SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. ______________)
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Sec. 240.14a-12
TEMPLETON RUSSIA AND EAST EUROPEAN FUND, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
LOGO
TEMPLETON RUSSIA AND EAST EUROPEAN FUND, INC.
IMPORTANT SHAREHOLDER INFORMATION
These materials are for the Annual Meeting of Shareholders scheduled for
August 22, 2008 at 12 Noon, Eastern time. The enclosed materials discuss the
proposals (the "Proposals" or, each, a "Proposal") to be voted on at the
meeting, and contain the Notice of Meeting, proxy statement and proxy card. A
proxy card is, in essence, a ballot. When you vote your proxy, it tells us how
you wish to vote on important issues relating to Templeton Russia and East
European Fund, Inc. (the "Fund"). If you specify a vote on a Proposal, your
proxy will be voted as you indicate. If you specify a vote on one Proposal but
not all Proposals, your proxy will be voted as specified on such Proposal and,
on the Proposal for which no vote is specified, your proxy will be voted FOR
such Proposal. If you simply sign, date and return the proxy card, but do not
specify a vote on any Proposal, your proxy will be voted FOR the Proposals.
We urge you to spend a few minutes reviewing the Proposals in the proxy
statement. Then, please fill out and sign the proxy card and return it to us so
that we know how you would like to vote. When shareholders return their proxies
promptly, the Fund may be able to save money by not having to conduct
additional mailings.
We welcome your comments. If you have any questions, call Fund Information
at 1-800/DIAL BEN(R) (1-800-342-5236).
TELEPHONE AND INTERNET VOTING
For your convenience, you may be able to vote by telephone or through the
Internet, 24 hours a day. If your account is eligible, instructions are
enclosed.
[THIS PAGE INTENTIONALLY LEFT BLANK]
LOGO
TEMPLETON RUSSIA AND EAST EUROPEAN FUND, INC.
NOTICE OF 2008 ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders (the "Meeting") of Templeton Russia and
East European Fund, Inc. (the "Fund") will be held at the Fund's offices, 500
East Broward Boulevard, 12th Floor, Fort Lauderdale, Florida 33394-3091 on
August 22, 2008 at 12 Noon, Eastern time.
During the Meeting, shareholders of the Fund will vote on the following
Proposals:
1.The election of four Directors of the Fund to hold office for the
terms specified.
2.To approve an Agreement and Plan of Reorganization that provides for
the reorganization of the Fund from a Maryland corporation to a
Delaware statutory trust.
By Order of the Board of Directors,
Robert C. Rosselot
Secretary
July 11, 2008
Please sign and promptly return the proxy card in the enclosed self-addressed
envelope regardless of the number of shares you own.
PROXY STATEMENT
TABLE OF CONTENTS
Page
- - ----
Information About Voting................................................................................
1
Who is asking for my vote?........................................................................... 1
Who is eligible to vote?............................................................................. 1
On what issues am I being asked to vote?............................................................. 1
How do the Fund's Directors recommend that I vote?................................................... 1
How do I ensure that my vote is accurately recorded?................................................. 1
May I revoke my proxy?............................................................................... 1
What if my shares are held in a brokerage account?................................................... 2
The Proposals...........................................................................................
2
Proposal 1: Election of Directors.................................................................... 2
Proposal 2: To approve an Agreement and Plan of Reorganization that provides for the reorganization
of the Fund from a Maryland corporation to a Delaware statutory trust....................... 13
Additional Information About the Fund...................................................................
17
Investment Manager................................................................................... 17
Administrator........................................................................................ 17
Transfer Agent....................................................................................... 17
Custodian............................................................................................ 17
Other Matters........................................................................................ 17
Principal Shareholders............................................................................... 18
Contacting the Board of Directors.................................................................... 18
Audit Committee.........................................................................................
18
Further Information About Voting and the Meeting........................................................
20
Solicitation of Proxies.............................................................................. 20
Voting by Broker-Dealers............................................................................. 21
Quorum............................................................................................... 21
Method of Tabulation................................................................................. 21
Adjournment.......................................................................................... 21
Shareholder Proposals................................................................................ 22
EXHIBITS
Exhibit A--Nominating Committee Charter................................................................. A-1
Exhibit B--Form of Agreement and Plan of Reorganization between Templeton Russia and East European
Fund, Inc. and Templeton Russia and East European Fund................................................ B-1
Exhibit C--Comparison of Governing Documents and State Law.............................................. C-1
Exhibit D--Audit Committee Charter...................................................................... D-1
TEMPLETON RUSSIA AND EAST EUROPEAN FUND, INC.
PROXY STATEMENT
.. INFORMATION ABOUT VOTING
Who is asking for my vote?
The Directors of Templeton Russia and East European Fund, Inc. (the "Fund"),
in connection with the Fund's Annual Meeting of Shareholders (the "Meeting"),
have requested your vote.
Who is eligible to vote?
Shareholders of record at the close of business on June 20, 2008 are
entitled to be present and to vote at the Meeting or any adjourned Meeting.
Each share of record is entitled to one vote (and a proportionate fractional
vote for each fractional share) on each matter presented at the Meeting. The
Notice of Meeting, the proxy card, and the proxy statement were first mailed to
shareholders of record on or about July 11, 2008.
On what issues am I being asked to vote?
You are being asked to vote on two Proposals:
1.To elect four nominees to the position of Director; and
2.To approve an Agreement and Plan of Reorganization that provides for
the reorganization of the Fund from a Maryland corporation to a newly
created Delaware statutory trust.
How do the Fund's Directors recommend that I vote?
The Directors unanimously recommend that you vote FOR the election of the
four nominees and FOR the approval of the Agreement and Plan of Reorganization
that provides for the reorganization of the Fund from a Maryland corporation to
a newly created Delaware statutory trust.
How do I ensure that my vote is accurately recorded?
You may attend the Meeting and vote in person or you may complete and return
the enclosed proxy card. If you are eligible to vote by telephone or through
the Internet, instructions are enclosed.
Proxy cards that are properly signed, dated and received at or prior to the
Meeting will be voted as specified. If you specify a vote on any of the
Proposals, your proxy will be voted as you indicate, and any Proposal for which
no vote is specified will be voted FOR that Proposal. If you simply sign, date
and return the proxy card, but do not specify a vote on either Proposal 1 or 2,
your shares will be voted FOR the election of all nominees as Director and FOR
the approval of an Agreement and Plan of Reorganization that provides for the
reorganization of the Fund from a Maryland corporation to a newly created
Delaware statutory trust.
May I revoke my proxy?
You may revoke your proxy at any time before it is voted by forwarding a
written revocation or a later-dated proxy to the Fund that is received by the
Fund at or prior to the Meeting, or by attending the Meeting and voting in
person.
What if my shares are held in a brokerage account?
If your shares are held by your broker, then in order to vote in person at
the Meeting, you will need to obtain a "Legal Proxy" from your broker and
present it to the Inspector of Election at the Meeting. Also, in order to
revoke your proxy, you may need to forward your written revocation or a
later-dated proxy card to your broker rather than to the Fund.
.. THE PROPOSALS
PROPOSAL 1: ELECTION OF DIRECTORS
How are nominees selected?
The Board of Directors of the Fund (the "Board" or the "Directors") has a
Nominating Committee consisting of Edith E. Holiday (Chairperson), Frank J.
Crothers, and Frank A. Olson, none of whom is an "interested person" of the
Fund as defined by the Investment Company Act of 1940, as amended (the "1940
Act"). Directors who are not interested persons of the Fund are referred to as
the "Independent Directors" and Directors who are interested persons of the
Fund are referred to as the "Interested Directors."
The Nominating Committee is responsible for selecting candidates to serve as
Directors and recommending such candidates (a) for selection and nomination as
Independent Directors by the incumbent Independent Directors and the full
Board; and (b) for selection and nomination as Interested Directors by the full
Board. In considering a candidate's qualifications, the Nominating Committee
generally considers the potential candidate's educational background, business
or professional experience, and reputation. In addition, the Nominating
Committee has established as minimum qualifications for Board membership as an
Independent Director: (1) that such candidate be independent from relationships
with the Fund's investment manager and other principal service providers both
within the terms and the spirit of the statutory independence requirements
specified under the 1940 Act and the rules thereunder; (2) that such candidate
demonstrate an ability and willingness to make the considerable time
commitment, including personal attendance at Board meetings, believed necessary
to his or her function as an effective Board member; and (3) that such
candidate have no continuing relationship as a director, officer or board
member of any U.S. registered investment company other than those within the
Franklin Templeton Investments fund complex or a closed-end business
development company primarily investing in non-public entities.
When the Board has or expects to have a vacancy, the Nominating Committee
receives and reviews information on individuals qualified to be recommended to
the full Board as nominees for election as Directors, including any
recommendations by "Qualifying Fund Shareholders" (as defined below). Such
individuals are evaluated based upon the criteria described above. To date, the
Nominating Committee has been able to identify, and expects to continue to be
able to identify, from its own resources an ample number of qualified
candidates. The Nominating Committee, however, will review recommendations from
Qualifying Fund Shareholders to fill vacancies on the Board if these
recommendations are submitted in writing and addressed to the Nominating
Committee at the Fund's offices and are presented with appropriate background
material concerning the candidate that demonstrates his or her ability to serve
as a Director, including as an Independent Director, of the Fund. A Qualifying
Fund Shareholder is a shareholder who (i) has continuously owned of record, or
beneficially through a financial intermediary, shares of the Fund having a net
asset value of not less than two hundred fifty thousand dollars ($250,000)
during the twenty-four month period prior to submitting the recommendation; and
(ii) provides a written notice to the Nominating Committee containing the
following information: (a) the name
2
and address of the Qualifying Fund Shareholder making the recommendation;
(b) the number of shares of the Fund which are owned of record and beneficially
by the Qualifying Fund Shareholder and the length of time that the shares have
been owned by the Qualifying Fund Shareholder; (c) a description of all
arrangements and understandings between the Qualifying Fund Shareholder and any
other person or persons (naming such person or persons) pursuant to which the
recommendation is being made; (d) the name, age, date of birth, business
address and residence address of the person or persons being recommended;
(e) such other information regarding each person recommended by the Qualifying
Fund Shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the U.S. Securities and Exchange Commission
("SEC") had the nominee been nominated by the Board; (f) whether the
shareholder making the recommendation believes the person recommended would or
would not be an "interested person" of the Fund, as defined in the 1940 Act;
and (g) the written consent of each person recommended to serve as a Director
of the Fund if so nominated and elected/appointed.
The Nominating Committee may amend these procedures from time to time,
including the procedures relating to the evaluation of nominees and the process
for submitting recommendations to the Nominating Committee.
The Board has adopted and approved a formal written charter for the
Nominating Committee. A copy of the charter is attached as Exhibit A to this
proxy statement.
Who are the nominees and Directors?
The Board is divided into three classes. Each class has a term of three
years. Each year the term of office of one class expires. This year, the terms
of three Directors expire. Harris J. Ashton, Larry D. Thompson and Constantine
D. Tseretopoulos have been nominated for three-year terms, set to expire at the
2011 Annual Meeting of Shareholders. Ann Torre Bates has been nominated for a
one-year term, set to expire at the 2009 Annual Meeting of Shareholders. These
terms continue, however, until successors are duly elected and qualified. All
of the nominees are currently members of the Board; however, Ann Torre Bates is
standing for election by the shareholders of the Fund for the first time. An
incumbent Interested Director recommended Ann Torre Bates for consideration by
the Nominating Committee as nominee for Independent Director. All nominees are
deemed to be Independent Directors. In addition, all of the current nominees
and Directors are also directors or trustees of other Franklin(R) funds,
Templeton(R) funds, and/or Mutual Series funds.
The Interested Directors of the Fund hold director and/or officer positions
with Franklin Resources, Inc. ("Resources") and its affiliates. Resources is a
publicly owned holding company, the principal shareholders of which are Charles
B. Johnson and Rupert H. Johnson, Jr., who owned approximately 18.1% and 15.8%,
respectively, of its outstanding shares as of March 31, 2008. Resources, a
global investment management organization operating as Franklin Templeton
Investments, is primarily engaged, through various subsidiaries, in providing
investment management, share distribution, transfer agent and administrative
services to a family of investment companies. Resources is a New York Stock
Exchange LLC ("NYSE") listed holding company (NYSE: BEN). Charles B. Johnson,
Chairman of the Board, Director and Vice President of the Fund, and Gregory E.
Johnson, Director of the Fund, are father and son. Rupert H. Johnson, Jr., Vice
President of the Fund, is the brother of Charles B. Johnson and the uncle of
Gregory E. Johnson. There are no other family relationships among any of the
Directors or nominees for Director.
3
Each nominee currently is available and has consented to serve if elected.
If any of the nominees should become unavailable, the designated proxy holders
will vote in their discretion for another person or persons who may be
nominated as Directors.
Listed below, for the nominees and Directors, are their names, year of birth
and addresses, as well as their positions and length of service with the Fund,
principal occupations during the past five years, the number of portfolios in
the Franklin Templeton Investments fund complex that they oversee, and other
directorships held by the nominee or Director.
Nominees for Independent Director to serve until 2011 Annual Meeting of Shareholders:
Number of
Portfolios in
Franklin
Templeton
Investments
Fund Complex
Length of Overseen
Name, Year of Birth and Address Position Time Served by Director* Other Directorships Held
- -------------------------------------------------------------------------------------------------------------
Harris J. Ashton (1932) Director Since 1994 143 Bar-S Foods (meat packing
500 East Broward Blvd. company).
Suite 2100
Fort Lauderdale, FL 33394-3091
Principal Occupation During Past 5 Years:
Director of various companies; and formerly, Director, RBC Holdings, Inc. (bank holding company) (until
2002); and President, Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery
and craft centers) (until 1998).
- -------------------------------------------------------------------------------------------------------------
Larry D. Thompson (1945) Director Since 2005 143 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
Principal Occupation During Past 5 Years:
Senior Vice President--Government Affairs, General Counsel and Secretary, PepsiCo, Inc. (consumer products);
and formerly, Director, Delta Airlines (aviation) (2003-2005) and Providian Financial Corp. (credit card
provider) (1997-2001); Senior Fellow of The Brookings Institution (2003-2004); Visiting Professor, University
of Georgia School of Law (2004); and Deputy Attorney General, U.S. Department of Justice (2001-2003).
- --------------------------------------------------------------------------------------------------------------
4
Number of
Portfolios in
Franklin
Templeton
Investments
Fund Complex
Length of Overseen
Name, Year of Birth and Address Position Time Served by Director* Other Directorships Held
- -----------------------------------------------------------------------------------------------------------------
Constantine D. Tseretopoulos (1954) Director Since 1997 21 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
Principal Occupation During Past 5 Years:
Physician, Lyford Cay Hospital (1987-present); director of various nonprofit organizations; and formerly,
Cardiology Fellow, University of Maryland (1985-1987) and Internal Medicine Resident, Greater Baltimore
Medical Center (1982-1985).
- -----------------------------------------------------------------------------------------------------------------
Nominee for Independent Director to serve until 2009 Annual Meeting of Shareholders:
Ann Torre Bates (1958) Director Since 28 SLM Corporation (Sallie Mae)
500 East Broward Blvd. January 2008 and Allied Capital Corporation
Suite 2100 (financial services).
Fort Lauderdale, FL 33394-3091
Principal Occupation During Past 5 Years:
Independent strategic and financial consultant; and formerly, Executive Vice President and Chief Financial
Officer, NHP Incorporated (manager of multifamily housing) (1995-1997); and Vice President and Treasurer,
US Airways, Inc. (until 1995).
