Growth Fund upon
the transfer of substantially all of its assets to Foreign Fund in
exchange solely for voting shares of Foreign Fund (Sections 361(a) and
357(a) of the Code). No opinion, however, will be expressed as to
whether any accrued market discount will be required to be recognized as
ordinary income pursuant to Section 1276 of the Code;
(3) Foreign Fund will recognize no gain or loss upon the receipt of
substantially all of the assets of Pacific Growth Fund in exchange
solely for voting shares of Foreign Fund (Section 1032(a) of the Code);
(4) No gain or loss will be recognized by Pacific Growth Fund upon
the distribution of Foreign Fund Shares to its shareholders in
liquidation of Pacific Growth Fund (in pursuance of the Plan) (Section
361(c)(1) of the Code);
(5) The basis of the assets of Pacific Growth Fund received by
Foreign Fund will be the same as the basis of such assets to Pacific
Growth Fund immediately prior to the Plan of Reorganization (Section
362(b) of the Code);
(6) The holding period of the assets of Pacific Growth Fund received
by Foreign Fund will include the period during which such assets were
held by Pacific Growth Fund (Section 1223(2) of the Code);
(7) No gain or loss will be recognized by the shareholders of Pacific
Growth Fund upon the exchange of their shares in Pacific Growth Fund for
voting shares of Foreign Fund including fractional shares to which they
may be entitled (Section 354(a) of the Code);
(8) The basis of Foreign Fund Shares received by the shareholders of
Pacific Growth Fund shall be the same as the basis of the Pacific Growth
Fund Shares exchanged therefor (Section 358(a)(1) of the Code);
(9) The holding period of Foreign Fund Shares received by
shareholders of Pacific Growth Fund (including fractional shares to
which they may be entitled) will include the holding period of the
Pacific Growth Fund Shares surrendered in exchange therefor, provided
that the Pacific Growth Fund Shares were held as a capital asset on the
effective date of the exchange (Section 1223(1) of the Code); and
(10) Foreign Fund will succeed to and take into account as of the
date of the transfer (as defined in Section 1.381(b)-1(b) of the
regulations issued by the United States Treasury ("Treasury
Regulations")) the items of Pacific Growth Fund described in Section
381(c) of the Code, subject to the conditions and limitations specified
in Sections 381, 382, 383 and 384 of the Code and the Treasury
Regulations.
(h) That there shall be delivered to the Company, on behalf of Foreign
Fund, an opinion in form and substance satisfactory to it from Messrs.
Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP, counsel to the Trust, on behalf of
Pacific Growth Fund, to the effect that, subject in all respects to the
effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other laws now or hereafter affecting generally the
enforcement of creditors' rights:
(1) Pacific Growth Fund is a series of the Trust and that the Trust
is a validly existing statutory trust in good standing under the laws of
the State of Delaware;
(2) The Trust is authorized to issue an unlimited number of shares of
beneficial interest, par value $0.01 per share, of Pacific Growth Fund.
Three classes of shares of Pacific Growth Fund (Class A, Class C, and
Advisor Class) have been designated as Pacific Growth Fund Shares, and
an unlimited number of shares of beneficial interest of the Trust have
been allocated to Pacific Growth Fund Shares. Assuming that the initial
shares of beneficial interest of Pacific Growth Fund were issued in
accordance with the 1940 Act and the Agreement and Declaration of Trust
and Bylaws of the Trust, and that all other outstanding shares of
Pacific Growth Fund were sold, issued and paid for in accordance with
the terms of Pacific Growth Fund's prospectus in effect at the time of
such sales, each such outstanding share is fully paid, non-assessable,
freely transferable and has full voting rights;
(3) The Trust is an open-end investment company of the management
type registered as such under the 1940 Act;
(4) Except as disclosed in Pacific Growth Fund's currently effective
prospectus, such counsel does not know of any material suit, action, or
legal or administrative proceeding pending or threatened against Pacific
Growth Fund, the unfavorable outcome of which would materially and
adversely affect the Trust or Pacific Growth Fund;
(5) The execution and delivery of this Plan and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary trust action on the part of the Trust on behalf of Pacific
Growth Fund; and
(6) To the knowledge of such counsel, neither the execution,
delivery, nor performance of this Plan by the Trust, on behalf of
Pacific Growth Fund, violates any provision of its Agreement and
Declaration of Trust or Bylaws, or the provisions of any agreement or
other instrument filed by the Trust as an exhibit to its Registration
Statement on Form N-1A; this Plan is the legal, valid and binding
obligation of the Trust, on behalf of Pacific Growth Fund, and is
enforceable against the Trust, on behalf of Pacific Growth Fund, in
accordance with its terms.
