As filed with the Securities and Exchange Commission on March 28,
1995.
File Nos.
33-69048
811-8034
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 3 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 5 (X)
FRANKLIN REAL ESTATE SECURITIES TRUST
(Exact Name of Registrant as Specified in Charter)
777 MARINERS ISLAND BLVD., SAN MATEO, CA 94404
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (415) 312-2000
Harmon E. Burns, 777 Mariners Island Blvd., San Mateo, CA 94404
(Name and Address of Agent for Service of Process)
Approximate Date of Proposed Public offering:
It is proposed that this filing will become effective (check
appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[.] 60 days after filing pursuant to paragraph (a)(i)
[x] on March 28, 1995 pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485
If appropriate, check the following box:
[X] This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
EXHIBIT INDEX PAGE
Declaration Pursuant to Rule 24f-2. The issuer has
registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Rule 24(f)(2) under
the Investment Company Act of 1940. The Rule 24f-2 Notice
for the issuer's most recent fiscal year was filed on June
29, 1994.
FRANKLIN REAL ESTATE SECURITIES TRUST
CROSS REFERENCE SHEET
FORM N-1A
Part A: Information Required in Prospectus
(Franklin Real Estate Securities Fund)
N-1A Location in
Item No. Item Registration Statement
1. Cover Page Cover Page
2. Synopsis Expense Table
3. Condensed Financial "Financial Highlights";
Information "Performance"
4. General Description "About the Fund";
of the Registrant "Investment Objective and
Policies Followed by the
Fund"; "General
Information"
5. Management of the "Management of the Fund"
Fund
5A. Management's The response to this item
Discussion of Fund is contained in
Performance Registrant's Annual Report
to Shareholders
6. Capital Stock and "Distributions to
Other Securities Shareholders"; "General
Information"; "Taxation of
the Fund and Its
Shareholders"
7. Purchase of "How to Buy Shares of the
Securities Being Fund"; "Purchasing Shares
Offered of the Fund in Connection
with Retirement Plans
Involving Tax-Deferred
Investments"; "Other
Programs and Privileges
Available to Fund
Shareholders"; "Exchange
Privilege"; "Valuation of
Fund Shares"
8. Redemption or "Exchange Privilege"; "How
Repurchase to Sell Shares of the
Fund"; "How to Get
Information Regarding an
Investment in the Fund"
9. Legal Proceedings Not Applicable
FRANKLIN REAL ESTATE SECURITIES TRUST
CROSS REFERENCE SHEET
FORM N-1A
Part B: Information Required in
Statement of Additional Information
(Franklin Real Estate Securities Fund)
N-1A Location in
Item No. Item Registration Statement
10. Cover Page Cover Page
11. Table of Contents Contents
12. General Information Cover Page; About the Fund
and History (see also the Prospectus
"About the Fund" and
"General Information")
13. Investment Objectives "The Fund's Investment
and Policies Objective and Restrictions"
(See also the Prospectus
"Investment Objective and
Policies Followed by the
Fund")
14. Management of the "Officers and Trustees"
Registrant
15. Control Persons and "Officers and Trustees"
Principal Holders of
Securities
16. Investment Advisory "Investment Management and
and Other Services Other Services" (See also
the Prospectus "Management
of the Fund")
17. Brokerage Allocation "The Fund's Policies
Regarding Brokers Used on
Portfolio Transactions"
18. Capital Stock and (See also the Prospectus
Other Securities "General Information" and
"About the Fund")
19. Purchase, Redemption "Additional Information
and Pricing of Regarding Fund Shares"
Securities Being (See also the Prospectus
Offered "How to Buy Shares of the
Fund", "How to Sell Shares
of the Fund", "Valuation of
Fund Shares")
20. Tax Status "Additional Information
Regarding Taxation"
21. Underwriters "The Fund's Underwriter"
22. Calculation of "General Information"
Performance Data
23. Financial Statements "Financial Statements"
This amendment, post-effective amendment #3, which relates to the
Fund's previously filed post-effective amendment #2, filed
January 27, 1995, including the Prospectus and Statement of
Additional Information contained therein, is being filed to
prevent the Fund's previously filed amendment from becoming
effective April 1, 1995, and to extend the time within which the
amendment will become effective either automatically or as and
when declared effective by the Commission as explained more fully
in the accompanying letter. The earlier filing was made in
connections with the introduction of the Fund's new multi class
distribution structure. After resolving any outstanding
comments, the Fund expects to request that all amendments filed
in connection with the implementations of the multi-class
structure be accelerated to become effective on or about May 1,
1995.
FRANKLIN REAL ESTATE SECURITIES TRUST
File Nos. 33-69048
811-8034
FORM N-1A
PART C
Other Information
Item 24 Financial Statements and Exhibits
a) Financial Statements
1. Unaudited Financial Statements dated October 31, 1994
(i) Statement of Investments and Net Assets dated
October 31, 1994
(ii) Statement of Assets and Liabilities dated October
31, 1994
(iii) Statement of Operations for the six months ended
October 31, 1994
(iv) Statements of Changes in Net Assets for the six
months ended October 31, 1994 and the period
ended April 30, 1994
(v) Notes to Financial Statements
2. Audited Financial Statements dated April 30, 1994
(i) Report of Independent Accountants - June 3, 1994.
(ii) Statements of Investments in Securities
and Net Assets, April 30, 1994.
(iii) Statement of Assets and Liabilities - April 30,
1994
(iv) Statement of Operations - for the period January
3, 1994 (effective date) to April 30, 1994
(v) Statement of Changes in Net Assets - for the
period January 3, 1994 (effective date) to April
30, 1994
(vi) Notes to Financial Statements
b) Exhibits:
The following exhibits are attached herewith, except
Exhibits: 6(ii), 8(ii), 8(iii), 14(i), 16(i), which are
incorporated by reference as noted.
(1) copies of the charter as now in effect:
(i) Certificate of Trust of Franklin Real
Estate Securities Trust dated September
14, 1993
(ii) Agreement and Declaration of Trust of
Franklin Real Estate Securities Trust
dated September 14, 1993
(2) copies of the existing By-Laws or instruments
corresponding thereto:
(i) By-Laws of Franklin Real Estate Securities
Trust
(3) copies of any voting trust agreement with respect
to more than five percent of any class of equity
securities of the Registrant;
Not Applicable
(4) copies of all instruments, defining the rights of
the holders of the securities being registered
including, where applicable the relevant portion
of the Declaration of Trust and Bylaws of the
Registrant:
Not Applicable
(5) Copies of all investment advisory contracts
relating to the management of the assets of the
Registrant;
(i) Management Agreement between Registrant
and Franklin Advisers, Inc. dated January
3, 1994
(6) copies of each underwriting or distribution
contract between the Registrant and a principal
underwriter, and specimens or copies of all
agreements between principal underwriters and
dealers;
(i) Form of Amended and Restated Distribution
Agreement between Registrant and
Franklin/Templeton Distributors, Inc.
(ii) Form of Dealer Agreement between Registrant
and Franklin/Templeton Distributors, Inc.
Registrant: Franklin Federal Tax-Free Income
Fund
Filing: Post-Effective Amendment No. 17 to
Registration on Form N-1A
File No. 2-75925
Filing Date: March 28, 1995
(7) copies of all bonus, profit sharing, pension or
other similar contracts or arrangements wholly or
partly for the benefit of Trustees or officers of
the Registrant in their capacity as such; any
such plan that is not set forth in a formal
document, furnish a reasonably detailed
description thereof;
Not Applicable
(8) copies of all custodian agreements and depository
contracts under Section 17(f) of the Investment
Company Act of 1940 (the "1940 Act"), with respect
to securities and similar investments of the
Registrant, including the schedule of
remuneration;
(i) Custodian Agreement between Registrant and
Bank of America NT & SA dated January 3,
1994.
(ii) Copy of Custodian Agreements between
Registrant and Citibank Delaware:
1. Citicash Management ACH Customer
Agreement
2. Citibank Cash Management
Services Master Agreement
3. Short Form Bank Agreement - Deposits
and Disbursements of Funds
Registrant: Franklin Premier Return
Fund
Filing: Post-Effective Amendment No.
54 to Registration on Form N-1A
File No. 2-12647
Filing Date: February 27, 1995
(iii) Amendment to Custodian Agreement between
Registrant and Bank of America NT & SA
dated December 1, 1994
Registrant: Franklin Premier Return Fund
Filing: Post-Effective Amendment No. 54
to Registration on Form N-1A
File No. 2-12647
Filing Date: February 27, 1995
(9) copies of all other material contracts not made
in the ordinary course of business which are to
be performed in whole or in part at or after the
date of filing the Registration Statement;
Not Applicable
(10) An opinion and consent of counsel as to the
legality of the securities being registered,
indicating whether they will when sold be legally
issued, fully paid and nonassessable;
Not Applicable
(11) copies of any other opinions, appraisals or
rulings and consents to the use thereof relied on
in the preparation of this registration statement
and required by Section 7 of the 1933 Act;
Not Applicable
(12) All financial statements omitted from Item 23;
Not Applicable
(13) copies of any agreements or understandings made
in consideration for providing the initial
capital between or among the Registrant, the
underwriter, adviser, promoter or initial
stockholders and written assurances from
promoters or initial stockholders that their
purchases were made for investment purposes
without any present intention of redeeming or
reselling;
(i) Letter of Understanding dated December 27,
1993
(14) copies of the model plan used in the
establishment of any retirement plan in
conjunction with which Registrant offers its
securities, any instructions thereto and any
other documents making up the model plan. Such
form(s) should disclose the costs and fees
charged in connection therewith;
(i) Copy of Model Retirement Plan:
Registrant: AGE High Income Fund, Inc.
Filing: Post-effective Amendment No. 26
to Registration Statement on Form N-1A
File No. 2-3020
Filing Date: August 1, 1989
(15) copies of any plan entered into by Registrant
pursuant to Rule 12b-l under the 1940 Act, which
describes all material aspects of the financing
of distribution of Registrant's shares, and any
agreements with any person relating to
implementation of such plan.
(i) Plan of Distribution Pursuant to Rule 12b-
1 dated January 3, 1994
(ii) Form of Class II Distribution Plan
Pursuant to Rule 12b-1 between Registrant
and Franklin/Templeton Distributors, Inc.
(16) schedule for computation of each performance
quotation provided in the registration statement
in response to Item 22 (which need not be
audited)
(i) Schedule for Computation of Performance
Quotation
Registrant: Franklin Tax-Advantaged U.S.
Government Securities Fund
Filing: Post-Effective Amendment No. 8 to
Registration on Form N-1A
File No. 33-11963
Filing Date: March 1, 1995
(17) (i) Power of Attorney dated January 17, 1995
(ii) Certificate of Secretary dated January 17,
1995
Item 25 Persons Controlled by or under Common Control with
Registrant
None
Item 26 Number of Holders of Securities
As of February 28, 1995, the number of record holders of
the only class of securities of the Registrant are as
follows:
Number of
Title of Class Record Holders
Shares of Beneficial Interest: 1,598
Item 27 Indemnification
See Article III, Section 7 and Article VII, Section 3 of
the Agreement and Declaration of Trust (Exhibit No.
1(ii)) and Article VI of the By-Laws (Exhibit No. 2(i))
of Registrant.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to Trustees,
officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid
by a Trustee, officer or controlling person of the
Registrant in the successful defense of any action, suit
or proceeding) is asserted by such Trustee, officer or
controlling person in connection with securities being
registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification
is against public policy as expressed in the Act and
will be governed by the final adjudication of such
issue.
Item 28 Business and Other Connections of Investment Adviser
The officers and Directors of the Registrant's advisor also
serve as officers and/or directors, trustees or managing
general partners for (1) the manager's corporate parent,
Franklin Resources, Inc., and/or (2) other investment companies
in the Franklin Group of Funds(Registered Trademark) and the
Templeton Group of Funds. In addition, Mr. Charles B. Johnson
is a director of General Host Corporation. For additional
information please see Part B.
Item 29 Principal Underwriters
a) Franklin/Templeton Distributors, Inc., ("Distributors")
also acts as principal underwriter of shares of AGE High Income
Fund, Inc., Franklin Premier Return Fund, Franklin Custodian
Funds, Inc., Franklin Gold Fund, Franklin Equity Fund, Franklin
New York Tax-Free Income Fund, Inc., Franklin California Tax-
Free Income Fund, Inc., Franklin California Tax Free Trust,
Franklin Federal Tax-Free Income Fund, Franklin Investors
Securities Trust, Franklin Tax-Advantaged International Bond
Fund, Franklin Tax-Advantaged U.S. Government Securities Fund,
Franklin Tax-Advantaged High Yield Securities Fund, Franklin
Tax-Free Trust, Franklin Managed Trust, Franklin Balance Sheet
Investment Fund, Franklin New York Tax-Free Trust, Franklin
International Trust, Franklin Strategic Mortgage Portfolio,
Institutional Fiduciary Trust, Franklin Money Fund, Franklin
Federal Money Fund, Franklin Tax Exempt Money Fund, Franklin
Municipal Securities Trust, Templeton Variable Products Series
Fund, Templeton Real Estate Securities Fund, Templeton Growth
Fund, Inc., Templeton Funds, Inc., Templeton Smaller Companies
Growth Fund, Inc., Templeton Income Trust, Templeton Global
Opportunities Trust, Templeton Institutional Funds, Inc.,
Templeton American Trust, Inc., Templeton Capital Accumulator
Fund, Inc., Templeton Developing Markets Trust, Templeton
Global Investment Trust, Templeton Variable Annuity Fund, Inc.,
and Franklin Templeton Japan Fund
(b) The information required by this Item 29 with respect to
each director and officer of Distributors is incorporated by
reference to Part B of this N-1A and Schedule A of Form BD
filed by Distributors with the Securities and Exchange
Commission pursuant to the Securities Act of 1934 (SEC File No.
8-5889).
(c) Not Applicable. Registrant's principal underwriter is an
affiliated person of an affiliated person of the Registrant.
Item 30 Location of Accounts and Records
The accounts, books or other documents required to be
maintained by Section 31 (a) of the Investment Company Act of
1940 will be kept by the Fund or its shareholder services
agent, Franklin/Templeton Investor Services, Inc., both of
whose address is 777 Mariners Island Blvd., San Mateo, CA
94404.
Item 31 Management Services
There are no management-related service contracts not
discussed in Part A or Part B.
Item 32 Undertakings
(a) The Registrant hereby undertakes to promptly call a
meeting of shareholders for the purpose of voting upon
the question of removal of any trustee or trustees when
requested in writing to do so by the record holders of
not less than 10 per cent of the Registrant's
outstanding shares and to assist its shareholders in the
communicating with other shareholders in accordance with
the requirements of Section 16(c) of the Investment
Company Act of 1940.
(b) The Registrant hereby undertakes to comply with the
information requirement in Item 5A of the Form N-1A by
including the required information in the Fund's annual
report and to furnish each person to whom a prospectus
is delivered a copy of the annual report upon request
and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly
caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of San
Mateo and the State of California, on the 27th day of March,
1995.
FRANKLIN REAL ESTATE SECURITIES TRUST
(Registrant)
By: Rupert H. Johnson, Jr.*
Rupert H. Johnson, Jr.
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
Rupert H. Johnson, Jr.* Principal Executive Officer and
Rupert H. Johnson, Jr. Trustee
Dated: March 28, 1995
Charles B. Johnson* Trustee
Charles B. Johnson Dated: March 28, 1995
Martin L. Flanagan* Principal Financial Officer
Martin L. Flanagan Dated: March 28, 1995
Diomedes Loo-Tam* Principal Accounting Officer
Diomedes Loo-Tam Dated: March 28, 1995
Frank H. Abbott III* Trustee
Frank H. Abbott III Dated: March 28, 1995
Harris J. Ashton* Trustee
Harris J. Ashton Dated: March 28, 1995
Harmon E. Burns* Trustee
Harmon E. Burns Dated: March 28, 1995
S. Joseph Fortunato* Trustee
S. Joseph Fortunato Dated: March 28, 1995
David W. Garbellano* Trustee
David W. Garbellano Dated: March 28, 1995
Frank W.T. LaHaye* Trustee
Frank W.T. LaHaye Dated: March 28, 1995
Gordon S. Macklin* Trustee
Gordon S. Macklin Dated: March 28, 1995
*By /s/ Larry L. Greene
Larry L. Greene, Attorney-in-Fact
(Pursuant to Powers of Attorney filed herewith)
FRANKLIN REAL ESTATE SECURITIES TRUST
REGISTRATION STATEMENT
EXHIBITS INDEX
EXHIBIT NO. DESCRIPTION LOCATION
EX-99.B1(i) Certificate of Trust of Attached
Franklin Real Estate
Securities Trust dated
September 14, 1993
EX-99.B1(ii) Agreement and Declaration of Attached
Trust of Franklin Real Estate
Securities Trust dated
September 14, 1993
EX-99.B2(i) By-Laws of Franklin Real Attached
Estate Securities Trust
EX-99.B5(i) Management Agreement dated Attached
January 3, 1994
EX-99.B6(i) Form of Amended and Restated Attached
Distribution Agreement
EX-99.B6(ii) Form of Dealer Agreement *
between Registrant and
Franklin/Templeton
Distributors, Inc.
EX-99.B8(i) Custodian Agreement dated Attached
January 3, 1994
EX-99.B8(ii) Copy of Custodian Agreements *
dated between Registrant and
Citibank Delaware
EX-99.B8(iii) Amendment to Custodian *
Agreement dated December 1,
1994
EX-99.B13(i) Letter of Understanding dated Attached
December 27, 1993
EX-99.B14(i) Copy of Model Retirement Plan: *
Registrant: AGE High Income
Fund, Inc.
Filing: Post-effective
Amendment No. 26 to
Registration Statement on Form
N-1A
File No. 2-30203
Filing Date: August 1, 1989
EX-99.B15(i) Plan of Distribution pursuant Attached
to Rule 12b-1 dated January 3,
1994
EX-99.B15(ii) Form of Class II Distribution Attached
Plan Pursuant to Rule 12b-1
between Registrant and
Franklin/Templeton
Distributors, Inc.
EX99.B16(i) Schedule for Computation of *
Performance Quotation
Registrant: Franklin Tax-
Advantaged U.S. government
Securities Fund
Filing: Post-Effective
Amendment No. 8 to
Registration on Form N-1A
File No. 33-11963
Filing Date: March 1, 1995
EX-99.B17(i) Power of Attorney dated Attached
January 17, 1995
EX-99.B17(ii) Certificate of Secretary dated Attached
January 17, 1995
*Incorporated by reference
CERTIFICATE OF TRUST
OF
FRANKLIN REAL ESTATE SECURITIES TRUST
a Delaware Business Trust
THIS Certificate of Trust of the FRANKLIN REAL ESTATE
SECURITIES TRUST (the "Trust"), dated as of this 14th day of
September, 1993, is being duly executed and filed, in order to
form a business trust pursuant to the Delaware Business Trust Act
(the "Act"), Del. Code Ann. tit. 12, (section)(section)3801-3819.
1. NAME. The name of the business trust formed
hereby is "FRANKLIN REAL ESTATE SECURITIES TRUST."
2. REGISTERED OFFICE AND REGISTERED AGENT. The Trust
will become, prior to the issuance of beneficial interests, a
registered investment company under the Investment Company Act of
1940, as amended. Therefore, in accordance with section 3807(b)
of the Act, the Trust has and shall maintain in the State of
Delaware a registered office and a registered agent for service
of process.
(a) REGISTERED OFFICE. The registered office of
the Trust in Delaware is The Corporation Trust Company,
1209 Orange Street, Wilmington, Delaware 19801.
(b) REGISTERED AGENT. The registered agent for
service of process on the Trust in Delaware is The
Corporation Trust Company.
3. LIMITATION ON LIABILITY. Pursuant to section 3804
of the Act, in the event that the Trust's governing instrument,
as defined in section 3801(f) of the Act, creates one or more
series as provided in section 3806(b)(2) of the Act, the debts,
liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to a particular series of the
Trust shall be enforceable against the assets of such series
only, and not against the assets of the Trust generally.
IN WITNESS WHEREOF, the Trustees named below do hereby
execute this Certificate of Trust as of the date first-above
written.
/s/ Frank H. Abbott, III /s/ Charles B. Johnson
Frank H. Abbott, III Charles B. Johnson
1045 Sansome Street 777 Mariners Island Blvd.
San Francisco, CA 94111 San Mateo, CA 94404
/s/ Harris J. Ashton /s/ Rupert H. Johnson, Jr.
Harris J. Ashton Rupert H. Johnson, Jr.
Metro Center, One Station Place 777 Mariners Island Blvd.
Stamford, CT 06904 San Mateo, CA 94404
/s/ S. Joseph Fortunato /s/ David W. Garbellano
S. Joseph Fortunato David W. Garbellano
Park Avenue at Morris County 111 New Montgomery St. #402
P.O. Box 1945 San Francisco, CA 94105
Morristown, NJ 07962-1945
/s/ Frank W.T. LaHaye /s/ Harmon E. Burns
Frank W.T. LaHaye Harmon E. Burns
20833 Stevens Creek Blvd. 777 Mariners Island Blvd.
Suite 102 San Mateo, CA 94404
Cupertino, CA 95014
/s/ Gordon S. Macklin
Gordon S. Macklin
8212 Burning Tree-Road
Bethesda, MD 20817
AGREEMENT AND DECLARATION OF TRUST
of
FRANKLIN REAL ESTATE SECURITIES TRUST
a Delaware Business Trust
Dated: September 14, 1993
TABLE OF CONTENTS
FRANKLIN REAL ESTATE SECURITIES TRUST
AGREEMENT AND DECLARATION OF TRUST
Page No.