- -----------------------------------------------------------------------------------------------------------------
Independent Directors serving until 2010 Annual Meeting of Shareholders:
Edith E. Holiday (1952) Lead Director 143 Hess Corporation (exploration
500 East Broward Blvd. Independent since 1996 and refining of oil and gas), H.J.
Suite 2100 Director and Lead Heinz Company (processed
Fort Lauderdale, FL 33394-3091 Independent foods and allied products), RTI
Director International Metals, Inc.
since 2007 (manufacture and distribution of
titanium), Canadian National
Railway (railroad) and White
Mountains Insurance Group,
Ltd. (holding company).
Principal Occupation During Past 5 Years:
Director or Trustee of various companies and trusts; and formerly, Assistant to the President of the United
States and Secretary of the Cabinet (1990-1993); General Counsel to the United States Treasury Department
(1989-1990); and Counselor to the Secretary and Assistant Secretary for Public Affairs and Public Liaison-
United States Treasury Department (1988-1989).
- -----------------------------------------------------------------------------------------------------------------
5
Number of
Portfolios in
Franklin
Templeton
Investments
Fund Complex
Length of Overseen
Name, Year of Birth and Address Position Time Served by Director* Other Directorships Held
- ----------------------------------------------------------------------------------------------------------------
Frank A. Olson (1932) Director Since 2003 143 Hess Corporation (exploration
500 East Broward Blvd. and refining of oil and gas) and
Suite 2100 Sentient Jet (private jet service).
Fort Lauderdale, FL 33394-3091
Principal Occupation During Past 5 Years:
Chairman Emeritus, The Hertz Corporation (car rental) (since 2000) (Chairman of the Board (1980-2000) and
Chief Executive Officer (1977-1999)); and formerly, Chairman of the Board, President and Chief Executive
Officer, UAL Corporation (airlines).
- ----------------------------------------------------------------------------------------------------------------
Robert E. Wade (1946) Director Since 2006 35 El Oro and Exploration Co.,
500 East Broward Blvd. p.l.c. (investments) and ARC
Suite 2100 Wireless Solutions, Inc.
Fort Lauderdale, FL 33394-3091 (wireless components and
network products).
Principal Occupation During Past 5 Years:
Practicing attorney.
- ----------------------------------------------------------------------------------------------------------------
Interested Director serving until 2010 Annual Meeting of Shareholders:
**Charles B. Johnson (1933) Chairman of Chairman of 143 None
One Franklin Parkway the Board, the Board
San Mateo, CA 94403-1906 Director and since 1995
Vice and Director
President and Vice
President
since 1994
Principal Occupation During Past 5 Years:
Chairman of the Board, Member--Office of the Chairman and Director, Franklin Resources, Inc.; Director,
Templeton Worldwide, Inc.; and officer and/or director or trustee, as the case may be, of some of the other
subsidiaries of Franklin Resources, Inc. and of 42 of the investment companies in Franklin Templeton
Investments.
- ----------------------------------------------------------------------------------------------------------------
6
Independent Directors serving until 2009 Annual Meeting of Shareholders:
Number of
Portfolios in
Franklin
Templeton
Investments
Fund Complex
Length of Overseen
Name, Year of Birth and Address Position Time Served by Director* Other Directorships Held
- ------------------------------------------------------------------------------------------------------------------
Frank J. Crothers (1944) Director Since 1998 21 Fortis, Inc. (utility holding
500 East Broward Blvd. company), Nuinsco Resources
Suite 2100 Limited (mineral exploration),
Fort Lauderdale, FL 33394-3091 Royal Fidelity Merchant Bank
& Trust Limited (financial
services), C.A. Bancorp Inc.
(financial services), Victory
Nickel Inc. (mineral
exploration), ABACO Markets
Limited (retail distributors) and
Belize Electricity Limited
(electric utility).
Principal Occupation During Past 5 Years:
Chairman, Island Corporate Holdings Ltd.; Director and Vice Chairman, Caribbean Utilities Company, Ltd.;
Director, Provo Power Company Ltd.; director of various other business and nonprofit organizations; and
formerly, Chairman, Atlantic Equipment & Power Ltd. (1977-2003).
- ------------------------------------------------------------------------------------------------------------------
David W. Niemiec (1949) Director Since 2005 21 Emeritus Corporation (assisted
500 East Broward Blvd. living) and OSI
Suite 2100 Pharmaceuticals, Inc.
Fort Lauderdale, FL 33394-3091 (pharmaceutical products).
Principal Occupation During Past 5 Years:
Advisor, Saratoga Partners (private equity fund); and formerly, Managing Director, Saratoga Partners (1998-
2001) and SBC Warburg Dillon Read (investment banking) (1997-1998); Vice Chairman, Dillon, Read & Co.
Inc. (investment banking) (1991-1997); and Chief Financial Officer, Dillon, Read & Co. Inc. (1982-1997).
- ------------------------------------------------------------------------------------------------------------------
Interested Director serving until 2009 Annual Meeting of Shareholders:
**Gregory E. Johnson (1961) Director Since 2006 94 None
One Franklin Parkway
San Mateo, CA 94403-1906
Principal Occupation During Past 5 Years:
Director, President and Chief Executive Officer, Franklin Resources, Inc.; President, Templeton Worldwide, Inc.;
Director, Templeton Asset Management Ltd.; and officer and/or director or trustee, as the case may be, of some
of the other subsidiaries of Franklin Resources, Inc. and of 33 of the investment companies in Franklin
Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------
7
* We base the number of portfolios on each separate series of the U.S.
registered investment companies within the Franklin Templeton Investments
fund complex. These portfolios have a common investment manager or
affiliated investment managers, and also may share a common underwriter.
** Charles B. Johnson and Gregory E. Johnson are "interested persons" of the
Fund as defined by the 1940 Act. The 1940 Act limits the percentage of
interested persons that can comprise a fund's board of directors. Charles B.
Johnson is considered an interested person of the Fund due to his position
as an officer, director and major shareholder of Resources, which is the
parent company of the Fund's investment manager, and his position with the
Fund. Gregory E. Johnson is considered an interested person of the Fund due
to his position as an officer, director and shareholder of Resources.
Charles B. Johnson is the father of Gregory E. Johnson. The remaining
Directors of the Fund are Independent Directors.
The following tables provide the dollar range of the equity securities of
the Fund and of all U.S. registered funds in the Franklin Templeton Investments
fund complex beneficially owned by the Directors as of May 30, 2008.
Independent Directors:
Aggregate Dollar Range of Equity
Dollar Range of Equity Securities in all Funds in the
Securities in the Fund Franklin Templeton
Name of Director (Number of Shares)* Investments Fund Complex
- -------------------------------------------------------------------------------------
Harris J. Ashton............. $1--$10,000 (100) Over $100,000
Ann Torre Bates.............. None Over $100,000
Frank J. Crothers............ None Over $100,000
Edith E. Holiday............. $1--$10,000 (100) Over $100,000
David W. Niemiec............. None Over $100,000
Frank A. Olson............... None Over $100,000
Larry D. Thompson............ None Over $100,000
Constantine D. Tseretopoulos. None Over $100,000
Robert E. Wade............... None Over $100,000
Interested Directors:
Aggregate Dollar Range of Equity
Dollar Range of Equity Securities in all Funds in the
Securities in the Fund Franklin Templeton
Name of Director (Number of Shares)* Investments Fund Complex
- -------------------------------------------------------------------------------------
Charles B. Johnson........... Over $100,000 (50,000) Over $100,000
Gregory E. Johnson........... None Over $100,000
* To the knowledge of the Fund's management, as of May 30, 2008, no nominee or
Director of the Fund, or officer of the Fund, owned 1% or more of the
outstanding shares of the Fund. No officers of the Fund, other than
Mr. Charles B. Johnson, owned shares of the Fund. As of such date, the
Directors and officers of the Fund owned, as a group, less than 1% of the
Fund's outstanding shares. In addition, Templeton Asset Management Ltd., the
Fund's investment manager, owns directly 1,445 shares of the Fund, and
Templeton Worldwide, Inc. ("TWI"), an affiliate of Templeton Asset
Management Ltd., owns directly 9,597 shares of the Fund. Certain officers
and Interested Directors of the Fund are also officers and/or directors of
Templeton Asset Management Ltd. and/or TWI, and in such capacity may
participate in the voting of such shares. However, such officers and
Interested Directors disclaim beneficial ownership of any such shares of the
Fund owned by Templeton Asset Management Ltd. and TWI.
8
How often do the Directors meet and what are they paid?
The role of the Directors is to provide general oversight of the Fund's
business, and to ensure that the Fund is operated for the benefit of all of the
Fund's shareholders. The Directors anticipate meeting at least five times
during the current fiscal year to review the operations of the Fund and the
Fund's investment performance, and more frequently as necessary. The Directors
also oversee the services furnished to the Fund by Templeton Asset Management
Ltd., the Fund's investment manager (the "Investment Manager"), and various
other service providers.
The Fund's Independent Directors constitute the sole independent Board
members of 14 investment companies in the Franklin Templeton Investments
complex for which each Independent Director currently is paid a $145,000 annual
retainer fee, together with a $7,000 per meeting fee for attendance at each
regularly scheduled Board meeting, a portion of which fees are allocated to the
Fund. To the extent held, compensation also may be paid for attendance at
specially called Board meetings. The Fund's lead Independent Director is paid
an annual supplemental retainer of $15,000 for service to such investment
companies, a portion of which is allocated to the Fund. Board members who serve
on the Audit Committee of the Fund and such other investment companies receive
a flat fee of $3,000 per Committee meeting attended in person and $2,000 per
telephonic meeting, a portion of which is allocated to the Fund. The Chairman
of the Audit Committee of the Fund and such other investment companies receives
an additional fee of $10,000 per year, a portion of which is allocated to the
Fund. Members of a Committee are not separately compensated for any committee
meeting held on the day of a regularly scheduled Board meeting. The foregoing
fee arrangements went into effect after June 1, 2007, and the table below also
reflects fees paid prior to such date under arrangements then in effect.
During the fiscal year ended March 31, 2008, there were five meetings of the
Board, three meetings of the Audit Committee, and four meetings of the
Nominating Committee. Each Director then in office attended at least 75% of the
aggregate of the total number of meetings of the Board and the total number of
meetings held by all committees of the Board on which the Director served. The
Fund does not currently have a formal policy regarding Directors' attendance at
the annual shareholders' meeting. No Directors attended the Fund's last annual
meeting held on August 24, 2007.
Independent Directors are also reimbursed for expenses incurred in
connection with Board meetings. The Interested Directors and certain officers
of the Fund are shareholders of Resources and may receive indirect remuneration
due to their participation in management fees and other fees received by the
Investment Manager and its affiliates from the funds in Franklin Templeton
Investments. The Investment Manager or its affiliates pay the salaries and
expenses of the officers. No pension or retirement benefits are accrued as part
of Fund expenses.
The table below indicates the total fees paid to Independent Directors by
the Fund individually and by all of the funds in Franklin Templeton Investments
fund complex. These Directors also serve as directors or trustees of other
funds in Franklin Templeton Investments, many of which hold meetings at
different dates and times. The Directors and the Fund's management believe that
having the same individuals serving on the boards of many of the funds in
Franklin Templeton Investments enhances the ability of each fund to obtain, at
a relatively modest cost to each separate fund, the services of high caliber,
experienced and knowledgeable Independent Directors who can bring their
experience and talents to, and effectively oversee the management of, several
funds.
9
Number of Boards within
Aggregate Total Compensation from Franklin Templeton
Compensation Franklin Templeton Investments Fund Complex
Name of Director from the Fund(1) Investments Fund Complex(2) on which Director Serves(3)
- ------------------------------------------------------------------------------------------------------------
Harris J. Ashton............. $2,899 $426,918 42
Ann Torre Bates(4), (5)...... 719 155,500 16
Frank J. Crothers............ 2,843 173,588 14
Edith E. Holiday............. 2,840 469,566 42
David W. Niemiec............. 2,857 173,588 14
Frank A. Olson............... 2,857 462,349 42
Larry D. Thompson............ 2,825 386,461 42
Constantine D. Tseretopoulos. 2,847 171,588 14
Robert E. Wade(5)............ 2,825 474,517 18
- --------
(1) Compensation received for the fiscal year ended March 31, 2008.
(2) Compensation received for the calendar year ended December 31, 2007.
(3) We base the number of boards on the number of U.S. registered investment
companies in the Franklin Templeton Investments fund complex. This number
does not include the total number of series or funds within each
investment company for which the Board members are responsible. Franklin
Templeton Investments currently includes 46 U.S. registered investment
companies, with approximately 157 U.S. based funds or series.
(4) Ms. Bates was appointed to the Board effective January 1, 2008.
(5) Ms. Bates and Mr. Wade are also independent trustees of Franklin Mutual
Series Funds and may, in the future, receive payments pursuant to a
discontinued retirement plan that generally provides payments to
independent board members who have served seven years or longer for such
fund.
Board members historically have followed a policy of having substantial
investments in one or more of the funds in Franklin Templeton Investments, as
is consistent with their individual financial goals. In February 1998, this
policy was formalized through adoption of a requirement that each Board member
invest one-third of the fees received for serving as a director or trustee of a
Templeton fund (excluding committee fees) in shares of one or more Templeton
funds (which may include the Fund) until the value of such investments equals
or exceeds five times the annual retainer and regular Board meeting fees paid
to such Board member. Investments in the name of family members or entities
controlled by a Board member constitute fund holdings of such Board member for
purposes of this policy, and a three-year phase-in period applies to such
investment requirements for newly elected Board members. In implementing such
policy, a Board member's fund holdings existing on February 27, 1998, are
valued as of such date with subsequent investments valued at cost.
Who are the Executive Officers of the Fund?
Officers of the Fund are appointed by the Directors and serve at the
pleasure of the Board. Listed below, for the Executive Officers, are their
names, year of birth and addresses, as well as their positions and length of
service with the Fund, and principal occupations during the past five years.
Name, Year of Birth and Address Position Length of Time Served
- ------------------------------------------------------------------------------------------------------------------
Charles B. Johnson Chairman of the Board, Director and Vice President
Director and since 1994 and Chairman of
Vice President the Board since 1995
Please refer to the table "Interested Director serving until 2010 Annual Meeting of Shareholders" for additional
information about Mr. Charles B. Johnson.
- ------------------------------------------------------------------------------------------------------------------
10
Name, Year of Birth and Address Position Length of Time Served
- ---------------------------------------------------------------------------------------------------------------------
Mark Mobius (1936) President and President since 1994 and
17th Floor, The Chater House Chief Executive Officer-- Chief Executive Officer--
8 Connaught Road Investment Management Investment Management
Central Hong Kong since 2002
Principal Occupation During Past 5 Years:
Portfolio Manager of various Templeton advisory affiliates; Managing Director, Templeton Asset Management
Ltd.; and officer and/or director, as the case may be, of some of the subsidiaries of Franklin Resources, Inc. and
of six of the investment companies in Franklin Templeton Investments; and formerly, President, International
Investment Trust Company Limited (investment manager of Taiwan R.O.C. Fund) (1986-1987); and Director,
Vickers da Costa, Hong Kong (1983-1986).
- ---------------------------------------------------------------------------------------------------------------------
Rupert H. Johnson, Jr. (1940) Vice President Since 1996
One Franklin Parkway
San Mateo, CA 94403-1906
Principal Occupation During Past 5 Years:
Vice Chairman, Member--Office of the Chairman and Director, Franklin Resources, Inc.; Director, Franklin
Advisers, Inc. and Templeton Worldwide, Inc.; Senior Vice President, Franklin Advisory Services, LLC; and
officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc.
and of 44 of the investment companies in Franklin Templeton Investments.
- ----------------------------------------------------------------------------------------------------------------------
Galen G. Vetter (1951) Senior Vice President and Since February 2008
500 East Broward Blvd., Chief Executive Officer--
Suite 2100 Finance and Administration
Fort Lauderdale, FL 33394-3091
Principal Occupation During Past 5 Years:
Senior Vice President, Franklin Templeton Services, LLC; officer of some of the other subsidiaries of Franklin
Resources, Inc. and of 46 of the investment companies in Franklin Templeton Investments; and formerly,
Managing Director, RSM McGladrey, Inc. (1999-2004); and Partner, McGladrey & Pullen, LLP (1979-1987 and
1991-2004).