In giving the opinions set forth above, this counsel may state that it is
relying on certificates of the officers of the Trust with regard to matters of
fact, and certain certifications and written statements of governmental
officials with respect to the good standing of the Trust.
(i) That there shall be delivered to the Trust, on behalf of Pacific
Growth Fund, an opinion in form and substance satisfactory to it from
Messrs. Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP, counsel to the Company, on
behalf of Foreign Fund, to the effect that, subject in all respects to the
effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other laws now or hereafter affecting generally the
enforcement of creditors' rights:
(1) Foreign Fund is a series of the Company and the Company is a
validly existing corporation in good standing under the laws of the
State of Maryland;
(2) The Company is authorized to issue two billion six hundred
million shares of common stock, par value $1.00 per share of Foreign
Fund. Foreign Fund is further divided into five (5) classes of shares of
which Foreign Fund Shares constitute Class A, Class C and Advisor Class
shares, par value $1.00 per share. Assuming that the initial shares of
common stock of Foreign Fund were issued in accordance with the 1940
Act, and the Articles of Incorporation and the By-laws of the Company,
and that all other outstanding shares of Foreign Fund were sold, issued
and paid for in accordance with the terms of Foreign Fund's prospectus
in effect at the time of such sales, each such outstanding share of
Foreign Fund is fully paid, non-assessable, freely transferable and has
full voting rights;
(3) Foreign Fund is an open-end investment company of the management
type registered as such under the 1940 Act;
(4) Except as disclosed in Foreign Fund's currently effective
prospectus, such counsel does not know of any material suit, action, or
legal or administrative proceeding pending or threatened against
Foreign Fund, the unfavorable outcome of which would materially and
adversely affect the Company or Foreign Fund;
(5) Foreign Fund Shares to be issued pursuant to the terms of this
Plan have been duly authorized and, when issued and delivered as
provided in this Plan, will have been validly issued and fully paid and
will be non-assessable by the Company, on behalf of Foreign Fund;
(6) The execution and delivery of this Plan and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company, on behalf of
Foreign Fund;
(7) To the knowledge of such counsel, neither the execution,
delivery, nor performance of this Plan by the Company, on behalf of
Foreign Fund, violates any provision of its Articles of Incorporation or
By-laws, or the provisions of any agreement or other instrument filed by
the Company as an exhibit to its Registration Statement on Form N-1A;
this Plan is the legal, valid and binding obligation of the Company, on
behalf of Foreign Fund, and is enforceable against the Company, on
behalf of Foreign Fund, in accordance with its terms; and
(8) The registration statement of the Company, of which the
prospectus dated January 1, 2003 of Foreign Fund is a part (the
"Prospectus") is, at the time of the signing of this Plan, effective
under the 1933 Act, and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of such registration statement has
been issued, and no proceedings for such purpose have been instituted or
are pending before or threatened by the U.S. Securities and Exchange
Commission under the 1933 Act, and nothing has come to counsel's
attention that causes it to believe that, at the time the Prospectus
became effective or at the time of the signing of this Plan, such
Prospectus (except for the financial statements and other financial and
statistical data included therein, as to which counsel need not express
an opinion), contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and such
counsel knows of no legal or government proceedings required to be
described in the Prospectus, or of any contract or document of a
character required to be described in the Prospectus that is not
described as required.
In giving the opinions set forth above, this counsel may state that it is
relying on certificates of the officers of the Company with regard to matters
of fact, and certain certifications and written statements of governmental
officials with respect to the good standing of the Company.
(j) That Pacific Growth Fund shall have received a certificate from the
President or any Vice President and the Secretary or any Assistant Secretary
of the Company, on behalf of Foreign Fund, to the effect that the statements
contained in the Prospectus, at the time the Prospectus became effective and
at the date of the signing of this Plan, did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
(k) That the Company's Registration Statement with respect to Foreign
Fund Shares to be delivered to Pacific Growth Fund's shareholders in
accordance with this Plan shall have become effective, and no stop order
suspending the effectiveness of the Registration Statement or any amendment
or supplement thereto, shall have been issued prior to the Closing Date or
shall be in effect at Closing, and no proceedings for the issuance of such
an order shall be pending or threatened on that date.
