NAME OF REGISTRANT
Franklin Managed Trust
File No. 811-04894
EXHIBIT ITEM No. 77q1(g): Exhibits
Agreement and Plan of Reorganization
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan")
is made as of this 29th day of April, 2016, by and between
Franklin Managed Trust ("FMT"), 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 Rising Dividends
Fund (the "Acquiring Fund"), and Franklin Value Investors
Trust ("FVIT"), 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 Value Fund (the "Target Fund"). Franklin Advisory
Services, LLC ("FAS"), a Delaware limited liability company,
investment manager to the Acquiring Fund and the Target Fund,
joins 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 FMT, 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, Class R6 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, Class R6 and Advisor Class
shares of beneficial interest, with no par value, 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, FVIT, 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 FVIT 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"). FMT, 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, FMT, on behalf of the Acquiring Fund, agrees at the
Closing to deliver to FVIT, 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, Class R6 and
Advisor Class shares of the Target Fund by the net asset value per
share each of Class A, Class C, Class R, Class R6 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, Class R6 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 FVIT, 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, FVIT, on behalf of the Target
Fund, shall distribute the Acquiring Fund Shares received by FVIT, 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 FMT at
1:00 p.m., Pacific time, on May 20, 2016 or such later date as
the officers of FMT and FVIT may mutually agree (the "Closing Date").
FVIT, 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, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇. FVIT, 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. FMT, 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 FVIT may reasonably request.
4. Representations and Warranties.
4.1. FMT, on behalf of the Acquiring Fund, represents and
warrants that:
(a) The Acquiring Fund is a series of FMT, which was originally
organized as a Massachusetts business trust on July 15, 1986, and was
reorganized as a Delaware statutory trust effective on
October 26, 1999. FMT is validly existing under the laws of the
State of Delaware. FMT 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) FMT 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, which 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) FMT, 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 FMT, 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 ▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ 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) FMT 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.l(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.
G) 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.
(1) 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
FMT'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, addition 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 FMT, 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 ▇▇▇▇ ▇▇▇.
(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by FMT, 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 FMT, on
behalf of the Acquiring Fund. FMT, 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 FMT'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. FVIT, on behalf of the Target Fund, represents and
warrants that:
(a) The Target Fund is a series of FVIT, which was originally
organized as a Massachusetts business trust on September 11, 1989,
and was reorganized as a Delaware statutory trust effective on November
2, 2015. FVIT is validly existing under the laws of the State
of Delaware. FVIT 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) FVIT 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 five classes of
shares: Class A, Class C, Class R, Class R6 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) FVIT, 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 FVIT, on behalf of the Target Fund, of the transactions
contemplated by the
Plan. FVIT, 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 October 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) FVIT 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.
G) 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 October 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.
(1) 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 FVIT'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 FVIT, 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 ▇▇▇▇ ▇▇▇.
(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by FVIT, 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 FVIT, on
behalf of the Target Fund. FVIT, 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 FVIT'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) FVIT, 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 FMT, on behalf of the Acquiring Fund, and
Covenants of FVIT, on behalf of the Target Fund.
5.1. FMT, 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 becomes 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. FVIT, 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
FVIT 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 FVIT, 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. FMT, on behalf of the Acquiring Fund, and FVIT, on behalf
of the Target Fund, intend that the Reorganization will qualify
as a reorganization within the meaning of Section 368(a)(l) of
the Code. FMT, on behalf of the Acquiring Fund, and FVIT, 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) ofthe Code.
6. Conditions Precedent to be Fulfilled by FMT, on behalf of
the Acquiring Fund, and by FVIT, 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) FVIT, 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 FVIT, on behalf of the
Target Fund, an opinion in form and substance satisfactory to
FVIT from ▇▇▇▇▇▇▇▇ Ronon ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, counsel to FMT,
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 FMT and that FMT is a
validly existing statutory trust in good standing under the laws
of the State of Delaware;
(2) FMT 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 FMT, on behalf of the Acquiring
Fund;
(4) The Plan is the legal, valid and binding obligation of FMT, on
behalf of the Acquiring Fund, and is enforceable against FMT, on behalf
of the Acquiring Fund, in accordance with its terms;
(5) FMT, 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 FMT, 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 FMT with regard to
matters of fact, and certain certifications and written statements
of governmental officials with respect to the good standing of FMT.
(g) That there shall be delivered to FMT, on behalf of the
Acquiring Fund, an opinion in form and substance satisfactory to
FMT from ▇▇▇▇▇▇▇▇ Ronon ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, counsel to FVIT, 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 FVIT and that FVIT is a validly
existing statutory trust in good standing under the laws of the State
of Delaware;
under the 1940 Act;
(2) FVIT is an open-end management investment company registered
(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 FVIT; and
(4) The Plan is the legal, valid and binding obligation of FVIT,
on behalf of the Target Fund, and is enforceable against FVIT, 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 FVIT, 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 FVIT, on behalf of the Target Fund.
(h) That there shall be delivered to FVIT, on behalf of the
Target Fund, and FMT, on behalf of the Acquiring Fund, an opinion
in form and substance satisfactory to it, from the law firm of
▇▇▇▇▇▇▇▇ Ronon ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, counsel to FMT, on behalf of
the Acquiring Fund, and FVIT, 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 FMT, on behalf of the
Acquiring Fund, and FVIT, 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)(l) 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)-l(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 ▇▇▇▇-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 ▇▇▇▇-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.
G) 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
FMT, on behalf of the Acquiring Fund, all work papers 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. FAS, the
investment manager for the Target Fund and the Acquiring Fund, will
pay 50% 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 FMT, on behalf of the Acquiring Fund, and
FVIT, on behalf of the Target Fund;
(2) by FVIT, 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 FMT, 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 FMT and FVIT.
(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
FMT, the Acquiring Fund, FVIT, 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 FMT,
on behalf of the Acquiring Fund, or FVIT, 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 FMT, the Acquiring
Fund, FVIT, 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 FVIT 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 FVIT 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) FMT and FVIT 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 FVIT, 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, FVIT, 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 FVIT
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) FVIT, on behalf of the Target Fund, acknowledges and agrees
that all obligations of FMT, on behalf of the Acquiring Fund, under
the Plan are binding only with respect to FMT, on behalf of the
Acquiring Fund; that any liability of FMT, 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 FVIT, 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) FMT, on behalf of the Acquiring Fund, acknowledges and agrees
that all obligations of FVIT, on behalf of the Target Fund, under the
Plan are binding only with respect to FVIT, on behalf of the Target
Fund; that any liability of FVIT, 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 FMT, 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 Managed
Trust, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
Secretary, or to the Target Fund, at Franklin Value Investors
Trust, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
Secretary, as the case maybe.
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, FMT, on behalf of the Acquiring Fund, and
FVIT, 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.
FRANKLIN MANAGED TRUST,
on behalf of FRANKLIN RISING DIVIDENDS FUND
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
FRANKLIN VALUE INVESTORS TRUST,
on behalf of FRANKLIN LARGE CAP VALUE FUND
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
With respect to Section 7 of the Plan only:
FRANKLIN ADVISORY SERVICES, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Investment Officer