- ---------------------------------------------------------------------------------------------------------------------
Laura F. Fergerson (1962) Chief Financial Officer and Since February 2008
One Franklin Parkway Chief Accounting Officer
San Mateo, CA 94403-3091
Principal Occupation During Past 5 Years:
Vice President, Franklin Templeton Services, LLC; officer of 46 of the investment companies in Franklin
Templeton Investments; and formerly, Director and member of Audit and Valuation Committees, Runkel Funds,
Inc. (2003-2004); Assistant Treasurer of most of the investment companies in Franklin Templeton Investments
(1997-2003); and Vice President, Franklin Templeton Services, LLC (1997-2003).
- ---------------------------------------------------------------------------------------------------------------------
11
Name, Year of Birth and Address Position Length of Time Served
-----------------------------------------------------------------------------------------------------------------
Jimmy D. Gambill (1947) Vice President Since February 2008
500 East Broward Blvd.,
Suite 2100
Fort Lauderdale, FL 33394-3091
Principal Occupation During Past 5 Years:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of
some of the other subsidiaries of Franklin Resources, Inc. and of 46 of the investment companies in Franklin
Templeton Investments.
-----------------------------------------------------------------------------------------------------------------
John R. Kay (1940) Vice President Since 1994
500 East Broward Blvd.,
Suite 2100
Fort Lauderdale, FL 33394-3091
Principal Occupation During Past 5 Years:
Vice President, Templeton Worldwide, Inc.; Senior Vice President, Franklin Templeton Services, LLC; and
officer of some of the other subsidiaries of Franklin Resources, Inc. and of 32 of the investment companies in
Franklin Templeton Investments; and formerly, Vice President and Controller, Keystone Group, Inc.
-----------------------------------------------------------------------------------------------------------------
Craig S. Tyle (1960) Vice President and Since 2005
One Franklin Parkway Assistant Secretary
San Mateo, CA 94403-1906
Principal Occupation During Past 5 Years:
General Counsel and Executive Vice President, Franklin Resources, Inc.; officer of some of the other subsidiaries
of Franklin Resources, Inc. and of 46 of the investment companies in Franklin Templeton Investments; and
formerly, Partner, Shearman & Sterling, LLP (2004-2005); and General Counsel, Investment Company Institute
(ICI) (1997-2004).
------------------------------------------------------------------------------------------------------------------
David P. Goss (1947) Vice President and Since 2000
One Franklin Parkway Assistant Secretary
San Mateo, CA 94403-1906
Principal Occupation During Past 5 Years:
Senior Associate General Counsel, Franklin Templeton Investments; officer and director of one of the
subsidiaries of Franklin Resources, Inc.; and officer of 46 of the investment companies in Franklin Templeton
Investments.
-----------------------------------------------------------------------------------------------------------------
Robert C. Rosselot (1960) Secretary Since 2004
500 East Broward Blvd.,
Suite 2100
Fort Lauderdale, FL 33394-3091
Principal Occupation During Past 5 Years:
Senior Associate General Counsel, Franklin Templeton Investments; Assistant Secretary, Franklin Resources,
Inc.; Vice President and Secretary, Templeton Investment Counsel, LLC; Vice President, Secretary and Trust
Officer, Fiduciary Trust International of the South; and officer of 14 of the investment companies in Franklin
Templeton Investments.
-----------------------------------------------------------------------------------------------------------------
12
Name, Year of Birth and Address Position Length of Time Served
- ------------------------------------------------------------------------------------------------------------
Gregory R. Seward (1956) Treasurer Since 2004
500 East Broward Blvd.,
Suite 2100
Fort Lauderdale, FL 33394-3091
Principal Occupation During Past 5 Years:
Vice President, Franklin Templeton Services, LLC; officer of 18 of the investment companies in Franklin
Templeton Investments; and formerly, Vice President, JPMorgan Chase (2000-2004) and American General
Financial Group (1991-2000).
- ------------------------------------------------------------------------------------------------------------
James M. Davis (1952) Chief Compliance Officer Chief Compliance Officer since
One Franklin Parkway and Vice President-- 2004 and Vice President--
San Mateo, CA 94403-1906 AML Compliance AML Compliance since 2006
Principal Occupation During Past 5 Years:
Director, Global Compliance, Franklin Resources, Inc.; officer of some of the other subsidiaries of Franklin
Resources, Inc. and of 46 of the investment companies in Franklin Templeton Investments; and formerly,
Director of Compliance, Franklin Resources, Inc. (1994-2001).
- -------------------------------------------------------------------------------------------------------------
. PROPOSAL 2: TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION THAT
PROVIDES FOR THE REORGANIZATION OF THE FUND FROM A MARYLAND
CORPORATION TO A DELAWARE STATUTORY TRUST
The Directors unanimously recommend that you approve an Agreement and Plan
of Reorganization (the "Delaware Plan"), substantially in the form attached to
this proxy statement as Exhibit B, that would change the state and form of
organization of the Fund. This proposed change calls for the reorganization of
the Fund from a Maryland corporation into a newly formed Delaware statutory
trust. The proposed reorganization will be referred to throughout this proxy
statement as the "DE Reorganization." To implement the DE Reorganization, the
Directors have approved the Delaware Plan, which contemplates the continuation
of the current business of the Fund in the form of a new Delaware statutory
trust named "Templeton Russia and East European Fund" (the "DE Fund").
What will the DE Reorganization mean for the Fund and its shareholders?
If the DE Plan is approved by shareholders and the DE Reorganization is
implemented, the DE Fund would have the same investment goals, policies and
restrictions as the Fund. The Board, including any persons elected under
Proposal 1, and officers of the DE Fund would be the same as those of the Fund,
and would operate the DE Fund in essentially the same manner as they previously
operated the Fund. Thus, on the effective date of the DE Reorganization, you
would hold an interest in the DE Fund that is equivalent to your then interest
in the Fund. For all practical purposes, a shareholder's investment in the Fund
would not change.
Why are the Directors recommending approval of the Delaware Plan and the DE
Reorganization?
The Directors have determined that investment companies formed as Delaware
statutory trusts have certain advantages over investment companies organized as
Maryland corporations. Under Delaware statutory trust law,
13
investment companies are able to simplify their operations by reducing
administrative burdens. For example, the Delaware law allows a Delaware
statutory trust to file a one-page Certificate of Trust with the State of
Delaware, which rarely needs to be amended. The Delaware law also allows
greater flexibility in drafting and amending an investment company's governing
documents, which can result in greater efficiencies of operation and savings
for an investment company and its shareholders. Maryland corporations must file
any amendments or supplements to their articles of incorporation with the
Maryland Secretary of State (for example, to increase the amount of authorized
shares of stock). Such filings and any related fees are not required in
Delaware.
Funds organized as Delaware statutory trusts also have greater flexibility
in structuring shareholder voting rights and shareholder meetings. For example,
Maryland corporate law imposes more stringent record date, notice, quorum and
adjournment provisions than the Delaware Statutory Trust Act (the "Delaware
Act"), which may cause shareholder meetings to be more costly and may make
obtaining any necessary shareholder approvals more difficult.
Most of the Franklin Templeton funds are now, or are likely to become,
Delaware statutory trusts. To the extent the boards and management of the
Franklin Templeton funds, including the Board and management of the Fund, have
to deal with the law of a single state, rather than the laws of multiple
states, efficiencies may be achieved, both in terms of reduced costs in
determining the requirements of law in unique circumstances and the certainty
of operating routinely in a familiar regulatory environment.
Finally, Delaware has a well-established body of legal precedent in the area
of corporate law that may be relevant in deciding issues pertaining to a
Delaware statutory trust. This could benefit the DE Fund and its shareholders
by, for example, making litigation involving the interpretation of provisions
in the DE Fund's governing instruments less likely or, if litigation should be
initiated, less burdensome or expensive. Exhibit C to this proxy statement
includes a more complete description of the differences between Maryland
corporations and Delaware statutory trust and a comparison of certain
provisions of the governing documents of the Fund and the DE Fund.
Shares of the DE Fund and the Fund each have one vote per full share and a
proportionate fractional vote for each fractional share. Both the DE Fund and
the Fund provide for noncumulative voting in the election of their
trustees/directors and provide for a classified board consisting of three
classes of trustees/directors, with staggered terms. Like the Fund, the DE Fund
intends to hold annual shareholder meetings. Special meetings of shareholders
may be called at any time by the DE Fund Board, by the chairperson of the DE
Fund Board or by the president of the DE Fund for the purpose of taking action
upon any matter deemed by the DE Fund Board to be necessary or desirable.
While shareholders of the DE Fund will have similar distribution and voting
rights as they currently have as shareholders of the Fund, there are certain
differences. The organizational structures differ in record date parameters for
determining shareholders entitled to notice, to vote and to a distribution. In
addition, the By-Laws that govern the operation of the DE Fund contain a
provision which requires that notice be given to the DE Fund by a shareholder
in advance of a shareholder meeting to enable a shareholder to present a
proposal at any such meeting. Failure to satisfy the requirements of this
advance notice provision will mean that a shareholder may not be able to
present a proposal at a meeting. The details of that new advance notice
provision are included in Exhibit C and its operation is described under
"Further Information About Voting and the Meeting--Shareholder Proposals" below.
14
Under Maryland corporation law, the shareholders of the Fund are not subject
to any personal liability for any claims against, or liabilities of, the Fund
solely by reason of being or having been a shareholder of the Fund. Under the
Delaware Act, shareholders of the DE Fund will be entitled to the same
limitation of personal liability as is extended to shareholders of a private
corporation organized for profit under the General Corporation Law of the State
of Delaware.
What are the procedures and consequences of the DE Reorganization?
Upon completion of the DE Reorganization, the DE Fund will continue the
business of the Fund with the same investment goal, policies and investment
restrictions as those of the Fund existing on the date of the DE
Reorganization, and will hold the same portfolio of securities then held by the
Fund. The DE Fund will be operated under substantially identical overall
management, investment management, and administrative arrangements as those of
the Fund. As the successor to the Fund's operations, the DE Fund will adopt the
Fund's notification of registration under the 1940 Act.
The DE Fund was created solely for the purpose of becoming the successor
organization to, and carrying on the business of, the Fund. To accomplish the
DE Reorganization, the Delaware Plan provides that the Fund will transfer all
of its portfolio securities and any other assets, subject to its liabilities,
to the DE Fund. In exchange for these assets and liabilities, the DE Fund will
issue its own shares of the DE Fund to the Fund, which will then distribute
those shares pro rata to you as a shareholder of the Fund. Through this
procedure, you will receive exactly the same number and dollar amount (based
upon net asset value) of shares of the DE Fund as you held in the Fund on the
date of the DE Reorganization. The net asset value of each share of the DE Fund
will be the same as that of the Fund on the date of DE Reorganization. You will
retain the right to any declared but undistributed dividends or other
distributions payable on the shares of the Fund that you may have had as of the
effective date of the DE Reorganization. As soon as practicable after the date
of the DE Reorganization, the Fund will be dissolved and cease its existence.
No certificates representing shares of the DE Fund will be issued to
shareholders of the Fund irrespective of whether such shareholders hold their
shares in the Fund in certificated form. Upon completion of the DE
Reorganization, each outstanding share certificate, that prior thereto had
represented shares of the Fund, will be cancelled and will no longer evidence
ownership thereof.
The Directors may terminate the Delaware Plan and abandon the DE
Reorganization at any time prior to the effective date of the DE Reorganization
if they determine that proceeding with the DE Reorganization is inadvisable and
not in the best interests of shareholders. If the DE Reorganization is not
approved by shareholders of the Fund, or if the Directors abandon the DE
Reorganization, the Fund will continue to operate as a Maryland corporation. If
the DE Reorganization is approved by shareholders, it is expected to be
completed during 2008.
What effect will the DE Reorganization have on the current investment
management agreement?
As a result of the DE Reorganization, the DE Fund will be subject to a new
investment management agreement between the DE Fund and the Investment Manager.
The new investment management agreement will be substantially identical to the
current investment management agreement between the Investment Manager and the
Fund.
15
What effect will the DE Reorganization have on the current shareholder
servicing agreements?
The DE Fund will enter into an agreement with Franklin Templeton Services,
LLC for administration services that is substantially identical to the Fund
Administration Agreement currently in place for the Fund. The Fund will assign
to the DE Fund the Fund's (i) service and transfer agency agreements with BNY
Mellon Shareowner Services (which provide for certain financial,
administrative, transfer agency and fund accounting services) and (ii) custody
agreement with JPMorgan Chase Bank, N.A.
What is the effect of shareholder approval of the Delaware Plan?
Under the 1940 Act, the shareholders of an investment company must elect
trustees and approve the initial investment management agreement for the DE
Fund. Theoretically, if the Delaware Plan is approved and the Fund is
reorganized as the DE Fund, the shareholders would need to vote on these two
items in order to comply with the 1940 Act. In order to comply with these
requirements and consistent with SEC guidance, shareholder approval of the
Delaware Plan will constitute, for purposes of the 1940 Act, shareholder
approval of: (1) the election of the Directors of the Fund who are in office on
the effective date of the DE Reorganization (including, if elected, any Board
nominees set forth in this proxy statement) as Trustees of the DE Fund; and
(2) a new investment management agreement between the DE Fund and the
Investment Manager, which is substantially identical to the investment
management agreement currently in place for the Fund.
If the Delaware Plan is approved by Fund shareholders, then this initial
shareholder approval for the DE Fund will be arranged by the Fund
(1) purchasing one share of the DE Fund; (2) as the sole shareholder voting FOR
the election of Board members and the initial investment management agreement;
and (3) then redeeming its share, all prior to the completion of the DE
Reorganization. These actions will enable the DE Fund to satisfy the
requirements of the 1940 Act without involving the time and expense of another
shareholder meeting.
What is the capitalization and structure of the DE Fund?
The DE Fund was formed as a Delaware statutory trust on May 21, 2008
pursuant to Delaware law. The DE Fund is authorized to issue an unlimited
number of shares of beneficial interest, without par value.
As of the effective date of the DE Reorganization, shares of the Fund and
the DE Fund will: (1) have similar distribution rights; (2) be fully paid and
non-assessable; (3) have no preemptive or subscription rights; (4) have similar
voting and liquidation rights; and (5) have one vote per share and
proportionate fractional vote for each fractional share. Neither the DE Fund
nor the Fund provides for cumulative voting in the election of its Board
members. The DE Fund also has the same fiscal year as the Fund.
Who will bear the expenses of the DE Reorganization?
Since the DE Reorganization will benefit the Fund and its shareholders, the
Board had authorized that the expenses incurred in the DE Reorganization shall
be paid by the Fund, whether or not the DE Reorganization is approved by
shareholders.
Are there any tax consequences for shareholders?
The DE Reorganization is designed to be tax-free for federal income tax
purposes so that you will not experience a taxable gain or loss when the DE
Reorganization is completed. Generally, the basis and holding
16
period of your shares in the DE Fund will be the same as the basis and holding
period of your shares in the Fund. Consummation of the DE Reorganization is
subject to receipt of a legal opinion from the law firm of Stradley Ronon
Stevens & Young, LLP, counsel to the DE Fund and the Fund, that under the
Internal Revenue Code of 1986, as amended, the DE Reorganization will not give
rise to the recognition of income, gain or loss for federal income tax purposes
to the Fund, the DE Fund, or their shareholders.
What if I choose to sell my shares at any time?
