AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement and Plan"), made
as of this 27th day of July, 1999, by and between Franklin Real Estate
Securities Trust (the "Trust"), a business trust created under the laws of
the State of Delaware in 1993, with its principal place of business at 000
Xxxxxxxx Xxxxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, on behalf of Franklin
Real Estate Securities Fund, a series of shares of the Trust ("Franklin
Fund"), and Xxxxxxxxx Global Real Estate Fund ("Xxxxxxxxx Fund"), a business
trust created under the laws of the Commonwealth of Massachusetts in 1989,
with its principal place of business at 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxx
Xxxxxxxxxx, Xxxxxxx 00000.
PLAN OF REORGANIZATION
The reorganization (hereinafter referred to as the "Plan of
Reorganization") will consist of (i) the acquisition by the Trust, on behalf
of Franklin Fund, of substantially all of the property, assets and goodwill
of Xxxxxxxxx Fund in exchange solely for shares of beneficial interest, par
value $0.01 per share, of Franklin Fund - Class A ("Franklin Fund Class A
Shares") and shares of beneficial interest, par value $0.01 per share, of
Franklin Fund - Class C ("Franklin Fund Class C Shares") (collectively,
"Franklin Fund Shares"); (ii) the distribution of (a) Franklin Fund Class A
Shares to the shareholders of Xxxxxxxxx Fund -- Class A shares ("Xxxxxxxxx
Fund Class A Shares") and (b) Franklin Fund Class C Shares to the
shareholders of Xxxxxxxxx Fund -- Class C shares ("Xxxxxxxxx Fund Class C
Shares"), according to their respective interests; and (iii) the subsequent
dissolution of Xxxxxxxxx Fund as soon as practicable after the closing (as
defined in Section 3, hereinafter called the "Closing"), all upon and subject
to the terms and conditions of this Agreement and Plan hereinafter set forth.
AGREEMENT
In order to consummate the Plan of Reorganization and in consideration
of the promises 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 XXXXXXXXX
FUND.
(a) Subject to the terms and conditions of this Agreement and Plan,
and in reliance on the representations and warranties of the Trust herein
contained, and in consideration of the delivery by the Trust of the number of
Franklin Fund Class A Shares and Franklin Fund Class C Shares hereinafter
provided, Xxxxxxxxx Fund agrees that it will convey, transfer and deliver to
the Trust, on behalf of Franklin Fund, at the Closing all of Xxxxxxxxx Fund's
then existing assets, free and clear of all liens, encumbrances, and claims
whatsoever (other than shareholders' rights of redemption), except for cash,
bank deposits, or cash equivalent securities in an estimated amount necessary
to: (i) pay the costs and expenses of carrying out this Agreement and 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 Xxxxxxxxx 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 (iii) pay such contingent liabilities as the Board of
Trustees shall reasonably deem to exist against Xxxxxxxxx Fund, if any, at
the Closing Date, for which contingent and other appropriate liability
reserves shall be established on Xxxxxxxxx Fund's books (hereinafter "Net
Assets"). Xxxxxxxxx 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 Agreement and Plan,
and in reliance on the representations and warranties of Xxxxxxxxx Fund
herein contained, and in consideration of such sale, conveyance, transfer,
and delivery, the Trust agrees at the Closing to deliver to Xxxxxxxxx Fund:
(i) the number of Franklin Fund Class A Shares, determined by dividing the
net asset value per share of Xxxxxxxxx Fund Class A Shares by the net asset
value per share of Franklin Fund Class A Shares, and multiplying the result
thereof by the number of outstanding Xxxxxxxxx Fund Class A Shares, as of
1:00 p.m. Pacific time on the Closing Date; and (ii) the number of Franklin
Fund Class C Shares, determined by dividing the net asset value per share of
Xxxxxxxxx Fund Class C Shares by the net asset value per share of Franklin
Fund Class C Shares, and multiplying the result thereof by the number of
outstanding Xxxxxxxxx Fund Class C Shares, as of 1:00 p.m. Pacific time on
the Closing Date. All such values shall be determined in the manner and as of
the time set forth in Section 2 hereof.