ARTICLE I Name and Definitions
1. Name
2. Definitions
(a) Trust
(b) Trust Property
(c) Trustees
(d) Shares
(e) Shareholder
(f) Person
(g) 1940 Act
(h) Commission and Principal Underwriter
(i) Declaration of Trust
(j) By-Laws
(k) Interested Person
(1) Investment Manager
(m) Series Company
(n) Series
ARTICLE II Purpose of Trust
ARTICLE III Shares
1. Division of Beneficial Interest
2. Ownership of Shares
3. Investments in the Trust
4. Status of Shares and Limitation of
Personal Liability
5. Power of Board of Trustees to Change
Provisions relating to Shares
6. Establishment and Designation of Series
(a) Assets Belonging to Series
(b) Liabilities Belonging to Series
(c) Dividends, Distributions, Redemptions,
and Repurchases
(d) Voting
(e) Equality
(f) Fractions
(g) Exchange Privilege
(h) Combination of Series
(i) Elimination of Series
7. Indemnification of Shareholders
ARTICLE IV Trustees
1. Number, Election and Tenure
2. Effect of Death, Resignation, etc.
of a Trustee
3. Powers
4. Payment of Expenses by the Trust
5. Payment of Expenses by Shareholders
6. Ownership of Assets of the Trust
7. Service Contracts
ARTICLE V Shareholders' Voting Powers
and Meetings
1. Voting Powers
2. Voting Power and Meetings
3. Quorum and Required Vote
4. Action by Written Consent
5. Record Dates
6. Additional Provisions
ARTICLE VI Net Asset Value, Distributions,
and Redemptions
1. Determination of Net Asset Value, Net
Income and Distributions
2. Redemptions and Repurchases
3. Redemptions at the Option of the Trust
ARTICLE VII Compensation and Limitation of
Liability of Trustees
1. Compensation
2. Limitation of Liability
3. Indemnification
ARTICLE VIII Miscellaneous
1. Trustees, Shareholders, etc.
Not Personally Liable; Notice
2. Trustee's Good Faith Action,
Expert Advice, No Bond or Surety
3. Liability of Third Persons Dealing
with Trustees
4. Termination of Trust or Series
5. Merger and Consolidation
6. Filing of Copies, References, Headings
7. Applicable Law
8. Provisions in Conflict with Law or Regulations
9. Amendments
10. Trust Only
11. Use of the Name "Franklin"
AGREEMENT AND DECLARATION OF TRUST
OF
FRANKLIN REAL STATE SECURITIES TRUST
THIS AGREEMENT AND DECLARATION OF TRUST is made and entered
into as of this 14th day of September, 1993, by the Trustees
named hereunder.
WHEREAS the Trustees desire and have agreed to manage all
property coming into their hands as trustees of a Delaware
business trust in accordance with the provisions hereinafter set
forth,
NOW, THEREFORE, the Trustees hereby direct that this
Agreement and Declaration of Trust be filed with the Secretary of
the state of Delaware and do hereby declare that they will hold
all cash, securities and other assets, which they may from time
to time acquire in any manner as Trustees hereunder, IN TRUST,
and manage and dispose of the same upon the following terms and
conditions for the pro rata benefit of the holders of Shares in
this Trust.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as the FRANKLIN
REAL ESTATE SECURITIES TRUST and the Trustees shall conduct the
business of the Trust under that name or any other name as they
may from time to time determine.
Section 2. Definitions. Whenever used herein, unless
otherwise required by the context or specifically provided:
(a) The "Trust" refers to the Delaware business trust
established by this Agreement and Declaration of Trust, as
amended from time to time;
(b) The "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or
for the account of the Trust or the Trustees.
(c) "Trustees" refers to the persons who have signed this
Agreement and Declaration of Trust, so long as they continue in
office in accordance with the terms hereof, and all other persons
who may from time to time be duly elected or appointed to serve
on the Board of Trustees in accordance with the provisions
hereof, and reference herein to a Trustee or the Trustees shall
refer to such person or persons in their capacity as trustees
hereunder;
(d) "Shares" means the shares of beneficial interest into
which the beneficial interest in the Trust shall be divided from
time to time and includes fractions of Shares as well as whole
Shares;
(e) "Shareholder" means a record owner of outstanding
Shares;
(f) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other
entities, whether or not legal entities, and governments and
agencies and political subdivisions thereof, whether domestic or
foreign;
(g) The "1940 Act" refers to the Investment Company Act of
1940 and the Rules and Regulations thereunder, all as amended
from time to time;
(h) The terms "Commission" and "Principal Underwriter" shall
have the meanings given them in the 1940 Act;
(i) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust, as amended or restated from time to time;
(j) "By-Laws" shall mean the By-Laws of the Trust as amended
from time to time;
(k) The term "Interested Person" has the meaning given it in
Section 2(a) (19) of the 1940 Act.
(1) "Investment Manager" means a party furnishing services
to the Trust pursuant to any contract described in Article IV,
Section 7(a) hereof.
(m) "Series Company" refers to the form of registered open-
end investment company described in Section 18(f) (2) of the 1940
Act or in any successor statutory provision; and
(n) "Series" refers to each Series of Shares established and
designated under or in accordance with the provisions of Article
III.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on
the business of a managed investment company registered under the
1940 Act through one or more portfolios invested primarily in
securities.
ARTICLE III
Shares
Section 1. Division of Beneficial Interest. The beneficial
interest in the Trust shall at all times be divided into an
unlimited number of Shares, with a par value of $.01 per Share.
The Trustees may authorize the division of Shares into separate
Series, and the different Series shall be established and
designated, and the variations in the relative rights and
preferences as between the different Series shall be fixed and
determined, by the Trustees. If no Series shall be established
the Shares shall have the rights and preferences provided for
herein or in Article III, Section 6 hereof, to the extent
relevant and not otherwise provided for herein.
Subject to the provisions of Section 6 of this Article III,
each Share shall have voting rights as provided in Article V
hereof, and holders of the Shares of any Series shall be entitled
to receive dividends, when and as declared with respect thereto
in the manner provided in Article VI, Section 1 hereof. No
Shares shall have any priority or preference over any other Share
of the same Series with respect to dividends or distributions
upon termination of the Trust or of such Series made pursuant to
Article VIII, Section 4 hereof. All dividends and distributions
shall be made ratably among all Shareholders of a particular
Series from the assets belonging to such Series according to the
number of Shares of such Series held of record by such
Shareholder on the record date for any dividend or distribution
or on the date of termination, as the case may be. Shareholders
shall have no preemptive or other right to subscribe to any
additional Shares or other securities issued by the Trust or any
Series. The Trustees may from time to time divide or combine the
Shares of any particular Series into a greater or lesser number
of shares of that Series without thereby changing the
proportionate beneficial interest of the Shares of that Series in
the assets belonging to that series or in any way affecting the
rights of Shares of any other Series.
Section 2. Ownership of Shares. The ownership of Shares
shall be recorded on the books of the Trust or a transfer or
similar agent for the Trust, which books shall be maintained
separately for the Shares of each Series. No certificates
certifying the ownership of Shares shall be issued except as the
Board of Trustees may otherwise determine from time to time. The
Trustees may make such rules as they consider appropriate for the
transfer of Shares of each Series and similar matters. The
record books of the Trust as kept by the Trust or any transfer or
similar agent, as the case may be, shall be conclusive as to who
are the Shareholders of each Series and as to the number of
Shares of each Series held from time to time by each.
Section 3. Investments in the Trust. The Trustees may
accept investments in the Trust from such Persons, at such times,
on such terms, and for such consideration as they from time to
time authorize.
Section 4. Status of Shares and Limitation of Personal
Liability Shares shall be deemed to be personal property giving
only the rights provided in this instrument. Every Shareholder by
virtue of having become a Shareholder shall be held to have
expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the
existence of the Trust shall not operate to terminate the Trust,
nor entitle the representative of any deceased Shareholder to an
accounting or to take any action in court or elsewhere against
the Trust or the Trustees, but entitles such representative only
to the rights of said deceased Shareholder under this Trust.
Ownership of Shares shall not entitle the Shareholder to any
title in or to the whole or any part of the Trust Property or
right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Shares constitute the
Shareholders as partners. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust shall have any power
to bind personally any Shareholders, nor, except as specifically
provided herein, to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay.
Section 5. Power of Board of Trustees to Change Provisions
Relating to Shares. Notwithstanding any other provision of this
Declaration of Trust and without limiting the power of the Board
of Trustees to amend the Declaration of Trust as provided
elsewhere herein, the Board of Trustees shall have the power to
amend this Declaration of Trust, at any time and from time to
time, in such manner as the Board of Trustees may determine in
their sole discretion, without the need for Shareholder action,
so as to add to, delete, replace or otherwise modify any
provisions relating to the Shares contained in this Declaration
of Trust, provided that before adopting any such amendment
without Shareholder approval the Board of Trustees shall
determine that it is consistent with the fair and equitable
treatment of all Shareholders or that Shareholder approval is not
otherwise required by the 1940 Act or other applicable law.
Without limiting the generality of the foregoing, the Board
of Trustees may, for the above-stated purposes, amend the
Declaration of Trust to amend any of the provisions set forth in
paragraphs (a) through (i) of Section 6 of this Article III.
Section 6. Establishment and Designation of Series. The
establishment and designation of any Series of Shares shall be
effective upon the resolution by a majority of the then Trustees,
setting forth such establishment and designation and the relative
rights and preferences of such Series, or as otherwise provided
in such resolution.
Shares of each Series established pursuant to this Section
6, unless otherwise provided in the resolution establishing such
Series, shall have the following relative rights and preferences:
(a) Assets Belonging to Series. All consideration received
by the Trust for the issue or sale of Shares of a particular
Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and
proceeds thereof from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same
may be, shall irrevocably belong to that Series for all purposes,
subject only to the rights of creditors, and shall be so recorded
upon the books of account of the Trust. Such consideration,
assets, income, earnings, profits and proceeds thereof, from
whatever source derived, including, without limitation, any
proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment
of such proceeds, in whatever form the same may be, are herein
referred to as "assets belonging to" that Series. In the event
that there are any assets, income, earnings, profits and proceeds
thereof, funds or payments which are not readily identifiable as
belonging to any particular Series (collectively "General
Assets"), the Trustees shall allocate such General Assets to,
between or among any one or more of the Series in such manner and
on such basis as they, in their sole discretion, deem fair and
equitable, and any General Asset so allocated to a particular
Series shall belong to that Series. Each such allocation by the
Trustees shall be conclusive and binding upon the Shareholders of
all Series for all purposes.
(b) Liabilities Belonging to Series. The assets belonging to
each particular Series shall be charged with the liabilities of
the Trust in respect to that Series and all expenses, costs,
charges and reserves attributable to that Series, and any general
liabilities of the Trust which are not readily identifiable as
belonging to any particular Series shall be allocated and charged
by the Trustees to and among any one or more of the Series in
such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. The liabilities, expenses,
costs, charges, and reserves so charged to a Series are herein
referred to as "liabilities belonging to" that Series. Each
allocation of liabilities, expenses, costs, charges and reserves
by the Trustees shall be conclusive and binding upon the holders
of all Series for all purposes. Under no circumstances shall the
assets allocated or belonging to any particular Series be charged
with liabilities attributable to any other Series. All Persons
who have extended credit which has been allocated to a particular
Series, or who have a claim or contract which has been allocated
to any particular Series, shall look only to the assets of that
particular Series for payment of such credit, claim, or contract.
(c) Dividends, Distributions Redemptions, and Repurchases.
Notwithstanding any other provisions of this Declaration of
Trust, including, without limitation, Article VI, no dividend or
distribution (including, without limitation, any distribution
paid upon termination of the Trust or of any Series) with respect
to, nor any redemption or repurchase of, the Shares of any Series
shall be effected by the Trust other than from the assets
belonging to such Series, nor, except as specifically provided in
Section 7 of this Article III, shall any Shareholder of any
particular Series otherwise have any right or claim against the
assets belonging to any other Series except to the extent that
such Shareholder has such a right or claim hereunder as a
Shareholder of such other Series. The Trustees shall have full
discretion, to the extent not inconsistent with the 1940 Act, to
determine which items shall be treated as income and which items
as capital; and each such determination and allocation shall be
conclusive and binding upon the Shareholders.
(d) Voting. All Shares of the Trust entitled to vote on a
matter shall vote separately by Series. That is, the Shareholders
of each Series shall have the right to approve or disapprove
matters affecting the Trust and each respective Series as if the
Series were separate companies. There are, however, two
exceptions to voting by separate Series. First, if the 1940 Act
requires all Shares of the Trust to be voted in the aggregate
without differentiation between the separate Series, then all the
Trust's Shares shall be entitled to vote on a one-vote-per-Share
basis. Second, if any matter affects only the interests of some
but not all Series, then only the Shareholders of such affected
Series shall be entitled to vote on the matter.
(e) Equality. All the Shares of each particular Series shall
represent an equal proportionate interest in the assets belonging
to that Series (subject to the liabilities belonging to that
Series), and each Share of any particular Series shall be equal
to each other Share of that Series.
(f) Fractions. Any fractional Share of a Series shall carry
proportionately all the rights and obligations of a whole share
of that Series, including rights with respect to voting, receipt
of dividends and distributions, redemption of Shares and
termination of the Trust.
(g) Exchange Privilege. The Trustees shall have the
authority to provide that the holders of Shares of any Series
shall have the right to exchange said Shares for Shares of one or
more other Series of Shares in accordance with such requirements
and procedures as may be established by the Trustees.
(h) Combination of Series. The Trustees shall have the
authority, without the approval of the Shareholders of any Series
unless otherwise required by applicable law, to combine the
assets and liabilities belonging to any two or more Series into
assets and liabilities belonging to a single Series.
(i) Elimination of Series. At any time that there are no
Shares outstanding of any particular Series previously
established and designated, the Trustees may by resolution of a
majority of the then Trustees abolish that Series and rescind the
establishment and designation thereof.
Section 7. Indemnification of Shareholders. In case any
Shareholder or former Shareholder shall be held to be personally
liable solely by reason of his or her being or having been a
Shareholder and not because of his or her acts or omissions or
for some other reason, the Shareholder or former Shareholder (or
his or her heirs, executors, administrators, or other legal
representatives or in the case of a corporation or other entity,
its corporate or other general successor) shall be entitled out
of the assets of the Trust to be held harmless from and
indemnified against all loss and expense arising from such
liability.
ARTICLE IV
The Board of Trustees
Section 1. Number, Election and Tenure. The number of
Trustees constituting the Board of Trustees shall be fixed from
time to time by a written instrument signed or by resolution
approved at a duly constituted meeting by a majority of the Board
of Trustees, provided, however, that the number of Trustees shall
in no event be less than one nor more than 15. The Board of
Trustees, by action of a majority of the then Trustees at a duly
constituted meeting, may fill vacancies in the Board of Trustees
or remove Trustees with or without cause. Each Trustee shall
serve during the continued lifetime of the Trust until he dies,
resigns, is declared bankrupt or incompetent by a court of
appropriate jurisdiction, or is removed, or, if sooner, until the
next meeting of Shareholders called for the purpose of electing
Trustees and until the election and qualification of his
successor. Any Trustee may resign at any time by written
instrument signed by him and delivered to any officer of the
Trust or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some
other time. Except to the extent expressly provided in a written
agreement with the Trust, no Trustee resigning and no Trustee
removed shall have any right to any compensation for any period
following his resignation or removal, or any right to damages on
account of such removal. The Shareholders may fix the number of
Trustees and elect Trustees at any meeting of Shareholders called
by the Trustees for that purpose.
Section 2. Effect of Death, Resignation, etc. of a Trustee.
The death, declination, resignation, retirement, removal, or
incapacity of one or more Trustees, or all of them, shall not
operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration of Trust.
Whenever a vacancy in the Board of Trustees shall occur, until
such vacancy is filled as provided in Article IV, Section 1, the
Trustees in office, regardless of their number, shall have all
the powers granted to the Trustees and shall discharge all the
duties imposed upon the Trustees by this Declaration of Trust. As
conclusive evidence of such vacancy, a written instrument
certifying the existence of such vacancy may be executed by an
officer of the Trust or by a majority of the Board of Trustees.
In the event of the death, declination, resignation, retirement,
removal, or incapacity of all the then Trustees within a short
period of time and without the opportunity for at least one
Trustee being able to appoint additional Trustees to fill
vacancies, the Trust's investment adviser or investment advisers
jointly, if there is more than one, are empowered to appoint new
Trustees subject to the provisions of Section 16(a) of the 1940
Act.
Section 3. Powers. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed
by the Board of Trustees, and such Board shall have all powers
necessary or convenient to carry out that responsibility
including the power to engage in securities transactions of all
kinds on behalf of the Trust. Without limiting the foregoing, the
Trustees may: adopt By-Laws not inconsistent with this
Declaration of Trust providing for the regulation and management
of the affairs of the Trust and may amend and repeal them to the
extent that such ByLaws do not reserve that right to the
Shareholders; fill vacancies in or remove from their number, and
may elect and remove such officers and appoint and terminate such
agents as they consider appropriate; appoint from their own
number and establish and terminate one or more committees
consisting of two or more Trustees which may exercise the powers
and authority of the Board of Trustees to the extent that the
Trustees determine; employ one or more custodians of the assets
of the Trust and may authorize such custodians to employ
subcustodians and to deposit all or any part of such assets in a
system or systems for the central handling of securities or with
a Federal Reserve Bank, retain a transfer agent or a shareholder
servicing agent, or both; provide for the issuance and
distribution of Shares by the Trust directly or through one or
more Principal Underwriters or otherwise; redeem, repurchase and
transfer Shares pursuant to applicable law; set record dates for
the determination of Shareholders with respect to various
matters; declare and pay dividends and distributions to
Shareholders of each Series from the assets of such Series; and
in general delegate such authority as they consider desirable to
any officer of the Trust, to any committee of the Trustees and to
any agent or employee of the Trust or to any such custodian,
transfer or shareholder servicing agent, or Principal
Underwriter. Any determination as to what is in the interests of
the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Declaration of Trust, the
presumption shall be in favor of a grant of power to the
Trustees.
Without limiting the foregoing, the Board of Trustees shall
have power and authority:
(a) To invest and reinvest cash, to hold cash uninvested,
and to subscribe for, invest in, reinvest in, purchase or
otherwise acquire, own, hold, pledge, sell, assign, transfer,
exchange, distribute, write options on, lend or otherwise deal in
or dispose of contracts for the future acquisition or delivery of
fixed income or other securities, and securities of every nature
and kind, including, without limitation, all types of bonds,
debentures, stocks, negotiable or non-negotiable instruments,
obligations, evidences of indebtedness, certificates of deposit
or indebtedness, commercial paper, repurchase agreements,
bankers' acceptances, and other securities of any kind, issued,
created, guaranteed, or sponsored by any and all Persons,
including, without limitation, states, territories, and
possessions of the United States and the District of Columbia and
any political subdivision, agency, or instrumentality thereof,
any foreign government or any political subdivision of the U.S.
Government or any foreign government, or any international
instrumentality, or by any bank or savings institution, or by any
corporation or organization organized under the laws of the
United States or of any state, territory, or possession thereof,
or by any corporation or organization organized under any foreign
law, or in "when issued" contracts for any such securities, to
change the investments of the assets of the Trust; and to
exercise any and all rights, powers, and privileges of ownership
or interest in respect of any and all such investments of every
kind and description, including, without limitation, the right to
consent and otherwise act with respect thereto, with power to
designate one or more Persons, to exercise any of said rights,
powers, and privileges in respect of any of said instruments;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate,
lease, or write options with respect to or otherwise deal in any
property rights relating to any or all of the assets of the
Trust;
(c) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property;
and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to
such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(d) To exercise powers and right of subscription or
otherwise which in any manner arise out of ownership of
securities;
(e) To hold any security or property in a form not
indicating any trust, whether in bearer, unregistered or other
negotiable form, or in its own name or in the name of a custodian
or subcustodian or a nominee or nominees or otherwise;
(f) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
issuer of any security which is held in the Trust; to consent to
any contract, lease, mortgage, purchase or sale of property by
such corporation or issuer; and to pay calls or subscriptions
with respect to any security held in the Trust;
(g) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that
connection to deposit any security with, or transfer any security
to, any such committee, depositary or trustee, and to delegate to
them such power and authority with relation to any security
(whether or not so deposited or transferred) as the Trustees
shall deem proper, and to agree to pay, and to pay, such portion
of the expenses and compensation of such committee, depositary or
trustee as the Trustees shall deem proper;
(h) To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any matter in controversy,
including but not limited to claims for taxes;
(i) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(j) To borrow funds or other property in the name of the
Trust exclusively for Trust purposes;
(k) To endorse or guarantee the payment of any notes or
other obligations of any Person; to make contracts of guaranty or
suretyship, or otherwise assume liability for payment thereof;
(1) To purchase and pay for entirely out of Trust Property
such insurance as they may deem necessary or appropriate for the
conduct of the business, including, without limitation, insurance
policies insuring the assets of the Trust or payment of
distributions and principal on its portfolio investments, and
insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, investment advisers, principal underwriters,
or independent contractors of the Trust, individually against all
claims and liabilities of every nature arising by reason of
holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any
such Person as Trustee, officer, employee, agent, investment
adviser, principal underwriter, or independent contractor,
including any action taken or omitted that may be determined to
constitute negligence, whether or not the Trust would have the
power to indemnify such Person against liability; and
(m) To adopt, establish and carry out pension, profit-
sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions,
including the purchasing of life insurance and annuity contracts
as a means of providing such retirement and other benefits, for
any or all of the Trustees, officers, employees and agents of the
Trust.
The Trustees shall not be limited to investing in
obligations maturing before the possible termination of the Trust
or one or more of its Series. The Trustees shall not in any way
be bound or limited by any present or future law or custom in
regard to investment by fiduciaries. The Trustees shall not be
required to obtain any court order to deal with any assets of the
Trust or take any other action hereunder.
Section 4. Payment of Expenses by the Trust. The Trustees
are authorized to pay or cause to be paid out of the principal or
income of the Trust, or partly out of the principal and partly
out of income, as they deem fair, all expenses, fees, charges,
taxes and liabilities incurred or arising in connection with the
Trust, or in connection with the management thereof, including,
but not limited to, the Trustees' compensation and such expenses
and charges for the services of the Trust's officers, employees,
investment adviser or manager, principal underwriter, auditors,
counsel, custodian, transfer agent, Shareholder servicing agent,
and such other agents or independent contractors and such other
expenses and charges as the Trustees may deem necessary or proper
to incur.
Section 5. Payment of Expenses by Shareholders. The Trustees
shall have the power, as frequently as they may determine, to
cause each Shareholder, or each Shareholder of any particular
Series, to pay directly, in advance or arrears, for charges of
the Trust's custodian or transfer, Shareholder servicing or
similar agent, an amount fixed from time to time by the Trustees,
by setting off such charges due from such Shareholder from
declared but unpaid dividends owed such Shareholder and/or by
reducing the number of shares in the account of such Shareholder
by that number of full and/or fractional Shares which represents
the outstanding amount of such charges due from such Shareholder.
Section 6. Ownership of Assets of the Trust. Title to all of
the assets of the Trust shall at all times be considered as
vested in the Trustees as joint tenants except that the Trustees
shall have power to cause legal title to any Trust Property to be
held by or in the name of one or more of the Trustees, or in the
name of the Trust, or in the name of any other Person as nominee,
on such terms as the Trustees may determine. The right, title and
interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee.
