NAME OF REGISTRANT:
Franklin Custodian Funds
File No. 811-00537
EXHIBIT - Item 77Q1 (g): Exhibits
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (Agreement)
is made as of this ____ day of January, 2008 by and between Franklin
Custodian Funds Inc., a Maryland corporation (the Fund), and Franklin
Custodian Funds, a Delaware statutory trust (the DE Trust) (the Fund and
the DE Trust are hereinafter collectively referred to as the parties).
In consideration of the mutual promises contained herein,
and intending to be legally bound, the parties hereto agree as follows:
1. Plan of Reorganization.
(a) Upon satisfaction of the conditions
precedent described in Section 3
hereof, the Fund, on behalf of itself and its five separately designated
series, as listed on Exhibit A hereto (collectively, the MD series),
will convey, transfer and deliver to the DE Trust, on behalf of each
of its separately designated series (collectively, the DE series)
(each of which corresponds to the MD series with the same name)
at the closing provided for in Section 2 (hereinafter referred to as the
Closing) all of the Funds then-existing assets, including the assets
of the MD series (the Assets), such Assets to become the Assets of
the corresponding DE series. In consideration thereof, the DE Trust,
on behalf of each DE series, agrees at the Closing (i) to assume and
pay when due all obligations and liabilities of the corresponding MD
series (including such MD series portion of any obligation and liability
of the Fund), existing on or after the Effective Date of the Reorganization
(as defined in Section 2 hereof), whether absolute, accrued, contingent or
otherwise, including all fees and expenses in connection with this
Agreement, which fees and expenses shall, in turn, include, without
limitation, costs of legal advice, accounting, printing, mailing, proxy
solicitation and transfer taxes, if any (collectively, the Liabilities),
such Liabilities to become the obligations and liabilities of the
corresponding DE series; and (ii) to deliver to the Fund, on behalf
of each MD series, in accordance with paragraph (b) of this Section 1,
full and fractional shares of each class of shares of beneficial interest,
without par value, of the corresponding DE series, equal in number to
the number of full and fractional shares of the corresponding class of
shares of common stock of the par value of ONE CENT ($0.01) of that
MD series outstanding at the time of calculation of the MD series net
asset value (NAV) on the business day immediately preceding the
Effective Date of the Reorganization. The reorganizations contemplated
hereby are intended to qualify as reorganizations within the meaning of
Section 368 of the Internal Revenue Code of 1986, as amended
(the Code). The Fund shall distribute to the MD series shareholders
the shares of the corresponding DE series in accordance with this
Agreement and the resolutions of the Board of Directors of the Fund
(the Board of Directors) authorizing the transactions contemplated
by this Agreement.
(b) In order to effect the delivery of shares described
in Section 1(a)(ii) hereof, the DE Trust will establish an open account
for each shareholder of the Fund and, on the Effective Date of the
Reorganization, will credit to such account full and fractional shares
of beneficial interest, without par value, of the corresponding DE
series and class of the DE Trust equal to the number of full and
fractional shares of beneficial interest such shareholder holds in
the corresponding MD series and classes of the Fund at the time
of calculation of the Funds NAV on the business day immediately
preceding the Effective Date of the Reorganization. Fractional shares
of the DE Trust will be carried to the third decimal place. At the time
of calculation of the MD series NAV on the business day immediately
preceding the Effective Date of the Reorganization, the NAV per share
of each DE series and class of shares of the DE Trust shall be deemed
to be the same as the NAV per share of each corresponding MD series
and class of shares of the Fund. On the Effective Date of the
Reorganization, each certificate representing shares of a class of shares
of an MD series will be deemed to represent the same number of shares
of the corresponding DE series and class of the DE Trust. Simultaneously
with such crediting of the shares of the DE Trust to the shareholders of
record of the Fund, the shares of the Fund held by such shareholders
shall be cancelled. Each shareholder of the Fund will have the right to
deliver their share certificates of the Fund to the DE Trust in exchange
for share certificates of the DE Trust. However, a shareholder need not
deliver such certificates to the DE Trust unless the shareholder so desires.
(c) As soon as practicable after the Effective Date of the
Reorganization, the Fund shall take all necessary steps under Maryland
law to effect a complete dissolution of the Fund and the MD series.
(d) The expenses of entering into and carrying out this
Agreement will be borne by the Fund to the extent not paid by
its investment manager.
2. Closing and Effective Date of the Reorganization.
The Closing shall consist of (i) the conveyance,
transfer and delivery of the Assets to the DE Trust, on behalf of its DE
series, in exchange for the assumption and payment, when due, by the
DE Trust, on behalf of its DE series, of the Liabilities of the corresponding
MD series; and (ii) the issuance and delivery of the DE series shares in
accordance with Section 1(b), together with related acts necessary to
consummate such transactions. Subject to receipt of all necessary
regulatory approvals and the final adjournment of the meeting of
shareholders of the Fund at which this Agreement is considered and
approved, the Closing shall occur on such date as the officers of the
parties may mutually agree (Effective Date of the Reorganization).