(c) Immediately following the Closing, Xxxxxxxxx Fund shall dissolve
and distribute pro rata to its shareholders of record as of the close of
business on the Closing Date Franklin Fund Shares received by Xxxxxxxxx Fund
pursuant to this Section 1. Such liquidation and distribution shall be
accomplished by the establishment of accounts on the share records of
Xxxxxxxxx Fund of the type and in the amounts due such shareholders based on
their respective holdings as of the close of business on the Closing Date.
Fractional Franklin 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
Xxxxxxxxx Fund shall be entitled to surrender the same to the transfer agent
for Franklin Fund in exchange for the number of Franklin Fund Shares into
which the shares of Xxxxxxxxx Fund theretofore represented by the certificate
or certificates so surrendered shall have been converted. Certificates for
Franklin 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 Xxxxxxxxx
Fund shall be deemed for all Franklin Fund's purposes to evidence ownership
of the number of Franklin Fund Shares into which the shares of beneficial
interest of Xxxxxxxxx Fund (which prior to the Closing were represented
thereby) have been converted.
2. VALUATION.
(a) The value of Xxxxxxxxx Fund's Net Assets to be acquired by the
Trust, on behalf of Franklin Fund, hereunder shall be computed as of 1:00
p.m. Pacific time on the Closing Date using the valuation procedures set
forth in Xxxxxxxxx Fund's currently effective prospectus.
(b) The net asset value of a share of beneficial interest of
Franklin Fund Class A Shares and of Franklin Fund Class C Shares shall be
determined to the nearest full cent as of 1:00 p.m. Pacific time on the
Closing Date using the valuation procedures set forth in Franklin Fund's
currently effective prospectus.
(c) The net asset value of a share of beneficial interest of
Xxxxxxxxx Fund Class A Shares and of Xxxxxxxxx Fund Class C Shares shall be
determined to the fourth decimal place as of 1:00 p.m. Pacific time on the
Closing Date using the valuation procedures set forth in Xxxxxxxxx Fund's
currently effective prospectus.
3. CLOSING AND CLOSING DATE.
The Closing Date shall be September 23, 1999, or such later date as the
parties may mutually agree. The Closing shall take place at the principal
office of the Trust at 2:00 p.m. Pacific time on the Closing Date. Xxxxxxxxx
Fund shall have provided for delivery as of the Closing of those Net Assets
of Xxxxxxxxx Fund to be transferred to Franklin Fund's Custodian, Bank of New
York, Mutual Funds Division, 00 Xxxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Also, Xxxxxxxxx Fund shall deliver at the Closing a list of names and
addresses of the shareholders of record of its Xxxxxxxxx Fund Class A Shares
and Xxxxxxxxx Fund Class C Shares and the number of shares of beneficial
interest of such classes owned by each such shareholder, indicating thereon
which such shares are represented by outstanding certificates and which by
book-entry accounts, all as of 1:00 p.m. Pacific time on the Closing Date,
certified by its transfer agent or by its President to the best of its or his
knowledge and belief. The Trust shall issue and deliver a certificate or
certificates evidencing the shares of beneficial interest of Franklin Fund to
be delivered to said transfer agent registered in such manner as Xxxxxxxxx
Fund may request, or provide evidence satisfactory to Xxxxxxxxx Fund that
such Franklin Fund Shares have been registered in an account on the books of
Franklin Fund in such manner as Xxxxxxxxx Fund may request.
4. Representations and Warranties by Xxxxxxxxx Fund.
Xxxxxxxxx Fund represents and warrants to the Trust that:
(a) Xxxxxxxxx Fund is a business trust created under the laws of the
Commonwealth of Massachusetts on July 17, 1989, and is validly existing and
in good standing under the laws of that Commonwealth. Xxxxxxxxx Fund is duly
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as a diversified, open-end, management investment company and all its
shares sold were sold pursuant to an effective registration statement filed
under the Securities Act of 1933, as amended (the "1933 Act"), except for
those shares sold pursuant to the private offering exemption for the purpose
of raising the required initial capital.