Upon the resignation, removal or death of a Trustee he shall
automatically cease to have any right, title or interest in any
of the Trust Property, and the right, title and interest of such
Trustee in the Trust Property shall vest automatically in the
remaining Trustees. Such vesting and cessation of title shall be
effective whether or not conveyancing documents have been
executed and delivered.
Section 7. Service Contracts.
(a) Subject to such requirements and restrictions as may be
set forth in the By-Laws, the Trustees may, at any time and from
time to time, contract for exclusive or nonexclusive advisory,
management and/or administrative services for the Trust or for
any Series with any corporation, trust, association or other
organization; and any such contract may contain such other terms
as the Trustees may determine, including without limitation,
authority for the Investment Manager, Investment Adviser or
Administrator to determine from time to time without prior
consultation with the Trustees what investments shall be
purchased, held, sold or exchanged and what portion, if any, of
the assets of the Trust shall be held uninvested and to make
changes in the Trust's investments, or such other activities as
may specifically be delegated to such party.
(b) The Trustees may also, at any time and from time to
time, contract with any corporation, trust, association or other
organization, appointing it exclusive or nonexclusive distributor
or Principal Underwriter for the Shares of one or more of the
Series. Every such contract shall comply with such requirements
and restrictions as may be set forth in the By-Laws; and any such
contract may contain such other terms as the Trustees may
determine.
(c) The Trustees are also empowered, at any time and from
time to time, to contract with any corporations, trusts,
associations or other organizations, appointing it or them the
custodian, transfer agent and/or shareholder servicing agent for
the Trust or one or more of its Series. Every such contract shall
comply with such requirements and restrictions as may be set
forth in the By-Laws or stipulated by resolution of the Trustees.
(d) The Trustees are further empowered, at any time and from
time to time, to contract with any entity to provide such other
services to the Trust or one or more of the Series, as the
Trustees determine to be in the best interests of the Trust and
the applicable Series.
(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of
the Trust is a shareholder, director, officer, partner,
trustee, employee, manager, adviser, principal underwriter,
distributor, or affiliate or agent of or for any
corporation, trust, association, or other organization, or
for any parent or affiliate of any organization with which
an advisory, management or administration contract, or
principal underwriter's or distributor's contract, or
transfer, shareholder servicing or other type of service
contract may have been or may hereafter be made, or that any
such organization, or any parent or affiliate thereof, is a
Shareholder or has an interest in the Trust, or that
(ii) any corporation, trust, association or other
organization with which an advisory, management or
administration contract or principal underwriter's or
distributor's contract, or transfer, shareholder servicing
or other type of service contract may have been or may
hereafter be made also has an advisory, management or
administration contract, or principal underwriter's or
distributor's contract, or transfer, shareholder servicing
or other service contract with one or more other
corporations, trust, associations, or other organizations,
or has other business or interests,
shall not affect the validity of any such contract or disqualify
any Shareholder, Trustee or officer of the Trust from voting upon
or executing the same, or create any liability or accountability
to the Trust or its Shareholders, provided approval of each such
contract is made pursuant to the requirements of the 1940 Act.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. Subject to the provisions of
Article III, Section 6(d), the Shareholders shall have power to
vote only (i) for the election of Trustees as provided in Article
IV, Section 1, (ii) to the same extent as the stockholders of a
Delaware business corporation as to whether or not a court
action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the
Trust or the Shareholders, (iii) with respect to the termination
of the Trust or any Series to the extent and as provided in
Article VIII, Section 4, and (iv) with respect to such additional
matters relating to the Trust as may be required by this
Declaration of Trust, the By-Laws or any registration of the
Trust with the Commission (or any successor agency) or any state,
or as the Trustees may consider necessary or desirable. Each
whole Share shall be entitled to one vote as to any matter on
which it is entitled to vote and each fractional Share shall be
entitled to a proportionate fractional vote. There shall be no
cumulative voting in the election of Trustees. Shares may be
voted in person or by proxy. A proxy with respect to Shares held
in the name of two or more persons shall be valid if executed by
any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any
one of them. A proxy purporting to be executed by or on behalf of
a Shareholder shall be deemed valid unless challenged at or prior
to its exercise and the burden of proving invalidity shall rest
on the challenger. At any time when no Shares of a Series are
outstanding, the Trustees may exercise all rights of Shareholders
of that Series with respect to matters affecting that Series,
take any action required by law, this Declaration of Trust or the
ByLaws, to be taken by the Shareholders.
Section 2. Voting Power and Meetings. Meetings of the
Shareholders may be called by the Trustees for the purpose of
electing Trustees as provided in Article IV, Section 1 and for
such other purposes as may be prescribed by law, by this
Declaration of Trust or by the By-Laws. Meetings of the
Shareholders may also be called by the Trustees from time to time
for the purpose of taking action upon any other matter deemed by
the Trustees to be necessary or desirable. A meeting of
Shareholders may be held at any place designated by the Trustees.
Written notice of any meeting of Shareholders shall be given or
caused to be given by the Trustees by mailing such notice at
least seven (7) days before such meeting, postage prepaid,
stating the time and place of the meeting, to each Shareholder at
the Shareholder's address as it appears on the records of the
Trust. Whenever notice of a meeting is required to be given to a
Shareholder under this Declaration of Trust or the By-Laws, a
written waiver thereof, executed before or after the meeting by
such Shareholder or his attorney thereunto authorized and filed
with the records of the meeting, shall be deemed equivalent to
such notice.
Section 3. Quorum and Required Vote. Except when a larger
quorum is required by applicable law, by the By-Laws or by this
Declaration of Trust, forty percent (40%) of the Shares entitled
to vote shall constitute a quorum at a Shareholders' meeting.
When any one or more Series is to vote as a single class separate
from any other Shares which are to vote on the same matters as a
separate class or classes, forty percent (40%) of the Shares of
each such Series entitled to vote shall constitute a quorum at a
Shareholder's meeting of that Series. Any meeting of Shareholders
may be adjourned from time to time by a majority of the votes
properly cast upon the question of adjourning a meeting to
another date and time, whether or not a quorum is present, and
the meeting may be held as adjourned within a reasonable time
after the date set for the original meeting without further
notice. Subject to the provisions of Article III, Section 6(d) l
when a quorum is present at any meeting, a majority of the Shares
voted shall decide any questions and a plurality shall elect a
Trustee, except when a larger vote is required by any provision
of this Declaration of Trust or the By-Laws or by applicable law.
Section 4. Action by Written Consent. Any action taken by
Shareholders may be taken without a meeting if Shareholders
holding a majority of the Shares entitled to vote on the matter
(or such larger proportion thereof as shall be required by any
express provision of this Declaration of Trust or by the By-Laws)
and holding a majority (or such larger proportion as aforesaid)
of the Shares of any Series entitled to vote separately on the
matter consent to the action in writing and such written consents
are filed with the records of the meetings of Shareholders. Such
consent shall be treated for all purposes as a vote taken at a
meeting of Shareholders.
Section 5. Record Dates. For the purpose of determining the
Shareholders of any Series who are entitled to vote or act at any
meeting or any adjournment thereof, the Trustees may from time to
time fix a time, which shall be not more than ninety (90) days
before the date of any meeting of Shareholders, as the record
date for determining the Shareholders of such Series having the
right to notice of and to vote at such meeting and any
adjournment thereof, and in such case only Shareholders of record
on such record date shall have such right, notwithstanding any
transfer of shares on the books of the Trust after the record
date. For the purpose of determining the Shareholders of any
Series who are entitled to receive payment of any dividend or of
any other distribution, the Trustees may from time to time fix a
date, which shall be before the date for the payment of such
dividend or such other payment, as the record date for
determining the Shareholders of such Series having the right to
receive such dividend or distribution. Without fixing a record
date the Trustees may for voting and/or distribution purposes
close the register or transfer books for one or more Series for
all or any part of the period between a record date and a meeting
of Shareholders or the payment of a distribution. Nothing in this
Section shall be construed as precluding the Trustees from
setting different record dates for different Series.
Section 6. Additional Provisions. The By-Laws may include
further provisions for Shareholders' votes and meetings and
related matters.
ARTICLE VI
Net Asset Value, Distributions, and Redemptions
Section 1. Determination of Net Asset Value, Net Income, and
Distributions. Subject to Article III, Section 6 hereof, the
Trustees, in their absolute discretion, may prescribe and shall
set forth in the By-laws or in a duly adopted vote of the
Trustees such bases and time for determining the per Share or net
asset value of the Shares of any Series or net income
attributable to the Shares of any Series, or the declaration and
payment of dividends and distributions on the Shares of any
Series, as they may deem necessary or desirable.
Section 2. Redemptions and Repurchases. The Trust shall
purchase such Shares as are offered by any Shareholder for
redemption, upon the presentation of a proper instrument of
transfer together with a request directed to the Trust or a
Person designated by the Trust that the Trust purchase such
Shares or in accordance with such other procedures for redemption
as the Trustees may from time to time authorize; and the Trust
will pay therefor the net asset value thereof, in accordance with
the ByLaws and applicable law. Payment for said Shares shall be
made by the Trust to the Shareholder within seven days after the
date on which the request is made in proper form. The obligation
set forth in this Section 2 is subject to the provision that in
the event that any time the New York Stock Exchange is closed for
other than weekends or holidays, or if permitted by the Rules of
the Commission during periods when trading on the Exchange is
restricted or during any emergency which makes it impracticable
for the Trust to dispose of the investments of the applicable
Series or to determine fairly the value of the net assets
belonging to such Series or during any other period permitted by
order of the Commission for the protection of investors, such
obligations may be suspended or postponed by the Trustees.
The redemption price may in any case or cases be paid wholly
or partly in kind if the Trustees determine that such payment is
advisable in the interest of the remaining Shareholders of the
Series for which the Shares are being redeemed. Subject to the
foregoing, the fair value, selection and quantity of securities
or other property so paid or delivered as all or part of the
redemption price may be determined by or under authority of the
Trustees. In no case shall the Trust be liable for any delay of
any corporation or other Person in transferring securities
selected for delivery as all or part of any payment in kind.
Section 3. Redemptions at the Option of the Trust. The Trust
shall have the right at its option and at any time to redeem
Shares of any Shareholder at the net asset value thereof as
described in Section 1 of this Article VI: (i) if at such time
such Shareholder owns Shares of any Series having an aggregate
net asset value of less than an amount determined from time to
time by the Trustees prior to the acquisition of said Shares; or
(ii) to the extent that such Shareholder owns Shares of a
particular Series equal to or in excess of a percentage of the
outstanding Shares of that Series determined from time to time by
the Trustees; or (iii) to the extent that such Shareholder owns
Shares equal to or in excess of a percentage, determined from
time to time by the Trustees, of the outstanding Shares of the
Trust or of any Series.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Section 1. Compensation. The Trustees as such shall be
entitled to reasonable compensation from the Trust, and they may
fix the amount of such compensation. Nothing herein shall in any
way prevent the employment of any Trustee for advisory,
management, legal, accounting, investment banking or other
services and payment for the same by the Trust.
Section 2. Limitation of Liability. The Trustees shall not
be responsible or liable in any event for any neglect or
wrongdoing of any officer, agent, employee, manager or Principal
Underwriter of the Trust, nor shall any Trustee be responsible
for the act or omission of any other Trustee, but nothing herein
contained shall protect any Trustee against any liability to
which he would otherwise be subject by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.
Every note, bond, contract, instrument, certificate or
undertaking and every other act or thing whatsoever issued,
executed or done by or on behalf of the Trust or the Trustees or
any of them in connection with the Trust shall be conclusively
deemed to have been issued, executed or done only in or with
respect to their or his capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally liable thereon.
Section 3. Indemnification. The Trustees shall be entitled
and empowered to the fullest extent permitted by law to purchase
with Trust assets insurance for and to provide by resolution or
in the By-Laws for indemnification out of Trust assets for
liability and for all expenses reasonably incurred or paid or
expected to be paid by a Trustee or officer in connection with
any claim, action, suit or proceeding in which he becomes
involved by virtue of his capacity or former capacity with the
Trust. The provisions, including any exceptions and limitations
concerning indemnification, may be set forth in detail in the By-
Laws or in a resolution of the Board of Trustees.
ARTICLE VIII
Miscellaneous
Section 1. Trustees, Shareholders, etc. Not Personally
Liable; Notice. All Persons extending credit to, contracting with
or having any claim against the Trust or any Series shall look
only to the assets of the Trust, or, to the extent that the
liability of the Trust may have been expressly limited by
contract to the assets of a particular Series, only to the assets
belonging to the relevant Series, for payment under such credit,
contract or claim; and neither the Shareholders nor the Trustees,
nor any of the Trust's officers, employees or agents, whether
past, present or future, shall be personally liable therefor.
Nothing in this Declaration of Trust shall protect any Trustee
against any liability to which such Trustee would otherwise be
subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate or
undertaking made or issued on behalf of the Trust by the Board of
Trustees, by any officers or officer or otherwise may include a
notice that this Declaration of Trust is on file with the
Secretary of the state of Delaware and may recite that the note,
bond, contract, instrument, certificate, or undertaking was
executed or made by or on behalf of the Trust or by them as
Trustee or Trustees or as officers or officer or otherwise and
not individually and that the obligations of such instrument are
not binding upon any of them or the Shareholders individually but
are binding only upon the assets and property of the Trust or
upon the assets belonging to the Series for the benefit of which
the Trustees have caused the note, bond, contract, instrument,
certificate or undertaking to be made or issued, and may contain
such further recital as he or they may deem appropriate, but the
omission of any such recital shall not operate to bind any
Trustee or Trustees or officer or officers or Shareholders or any
other person individually.
Section 2. Trustee's Good Faith Action, Expert Advice, No
Bond or Surety. The exercise by the Trustees of their powers and
discretions hereunder shall be binding upon everyone interested.
A Trustee shall be liable solely for his own wilful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved In the conduct of the office of Trustee, and shall not
be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect
to the meaning and operation of this Declaration of Trust, and
shall be under no liability for any act or omission in accordance
with such advice nor for failing to follow such advice. The
Trustees shall not be required to give any bond as such, nor any
surety if a bond is required.
Section 3. Liability of Third Persons Dealing with Trustees.
No Person dealing with the Trustees shall be bound to make any
inquiry concerning the validity of any transaction made or to be
made by the Trustees or to see to the application of any payments
made or property transferred to the Trust or upon its order.
Section 4. Termination of Trust or Series. Unless terminated
as provided herein, the Trust shall continue without limitation
of time. The Trust may be terminated at any time by vote of at
least two-thirds (66-2/3%) of the Shares of each Series entitled
to vote, voting separately by Series, or by the Trustees by
written notice to the Shareholders. Any Series may be terminated
at any time by vote of at least two-thirds (66-2/3%) of the
Shares of that Series or by the Trustees by written notice to the
Shareholders of that Series.
Upon termination of the Trust (or any Series, as the case
may be), after paying or otherwise providing for all charges,
taxes, expenses and liabilities belonging, severally, to each
Series (or the applicable Series, as the case may be), whether
due or accrued or anticipated as may be determined by the
Trustees, the Trust shall, in accordance with such procedures as
the Trustees consider appropriate, reduce the remaining assets
belonging. severally, to each Series (or the applicable Series,
as the case may be), to distributable form in cash or shares or
other securities, or any combination thereof, and distribute the
proceeds belonging to each Series (or the applicable Series, as
the case may be), to the Shareholders of that Series, as a
Series, ratably according to the number of Shares of that Series
held by the several Shareholders on the date of termination.
Section 5. Merger and Consolidation. The Trustees may cause
the Trust or one or more of its Series to be merged into or
consolidated with another Trust or company or the Shares
exchanged under or pursuant to any state or Federal statute, if
any, or otherwise to the extent permitted by law. Such merger or
consolidation or Share exchange must be authorized by vote of a
majority of the outstanding Shares of the Trust, as a whole, or
any affected Series, as may be applicable; provided that in all
respects not governed by statute or applicable law, the Trustees
shall have power to prescribe the procedure necessary or
appropriate to accomplish a sale of assets, merger or
consolidation.
Section 6. Filing of Copies, References, Headings. The
original or a copy of this instrument and of each amendment
hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. A copy of this instrument and of
each amendment hereto shall be filed by the Trust with the
Secretary of the state of Delaware and with any other
governmental office where such filing may from time to time be
required. Anyone dealing with the Trust may rely on a certificate
by an officer of the Trust as to whether or not any such
amendments have been made and as to any matters in connection
with the Trust hereunder; and, with the same effect as if it were
the original, may rely on a copy certified by an officer of the
Trust to be a copy of this instrument or of any such amendments.
In this instrument and in any such amendment, references to this
instrument, and all expressions like "herein", "hereof" and
"hereunder", shall be deemed to refer to this instrument as
amended or affected by any such amendments. Headings are placed
herein for convenience of reference only and shall not be taken
as a part hereof or control or affect the meaning, construction
or effect of this instrument. Whenever the singular number is
used herein, the same shall include the plural; and the neuter,
masculine and feminine genders shall include each other, as
applicable. This instrument may be executed in any number of
counterparts each of which shall be deemed an original.
Section 7. Applicable Law. This Agreement and Declaration of
Trust is created under and is to be governed by and construed and
administered according to the laws of state of Delaware. The
Trust shall be of the type commonly called a Delaware business
trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a
trust.
Section 8. Provisions in Conflict with Law or Regulations.
(a) The provisions of the Declaration of Trust are
severable, and if the Trustees shall determine, with the advice
of counsel, that any of such provisions is in conflict with the
1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and
regulations, the conflicting provision shall be deemed never to
have constituted a part of the Declaration of Trust; provided,
however, that such determination shall not affect any of the
remaining provisions of the Declaration of Trust or render
invalid or improper any action taken or omitted prior to such
determination.
(b) If any provision of the Declaration of Trust shall
be held invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall attach only to such
provision in such jurisdiction and shall not in any manner affect
such provision in any other jurisdiction or any other provision
of the Declaration of Trust in any jurisdiction.
Section 9. Amendments. This Declaration of Trust may be
amended at any time by an instrument in writing signed by a
majority of the then Trustees.
Section 10. Trust Only. It is the intention of the Trustees
to create only the relationship of Trustee and beneficiary
between the Trustees and each Shareholder from time to time. It
is not the intention of the Trustees to create a general
partnership, limited partnership, joint stock association,
corporation, bailment, or any form of legal relationship other
than a trust. Nothing in this Agreement and Declaration of Trust
shall be construed to make the Shareholders, either by themselves
or with the Trustees, partners or members of a joint stock
association.
Section 11. Use of the Name "Franklin." Franklin Advisers,
Inc., as the proposed Manager of the Trust's assets, has
consented to the use by the Trust of the identifying word
"Franklin" as part of the name of the Trust and in the name of
any Series of Shares. Such consent is conditioned upon the
employment of the Manager, or an affiliate of said Company, as
Manager of the Trust and said Series. The name or identifying
words "Franklin or any variation thereof may be used from time to
time in other connections and for other purposes by the Manager
or affiliated entities. The Manager has the right to require the
Trust to cease using "Franklin" in the name of the Trust and in
the names of its Series if the Trust and said Series cease to
employ, for any reason, the Manager, or an affiliate of said
Company, as the Manager or adviser of the Trust or such Series.
Future names adopted by the Trust for itself and its Series shall
be the property of the Manager and its affiliates, and the use of
such names shall be subject to the same conditions set forth in
this Section insofar as such name or identifying words require
the consent of the Manager.
IN WITNESS WHEREOF, the Trustees named below do hereby set
their hands as of the 14th day of September, 1993.
/s/ Frank H. Abbott, III /s/ Charles B. Johnson
Frank H. Abbott, III Charles B. Johnson
1045 Sansome Street 777 Mariners Island Blvd.
San Francisco, CA 94111 San Mateo, CA 94404
/s/ Harris J. Ashton /s/ Rupert H. Johnson, Jr.
Harris J. Ashton Rupert H. Johnson, Jr.
Metro Center, One Station Place 777 Mariners Island Blvd.
Stamford, CT 06904 San Mateo, CA 94404
/s/ S. Joseph Fortunato /s/ David W. Garbellano
S. Joseph Fortunato David W. Garbellano
Park Avenue at Morris County 111 New Montgomery St. #402
P.O. Box 1945 San Francisco, CA 94105
Morristown, NJ 07962-1945
/s/ Frank W.T. LaHaye /s/ Harmon E. Burns
Frank W.T. LaHaye Harmon E. Burns
20833 Stevens Creek Blvd. 777 Mariners Island Blvd.
Suite 102 San Mateo, CA 94404
Cupertino, CA 95014
/s/ Gordon S. Macklin
Gordon S. Macklin
8212 Burning Tree Road
Bethesda, MD 20817
BY-LAWS
OF
FRANKLIN REAL ESTATE SECURITIES TRUST
A Delaware Business Trust
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The Board of Trustees shall fix
and, from time to time, may change the location of the principal
executive office of the Trust at any place within or outside the
State of Delaware.
Section 2. OTHER OFFICES. The Board of Trustees may at any
time establish branch or subordinate offices at any place or
places where the Trust intends to do business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section I. PLACE OF MEETINGS. Meetings of shareholders shall
be held at any place within or outside the State of Delaware
designated by the Board of Trustees. In the absence of any such
designation, shareholders' meetings shall be held at the
principal executive office of the Trust.
Section 2. CALL OF MEETING. A meeting of the shareholders
may be called at any time by the Board of Trustees or by the
Chairman of the Board or by the President.
Section 3. NOTICE OF SHAREHOLDERS' MEETING. All notices of
meetings of shareholders shall be sent or otherwise given in
accordance with Section 4 of this Article II not less than seven
(7) nor more than seventy-five (75) days before the date of the
meeting. The notice shall specify (i) the place, date and hour of
the meeting, and (ii) the general nature of the business to be
transacted. The notice of any meeting at which trustees are to be
elected also shall include the name of any nominee or nominees
whom at the time of the notice are intended to be presented for
election.
If action is proposed to be taken at any meeting for
approval of (i) a contract or transaction in which a trustee has
a direct or indirect financial interest, (ii) an amendment of the
Declaration of Trust, (iii) a reorganization of the Trust, or
(iv) a voluntary dissolution of the Trust, the notice shall also
state the general nature of that proposal.
Section 4. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
Notice of any meeting of shareholders shall be given either
personally or by first-class mail or telegraphic or other written
communication, charges prepaid, addressed to the shareholder at
the address of that shareholder appearing on the books of the
Trust or its transfer agent or given by the shareholder to the
Trust for the purpose of notice. If no such address appears on
the Trust's books or is given, notice shall be deemed to have
been given if sent to that shareholder by first-class mail or
telegraphic or other written communication to the Trust's
principal executive office, or if published at least once in a
newspaper of general circulation in the county where that office
is located. Notice shall be deemed to have been given at the time
when delivered personally or deposited in the mail or sent by
telegram or other means of written communication.
