NAME OF REGISTRANT
▇▇▇▇▇▇▇▇ Custodian Funds
File No. 811-00537
EXHIBIT ITEM No. 77q1(g): Exhibits
Agreement and Plan of Reorganization
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") is made
as of this 9th day of March, 2016 by and between Franklin Custodian
Funds ("FCF"), a statutory trust created under the laws of the
State of Delaware, with its principal place of business at One
Franklin Parkway, San Mateo, CA 94403, on behalf of its series,
Franklin Growth Fund (the "Acquiring Fund"), and Franklin Global
Trust ("FGT"), a statutory trust created under the laws of the
State of Delaware, with its principal place of business at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, on behalf of its series,
Franklin Large Cap Equity Fund (the "Target Fund"). Franklin
Advisers, Inc. ("Advisers"), a California corporation, investment
manager to the Acquiring Fund, and Fiduciary International Inc.
("Fiduciary"), a New York corporation, investment manager to the
Target Fund, join this Plan solely for purposes of Section 7.
PLAN OF REORGANIZATION
The reorganization (hereinafter referred to as the "Reorganization")
will consist of (i) the acquisition by FCF, on behalf of the
Acquiring Fund, of substantially all of the property, assets and
goodwill of the Target Fund in exchange solely for full and
fractional Class A, Class C, Class R and Advisor Class shares
of beneficial interest, with no par value, of the Acquiring
Fund (the "Acquiring Fund Shares"); (ii) the distribution of
Acquiring Fund Shares to the holders of Class A, Class C, Class R
and Advisor Class shares of beneficial interest of the Target
Fund (the "Target Fund Shares"), respectively, according to their
respective interests in the Target Fund in complete liquidation
of the Target Fund; and (iii) the dissolution of the Target Fund
as soon as is practicable after the closing
(as described in Section 3, hereinafter called the "Closing"),
all upon and subject to the terms and conditions of the Plan
hereinafter set forth.
AGREEMENT
In order to consummate the Reorganization and in consideration
of the premises and of the covenants and agreements hereinafter
set forth, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Sale and Transfer of Assets, Liquidation and
Dissolution of the Target Fund.
(a) Subject to the terms and conditions of the Plan, and in reliance
on the representations and warranties herein contained, and in
consideration of the delivery by the Acquiring Fund of the number
of Acquiring Fund Shares hereinafter provided, FGT, on behalf of the
Target Fund, agrees that, at the time of Closing, it will convey,
transfer and deliver to the Acquiring Fund all of the Target Fund's
then existing assets, including any interest in pending or future
legal claims in connection with past or present portfolio holdings,
whether in form of class action claims, opt-out or other direct
litigation claims, or regulator or government-established investor
recovery fund claims, and any and all resulting recoveries, 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 25% of the costs and expenses of carrying out
the Reorganization in accordance with Section 7 of the Plan,
(including, but not limited to, fees of counsel and accountants,
and expenses of the Target Fund's liquidation and
dissolution contemplated hereunder), which costs and expenses
shall be established on the Target Fund's books as liability
reserves; (ii) discharge its unpaid liabilities on its books at the
Closing Date (as such term is defined in Section 3), including,
but not limited to, its income dividends and capital gains
distributions, if any, payable for the period prior to the
Closing Date and through the final taxable year ending with the
Target Fund's complete liquidation; and (iii) pay such contingent
liabilities, if any, as the officers of FGT shall reasonably deem to
exist against the Target Fund at the Closing Date, for which
contingent and other appropriate liability reserves shall be
established on the Target Fund's books (such assets hereinafter
"Net Assets"). FCF, on behalf of the Acquiring Fund, shall not
assume any liability of the Target Fund, whether accrued or
contingent, known or unknown, and the Target 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.
(b) Subject to the terms and conditions of the Plan, and in
reliance on the representations and warranties herein contained,
and in consideration of such sale, conveyance, transfer, and
delivery, FCF, on behalf of the Acquiring Fund, agrees at the
Closing to deliver to FGT, on behalf of the Target Fund, the
number of Acquiring Fund Shares, determined by dividing the net
asset value per share of each Class A, Class C, Class R and Advisor
Class shares of the Target Fund by the net asset value per share
each of Class A, Class C, Class R and Advisor Class shares of the
Acquiring Fund, respectively, and separately multiplying the result
thereof by the number of outstanding Class A, Class C, Class R and
Advisor Class shares, respectively, of the Target Fund as
of 1:00 p.m., Pacific time, on the Closing Date. The Acquiring Fund
Shares delivered to FGT, on behalf of the Target Fund, at the
Closing shall have an aggregate net asset value equal to the value
of the Target Fund's Net Assets, all determined as provided in
Section 2 of the Plan and as of the date and time specified herein.