(l) That Foreign Fund Shares to be delivered hereunder shall be eligible
for sale with each state commission or agency with which such eligibility is
required in order to permit Foreign Fund Shares lawfully to be delivered to
each holder of Pacific Growth Fund Shares.
(m) That, at the Closing, there shall be transferred to the Company, on
behalf of Foreign Fund, aggregate Net Assets of Pacific Growth Fund
comprising at least 90% in fair market value of the total net assets and 70%
of the fair market value of the total gross assets recorded on the books of
Pacific Growth Fund on the Closing Date.
(n) That there be delivered to the Company, on behalf of Foreign Fund,
information concerning the tax basis of Pacific Growth Fund in all
securities transferred to Foreign Fund, together with shareholder
information including the names, addresses, and taxpayer identification
numbers of the shareholders of Pacific Growth Fund as of the Closing Date,
the number of shares held by each shareholder, the dividend reinvestment
elections applicable to each shareholder, and the backup withholding and
nonresident alien withholding certifications, notices or records on file
with Pacific Growth Fund respect to each shareholder.
9. Brokerage Fees and Expenses.
(a) The Trust, on behalf of Pacific Growth Fund, and the Company, on behalf
of Foreign Fund, each represents and warrants to the other that there are no
broker or finders' fees payable by it in connection with the transactions
provided for herein.
(b) The expenses of entering into and carrying out the provisions of this
Plan shall be borne one-quarter by Foreign Fund, one-quarter by Pacific Growth
Fund, and one-quarter by Franklin Advisers, Inc. and one-quarter by Xxxxxxxxx
Global Advisors Limited.
10. Termination; Postponement; Waiver; Order.
(a) Anything contained in this Plan to the contrary notwithstanding, this
Plan may be terminated and the Plan of Reorganization abandoned at any time
(whether before or after approval thereof by the shareholders of Pacific Growth
Fund) prior to the Closing, or the Closing may be postponed as follows:
(1) by mutual consent of the Trust, on behalf of Pacific Growth Fund, and
the Company, on behalf of Foreign Fund;
(2) by the Company, on behalf of Foreign Fund, if any condition of its
obligations set forth in Section 8 has not been fulfilled or waived and it
reasonably appears that such condition or obligation will not or cannot be
met; or
(3) by the Trust, on behalf of Pacific Growth Fund, if any conditions of
its obligations set forth in Section 8 has not been fulfilled or waived and
it reasonably appears that such condition or obligation will not or cannot
be met.
An election by the Company or the Trust to terminate the Plan and to abandon
the Plan of Reorganization shall be exercised respectively, by the Board of
Directors or Trustees of either the Company or the Trust.
(b) If the transactions contemplated by this Plan have not been consummated
by December 31, 2003, the Plan shall automatically terminate on that date,
unless a later date is agreed to by both the Company and the Trust.
(c) In the event of termination of the Plan pursuant to the provisions
hereof, the same shall become void and have no further effect, and neither the
Trust, the Company, Pacific Growth Fund nor Foreign Fund, nor their directors,
trustees, officers, or agents or the shareholders of Pacific Growth Fund or
Foreign Fund shall have any liability in respect of this Plan, but all expenses
incidental to the preparation and carrying out of this Plan shall be paid as
provided in Section 9(b) hereof.
(d) At any time prior to the Closing, any of the terms or conditions of this
Plan may be waived by the party who is entitled to the benefit thereof by
action taken by that party's Board of Directors or Trustees if, in the judgment
of such Board of Directors or Trustees, such action or waiver will not have a
material adverse effect on the benefits intended under this Plan to its
shareholders, on behalf of whom such action is taken.
(e) The respective representations and warranties contained in Sections 4 to
6 hereof shall expire with and be terminated by the Plan on the Closing Date,
and neither the Trust nor the Company, nor any of their officers,
directors, trustees, agents or shareholders shall have any liability with
respect to such representations or warranties after the Closing Date. This
provision shall not protect any officer, director, trustee, agent or
shareholder of the Trust or the Company against any liability to the entity for
which that officer, trustee, agent or shareholder so acts or to its
shareholders to which that officer, trustee, agent or shareholder would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties in the conduct of such office.