If any notice addressed to a shareholder at the address of
that shareholder appearing on the books of the Trust is returned
to the Trust by the United States Postal Service marked to
indicate that the Postal Service is unable to deliver the notice
to the shareholder at that address, all future notices or reports
shall be deemed to have been duly given without further mailing
if these shall be available to the shareholder on written demand
of the shareholder at the principal executive office of the Trust
for a period of one year from the date of the giving of the
notice.
An affidavit of the mailing or other means of giving any
notice of any shareholder's meeting shall be executed by the
secretary, assistant secretary or any transfer agent of the Trust
giving the notice and shall be filed and maintained in the minute
book of the Trust.
Section 5. ADJOURNED MEETING; NOTICE. Any shareholder's
meeting, whether or not a quorum is present, may be adjourned
from time to time by the vote of the majority of the shares
represented at that meeting, either in person or by proxy.
When any meeting of shareholders is adjourned to another
time or place, notice need not be given of the adjourned meeting
at which the adjournment is taken, unless a new record date of
the adjourned meeting is fixed or unless the adjournment is for
more than sixty (60) days from the date set for the original
meeting, in which case the Board of Trustees shall set a new
record date. Notice of any such adjourned meeting shall be given
to each shareholder of record entitled to vote at the adjourned
meeting in accordance with the provisions of Sections 3 and 4 of
this Article II. At any adjourned meeting, the Trust may transact
any business which might have been transacted at the original
meeting.
Section 6. VOTING. The shareholders entitled to vote at any
meeting of shareholders shall be determined in accordance with
the provisions of the Declaration of Trust, as in effect at such
time. The shareholders' vote may be by voice vote or by ballot,
provided, however, that any election for trustees must be by
ballot if demanded by any shareholder before the voting has
begun. On any matter other than elections of trustees, any
shareholder may vote part of the shares in favor of the proposal
and refrain from voting the remaining shares or vote them against
the proposal, but if the shareholder fails to specify the number
of shares which the shareholder is voting affirmatively, it will
be conclusively presumed that the shareholder's approving vote is
with respect to the total shares that the shareholder is entitled
to vote on such proposal.
Section 7. WAIVER OF NOTICE BY CONSENT OF ABSENT
SHAREHOLDERS. The transactions of the meeting of shareholders,
however called and noticed and wherever held, shall be as valid
as though had at a meeting duly held after regular call and
notice if a quorum be present either in person or by proxy and if
either before or after the meeting, each person entitled to vote
who was not present in person or by proxy signs a written waiver
of notice or a consent to a holding of the meeting or an approval
of the minutes. The waiver of notice or consent need not specify
either the business to be transacted or the purpose of any
meeting of shareholders.
Attendance by a person at a meeting shall also constitute a
waiver of notice of that meeting, except when the person objects
at the beginning of the meeting to the transaction of any
business because the meeting is not lawfully called or convened
and except that attendance at a meeting is not a waiver of any
right to object to the consideration of matters not included in
the notice of the meeting if that objection is expressly made at
the beginning of the meeting.
Section 8. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A
MEETING. Any action which may be taken at any meeting of
shareholders may be taken without a meeting and without prior
notice if a consent in writing setting forth the action so taken
is signed by the holders of outstanding shares having not less
than the minimum number of votes that would be necessary to
authorize or take that action at a meeting at which all shares
entitled to vote on that action were present and voted. All such
consents shall be filed with the Secretary of the Trust and shall
be maintained in the Trust's records. Any shareholder giving a
written consent or the shareholder's proxy holders or a
transferee of the shares or a personal representative of the
shareholder or their respective proxy holders may revoke the
consent by a writing received by the Secretary of the Trust
before written consents of the number of shares required to
authorize the proposed action have been filed with the Secretary.
If the consents of all shareholders entitled to vote have
not been solicited in writing and if the unanimous written
consent of all such shareholders shall not have been received,
the Secretary shall give prompt notice of the action approved by
the shareholders without a meeting. This notice shall be given in
the manner specified in Section 4 of this Article II. In the case
of approval of (i) contracts or transactions in which a trustee
has a direct or indirect financial interest, (ii) indemnification
of agents of the Trust, and (iii) a reorganization of the Trust,
the notice shall be given at least ten (10) days before the
consummation of any action authorized by that approval.
Section 9. RECORD DATE FOR SHAREHOLDER NOTICE; VOTING AND
GIVING CONSENTS. For purposes of determining the shareholders
entitled to notice of any meeting or to vote or entitled to give
consent to action without a meeting, the Board of Trustees may
fix in advance a record date which shall not be more than ninety
(90) days nor less than seven (7) days before the date of any
such meeting as provided in the Declaration of Trust.
If the Board of Trustees does not so fix a record date:
(a) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the
close of business on the business day next preceding the day on
which notice is given or if notice is waived, at the close of
business on the business day next preceding the day on which the
meeting is held.
(b) The record date for determining shareholders entitled to
give consent to action in writing without a meeting, (i) when no
prior action by the Board of Trustees has been taken, shall be
the day on which the first written consent is given, or (ii) when
prior action of the Board of Trustees has been taken, shall be at
the close of business on the day on which the Board of Trustees
adopt the resolution relating to that action or the seventy-fifth
day before the date of such other action, whichever is later.
Section 10. PROXIES. Every person entitled to vote for
trustees or on any other matter shall have the right to do so
either in person or by one or more agents authorized by a written
proxy signed by the person and filed with the Secretary of the
Trust. A proxy shall be deemed signed if the shareholder's name
is placed on the proxy (whether by manual signature, typewriting,
telegraphic transmission or otherwise) by the shareholder or the
shareholder's attorney-in-fact. A validly executed proxy which
does not state that it is irrevocable shall continue in full
force and effect unless (i) revoked by the person executing it
before the vote pursuant to that proxy by a writing delivered to
the Trust stating that the proxy is revoked or by a subsequent
proxy executed by or attendance at the meeting and voting in
person by the person executing that proxy; or (ii) written notice
of the death or incapacity of the maker of that proxy is received
by the Trust before the vote pursuant to that proxy is counted;
provided however, that no proxy shall be valid after the
expiration of eleven (11) months from the date of the proxy
unless otherwise provided in the proxy. The revocability of a
proxy that states on its face that it is irrevocable shall be
governed by the provisions of the General Corporation Law of the
State of California.
Section 11. INSPECTORS OF ELECTION. Before any meeting of
shareholders, the Board of Trustees may appoint any persons other
than nominees for office to act as inspectors of election at the
meeting or its adjournment. If no inspectors of election are so
appointed, the chairman of the meeting may and on the request of
any shareholder or a shareholder's proxy shall, appoint
inspectors of election at the meeting. The number of inspectors
shall be either one (1) or three (3). If inspectors are appointed
at a meeting on the request of one or more shareholders or
proxies, the holders of a majority of shares or their proxies
present at the meeting shall determine whether one (1) or three
(3) inspectors are to be appointed. If any person appointed as
inspector fails to appear or fails or refuses to act, the
chairman of the meeting may and on the request of any shareholder
or a shareholder's proxy, shall appoint a person to fill the
vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the
existence of a quorum and the authenticity, validity and effect
of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any
way arising in connection with the right to vote;
(d)Count and tabulate all votes or consents;
(e)Determine when the polls shall close;
(f)Determine the result; and
(g)Do any other acts that may be proper to conduct the
election or vote with fairness to all shareholders.
ARTICLE III
TRUSTEES
Section 1. POWERS. Subject to the applicable provisions of
the Declaration of Trust and these By-Laws relating to action
required to be approved by the shareholders or by the outstanding
shares, the business and affairs of the Trust shall be managed
and all powers shall be exercised by or under the direction of
the Board of Trustees.
Section 2. NUMBER AND QUALIFICATION OF TRUSTEES. The exact
number of trustees shall be set forth in the Agreement and
Declaration of Trust, until changed by a duly adopted amendment
to the Declaration of Trust.
Section 3. VACANCIES. Vacancies in the Board of Trustees may
be filled by a majority of the remaining trustees, though less
than a quorum, or by a sole remaining trustee, unless the Board
of Trustees calls a meeting of shareholders for the purposes of
electing trustees. In the event that at any time less than a
majority of the trustees holding office at that time were so
elected by the holders of the outstanding voting securities of
the Trust, the Board of Trustees shall forthwith cause to be held
as promptly as possible, and in any event within sixty (60) days,
a meeting of such holders for the purpose of electing trustees to
fill any existing vacancies in the Board of Trustees, unless such
period is extended by order of the United States Securities and
Exchange Commission.
Notwithstanding the above, whenever and for so long as the
Trust is a participant in or otherwise has in effect a Plan under
which the Trust may be deemed to bear expenses of distributing
its shares as that practice is described in Rule 12b-1 under the
Investment Company Act of 1940, then the selection and nomination
of the trustees who are not interested persons of the Trust (as
that term is defined in the Investment Company Act of 1940) shall
be, and is, committed to the discretion of such disinterested
trustees.
Section 4. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE. All
meetings of the Board of Trustees may be held at any place within
or outside the State of Delaware that has been designated from
time to time by resolution of the Board. In the absence of such a
designation, regular meetings shall be held at the principal
executive office of the Trust. Any meeting, regular or special,
may be held by conference telephone or similar communication
equipment, so long as all trustees participating in the meeting
can hear one another and all such trustees shall be deemed to be
present in person at the meeting.
Section 5. REGULAR MEETINGS. Regular meetings of the Board
of Trustees shall be held without call at such time as shall from
time to time be fixed by the Board of Trustees. Such regular
meetings may be held without notice.
Section 6. SPECIAL MEETINGS. Special meetings of the Board
of Trustees for any purpose or purposes may be called at any time
by the chairman of the board or the president or any vice
president or the secretary or any two (2) trustees.
Notice of the time and place of special meetings shall be
delivered personally or by telephone to each trustee or sent by
first-class mail or telegram, charges prepaid, addressed to each
trustee at that trustee's address as it is shown on the records
of the Trust. In case the notice is mailed, it shall be deposited
in the United States mail at least seven (7) days before the time
of the holding of the meeting. In case the notice is delivered
personally, by telephone, to the telegraph company, or by express
mail or similar service, it shall be given at least forty-
eight(48) hours before the time of the holding of the meeting.
Any oral notice given personally or by telephone may be
communicated either to the trustee or to a person at the office
of the trustee who the person giving the notice has reason to
believe will promptly communicate it to the trustee. The notice
need not specify the purpose of the meeting or the place if the
meeting is to be held at the principal executive office of the
Trust.
Section 7. QUORUM. A majority of the authorized number of
trustees shall constitute a quorum for the transaction of
business, except to adjourn as provided in Section 10 of this
Article III. Every act or decision done or made by a majority of
the trustees present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Trustees,
subject to the provisions of the Declaration of Trust. A meeting
at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of trustees if any action
taken is approved by a least a majority of the required quorum
for that meeting.
Section 8. WAIVER OF NOTICE. Notice of any meeting need not
be given to any trustee who either before or after the meeting
signs a written waiver of notice, a consent to holding the
meeting, or an approval of the minutes. The waiver of notice or
consent need not specify the purpose of the meeting. All such
waivers, consents, and approvals shall be filed with the records
of the Trust or made a part of the minutes of the meeting. Notice
of a meeting shall also be deemed given to any trustee who
attends the meeting without protesting before or at its
commencement the lack of notice to that trustee.
Section 9. ADJOURNMENT. A majority of the trustees present,
whether or not constituting a quorum, may adjourn any meeting to
another time and place.
Section 10. NOTICE OF ADJOURNMENT. Notice of the time and
place of holding an adjourned meeting need not be given unless
the meeting is adjourned for more than forty-eight (48) hours, in
which case notice of the time and place shall be given before the
time of the adjourned meeting in the manner specified in Section
7 of this Article III to the trustees who were present at the
time of the adjournment.
Section 11. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken by the Board of Trustees may be taken
without a meeting if a majority of the members of the Board of
Trustees shall individually or collectively consent in writing to
that action. Such action by written consent shall have the same
force and effect as a majority vote of the Board of Trustees.
Such written consent or consents shall be filed with the minutes
of the proceedings of the Board of Trustees.
Section 12. FEES AND COMPENSATION OF TRUSTEES. Trustees and
members of committees may receive such compensation, if any, for
their services and such reimbursement of expenses as may be fixed
or determined by resolution of the Board of Trustees. This
Section 12 shall not be construed to preclude any trustee from
serving the Trust in any other capacity as an officer, agent,
employee, or otherwise and receiving compensation for those
services.
Section 13. DELEGATION OF POWER TO OTHER TRUSTEES. Any
Trustee may, by power of attorney, delegate his power for a
period not exceeding six (6) months at any one time to any other
Trustee or Trustees; provided that in no case shall fewer than
two (2) Trustees personally exercise the powers granted to the
Trustees under this Declaration of Trust except as otherwise
expressly provided herein or by resolution of the Board of
Trustees.
ARTICLE IV
COMMITTEES
Section 1. COMMITTEES OF TRUSTEES. The Board of Trustees may
by resolution adopted by a majority of the authorized number of
trustees designate one or more committees, each consisting of two
(2) or more trustees, to serve at the pleasure of the Board. The
Board may designate one or more trustees as alternate members of
any committee who may replace any absent member at any meeting of
the committee. Any committee to the extent provided in the
resolution of the Board, shall have the authority of the Board,
except with respect to:
(a) the approval of any action which under applicable law
also requires shareholders' approval or approval of the
outstanding shares, or requires approval by a majority of the
entire Board or certain members of said Board;
(b) the filling of vacancies on the Board of Trustees or in
any committee;
(c) the fixing of compensation of the trustees for serving
on the Board of Trustees or on any committee;
(d) the amendment or repeal of the Declaration of Trust or
of the By-Laws or the adoption of new By-Laws;
(e) the amendment or repeal of any resolution of the Board
of Trustees which by its express terms is not so amendable or
repealable;
(f) a distribution to the shareholders of the Trust, except
at a rate or in a periodic amount or within a designated range
determined by the Board of Trustees; or
(g) the appointment of any other committees of the Board of
Trustees or the members of these committees.
Section 2. MEETINGS AND ACTION OF COMMITTEES. Meetings and
action of committees shall be governed by and held and taken in
accordance with the provisions of Article III of these By-Laws,
with such changes in the context thereof as are necessary to
substitute the committee and its members for the Board of
Trustees and its members, except that the time of regular
meetings of committees may be determined either by resolution of
the Board of Trustees or by resolution of the committee. Special
meetings of committees may also be called by resolution of the
Board of Trustees, and notice of special meetings of committees
shall also be given to all alternate members who shall have the
right to attend all meetings of the committee. The Board of
Trustees may adopt rules for the government of any committee not
inconsistent with the provisions of these By-Laws.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the Trust shall be a
president, a secretary, and a treasurer. The Trust may also have,
at the discretion of the Board of Trustees, a chairman of the
board, one or more vice presidents, one or more assistant
secretaries, one or more assistant treasurers, and such other
officers as may be appointed in accordance with the provisions of
Section 3 of this Article V. Any number of offices may be held by
the same person.
Section 2. ELECTION OF OFFICERS. The officers of the Trust,
except such officers as be may appointed in accordance with the
provisions of Section 3 or Section 5 of this Article V, shall be
chosen by the Board of Trustees, and each shall serve at the
pleasure of the Board of Trustees, subject to the rights, if any,
of an officer under any contract of employment.
Section 3. SUBORDINATE OFFICERS. The Board of Trustees may
appoint and may empower the President to appoint such other
officers as the business of the Trust may require, each of whom
shall hold office for such period, have such authority and
perform such duties as are provided in these By-Laws or as the
Board of Trustees may from time to time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to
the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without
cause, by the Board of Trustees at any regular or special meeting
of the Board of Trustees or except in the case of an officer upon
whom such power of removal may be conferred by the Board of
Trustees.
Any officer may resign at any time by giving written notice
to the Trust. Any resignation shall take effect at the date of
the receipt of that notice or at any later time specified in that
notice; and unless otherwise specified in that notice, the
acceptance of the resignation shall not be necessary to make it
effective. Any resignation is without prejudice to the rights, if
any, of the Trust under any contract to which the officer is a
party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office
because of death, resignation, removal, disqualification or other
cause shall be filled in the manner prescribed in these By-Laws
for regular appointment to that office.
Section 6. CHAIRMAN OF THE BOARD. The chairman of the board,
if such an officer is elected, shall if present preside at
meetings of the Board of Trustees and exercise and perform such
other powers and duties as may be from time to time assigned to
him by the Board of Trustees or prescribed by the By-Laws.
Section 7. PRESIDENT. Subject to such supervisory powers, if
any, as may be given by the Board of Trustees to the chairman of
the board, if there be such an officer, the president shall be
the chief executive officer of the Trust and shall, subject to
the control of the Board of Trustees, have general supervision,
direction and control of the business and the officers of the
Trust. He shall preside at all meetings of the shareholders and
in the absence of the chairman of the board or if there be none,
at all meetings of the Board of Trustees. He shall have the
general powers and duties of management usually vested in the
office of president of a corporation and shall have such other
powers and duties as may be prescribed by the Board of Trustees
or these By-Laws.
Section 8. VICE PRESIDENTS. In the absence or disability of
the president, the vice presidents, if any, in order of their
rank as fixed by the Board of Trustees or if not ranked, a vice
president designated by the Board of Trustees, shall perform all
the duties of the president and when so acting shall have all
powers of and be subject to all the restrictions upon the
president. The vice presidents shall have such other powers and
perform such other duties as from time to time may be prescribed
for them respectively by the Board of Trustees or by these ByLaws
and the president or the chairman of the board.
Section 9. SECRETARY. The secretary shall keep or cause to
be kept at the principal executive office of the Trust or such
other place as the Board of Trustees may direct a book of minutes
of all meetings and actions of trustees, committees of trustees
and shareholders with the time and place of holding, whether
regular or special, and if special, how authorized, the notice
given, the names of those present at trustees' meetings or
committee meetings, the number of shares present or represented
at shareholders' meetings, and the proceedings.
The secretary shall keep or cause to be kept at the
principal executive office of the Trust or at the office of the
Trust's transfer agent or registrar, as determined by resolution
of the Board of Trustees, a share register or a duplicate share
register showing the names of all shareholders and their
addresses, the number and classes of shares held by each, the
number and date of certificates issued for the same and the
number and date of cancellation of every certificate surrendered
for cancellation.
The secretary shall give or cause to be given notice of all
meetings of the shareholders and of the Board of Trustees
required by these By-Laws or by applicable law to be given and
shall have such other powers and perform such other duties as may
be prescribed by the Board of Trustees or by these By-Laws.
Section 10. TREASURER. The treasurer shall be the chief
financial officer of the Trust and shall keep and maintain or
cause to be kept and maintained adequate and correct books and
records of accounts of the properties and business transactions
of the Trust, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, retained
earnings and shares. The books of account shall at all reasonable
times be open to inspection by any trustee.
The treasurer shall deposit all monies and other valuables
in the name and to the credit of the Trust with such depositaries
as may be designated by the Board of Trustees. He shall disburse
the funds of the Trust as may be ordered by the Board of
Trustees, shall render to the president and trustees, whenever
they request it, an account of all of his transactions as chief
financial officer and of the financial condition of the Trust and
shall have other powers and perform such other duties as may be
prescribed by the Board of Trustees or these By-Laws.
ARTICLE VI
INDEMNIFICATION OF TRUSTEES, OFFICERS,
EMPLOYEES AND OTHER AGENTS
Section 1. AGENTS, PROCEEDINGS AND EXPENSES. For the purpose
of this Article, "agent" means any person who is or was a
trustee, officer, employee or other agent of this Trust or is or
was serving at the request of this Trust as a trustee, director,
officer, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other
enterprise or was a trustee, director, officer, employee or agent
of a foreign or domestic corporation which was a predecessor of
another enterprise at the request of such predecessor entity;
"proceeding" means any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or
investigative; and "expenses" includes without limitation
attorney's fees and any expenses of establishing a right to
indemnification under this Article.
Section 2. ACTIONS OTHER THAN BY TRUST. This Trust shall
indemnify any person who was or is a party or is threatened to be
made a party to any proceeding (other than an action by or in the
right of this Trust) by reason of the fact that such person is or
was an agent of this Trust, against expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred in
connection with such proceeding if that person acted in good
faith and in a manner that person reasonably believed to be in
the best interests of this Trust and in the case of a criminal
proceeding, had no reasonable cause to believe the conduct of
that person was unlawful. The termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent shall not of itself create a
presumption that the person did not act in good faith and in a
manner which the person reasonably believed to be in the best
interests of this Trust or that the person had reasonable cause
to believe that the person's conduct was unlawful.
Section 3. ACTIONS BY THE TRUST. This Trust shall indemnify
any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action by or in the
right of this Trust to procure a judgment in its favor by reason
of the fact that the person is or was an agent of this Trust,
against expenses actually and reasonably incurred by that person
in connection with the defense or settlement of that action if
that person acted in good faith, in a manner that person believed
to be in the best interests of this Trust and with such care,
including reasonable inquiry, as an ordinarily prudent person in
a like position would use under similar circumstances.
Section 4. EXCLUSION OF INDEMNIFICATION. Notwithstanding any
provision to the contrary contained herein, there shall be no
right to indemnification for any liability arising by reason of
willful misfeasance, bad faith, gross negligence, or the reckless
disregard of the duties involved in the conduct of the agent's
office with this Trust.
No indemnification shall be made under Sections 2 or 3 of
this Article:
(a) In respect of any claim, issue or matter as to which
that person shall have been adjudged to be liable in the
performance of that person's duty to this Trust, unless and only
to the extent that the court in which that action was brought
shall determine upon application that in view of all the
circumstances of the case, that person was not liable by reason
of the disabling conduct set forth in the preceding paragraph and
is fairly and reasonably entitled to indemnity for the expenses
which the court shall determine; or
(b) In respect of any claim, issue, or matter as to which
that person shall have been adjudged to be liable on the basis
that personal benefit was improperly received by him, whether or
not the benefit resulted from an action taken in the person's
official capacity; or
(c) Of amounts paid in settling or otherwise disposing of a
threatened or pending action, with or without court approval, or
of expenses incurred in defending a threatened or pending action
which is settled or otherwise disposed of without court approval,
unless the required approval set forth in Section 6 of this
Article is obtained.