(b) Xxxxxxxxx Fund is authorized to issue an unlimited number of
shares of beneficial interest, par value $0.01 per share, each outstanding
share of which is fully paid, non-assessable, freely transferable and has
full voting rights.
(c) The financial statements appearing in Xxxxxxxxx Fund's Annual
Report to Shareholders for the fiscal year ended August 31, 1998, audited by
McGladrey & Xxxxxx LLP, and SemiAnnual Report to Shareholders for the six
month period ended February 28, 1999, copies of which have been delivered to
the Trust, fairly present the financial position of Xxxxxxxxx Fund as of such
dates and the results of its operations for the periods indicated in
conformity with generally accepted accounting principles applied on a
consistent basis.
(d) The books and records of Xxxxxxxxx Fund made available to the
Trust and/or its counsel accurately summarize the accounting data represented
and contain no material omissions with respect to the business and operations
of Xxxxxxxxx Fund.
(e) Xxxxxxxxx Fund has the necessary power and authority to conduct
its business as such business is now being conducted.
(f) Xxxxxxxxx Fund is not a party to or obligated under any
provision of its Amended and Restated Declaration of Trust or By-laws, or any
contract or any other commitment or obligation, and is not subject to any
order or decree that would be violated by its execution of or performance
under this Agreement and Plan.
(g) Xxxxxxxxx Fund has elected to be treated 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"),
has qualified as a RIC for each taxable year since its inception, and will
qualify as a RIC as of the Closing Date.
5. REPRESENTATIONS AND WARRANTIES BY THE TRUST.
The Trust represents and warrants to Xxxxxxxxx Fund that:
(a) The Trust is a business trust created under the laws of the
State of Delaware on September 22, 1993, and is validly existing and in good
standing 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 Franklin
Fund's shares sold were sold pursuant to an effective registration statement
filed under the 1933 Act, except for those shares sold pursuant to the
private offering exemption for the purpose of raising the required initial
capital.
(b) The Trust is authorized to issue an unlimited number of shares
of beneficial interest, par value $0.01 per share, each outstanding share of
which is fully paid, non-assessable, freely transferable, and has full voting
rights. Franklin Fund Shares to be issued pursuant to this Agreement and Plan
will be fully paid, non-assessable, freely transferable and have full voting
rights.
(c) At the Closing, Franklin Fund Class A Shares will be eligible
for offering to the public in those states of the United States and
jurisdictions in which the shares of Xxxxxxxxx Fund Class A Shares are
presently eligible for offering to the public, and Franklin Fund Class C
Shares will be eligible for offering to the public in those states of the
United States and jurisdictions in which the shares of Xxxxxxxxx Fund Class C
Shares are presently eligible for offering to the public; and there are a
sufficient number of Franklin Fund Class A Shares and Franklin Fund Class C
Shares registered under the 1933 Act to permit the transfers contemplated by
this Agreement and Plan to be consummated.
(d) The financial statements appearing in the Trust's Annual Report
to Shareholders for the fiscal year ended April 30, 1999, audited by
PricewaterhouseCoopers LLP, copies of which have been delivered to Xxxxxxxxx
Fund, fairly present the financial position of Franklin 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.
(e) The Trust has the necessary power and authority to conduct
Franklin Fund's business as such business is now being conducted.
(f) The Trust is not a party to or obligated under any provision of
the Trust's Agreement and Declaration of Trust or By-laws, or any contract or
any other commitment or obligation, and is not subject to any order or
decree, that would be violated by the Trust's execution of or performance
under this Agreement and Plan.
(g) The Trust has elected to treat Franklin Fund as a RIC for
federal income tax purposes under Part I of Subchapter M of the Code, and
Franklin Fund has qualified as a RIC for each taxable year since its
inception and will qualify as a RIC as of the Closing Date.