(c) Immediately following the Closing, FGT, on behalf of the Target
Fund, shall distribute the Acquiring Fund Shares received by FGT, on
behalf of the Target Fund, pursuant to this Section 1 to the Target
Fund's shareholders of record so that each shareholder receives full
and fractional Acquiring Fund Shares of the corresponding class of
the Acquiring Fund equal in value to the full and fractional shares
of the Target Fund held by the shareholder as of 1:00 p.m., Pacific
time, on the Closing Date. Such distribution shall be accomplished
by the establishment of accounts on the share records of the
Acquiring Fund of the type and in the amounts due such shareholders
based on their respective holdings in the Target Fund as
of 1:00 p.m., Pacific time, on the Closing Date. Fractional
Acquiring 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 Target Fund
Shares shall be entitled to surrender the same to the transfer
agent for the Acquiring Fund in exchange for the number of Acquiring
Fund Shares of the same class into which the Target Fund Shares
theretofore represented by the certificate or certificates so
surrendered shall have been converted. Until so surrendered, each
outstanding certificate, if any, which, prior to the Closing,
represented Target Fund Shares shall be deemed for all Acquiring
Fund purposes to evidence ownership of the number of Acquiring Fund
Shares into which the Target Fund Shares (which prior to the Closing
were represented thereby) have been converted. Certificates for the
Acquiring Fund Shares shall not be issued. After the distribution,
the Target Fund shall be dissolved.
(d) At the Closing, each shareholder of record of the Target Fund
as of the record date (the "Distribution Record Date") with
respect to any unpaid dividends and other distributions that were
declared prior to the Closing, including any dividend or
distribution declared pursuant to Section 6(d) hereof, shall have
the right to receive such unpaid dividends and distributions with
respect to the shares of the Target Fund that such person had
on such Distribution Record Date.
(e) All books and records relating to the Target Fund, including
all books and records required to be maintained under the Investment
Company Act of 1940 (the "1940 Act"), and the rules and regulations
thereunder, shall be available to the Acquiring Fund from and after
the date of the Plan, and shall be turned over to the Acquiring
Fund on or prior to the Closing.
2. Valuation.
(a) The net asset value per share of the Acquiring Fund Shares
and the Target Fund Shares and the value of the Target Fund's Net
Assets to be acquired by the Acquiring Fund hereunder shall in each
case be computed as of 1:00 p.m., Pacific time, on the Closing Date,
unless on such date: (i) the New York Stock Exchange ("NYSE") is not
open for unrestricted trading; or (ii) the reporting of trading on
the NYSE or other relevant market is disrupted; or (iii) any other
extraordinary financial event or market condition occurs (each of
the events described in (i), (ii) or (iii) are
referred to as a "Market Disruption"). The net asset value per
share of the Acquiring Fund Shares and the Target Fund Shares and
the value of the Target Fund's Net Assets shall be computed in
accordance with the valuation procedures set forth in the most
recent respective prospectus of the Acquiring Fund and the Target
Fund, as amended or supplemented.
(b) In the event of a Market Disruption on the proposed Closing Date
so that an accurate appraisal of the net asset value per share
of the Acquiring Fund Shares or Target Fund Shares or the value
of the Target 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
per share of the Acquiring Fund Shares and Target Fund Shares and
the value of the Target Fund's Net Assets shall be made by the
administrator to the Acquiring Fund and Target Fund.
3. Closing and Closing Date.
The Closing shall take place at the principal office of
FCF at 1:00 p.m., Pacific time, on March 11, 2016 or such
other date as the officers of FCF and FGT may mutually agree
(the "Closing Date"). FGT, on behalf of the Target Fund, shall
have provided for delivery as of the Closing those Net Assets to
be transferred to the account of the Acquiring Fund's custodian,
The Bank of New York Mellon, Mutual Funds Division, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇. FGT, on behalf of the Target Fund,
shall deliver at the Closing a list of names and addresses of the
holders of record of each class of the Target Fund 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,
as of 1:00 p.m., Pacific time, on the Closing Date. FCF, on behalf
of the Acquiring Fund, shall provide evidence that such Acquiring
Fund Shares have been registered in an account on the books of
Acquiring Fund in such manner as the officers of FGT may
reasonably request.
4. Representations and Warranties.
4.1. FCF, on behalf of the Acquiring Fund, represents and
warrants that:
(a) The Acquiring Fund is a series of FCF, which was
originally organized as a Delaware corporation in 1947,
reincorporated as a Maryland corporation in 1979, and
converted to a Delaware statutory trust effective February 1, 2008.
FCF is validly existing under the laws of the State of Delaware.
FCF is duly registered under the 1940 Act as an open-end management
investment company and the Acquiring Fund's shares sold were sold
pursuant to an effective registration statement filed under the
Securities Act of 1933 (the "1933 Act"), except for those shares
sold pursuant to the private offering exemption for the purpose of
raising initial capital or obtaining any required initial
shareholder approvals.
(b) FCF is authorized to issue an unlimited number of shares of
beneficial interest, without par value, of the Acquiring Fund. Each
outstanding share of the Acquiring Fund is fully paid,
non-assessable, and has full voting rights, and each Acquiring Fund
Share when issued pursuant to and in accordance with the Plan, will
be fully paid, non-assessable, and will have full voting rights.
The Acquiring Fund currently is divided into five classes of shares:
Class A, Class C, Class R, Class R6 and Advisor Class shares of
beneficial interest, of which Class A, Class C, Class R and Advisor
Class represent Acquiring Fund Shares. An unlimited number of
shares of beneficial interest of the Acquiring Fund has been
allocated and designated to each class of the Acquiring Fund.