You may continue to trade your shares of the Fund on the NYSE until the
close of trading on the business day before the effective date of the DE
Reorganization. The shares of the DE Fund will be listed on the NYSE just as
shares of the Fund historically have been listed. Consequently, upon the
effectiveness of the DE Reorganization you may trade, on the NYSE, the shares
of the DE Fund you receive in the DE Reorganization. The market value of your
shares will not be affected by the DE Reorganization except to the extent that
market forces affect the value of the shares, as currently occurs.
What is the effect of my voting FOR the Delaware Plan?
By voting FOR the Delaware Plan, you will be agreeing to become a
shareholder of a closed-end fund organized as a Delaware statutory trust, with
trustees, an investment management agreement, and other service arrangements
that are substantially identical to those in place for the Fund.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR PROPOSAL 2.
.. ADDITIONAL INFORMATION ABOUT THE FUND
The Investment Manager. The Investment Manager of the Fund is Templeton
Asset Management Ltd., a Singapore company with an office at 7 Temasek Blvd.,
Suntee Tower One, #38-03, Singapore 03987. Pursuant to an investment management
agreement, the Investment Manager manages the investment and reinvestment of
Fund assets. The Investment Manager is an indirect, wholly owned subsidiary of
Resources.
The Administrator. The administrator of the Fund is Franklin Templeton
Services, LLC ("FT Services"), with offices at 500 East Broward Boulevard,
Suite 2100, Fort Lauderdale, Florida 33394-3091. FT Services is an indirect,
wholly owned subsidiary of Resources and an affiliate of the Investment
Manager. Pursuant to an administration agreement, FT Services performs certain
administrative functions for the Fund.
The Transfer Agent. The transfer agent, registrar and dividend disbursement
agent for the Fund is BNY Mellon Shareowner Services, P. O. Box 358015,
Pittsburgh, PA 15252-8015.
The Custodian. The custodian for the Fund is JPMorgan Chase Bank, N.A.,
MetroTech Center, Brooklyn, New York 11245.
Other Matters. The Fund's last audited financial statements and annual
report for the fiscal year ended March 31, 2008, are available free of charge.
To obtain a copy, please call 1-800/DIAL BEN(R) (1-800-342-5236) or forward a
written request to Franklin Templeton Investor Services, LLC, P.O. Box 33030,
St. Petersburg, Florida 33733-8030.
17
Principal Shareholders. As of June 20, 2008, the Fund had 5,497,179 shares
outstanding and total net assets of $350,046,911.06. The Fund's shares are
listed on NYSE (NYSE: TRF). From time to time, the number of shares held in
"street name" accounts of various securities dealers for the benefit of their
clients may exceed 5% of the total shares outstanding. To the knowledge of the
Fund's management, as of June 20, 2008, there were no other entities holding
beneficially or of record more than 5% of the Fund's outstanding shares.
In addition, to the knowledge of the Fund's management, as of June 20, 2008,
no nominee or Director of the Fund owned 1% or more of the outstanding shares
of the Fund, and the Directors and officers of the Fund owned, as a group, less
than 1% of the outstanding shares of the Fund.
Contacting the Board of Directors. If a shareholder wishes to send a
communication to the Board, such correspondence should be in writing and
addressed to the Board of Directors at the Fund's offices, 500 East Broward
Boulevard, Suite 2100, Fort Lauderdale, Florida 33394-3091, Attention:
Secretary. The correspondence will be given to the Board for review and
consideration.
.. AUDIT COMMITTEE
Audit Committee and Independent Registered Public Accounting Firm. The
Fund's Audit Committee is responsible for the appointment, compensation and
retention of the Fund's independent registered public accounting firm
("auditors"), including evaluating their independence, recommending the
selection of the Fund's auditors to the full Board, and meeting with such
auditors to consider and review matters relating to the Fund's financial
reports and internal auditing. The Audit Committee is comprised of Ms. Bates
and Messrs. Niemiec (Chairman), Crothers and Tseretopoulos, all of whom are
Independent Directors and also are considered to be "independent" as that term
is defined by the listing standards applicable to the Fund.
Selection of Auditors. The Audit Committee and the Board have selected the
firm of PricewaterhouseCoopers LLP ("PwC") as auditors of the Fund for the
current fiscal year. Representatives of PwC are not expected to be present at
the Meeting, but will have the opportunity to make a statement if they wish,
and will be available should any matter arise requiring their presence.
Audit Fees. The aggregate fees paid to PwC for professional services
rendered by PwC for the audit of the Fund's annual financial statements or for
services that are normally provided by PwC in connection with statutory and
regulatory filings or engagements were $70,087 for the fiscal year ended
March 31, 2008 and $90,221 for the fiscal year ended March 31, 2007.
Audit-Related Fees. For the fiscal years ended March 31, 2008 and March 31,
2007, there were no fees paid to PwC for assurance and related services by PwC
that are reasonably related to the performance of the audit or review of the
Fund's financial statements and not reported under "Audit Fees" above.
In addition, the Audit Committee pre-approves PwC's engagement for
audit-related services to be provided to the Investment Manager and certain
entities controlling, controlled by, or under common control with the
Investment Manager that provide ongoing services to the Fund, which engagements
relate directly to the operations and financial reporting of the Fund. For
fiscal years ended March 31, 2008 and 2007, there were no fees paid to PwC for
assurance and related services.
18
Tax Fees. The aggregate fees paid for professional services rendered by PwC
for tax compliance, tax advice and tax planning ("tax services") were $0 for
the fiscal year ended March 31, 2008 and $4,350 for the fiscal year ended
March 31, 2007.
In addition, the Audit Committee pre-approves PwC's engagement for tax
services to be provided to the Investment Manager and certain entities
controlling, controlled by, or under common control with the Investment Manager
that provide ongoing services to the Fund, which engagements relate directly to
the operations and financial reporting of the Fund. The fees for these services
were $0 for the fiscal year ended March 31, 2008 and $49,961 for the fiscal
year ended March 31, 2007. The services for which these fees were paid included
tax compliance and advice.
All Other Fees. The aggregate fees paid for products and services provided
by PwC to the Fund, other than the services reported above, were $0 for the
fiscal year ended March 31, 2008 and $189 for the fiscal year ended March 31,
2007. The services for which these fees were paid included review of materials
provided to the Board in connection with the investment management contract
renewal process.
In addition, the Audit Committee pre-approves PwC's engagement for other
services with the Investment Manager and certain entities controlling,
controlled by, or under common control with the Investment Manager that provide
ongoing services to the Fund, which engagements relate directly to the
operations and financial reporting of the Fund. The aggregate fees paid to PwC
for such other services and not reported above were $0 for the fiscal year
ended March 31, 2008 and $175,672 for the fiscal year ended March 31, 2007. The
services for which these fees were paid included review of materials provided
to the Board in connection with the investment management contract renewal
process.
Aggregate Non-Audit Fees. The aggregate fees for non-audit services
provided by PwC to the Fund, to the Investment Manager or to any entity
controlling, controlled by, or under common control with the Investment Manager
that provide ongoing services to the Fund were $0 for the fiscal year ended
March 31, 2008 and $230,172 for the fiscal year ended March 31, 2007. The
aggregate non-audit fees include the amounts shown under Tax Fees and All Other
Fees above for the fiscal years ended March 31, 2008 and March 31, 2007,
respectively.
The Audit Committee has determined that the provision of the non-audit
services that were rendered to the Investment Manager and to any entities
controlling, controlled by, or under common control with the Investment Manager
that provide ongoing services to the Fund is compatible with maintaining PwC's
independence.
Audit Committee Pre-Approval Policies and Procedures. As of the date of
this proxy statement, the Audit Committee has not adopted written pre-approval
policies and procedures. As a result, all such services described above and
provided by PwC must be directly pre-approved by the Audit Committee.
Audit Committee Report. The Board has adopted and approved a formal written
charter for the Audit Committee, which sets forth the Audit Committee's
responsibilities. A copy of the charter is attached as Exhibit D to this proxy
statement.
As required by the charter, the Audit Committee reviewed the Fund's audited
financial statements and met with management, as well as with PwC, the Fund's
auditors, to discuss the financial statements.
19
The Audit Committee received the written disclosures and the letter from PwC
required by Independence Standards Board Standard No. 1. The Audit Committee
also received the report of PwC regarding the results of their audit. In
connection with their review of the financial statements and the auditors'
report, the members of the Audit Committee discussed with a representative of
PwC, PwC's independence, as well as the following: the auditors'
responsibilities in accordance with generally accepted auditing standards; the
auditors' responsibilities for information prepared by management that
accompanies the Fund's audited financial statements and any procedures
performed and the results; the initial selection of, and whether there were any
changes in, significant accounting policies or their application; management's
judgments and accounting estimates; whether there were any significant audit
adjustments; whether there were any disagreements with management; whether
there was any consultation with other accountants; whether there were any major
issues discussed with management prior to the auditors' retention; whether the
auditors encountered any difficulties in dealing with management in performing
the audit; and the auditors' judgments about the quality of the Fund's
accounting principles.
Based on its review and discussions with management and the Fund's auditors,
the Audit Committee did not become aware of any material misstatements or
omissions in the financial statements. Accordingly, the Audit Committee
recommended to the Board that the audited financial statements be included in
the Fund's Annual Report to Shareholders for the fiscal year ended March 31,
2008 for filing with the U.S. Securities and Exchange Commission.
AUDIT COMMITTEE
David W. Niemiec (Chairman)
Ann Torre Bates
Frank J. Crothers
Constantine D. Tseretopoulos
.. FURTHER INFORMATION ABOUT VOTING AND THE MEETING
Solicitation of Proxies. Your vote is being solicited by the Directors. The
cost of soliciting proxies, including the fees of a proxy soliciting agent, is
borne by the Fund. The Fund reimburses brokerage firms and others for their
expenses in forwarding proxy material to the beneficial owners and soliciting
them to execute proxies. The Fund expects that the solicitation would be
primarily by mail, but may also include telephone, facsimile, electronic or
other means of communication. The Fund does not reimburse Directors and
officers of the Fund, or regular employees and agents of the Investment Manager
involved in the solicitation of proxies. The Fund intends to pay all costs
associated with the solicitation and the Meeting.
D.F. King & Co., Inc. (the "Solicitor"), has been engaged to assist in the
solicitation of proxies, at an estimated cost of $8,750.00 to $11,163.00,
including expenses. As the date of the Meeting approaches, certain Fund
shareholders may receive a telephone call from a representative of the
Solicitor if their votes have not yet been received.
Authorization to permit the Solicitor to execute proxies may be obtained by
telephonic instructions from shareholders of the Fund. Proxies that are
obtained telephonically will be recorded in accordance with the procedures set
forth below. The Board believes that these procedures are reasonably designed
to ensure that both the identity of the shareholder casting the vote and the
voting instructions of the shareholder are accurately determined.
20
In all cases where a telephonic proxy is solicited, the Solicitor
representative is required to ask for each shareholder's full name and address
and to confirm that the shareholder has received the proxy materials in the
mail. If the shareholder is a corporation or other entity, the Solicitor
representative is required to ask for the person's title and confirmation that
the person is authorized to direct the voting of the shares. If the information
solicited agrees with the information provided to the Solicitor, then the
Solicitor may ask for the shareholder's instructions on the Proposals. Although
the Solicitor representative is permitted to answer questions about the
process, he or she is not permitted to recommend to the shareholder how to
vote, other than to read any recommendation set forth in the proxy statement.
The Solicitor will record the shareholder's instructions on the card. Within 72
hours, the shareholder will be sent a letter or mailgram to confirm their vote
and asking the shareholder to call the Solicitor immediately if their
instructions are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Meeting, but does not wish to
give a proxy by telephone, the shareholder may still submit the proxy card
originally sent with the proxy statement by mail, by Internet, or by telephone
instruction, or attend in person.
Voting by Broker-Dealers. The Fund expects that, before the Meeting,
broker-dealer firms holding shares of the Fund in "street name" for their
customers will request voting instructions from their customers and beneficial
owners. If these instructions are not received by the date specified in the
broker-dealer firms' proxy solicitation materials, the Fund understands that
current NYSE Rules permit the broker-dealers to vote on Proposal 1 on behalf of
their customers and beneficial owners. Certain broker-dealers may exercise
discretion over shares held in their name for which no instructions are
received by voting these shares in the same proportion as they vote shares for
which they received instructions.
Quorum. A majority of the shares entitled to be cast--present in person or
represented by proxy--constitutes a quorum at the Meeting. The shares over
which broker-dealers have discretionary voting power, the shares that represent
"broker non-votes" (i.e., shares held by brokers or nominees as to which
(i) instructions have not been received from the beneficial owners or persons
entitled to vote and (ii) the broker or nominee does not have discretionary
voting power on a particular matter), and the shares whose proxies reflect an
abstention on any item will all be counted as shares present and entitled to
vote for purposes of determining whether the required quorum of shares exists.
Method of Tabulation. Proposal 1, the election of Directors, requires the
affirmative vote of the holders of a plurality of the Fund's shares present and
voting on the Proposal at the Meeting. Proposal 2, to approve an Agreement and
Plan of Reorganization, that provides for the reorganization of the Fund from a
Maryland corporation to a Delaware statutory trust, requires the affirmative
vote of the lesser of: (i) more than 50% of the outstanding shares of the Fund;
or (ii) 67% or more of the outstanding shares of the Fund present at the
Meeting, if the holders of more than 50% of the outstanding shares are present
or represented by proxy.
Abstentions and broker non-votes will be treated as votes present at the
Meeting, but will not be treated as votes cast. Abstentions and broker
non-votes, therefore, will have no effect on Proposal 1, which requires a
plurality of the Fund's shares present and voting, but will have the same
effect as a vote "against" Proposal 2.
Adjournment. The holders of a majority of shares entitled to vote at the
Meeting and present in person or by proxy, whether or not sufficient to
constitute a quorum, or any officer present entitled to preside or act as
Secretary of the Meeting may adjourn the Meeting. Such authority to adjourn the
Meeting may be used in the event that a quorum is not present at the Meeting or
in the event that a quorum is present but sufficient votes have
21
not been received to approve a Proposal or to permit further solicitation of
proxies or for any other reason consistent with Maryland law and the Fund's
Articles of Incorporation and By-Laws. Unless otherwise instructed by a
shareholder granting a proxy, the persons designated as proxies may use their
discretionary authority to vote as instructed by management of the Fund on
questions of adjournment and on any other proposals raised at the Meeting to
the extent permitted by the SEC's proxy rules, including proposals for which
management of the Fund did not have timely notice, as set forth in the SEC's
proxy rules and the Fund's proxy statement for the 2007 annual meeting.
Shareholder Proposals. The shareholder vote on Proposal 2, the matter
concerning the proposed reorganization of the Fund from a Maryland corporation
to a Delaware statutory trust, will dictate the requirements relating to
shareholder proposals for the 2009 Annual Meeting of Shareholders. This section
describes those requirements.
Submission of Shareholder Proposals to the DE Fund. If Proposal 2 is
approved by shareholders, the Fund will be reorganized as the DE Fund, and the
DE Fund's By-Laws, in addition to the proxy rules under the federal securities
laws, will govern shareholder proposals. The DE Fund anticipates that the 2009
Annual Meeting of Shareholders will be held on or about August 28, 2009. A
shareholder who wishes to submit a proposal for consideration for inclusion in
the DE Fund's proxy statement for the 2009 Annual Meeting of Shareholders must
send such written proposal to the DE Fund's offices at 500 East Broward
Boulevard, Suite 2100, Fort Lauderdale, Florida 33394-3091, Attention:
Secretary, so that it is received no later than March 13, 2009 in order to be
included in the DE Fund's proxy statement and proxy card relating to that
meeting and presented at the meeting.