6. REPRESENTATIONS AND WARRANTIES BY XXXXXXXXX FUND AND THE TRUST.
Xxxxxxxxx Fund and the Trust each represents and warrants to the other
that:
(a) The statement of assets and liabilities to be furnished by it as
of 1:00 p.m. Pacific time on the Closing Date for the purpose of determining
the number of Franklin Fund Shares to be issued pursuant to Section 1 of this
Agreement and Plan will accurately reflect its Net Assets in the case of
Xxxxxxxxx Fund and its net assets in the case of Franklin Fund, 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, there
is no material suit, judicial action, or legal or administrative proceeding
pending or threatened against it.
(d) There are no known actual or proposed deficiency assessments
with respect to any taxes payable by it.
(e) The execution, delivery, and performance of this Agreement and
Plan have been duly authorized by all necessary action of its Board of
Trustees, and this Agreement and Plan constitutes a valid and binding
obligation enforceable in accordance with its terms.
(f) It anticipates that consummation of this Agreement and Plan will
not cause it, in the case of Xxxxxxxxx Fund, and Franklin Fund, in the case
of the Trust, to fail to conform to the requirements of Subchapter M of the
Code for federal income taxation as a RIC at the end of its fiscal year.
(g) It has the necessary power and authority to conduct its
business, in the case of Xxxxxxxxx Fund, and Franklin Fund's business, in the
case of the Trust, as such business is now being conducted.
7. COVENANTS OF XXXXXXXXX FUND AND THE TRUST.
(a) Xxxxxxxxx Fund and the Trust, on behalf of Franklin Fund, each
covenant to operate their respective businesses as presently conducted
between the date hereof and the Closing.
(b) Xxxxxxxxx Fund undertakes that it will not acquire Franklin Fund
Shares for the purpose of making distributions thereof to anyone other than
Xxxxxxxxx Fund's shareholders.
(c) Xxxxxxxxx Fund undertakes that, if this Agreement and Plan is
consummated, it will file an application pursuant to Section 8(f) of the 1940
Act for an order declaring that it has ceased to be an investment company.
(d) Xxxxxxxxx Fund and the Trust each agree that, by the Closing,
all of their federal and other tax returns and reports required by law to be
filed by Xxxxxxxxx Fund or by the Trust, on behalf of Franklin Fund, on or
before such date shall have been filed, and all Federal and other taxes shown
as due on said returns shall have either been paid or adequate liability
reserves shall have been provided for the payment of such taxes.
(e) At the Closing, Xxxxxxxxx Fund will provide the Trust with a
copy of the shareholder ledger accounts, certified by its transfer agent or
its President to the best of its or his knowledge and belief, for all the
shareholders of record of its shares as of 1:00 p.m. Pacific time on the
Closing Date who are to become shareholders of Franklin Fund as a result of
the transfer of assets that is the subject of this Agreement and Plan.
(f) Xxxxxxxxx Fund agrees to mail to each shareholder of record
entitled to vote at the meeting of its shareholders at which action on this
Agreement and Plan is to be considered, in sufficient time to comply with
requirements as to notice thereof, a Combined Prospectus and Proxy Statement
that complies in all material respects with the applicable provisions of
Section 14(a) of the Securities Exchange Act of 1934, as amended, and Section
20(a) of the 1940 Act, and the rules and regulations, respectively,
thereunder.
(g) The Trust will file with the U.S. Securities and Exchange
Commission a registration statement on Form N-14 under the 1933 Act relating
to Franklin Fund Shares issuable hereunder ("Registration Statement"), and
will use its best efforts to provide that the Registration Statement becomes
effective as promptly as practicable. At the time it becomes effective, the
Registration Statement will (i) comply in all material respects with the
applicable provisions of the 1933 Act, and the rules and regulations
promulgated thereunder; and (ii) not contain any untrue statement of material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. At the time the
Registration Statement becomes effective, at the time of Xxxxxxxxx Fund's
shareholders' meeting, and at the Closing Date, the prospectus and statement
of additional information included in the Registration Statement will not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
8. CONDITIONS PRECEDENT TO BE FULFILLED BY XXXXXXXXX FUND AND THE TRUST.
The obligations of Xxxxxxxxx Fund and the Trust to effectuate this
Agreement and 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 Agreement and 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 this Agreement and Plan adopted by its Board of
Trustees certified by its Secretary or equivalent officer.