(c) FCF, on behalf of the Acquiring Fund, is not a party to
or obligated under any provision of its Agreement and Declaration
of Trust, as amended, or By-laws, as amended, 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 the Plan, and no consent, approval, authorization or order of
any court or governmental authority is required for the consummation
by FCF, on behalf of the Acquiring Fund, of the transactions
contemplated by the Plan, except for the registration of Acquiring
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.
(d) The financial statements appearing in the Acquiring Fund's
Annual Report to Shareholders for the fiscal year ended
September 30, 2015, audited by PricewaterhouseCoopers LLP, and any
interim unaudited financial statements, fairly present the financial
position of the Acquiring Fund as of their respective dates and the
results of the Acquiring Fund's operations for periods indicated, in
conformity with Generally Accepted Accounting Principles applied on
a consistent basis.
(e) The books and records of the Acquiring Fund accurately summarize
the accounting data represented and contain no material omissions
with respect to the business and operations of the Acquiring Fund.
(f) FCF has elected to treat the Acquiring 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"). The Acquiring 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, has not had any earnings and
profits accumulated in any taxable year to which the provisions
of Subchapter M of the Code (or the corresponding provisions of
prior law) did not apply, and intends to continue to qualify as
a RIC after the Closing Date. Consummation of the transactions
contemplated by the Plan will not cause the Acquiring Fund to
fail to be qualified as a RIC as of the Closing Date.
(g) The Acquiring Fund does not have any unamortized or
unpaid organizational fees or expenses.
(h) The Acquiring 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 4.1(d) hereof and those incurred in the ordinary
course of business as an investment company and of a nature and
amount similar to, and consistent with, those shown in such
financial statements since the dates of those financial statements.
(i) There is no inter-corporate indebtedness existing between the
Target Fund and the Acquiring Fund that was issued, acquired, or
will be settled at a discount.
(j) The registration statement on Form N-14 referred to in
Section 5.1(a) hereof (the "Registration Statement"), including any
prospectus or statement of additional information contained or
incorporated therein by reference and any supplements or amendments
thereto, insofar as it relates to the Acquiring Fund and the
Acquiring Fund Shares, will, from the effective date of the
Registration Statement through the date of the special meeting of
the Target Fund's shareholders (the "Special Meeting") and on the
Closing Date: (i) comply, as amended, in all material respects with the
provisions of the 1933 Act, the Securities Exchange Act of
1934 (the "1934 Act"), the 1940 Act, the rules and regulations
thereunder, and all applicable state securities laws and the rules
and regulations thereunder; and (ii) 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, provided, however, that the representations and
warranties of this subparagraph shall not apply to statements in
or omissions from the Registration Statement made in reliance
upon and in conformity with information that was furnished by the
Target Fund for use therein.
(k) Since September 30, 2015, there has not been any material
adverse change in the Acquiring Fund's financial condition, assets,
liabilities or business other than changes occurring in the ordinary
course of business.
(l) On the Closing Date, all material Returns (as defined below)
of the Acquiring Fund required by law to have been filed by such
date (including any extensions) shall have been filed and are or
will be true, correct and complete in all material respects, and
all Taxes (as defined below) shown as due or claimed to be due by
any government entity shall have been paid or provision has been made
for the payment thereof. To FCF's knowledge, no such Return is
currently under audit by any federal, state, local or foreign Tax
authority; no assessment has been asserted with respect to such
Returns; there are no levies, liens or other encumbrances on the
Acquiring Fund or its assets resulting from the non-payment of any
Taxes; no waivers of the time to assess any such Taxes are
outstanding nor are any written requests for such waivers pending;
and adequate provision has been made in the Acquiring Fund's
financial statements for all Taxes in respect of all periods ended
on or before the date of such financial statements. As used in
this Plan, "Tax" or "Taxes" means any tax, governmental fee or other
like assessment or charge of any kind whatsoever
(including, but not limited to, withholding on amounts paid
to or by any person), together with any interest, penalty, a
ddition to tax or additional amount imposed by any governmental
authority (domestic or foreign) responsible for the imposition of
any such tax. "Return" means reports, returns, information returns,
elections, agreements, declarations, or other documents of any
nature or kind (including any attached schedules, supplements and
additional or supporting material) filed or required to be filed
with respect to Taxes, including any claim for refund, amended
return or declaration of estimated Taxes (and including any
amendments with respect thereto).
(m) All information to be furnished by FCF, on behalf of the
Acquiring Fund, for use in preparing any registration statement
(including the Registration Statement), proxy statement and other
documents which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete in all material
respects and shall comply with federal securities and other laws and
regulations thereto.
(n) The Acquiring Fund has no outstanding options, warrants,
pre-emptive rights or other rights to subscribe for or purchase
Acquiring Fund Shares, 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 management investment company
operating under the 1940 Act.
(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by FCF, on
behalf of the Acquiring Fund, of the transactions contemplated by
the Plan, except as may otherwise be required under federal or
state securities laws or the rules and regulations thereunder.
(p) There is no material suit, judicial action, or legal or
administrative proceeding pending or threatened against FCF, on
behalf of the Acquiring Fund. FCF, on behalf of the Acquiring
Fund, is not 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 the Acquiring Fund's business
or its ability to consummate the transactions herein contemplated.
(q) The execution, delivery, and performance of the Plan have
been duly authorized by all necessary action of FCF's Board of
Trustees.