(f) If any order or orders of the U.S. Securities and Exchange Commission
with respect to this Plan shall be issued prior to the Closing and shall impose
any terms or conditions that are determined by action of the Board of Trustees
of the Trust, on behalf of Pacific Growth Fund, or the Board of Directors of
the Company, on behalf of Foreign Fund, to be acceptable, such terms and
conditions shall be binding as if a part of this Plan without further vote or
approval of the shareholders of Pacific Growth Fund, unless such terms and
conditions shall result in a change in the method of computing the number of
Foreign Fund Shares to be issued to Pacific Growth Fund in which event, unless
such terms and conditions shall have been included in the proxy solicitation
material furnished to the shareholders of Pacific Growth Fund prior to the
meeting at which the transactions contemplated by this Plan shall have been
approved, this Plan shall not be consummated and shall terminate unless the
Trust shall promptly call a special meeting of the shareholders of Pacific
Growth Fund at which such conditions so imposed shall be submitted for approval.
11. Indemnification.
(a) The Company, on behalf of Foreign Fund, shall indemnify, defend and hold
harmless Pacific Growth Fund, the Trust, its Board of Trustees, officers,
employees and agents (collectively "Acquired Fund Indemnified Parties") against
all losses, claims, demands, liabilities and expenses, including reasonable
legal and other expenses incurred in defending third party claims, actions,
suits or proceedings, whether or not resulting in any liability to such
Acquired Fund Indemnified Parties, including amounts paid by any one or more of
the Acquired Fund Indemnified Parties in a compromise or settlement of any such
claim, action, suit or proceeding, or threatened third party claim, suit,
action or proceeding made with the consent of the Company and Foreign Fund,
arising from any untrue statement or alleged untrue statement of a material
fact contained in the Form N-14 Registration Statement, as filed and in effect
with the SEC or any application prepared by the Company and Foreign Fund with
any state regulatory agency in connection with the transactions contemplated by
this Plan under the securities laws thereof ("Application"); or which arises
out of or is based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company and Foreign Fund
shall only be liable in such case to the extent that any such loss, claim,
demand, liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission about the Company
and/or Foreign Fund or the transactions contemplated by this Plan made in the
Form N-14 Registration Statement or any Application.
(b) The Trust, on behalf of Pacific Growth Fund, until the time of Pacific
Growth Fund's liquidation, shall indemnify, defend, and hold harmless Foreign
Fund, the Company, its Board of Directors, officers, employees and agents
("Acquiring Fund Indemnified Parties") against all losses, claims, demands,
liabilities, and expenses, including reasonable legal and other expenses
incurred in defending third party claims, actions, suits or proceedings,
whether or not resulting in any liability to such Acquiring Fund Indemnified
Parties, including amounts paid by any one or more of the Acquiring Fund
Indemnified Parties in a compromise or settlement of any such claim, suit,
action, or proceeding, made with the consent of the Trust, arising from any
untrue statement or alleged untrue statement of a material fact contained in
the Form N-14 Registration Statement, as filed and in effect with the SEC or
any Application; or which arises out of or is based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
that the Trust and Pacific Growth Fund shall only be liable in such case to the
extent that any such loss, claim, demand, liability or expense arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission about the Trust and/or Pacific Growth Fund or the transactions
contemplated by this Plan made in the Form N-14 Registration Statement or any
Application.
(c) A party seeking indemnification hereunder is hereinafter called the
"Indemnified Party" and the party from whom the indemnified party is seeking
indemnification hereunder is hereinafter called the "Indemnifying Party." Each
Indemnified Party shall notify the Indemnifying Party in writing within ten
(10) days of the receipt by one or more of the Indemnified Parties of any
notice of legal process of any suit brought against or claim made against such
Indemnified Party as to any matters covered by this Section 11, but the failure
to notify the Indemnifying Party shall not relieve the Indemnifying Party from
any liability which it may have to any Indemnified Party otherwise than under
this Section 11. The Indemnifying Party shall be entitled to participate at its
own expense in the defense of any claim, action, suit, or proceeding covered by
this Section 11, or, if it so elects, to assume at its own expense, the defense
thereof with counsel satisfactory to the Indemnified Parties; provided,
however, if the defendants in any such action include both the Indemnifying
Party and any Indemnified Party and the Indemnified Party shall have reasonably
concluded that there may be legal defenses available to it which are different
from or additional to those available to the Indemnifying Party, the
Indemnified Party shall have the right to select separate counsel to assume
such legal defense and to otherwise participate in the defense of such action
on behalf of such Indemnified Party.