A shareholder of the DE Fund who has not submitted a written proposal for
inclusion in the DE Fund's proxy statement by March 13, 2009, as set forth
above, may nonetheless present a proposal at the DE Fund's 2009 Annual Meeting
of Shareholders if such shareholder notifies the DE Fund in writing, at the DE
Fund's offices, of such proposal not earlier than March 31, 2009 and not later
than April 30, 2009. If a shareholder fails to give notice within these dates,
then the matter shall not be eligible for consideration at the shareholders'
meeting. If, notwithstanding the effect of the foregoing notice provisions, a
shareholder proposal is acted upon at the 2009 Annual Meeting of Shareholders,
the persons designated as proxies for the 2009 Annual Meeting of Shareholders
may exercise discretionary voting power with respect to any shareholder
proposal not received by the DE Fund at the DE Fund's offices by May 27, 2009.
A shareholder proposal may be presented at the 2009 Annual Meeting of
Shareholders only if such proposal concerns a matter that may be properly
brought before the meeting under applicable federal proxy rules and state law.
Submission of a proposal by a shareholder does not guarantee that the
proposal will be included in the DE Fund's proxy statement or presented at the
meeting.
In addition to the requirements set forth above, a shareholder must comply
with the following:
1. A shareholder intending to present a proposal must (i) be entitled to
vote at the meeting; (ii) comply with the notice procedures set forth
herein; and (iii) have been a shareholder of record at the time the
shareholder's notice was received by the DE Fund.
2. Each notice regarding nomination for the election of Trustees shall
set forth (i) the name, age, business address and, if known, residence
address of each nominee proposed in such notice; (ii) the principal
occupation or employment of each such nominee; (iii) the number of
outstanding shares of the
22
DE Fund which are beneficially owned by each such nominee; and (iv) all such
other information regarding each such nominee that would have been required
to be included in a proxy statement filed pursuant to the proxy rules of the
SEC had each nominee been nominated by the Trustees of the DE Fund. In
addition, the shareholder making such nomination shall promptly provide any
other information reasonably requested by the DE Fund.
3. Each notice regarding a business proposal shall set forth as to each
matter: (i) a brief description of the business desired to be brought before
the meeting and the reasons for conducting such business at the meeting;
(ii) the name and address, as they appear on the DE Fund's books, of the
shareholder proposing such business; (iii) the number of outstanding shares
of the DE Fund which are beneficially owned by the shareholder; (iv) any
material interest of the shareholder in such business; and (v) all such
other information regarding each such matter that would have been required
to be included in a proxy statement filed pursuant to the proxy rules of the
SEC had each such matter been proposed by the Trustees of the DE Fund.
Submission of Shareholder Proposals to the Fund. If Proposal 2 is not
approved by shareholders, the Fund will remain a Maryland corporation, and the
proxy rules under the federal securities laws alone will continue to govern
shareholder proposals. The Fund anticipates that the 2009 Annual Meeting of
Shareholders will be held on or about August 28, 2009. A shareholder who wishes
to submit a proposal for consideration for inclusion in the Fund's proxy
statement for the 2009 Annual Meeting of Shareholders must send such written
proposal to the Fund's offices, at 500 East Broward Boulevard, Suite 2100, Fort
Lauderdale, Florida 33394-3091, Attention: Secretary, so that it is received no
later than March 13, 2009 in order to be included in the Fund's proxy statement
and proxy card relating to that meeting and presented at the meeting.
A shareholder of the Fund who has not submitted a written proposal for
inclusion in the Fund's proxy statement by March 13, 2009, as described above,
may nonetheless present a proposal at the Fund's 2009 Annual Meeting of
Shareholders if such shareholder notifies the Fund, at the Fund's offices, of
such proposal by May 27, 2009. If a shareholder fails to give notice by this
date, then the persons designated as proxies for the 2009 Annual Meeting of
Shareholders may exercise discretionary voting power with respect to any such
proposal.
A shareholder proposal may be presented at the 2009 Annual Meeting of
Shareholders only if such proposal concerns a matter that may be properly
brought before the meeting under applicable federal proxy rules and state law.
Submission of a proposal by a shareholder does not guarantee that the
proposal will be included in the Fund's proxy statement or presented at the
meeting.
A shareholder proposal may be presented at the 2009 Annual Meeting of
Shareholders only if such proposal concerns a matter that may be properly
brought before the meeting under applicable federal proxy rules and state law.
By Order of the Board of Directors,
Robert C. Rosselot
Secretary
July 11, 2008
23
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EXHIBIT A
NOMINATING COMMITTEE CHARTER
I. The Committee.
The Nominating Committee (the "Committee") is a committee of, and
established by, the Board of Directors/Trustees of the Fund (the "Board").
The Committee consists of such number of members as set by the Board from
time to time and its members shall be selected by the Board. The Committee
shall be comprised entirely of "independent members." For purposes of this
Charter, independent members shall mean members who are not interested
persons of the Fund ("Disinterested Board members") as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended (the
"1940 Act").
II.Board Nominations and Functions.
1. The Committee shall make recommendations for nominations for
Disinterested Board members on the Board to the incumbent Disinterested
Board members and to the full Board. The Committee shall evaluate
candidates' qualifications for Board membership and the independence of
such candidates from the Fund's investment manager and other principal
service providers. Persons selected must be independent in terms of both
the letter and the spirit of the 1940 Act. The Committee shall also
consider the effect of any relationships beyond those delineated in the
1940 Act that might impair independence, e.g., business, financial or
family relationships with investment managers or service providers.
2. The Committee also shall evaluate candidates' qualifications and make
recommendations for "interested" members on the Board to the full Board.
3. The Committee may adopt from time to time specific, minimum
qualifications that the Committee believes a candidate must meet before
being considered as a candidate for Board membership and shall comply
with any rules adopted from time to time by the U.S. Securities and
Exchange Commission regarding investment company nominating committees
and the nomination of persons to be considered as candidates for Board
membership.
4. The Committee shall review shareholder recommendations for nominations
to fill vacancies on the Board if such recommendations are submitted in
writing and addressed to the Committee at the Fund's offices. The
Committee shall adopt, by resolution, a policy regarding its procedures
for considering candidates for the Board, including any recommended by
shareholders.
III.Committee Nominations and Functions.
The Committee shall make recommendations to the full Board for nomination
for membership on all committees of the Board.
IV.Other Powers and Responsibilities.
1. The Committee shall meet at least once each year or more frequently in
open or executive sessions. The Committee may invite members of
management, counsel, advisers and others to attend its meetings as it
deems appropriate. The Committee shall have separate sessions with
management and others, as and when it deems appropriate.
A-1
2. The Committee shall have the resources and authority appropriate to
discharge its responsibilities, including authority to retain special
counsel and other experts or consultants at the expense of the Fund.
3. The Committee shall report its activities to the Board and make such
recommendations as the Committee may deem necessary or appropriate.
4. A majority of the members of the Committee shall constitute a quorum for
the transaction of business at any meeting of the Committee. The action
of a majority of the members of the Committee present at a meeting at
which a quorum is present shall be the action of the Committee. The
Committee may meet in person or by telephone, and the Committee may act
by written consent, to the extent permitted by law and by the Fund's
by-laws. In the event of any inconsistency between this Charter and the
Fund's organizational documents, the provisions of the Fund's
organizational documents shall be given precedence.
5. The Committee shall review this Charter at least annually and recommend
any changes to the full Board.
ADDITIONAL STATEMENT FOR CLOSED-END FUNDS ONLY
The Committee shall comply with any rules of any stock exchange, if any,
applicable to nominating committees of closed-end funds whose shares are
registered thereon.
A-2
EXHIBIT B
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN TEMPLETON RUSSIA AND EAST EUROPEAN FUND, INC. AND
TEMPLETON RUSSIA AND EAST EUROPEAN FUND
This Agreement and Plan of Reorganization ("Agreement") is made as of this
__ day of __________, 2008 by and between Templeton Russia and East European
Fund, Inc., a Maryland corporation (the "Fund"), and Templeton Russia and East
European Fund, a Delaware statutory trust (the "DE Fund") (the Fund and the DE
Fund are hereinafter collectively referred to as the "parties").
In consideration of the mutual promises contained herein, and intending to
be legally bound, the parties hereto agree as follows:
1. Plan of Reorganization.
(a) Upon satisfaction of the conditions precedent described in Section 3
hereof, the Fund will convey, transfer and deliver to the DE Fund at the
closing provided for in Section 2 (hereinafter referred to as the "Closing")
all of the Fund's then-existing assets (the "Assets"). In consideration
thereof, the DE Fund agrees at the Closing (i) to assume and pay when due
all obligations and liabilities of the Fund, existing on or after the
Effective Date of the Reorganization (as defined in Section 2 hereof),
whether absolute, accrued, contingent or otherwise, including all fees and
expenses in connection with this Agreement, which fees and expenses shall,
in turn, include, without limitation, costs of legal advice, accounting,
printing, mailing, proxy solicitation and transfer taxes, if any
(collectively, the "Liabilities"), such Liabilities to become the
obligations and liabilities of the DE Fund; and (ii) to deliver to the Fund
in accordance with paragraph (b) of this Section 1, full and fractional
shares of beneficial interest, without par value, of the DE Fund, equal in
number to the number of full and fractional shares of common stock, $0.01
par value per share, of the Fund outstanding at the close of regular trading
on the New York Stock Exchange LLC ("NYSE") on the business day immediately
preceding the Effective Date of the Reorganization. The reorganization
contemplated hereby is intended to qualify as a reorganization within the
meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"). The Fund shall distribute to the Fund's shareholders the shares of
the DE Fund in accordance with this Agreement and the resolutions of the
Board of Directors of the Fund (the "Board of Directors") authorizing the
transactions contemplated by this Agreement.
(b) In order to effect the delivery of shares described in
Section 1(a)(ii) hereof, the DE Fund will establish an open account for each
shareholder of the Fund and, on the Effective Date of the Reorganization,
will credit to such account full and fractional shares of beneficial
interest, without par value, of the DE Fund equal to the number of full and
fractional shares of common stock such shareholder holds in the Fund at the
close of regular trading on the NYSE on the business day immediately
preceding the Effective Date of the Reorganization. Fractional shares of the
DE Fund will be carried to the fourth decimal place. At the close of regular
trading on the NYSE on the business day immediately preceding the Effective
Date of the Reorganization, the net asset value per share of the shares of
the DE Fund shall be deemed to be the same as the net asset value per share
of the common stock of the Fund. On the Effective Date of the
Reorganization, each certificate representing shares of the Fund will be
deemed to represent the same number of shares of the DE Fund. Simultaneously
with the crediting of the shares of the DE Fund to the shareholders of record
B-1
of the Fund, the shares of the Fund held by such shareholders shall be
deemed cancelled. Share certificates of the DE Fund shall not be issued.
(c) As soon as practicable after the Effective Date of the
Reorganization, the Fund shall take all necessary steps under Maryland law
to effect a complete dissolution of the Fund.
(d) The expenses of entering into and carrying out this Agreement will be
borne by the Fund.
2. Closing and Effective Date of the Reorganization.
The Closing shall consist of (i) the conveyance, transfer and delivery of
the Assets to the DE Fund in exchange for the assumption and payment, when due,
by the DE Fund, of the Liabilities of the Fund; and (ii) the issuance and
delivery of the DE Fund's shares in accordance with Section 1(b), together with
related acts necessary to consummate such transactions. The Closing shall occur
either on (a) the business day immediately following the later of the receipt
of all necessary regulatory approvals and the final adjournment of the meeting
of shareholders of the Fund at which this Agreement is considered and approved,
or (b) such later date as the parties may mutually agree ("Effective Date of
the Reorganization").
3. Conditions Precedent.
The obligations of the Fund and the DE Fund to effectuate the transactions
hereunder shall be subject to the satisfaction of each of the following
conditions:
(a) Such authority and orders from the U.S. Securities and Exchange
Commission (the "Commission") and state securities commissions as may be
necessary to permit the parties to carry out the transactions contemplated
by this Agreement shall have been received;
(b) Such approvals from the NYSE as may be necessary to permit the
parties to carry out the transactions contemplated by this Agreement shall
have been received;
(c) (i) an amendment of the Form N-8A Notification of Registration ("Form
N-8A") filed pursuant to Section 8(a) of the Investment Company Act of 1940,
as amended (the "1940 Act"), reflecting the change in legal form of the Fund
to a Delaware statutory trust shall have been filed with the Commission and
the DE Fund shall have expressly adopted such amended Form N-8A as its own
for purposes of the 1940 Act; (ii) a registration statement on Form 8-A
("8-A Registration Statement") under the Securities Exchange Act of 1934, as
amended, shall have been filed with the Commission and the NYSE by the DE
Fund; (iii) a Technical Original Listing Application shall have been filed
with the NYSE by the DE Fund; and (iv) the 8-A Registration Statement filed
with the Commission relating to the DE Fund shall have become effective, and
no stop-order suspending the effectiveness of the 8-A Registration Statement
shall have been issued, and no proceeding for that purpose shall have been
initiated or threatened by the Commission (other than any such stop-order
proceeding or threatened proceeding or threatened proceeding which shall
have been withdrawn or terminated);
(d) Each party shall have received an opinion of Stradley Ronon Stevens &
Young, LLP, Philadelphia, Pennsylvania, to the effect that, assuming the
reorganization contemplated hereby is carried out in accordance with this
Agreement, the laws of the State of Maryland and the State of Delaware, and
in accordance with customary representations provided by the parties in a
certificate(s) delivered to Stradley Ronon Stevens & Young, LLP, the
reorganization contemplated by this Agreement qualifies as a
"reorganization" under Section 368 of the Code, and thus will not give rise
to the recognition of income, gain or loss for federal income tax purposes
to the Fund, the DE Fund or the shareholders of the Fund or the DE Fund;
B-2
(e) The Fund shall have received an opinion of Stradley Ronon Stevens &
Young, LLP, dated the Effective Date of the Reorganization, addressed to and
in form and substance reasonably satisfactory to the Fund, to the effect
that (i) the DE Fund is a statutory trust duly formed, validly existing, and
in good standing under the laws of the State of Delaware; (ii) this
Agreement and the transactions contemplated thereby and the execution and
delivery of this Agreement have been duly authorized and approved by all
requisite statutory trust action of the DE Fund and this Agreement is a
legal, valid and binding agreement of the DE Fund in accordance with its
terms; and (iii) the shares of the DE Fund to be issued in the
reorganization have been duly authorized and, upon issuance thereof in
accordance with this Agreement, will have been validly issued and fully paid
and will be nonassessable by the DE Fund;
(f) The DE Fund shall have received the opinion of Stradley Ronon
Stevens & Young, LLP, dated the Effective Date of the Reorganization,
addressed to and in form and substance reasonably satisfactory to the DE
Fund, to the effect that: (i) the Fund is duly incorporated, legally
existing, and in good standing under the laws of the State of Maryland; and
(ii) this Agreement and the transactions contemplated hereby and the
execution and delivery of this Agreement have been duly authorized and
approved by all requisite corporate action of the Fund and this Agreement is
a legal, valid and binding agreement of the Fund in accordance with its
terms;
(g) The shares of the DE Fund are eligible for offering to the public in
those states of the United States and jurisdictions in which the shares of
the Fund are currently eligible for offering to the public so as to permit
the issuance and delivery by the DE Fund of the shares contemplated by this
Agreement to be consummated;
(h) This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by the appropriate action of the Board of
Directors and the shareholders of the Fund;
(i) The shareholders of the Fund shall have voted to direct the Fund to
vote, and the Fund shall have voted, as sole shareholder of the DE Fund, to:
(1)Elect as Trustees of the DE Fund the following individuals:
Nominees to serve as Trustees until the 2011 Annual Meeting of
Shareholders--Messrs. Harris J. Ashton, Larry D. Thompson and
Constantine D. Tseretopoulos; Nominees to serve as Trustees until
the 2010 Annual Meeting of Shareholders--Ms. Edith E. Holiday and
Messrs. Frank A. Olson, Robert E. Wade and Charles B. Johnson;
and Nominees to serve as Trustees until the 2009 Annual Meeting
of Shareholders--Ms. Ann Torre Bates and Messrs. Frank J.