Section 5. SUCCESSFUL DEFENSE BY AGENT. To the extent that
an agent of this Trust has been successful on the merits in
defense of any proceeding referred to in Sections 2 or 3 of this
Article or in defense of any claim, issue or matter therein,
before the court or other body before whom the proceeding was
brought, the agent shall be indemnified against expenses actually
and reasonably incurred by the agent in connection therewith,
provided that the Board of Trustees, including a majority who are
disinterested, non-party trustees, also determines that based
upon a review of the facts, the agent was not liable by reason of
the disabling conduct referred to in Section 4 of this Article.
Section 6. REQUIRED APPROVAL. Except as provided in Section
5 of this Article, any indemnification under this Article shall
be made by this Trust only if authorized in the specific case on
a determination that indemnification of the agent is proper in
the circumstances because the agent has met the applicable
standard of conduct set forth in Sections 2 or 3 of this Article
and is not prohibited from indemnification because of the
disabling conduct set forth in Section 4 of this Article, by:
(a) A majority vote of a quorum consisting of trustees who
are not parties to the proceeding and are not interested persons
of the Trust (as defined in the Investment Company Act of 1940);
or
(b) A written opinion by an independent legal counsel.
Section 7. ADVANCE OF EXPENSES. Expenses incurred in
defending any proceeding may be advanced by this Trust before the
final disposition of the proceeding on receipt of an undertaking
by or on behalf of the agent to repay the amount of the advance
unless it shall be determined ultimately that the agent is
entitled to be indemnified as authorized in this Article,
provided the agent provides a security for his undertaking, or a
majority of a quorum of the disinterested, non-party trustees, or
an independent legal counsel in a written opinion, determine that
based on a review of readily available facts, there is reason to
believe that said agent ultimately will be found entitled to
indemnification.
Section 8. OTHER CONTRACTUAL RIGHTS. Nothing contained in
this Article shall affect any right to indemnification to which
persons other than trustees and officers of this Trust or any
subsidiary hereof may be entitled by contract or otherwise.
Section 9. LIMITATIONS. No indemnification or advance shall
be made under this Article, except as provided in Sections 5
or 6 in any circumstances where it appears:
(a) That it would be inconsistent with a provision of the
Agreement and Declaration of Trust, a resolution of the
shareholders, or an agreement in effect at the time of accrual of
the alleged cause of action asserted in the proceeding in which
the expenses were incurred or other amounts were paid which
prohibits or otherwise limits indemnification; or
(b) That it would be inconsistent with any condition
expressly imposed by a court in approving a settlement.
Section 10. INSURANCE. Upon and in the event of a
determination by the Board of Trustees of this Trust to purchase
such insurance, this Trust shall purchase and maintain insurance
on behalf of any agent of this Trust against any liability
asserted against or incurred by the agent in such capacity or
arising out of the agent's status as such, but only to the extent
that this Trust would have the power to indemnify the agent
against that liability under the provisions of this Article.
Section 11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN. This
Article does not apply to any proceeding against any trustee,
investment manager or other fiduciary of an employee benefit plan
in that person's capacity as such, even though that person may
also be an agent of this Trust as defined in Section 1 of this
Article. Nothing contained in this Article shall limit any right
to indemnification to which such a trustee, investment manager,
or other fiduciary may be entitled by contract or otherwise which
shall be enforceable to the extent permitted by applicable law
other than this Article.
ARTICLE VII
RECORDS AND REPORTS
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER.
This Trust shall keep at its principal executive office or at the
office of its transfer agent or registrar, if either be appointed
and as determined by resolution of the Board of Trustees, a
record of its shareholders, giving the names and addresses of all
shareholders and the number and series of shares held by each
shareholder.
Section 2. MAINTENANCE AND INSPECTION OF BY-LAWS. The Trust
shall keep at its principal executive office the original or a
copy of these By-Laws as amended to date, which shall be open to
inspection by the shareholders at all reasonable times during
office hours.
Section 3. MAINTENANCE AND INSPECTION OF OTHER RECORDS. The
accounting books and records and minutes of proceedings of the
shareholders and the Board of Trustees and any committee or
committees of the Board of Trustees shall be kept at such place
or places designated by the Board of Trustees or in the absence
of such designation, at the principal executive office of the
Trust. The minutes shall be kept in written form and the
accounting books and records shall be kept either in written form
or in any other form capable of being converted into written
form. The minutes and accounting books and records shall be open
to inspection upon the written demand of any shareholder or
holder of a voting trust certificate at any reasonable time
during usual business hours for a purpose reasonably related to
the holder's interests as a shareholder or as the holder of a
voting trust certificate. The inspection may be made in person or
by an agent or attorney and shall include the right to copy and
make extracts.
Section 4. INSPECTION BY TRUSTEES. Every trustee shall have
the absolute right at any reasonable time to inspect all books,
records, and documents of every kind and the physical properties
of the Trust. This inspection by a trustee may be made in person
or by an agent or attorney and the right of inspection includes
the right to copy and make extracts of documents.
Section 5. FINANCIAL STATEMENTS. A copy of any financial
statements and any income statement of the Trust for each
quarterly period of each fiscal year and accompanying balance
sheet of the Trust as of the end of each such period that has
been prepared by the Trust shall be kept on file in the principal
executive office of the Trust for at least twelve (12) months and
each such statement shall be exhibited at all reasonable times to
any shareholder demanding an examination of any such statement or
a copy shall be mailed to any such shareholder.
The quarterly income statements and balance sheets referred
to in this section shall be accompanied by the report, if any, of
any independent accountants engaged by the Trust or the
certificate of an authorized officer of the Trust that the
financial statements were prepared without audit from the books
and records of the Trust.
ARTICLE VIII
GENERAL MATTERS
Section 1. CHECKS, DRAFTS, EVIDENCE OF INDEBTEDNESS. All
checks, drafts, or other orders for payment of money, notes or
other evidences of indebtedness issued in the name of or payable
to the Trust shall be signed or endorsed by such person or
persons and in such manner as from time to time shall be
determined by resolution of the Board of Trustees.
Section 2. CONTRACTS AND INSTRUMENTS; HOW EXECUTED. The
Board of Trustees, except as otherwise provided in these By-Laws,
may authorize any officer or officers, agent or agents, to enter
into any contract or execute any instrument in the name of and on
behalf of the Trust and this authority may be general or confined
to specific instances; and unless so authorized or ratified by
the Board of Trustees or within the agency power of an officer,
no officer, agent, or employee shall have any power or authority
to bind the Trust by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
Section 3. CERTIFICATES FOR SHARES. A certificate or
certificates for shares of beneficial interest in any series of
the Trust may be issued to a shareholder upon his request when
such shares are fully paid. All certificates shall be signed in
the name of the Trust by the chairman of the board or the
president or vice president and by the treasurer or an assistant
treasurer or the secretary or any assistant secretary, certifying
the number of shares and the series of shares owned by the
shareholders. Any or all of the signatures on the certificate may
be facsimile. In case any officer, transfer agent, or registrar
who has signed or whose facsimile signature has been placed on a
certificate shall have ceased to be that officer, transfer agent,
or registrar before that certificate is issued, it may be issued
by the Trust with the same effect as if that person were an
officer, transfer agent or registrar at the date of issue.
Notwithstanding the foregoing, the Trust may adopt and use a
system of issuance, recordation and transfer of its shares by
electronic or other means.
Section 4. LOST CERTIFICATES. Except as provided in this
Section 4, no new certificates for shares shall be issued to
replace an old certificate unless the latter is surrendered to
the Trust and cancelled at the same time. The Board of Trustees
may in case any share certificate or certificate for any other
security is lost, stolen, or destroyed, authorize the issuance of
a replacement certificate on such terms and conditions as the
Board of Trustees may require, including a provision for
indemnification of the Trust secured by a bond or other adequate
security sufficient to protect the Trust against any claim that
may be made against it, including any expense or liability on
account of the alleged loss, theft, or destruction of the
certificate or the issuance of the replacement certificate.
Section 5. REPRESENTATION OF SHARES OF OTHER ENTITIES HELD
BY TRUST. The chairman of the board, the president or any vice
president or any other person authorized by resolution of the
Board of Trustees or by any of the foregoing designated officers,
is authorized to vote or represent on behalf of the Trust any and
all shares of any corporation, partnership, trusts, or other
entities, foreign or domestic, standing in the name of the Trust.
The authority granted may be exercised in person or by a proxy
duly executed by such designated person.
Section 6. FISCAL YEAR. The fiscal year of the Trust shall
be fixed and refixed or changed from time to time by resolution
of the Trustees. The fiscal year of the Trust shall be the
taxable year of each Series of the Trust.
ARTICLE IX
AMENDMENTS
Section 1. AMENDMENT BY SHAREHOLDERS. These By-Laws may be
amended or repealed by the affirmative vote or written consent of
a majority of the outstanding shares entitled to vote, except as
otherwise provided by applicable law or by the Declaration of
Trust or these By-Laws.
Section 2. AMENDMENT BY TRUSTEES. Subject to the right of
shareholders as provided in Section 1 of this Article to adopt,
amend or repeal By-Laws, and except as otherwise provided by law
or by the Declaration of Trust, these By-Laws may be adopted,
amended, or repealed by the Board of Trustees.
FRANKLIN REAL ESTATE SECURITIES TRUST
on behalf of
FRANKLIN REAL ESTATE SECURITIES FUND
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT made between REAL ESTATE
SECURITIES TRUST, a Delaware business trust (the "Trust"), on
behalf of FRANKLIN REAL ESTATE SECURITIES FUND (the "Fund"), a
series of the Trust, and FRANKLIN ADVISERS, INC., a California
corporation, (the "Manager").
WHEREAS, the Trust has been organized and intends to operate
as an investment company registered under the Investment Company
Act of 1940 (the "1940 Act") for the purpose of investing and
reinvesting its assets in securities, as set forth in its
Agreement and Declaration of Trust, its By-Laws and its
Registration Statements under the 1940 Act and the Securities Act
of 1933, all as heretofore and hereafter amended and
supplemented; and the Trust desires to avail itself of the
services, information, advice, assistance and facilities of an
investment manager and to have an investment manager perform
various management, statistical, research, investment advisory
and other services for the Fund; and,
WHEREAS, the Manager is registered as an investment adviser
under the Investment Advisers Act of 1940, is engaged in the
business of rendering management, investment advisory,
counselling and supervisory services to investment companies and
other investment counselling clients, and desires to provide
these services to the Fund.
NOW THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is mutually agreed as follows:
l. Employment of the Manager. The Trust hereby employs the
Manager to manage the investment and reinvestment of the Fund's
assets and to administer its affairs, subject to the direction of
the Board of Trustees and the officers of the Trust, for the
period and on the terms hereinafter set forth. The Manager
hereby accepts such employment and agrees during such period to
render the services and to assume the obligations herein set
forth for the compensation herein provided. The Manager shall
for all purposes herein be deemed to be an independent contractor
and shall, except as expressly provided or authorized (whether
herein or otherwise), have no authority to act for or represent
the Fund or the Trust in any way or otherwise be deemed an agent
of the Fund or the Trust.
2. Obligations of and Services to be Provided by the
Manager. The Manager undertakes to provide the services
hereinafter set forth and to assume the following obligations:
A. Administrative Services. The Manager shall furnish
to the Fund adequate (i) office space, which may be space within
the offices of the Manager or in such other place as may be
agreed upon from time to time, (ii) office furnishings,
facilities and equipment as may be reasonably required for
managing the affairs and conducting the business of the Fund,
including conducting correspondence and other communications with
the shareholders of the Fund, maintaining all internal
bookkeeping, accounting and auditing services and records in
connection with the Fund's investment and business activities.
The Manager shall employ or provide and compensate the executive,
secretarial and clerical personnel necessary to provide such
services. The Manager shall also compensate all officers and
employees of the Trust who are officers or employees of the
Manager or its affiliates.
B. Investment Management Services.
(a) The Manager shall manage the Fund's assets
subject to and in accordance with the investment objectives and
policies of the Fund and any directions which the Trust's Board
of Trustees may issue from time to time. In pursuance of the
foregoing, the Manager shall make all determinations with respect
to the investment of the Fund's assets and the purchase and sale
of its investment securities, and shall take such steps as may be
necessary to implement the same. Such determinations and
services shall include determining the manner in which any voting
rights, rights to consent to corporate action and any other
rights pertaining to the Fund's investment securities shall be
exercised. The Manager shall render or cause to be rendered
regular reports to the Trust, at regular meetings of its Board of
Trustees and at such other times as may be reasonably requested
by the Trust's Board of Trustees, of (i) the decisions made with
respect to the investment of the Fund's assets and the purchase
and sale of its investment securities, (ii) the reasons for such
decisions and (iii) the extent to which those decisions have been
implemented.
(b) The Manager, subject to and in accordance
with any directions which the Trust's Board of Trustees may issue
from time to time, shall place, in the name of the Fund, orders
for the execution of the Fund's securities transactions. When
placing such orders, the Manager shall seek to obtain the best
net price and execution for the Fund, but this requirement shall
not be deemed to obligate the Manager to place any order solely
on the basis of obtaining the lowest commission rate if the other
standards set forth in this section have been satisfied. The
parties recognize that there are likely to be many cases in which
different brokers are equally able to provide such best price and
execution and that, in selecting among such brokers with respect
to particular trades, it is desirable to choose those brokers who
furnish research, statistical, quotations and other information
to the Fund and the Manager in accordance with the standards set
forth below. Moreover, to the extent that it continues to be
lawful to do so and so long as the Board of Trustees determines
that the Fund will benefit, directly or indirectly, by doing so,
the Manager may place orders with a broker who charges a
commission for that transaction which is in excess of the amount
of commission that another broker would have charged for
effecting that transaction, provided that the excess commission
is reasonable in relation to the value of "brokerage and research
services" (as defined in Section 28(e) (3) of the Securities
Exchange Act of 1934) provided by that broker.
Accordingly, the Trust and the Manager agree that
the Manager shall select brokers for the execution of the Fund's
transactions from among:
(i) Those brokers and dealers who provide
quotations and other services to the Fund,
specifically including the quotations necessary to
determine the Fund's net assets, in such amount of
total brokerage as may reasonably be required in
light of such services; and
(ii) Those brokers and dealers who supply
research, statistical and other data to the
Manager or its affiliates which the Manager or its
affiliates may lawfully and appropriately use in
their investment advisory capacities, which relate
directly to securities, actual or potential, of
the Fund, or which place the Manager in a better
position to make decisions in connection with the
management of the Fund's assets and securities,
whether or not such data may also be useful to the
Manager and its affiliates in managing other
portfolios or advising other clients, in such
amount of total brokerage as may reasonably be
required. Provided that the Trust's officers are
satisfied that the best execution is obtained, the
sale of shares of the Fund may also be considered
as a factor in the selection of broker-dealers to
execute the Fund's portfolio transactions.
(c) When the Manager has determined that the Fund
should tender securities pursuant to a "tender offer
solicitation," Franklin/Templeton Distributors, Inc.
("Distributors") shall be designated as the "tendering dealer" so
long as it is legally permitted to act in such capacity under the
federal securities laws and rules thereunder and the rules of any
securities exchange or association of which Distributors may be a
member. Neither the Manager nor Distributors shall be obligated
to make any additional commitments of capital, expense or
personnel beyond that already committed (other than normal
periodic fees or payments necessary to maintain its corporate
existence and membership in the National Association of
Securities Dealers, Inc.) as of the date of this Agreement. This
Agreement shall not obligate the Manager or Distributors (i) to
act pursuant to the foregoing requirement under any circumstances
in which they might reasonably believe that liability might be
imposed upon them as a result of so acting, or (ii) to institute
legal or other proceedings to collect fees which may be
considered to be due from others to it as a result of such a
tender, unless the Trust on behalf of the Fund shall enter into
an agreement with the Manager and/or Distributors to reimburse
them for all such expenses connected with attempting to collect
such fees, including legal fees and expenses and that portion of
the compensation due to their employees which is attributable to
the time involved in attempting to collect such fees.
(d) The Manager shall render regular reports to
the Trust, not more frequently than quarterly, of how much total
brokerage business has been placed by the Manager, on behalf of
the Fund, with brokers falling into each of the categories
referred to above and the manner in which the allocation has been
accomplished.
(e) The Manager agrees that no investment
decision will be made or influenced by a desire to provide
brokerage for allocation in accordance with the foregoing, and
that the right to make such allocation of brokerage shall not
interfere with the Manager's paramount duty to obtain the best
net price and execution for the Fund.
C. Provision of Information Necessary for Preparation of
Securities Registration Statements, Amendments and Other Materials.
The Manager, its officers and employees will make available and
provide accounting and statistical information required by the Fund
in the preparation of registration statements, reports and other
documents required by federal and state securities laws and with
such information as the Fund may reasonably request for use in the
preparation of such documents or of other materials necessary or
helpful for the underwriting and distribution of the Fund's shares.
D. Other Obligations and Services. The Manager shall
make its officers and employees available to the Board of Trustees
and officers of the Trust for consultation and discussions regarding
the administration and management of the Fund and its investment
activities.
3. Expenses of the Fund. It is understood that the Fund will
pay all of its own expenses other than those expressly assumed by
the Manager herein, which expenses payable by the Fund shall
include:
A. Fees and expenses paid to the Manager as provided
herein;
B. Expenses of all audits by independent public
accountants;
C. Expenses of transfer agent, registrar, custodian,
dividend disbursing agent and shareholder record-keeping services,
including the expenses of issue, repurchase or redemption of its
shares;
D. Expenses of obtaining quotations for calculating the
value of the Fund's net assets;
E. Salaries and other compensations of executive officers
of the Trust who are not officers, directors, stockholders or
employees of the Manager or its affiliates;
F. Taxes levied against the Fund;
G. Brokerage fees and commissions in connection with the
purchase and sale of securities for the Fund;
H. Costs, including the interest expense, of borrowing
money;
I. Costs incident to meetings of the Board of Trustees
and shareholders of the Fund, reports to the Fund's shareholders,
the filing of reports with regulatory bodies and the maintenance
of the Fund's and the Trust's legal existence;
J. Legal fees, including the legal fees related to the
registration and continued qualification of the Fund's shares for
sale;
K. Trustees' fees and expenses to trustees who are not
directors, officers, employees or stockholders of the Manager or
any of its affiliates;
L. Costs and expense of registering and maintaining
the registration of the Fund and its shares under federal and any
applicable state laws; including the printing and mailing of
prospectuses to its shareholders;
M. Trade association dues; and
N. The Fund's pro rata portion of fidelity bond,
errors and omissions, and trustees and officer liability
insurance premiums.
4. Compensation of the Manager. The Fund shall pay a
management fee in cash to the Manager based upon a percentage of
the value of the Fund's net assets, calculated as set forth
below, as compensation for the services rendered and obligations
assumed by the Manager, during the preceding month, on the first
business day of the month in each year.
A. For purposes of calculating such fee, the value of
the net assets of the Fund shall be determined in the same manner
as that Fund uses to compute the value of its net assets in
connection with the determination of the net asset value of its
shares, all as set forth more fully in the Fund's current
prospectus and statement of additional information. The rate of
the management fee payable by the Fund shall be calculated daily
at the following annual rates:
.625 of 1% of the value of net assets up to and
including $100,000,000;
.50 of 1% of the value of net assets over
$100,000,000 up to and including $250,000,000;
.45 of 1% of the value of net assets over
$250,000,000 up to and including $10,000,000,000;
.44 of 1% of the value of net assets over
$10,000,000,000 up to and including
$12,500,000,000;
.42 of 1% of the value of net assets over
$12,500,000,000 up to and including
$15,000,000,000; and
.40 of 1% of the value of net assets in excess of
$15,000,000,000.
B. The management fee payable by the Fund shall be
reduced or eliminated to the extent that Distributors has
actually received cash payments of tender offer solicitation fees
less certain costs and expenses incurred in connection therewith
and to the extent necessary to comply with the limitations on
expenses which may be borne by the Fund as set forth in the laws,
regulations and administrative interpretations of those states in
which the Fund's shares are registered. The Manager may, from
time to time, voluntarily reduce or waive any management fee due
to it hereunder.
C. If this Agreement is terminated prior to the end of
any month, the accrued management fee shall be paid to the date
of termination.
5. Activities of the Manager. The services of the Manager
to the Fund hereunder are not to be deemed exclusive, and the
Manager and any of its affiliates shall be free to render similar
services to others. Subject to and in accordance with the
Agreement and Declaration of Trust and By-Laws of the Trust and
Section 10(a) of the 1940 Act, it is understood that trustees,
officers, agents and shareholders of the Trust are or may be
interested in the Manager or its affiliates as directors,
officers, agents or stockholders; that directors, officers,
agents or stockholders of the Manager or its affiliates are or
may be interested in the Trust as trustees, officers, agents,
shareholders or otherwise; that the Manager or its affiliates may
be interested in the Fund as shareholders or otherwise; and that
the effect of any such interests shall be governed by said
Agreement and Declaration of Trust, By-Laws and the 1940 Act.
6. Liabilities of the Manager.
A. In the absence of willful misfeasance, bad faith,
gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Manager, the Manager shall not be
subject to liability to the Trust or the Fund or to any
shareholder of the Fund for any act or omission in the course of,
or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any
security by the Fund.
B. Notwithstanding the foregoing, the Manager agrees
to reimburse the Trust for any and all costs, expenses, and
counsel and trustees' fees reasonably incurred by the Trust in
the preparation, printing and distribution of proxy statements,
amendments to its Registration Statement, holdings of meetings of
its shareholders or trustees, the conduct of factual
investigations, any legal or administrative proceedings
(including any applications for exemptions or determinations by
the Securities and Exchange Commission) which the Trust incurs as
the result of action or inaction of the Manager or any of its
affiliates or any of their officers, directors, employees or
stockholders where the action or inaction necessitating such
expenditures (i) is directly or indirectly related to any
transactions or proposed transaction in the stock or control of
the Manager or its affiliates (or litigation related to any
pending or proposed or future transaction in such shares or
control) which shall have been undertaken without the prior,
express approval of the Trust's Board of Trustees; or, (ii) is
within the control of the Manager or any of its affiliates or any
of their officers, directors, employees or stockholders. The
Manager shall not be obligated pursuant to the provisions of this
Subparagraph 6(B), to reimburse the Trust for any expenditures
related to the institution of an administrative proceeding or
civil litigation by the Trust or a shareholder seeking to recover
all or a portion of the proceeds derived by any stockholder of
the Manager or any of its affiliates from the sale of his shares
of the Manager, or similar matters. So long as this Agreement is
in effect, the Manager shall pay to the Trust the amount due for
expenses subject to this Subparagraph 6(B) within 30 days after a
bill or statement has been received by the Manager therefor.