(r) The Acquiring 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.
4.2. FGT, on behalf of the Target Fund, represents and warrants that:
(a) The Target Fund is a series of FGT, which was organized as a
Delaware statutory trust on September 26, 2000 and is validly
existing under the laws of the State of Delaware. FGT is duly
registered under the 1940 Act as an open end management investment
company and the Target 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 initial capital or obtaining any
required initial shareholder approvals.
(b) FGT is authorized to issue an unlimited number of shares of
beneficial interest, without par value of the Target Fund. Each
outstanding share of the Target Fund is fully paid, non-assessable,
and has full voting rights. The Target Fund currently is divided
into four classes of shares: Class A, Class C, Class R and Advisor
Class shares of beneficial interest, which represent Target Fund
Shares. An unlimited number of shares of beneficial interest of the
Target Fund has been allocated and designated to each class of the
Target Fund.
(c) FGT, on behalf of the Target Fund, is not a party to or
obligated under any provision of its Agreement and Declaration of
Trust, as amended, or By-laws, as amended, 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 the Plan, and no consent, approval, authorization or order
of any court or governmental authority is required for the
consummation by FGT, on behalf of the Target Fund, of the
transactions contemplated by the Plan. FGT, on behalf of the Target
Fund, has no material contracts or other commitments (other than
the Plan or agreements for the purchase of securities entered into
in the ordinary course of business and consistent with its
obligations under the Plan) which will not be terminated by it
in accordance with their terms at or prior to the Closing Date, or
which will result in a penalty or additional fee to be due from or
payable by it.
(d) The financial statements appearing in the Target Fund's Annual
Report to Shareholders for the fiscal year ended July 31, 2015,
audited by PricewaterhouseCoopers LLP, and any interim unaudited
financial statements, fairly present the financial position of the
Target Fund as of their respective dates and the results of the
Target Fund's operations for periods indicated, in conformity with
Generally Accepted Accounting Principles applied on a consistent
basis.
(e) The books and records of the Target Fund accurately summarize
the accounting data represented and contain no material omissions
with respect to the business and operations of the Target Fund.
(f) FGT has elected to treat the Target Fund as a RIC for federal
income tax purposes under Part I of Subchapter M of the Code. The
Target Fund is a "fund" as defined in Section 851(g)(2) of the Code,
has qualified as a RIC for each taxable year since inception that
has ended prior to the Closing Date and will have satisfied the
requirements of Part I of Subchapter M of the Code to maintain such
qualification for the period beginning on the first day of its
current taxable year and ending on the Closing Date. 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. The Target
Fund has no earnings and profits accumulated in any taxable year to
which the provisions of Subchapter M of the Code (or the
corresponding provisions of prior law) did not apply.
(g) The Target Fund does not have any unamortized or unpaid
organizational fees or expenses.
(h) The Target 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 4.2(d) hereof and those incurred in the ordinary course of
business as an investment company and of a nature and amount similar
to, and consistent with, those shown in such financial statements
since the dates of those financial statements.
(i) There is no inter-corporate indebtedness existing between the
Target Fund and the Acquiring Fund that was issued, acquired, or
will be settled at a discount.
(j) The Registration Statement, including any prospectus or
statement of additional information contained or incorporated
therein by reference and any supplements or amendments thereto,
insofar as it relates to the Target Fund, will, from the effective
date of the Registration Statement through the date of the Special
Meeting and on the Closing Date: (i) comply in all material
respects with the provisions of the 1933 Act, the 1934 Act, the 1940
Act, the rules and regulations thereunder, and all applicable state
securities laws and the rules and regulations thereunder; and (ii)
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, provided, however, that the
representations and warranties of this subparagraph shall not apply to
statements in or omissions from the Registration Statement made in
reliance upon and in conformity with information that was furnished
by the Acquiring Fund for use therein.
(k) Since July 31, 2015, there has been no material adverse change
in the Target Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of
business.
(l) On the Closing Date, all material Returns of the Target Fund
required by law to have been filed by such date (including any
extensions) shall have been filed and are or will be true, correct
and complete in all material respects, and all Taxes shown as due
or claimed to be due by any government entity shall have been paid
or provision has been made for the payment thereof. To FGT's
knowledge, no such Return is currently under audit by any federal,
state, local or foreign Tax authority; no assessment has been
asserted with respect to such Returns; there are no levies, liens
or other encumbrances on the Target Fund or its assets resulting
from the non-payment of any Taxes; no waivers of the time to assess
any such Taxes are outstanding nor are any written requests for such
waivers pending; and adequate provision has been made in the Target
Fund's financial statements for all Taxes in respect of all periods
ended on or before the date of such financial statements.
(m) All information to be furnished by FGT, on behalf of the
Target Fund, for use in preparing any registration statement
(including the Registration Statement), proxy statement and other
documents which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete in all material
respects and shall comply with federal securities and other laws
and regulations thereto.
(n) The Target Fund has no outstanding options, warrants, pre-emptive
rights or other rights to subscribe for or purchase Target Fund Shares
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 managed investment company operating under
the 1940 Act.
(o) No consent, approval, authorization or order of any court
or governmental authority is required for the consummation by FGT,
on behalf of the Target Fund, of the transactions contemplated by
the Plan, except as may otherwise be required under federal or
state securities laws or the rules and regulations thereunder.