(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 of Reorganization 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 Agreement and Plan and the Plan of Reorganization
contemplated hereby shall have been adopted and approved by the appropriate
action of the shareholders of Xxxxxxxxx Fund at an annual or special meeting
or any adjournment thereof.
(e) That Xxxxxxxxx Fund shall have declared a distribution or
distributions prior to the Closing Date that, together with all previous
distributions, shall have the effect of distributing to its shareholders (i)
all of its net investment income and all of its net realized capital gains,
if any, for the period from the close of its last fiscal year to 1:00 p.m.
Pacific time on the Closing Date; and (ii) any undistributed net investment
income and net realized capital gains from any period to the extent not
otherwise declared for distribution.
(f) That there shall be delivered to Xxxxxxxxx Fund and the Trust an
opinion from Messrs. Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP, counsel to
Xxxxxxxxx Fund and the Trust, to the effect that, provided the acquisition
contemplated hereby is carried out in accordance with this Agreement and Plan
and based upon certificates of the officers of Xxxxxxxxx Fund and the Trust
with regard to matters of fact:
(1) The acquisition by Franklin Fund of substantially all the
assets of Xxxxxxxxx Fund as provided for herein in exchange for Franklin Fund
Shares will qualify as a reorganization within the meaning of Section
368(a)(1)(C) of the Code, and Xxxxxxxxx Fund and Franklin Fund will each be a
party to the respective reorganization within the meaning of Section 368(b)
of the Code;
(2) No gain or loss will be recognized by Xxxxxxxxx Fund upon
the transfer of substantially all of its assets to Franklin Fund in exchange
solely for voting shares of Franklin Fund (Code Sections 361(a) and 357(a)).
No opinion, however, will be expressed as to whether any accrued market
discount will be required to be recognized as ordinary income pursuant to
Section 1276 of the Code;
(3) No gain or loss will be recognized by Franklin Fund upon
the receipt of substantially all of the assets of Xxxxxxxxx Fund in exchange
solely for voting shares of Franklin Fund (Code Section 1032(a));
(4) The basis of the assets of Xxxxxxxxx Fund received by
Franklin Fund will be the same as the basis of such assets to Xxxxxxxxx Fund
immediately prior to the exchange (Code Section 362(b));
(5) The holding period of the assets of Xxxxxxxxx Fund
received by Franklin Fund will include the period during which such assets
were held by Xxxxxxxxx Fund (Code Section 1223(2));
(6) No gain or loss will be recognized to the shareholders of
Xxxxxxxxx Fund upon the exchange of their shares in Xxxxxxxxx Fund for voting
shares of Franklin Fund (Code Section 354(a));
(7) The basis of Franklin Fund Shares received by Xxxxxxxxx
Fund's shareholders shall be the same as the basis of the shares of Xxxxxxxxx
Fund exchanged therefor (Code Section 358(a)(1));
(8) The holding period of Franklin Fund Shares received by
Xxxxxxxxx Fund's shareholders (including fractional shares to which they may
be entitled) will include the holding period of Xxxxxxxxx Fund's shares
surrendered in exchange therefor, provided that Xxxxxxxxx Fund's shares were
held as a capital asset on the date of the exchange (Code Section 1223(1));
and
(9) Franklin Fund will succeed to and take into account as of
the date of the proposed transfer the items of Xxxxxxxxx Fund described in
Section 381(c) of the Code (as defined in Section 1.381(b)-1(b) of the Income
Tax Regulations), subject to the conditions and limitations specified in
Sections 381(b) and (c), 382, 383 and 384 of the Code and the Income Tax
Regulations thereunder.