Upon receipt of notice from the Indemnifying Party to the Indemnified
Parties of the election by the Indemnifying Party to assume the defense of such
action, the Indemnifying Party shall not be liable to such Indemnified Parties
under this Section 11 for any legal or other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof unless (i) the
Indemnified Parties shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the provision of the
immediately preceding sentence (it being understood, however, that the
Indemnifying Parties shall not be liable for the expenses of more than one
separate counsel); (ii) the Indemnifying Parties do not employ counsel
reasonably satisfactory to the Indemnified Parties to represent the Indemnified
Parties within a reasonable amount of time after notice of commencement of the
action; or (iii) the Indemnifying Parties have authorized the employment of
counsel for the Indemnified Parties at its expense.
(d) This Section 11 shall survive the termination of this Plan and for a
period of three (3) years following the Closing Date.
12. Liability of the Company and the Trust.
(a) Each party acknowledges and agrees that all obligations of the Company
under this Plan are binding only with respect to Foreign Fund; that any
liability of the Company under this Plan with respect to the Company, or in
connection with the transactions contemplated herein with respect to Foreign
Fund, shall be discharged only out of the assets of Foreign Fund; that no other
series of the Company shall be liable with respect to this Plan or in
connection with the transactions contemplated herein; and that neither the
Trust nor Pacific Growth Fund shall seek satisfaction of any such obligation or
liability from the shareholders of the Company, the directors, officers,
employees or agents of the Company, or any of them.
(b) Each party acknowledges and agrees that all obligations of the Trust
under this Plan are binding only with respect to Pacific Growth Fund; that any
liability of the Trust under this Plan with respect to Pacific Growth Fund, or
in connection with the transactions contemplated herein with respect to Pacific
Growth Fund, shall be discharged only out of the assets of Pacific Growth Fund;
that no other series of the Trust shall be liable with respect to this Plan or
in connection with the transactions contemplated herein; and that neither the
Company nor Foreign Fund shall seek satisfaction of any such obligation or
liability from the shareholders of the Trust, the trustees, officers, employees
or agents of the Trust, or any of them.
13. Entire Agreement and Amendments.
The Plan embodies the entire agreement between the parties and there are no
agreements, understandings, restrictions, or warranties relating to the
transactions contemplated by the Plan other than those set forth herein or
herein provided for. The Plan may be amended only by mutual consent of the
parties in writing. Neither the Plan nor any interest herein may be assigned
without the prior written consent of the other party.
14. Counterparts.
The Plan may be executed in any number of counterparts, each of which shall
be deemed to be an original, but all such counterparts together shall
constitute but one instrument.
15. Notices.
Any notice, report, or demand required or permitted by any provision of this
Plan shall be in writing and shall be deemed to have been given if delivered or
mailed, first class postage prepaid, addressed to Foreign Fund, at Xxxxxxxxx
Funds, Inc., 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxxx Xxxxxxxxxx, Xxxxxxx
00000, Attention: Secretary, or Pacific Growth Fund, at Franklin Xxxxxxxxx
International Trust, Xxx Xxxxxxxx Xxxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000-0000,
Attention: Secretary, as the case may be.
16. Governing Law.
This Plan shall be governed by and carried out in accordance with the laws
of the State of Delaware.
IN WITNESS WHEREOF, the Trust, on behalf of Pacific Growth Fund, and the
Company, on behalf of Foreign Fund, have each caused this Plan to be executed
on its behalf by its duly authorized officers, all as of the date and year
first-above written.
Attest: XXXXXXXXX FUNDS, INC., on behalf of
XXXXXXXXX FOREIGN FUND
By: /s/XXXXXX X. XXXXXXXX By:/s/XXXXXXX X. XXXXX
---------------------------------- ----------------------------------
Xxxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxx
Assistant Secretary Vice President
FRANKLIN XXXXXXXXX INTERNATIONALTRUST,
on behalf of TEMPLETON PACIFIC GROWTH
Attest: FUND
By: /s/XXXXXX X. XXXXXXX By:/s/XXXXX X. XXXX
---------------------------------- ----------------------------------
Xxxxxx X. Xxxxxxx Xxxxx X. Xxxx
Secretary Vice President