Crothers, David W. Niemiec and Gregory E. Johnson; and
(2)Approve an Investment Management Agreement between Templeton
Asset Management Ltd. and the DE Fund which is substantially
identical to the then-current Investment Management Agreement, as
amended and restated to date, between Templeton Asset Management
Ltd. and the Fund; and
(j) The Trustees of the DE Fund shall have duly adopted and approved this
Agreement and the transactions contemplated hereby and shall have taken the
following actions at a meeting duly called for such purposes:
(1)Approval of the Investment Management Agreement described in
paragraph (i)(2) of this Section 3 between Templeton Asset
Management Ltd. and the DE Fund;
B-3
(2)Approval of the assignment to the DE Fund of the Custody
Agreement, dated June 15, 1995, as amended to date, between The
Chase Manhattan Bank, N.A. (now JPMorgan Chase Bank, N.A.), and
the Fund;
(3)Selection of PricewaterhouseCoopers LLP as the DE Fund's
Independent Registered Public Accounting Firm for the fiscal year
ending March 31, 2009;
(4)Approval of a Fund Administration Agreement between the DE Fund
and Franklin Templeton Services, LLC;
(5)Approval of the assignment to the DE Fund of the Service
Agreement dated June 15, 1995, between Chemical Mellon
Shareholder Services (now BNY Mellon Shareowner Services) and the
Fund;
(6)Approval of the assignment to the DE Fund of the Fund's Plan
Agent Agreement with Mellon Securities Trust Company, as amended;
(7)Authorization of the issuance by the DE Fund, prior to the
Effective Date of the Reorganization, of one share of beneficial
interest of the DE Fund to the Fund in consideration for the
payment of $1.00 for such share for the purpose of enabling the
Fund to vote on the matters referred to in paragraph (i) of this
Section 3;
(8)Submission of the matters referred to in paragraph (i) of this
Section 3 to the Fund as sole shareholder of the DE Fund; and
(9)Authorization of the issuance and delivery by the DE Fund of
shares of the DE Fund on the Effective Date of the Reorganization
and the assumption by the DE Fund of the Liabilities of the Fund
in exchange for the Assets of the Fund pursuant to the terms and
provisions of this Agreement.
At any time prior to the Closing, any of the foregoing conditions may be
waived or amended, or any additional terms and conditions may be fixed, by the
Board of Directors, if, in the judgment of such Board, such waiver, amendment,
term or condition will not affect in a materially adverse way the benefits
intended to be accorded the shareholders of the Fund under this Agreement.
4. Dissolution of the Fund.
Promptly following the consummation of the Closing, the officers of the Fund
shall take all steps necessary under Maryland law to dissolve its corporate
status, including publication of any necessary notices to creditors, receipt of
any necessary pre-dissolution clearances from the State of Maryland, and filing
for record with the State Department of Assessments and Taxation of Maryland of
Articles of Dissolution.
5. Termination.
The Board of Directors may terminate this Agreement and abandon the
reorganization contemplated hereby, notwithstanding approval thereof by the
shareholders of the Fund, at any time prior to the Effective Date of the
Reorganization if, in the judgment of such Board, the facts and circumstances
make proceeding with this Agreement inadvisable.
B-4
6. Entire Agreement.
This Agreement embodies the entire agreement between the parties hereto and
there are no agreements, understandings, restrictions or warranties among the
parties hereto other than those set forth herein or herein provided for.
7. Further Assurances.
The Fund and the DE Fund shall take such further action as may be necessary
or desirable and proper to consummate the transactions contemplated hereby.
8. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same
instrument.
9. Governing Law.
This Agreement and the transactions contemplated hereby shall be governed
by, and construed and enforced in accordance with, the laws of the State of
Delaware.
IN WITNESS WHEREOF, the Fund and the DE Fund have each caused this Agreement
and Plan of Reorganization to be executed on its behalf by its President or a
Vice President and attested by its Secretary or an Assistant Secretary, all as
of the day and year first-above written.
TEMPLETON RUSSIA AND
EAST EUROPEAN FUND, INC. (a Maryland
corporation)
Attest:
By: By:
---------------------------------- ---------------------------------
Name: Name:
Title: Title:
TEMPLETON RUSSIA AND
EAST EUROPEAN FUND (a Delaware
statutory trust)
Attest:
By: By:
---------------------------------- ---------------------------------
Name: Name:
Title: Title:
B-5
EXHIBIT C
A COMPARISON OF GOVERNING DOCUMENTS AND STATE LAW
A Comparison of:
The Law Governing Delaware Statutory Trusts and
The Charter Documents of Templeton Russia and East European Fund
Under Such Law
With
The Law Governing Maryland Corporations and
The Charter Documents of Templeton Russia and East European Fund, Inc.
Under Such Law
Delaware Statutory Trust Maryland Corporation
------------------------ --------------------
Governing A Delaware statutory trust (a "DST") is A Maryland corporation is created by
Documents/ formed by executing a governing instrument executing and filing articles of incorporation
Governing Body and executing and filing a Certificate of Trust with the Maryland State Department of
with the Delaware Secretary of State Assessments and Taxation ("MSDAT"). The
("Secretary of State"). No filing of the Maryland law governing corporations is
governing instruments (including the by-laws) referred to in this analysis as "Maryland
with the Secretary of State is required. The Law."
Delaware law governing a DST is referred to
in this analysis as the "Delaware Act."
A DST is an unincorporated association A corporation is incorporated under Maryland
organized under the Delaware Act whose Law. A corporation's operations are governed
operations are governed by its governing by its charter and by-laws, and its business
instrument (which may consist of one or more and affairs are managed by or under the
instruments). Its business and affairs are direction of a board of directors (the "board of
managed by or under the direction of a directors" or collectively, the "directors").
trustee, or more typically, a board of trustees
(the "board of trustees" or collectively, the
"trustees").
If a DST is, becomes, or will become prior to
or within 180 days following its first issuance
of beneficial interests, a registered investment
company under the Investment Company Act
of 1940, as amended (the "1940 Act"), such
DST is not required to have a trustee who is a
resident of Delaware or who has a principal
place of business in Delaware provided that
notice that the DST is or will become an
investment company is set forth in the DST's
certificate of trust and the DST has a
registered office and a registered agent for
service of process in Delaware.
C-1
Delaware Statutory Trust Maryland Corporation
------------------------ --------------------
The governing instrument for the DST, Templeton Russia and East European Fund,
Templeton Russia and East European Fund Inc., a Maryland corporation, is referred to in
(the "Trust"), is comprised of an agreement this analysis as the "Corporation." The
and declaration of trust ("Declaration") and Corporation is governed by its Articles of
by-laws ("By-Laws"). The Trust's governing Incorporation, as amended and supplemented
body is a board of trustees (the "Board" or ("Charter"), and by-laws ("By-Laws"). The
"Board of Trustees" or collectively, the Corporation's governing body is a board of
"Trustees"). directors (the "Board" or "Board of Directors"
or collectively, the "Directors").
The Board is divided into three classes, each
The Board is divided into three classes, with having a term of three years. At the annual
the term of office of one class expiring each meeting of stockholders, the term of one class
year. At each annual meeting of Shareholders, shall expire. Thus, at each annual election, the
the successors to the class of Trustees whose directors chosen to succeed those whose terms
term then expires are elected to hold office for are expiring shall be elected for a term
a term expiring at the third succeeding annual expiring at the time of the third succeeding
meeting. Each Trustee holds office for his or annual meeting of stockholders, or thereafter
her applicable term or until such Trustee's in each case when their respective successors
earlier death, resignation, removal, retirement are elected and qualified. The number of
or inability otherwise to serve, or, if sooner Directorships shall be apportioned among the
than any of such events, until the next meeting classes so as to maintain the classes as nearly
of Shareholders called for the purpose of equal as possible. (Sixth Art. See also BL Art.
electing Trustees or consent of Shareholders in III, Sec. 1.) The By-Laws do not expressly
lieu thereof for the election of Trustees, and address the death, resignation, retirement or
until the election and qualification of his or her inability otherwise to serve of a Director. As
successor. (Art. IV, Sec. 1(c), (d)) Vacancies permitted under Maryland Law, the By-Laws
in any class of Trustees may be filled by not provide that if there is a vacancy on the Board
less than a majority vote of the Trustee(s) then for any reason except an increase in the
in office unless a special meeting of number of Directors, the Directors then in
Shareholders is called, in which case the office may, by a majority vote, fill the
vacancy will be filled by vote at the meeting. vacancy.
Designation of Under the Delaware Act, the ownership Equity securities of a corporation are generally
Ownership interests in a DST are denominated as denominated as shares of stock. Record or
Shares or "beneficial interests" and are held by beneficial owners of shares of stock are
Interests "beneficial owners." However, there is stockholders. Generally, equity securities that
flexibility as to how a governing instrument have voting rights and are entitled to the
refers to "beneficial interests" and "beneficial residual assets of the corporation, after
owners" and the governing instrument may payment of liabilities, are referred to as
identify "beneficial interests" and "beneficial "common stock."
owners" as "shares" and "shareholders,"
respectively.
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In the Declaration, the Trust's beneficial The Corporation's equity securities are shares
interests, without par value, are designated as of common stock, par value $0.01 per share,
"Shares" and its beneficial owners are and the owners of such stock are
designated as "Shareholders." This analysis "stockholders." (Fifth Art., Sec. (1)). Under
will use the "Share" and "Shareholder" Maryland Law and the Charter, the Corporation
terminology. (Art. III, Sec. 1(a); Art. I, Sec. is required to authorize for issuance a set
4(q), (r)). Under the Delaware Act and the number of shares of equity securities or
Declaration, the Trust has an unlimited number common stock of the Corporation. The
of Shares authorized for issuance. Corporation may not authorize for issuance an
unlimited number of shares.
Amendments The Delaware Act provides broad flexibility as Under Maryland Law, amendments to the
to Governing to the manner of amending and/or restating the charter must generally be approved by the
Documents governing instrument of a DST. Amendments board and by the affirmative vote of two-thirds
to the Declaration that do not change the of all votes entitled to be cast (unless the
information in the DST's certificate of trust are charter requires amendment by a higher or
not required to be filed with the Secretary of lesser proportion of the voting stock, but not
State. less than a majority of the shares outstanding).
Declaration of Trust Charter
The Declaration provides that amendments and/ The Charter provides that the Charter may be
or restatements of the Declaration may amended, altered, repealed, or added to upon
generally be made at any time by the Board of the vote of the holders of a majority of the
Trustees by an instrument in writing signed by shares outstanding and entitled to vote thereon,
not less than a majority of the Board of except that the amendment or repeal of
Trustees and, to the extent required by the provisions pertaining to fixing the number of
Declaration, the 1940 Act, applicable law, or Directors and the classification of the board, the
the requirements of any securities exchange on removal of directors, the personal liability of
which shares are listed for trading, by approval directors and officers of the Corporation,
of such amendment by the Shareholders in indemnification, the merger or consolidation of
accordance with Article III and Article V the Corporation, sale of all or substantially all
thereof. Any such restatement and/or of the assets of the Corporation, dissolution,
amendment shall be effective immediately upon liquidation or conversion (to an open-end fund)
execution and, if applicable, Shareholder of the Corporation, or amendments to the
approval or upon such future date and time as Charter require the affirmative vote of the
may be stated therein. Amendments or a repeal holders of at least two-thirds of all shares then
of certain provisions, however, require approval entitled to vote, unless such action was
of the Board of Trustees, as set forth above, and previously approved, adopted or authorized by
the affirmative vote of holders of at least the vote of two-thirds of the total number of
two-thirds (66 2/3%) of the outstanding shares directors fixed in accordance with the By-Laws.
entitled to vote, unless such action has (Thirteenth Art.)
previously been approved by the affirmative
vote of at least two-thirds (66 2/3%) of the
Board of Trustees, in which case the
shareholder vote set forth in Art. V,
Sec. 2(b)(1) (the affirmative "vote of a majority
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of the outstanding voting securities," as defined
in the 1940 Act, of the Trust entitled to vote at
a meeting at which a quorum is present) shall
be required. Such provisions include those
pertaining to the number, classes, election,
term, removal, resignation, quorum, powers,
required vote and action by written consent of
the Board of Trustees; shareholders' voting
power, quorum, required vote, action by written
consent and record dates; limitation of liability
and indemnification of agents of the Trust;
transactions such as the dissolution, merger,
consolidation, conversion, sale of assets and
reclassification of the Trust to an open-end
company and amendments of the Declaration.
(Art. IX, Sec. 1 and 2)
By-Laws By-Laws
The Delaware Act provides that the governing Under Maryland Law, after the organizational
instruments of a DST may consist of one or meeting, the power to adopt, alter or repeal the
more instruments, but does not specifically by-laws is vested in the stockholders, except to
provide that one of the governing instruments the extent that the charter or by-laws vest such
shall be By-Laws or how they may be adopted, power in the board.
amended or repealed.
The By-Laws may be amended, restated or The By-Laws may be adopted, amended or
repealed or new By-Laws may be adopted by repealed by "vote of the holders of a majority
the affirmative "vote of a majority of the of the [Corporation's] stock" (as defined in the
outstanding voting securities" (as defined in the 1940 Act); except, however, that the
1940 Act). The By-Laws may also be amended, amendment of provisions pertaining to the
restated or repealed or new By-Laws may be fixing of the number of directors and the
adopted by the Board of Trustees. (BL Art. classification of the board and the removal of
VIII, Sec. 1, 2) directors requires the affirmative vote of the
holders of 75% of the Corporation's shares,
Certificate of Trust unless such action had previously been
Pursuant to the Declaration, amendments and/ approved by the affirmative vote of two-thirds
or restatements of the Certificate of Trust shall of the total number of directors fixed by the
be made at any time by the Board of Trustees, By-Laws in which case the affirmative vote of
without approval of the shareholders, to correct a majority of the outstanding shares is required.
any inaccuracy contained therein. Any such Directors may adopt, amend or repeal any
amendments/restatements of the Certificate of By-Law (not inconsistent with any By-Law
Trust must be executed by at least one (1) adopted, amended or repealed by stockholders)
trustee and filed with the Secretary of State in by majority vote of all of the Directors in
order to become effective. (Art. IX, Sec. 1) office, in accordance with applicable law. (BL
Art. VIII, Sec. 1, 2)
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Preemptive Under the Delaware Act, a governing Under Maryland Law, a stockholder does not
Rights and instrument may contain any provision relating have preemptive rights unless the charter
Redemption to the rights, duties and obligations of the expressly grants such rights.
of Shares shareholders. Unless otherwise provided in the
governing instrument, a shareholder shall have
no preemptive right to subscribe to any
additional issue of shares or another interest in
a DST.