This provision shall not be deemed to be a waiver of any claim
the Trust may have or may assert against the Manager or others
for costs, expenses or damages heretofore incurred by the Trust
or for costs, expenses or damages the Trust may hereafter incur
which are not reimbursable to it hereunder.
C. No provision of this Agreement shall be construed
to protect any trustee or officer of the Trust, or director or
officer of the Manager, from liability in violation of Sections
17(h) and (i) of the 1940 Act.
7. Renewal and Termination.
A. This Agreement shall become effective on the date
written below and shall continue in effect for two (2) years
thereafter, unless sooner terminated as hereinafter provided and
shall continue in effect thereafter for periods not exceeding one
(1) year so long as such continuation is approved at least
annually (i) by a vote of a majority of the outstanding voting
securities of each Fund or by a vote of the Board of Trustees of
the Trust, and (ii) by a vote of a majority of the Trustees of
the Trust who are not parties to the Agreement (other than as
Trustees of the Trust), cast in person at a meeting called for
the purpose of voting on the Agreement.
B. This Agreement:
(i) may at any time be terminated without the
payment of any penalty either by vote of the Board of Trustees of
the Trust or by vote of a majority of the outstanding voting
securities of the Fund on 60 days' written notice to the Manager;
(ii) shall immediately terminate with respect to
the Fund in the event of its assignment; and
(iii) may be terminated by the Manager on 60
days' written notice to the Fund.
C. As used in this Paragraph the terms "assignment,"
"interested person" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth for any such
terms in the 1940 Act.
D. Any notice under this Agreement shall be given in
writing addressed and delivered, or mailed post-paid, to the
other party at any office of such party.
8. Severability. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected
thereby.
9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and effective on the 3rd day of January, 1994.
FRANKLIN REAL ESTATE SECURITIES TRUST
By: /s/ Rupert H. Johnson, Jr.
FRANKLIN ADVISERS, INC.
By: /s/ Harmon E. Burns
Executive Vice President
FRANKLIN REAL ESTATE SECURITIES TRUST
777 Mariners Island Blvd.
San Mateo, California 94404
Franklin/Templeton Distributors, Inc.
777 Mariners Island Blvd.
San Mateo, California 94404
Re: Amended and Restated Distribution Agreement
Gentlemen:
We (the "Fund") are a corporation or business trust operating as
an open-end management investment company or "mutual fund", which
is registered under the Investment Company Act of 1940 (the "1940
Act") and whose shares are registered under the Securities Act of
1933 (the "1933 Act"). We desire to issue one or more series or
classes of our authorized but unissued shares of capital stock or
beneficial interest (the "Shares") to authorized persons in
accordance with applicable Federal and State securities laws.
The Fund's Shares may be made available in one or more separate
series, each of which may have one or more classes.
You have informed us that your company is registered as a broker-
dealer under the provisions of the Securities Exchange Act of
1934 and that your company is a member of the National
Association of Securities Dealers, Inc. You have indicated your
desire to act as the exclusive selling agent and distributor for
the Shares. We have been authorized to execute and deliver this
Distribution Agreement ("Agreement") to you by a resolution of
our Board of Directors or Trustees ("Board") passed at a meeting
at which a majority of Board members, including a majority who
are not otherwise interested persons of the Fund and who are not
interested persons of our investment adviser, its related
organizations or with you or your related organizations, were
present and voted in favor of the said resolution approving this
Agreement.
1. Appointment of Underwriter. Upon the execution of this
Agreement and in consideration of the agreements on your part
herein expressed and upon the terms and conditions set forth
herein, we hereby appoint you as the exclusive sales agent for
our Shares and agree that we will deliver such Shares as you may
sell. You agree to use your best efforts to promote the sale of
Shares, but are not obligated to sell any specific number of
Shares.
However, the Fund and each series retain the right to make
direct sales of its Shares without sales charges consistent with
the terms of the then current prospectus and applicable law, and
to engage in other legally authorized transactions in its Shares
which do not involve the sale of Shares to the general public.
Such other transactions may include, without limitation,
transactions between the Fund or any series or class and its
shareholders only, transactions involving the reorganization of
the Fund or any series, and transactions involving the merger or
combination of the Fund or any series with another corporation or
trust.
2. Independent Contractor. You will undertake and
discharge your obligations hereunder as an independent contractor
and shall have no authority or power to obligate or bind us by
your actions, conduct or contracts except that you are authorized
to promote the sale of Shares. You may appoint sub-agents or
distribute through dealers or otherwise as you may determine from
time to time, but this Agreement shall not be construed as
authorizing any dealer or other person to accept orders for sale
or repurchase on our behalf or otherwise act as our agent for any
purpose.
3. Offering Price. Shares shall be offered for sale at a
price equivalent to the net asset value per share of that series
and class plus any applicable percentage of the public offering
price as sales commission or as otherwise set forth in our then
current prospectus. On each business day on which the New York
Stock Exchange is open for business, we will furnish you with the
net asset value of the Shares of each available series and class
which shall be determined in accordance with our then effective
prospectus. All Shares will be sold in the manner set forth in
our then effective prospectus and statement of additional
information, and in compliance with applicable law.
4. Compensation.
A. Sales Commission. You shall be entitled to charge
a sales commission on the sale or redemption, as appropriate, of
each series and class of each Fund's Shares in the amount of any
initial, deferred or contingent deferred sales charge as set
forth in our then effective prospectus. You may allow any sub-
agents or dealers such commissions or discounts from and not
exceeding the total sales commission as you shall deem advisable,
so long as any such commissions or discounts are set forth in our
current prospectus to the extent required by the applicable
Federal and State securities laws. You may also make payments to
sub-agents or dealers from your own resources, subject to the
following conditions: (a) any such payments shall not create any
obligation for or recourse against the Fund or any series or
class, and (b) the terms and conditions of any such payments are
consistent with our prospectus and applicable federal and state
securities laws and are disclosed in our prospectus or statement
of additional information to the extent such laws may require.
B. Distribution Plans. You shall also be entitled to
compensation for your services as provided in any Distribution
Plan adopted as to any series and class of any Fund's Shares
pursuant to Rule 12b-1 under the 1940 Act.
5. Terms and Conditions of Sales. Shares shall be offered
for sale only in those jurisdictions where they have been
properly registered or are exempt from registration, and only to
those groups of people which the Board may from time to time
determine to be eligible to purchase such shares.
6. Orders and Payment for Shares. Orders for Shares shall
be directed to the Fund's shareholder services agent, for
acceptance on behalf of the Fund. At or prior to the time of
delivery of any of our Shares you will pay or cause to be paid to
the custodian of the Fund's assets, for our account, an amount in
cash equal to the net asset value of such Shares. Sales of
Shares shall be deemed to be made when and where accepted by the
Fund's shareholder services agent. The Fund's custodian and
shareholder services agent shall be identified in its prospectus.
7. Purchases for Your Own Account. You shall not purchase
our Shares for your own account for purposes of resale to the
public, but you may purchase Shares for your own investment
account upon your written assurance that the purchase is for
investment purposes and that the Shares will not be resold except
through redemption by us.
8. Sale of Shares to Affiliates. You may sell our Shares
at net asset value to certain of your and our affiliated persons
pursuant to the applicable provisions of the federal securities
statutes and rules or regulations thereunder (the "Rules and
Regulations"), including Rule 22d-1 under the 1940 Act, as
amended from time to time.
9. Allocation of Expenses. We will pay the expenses:
(a) Of the preparation of the audited and certified
financial statements of our company to be included
in any Post-Effective Amendments ("Amendments") to
our Registration Statement under the 1933 Act or
1940 Act, including the prospectus and statement
of additional information included therein;
(b) Of the preparation, including legal fees, and
printing of all Amendments or supplements filed
with the Securities and Exchange Commission,
including the copies of the prospectuses included
in the Amendments and the first 10 copies of the
definitive prospectuses or supplements thereto,
other than those necessitated by your (including
your "Parent's") activities or Rules and
Regulations related to your activities where such
Amendments or supplements result in expenses which
we would not otherwise have incurred;
(c) Of the preparation, printing and distribution of
any reports or communications which we send to our
existing shareholders; and
(d) Of filing and other fees to Federal and State
securities regulatory authorities necessary to
continue offering our Shares.
You will pay the expenses:
(a) Of printing the copies of the prospectuses and any
supplements thereto and statements of additional
information which are necessary to continue to
offer our Shares;
(b) Of the preparation, excluding legal fees, and
printing of all Amendments and supplements to our
prospectuses and statements of additional
information if the Amendment or supplement arises
from your (including your "Parent's") activities
or Rules and Regulations related to your
activities and those expenses would not otherwise
have been incurred by us;
(c) Of printing additional copies, for use by you as
sales literature, of reports or other
communications which we have prepared for
distribution to our existing shareholders; and
(d) Incurred by you in advertising, promoting and
selling our Shares.
10. Furnishing of Information. We will furnish to you such
information with respect to each series and class of Shares, in
such form and signed by such of our officers as you may
reasonably request, and we warrant that the statements therein
contained, when so signed, will be true and correct. We will
also furnish you with such information and will take such action
as you may reasonably request in order to qualify our Shares for
sale to the public under the Blue Sky Laws of jurisdictions in
which you may wish to offer them. We will furnish you with
annual audited financial statements of our books and accounts
certified by independent public accountants, with semi-annual
financial statements prepared by us, with registration statements
and, from time to time, with such additional information
regarding our financial condition as you may reasonably request.
11. Conduct of Business. Other than our currently
effective prospectus, you will not issue any sales material or
statements except literature or advertising which conforms to the
requirements of Federal and State securities laws and regulations
and which have been filed, where necessary, with the appropriate
regulatory authorities. You will furnish us with copies of all
such materials prior to their use and no such material shall be
published if we shall reasonably and promptly object.
You shall comply with the applicable Federal and State
laws and regulations where our Shares are offered for sale and
conduct your affairs with us and with dealers, brokers or
investors in accordance with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc.
12. Redemption or Repurchase Within Seven Days. If Shares
are tendered to us for redemption or repurchase by us within
seven business days after your acceptance of the original
purchase order for such Shares, you will immediately refund to us
the full sales commission (net of allowances to dealers or
brokers) allowed to you on the original sale, and will promptly,
upon receipt thereof, pay to us any refunds from dealers or
brokers of the balance of sales commissions reallowed by you. We
shall notify you of such tender for redemption within 10 days of
the day on which notice of such tender for redemption is received
by us.
13. Other Activities. Your services pursuant to this
Agreement shall not be deemed to be exclusive, and you may render
similar services and act as an underwriter, distributor or dealer
for other investment companies in the offering of their shares.
14. Term of Agreement. This Agreement shall become
effective on the date of its execution, and shall remain in
effect for a period of two (2) years. The Agreement is renewable
annually thereafter, with respect to the Fund or, if the Fund has
more than one series, with respect to each series, for successive
periods not to exceed one year (i) by a vote of (a) a majority of
the outstanding voting securities of the Fund or, if the Fund has
more than one series, of each series, or (b) by a vote of the
Board, and (ii) by a vote of a majority of the members of the
Board who are not parties to the Agreement or interested persons
of any parties to the Agreement (other than as members of the
Board), cast in person at a meeting called for the purpose of
voting on the Agreement.
This Agreement may at any time be terminated by the
Fund or by any series without the payment of any penalty, (i)
either by vote of the Board or by vote of a majority of the
outstanding voting securities of the Fund or any series on 90
days' written notice to you; or (ii) by you on 90 days' written
notice to the Fund; and shall immediately terminate with respect
to the Fund and each series in the event of its assignment.
15. Suspension of Sales. We reserve the right at all times
to suspend or limit the public offering of Shares upon two days'
written notice to you.
16. Miscellaneous. This Agreement shall be subject to the
laws of the State of California and shall be interpreted and
construed to further promote the operation of the Fund as an open-
end investment company. This Agreement shall supersede all
Distribution Agreements and Amendments previously in effect
between the parties. As used herein, the terms "Net Asset
Value," "Offering Price," "Investment Company," "Open-End
Investment Company," "Assignment," "Principal Underwriter,"
"Interested Person," "Parent," "Affiliated Person," and "Majority
of the Outstanding Voting Securities" shall have the meanings set
forth in the 1933 Act or the 1940 Act and the Rules and
Regulations thereunder.
Nothing herein shall be deemed to protect you against any
liability to us or to our securities holders to which you would
otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of your duties hereunder,
or by reason of your reckless disregard of your obligations and
duties hereunder.
If the foregoing meets with your approval, please acknowledge
your acceptance by signing each of the enclosed copies, whereupon
this will become a binding agreement as of the date set forth
below.
Very truly yours,
FRANKLIN REAL ESTATE SECURITIES TRUST
By:
Accepted:
Franklin/Templeton Distributors, Inc.
By:
DATED:
CUSTODY AGREEMENT
THIS CUSTODY AGREEMENT ("Agreement") is made and
entered into as of January 3, 1994, by and between FRANKLIN REAL
ESTATE SECURITIES TRUST, a Delaware business trust (the "Trust"),
and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a
banking association organized under the laws of the United States
(the "Custodian").
RECITALS
A. The Trust is an investment company registered under
the Investment Company Act of 1940, as amended (the "Investment
Company Act") that invests and reinvests, on behalf of its
series, in Domestic Securities and Foreign Securities.
B. The Custodian is, and has represented to the Trust
that the Custodian is, a "bank" as that term is defined in
Section 2(a)(5) of the Investment Company Act of 1940, as amended
and is eligible to receive and maintain custody of investment
company assets pursuant to Section 17(f) and Rule 17f-2
thereunder.
C. The Trust and the Custodian desire to provide for
the retention of the Custodian as a custodian of the assets of
the Trust and such subsequent series as the parties hereto may
determine from time-to-time, on the terms and subject to the
provisions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
Section 1. DEFINITIONS
For purposes of this Agreement, the following terms
shall have the respective meanings specified below:
"Agreement" shall mean this Custody Agreement.
"Board of Trustees" shall mean the Board of Trustees of
the Trust.
"Business Day" with respect to any Domestic Security
means any day, other than a Saturday or Sunday, that is not a day
on which banking institutions are authorized or required by law
to be closed in The City of New York and, with respect to Foreign
Securities, a London Business Day. "London Business Day" shall
mean any day on which dealings and deposits in U.S. dollars are
transacted in the London interbank market.
"Custodian" shall mean Bank of America National Trust
and Savings Association.
"Domestic Securities" shall have the meaning provided
in Subsection 2.1 hereof.
"Executive Committee" shall mean the executive
committee of the Board of Trustees.
"Foreign Custodian" shall have the meaning provided in
Section 4.1 hereof.
"Foreign Securities" shall have the meaning provided in
Section 2.1 hereof.
"Foreign Securities Depository" shall have the meaning
provided in Section 4.1 hereof.
"Trust" shall mean the Franklin Real Estate Securities
Trust and any separate series of the Trust hereinafter organized.
"Investment Company Act" shall mean the Investment
Company Act of 1940, as amended.
"Securities" shall have the meaning provided in Section
2.1 hereof.
"Securities System" shall have the meaning provided in
Section 3.1 hereof.
"Securities System Account" shall have the meaning provided
in Subsection 3.8(a) hereof.
"Shares" shall mean shares of beneficial interest of the
Trust.
"Subcustodian" shall have the meaning provided in Subsection
3.7 hereof, but shall not include any Foreign Custodian.
"Transfer Agent" shall mean the duly appointed and acting
transfer agent for the Trust.
"Writing" shall mean a communication in writing, a
communication by telex, the Custodian's Global Custody
Instruction SystemTM, facsimile transmission, bankwire or other
teleprocess or electronic instruction system acceptable to the
Custodian.
Section 2. APPOINTMENT OF CUSTODIAN; DELIVERY OF ASSETS
2.1 Appointment of Custodian. The Trust hereby
appoints and designates the Custodian as a custodian of the
assets of the Trust including cash, securities the Trust desires
to be held within the United States ("Domestic Securities") and
securities it desires to be held outside the United States
("Foreign Securities"). Domestic Securities and Foreign
Securities are sometimes referred to herein, collectively, as
"Securities." The Custodian hereby accepts such appointment and
designation and agrees that it shall maintain custody of the
assets of the Trust delivered to it hereunder in the manner
provided for herein.
2.2 Delivery of Assets. The Trust agrees to deliver
to the Custodian Securities and cash owned by the Trust, payments
of income, principal or capital distributions received by the
Trust with respect to Securities owned by the Trust from time to
time, and the consideration received by it for such Shares or
other securities of the Trust as may be issued and sold from time
to time. The Custodian shall have no responsibility whatsoever
for any property or assets of the Trust held or received by the
Trust and not delivered to the Custodian pursuant to and in
accordance with the terms hereof. All Securities accepted by the
Custodian on behalf of the Trust under the terms of this
Agreement shall be in "street name" or other good delivery form
as determined by the Custodian.
2.3 Subcustodians. Upon receipt of Proper
Instructions and a certified copy of a resolution of the Board of
Trustees or of the Executive Committee certified by the Secretary
or an Assistant Secretary of the Trust, the Custodian may from
time to time appoint one or more Subcustodians or Foreign
Custodians to hold assets of the Trust in accordance with the
provisions of this Agreement.
2.4 No Duty to Manage. The Custodian, a Subcustodian
or a Foreign Custodian shall not have any duty or responsibility
to manage or recommend investments of the assets of the Trust
held by them or to initiate any purchase, sale or other
investment transaction in the absence of Proper Instructions or
except as otherwise specifically provided herein.
Section 3. DUTIES OF THE CUSTODIAN WITH RESPECT TO ASSETS OF
THE TRUST HELD BY THE CUSTODIAN
3.1 Holding Securities. The Custodian shall hold and
physically segregate from any property owned by the Custodian,
for the account of the Trust, all non-cash property delivered by
the Trust to the Custodian hereunder other than Securities which,
pursuant to Subsection 3.8 hereof, are held through a registered
clearing agency, a registered securities depository, the Federal
Reserve's book-entry securities system (referred to herein,
individually, as a "Securities System"), or held by a
Subcustodian, Foreign Custodian or in a Foreign Securities
Depository.
3.2 Delivery of Securities. Except as otherwise
provided in Subsection 3.5 hereof, the Custodian, upon receipt of
Proper Instructions, shall release and deliver Securities owned
by the Trust and held by the Custodian in the following cases or
as otherwise directed in Proper Instructions:
(a) except as otherwise provided herein, upon
sale of such Securities for the account of the Trust and receipt
by the Custodian, a Subcustodian or a Foreign Custodian of
payment therefor;
(b) upon the receipt of payment by the Custodian,
a Subcustodian or a Foreign Custodian in connection with any
repurchase agreement related to such Securities entered into by
the Trust;
(c) in the case of a sale effected through a
Securities System, in accordance with the provisions of
Subsection 3.8 hereof;
(d) to a tender agent or other authorized agent
in connection with (i) a tender or other similar offer for
Securities owned by the Trust, or (ii) a tender offer or
repurchase by the Trust of its own Shares;
(e) to the issuer thereof or its agent when such
Securities are called, redeemed, retired or otherwise become
payable; provided, that in any such case, the cash or other
consideration is to be delivered to the Custodian, a Subcustodian
or a Foreign Custodian;
(f) to the issuer thereof, or its agent, for
transfer into the name or nominee name of the Trust, the name or
nominee name of the Custodian, the name or nominee name of any
Subcustodian or Foreign Custodian; or for exchange for a
different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new Securities are to be
delivered to the Custodian, a Subcustodian or Foreign Custodian;
(g) to the broker selling the same for
examination in accordance with the "street delivery" custom;
(h) for exchange or conversion pursuant to any
plan of merger, consolidation, recapitalization, or
reorganization of the issuer of such Securities, or pursuant to a
conversion of such Securities; provided that, in any such case,
the new Securities and cash, if any, are to be delivered to the
Custodian or a Subcustodian;
(i) in the case of warrants, rights or similar
securities, the surrender thereof in connection with the exercise
of such warrants, rights or similar Securities or the surrender
of interim receipts or temporary Securities for definitive
Securities; provided that, in any such case, the new Securities
and cash, if any, are to be delivered to the Custodian, a
subcustodian or a Foreign Custodian;
(j) for delivery in connection with any loans of
Securities made by the Trust, but only against receipt by the
Custodian, a Subcustodian or a Foreign Custodian of adequate
collateral as determined by the Trust (and identified in Proper
Instructions communicated to the Custodian), which may be in the
form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be credited
to the account of the Custodian, a Subcustodian or a Foreign
Custodian in the Federal Reserve's book-entry securities system,
the Custodian will not be held liable or responsible for the
delivery of Securities owned by the Trust prior to the receipt of
such collateral;
(k) for delivery as security in connection with
any borrowings by the Trust requiring a pledge of assets by the
Trust, but only against receipt by the Custodian, a Subcustodian
or a Foreign Custodian of amounts borrowed;
(l) for delivery in accordance with the
provisions of any agreement among the Trust, the Custodian, a
Subcustodian or a Foreign Custodian and a broker-dealer relating
to compliance with the rules of registered clearing corporations
and of any registered national securities exchange, or of any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Trust;
(m) for delivery in accordance with the
provisions of any agreement among the Trust, the Custodian, a
Subcustodian or a Foreign Custodian and a futures commission
merchant, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any contract market, or any
similar organization or organizations, regarding account deposits
in connection with transactions by the Trust;
(n) upon the receipt of instructions from the
Transfer Agent for delivery to the Transfer Agent or to the
holders of Shares in connection with distributions in kind in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
(o) for any other proper purpose, but only upon
receipt of proper Instructions, and a certified copy of a
resolution of the Trustees or of the Executive Committee
certified by the Secretary or an Assistant Secretary of the
Trust, specifying the securities to be delivered, setting forth
the purpose for which such delivery is to be made, declaring such
purpose to be a proper purpose, and naming the person or persons
to whom delivery of such securities shall be made.
3.3 Registration of Securities. Securities held by
the Custodian, a Subcustodian or a Foreign Custodian (other than
bearer Securities) shall be registered in the name or nominee
name of the Trust, in the name or nominee name of the Custodian
or in the name or nominee name of any Subcustodian or Foreign
Custodian. The Trust agrees to hold the Custodian, any such
nominee, Subcustodian or Foreign Custodian harmless from any
liability as a holder of record of such Securities.