(p) There is no material suit, judicial action, or legal or
administrative proceeding pending or threatened against FGT, on behalf
of the Target Fund. FGT, on behalf of the Target Fund, is not 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
the Target Fund's business or its ability to consummate the
transactions herein contemplated.
(q) The execution, delivery, and performance of the Plan
have been duly authorized by all necessary action of the FGT's
Board of Trustees, subject to approval of the Target Fund's
shareholders.
(r) The Target 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.
(s) At the Closing, the Target Fund will have good and marketable
title to all of the securities and other assets transferred pursuant
to Section 1 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.
(t) FGT, on behalf of the Target Fund, will declare and pay or
cause to be paid a dividend or dividends prior to the Closing Date
that, together with all previous dividends, shall have the effect
of distributing to its shareholders (i) all of the Target Fund's
investment company taxable income for the taxable year ended prior
to the Closing Date and substantially all of such investment company
taxable income for the final taxable year ending with its complete
liquidation (in each case determined without regard to any deductions
for dividends paid); and (ii) all of the Target Fund's net capital
gain recognized in its taxable year ended prior to the Closing Date
and substantially all of any such net capital gain recognized in
such final taxable year (in each case after reduction for any
capital loss carryover).
5. Covenants of FCF, on behalf of the Acquiring Fund, and
Covenants of FGT, on behalf of the Target Fund.
5.1. FCF, on behalf of the Acquiring Fund:
(a) Shall file the Registration Statement with the Securities
and Exchange Commission ("SEC") and use its best efforts to provide
that the Registration Statement become effective as promptly as
practicable.
(b) Shall have mailed to each shareholder of record of the Target
Fund entitled to vote at the Special Meeting at which action on the
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 the 1933 Act, Section 14(a) of the 1934 Act and
Section 20(a) of the 1940 Act, and the rules and regulations
thereunder (the "Prospectus/Proxy Statement").
(c) Covenants to operate the Acquiring Fund's business as presently
conducted between the date hereof and the Closing, it being
understood that such ordinary course of business will include the
distribution of customary dividends and distributions and any other
distribution necessary or desirable to minimize federal income or
excise Taxes.
(d) Subject to the provisions of the Plan, 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 the Plan.
5.2. FGT, on behalf of the Target Fund:
(a) Shall provide the Acquiring Fund with information reasonably
necessary for the preparation and distribution of the
Prospectus/Proxy Statement to be included in the Registration
Statement, in compliance with the 1933 Act, the 1934 Act and the
1940 Act, in connection with the Special Meeting referred to below.
(b) As of the Closing, shall have called and held the Special
Meeting to consider and vote upon the Plan, and FGT shall have taken
all other actions reasonably necessary to obtain approval of the
transactions contemplated herein.
(c) Covenants to operate the Target Fund's business as presently
conducted between the date hereof and the Closing, it being
understood that such ordinary course of business will include
the distribution of customary dividends and distributions and any
other distribution necessary or desirable to minimize federal income
or excise Taxes.
(d) Subject to the provisions of the Plan, 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 the Plan.
(e) Shall file, by the Closing Date, all of the Target Fund's
federal and other Tax Returns required by law to be filed on or
before such date 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.
(f) Shall provide at the Closing:
(1) A statement of the respective tax basis and holding period of
all investments to be transferred by the Target Fund to the
Acquiring Fund.
(2) A copy (which may be in electronic form) of the Target
Fund's shareholder ledger accounts including, without limitation,
the name, address and taxpayer identification number of each
shareholder of record, the number of shares of beneficial interest
held by each shareholder, the dividend reinvestment elections
applicable to each shareholder, the backup withholding and
nonresident alien withholding certifications, notices or
records on file with FGT, with respect to each shareholder,
and such information as the Acquiring Fund may reasonably request
concerning Target Fund shares or Target Fund shareholders in
connection with Target Fund's cost basis reporting and related
obligations under Sections 1012, 6045, 6045A, and 6045B of the
Code and related regulations issued by the United States Treasury
("Treasury Regulations") following the Closing for all of the
shareholders of record of the Target Fund's shares as of the
close of business on the day of valuation as described in
Section 2, who are to become holders of the Acquiring Fund as a
result of the transfer of assets that is the subject of this Plan
(the "Target Fund Shareholder Documentation").
(3) A copy of any other Tax books and records of the Target
Fund necessary for purposes of preparing any Tax Returns, schedules,
forms, statements or related documents (including but not limited
to any income, excise or information returns, as well as any
transfer statements (as described in Treas. Reg. 1.6045A-1))
required by law to be filed by the Target Fund after the Closing.
(4) If requested by the Acquiring Fund, all FASB ASC ▇▇▇-▇▇-▇▇
(formerly, FIN 48) work papers and supporting statements pertaining
to the Target Fund.
(g) As promptly as practicable, but in any case within sixty days
after the date of Closing, the Target Fund shall furnish the
Acquiring Fund, in such form as is reasonably satisfactory to the
Acquiring Fund, a statement of the earnings and profits of the
Target Fund for federal income tax purposes that will be carried
over by the Acquiring Fund as a result of Section 381 of the Code.
(h) Undertakes that it will not acquire Acquiring Fund Shares
for the purpose of making distributions thereof to anyone other
than Target Fund shareholders.