The Declaration provides that Shareholders The Charter does not contain any provisions
shall have no preemptive or other right to regarding preemptive rights. The By-Laws state
subscribe for new or additional Shares or other that the corporation's stockholders do not have
securities issued by the Trust. (Art. III, preemptive rights. (BL Art. VII, Sec. 10)
Sec. 1(e))
The Trust has the right at its option and at any
time, subject to the 1940 Act and other
applicable law, to repurchase Shares of any
Shareholder under certain circumstances at a
price that meets the requirements of Section 23
of the 1940 Act, and the rules and regulations
adopted thereunder, and that is in accordance
with the terms of the Declaration, the By-Laws
and other applicable law. (Art. VI, Sec. 2(b))
Dissolution The Trust shall have perpetual existence unless See Voting Rights, Meetings, Notice, Quorum,
and dissolved: (i) upon approval of the Board of Record Dates and Proxies--Stockholder Vote
Termination Trustees, and the affirmative vote of the for the Maryland Law as to the stockholder
Events holders of at least 66 2/3% of the Shares entitled vote required to dissolve voluntarily a
to vote to approve such transaction unless such corporation.
action has been previously approved by the
affirmative vote of at least two-thirds (66 2/3%) Depending on the grounds for involuntary
of the Board of Trustees, in which case the dissolution, under Maryland Law (i)
affirmative "vote of a majority of the stockholders entitled to cast at least 25% of all
outstanding voting securities," as defined in the the votes entitled to be cast in the election of
1940 Act, of the Trust entitled to vote at the directors; (ii) any stockholder entitled to vote in
meeting at which a quorum is present, shall be the election of directors; or (iii) any
required; (ii) upon the sale, conveyance and stockholder or creditor of the corporation, may
transfer of all or substantially all of the assets petition a court of equity to dissolve the
of the Trust to another entity; or (iii) upon the corporation.
occurrence of a dissolution or termination event
pursuant to any provision of the Delaware Act. The Charter provides that, notwithstanding any
(Art. VIII, Sec. 2(a) and (b), Sec. 3(c)) other provision of the Charter, a favorable vote
of the holders of at least two-thirds of the
shares of the Corporation then entitled to be
voted on the matter shall be required to
approve, adopt or authorize a liquidation or
dissolution of the Corporation, unless such
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action has previously been approved, adopted
or authorized by the affirmative vote of
two-thirds of the total number of Directors
fixed in accordance with the Bylaws, in which
case the affirmative vote of a majority of the
outstanding shares of the Corporation, as
defined in the 1940 Act, is required. (Twelfth
Art.)
Liquidation Under the Delaware Act, a DST that has Under Maryland Law, a corporation that has
upon dissolved shall first pay or make reasonable voluntarily dissolved shall pay, satisfy and
Dissolution provision to pay all known claims and discharge the existing debts and obligations of
or obligations, including those that are contingent, the corporation, including necessary expenses
Termination conditional and unmatured, and all known of liquidation, before distributing the remaining
claims and obligations for which the claimant assets to the stockholders.
is unknown. Any remaining assets shall be
distributed to the shareholders or as otherwise
provided in the governing instrument.
The Declaration provides that any remaining
assets of the dissolved Trust shall be distributed
ratably to the Shareholders according to the
number of outstanding Shares held of record by
the several Shareholders on the record date for
such dissolution distribution. (Art. VIII, Sec. 2)
Voting Under the Delaware Act, the governing
Rights, instrument may set forth any provision relating
Meetings, to trustee and shareholder voting rights,
Notice, including the withholding of such rights from
Quorum, certain trustees or shareholders. If voting rights
Record are granted, the governing instrument may
Dates and contain any provision relating to meetings,
Proxies notice requirements, written consents, record
dates, quorum requirements, voting by proxy
and any other matter pertaining to the exercise
of voting rights. The governing instrument may
also provide for the establishment of record
dates for allocations and distributions by the
DST.
One Vote Per Share One Vote Per Share
The Declaration provides that each outstanding Under Maryland Law, unless a corporation's
Share is entitled to one vote and each charter provides for a greater or lesser number
outstanding fractional Share is entitled to a of votes per share, or limits or denies voting
fractional vote. (Art. V, Sec. 1) rights, each outstanding share of stock is
entitled to one vote on each matter submitted to
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a vote at a meeting of stockholders. A
corporation may issue fractional shares of
stock.
The Charter provides that each outstanding
share of stock is entitled to one vote and each
outstanding fractional share of stock is entitled
to a fractional vote. (Fifth Art., Sec. (2); BL
Art. II, Sec. 7)
Shareholders' Meetings Stockholders' Meetings
While the Delaware Act does not mandate Under Maryland Law, every corporation must
annual shareholders' meetings, the By-Laws hold an annual stockholders' meeting to elect
require annual meetings for the election of directors and transact other business, except
trustees and the transaction of other business. that the charter or by-laws of a corporation
The By-Laws also authorize the calling of a registered under the 1940 Act may provide that
special meeting (i) when deemed necessary or an annual meeting is not required in any year in
desirable by the Board of Trustees or (ii) to the which the election of directors is not required
extent permitted by the 1940 Act, by the by the 1940 Act. Maryland Law authorizes, and
chairperson of the Board, or at the request of permits the charter and by-laws to authorize,
holders of 10% of the outstanding Shares if certain persons to call special meetings of
such Shareholders pay the reasonably estimated stockholders.
cost of preparing and mailing the notice
thereof, for the purpose of electing trustees. The By-Laws require annual meetings of
However, no special meeting may be called at stockholders for the election of directors and
the request of Shareholders to consider any the transaction of other business. The By-Laws
matter that is substantially the same as a matter also authorize the calling of a special meeting,
voted upon at a Shareholders' meeting held unless otherwise "prescribed" by statute or the
during the preceding twelve (12) months, Charter, by the board or the president, and shall
unless requested by holders of a majority of all be called by the president or the secretary upon
outstanding Shares entitled to vote at such the written request of a majority of the directors
meeting. (BL Art. II, Sec. 2(a), (b)) or at the written request of stockholders owning
10% "in amount of the entire capital stock" of
Under the By-Laws, Shareholder proposals may the Corporation then issued and outstanding,
be presented at an annual Shareholders' provided that such request shall state the
meeting if brought by a Shareholder who (i) is purpose of such meeting and the matters
entitled to vote at the meeting; (ii) complies proposed to be acted on. However, no special
with the notice procedures set forth in the By- meeting will be called at the request of
Laws; and (iii) was a Shareholder of record at stockholders to consider any matter that is
the time such notice is received by the secretary substantially the same as a matter voted upon at
of the Trust. The Shareholder's notice must be a stockholders' special meeting held during the
in writing and delivered to the Trust not less preceding 12 months, unless requested by
than one hundred twenty (120) days nor more holders of a majority of all outstanding shares
than one hundred fifty (150) days prior to the entitled to vote at such meeting. (BL Art. II,
date of any such meeting. Each such notice Sec. 2, 3)
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given by a Shareholder must include certain
information set forth in the By-Laws and as
reasonably requested by the Trust. At the
annual meeting, the appropriate officer may, if
the facts warrant, determine and declare to such
meeting that a proposal was not made in
accordance with the procedure in the By-Laws,
and, if the officer should so determine, shall so
declare to the meeting, and the defective
proposal shall be disregarded and laid over for
action at the next succeeding annual meeting of
the Shareholders taking place thirty (30) days
or more thereafter. (BL Art. II, Sec. 2(c)-(f))
Record Dates Record Dates
As set forth above, the Delaware Act authorizes Under Maryland Law, unless the by-laws
the governing instrument of a DST to set forth otherwise provide, the board may set a record
any provision relating to record dates. date, which date must be set within the
parameters outlined by the Maryland statute,
for determining stockholders entitled to notice
of a meeting, vote at a meeting, receive
dividends or be allotted other rights.
In order to determine the Shareholders entitled In order to determine the stockholders entitled
to notice of, and to vote at, a Shareholders' to notice of, and to vote at, a stockholders'
meeting, the Declaration authorizes the Board meeting, the By-Laws authorize the Board of
of Trustees to fix a record date. The record date Directors to fix a record date not less than ten
may not precede the date on which it is fixed by (10) nor more than ninety (90) days prior to the
the Board and it may not be more than one date of the meeting or prior to the last day on
hundred and twenty (120) days nor less than ten which the consent or dissent of stockholders
(10) days before the date of the Shareholders' may be effectively expressed for any purpose
meeting. A determination of Shareholders of without a meeting. If the Board does not fix a
record entitled to notice of or to vote at a record date, the record date shall be the later of
meeting of Shareholders shall apply to any the close of business on the day on which
adjournment of the meeting; provided, notice of the meeting is mailed or the 30/th/ day
however, that the Board of Trustees may fix a before the meeting, except if all stockholders
new record date for the adjourned meeting and waive notice, the record date is the close of
shall fix a new record date for any meeting that business on the 10/th/ day next preceding the day
is adjourned for more than sixty (60) days from the meeting is held. (BL Art. VII, Sec. 5)
the date set for the original meeting. The
By-Laws provide that notice of a Shareholders'
meeting shall be given to Shareholders entitled
to vote at such meeting not less than ten (10)
nor more than
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one hundred and twenty (120) days before the
date of the meeting. (Art. V, Sec. 4(a); BL
Art. II, Sec. 3)
To determine the Shareholders entitled to vote
on any action without a meeting, the
Declaration authorizes the Board of Trustees to
fix a record date. The record date may not
precede the date on which it is fixed by the
Board nor may it be more than thirty (30) days
after the date on which it is fixed by the Board.
(Art. V, Sec. 4(a))
Pursuant to the Declaration, if the Board of
Trustees does not fix a record date: (a) the
record date for determining Shareholders
entitled to notice of, and to vote at, a meeting
will be the day before the date on which notice
is given or, if notice is waived, on the day
before the date of the meeting; (b) the record
date for determining Shareholders entitled to
vote on any action by consent 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 signed written
consent is delivered to the Trust, or (ii) when
prior action of the Board of Trustees has been
taken, shall be the day on which the Board of
Trustees adopts the resolution taking such prior
action. (Art. V, Sec. 4(b))
For the purpose of determining the To determine the stockholders entitled to a
Shareholders of the Trust who are entitled to dividend, any other distribution, or delivery of
receive payment of any dividend or of any evidences of rights or other interests from the
other distribution of assets of the Trust (other Corporation, the By-Laws authorize the Board
than in connection with a dissolution of the to fix a record date not exceeding ninety (90)
Trust, a merger, consolidation, conversion, sale days preceding the date fixed for the payment
of assets, or any other transactions, in each case of the dividend or distribution or delivery of the
that is governed by Article VIII of the evidences. (BL Art. VII, Sec. 5)
Declaration of Trust), the Board of Trustees
may: (i) from time to time fix a record date,
which record date shall not precede the date
upon which the resolution fixing the record date
is adopted, and which record date shall not be
more than sixty (60) days before the date for
the payment of such dividend and/or such other
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distribution; (ii) adopt standing resolutions
fixing record dates and related payment dates at
periodic intervals of any duration for the
payment of such dividend and/or such other
distribution; and/or (iii) delegate to an
appropriate officer or officers of the Trust the
determination of such periodic record and/or
payments dates with respect to such dividend
and/or such other distribution. (Art. V,
Sec. 4(c))
Quorum for Shareholders' Meeting Quorum for Stockholders' Meeting
To transact business at a Shareholders' Under Maryland Law, unless the charter or
meeting, the Declaration provides that a Maryland Law provides otherwise, in order to
majority of the outstanding Shares entitled to constitute a quorum for a meeting, there must
vote at the meeting, which are present in person be present in person or by proxy, stockholders
or represented by proxy, shall constitute a entitled to cast a majority of all the votes
quorum at such meeting, except when a larger entitled to be cast at the meeting.
quorum is required by the Declaration, the
By-laws, applicable law or any securities To transact business at a meeting, the By-Laws
exchange on which such shares are listed for provide that a majority of the outstanding
trading, in which case such quorum shall shares entitled to vote, which are present in
comply with such requirements. (Art. V, person or represented by proxy, shall constitute
Sec. 2(a)) a quorum at a stockholders' meeting.
(BL Art. II, Sec. 5)
Shareholder Vote Stockholder Vote
The Delaware Act provides that the governing Under Maryland Law, for most stockholder
instruments of a DST, such as the Trust, may actions, unless the charter or Maryland Law
determine the requisite shareholder vote to provides otherwise, a majority of all votes cast
approve actions for the Trust. at a meeting at which a quorum is present is
required to approve any matter. Actions such as
(i) amendments to the corporation's charter, (ii)
mergers, (iii) consolidations, (iv) statutory
share exchanges, and (v) dissolutions require
the affirmative vote of two-thirds of all votes
entitled to be cast on the matter unless the
charter provides for a lesser proportion which
may not be less than a majority of all votes
entitled to be cast on the matter. Transfers of
assets by a registered investment company do
not require stockholder approval or filing of
articles of transfer. Unless the charter or by-
laws require a greater vote, a plurality of all
votes cast at a meeting at which a quorum is
present is required to elect a director.
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The Declaration provides that, subject to any Election of Directors. Under the By-Laws, at a
provision of the Declaration, the By-Laws or stockholders' meeting at which a quorum is
applicable law that requires a different vote: present, a plurality of the votes cast shall be
(i) in all matters other than the election of required to elect Directors at the annual
Trustees, the affirmative "vote of a majority of meeting and to fill any vacancy resulting from
the outstanding voting securities" (as defined in an increase in the number of Directors on the
the 1940 Act) of the Trust entitled to vote at a Board (adopted by vote of the stockholders) as
Shareholders' meeting at which a quorum is well as fill any then existing vacancies on the
present, shall be the act of the Shareholders; Board. (BL Art. II, Sec. 2; BL Art. III, Sec. 1)
and (ii) Trustees shall be elected by not less
than a plurality of the votes cast of the holders Other matters for which the vote is not
of outstanding Shares entitled to vote present in expressly designated otherwise. For all other
person or represented by proxy at a matters, other than any specific matter for
Shareholders' meeting at which a quorum is which applicable statutes, the Charter or By-
present. (Art. V, Sec. 2(b)) Laws expressly provides for a different vote, a
majority of the votes cast, at a stockholders'
meeting at which a quorum is present, shall
decide any question brought before such
meeting. (BL Art. II, Sec. 6)
Shareholder Vote on Certain Transactions Stockholder Vote on Certain Transactions
Under the Declaration, in order for the Trust to Under the Charter, in order to consummate a
consummate a dissolution, merger, merger, consolidation, sale of all or
consolidation, conversion, sale of all or substantially all of the assets, the liquidation or
substantially all the assets or reclassification, dissolution of the Corporation, or the
such transaction shall be approved in the conversion of the Corporation from a closed-
following manner: the transaction must be end fund to an open-end fund, such transaction
approved by the vote of a majority of the shall be approved in the following manner: the
Trustees present at a meeting at which a transaction must be approved by the favorable
quorum is present, and the affirmative vote of vote of at least two-thirds of the outstanding
the holders of at least 66 2/3% of the outstanding shares entitled to vote, unless such action has
Shares entitled to vote, unless such action has been previously approved by the affirmative
been previously approved by the affirmative vote of two-thirds of the total number of
vote of at least 66 2/3% of the Board of Trustees, directors fixed pursuant to the By-Laws, in
in which case the affirmative "vote of a which case the transaction must be approved by
majority of the outstanding voting securities" the affirmative vote of a majority of all the
(as defined in the 1940 Act) of the Trust outstanding securities of the Corporation, as
entitled to vote at a Shareholders' meeting at defined in the 1940 Act. (Eleventh Art. and
which a quorum is present shall be required. Twelfth Art.)
(Art. VIII, Sec. 1)
Cumulative Voting Cumulative Voting
The Declaration provides that Shareholders are Maryland Law provides that the charter may
not entitled to cumulate their votes on any authorize cumulative voting for the election of
matter. (Art. V, Sec. 1) the directors and if the charter does not so
provide, then the stockholders are not entitled
to cumulative voting rights.
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The Charter and By-Laws do not have any
provisions as to whether stockholders are
entitled to cumulate their votes on any matter
and, consequently, the stockholders are not
entitled to cumulate their votes on any matter.
Proxies Proxies
Under the Delaware Act, unless otherwise Under Maryland Law, a stockholder may sign a
provided in the governing instrument of a DST, writing authorizing another person to act as a
on any matter that is to be voted on by the proxy or may transmit such authorization by
shareholders, the shareholders may vote in telegram, cablegram, datagram, electronic mail,
person or by proxy and such proxy may be or any other electronic or telephonic means.
granted in writing, by means of "electronic
transmission" (as defined in the Delaware Act)
or as otherwise permitted by applicable law.