3. Conditions Precedent.
The obligations of the Fund and the DE Trust to
effectuate the transactions hereunder shall be subject to the satisfaction
of each of the following conditions:
(a) Such authority and orders from the U.S. Securities
and Exchange Commission (the commission) and state securities
commissions as may be necessary to permit the parties to carry out the
transactions contemplated by this Agreement shall have been received;
(b) (i) One or more post-effective amendments to the Funds
Registration Statement on Form N-1A (Registration Statement)
under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended (the 1940 Act), containing
such amendments to such Registration Statement as are determined
under the supervision of the Board of Directors to be necessary and
appropriate as a result of this Agreement, shall have been filed with
the Commission; (ii) the DE Trust shall have adopted as its own
such Registration Statement, as so amended; (iii) the most recent
post-effective amendment or amendments to the Funds Registration
Statement shall have become effective, and no stop order suspending
the effectiveness of the Registration Statement shall have been issued,
and no proceeding for that purpose shall have been initiated or
threatened by the Commission (other than any such stop order,
proceeding or threatened proceeding which shall have been
withdrawn or terminated); and (iv) an amendment of the Form
N-8A Notification of Registration filed pursuant to Section 8(a)
of the 1940 Act (Form N-8A) reflecting the change in legal form
of the Fund to a Delaware statutory trust shall have been filed with
the Commission and the DE Trust shall have expressly adopted such
amended Form N-8A as its own for purposes of the 1940 Act;
(c) Each party shall have received an opinion of
Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP, Philadelphia, Pennsylvania,
to the effect that, assuming the reorganizations contemplated hereby
are carried out in accordance with this Agreement, the laws of the State
of Maryland and the State of Delaware, and in accordance with
customary representations provided by the parties in a certificate(s)
delivered to Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP, each reorganization
contemplated by this Agreement qualifies as a reorganization under
Section 368 of the Code, and thus will not give rise to the recognition
of income, gain or loss for federal income tax purposes to the Fund,
on behalf of the MD series, the DE Trust, on behalf of the DE series,
or their shareholders;
(d) The Fund shall have received an opinion of Xxxxxxxx
Ronon Xxxxxxx & Xxxxx, LLP, dated the Effective Date of the Reorganization,
addressed to and in form and substance reasonably satisfactory to the Fund,
to the effect that (i) the DE Trust is a statutory trust duly formed, in good
standing and having a legal existence under the laws of the State of
Delaware; (ii) this Agreement and the transactions contemplated thereby
and the execution and delivery of this Agreement have been duly authorized
and approved by all requisite statutory trust action of the DE Trust and
this Agreement is a legal, valid and binding agreement of the DE Trust
in accordance with its terms; and (iii) the shares of the DE Trust to be
issued in the reorganization, upon issuance thereof in accordance with
this Agreement, will have been validly issued and fully paid and will
be nonassessable by the DE Trust;
(e) The DE Trust shall have received the opinion
of Bleakley Xxxxx & Xxxxxxx, LLP, dated the Effective Date of the
Reorganization, addressed to and in form and substance reasonably
satisfactory to the DE Trust, to the effect that: (i) the Fund is duly
incorporated, legally existing and in good standing under the laws
of the State of Maryland; and (ii) this Agreement and the transactions
contemplated hereby and the execution and delivery of this Agreement
have been duly authorized and approved by all requisite corporate action
of the Fund and this Agreement is a legal, valid and binding agreement
of the Fund in accordance with its terms;
(f) The shares of the DE Trust are eligible for offering
to the public in those states of the United States and jurisdictions in which
the shares of the Fund are currently eligible for offering to the public
so as to permit the issuance and delivery by the DE Trust of the shares
contemplated by this Agreement to be consummated;
(g) This Agreement and the transactions contemplated
hereby shall have been duly adopted and approved by the appropriate
action of the Board of Directors and the shareholders of the Fund;
(h) The shareholders of the Fund shall have voted to
direct the Fund to vote, and the Fund shall have voted, as sole shareholder
of each series of the DE Trust, to:
(1) Elect as Trustees of the DE Trust the following
individuals: Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx, Xxx Xxxx,
Xxxxx X. Holiday, Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx, Xx.,
Xxxxx X.X. XxXxxx, Xxxxx X. Xxxxx, Xxxxx X. Xxxxxxxx,
and Xxxx X. Xxxxxx; and
(2) Approve Investment Management Agreements
between Franklin Advisers, Inc., on behalf of the Franklin DynaTech
Fund, Franklin Income Fund, Franklin U.S. Government Securities Fund,