(g) That the Trust shall have received an opinion in form and
substance satisfactory to it from Messrs. Xxxxxxxx Ronon Xxxxxxx & Xxxxx,
LLP, counsel to Xxxxxxxxx Fund, to the effect that, subject in all respects
to the effects of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other laws now or hereafter affecting generally
the enforcement of creditors' rights:
(1) Xxxxxxxxx Fund was created as a business trust under the
laws of the Commonwealth of Massachusetts on July 17, 1989, and is a validly
existing business trust and in good standing under the laws of that
commonwealth;
(2) Xxxxxxxxx Fund is authorized to issue an unlimited number
of shares of beneficial interest, par value $0.01 per share. Assuming that
the initial shares of beneficial interest were issued in accordance with the
1940 Act and the Amended and Restated Declaration of Trust and By-laws of
Xxxxxxxxx Fund, and that all other outstanding shares of Xxxxxxxxx Fund were
sold, issued and paid for in accordance with the terms of Xxxxxxxxx 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) Xxxxxxxxx Fund is an open-end, diversified investment
company of the management type registered as such under the 1940 Act;
(4) Except as disclosed in Xxxxxxxxx Fund's currently
effective prospectus, such counsel does not know of any material suit,
action, or legal or administrative proceeding pending or threatened against
Xxxxxxxxx Fund, the unfavorable outcome of which would materially and
adversely affect Xxxxxxxxx Fund;
(5) All actions required to be taken by Xxxxxxxxx Fund to
authorize this Agreement and Plan and to effect the Plan of Reorganization
contemplated hereby have been duly authorized by all necessary action on the
part of Xxxxxxxxx Fund; and
(6) Neither the execution, delivery, nor performance of this
Agreement and Plan by Xxxxxxxxx Fund violates any provision of its Amended
and Restated Declaration of Trust or By-laws, or the provisions of any
agreement or other instrument known to such counsel to which Xxxxxxxxx Fund
is a party or by which Xxxxxxxxx Fund is otherwise bound; this Agreement and
Plan is the legal, valid and binding obligation of Xxxxxxxxx Fund and is
enforceable against Xxxxxxxxx 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 Xxxxxxxxx Fund with regard to
matters of fact, and certain certifications and written statements of
governmental officials with respect to the good standing of Xxxxxxxxx Fund.
(h) That Xxxxxxxxx Fund shall have received an opinion in form and
substance satisfactory to it from Messrs. Xxxxxxxx Ronon Xxxxxxx & Xxxxx,
LLP, counsel to the Trust, 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) The Trust was created as a business trust under the laws
of the State of Delaware on September 14, 1993, and is a validly existing
business trust and in good standing under the laws of that state;
(2) The Trust is authorized to issue an unlimited number of
shares of beneficial interest of Franklin Fund, par value $0.01 per share.