3.4 Bank Accounts. The Custodian shall open and
maintain a separate bank account or accounts for the Trust,
subject only to draft or order by the Custodian acting pursuant
to the terms of this Agreement, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by
it hereunder from or for the account of the Trust, other than
cash maintained by the Trust in a bank account established and
used in accordance with Rule 17f-3 under the Investment Company
Act. Funds held by the Custodian for the Trust may be deposited
by it to its credit as Custodian in the banking departments of
the Custodian, a Subcustodian or a Foreign Custodian. It is
understood and agreed by the Custodian and the Trust that the
rate of interest, if any, payable on such funds (including
foreign currency deposits) that are deposited with the Custodian
may not be a market rate of interest and that the rate of
interest payable by the Custodian to the Trust shall be agreed
upon by the Custodian and the Trust from time to time. Such
funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that
capacity.
3.5 Collection of Income; Trade Settlement; Crediting
of Accounts. The Custodian shall collect income payable with
respect to Securities owned by the Trust, settle Securities
trades for the account of the Trust and credit and debit the
Trust's account with the Custodian in connection therewith as
follows:
(a) Upon receipt of Proper Instructions, the
Custodian shall effect the purchase of a Security by charging the
account of the Trust on the contractual settlement date. The
Custodian shall have no liability of any kind to any person,
including the Trust, if the Custodian effects payment on behalf
of the Trust as provided for herein or in Proper Instructions,
and the seller or selling broker fails to deliver the Securities
purchased.
(b) Upon receipt of Proper Instructions, the
Custodian shall effect the sale of a Security by delivering a
certificate or other indicia of ownership, and shall credit the
account of the Trust with the proceeds of such sale on the
contractual settlement date. The Custodian shall have no
liability of any kind to any person, including the Trust, if the
Custodian delivers such a certificate(s) or other indicia of
ownership as provided for herein or in Proper Instructions, and
the purchaser or purchasing broker fails to effect payment to
the Trust within a reasonable time period, as determined by the
Custodian in its sole discretion. In such event, the Custodian
shall be entitled to reimbursement of the amount so credited to
the account of the Trust in connection with such sale.
(c) The Trust is responsible for ensuring that
the Custodian receives timely and accurate Proper Instructions to
enable the Custodian to effect settlement of any purchase or
sale. If the Custodian does not receive such instructions within
the required time period, the Custodian shall have no liability
of any kind to any person, including the Trust, for failing to
effect settlement on the contractual settlement date. However,
the Custodian shall use its best reasonable efforts to effect
settlement as soon as possible after receipt of Proper
Instructions.
(d) The Custodian shall credit the account of the
Trust with interest income payable on interest bearing Securities
on payable date. Interest income on cash balances will be
credited monthly to the account of the Trust on the first
Business Day (on which the Custodian is open for business)
following the end of each month. Dividends and other amounts
payable with respect to Domestic Securities and Foreign
Securities shall be credited to the account of the Trust when
received by the Custodian. The Custodian shall not be required
to commence suit or collection proceedings or resort to any
extraordinary means to collect such income and other amounts
payable with respect to Securities owned by the Trust. The
collection of income due the Trust on Domestic Securities loaned
pursuant to the provisions of Subsection 3.2(j) shall be the
responsibility of the Trust. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the
Trust with such information or data as may be necessary to assist
the Trust in arranging for the timely delivery to the Custodian
of the income to which the Trust is entitled. The Custodian
shall have no liability to any person, including the Trust, if
the Custodian credits the account of the Trust with such income
or other amounts payable with respect to Securities owned by the
Trust (other than Securities loaned by the Trust pursuant to
Subsection 3.2(j) hereof) and the Custodian subsequently is
unable to collect such income or other amounts from the payors
thereof within a reasonable time period, as determined by the
Custodian in its sole discretion. In such event, the Custodian
shall be entitled to reimbursement of the amount so credited to
the account of the Trust.
3.6 Payment of Trust Monies. Upon receipt of Proper
Instructions the Custodian shall pay out monies of the Trust in
the following cases or as otherwise directed in Proper
Instructions:
(a) upon the purchase of Securities, futures
contracts or options on futures contracts for the account of the
Trust but only, except as otherwise provided herein, (i) against
the delivery of such securities, or evidence of title to futures
contracts or options on futures contracts, to the Custodian or a
Subcustodian registered pursuant to Subsection 3.3 hereof or in
proper form for transfer; (ii) in the case of a purchase effected
through a Securities System, in accordance with the conditions
set forth in Subsection 3.8 hereof; or (iii) in the case of
repurchase agreements entered into between the Trust and the
Custodian, another bank or a broker-dealer (A) against delivery
of the Securities either in certificated form to the Custodian or
a Subcustodian or through an entry crediting the Custodian's
account at the appropriate Federal Reserve Bank with such
Securities or (B) against delivery of the confirmation evidencing
purchase by the Trust of Securities owned by the Custodian or
such broker-dealer or other bank along with written evidence of
the agreement by the Custodian or such broker-dealer or other
bank to repurchase such Securities from the Trust;
(b) in connection with conversion, exchange or
surrender of Securities owned by the Trust as set forth in
Subsection 3.2 hereof;
(c) for the redemption or repurchase of Shares
issued by the Trust;
(d) for the payment of any expense or liability
incurred by the Trust, including but not limited to the following
payments for the account of the Trust: custodian fees, interest,
taxes, management, accounting, transfer agent and legal fees and
operating expenses of the Trust whether or not such expenses are
to be in whole or part capitalized or treated as deferred
expenses; and
(e) for the payment of any dividends or
distributions declared by the Board of Trustees with respect to
the Shares.
3.7 Appointment of Subcustodians. The Custodian may,
upon receipt of Proper Instructions, appoint another bank or
trust company, which is itself qualified under the Investment
Company Act to act as a custodian (a "Subcustodian"), as the
agent of the Custodian to carry out such of the duties of the
Custodian hereunder as a Custodian may from time to time direct;
provided, however, that the appointment of any Subcustodian shall
not relieve the Custodian of its responsibilities or liabilities
hereunder.
3.8 Deposit of Securities in Securities Systems. The
Custodian may deposit and/or maintain Domestic Securities owned
by the Trust in a Securities System in accordance with applicable
Federal Reserve Board and Securities and Exchange Commission
rules and regulations, if any, and subject to the following
provisions:
(a) the Custodian may hold Domestic Securities of
the Trust in the Depository Trust Company or the Federal
Reserve's book entry system or, upon receipt of Proper
Instructions, in another Securities System provided that such
securities are held in an account of the Custodian in the
Securities System ("Securities System Account") which shall not
include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
(b) the records of the Custodian with respect to
Domestic Securities of the Trust which are maintained in a
Securities System shall identify by book-entry those Domestic
Securities belonging to the Trust;
(c) the Custodian shall pay for Domestic
Securities purchased for the account of the Trust upon (i)
receipt of advice from the Securities System that such securities
have been transferred to the Securities System Account, and (ii)
the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Trust.
The Custodian shall transfer Domestic Securities sold for the
account of the Trust upon (A) receipt of advice from the
Securities System that payment for such securities has been
transferred to the Securities System Account, and (B) the making
of an entry on the records of the Custodian to reflect such
transfer and payment for the account of the Trust. Copies of all
advices from the Securities System of transfers of Domestic
Securities for the account of the Trust shall be maintained for
the Trust by the Custodian and be provided to the Trust at its
request. Upon request, the Custodian shall furnish the Trust
confirmation of each transfer to or from the account of the Trust
in the form of a written advice or notice; and
(d) upon request, the Custodian shall provide the
Trust with any report obtained by the Custodian on the Securities
System's accounting system, internal accounting control and
procedures for safeguarding domestic securities deposited in the
Securities System.
3.9 Segregated Account. The Custodian shall upon
receipt of Proper Instructions establish and maintain a
segregated account or accounts for and on behalf of the Trust,
into which account or accounts may be transferred cash and/or
Securities, including Securities maintained in an account by the
Custodian pursuant to Section 3.8 hereof, (i) in accordance with
the provisions of any agreement among the Trust, the Custodian
and a broker-dealer or futures commission merchant, relating to
compliance with the rules of registered clearing corporations and
of any national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Trust, (ii)
for purposes of segregating cash or securities in connection with
options purchased, sold or written by the Trust or commodity
futures contracts or options thereon purchased or sold by the
Trust and (iii) for other proper corporate purposes, but only, in
the case of this clause (iii), upon receipt of, in addition to
Proper Instructions, a certified copy of a resolution of the
Board of Trustees or of the Executive Committee certified by the
Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such purposes
to be proper corporate purposes.
3.10 Ownership Certificates for Tax Purposes. The
Custodian shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection
with receipt of income or other payments with respect to domestic
securities of the Trust held by it and in connection with
transfers of such securities.
3.11 Proxies. The Custodian shall, with respect to
the Securities held hereunder, promptly deliver to the Trust all
proxies, all proxy soliciting materials and all notices relating
to such Securities. If the Securities are registered otherwise
than in the name of the Trust or a nominee of the Trust, the
Custodian shall use its best reasonable efforts, consistent with
applicable law, to cause all proxies to be promptly executed by
the registered holder of such Securities in accordance with
Proper Instructions.
3.12 Communications Relating to Trust Portfolio
Securities. The Custodian shall transmit promptly to the Trust
all written information (including, without limitation, pendency
of calls and maturities of Securities and expirations of rights
in connection therewith and notices of exercise of put and call
options written by the Trust and the maturity of futures
contracts purchased or sold by the Trust) received by the
Custodian from issuers of Securities being held for the Trust.
With respect to tender or exchange offers, the Custodian shall
transmit promptly to the Trust all written information received
by the Custodian from issuers of the Securities whose tender or
exchange is sought and from the party (or its agents) making the
tender or exchange offer. If the Trust desires to take action
with respect to any tender offer, exchange offer or any other
similar transaction, the Trust shall notify the Custodian at
least three Business Days prior to the date of which the
Custodian is to take such action.
3.13 Reports by Custodian. Custodian shall each
business day furnish the Trust with a statement summarizing all
transactions and entries for the account of the Fund for the
preceding day. At the end of every month Custodian shall furnish
the Trust with a list of the portfolio securities showing the
quantity of each issue owned, the cost of each issue and the
market value of each issue at the end of each month. Such
monthly report shall also contain separate listings of (a)
unsettled trades and (b) when-issued securities. Custodian shall
furnish such other reports as may be mutually agreed upon from
time-to-time.
Section 4. CERTAIN DUTIES OF THE CUSTODIAN WITH RESPECT TO
ASSETS OF THE TRUST HELD OUTSIDE THE UNITED STATES
4.1 Custody outside the United States. The Trust
authorizes the Custodian to hold Foreign Securities and cash in
custody accounts which have been established by the Custodian
with (i) its foreign branches, (ii) foreign banking institutions,
foreign branches of United States banks and subsidiaries of
United States banks or bank holding companies (each a "Foreign
Custodian") and (iii) Foreign Securities depositories or clearing
agencies (each a "Foreign Securities Depository"); provided,
however, that the Board of Trustees or the Executive Committee
has approved in advance the use of each such Foreign Custodian
and Foreign Securities Depository and the contract between the
Custodian and each Foreign Custodian and that such approval is
set forth in Proper Instructions and a certified copy of a
resolution of the Board of Trustees or of the Executive Committee
certified by the Secretary or an Assistant Secretary of the
Trust. Unless expressly provided to the contrary in this Section
4, custody of Foreign Securities and assets held outside the
United States by the Custodian, a Foreign Custodian or through a
Foreign Securities Depository shall be governed by Section 3
hereof.
4.2 Assets to be Held. The Custodian shall limit the
securities and other assets maintained in the custody of its
foreign branches, Foreign Custodians and Foreign Securities
Depositories to: (i) "foreign securities", as defined in
paragraph (c) (1) of Rule 17f-5 under the Investment Company Act,
and (ii) cash and cash equivalents in such amounts as the
Custodian or the Trust may determine to be reasonably necessary
to effect the Trust's Foreign Securities transactions.
4.3 Foreign Securities Depositories. Except as may
otherwise be agreed upon in writing by the Custodian and the
Trust, assets of the Trust shall be maintained in Foreign
Securities Depositories only through arrangements implemented by
the Custodian or Foreign Custodians pursuant to the terms hereof.
4.4 Segregation of Securities. The Custodian shall
identify on its books and records as belonging to the Trust, the
Foreign Securities of the Trust held by each Foreign Custodian.
4.5 Agreements with Foreign Custodians. Each
agreement with a Foreign Custodian shall provide generally that:
(a) the Trust's assets will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of the
Foreign Custodian or its creditors, except a claim of payment for
their safe custody or administration; (b) beneficial ownership
for the Trust's assets will be freely transferable without the
payment of money or value other than for custody or
administration; (c) adequate records will be maintained
identifying the assets as belonging to the Trust; (d) the
independent public accountants for the Trust, will be given
access to the records of the Foreign Custodian relating to the
assets of the Trust or confirmation of the contents of those
records; (e) the disposition of assets of the Trust held by the
Foreign Custodian will be subject only to the instructions of the
Custodian or its agents; (f) the Foreign Custodian shall
indemnify and hold harmless the Custodian and the Trust from and
against any loss, damage, cost, expense, liability or claim
arising out of or in connection with the Foreign Custodian's
performance of its obligations under such agreement; (g) to the
extent practicable, the Trust's assets will be adequately insured
in the event of loss; and (h) the Custodian will receive periodic
reports with respect to the safekeeping of the Trust's assets,
including notification of any transfer to or from the Trust's
account.
4.6 Access of Independent Accountants of the Trust.
Upon request of the Trust, the Custodian will use its best
reasonable efforts to arrange for the independent accountants of
the Trust to be afforded access to the books and records of any
Foreign Custodian insofar as such books and records relate to the
custody by any such Foreign Custodian of assets of the Trust.
4.7 Transactions in Foreign Custody Accounts. Upon
receipt of Proper Instructions, the Custodian shall instruct the
appropriate Foreign Custodian to transfer, exchange or deliver
Foreign Securities owned by the Trust, but, except to the extent
explicitly provided herein, only in any of the cases specified in
Subsection 3.2. Upon receipt of Proper Instructions, the
Custodian shall pay out or instruct the appropriate Foreign
Custodian to pay out monies of the Trust in any of the cases
specified in Subsection 3.6. Notwithstanding anything herein to
the contrary, settlement and payment for Foreign Securities
received for the account of the Trust and delivery of Foreign
Securities maintained for the account of the Trust may be
effected in accordance with the customary or established
securities trading or securities processing practices and
procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering securities to
the purchaser thereof or to a dealer therefor (or an agent for
such purchaser or dealer) against a receipt with the expectation
of receiving later payment for such securities from such
purchaser or dealer. Foreign Securities maintained in the
custody of a Foreign Custodian may be maintained in the name of
such entity or its nominee name to the same extent as set forth
in Section 3.3 of this Agreement and the Trust agrees to hold any
Foreign Custodian and its nominee harmless from any liability as
a holder of record of such securities.
4.8 Liability of Foreign Custodian. Each agreement
between the Custodian and a Foreign Custodian shall require the
Foreign Custodian to exercise reasonable care in the performance
of its duties and to indemnify and hold harmless the Custodian
and the Trust from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the
Foreign Custodian's performance of such obligations. At the
election of the Trust, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any claims against a
Foreign Custodian as a consequence of any such loss, damage,
cost, expense, liability or claim if and to the extent that the
Trust has not been made whole for any such loss, damage, cost,
expense, liability or claim.
4.9 Monitoring Responsibilities.
(a) The Custodian will promptly inform the Trust
in the event that the Custodian learns of a material adverse
change in the financial condition of a Foreign Custodian or is
notified by (i) a foreign banking institution employed as a
Foreign Custodian that there appears to be a substantial
likelihood that its shareholders' equity will decline below $200
million or that its shareholders' equity has declined below $200
million (in each case computed in accordance with generally
accepted United States accounting principles) and denominated in
U.S. dollars, or (ii) a subsidiary of a United States bank or
bank holding company acting as a Foreign Custodian that there
appears to be a substantial likelihood that its shareholders'
equity will decline below $100 million or that its shareholders'
equity has declined below $100 million (in each case computed in
accordance with generally accepted United States accounting
principles) and denominated in U.S. dollars.
(b) The custodian will furnish such information
as may be reasonably necessary to assist the Trust's Board of
Trustees in its annual review and approval of the continuance of
all contracts or arrangements with Foreign Subcustodians.
Section 5. PROPER INSTRUCTIONS
As used in this Agreement, the term "Proper
Instructions" means instructions of the Trust received by the
Custodian via telephone or in Writing which the Custodian
believes in good faith to have been given by Authorized Persons
(as defined below) or which are transmitted with proper testing
or authentication pursuant to terms and conditions which the
Custodian may specify. Any Proper Instructions delivered to the
Custodian by telephone shall promptly thereafter be confirmed in
Writing by an Authorized Person, but the Trust will hold the
Custodian harmless for its failure to send such confirmation in
writing, the failure of such confirmation to conform to the
telephone instructions received or the Custodian's failure to
produce such confirmation at any subsequent time. Unless
otherwise expressly provided, all Proper Instructions shall
continue in full force and effect until cancelled or superseded.
If the Custodian requires test arrangements, authentication
methods or other security devices to be used with respect to
Proper Instructions, any Proper Instructions given by the Trust
thereafter shall be given and processed in accordance with such
terms and conditions for the use of such arrangements, methods or
devices as the Custodian may put into effect and modify from time
to time. The Trust shall safeguard any testkeys, identification
codes or other security devices which the Custodian shall make
available to it. The Custodian may electronically record any
Proper Instructions given by telephone, and any other telephone
discussions, with respect to its activities hereunder. As used
in this Agreement, the term "Authorized Persons" means such
officers or such agents of the Trust as have been designated by a
resolution of the Board of trustees or of the Executive
Committee, a certified copy of which has been provided to the
Custodian, to act on behalf of the Trust under this Agreement.
Each of such persons shall continue to be an Authorized Person
until such time as the Custodian receives Proper Instructions
that any such officer or agent is no longer an Authorized Person.
Section 6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express
authority from the Trust:
(a) make payments to itself or others for minor
expenses of handling Securities or other similar items relating
to its duties under this Agreement, provided that all such
payments shall be accounted for to the Trust;
(b) endorse for collection, in the name of the
Trust, checks, drafts and other negotiable instruments; and
(c) in general, attend to all non-discretionary
details in connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the Securities and
property of the Trust except as otherwise provided in Proper
Instructions.
Section 7. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any
instructions (conveyed by telephone or in Writing), notice,
request, consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly given or
executed by or on behalf of the Trust. The Custodian may receive
and accept a certified copy of a resolution of the Board of
Trustees or Executive Committee as conclusive evidence (a) of the
authority of any person to act in accordance with such resolution
or (b) of any determination or of any action by the Board of
Trustees or Executive Committee as described in such resolution,
and such resolution may be considered as in full force and effect
until receipt by the Custodian of written notice by an Authorized
Person to the contrary.
Section 8. DUTY OF CUSTODIAN TO SUPPLY INFORMATION
The Custodian shall cooperate with and supply necessary
information in its possession (to the extent permissible under
applicable law) to the entity or entities appointed by the Board
of Trustees to keep the books of account of the Trust and/or
compute the net asset value per Share of the outstanding Shares
of the Trust.
Section 9. RECORDS
The Custodian shall create and maintain all records
relating to its activities under this Agreement which are
required with respect to such activities under Section 31 of the
Investment Company Act and Rules 31a-1 and 31a-2 thereunder. All
such records shall be the property of the Trust and shall at all
times during the regular business hours of the Custodian be open
for inspection by duly authorized officers, employees or agents
of the Trust and employees and agents of the Securities and
Exchange Commission. The Custodian shall, at the Trust's
request, supply the Trust with a tabulation of Securities owned
by the Trust and held by the Custodian and shall, when requested
to do so by the Trust and for such compensation as shall be
agreed upon between the Trust and the Custodian, include
certificate numbers in such tabulations.
Section 10. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable
compensation for its services and expenses as Custodian, as
agreed upon from time to time between the Trust and the
Custodian.
Section 11. RESPONSIBILITY OF CUSTODIAN
The Custodian shall be responsible for the performance
of only such duties as are set forth herein or contained in
Proper Instructions and shall use reasonable care in carrying out
such duties. The Custodian shall be liable to the Trust for any
loss which shall occur as the result of the failure of a Foreign
Custodian or a Foreign Securities Depository engaged by such
Foreign Custodian or the Custodian to exercise reasonable care
with respect to the safekeeping of securities and other assets of
the Trust to the same extent that the Custodian would be liable
to the Trust if the Custodian itself were holding such securities
and other assets. In the event of any loss to the Trust by
reason of the failure of the Custodian, a Foreign Custodian or a
Foreign Securities Depository engaged by such Foreign Custodian
or the Custodian to utilize reasonable care, the Custodian shall
be liable to the Trust to the extent of the Trust's damages, to
be determined based on the market value of the property which is
the subject of the loss at the date of discovery of such loss and
without reference to any special conditions or circumstances.
The Custodian shall be held to the exercise of reasonable care in
carrying out this Agreement. The Trust agrees to indemnify and
hold harmless the Custodian and its nominees from all taxes,
charges, expenses, assessments, claims and liabilities (including
legal fees and expenses) incurred by any of them in connection
with the performance of this Agreement, except such as may arise
from any negligent action, negligent failure to act or willful
misconduct on the part of the indemnified entity or any Foreign
Custodian or Foreign Securities Depository. The Custodian shall
be entitled to rely, and may act, on advice of counsel (who may
be counsel for the Trust) on all matters and shall be without
liability for any action reasonably taken or omitted pursuant to
such advice. The Custodian need not maintain any insurance for
the benefit of the Trust.
All collections of funds or other property paid or
distributed in respect of Securities held by the Custodian,
agent, Subcustodian or Foreign Custodian hereunder shall be made
at the risk of the Trust. The Custodian shall have no liability
for any loss occasioned by delay in the actual receipt of notice
by the Custodian, agent, Subcustodian or by a Foreign Custodian
of any payment, redemption or other transaction regarding
securities in respect of which the Custodian has agreed to take
action as provided in Section 3 hereof. The Custodian shall not
be liable for any action taken in good faith upon Proper
Instructions or upon any certified copy of any resolution of the
Board of Trustees and may rely on the genuineness of any such
documents which it may in good faith believe to be validly
executed. The Custodian shall not be liable for any loss
resulting from, or caused by, the direction of the Trust to
maintain custody of any Securities or cash in a foreign country
including, but not limited to, losses resulting from
nationalization, expropriation, currency restrictions, civil
disturbance, acts of war or terrorism, insurrection, revolution,
nuclear fusion, fission or radiation or other similar occurrences
or events beyond the control of the Custodian. Finally, the
Custodian shall not be liable for any taxes, including interest
and penalties with respect thereto, that may be levied or
assessed upon or in respect of any assets of the Trust held by
the Custodian.