(i) Undertakes that, if the Plan is consummated, the Target
Fund will liquidate and dissolve.
5.3. FCF, on behalf of the Acquiring Fund, and FGT, on behalf
of the Target Fund, intend that the Reorganization will qualify as
a reorganization within the meaning of Section 368(a)(1) of the Code.
FCF, on behalf of the Acquiring Fund, and FGT, on behalf of the
Target Fund, shall not take any action or cause any action to
be taken (including, without limitation the filing of any Tax
Return) that is inconsistent with such treatment or results in
the failure of such Reorganization to qualify as a reorganization
within the meaning of Section 368(a)(1) of the Code.
6. Conditions Precedent to be Fulfilled by FCF, on behalf
of the Acquiring Fund, and by FGT, on behalf of the Target Fund.
The consummation of the 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; and (ii)
the other party shall have performed all obligations required by the
Plan to be performed by it prior to the Closing.
(b) That the Registration Statement will have become effective and
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 Fund or would prohibit the transactions contemplated hereby.
(c) That the Plan and the Reorganization contemplated hereby shall
have been adopted and approved by the appropriate action of the
shareholders of the Target Fund at a meeting or any adjournment thereof.
(d) FGT, on behalf of the Target Fund, shall have declared and paid
or cause to have been paid a dividend or dividends prior to the Closing
Date that, together with all previous dividends, shall have the effect of
distributing to its shareholders (i) all of the Target Fund's investment
company taxable income for the taxable year ended prior to the Closing Date
and substantially all of such investment company taxable income for the
final taxable year ending with its complete liquidation (in each case
determined without regard to any deductions for dividends paid); and (ii)
all of the Target Fund's net capital gain recognized in its taxable year
ended prior to the Closing Date and substantially all of any such
net capital gain recognized in such final taxable year (in each case
after reduction for any capital loss carryover).
(e) That all required consents of other parties and all other
consents, orders, and permits of federal, state and local authorities
(including those of 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 the Target Fund or the Acquiring Fund.
(f) That there shall be delivered to FGT, behalf of the Target Fund,
an opinion in form and substance satisfactory to FGT from ▇▇▇▇▇▇▇▇
Ronon ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, counsel to FCF, 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 Acquiring Fund is a series of FCF and that FCF is a
validly existing statutory trust in good standing under the laws of
the State of Delaware;
(2) FCF is an open-end management investment company registered
as such under the 1940 Act;
(3) The execution and delivery of the Plan and the consummation
of the transactions contemplated hereby have been duly authorized by
all necessary trust action on the part of FCF, on behalf of the
Acquiring Fund;
(4) The Plan is the legal, valid and binding obligation of FCF,
on behalf of the Acquiring Fund, and is enforceable against FCF, on
behalf of the Acquiring Fund, in accordance with its terms;
(5) FCF, on behalf of the Acquiring Fund, is authorized to
issue an unlimited number of shares of beneficial interest, without
par value; and
(6) Acquiring Fund Shares to be issued pursuant to the terms of
the Plan have been duly authorized and, when issued and delivered as
provided in the Plan and the Registration Statement, will have been
validly issued and fully paid and will be non-assessable by FCF, on
behalf of the Acquiring Fund.
In giving the opinion set forth above, counsel may state that it is
relying on certificates of the officers of FCF with regard to
matters of fact, and certain certifications and written statements
of governmental officials with respect to the good standing of FCF.
(g) That there shall be delivered to FCF, on behalf of the
Acquiring Fund, an opinion in form and substance satisfactory to FCF
from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, counsel to FGT, 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 Target Fund is a series of FGT and that FGT is a validly existing
statutory trust in good standing under the laws of the State of Delaware
(2) FGT is an open-end management investment company registered under
the 1940 Act;
(3) The execution and delivery of the Plan and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary trust action on the part of FGT; and
(4) The Plan is the legal, valid and binding obligation of FGT,
on behalf of the Target Fund, and is enforceable against FGT, on
behalf of the Target Fund, in accordance with its terms.
In giving the opinion set forth above, counsel may state that it is
relying on certificates of the officers of FGT, on behalf of the
Target Fund, with regard to matters of fact, and certain
certifications and written statements of governmental officials with
respect to the good standing of FGT, on behalf of the Target Fund.