Assuming that the initial shares of beneficial interest of Franklin Fund were
issued in accordance with the 1940 Act, and the Agreement and Declaration of
Trust and By-laws of the Trust, and that all other outstanding shares of
Franklin Fund were sold, issued and paid for in accordance with the terms of
Franklin Fund's prospectus in effect at the time of such sales, each such
outstanding share of Franklin Fund 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 Franklin Fund's currently effective
prospectus, such counsel does not know of any material suit, action, or legal
or administrative proceeding pending or threatened against the Trust, the
unfavorable outcome of which would materially and adversely affect the Trust
or Franklin Fund;
(5) Franklin Fund Shares to be issued pursuant to the terms of
this Agreement and Plan have been duly authorized and, when issued and
delivered as provided in this Agreement and Plan, will have been validly
issued and fully paid and will be non-assessable by the Trust;
(6) All actions required to be taken by the Trust to authorize
this Agreement and Plan and to effect the Plan of Reorganization contemplated
hereby have been duly authorized by all necessary action on the part of the
Trust;
(7) Neither the execution, delivery, nor performance of this
Agreement and Plan by the Trust violates any provision of its Agreement and
Declaration of Trust or By-laws, or the provisions of any agreement or other
instrument known to such counsel to which the Trust is a party or by which
the Trust, on behalf of Franklin Fund, is otherwise bound; this Agreement and
Plan is the legal, valid and binding obligation of the Trust and is
enforceable against the Trust and/or Franklin Fund in accordance with its
terms; and
(8) The registration statement of the Trust, of which the
prospectus, dated September 1, 1998, as amended January 1, 1999, of Franklin
Fund is a part (the "Prospectus"), is, at the time of the signing of this
Agreement and 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 Agreement
and Plan, or at the Closing, such Prospectus (except for the financial
statements and other financial and statistical data included therein, as to
which counsel need not express an opinion), contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and such
counsel knows of no legal or government proceedings required to be described
in the Prospectus, or of any contract or document of a character required to
be described in the Prospectus that is not described as required.
In giving the opinions set forth above, this counsel may state that it
is relying on certificates of the officers of 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 Xxxxxxxxx Fund shall have received a certificate from the
President and Secretary of the Trust to the effect that the statements
contained in Franklin Fund's Prospectus, at the time the Prospectus became
effective, at the date of the signing of this Agreement and Plan, and at the
Closing, did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(j) That the Trust's Registration Statement with respect to Franklin
Fund Shares to be delivered to Xxxxxxxxx Fund's shareholders in accordance
with this Agreement and Plan shall have become effective, and no stop order
suspending the effectiveness of the Registration Statement or any amendment
or supplement thereto, shall have been issued prior to the Closing Date or
shall be in effect at Closing, and no proceedings for the issuance of such an
order shall be pending or threatened on that date.
(k) That Franklin Fund Shares to be delivered hereunder shall be
eligible for sale by the Trust with each state commission or agency with
which such eligibility is required in order to permit Franklin Fund Shares
lawfully to be delivered to each Xxxxxxxxx Fund shareholder.
(l) That, at the Closing, Xxxxxxxxx Fund transfers to the Trust, on
behalf of Franklin Fund, aggregate Net Assets of Xxxxxxxxx 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 Xxxxxxxxx
Fund on the Closing Date.
9. BROKERAGE FEES AND EXPENSES.
(a) Xxxxxxxxx Fund and the Trust 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 Agreement and Plan shall be borne one-quarter by Xxxxxxxxx Fund,
one-quarter by Franklin Fund, one-quarter by Franklin Advisers, Inc., and
one-quarter by Xxxxxxxxx Global Advisors Limited.
10. TERMINATION; POSTPONEMENT; WAIVER; ORDER.
(a) Anything contained in this Agreement and Plan to the contrary
notwithstanding, this Agreement and Plan may be terminated and the Plan of
Reorganization abandoned at any time (whether before or after approval
thereof by the shareholders of Xxxxxxxxx Fund) prior to the Closing or the
Closing may be postponed as follows:
(1) by mutual consent of Xxxxxxxxx Fund and the Trust;
(2) by the Trust if any condition of its obligations set forth
in Section 8 has not been fulfilled or waived; or
(3) by Xxxxxxxxx Fund if any condition of its obligations set
forth in Section 8 has not been fulfilled or waived.
An election by Xxxxxxxxx Fund or the Trust to terminate this Agreement
and Plan and to abandon the Plan of Reorganization shall be exercised,
respectively, by the Board of Trustees of Xxxxxxxxx Fund or the Trust.
(b) If the transactions contemplated by this Agreement and Plan have
not been consummated by January 31, 2000, the Agreement and Plan shall
automatically terminate on that date, unless a later date is agreed to by
both the Trust and Xxxxxxxxx Fund.
(c) In the event of termination of this Agreement and Plan pursuant
to the provisions hereof, the same shall become void and have no further
effect, and neither Xxxxxxxxx Fund nor the Trust, nor their trustees,
officers, agents or shareholders shall have any liability in respect of this
Agreement and Plan.