Section 12. LIMITED LIABILITY OF THE TRUST
The Custodian acknowledges that it has received notice
of and accepts the limitations of the Trust's liability as set
forth in its Agreement and Declaration of Trust. The Custodian
agrees that the Trust's obligation hereunder shall be limited to
the assets of the Trust, and that the Custodian shall not seek
satisfaction of any such obligation from the shareholders of the
Trust nor from any Trustee, officer, employee, or agent of the
Trust.
Section 13. EFFECTIVE PERIOD; TERMINATION
This Agreement shall become effective as of the date of
its execution and shall continue in full force and effect until
terminated as hereinafter provided. This Agreement may be
terminated by the Trust or the Custodian by 60 days notice in
Writing to the other provided that any termination by the Trust
shall be authorized by a resolution of the Board of Trustees, a
certified copy of which shall accompany such notice of
termination, and provided further, that such resolution shall
specify the names of the persons to whom the Custodian shall
deliver the assets of the Trust held by it. If notice of
termination is given by the Custodian, the Trust shall, within 60
days following the giving of such notice, deliver to the
Custodian a certified copy of a resolution of the Board of
Trustees specifying the names of the persons to whom the
Custodian shall deliver assets of the Trust held by it. In
either case the Custodian will deliver such assets to the persons
so specified, after deducting therefrom any amounts which the
Custodian determines to be owed to it hereunder (including all
costs and expenses of delivery or transfer of Trust assets to the
persons so specified). If within 60 days following the giving of
a notice of termination by the Custodian, the Custodian does not
receive from the Trust a certified copy of a resolution of the
Board of Trustees specifying the names of the persons to whom the
Custodian shall deliver the assets of the Trust held by it, the
Custodian, at its election, may deliver such assets to a bank or
trust company doing business in the State of California to be
held and disposed of pursuant to the provisions of this Agreement
or may continue to hold such assets until a certified copy of one
or more resolutions as aforesaid is delivered to the Custodian.
The obligations of the parties hereto regarding the use of
reasonable care, indemnities and payment of fees and expenses
shall survive the termination of this Agreement.
Section 14. MISCELLANEOUS
14.1 Relationship. Nothing contained in this Agreement
shall (i) create any fiduciary, joint venture or partnership
relationship between the Custodian and the Trust or (ii) be
construed as or constitute a prohibition against the provision by
the Custodian or any of its affiliates to the Trust of investment
banking, securities dealing or brokerages services or any other
banking or financial services.
14.2 Further Assurances. Each party hereto shall
furnish to the other party hereto such instruments and other
documents as such other party may reasonably request for the
purpose of carrying out or evidencing the transactions
contemplated by this Agreement.
14.3 Attorneys' Fees. If any lawsuit or other action
or proceeding relating to this Agreement is brought by a party
hereto against the other party hereto, the prevailing party shall
be entitled to recover reasonable attorneys' fees, costs and
disbursements (including allocated costs and disbursements of in-
house counsel), in addition to any other relief to which the
prevailing party may be entitled.
14.4 Notices. Except as otherwise specified herein,
each notice or other communication hereunder shall be in Writing
and shall be delivered to the intended recipient at the following
address (or at such other address as the intended recipient shall
have specified in a written notice given to the other parties
hereto):
if to the Trust :
Franklin Real Estate Securities Trust
c/o Franklin Resources, Inc.
777 Mariners Island Blvd.
San Mateo, CA 94404
Attention: Trust Manager
if to the Custodian:
Bank of America NT&SA
1455 Market Street
16th Floor, Dept. 5014
San Francisco, CA 94104
14.5 Headings. The underlined headings contained
herein are for convenience of reference only, shall not be deemed
to be a part of this Agreement and shall not be referred to in
connection with the interpretation hereof.
14.6 Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original and both
of which, when taken together, shall constitute one agreement.
14.7 Governing Law. This Agreement shall be
construed in accordance with, and governed in all respects by,
the laws of the State of California (without giving effect to
principles of conflict of laws).
14.8 Force Majeure. Subject to the provisions of
Section 11 hereof regarding the Custodian's general standard of
care, no failure, delay or default in performance of any
obligation hereunder shall constitute an event of default or a
breach of this agreement, or give rise to any liability
whatsoever on the part of one party hereto to the other, to the
extent that such failure to perform, delay or default arises out
of a cause beyond the control and without negligence of the party
otherwise chargeable with failure, delay or default; including,
but not limited to: action or inaction of governmental, civil or
military authority; fire; strike; lockout or other labor dispute;
flood; war; riot; theft; earthquake; natural disaster; breakdown
of public or common carrier communications facilities; computer
malfunction; or act, negligence or default of the other party.
This paragraph shall in no way limit the right of either party to
this Agreement to make any claim against third parties for any
damages suffered due to such causes.
14.9 Successors and Assigns. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and assigns, if any.
14.10 Waiver. No failure on the part of any person to
exercise any power, right, privilege or remedy hereunder, and no
delay on the part of any person in the exercise of any power,
right, privilege or remedy hereunder, shall operate as a waiver
thereof; and no single or partial exercise of any such power,
right, privilege or remedy shall preclude any other or further
exercise thereof or of any other power, right, privilege or
remedy.
14.11 Amendments. This Agreement may not be amended,
modified, altered or supplemented other than by means of an
agreement or instrument executed on behalf of each of the parties
hereto.
14.12 Severability. In the event that any provision
of this Agreement, or the application of any such provision to
any person or set of circumstances, shall be determined to be
invalid, unlawful, void or unenforceable to any extent, the
remainder of this Agreement, and the application of such
provision to persons or circumstances other than those as to
which it is determined to be invalid, unlawful, void or
unenforceable, shall not be impaired or otherwise affected and
shall continue to be valid and enforceable to the fullest extent
permitted by law.
14.13 Parties in Interest. None of the provisions of
this Agreement is intended to provide any rights or remedies to
any person other than the Trust and the Custodian and their
respective successors and assigns, if any.
14.14 Entire Agreement. This Agreement sets forth the
entire understanding of the parties hereto and supersedes all
prior agreements and understandings between the parties hereto
relating to the subject matter hereof.
14.15 Variations of Pronouns. Whenever required by
the context hereof, the singular number shall include the plural,
and vice versa; the masculine gender shall include the feminine
and neuter genders; and the neuter gender shall include the
masculine and feminine genders.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above
written.
"Custodian": BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ illegible
Its Vice President
"Trust": FRANKLIN REAL ESTATE SECURITIES TRUST
By /s/ Rupert H. Johnson
Its
FRANKLIN
RESOURCES, INC.
(Franklin Logo)
777 Mariners Island Blvd.
P.O. Box 7777
San Mateo, CA 94403-7777
415/312-3000
December 27, 1993
Franklin Real Estate Securities Trust
777 Mariners Island Blvd.
San Mateo, CA 94404
Gentlemen:
We propose to acquire 100,000 shares of beneficial interest
(the "Shares") of the Franklin Real Estate Securities Fund (the
"Fund"), a series of Franklin Real Estate Securities Trust (the
"Trust") at a purchase price of $10 per share for a total of
$1,000,000. We will purchase the Shares in a private offering
prior to the effectiveness of the Form N-1A registration
statement filed by the Fund under the Securities Act of 1933.
The Shares are being purchased pursuant to Section 14 of the
Investment Company Act of 1940 to serve as the seed money for the
Fund prior to the commencement of the public offering of its
shares.
In connection with such purchase, we understand that: (i)
we, the purchaser, intend to acquire the Shares for our own
account as the sole beneficial owner thereof and have no present
intention of redeeming or reselling the Shares so acquired; and
(ii) in the event any of the initial 100,000 Shares are redeemed
during the first five years, the Fund may charge against our
redemption proceeds a pro rata portion of any unamortized
organization expenses which would be borne by such Shares during
the balance of the initial five-year period were they not to be
redeemed.
We consent to the filing of this Investment Letter as an
exhibit to the form N-1A registration of the Fund.
Sincerely,
FRANKLIN RESOURCES, INC.
By: /s/ Harmon E. Burns
Harmon E. Burns
Executive Vice President
FRANKLIN REAL ESTATE SECURITIES TRUST
Preamble to Distribution Plan
The following Distribution Plan (the "Plan") has been
adopted pursuant to Rule l2b-l under the Investment Company Act
of 1940 (the "Act") by Franklin Real Estate Securities Trust (the
"Trust") for the use of a newly organized series entitled
Franklin Real Estate Securities Fund (the "Fund"). The Plan has
been approved by a majority of the Board of Trustees of the Trust
(the "Board of Trustees"), including a majority of the trustees
who are not interested persons of the Trust and who have no
direct or indirect financial interest in the operation of the
Plan (the "non-interested trustees"), cast in person at a meeting
called for the purpose of voting on such Plan.
In reviewing the Plan, the Board of Trustees considered the
schedule and nature of payments and terms of the Management
Agreement between the Trust, on behalf of the Fund, and Franklin
Advisers, Inc. (the "Manager") and the terms of the Underwriting
Agreement between the Trust and Franklin/Templeton Distributors,
Inc. ("Distributors"). The Board of Trustees concluded that the
compensation of the Manager, under the Management Agreement was
fair and not excessive; however, the Board of Trustees also
recognized that uncertainty may exist from time to time with
respect to whether payments to be made by the Fund to the Manager
or to Distributors or others or by the Manager or Distributors to
others may be deemed to constitute distribution expenses.
Accordingly, the Board determined that the Plan should provide
for such payments and that adoption of the Plan would be prudent
and in the best interests of the Fund and its shareholders. Such
approval included a determination that in the exercise of their
reasonable business judgment and in light of their fiduciary
duties, there is a reasonable likelihood that the Plan will
benefit the Fund and its shareholders.
DISTRIBUTION PLAN
l. The Fund shall reimburse Distributors or others for all
expenses incurred by Distributors or others in the promotion and
distribution of the shares of the Fund, including but not limited
to, the printing of prospectuses and reports used for sales
purposes, expenses of preparation and distribution of sales
literature and related expenses, advertisements, and other
distribution-related expenses, including a prorated portion of
Distributors' overhead expenses attributable to the distribution
of Fund shares, as well as any distribution or service fees paid
to securities dealers or their firms or others who have executed
a servicing agreement with the Fund, Distributors or its
affiliates, which form of agreement has been approved from time
to time by the trustees, including the non-interested trustees.
2. The maximum amount which may be reimbursed by the Fund to
Distributors or others pursuant to Paragraph 1 herein shall be
.25 of 1% per annum of the average daily net assets of the Fund.
Said reimbursement shall be made quarterly by the Fund to
Distributors or others .
3. In addition to the payments which the Fund is authorized to
make pursuant to paragraphs 1 and 2 hereof, to the extent that
the Fund, the Manager, Distributors or other parties on behalf of
the Fund, the Manager or Distributors make payments that are
deemed to be payments for the financing of any activity primarily
intended to result in the sale of shares issued by the Fund
within the context of Rule 12b-1 under the Act, then such
payments shall be deemed to have been made pursuant to the Plan.
In no event shall the aggregate asset-based sales charges
which include payments specified in paragraphs 1 and 2, plus any
other payments deemed to be made pursuant to the Plan under this
paragraph, exceed the amount permitted to be paid pursuant to the
Rules of Fair Practice of the National Association of Securities
Dealers, Inc., Article III, Section 26(d).
4. Distributors shall furnish to the Board of Trustees, for
their review, on a quarterly basis, a written report of the
monies reimbursed to it and to others under the Plan, and shall
furnish the Board of Trustees with such other information as the
Board of Trustees may reasonably request in connection with the
payments made under the Plan in order to enable the Board of
Trustees to make an informed determination of whether the Plan
should be continued.
5. The Plan shall continue in effect for a period of more than
one year only so long as such continuance is specifically
approved at least annually by the Board of Trustees, including
the non-interested trustees, cast in person at a meeting called
for the purpose of voting on the Plan.
6. The Plan, and any agreements entered into pursuant to this
Plan, may be terminated at any time, without penalty, by vote of
a majority of the outstanding voting securities of the Fund, or
by vote of the majority of the non-interested trustees, on not
more than sixty (60) days' written notice, or by Distributors on
not more than sixty (60) days' written notice and shall terminate
automatically in the event of any act that constitutes an
assignment of the Management Agreement between the Trust and the
Manager or the Underwriting Agreement between the Trust and
Distributors.
7. The Plan, and any agreements entered into pursuant to this
Plan, may not be amended to increase materially the amount to be
spent for distribution pursuant to Paragraph 2 hereof without
approval by a majority of the Fund's outstanding voting
securities.
8. All material amendments to the Plan, or any agreements
entered into pursuant to this Plan, shall be approved by the non-
interested trustees cast in person at a meeting called for the
purpose of voting on any such amendment.
9. So long as the Plan is in effect, the selection and
nomination of the Trust's non-interested trustees shall be
committed to the discretion of such non-interested trustees.
10. This Plan shall take effect on the 3rd day of January,
1994.
This Plan and the terms and provisions thereof are hereby
accepted and agreed to by the Trust, on behalf of the Fund, and
Distributors as evidenced by their execution hereof.
FRANKLIN REAL ESTATE SECURITIES TRUST
on behalf of Franklin Real Estate Securities Fund
By: /s/ Rupert H. Johnson, Jr.
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
By: /s/ Harmon E. Burns
Executive Vice President
CLASS II DISTRIBUTION PLAN
I. Investment Company: FRANKLIN REAL ESTATE SECURITIES TRUST
II. Fund: FRANKLIN REAL ESTATE SECURITIES FUND
III. Maximum Per Annum Rule 12b-1 Fees for Class II Shares
(as a percentage of average daily net assets of the class)
A. Distribution Fee: 0.75%
B. Service Fee: 0.25%
PREAMBLE TO CLASS II DISTRIBUTION PLAN
The following Distribution Plan (the "Plan") has been
adopted pursuant to Rule 12b-1 under the Investment Company Act
of 1940 (the "Act") by the Investment Company named above
("Investment Company") for the class II shares (the "Class") of
each Fund named above ("Fund"), which Plan shall take effect as
of the date class II shares are first offered (the "Effective
Date of the Plan"). The Plan has been approved by a majority of
the Board of Directors or Trustees of the Investment Company (the
"Board"), including a majority of the Board members who are not
interested persons of the Investment Company and who have no
direct, or indirect financial interest in the operation of the
Plan (the "non-interested Board members"), cast in person at a
meeting called for the purpose of voting on such Plan.
In reviewing the Plan, the Board considered the schedule and
nature of payments and terms of the Management Agreement between
the Investment Company and Franklin Advisers, Inc. and the terms
of the Underwriting Agreement between the Investment Company and
Franklin/Templeton Distributors, Inc. ("Distributors"). The
Board concluded that the compensation of Advisers, under the
Management Agreement, and of Distributors, under the Underwriting
Agreement, was fair and not excessive. The approval of the Plan
included a determination that in the exercise of their reasonable
business judgment and in light of their fiduciary duties, there
is a reasonable likelihood that the Plan will benefit the Fund
and its shareholders.
DISTRIBUTION PLAN
1. (a) The Fund shall pay to Distributors a quarterly fee
not to exceed the above-stated maximum distribution fee per annum
of the Class' average daily net assets represented by shares of
the Class, as may be determined by the Board from time to time.
(b) In addition to the amounts described in (a) above,
the Fund shall pay (i) to Distributors for payment to dealers or
others, or (ii) directly to others, an amount not to exceed the
above-stated maximum service fee per annum of the Class' average
daily net assets represented by shares of the Class, as may be
determined by the Fund's Board from time to time, as a service
fee pursuant to servicing agreements which have been approved
from time to time by the Board, including the non-interested
Board members.
2. (a) Distributors shall use the monies paid to it
pursuant to Paragraph 1(a) above to assist in the distribution
and promotion of shares of the Class. Payments made to
Distributors under the Plan may be used for, among other things,
the printing of prospectuses and reports used for sales purposes,
expenses of preparing and distributing sales literature and
related expenses, advertisements, and other distribution-related
expenses, including a pro-rated portion of Distributors' overhead
expenses attributable to the distribution of Class shares, as
well as for additional distribution fees paid to securities
dealers or their firms or others who have executed agreements
with the Investment Company, Distributors or its affiliates,
which form of agreement has been approved from time to time by
the Trustees, including the non-interested trustees. In
addition, such fees may be used to pay for advancing the
commission costs to dealers or others with respect to the sale of
Class shares.
(b) The monies to be paid pursuant to paragraph 1(b)
above shall be used to pay dealers or others for, among other
things, furnishing personal services and maintaining shareholder
accounts, which services include, among other things, assisting
in establishing and maintaining customer accounts and records;
assisting with purchase and redemption requests; arranging for
bank wires; monitoring dividend payments from the Fund on behalf
of customers; forwarding certain shareholder communications from
the Fund to customers; receiving and answering correspondence;
and aiding in maintaining the investment of their respective
customers in the Class. Any amounts paid under this paragraph
2(b) shall be paid pursuant to a servicing or other agreement,
which form of agreement has been approved from time to time by
the Board.
3. In addition to the payments which the Fund is authorized
to make pursuant to paragraphs 1 and 2 hereof, to the extent that
the Fund, Advisers, Distributors or other parties on behalf of
the Fund, Advisers or Distributors make payments that are deemed
to be payments by the Fund for the financing of any activity
primarily intended to result in the sale of Class shares issued
by the Fund within the context of Rule 12b-1 under the Act, then
such payments shall be deemed to have been made pursuant to the
Plan.
In no event shall the aggregate asset-based sales charges
which include payments specified in paragraphs 1 and 2, plus any
other payments deemed to be made pursuant to the Plan under this
paragraph, exceed the amount permitted to be paid pursuant to the
Rules of Fair Practice of the National Association of Securities
Dealers, Inc., Article III, Section 26(d).
4. Distributors shall furnish to the Board, for its review,
on a quarterly basis, a written report of the monies reimbursed
to it and to others under the Plan, and shall furnish the Board
with such other information as the Board may reasonably request
in connection with the payments made under the Plan in order to
enable the Board to make an informed determination of whether the
Plan should be continued.
5. The Plan shall continue in effect for a period of more
than one year only so long as such continuance is specifically
approved at least annually by the Board, including the non-
interested Board members, cast in person at a meeting called for
the purpose of voting on the Plan.
6. The Plan, and any agreements entered into pursuant to
this Plan, may be terminated at any time, without penalty, by
vote of a majority of the outstanding voting securities of the
Fund or by vote of a majority of the non-interested Board
members, on not more than sixty (60) days' written notice, or by
Distributors on not more than sixty (60) days' written notice,
and shall terminate automatically in the event of any act that
constitutes an assignment of the Management Agreement between the
Fund and Advisers.
7. The Plan, and any agreements entered into pursuant to
this Plan, may not be amended to increase materially the amount
to be spent for distribution pursuant to Paragraph 1 hereof
without approval by a majority of the Fund's outstanding voting
securities.
8. All material amendments to the Plan, or any agreements
entered into pursuant to this Plan, shall be approved by the non-
interested Board members cast in person at a meeting called for
the purpose of voting on any such amendment.
9. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested Board members shall be
committed to the discretion of such non-interested Board members.
This Plan and the terms and provisions thereof are hereby
accepted and agreed to by the Investment Company and Distributors
as evidenced by their execution hereof.
Date: , 1995
Investment Company
By:
Franklin/Templeton Distributors, Inc.
By:
POWER OF ATTORNEY
The undersigned officers and trustees of FRANKLIN REAL ESTATE
SECURITIES TRUST (the "Registrant") hereby appoint HARMON E.
BURNS, DEBORAH R. GATZEK, MARK H. PLAFKER, KAREN L. SKIDMORE and
LARRY L. GREENE (with full power to each of them to act alone)
his attorney-in-fact and agent, in all capacities, to execute,
and to file any of the documents referred to below relating to
Post-Effective Amendments to the Registrant's registration
statement on Form N-1A under the Investment Company Act of 1940,
as amended, and under the Securities Act of 1933 covering the
sale of shares by the Registrant under prospectuses becoming
effective after this date, including any amendment or amendments
increasing or decreasing the amount of securities for which
registration is being sought, with all exhibits and any and all
documents required to be filed with respect thereto with any
regulatory authority. Each of the undersigned grants to each of
said attorneys, full authority to do every act necessary to be
done in order to effectuate the same as fully, to all intents and
purposes as he could do if personally present, thereby ratifying
all that said attorneys-in-fact and agents, may lawfully do or
cause to be done by virtue hereof.
The undersigned officers and trustees hereby execute this Power
of Attorney as of this 17th day of January 1995.
/s/ Rupert H. Johnson, Jr /s/ Charles B. Johnson
Rupert H. Johnson, Jr., Charles B. Johnson,
Principal Executive Officer Trustee
and Trustee
/s/ Frank H. Abbott, III /s/ Harris J. Ashton
Frank H. Abbott, III, Harris J. Ashton,
Trustee Trustee
/s/ Harmon E. Burns /s/ Joseph Fortunato
Harmon E. Burns, S. Joseph Fortunato,
Trustee Trustee
/s/ David W. Garbellano /s/ Frank W. T. LaHaye,
David W. Garbellano, Frank W. T. LaHaye,
Trustee Trustee
/s/ Gordon S. Macklin /s/ Martin L. Flanagan,
Gordon S. Macklin, Martin L. Flanagan,
Trustee Principal Financial Officer
/s/ Diomedes Loo-Tam
Diomedes Loo-Tam,
Principal Accounting Officer
CERTIFICATE OF SECRETARY
I, Deborah R. Gatzek, certify that I am Secretary of
Franklin Real Estate Securities Trust (the "Trust").
As Secretary of the Trust, I further certify that the following
resolution was adopted by a majority of the Trustees of the Trust
present at a meeting held at 777 mariners Island Boulevard, San
Mate, California, On January 17, 1995.
RESOLVED, that a Power of Attorney, substantially in
the form of the Power of Attorney presented to this
board, appointing Mark H. Plafker, Harmon E. Burns,
Deborah R. Gatzek, Karen L. Skidmore and Larry L.
Greene as attorneys-in-fact for the purpose of filing
documents with the Securities and Exchange commission,
be executed by a majority of the Trustees and
designated officers.
I declare under penalty of perjury that the matters set forth in
this certificate are true and correct of my own knowledge.
/s/ Deborah R. Gatzek
Dated: January 17, 1995 Deborah R. Gatzek
Secretary