(h) That there shall be delivered to FGT, on behalf of the
Target Fund, and FCF, on behalf of the Acquiring Fund, an opinion
in form and substance satisfactory to it, from the law firm of
▇▇▇▇▇▇▇▇ Ronon ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, counsel to FCF, on behalf
of the Acquiring Fund and FGT, on behalf of the Target Fund, to
the effect that, provided the transaction contemplated hereby is
carried out in accordance with the Plan, and the laws of the State
of Delaware, and based upon certificates of the officers of FCF, on
behalf of the Acquiring Fund, and FGT, on behalf of the Target Fund,
with regard to matters of fact:
(1) The acquisition by the Acquiring Fund of substantially all of
the assets of the Target Fund in exchange solely for the Acquiring
Fund Shares followed by the distribution by the Target Fund to its
shareholders of the Acquiring Fund Shares in complete liquidation
of the Target Fund will qualify as a reorganization within the
meaning of Section 368(a)(1) of the Code, and the Target Fund and
the Acquiring 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 the Target Fund upon
the transfer of substantially all of its assets to the Acquiring Fund
in exchange solely for the Acquiring Fund Shares pursuant to Section
361(a) and Section 357(a) of the Code;
(3) No gain or loss will be recognized by the Acquiring Fund upon
the receipt by it of substantially all of the assets of the Target
Fund in exchange solely for the Acquiring Fund Shares pursuant to
Section 1032(a) of the Code;
(4) No gain or loss will be recognized by the Target Fund upon the
distribution of the Acquiring Fund Shares by the Target Fund to its
shareholders in complete liquidation pursuant to Section 361(c)(1)
of the Code;
(5) The tax basis of the assets of the Target Fund received by
the Acquiring Fund will be the same as the tax basis of these assets
in the hands of the Target Fund immediately prior to the
Reorganization pursuant to Section 362(b) of the Code;
(6) The holding periods of the assets of the Target Fund
received by the Acquiring Fund will include the periods during
which such assets were held by the Target Fund pursuant to
Section 1223(2) of the Code;
(7) No gain or loss will be recognized by the shareholders of
the Target Fund upon the exchange of their Target Fund Shares
solely for the Acquiring Fund Shares (including fractional shares
to which they may be entitled) pursuant to Section 354(a) of the Code;
(8) The aggregate tax basis of the Acquiring Fund Shares to be
received by each Target Fund shareholder (including fractional shares
to which they may be entitled) will be the same as the aggregate tax
basis of the Target Fund Shares exchanged therefor pursuant to Section
358(a)(1) of the Code;
(9) The holding period of the Acquiring Fund Shares to be received
by each Target Fund shareholder (including fractional shares to which
they may be entitled) will include the holding period of the Target
Fund Shares surrendered in exchange therefor, provided that the
shareholder held the Target Fund Shares as a capital asset on the
date of the Reorganization pursuant to Section 1223(1) of the Code;
(10) The Acquiring 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
Treasury Regulations) the items of the Target 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 thereunder.
No opinion will be expressed as to the effect of the Reorganization
on: (i) the Target Fund or the Acquiring Fund with respect to any
asset as to which any unrealized gain or loss is required to be
recognized for federal income tax purposes at the end of a taxable
year (or on the termination or transfer thereof) under a
mark-to-market system of accounting; and (ii) any Target Fund
shareholder that is required to recognize unrealized gains and
losses for federal income tax purposes under a mark-to-market
system of accounting.
(i) That the Acquiring Fund's Prospectus contained in the
Registration Statement with respect to Acquiring Fund Shares to
be delivered to Target Fund shareholders in accordance with the
Plan shall be 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 the Closing, and no
proceedings for the issuance of such an order shall be pending
or threatened on that date.
(j) That the Acquiring 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 the
Acquiring Fund Shares lawfully to be delivered to each holder
of the Target Fund Shares.
(k) The Target Fund will provide the Acquiring Fund with (1) a
statement of the respective tax basis and holding period of all
investments to be transferred by the Target Fund to the Acquiring
Fund, (2) the Target Fund Shareholder Documentation, (3) if requested
by FCF, on behalf of the Acquiring Fund, all workpapers and supporting
statements related to ASC ▇▇▇-▇▇-▇▇ (formerly, FIN 48) pertaining to
the Target Fund, (4) the Tax books and records of the Target Fund for
purposes of preparing any Returns required by law to be filed for Tax
periods ending after the Closing Date, and (5) a statement of earnings
and profits as provided in Section 5.2(g).
7. Expenses.
The expenses of entering into and carrying out the provisions of
the Plan shall be borne as follows: each Fund will pay 25% of the
costs of the Reorganization. Advisers, the investment manager for
the Acquiring Fund, and Fiduciary, the investment manager for the
Target Fund, will each pay 25% of the costs of the Reorganization.
8. Termination; Postponement; Waiver; Order.
(a) Anything contained in the Plan to the contrary
notwithstanding, the Plan may be terminated and the Reorganization
abandoned at any time prior (whether before or after approval
thereof by the shareholders of the Target Fund) to the Closing,
or the Closing may be postponed:
(1) by mutual consent of FCF, on behalf of the Acquiring Fund,
and FGT, on behalf of the Target Fund;
(2) by FGT, on behalf of the Target Fund, if any condition of
its obligations set forth in Section 6 has not been fulfilled or
waived and it reasonably appears that such condition or obligation
will not or cannot be met; or
(3) by FCF, on behalf of the Acquiring Fund, if any conditions
of its obligations set forth in Section 6 has not been fulfilled
or waived and it reasonably appears that such condition or
obligation will not or cannot be met.
(b) If the transactions contemplated by the Plan have not
been consummated by December 31, 2016, the Plan shall automatically
terminate on that date, unless a later date is mutually agreed to
by officers of FCF and FGT.
(c) In the event of termination of the Plan prior to its
consummation, pursuant to the provisions hereof, the Plan shall
become void and have no further effect, and neither FCF, the
Acquiring Fund, FGT, the Target Fund, nor their trustees,
officers, or agents or the shareholders of the Target or
Acquiring Fund shall have any liability in respect of the Plan,
but all expenses incidental to the preparation and carrying out
of the Plan shall be paid as provided in Section 7 hereof.