(d) At any time prior to the Closing, any of the terms or conditions
of this Agreement and Plan may be waived by the party who is entitled to the
benefit thereof by action taken by that party's Board of Trustees if, in the
judgment of such Board of Trustees, such action or waiver will not have a
material adverse effect on the benefits intended under this Agreement and
Plan to its shareholders, on behalf of whom such action is taken.
(e) The respective representations and warranties contained in
Sections 4 to 6 hereof shall expire with and be terminated by the Plan of
Reorganization, and neither Xxxxxxxxx Fund nor the Trust, nor any of their
officers, trustees, agents or shareholders shall have any liability with
respect to such representations or warranties after the Closing. This
provision shall not protect any officer, trustee, agent or shareholder of
Xxxxxxxxx Fund or the Trust against any liability to the entity for which
that officer, trustee, agent or shareholder so acts or to its shareholders to
which that officer, trustee, agent or shareholder would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties in the conduct of such office.
(f) If any order or orders of the U.S. Securities and Exchange
Commission with respect to this Agreement and 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 Xxxxxxxxx Fund or the Trust to be
acceptable, such terms and conditions shall be binding as if a part of this
Agreement and Plan without further vote or approval of the shareholders of
Xxxxxxxxx Fund, unless such terms and conditions shall result in a change in
the method of computing the number of Franklin Fund Shares to be issued to
Xxxxxxxxx Fund in which event, unless such terms and conditions shall have
been included in the proxy solicitation material furnished to the
shareholders of Xxxxxxxxx Fund prior to the meeting at which the transactions
contemplated by this Agreement and Plan shall have been approved, this
Agreement and Plan shall not be consummated and shall terminate unless
Xxxxxxxxx Fund shall promptly call a special meeting of shareholders at which
such conditions so imposed shall be submitted for approval.
11. ENTIRE AGREEMENT AND AMENDMENTS.
This Agreement and Plan embodies the entire agreement between the
parties and there are no agreements, understandings, restrictions, or
warranties between the parties other than those set forth herein or herein
provided for. This Agreement and Plan may be amended only by mutual consent
of the parties in writing. Neither this Agreement and Plan nor any interest
herein may be assigned without the prior written consent of the other party.
12. COUNTERPARTS.
This Agreement and Plan may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts
together shall constitute but one instrument.
13. NOTICES.
Any notice, report, or demand required or permitted by any provision of
this Agreement and Plan shall be in writing and shall be deemed to have been
given if delivered or mailed, first class postage prepaid, addressed to
Franklin Real Estate Securities Trust at 000 Xxxxxxxx Xxxxxx Xxxxxxxxx, P. O.
Xxx 0000, Xxx Xxxxx, Xxxxxxxxxx 00000, Attention: Secretary, or Templeton
Global Real Estate Fund, at 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx,
Xxxxxxx 00000, Attention: Secretary, as the case may be.
14. GOVERNING LAW.
This Agreement and Plan shall be governed by and carried out in
accordance with the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, Franklin Real Estate Securities Trust, on behalf of
Franklin Real Estate Securities Fund, and Xxxxxxxxx Global Real Estate Fund
have each caused this Agreement and Plan to be executed on its behalf by its
duly authorized officers, all as of the date and year first-above written.
FRANKLIN REAL ESTATE SECURITIES TRUST, on
behalf of FRANKLIN REAL ESTATE SECURITIES
FUND
Attest:
/s/ XXXXXX XXXXX By: /s/ XXXXXXX X. XXXXXX
Assistant Secretary Xxxxxxx X. Xxxxxx
Vice President
XXXXXXXXX GLOBAL REAL ESTATE FUND
Attest:
/s/ XXXXXX XXXXX By: /s/ XXXXXXX X. XXXXXX
Assistant Secretary Xxxxxxx X. Xxxxxx
Vice President