and Franklin Utilities Fund, and the DE Trust, and Franklin Investment
Advisory Services, LLC (together, the Investment Managers),
on behalf of the Franklin Growth Fund, and the DE Trust, which
are substantially identical to the then-current Investment Management
Agreements between such Investment Manager and the Fund;
(i) The Trustees of the DE Trust shall have duly adopted
and approved this Agreement and the transactions contemplated hereby,
including authorization of the issuance and delivery by the DE Trust of
shares of the DE Trust on the Effective Date of the Reorganization and
the assumption by the DE Trust of the Liabilities of the Fund in exchange
for the Assets of the Fund pursuant to the terms and provisions of this
Agreement, and shall have taken the following actions at a meeting
duly called:
(1) Approval of the Investment Management Agreements
described in paragraph (h)(2) of this Section 3 between the Investment
Managers and the DE Trust;
(2) Approval of the assignment to the DE Trust of the
custody agreement, as amended to date, between the Bank of New York
and the Fund;
(3) Selection of PricewaterhouseCoopers LLP as the
DE Trusts independent auditors for the fiscal year ending
September 30, 2008;
(4) Approval of subcontracts for fund administrative
services with Franklin Xxxxxxxxx Services, LLC;
(5) Approval of a distribution agreement between the
DE Trust and Franklin Xxxxxxxxx Distributors, Inc.;
(6) Approval of a form of dealer agreement
between dealers and Franklin Xxxxxxxxx Distributors, Inc., including
any amendment(s) to the form of dealer agreement;
(7) Approval of distribution plans by the DE
Trust pursuant to Rule 12b-1 under the 1940 Act relating to each
of Class A, B, B1, C, and R, as applicable:
(8) Approval of the multiple class plans pursuant
to Rule 18f-3;
(9) Approval of a transfer agent and shareholder
services agreement with Franklin Xxxxxxxxx Investor Services, LLC;
(10) Authorization of the issuance by the DE Trust
of one share of each series of the DE Trust to the Fund in consideration
for the payment of $1.00 for each such share for the purpose of enabling
the Fund to vote on the matters referred to in paragraph (h) of this
Section 3, and the subsequent redemption of such shares, all prior
to the Effective Date of the Reorganization; and
(11) Submission of the matters referred to in
paragraph (h) of this Section 3 to the Fund as sole shareholder
of each series of the DE Trust.
At any time prior to the Closing, any of the foregoing
conditions may be waived or amended, or any additional terms and
conditions may be fixed, by the Board of Directors, if, in the judgment
of such Board, such waiver, amendment, term or condition will not
affect in a materially adverse way the benefits intended to be accorded
the shareholders of the Fund under this Agreement.
4. Dissolution of the Fund.
Promptly following the consummation of the Closing, the
officers of the Fund shall take all steps necessary under Maryland law
to dissolve its corporate status and the MD series, including publication
of any necessary notices to creditors, receipt of any necessary
pre-dissolution clearances from the State of Maryland, and filing
for record with the Secretary of the State of Maryland of
Articles of Dissolution.
5. Termination.
The Board of Directors may terminate this
Agreement and abandon the reorganization contemplated hereby,
notwithstanding approval thereof by the shareholders of the Fund,
at any time prior to the Effective Date of the Reorganization if, in
the judgment of such Board, the facts and circumstances make
proceeding with this Agreement inadvisable.
6. Entire Agreement.
This Agreement embodies the entire agreement between
the parties hereto and there are no agreements, understandings, restrictions
or warranties among the parties hereto other than those set forth herein
or herein provided for.
7. Further Assurances; Other Agreements.
The Fund and the DE Trust shall take such further
action as may be necessary or desirable and proper to consummate
the transactions contemplated hereby.
8. Counterparts.
This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.
9. Governing Law.
This Agreement and the transactions contemplated
hereby shall be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware.
IN WITNESS WHEREOF, the Fund and the DE Trust have
each caused this Agreement and Plan of Reorganization to be executed
on its behalf by its President or a Vice President and attested by its
Secretary or an Assistant Secretary, all as of the day and
year first-above written.
Attest:
By/s/Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Assistant Secretary
Attest:
By/s/Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Assistant Secretary
FRANKLIN CUSTODIAN FUNDS INC.
(a Maryland corporation)
By/s/Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Vice President
FRANKLIN CUSTODIAN FUNDS
(a Delaware statutory trust)
By/s/Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Vice President
EXHIBIT A
Franklin DynaTech Fund
Franklin Growth Fund
Franklin Income Fund
Franklin U.S. Government Securities Fund
Franklin Utilities Fund
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