(d) At any time prior to the Closing, any of the terms or
conditions of the Plan may be waived by FCF, on behalf of the
Acquiring Fund, or FGT, on behalf of the Target Fund, if, in the
judgment of their respective officers, such action or waiver will
not have a material adverse effect on the benefits intended under
the Plan to such Fund's shareholders.
(e) The representations and warranties contained in Section
4 hereof shall expire with and be terminated by the Plan on the
Closing Date, and neither FCF, the Acquiring Fund, FGT, the
Target Fund, nor any of their respective officers, trustees,
agents or shareholders shall have any liability with respect to
such representations or warranties after the Closing Date.
(f) If any order of the SEC with respect to the Plan
shall be issued prior to the Closing that imposes any term
or condition that is determined by action of the Board of
Trustees of FGT to be acceptable, such term or condition shall be
binding as if it were a part of the Plan without a vote or approval
of the shareholders of the Target Fund; provided that, if such term
or condition would result in a change in the method of computing the
number of Acquiring Fund Shares to be issued to the Target Fund, and
such term or condition had not been included in the Prospectus/Proxy
Statement or other proxy solicitation material furnished to the
shareholders of the Target Fund prior to the Special Meeting, the
Plan shall not be consummated and shall terminate unless FGT
promptly calls a special meeting of its shareholders at which
such condition shall be submitted for approval.
9. Cooperation and Exchange of Information; Reporting Responsibility.
(a) FCF and FGT will provide each other and their respective
representatives with such cooperation, assistance, and information
as either of them reasonably may request of the other in filing
any Tax returns, amended return or claim for refund, determining
a liability for Taxes, or in determining the financial reporting
of any tax position, or a right to a refund of Taxes or
participating in or conducting any audit or other proceeding
in respect of Taxes.
(b) Any reporting responsibility of the Target Fund is and shall
remain the responsibility of FGT, up to and including the Closing
Date, and such later date on which the Target Fund is terminated
including, without limitation, responsibility for (i) preparing and
filing Tax Returns relating to Tax periods ending on or prior to the
date of Closing (whether due before or after the Closing); and (ii)
preparing and filing other documents with the SEC, any state
securities commission, and any federal, state or local Tax
authorities or any other relevant regulatory authority, except
as otherwise is mutually agreed by the parties.
(c) After the Closing Date, FGT, on behalf of the Target Fund,
shall or shall cause its agents to prepare any federal, state or
local Tax Returns, including any Forms 1099, required to be filed
by FGT with respect to the Target Fund's final taxable year ending
with its complete liquidation and for any prior periods or taxable
years and shall further cause such Tax Returns and Forms 1099 to
be duly filed with the appropriate taxing authorities.
10. Liability of the Target Fund and the Acquiring Fund.
(a) FGT, on behalf of the Target Fund, acknowledges and agrees
that all obligations of FCF, on behalf of the Acquiring Fund, under
the Plan are binding only with respect to FCF, on behalf of the
Acquiring Fund; that any liability of FCF, on behalf of the
Acquiring Fund, under the Plan or in connection with the transactions
contemplated herein shall be discharged only out of the assets of
the Acquiring Fund; and that FGT, on behalf of the Target Fund,
shall not seek satisfaction of any such obligation or liability
from the shareholders of the Acquiring Fund, the trustees, officers,
employees or agents of the Acquiring Fund, or any of them.
(b) FCF, on behalf of the Acquiring Fund, acknowledges and
agrees that all obligations of FGT, on behalf of the Target
Fund, under the Plan are binding only with respect to FGT,
on behalf of the Target Fund; that any liability of FGT, on
behalf of the Target Fund, under the Plan in connection with
the transactions contemplated herein, shall be discharged only out of
the assets of the Target Fund; and that FCF, on behalf of the Acquiring
Fund, shall not seek satisfaction of any such obligation or liability
from the shareholders of the Target Fund, the trustees, officers,
employees or agents of the Target Fund, or any of them.
11. 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.
12. 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.
13. Governing Law.
The Plan shall be governed by and carried out in accordance
with the laws of the State of Delaware.
14. Notices.
Any notice, report, or demand required or permitted by any
provision of the Plan shall be in writing and shall be deemed
to have been given if delivered or mailed, first class postage
prepaid, addressed to the Acquiring Fund, at Franklin Custodian
Funds, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
Secretary, or to the Target Fund, at Franklin Global Trust, ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Secretary, as the
case may be.
15. Headings.
The paragraph headings contained in this Plan are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Plan.
[Signature Page Follows]
IN WITNESS WHEREOF, FCF, on behalf of the Acquiring Fund, and FGT, on
behalf of the Target Fund, have caused the Plan to be executed on its
behalf by its duly authorized officers, all as of the date and year
first-above written.
▇▇▇▇▇▇▇▇ CUSTODIAN FUNDS,
on behalf of FRANKLIN GROWTH FUND
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President and Secretary
FRANKLIN GLOBAL TRUST,
on behalf of FRANKLIN LARGE CAP EQUITY FUND
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President and Secretary
With respect to Section 7 of the Plan only:
▇▇▇▇▇▇▇▇ ADVISERS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
With respect to Section 7 of the Plan only:
FIDUCIARY INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Chairman