Under the Delaware Act, the term "electronic
transmission" is defined as any form of
communication not directly involving the
physical transmission of paper that creates a
record that may be retained, retrieved and
reviewed by a recipient thereof and that may be
directly reproduced in paper form by such a
recipient through an automated process.
The By-Laws permit a Shareholder to authorize The By-Laws require a proxy to be executed in
another person to act as proxy by the following writing by the stockholder or by a duly
methods: execution of a written instrument or authorized attorney-in-fact. Unless a proxy
by "electronic transmission" (as defined in the provides otherwise, it is not valid more than 11
Delaware Act), telephonic, computerized, months after its date. A proxy is revocable by
telecommunications or another reasonable the person executing it or by his or her personal
alternative to the execution of a written representatives or assigns. A proxy with respect
instrument. A proxy is deemed executed if the to stock held in the name of two or more
Shareholder's name is placed on the proxy by persons will be valid if executed by one of
the Shareholder or his or her attorney-in-fact. them, unless before it is exercised the
Unless a proxy provides otherwise, it is not Corporation receives specific written notice to
valid more than 11 months after its date. A the contrary from any one of them. A proxy
proxy with respect to Shares held in the name purporting to be executed by or on behalf of a
of two or more persons shall be valid if stockholder shall be deemed valid unless it is
executed by any one of them unless, at or prior challenged at or before it is exercised.
to the exercise of the proxy, the Secretary of the (BL Art. II, Sec. 8)
Trust receives a specific written notice to the
contrary from any one of them. A proxy
purporting to be by or on behalf of a
Shareholder shall be deemed valid unless
challenged at or prior to its exercise. (BL Art.
II, Sec. 8)
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Action by Written Consent Action by Written Consent
Under the Delaware Act, unless otherwise provided Maryland Law provides that any action
in the governing instrument of a DST, on any required or permitted to be taken at a
matter that is to be voted on by the shareholders, stockholders' meeting may be taken without a
such action may be taken without a meeting, meeting, if a unanimous written consent is
without prior notice and without a vote if a written signed by each stockholder entitled to vote on
consent(s), setting forth the action taken, is signed the matter.
by the shareholders having the minimum number
of votes that would be necessary to take such action
at a meeting at which all interests in the DST (as
applicable) entitled to vote on such action were
present and voted. Unless otherwise provided in the
governing instrument, a consent transmitted by
"electronic transmission" (as defined in the
Delaware Act) by a shareholder or by a person
authorized to act for a shareholder will be deemed
to be written and signed for this purpose.
Shareholders. The Declaration authorizes Stockholders. The By-Laws provide that any
Shareholders to take action without a meeting action to be taken by stockholders may be taken
and without prior notice if written consents without a meeting if: (1) all stockholders
setting forth the action taken is or are signed by entitled to vote on the matter consent to the
the holders of more than 50% of the action in writing; (2) all stockholders entitled to
outstanding Shares of the Trust (or such notice of the meeting but not entitled to vote at
different proportion thereof as shall be required it sign a written waiver of any right to dissent;
by law, the Declaration, or the By-Laws for and (3) the consents and waivers are filed with
approval of such action) are received by the the records of stockholder meetings. (BL Art.
secretary of the Trust either (i) by the date set II, Sec. 10)
by resolution of the Board of Trustees for the
Shareholder vote on such action, or (ii) if no
date is set by resolution of the Board, within 30
days after the record date for such action as
determined by reference to Art. V, Sec. 4(b). A
consent transmitted by "electronic
transmission" (as defined in the Delaware Act)
by a Shareholder or by a Person(s) authorized
to act for a shareholder shall be deemed to be
written and signed for purposes of this
provision. (Art. V, Sec. 3)
Removal of The governing instrument of a DST may Under Maryland Law, unless otherwise
Trustees/ contain any provision relating to the removal of provided in the charter, a director may
Directors trustees; provided however, that there shall at generally be removed with or without cause by
all times be at least one trustee of the DST. the vote of a majority of all the votes entitled to
be cast generally for the election of directors
unless (i) such director is elected by a certain
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class or series, (ii) the charter provides for
cumulative voting or (iii) the board is classified.
If the Board is classified, a Director may not be
removed without cause unless the charter or
certificate of incorporation provide otherwise.
Under the Declaration, any Trustee may be Under the Charter, a Director may be removed
removed, with or without cause, by the with or without cause, but only by action of the
Shareholders, upon the vote of the holders of at stockholders taken by the holders of at least 75%
least 75% of the Shares entitled to vote at any of the shares then entitled to vote in an election
meeting called for that purpose, or by the Board of Directors. A stockholders' meeting shall be
of Trustees, by action of a majority of the called for such purpose by the Board if
Trustees then in office. (Art. IV, Sec. 1(e)) requested in writing by holders of not less than
10% of outstanding shares of the Corporation.
(Seventh Art., Sec. (2); BL Art. III, Sec. 1. See
also BL Art. III, Sec. 4).
Vacancies Subject to the 1940 Act, vacancies on the board Under Maryland Law, stockholders may elect
on Board of trustees may be filled by not less than a persons to fill vacancies that result from the
of majority vote of the Trustee(s) then in office, removal of directors. Unless the charter or by-
Trustees/ regardless of the number. However, a laws provide otherwise, a majority of the
Directors Shareholders' meeting shall be called to elect directors in office, whether or not comprising a
Trustees if required by the 1940 Act. (BL Art. quorum, may fill vacancies that result from any
III, Sec. 1(b)) cause except an increase in the number of
directors. A majority of the entire board of
directors may fill vacancies that result from an
increase in the number of directors.
In the event all Trustee offices become vacant, Under the By-Laws, Directors may increase or
an authorized officer of the investment adviser decrease their number; if the number is
shall serve as the sole remaining Trustee and increased, the added Directors may be elected by
shall, as soon as practicable, fill all of the a majority of Directors then in office. For other
vacancies on the board. Upon the qualification vacancies, the Directors then in office (though
of such Trustees, the authorized officer of the less than quorum) shall continue to act and may
investment adviser shall resign as Trustee and a by majority vote fill any vacancy until the next
Shareholders' meeting shall be called to elect meeting of stockholders, subject to the 1940 Act.
Trustees, as required by the 1940 Act. (BL Art. (BL Art. III, Sec. 1, 2)
III, Sec. 1(c))
The number of Directors may also be increased
or decreased by vote of stockholders at any
meeting called for the purpose and if the vote is
to increase the number, stockholders will vote
by plurality to elect the Directors to fill the new
vacancies as well as any then existing vacancies.
The By-Laws further provide that "[a]ny
vacancy may be filled by the [s]tockholders at
any meeting thereof." (BL Art. III, Sec. 1)
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Shareholder Under the Delaware Act, except to the extent The stockholders of a corporation are not
Liability otherwise provided in the governing liable for the obligations of the corporation.
instrument of a DST, shareholders of a DST
are entitled to the same limitation of personal
liability extended to shareholders of a private
corporation organized for profit under the
General Corporation Law of the State of
Delaware (such shareholders are generally not
liable for the obligations of the corporation).
Under the Declaration, Shareholders are
entitled to the same limitation of personal
liability as that extended to shareholders of a
private corporation organized for profit under
the General Corporation Law of the State of
Delaware. However, the Board of Trustees
may cause any Shareholder to pay directly an
amount fixed from time to time by the Board
of Trustees or an officer of the Trust for
charges of the Trust's custodian or transfer,
dividend disbursing, shareholder servicing or
similar agent, which are not customarily
charged generally to the Trust, where such
services are provided to such Shareholder
individually, rather than to all Shareholders
collectively. (Art. III, Sec. 5; Art. IV, Sec. 5)
Trustee/Direc- Subject to the provisions in the governing Maryland Law requires a director to perform
tor/Agent instrument, the Delaware Act provides that a his or her duties in good faith, in a manner he
Liability trustee or any other person managing the DST, or she reasonably believes to be in the best
when acting in such capacity, will not be interests of the corporation and with the care
personally liable to any person other than the that an ordinarily prudent person in a like
DST or a shareholder of the DST for any act, position would use under similar
omission or obligation of the DST or any circumstances. A director who performs his or
trustee. To the extent that at law or in equity, a her duties in accordance with this standard has
trustee has duties (including fiduciary duties) no liability to the corporation, its stockholders
and liabilities to the DST and its shareholders, or to third persons by reason of being or having
such duties and liabilities may be expanded or been a director. A corporation may include in
restricted by the governing instrument, except its charter a provision expanding or limiting the
for any act or omission that constitutes a bad liability of its directors and officers for money
faith violation of the implied contractual damages to the corporation or its stockholders,
covenant of good faith and fair dealing. provided however, that liability may not be
limited to the extent the person has received an
improper benefit or profit in money, property or
services or where such person has been actively
and deliberately dishonest.
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The Declaration provides that any person The Charter provides that no Director or
who is or was a Trustee, officer, employee or officer shall be personally liable to the
other agent of the Trust or is or was serving Corporation or its stockholders for monetary
at the request of the Trust as a Trustee, damages except: (i) a Director or officer is
director, officer, employee or other agent of liable for the amount of any improper benefit
another corporation, partnership, joint or profit he or she receives; and (ii) where a
venture, trust or other enterprise (an "Agent") judgment or other final adjudication adverse
will be liable to the Trust and to any to the Director or officer is entered in a
Shareholder for any act or omission that proceeding based on a finding that such
constitutes a bad faith violation of the implied person's action, or failure to act, was the
contractual covenant of good faith and fair result of active and deliberate dishonesty and
dealing, for such Agent's own willful was material to the cause of action
misfeasance, bad faith, gross negligence or adjudicated in the proceeding. The Charter
reckless disregard of the duties involved in further provides that no Director or officer
the conduct of such Agent (such conduct will be protected from liability to the
referred to as "Disqualifying Conduct") and Corporation or its stockholders arising from
for nothing else. Subject to the preceding such Director's or officer's willful
provision and to the fullest extent that misfeasance, bad faith, gross negligence or
limitations on the liability of Agents are reckless disregard of the duties involved in
permitted by the OSTA, Agents will not be the conduct of his office ("Disabling
liable for any act or omission of any other Conduct"). (Ninth Art.)
Agent or any investment adviser or principal
underwriter of the Trust. No Agent, when
acting in such capacity, shall be personally
liable to any person (other than the Trust or
its Shareholders as described above) for any
act, omission or obligation of the Trust or any
Trustee. (Art. VII, Sec. 1(b), (c), (d))
Indemnification Subject to such standards and restrictions Unless limited by its charter, Maryland Law
contained in the governing instrument of a requires a corporation to indemnify a director
DST, the Delaware Act authorizes a DST to who has been successful, on the elements or
indemnify and hold harmless any trustee, otherwise, in the defense of any proceeding
shareholder or other person from and against to which such person was a party because of
any and all claims and demands. such person's service in such capacity,
against reasonable expenses incurred in
connection with the proceeding.
Maryland Law permits a corporation to
indemnify a director, officer, employee or
agent who is a party or threatened to be a
party, by reason of service in that capacity, to
any threatened, pending or completed action,
suit or proceeding, against judgments,
penalties, fines, settlements and reasonable
expenses unless it is established that: (i) the
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act or omission of such person was material to
the matter giving rise to the proceeding, and
was committed in bad faith or was the result of
active and deliberate dishonesty; (ii) such
person actually received an improper personal
benefit; or (iii) such person had reasonable
cause to believe that the act or omission was
unlawful. However, if the proceeding is a
derivative suit or was brought by the
corporation, the corporation may not indemnify
a person who has been adjudged to be liable to
the corporation. Corporations are authorized to
advance payment of reasonable expenses upon
compliance with certain requirements.
Pursuant to the Declaration, the Trust will The Charter provides that the Corporation shall,
indemnify any Agent who was or is a party or is to the full extent permitted by the General
threatened to be made a party to any proceeding Corporation Law of the State of Maryland, as
by reason of such Agent's capacity, against amended from time to time, indemnify all
attorneys' fees and other certain expenses, persons whom it may indemnify pursuant
judgments, fines, settlements and other amounts thereto. However, no Director or officer shall
incurred in connection with such proceeding if be protected from liability to the Corporation or
such Agent acted in good faith or, in the case of its stockholders to which such person would
a criminal proceeding, had no reasonable cause otherwise be subject by reason of his or her
to believe such Agent's conduct was unlawful. Disabling Conduct. (Tenth Art.)
However, there is no right to indemnification
for any liability arising from the Agent's The By-Laws provide that the Corporation will
Disqualifying Conduct. As to any matter for indemnify its: (i) Directors to the fullest extent
which such Agent is found to be liable in the that indemnification of Directors is permitted
performance of such Agent's duty to the Trust by the Maryland General Corporation Law; (ii)
or its Shareholders, indemnification will be officers to the same extent as its Directors and
made only to the extent that the court in which to such further extent as is consistent with law;
that action was brought determines that in view and (iii) Directors and officers who, while
of all the circumstances of the case, the Agent serving as Directors or officers, also serve at
was not liable by reason of such Agent's the request of the Corporation as a director,
Disqualifying Conduct. Note that the Securities officer, partner, trustee, employee, agent or
Act of 1933, as amended (the "1933 Act"), in fiduciary of another corporation, partnership,
the opinion of the U.S. Securities and Exchange joint venture, trust, other enterprise or
Commission ("SEC"), and the 1940 Act also employee benefit plan to the fullest extent
limit the ability of the Trust to indemnify an consistent with law. This indemnification (and
Agent. (Art. VII, Sec. 2(a), (b)) other rights) provided by the By-Laws
continues as to persons who have ceased to be a
Expenses incurred by an Agent in defending Director or officer, includes the advance of
any proceeding may be advanced by the Trust reasonable expenses subject to certain
before the final disposition of the proceeding on conditions, and will inure to the benefit of the
receipt of an undertaking by or on behalf of the heirs, executors and administrators of such
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Agent to repay the amount of the advance if it is persons, but such persons will not be protected
ultimately determined that the Agent is not against any liability to the Corporation or its
entitled to indemnification by the Trust, stockholders arising from his or her Disabling
provided, that at least one of the following Conduct. The Corporation may indemnify, and
conditions for the advancement of expenses is advance reasonable expenses to, its employees
met: (i) the Agent shall provide a security for his and agents who are not officers or Directors of
undertaking, (ii) the Trust shall be insured the Corporation as may be provided by the
against losses arising by reason of any lawful Board of Directors or by contract, subject to any
advances, or (iii) a majority of a quorum of the limitations imposed by the 1940 Act. The
disinterested, non-party Trustees of the Trust, or By-Laws permit the Board of Directors to make
an independent legal counsel in a written such additional provisions for the
opinion, shall determine, based on a review of indemnification and advancement of expenses to
readily available facts (as opposed to a full trial- Directors, officers, employees and agents, as are
type inquiry), that there is reason to believe that consistent with the law. The indemnification
the Agent ultimately will be found entitled to provided by the By-Laws is not exclusive of any
indemnification. (Art. VII, Sec. 2(d)) other right, with respect to indemnification or
otherwise, to which those seeking
indemnification may be entitled under any
insurance or other agreement or resolution of
stockholders or disinterested Directors or
otherwise. (BL Art. V, Sec. 1, 2, 4 and 5)
Insurance The Delaware Act is silent as to the right of a Under Maryland Law, a corporation may
DST to purchase insurance on behalf of its purchase insurance on behalf of any person who
trustees or other persons. However, as the policy is or was a director, officer, employee or agent
of the Delaware Act is to give maximum effect against any liability asserted against and
to the principle of freedom of contract and to the incurred by such person in any such capacity
enforceability of governing instruments, the whether or not the corporation would have the
Declaration authorizes the Board of Trustees, to power to indemnify such person against such
the fullest extent permitted by applicable law, to liability.
purchase with Trust assets, insurance for liability
and for all expenses of an Agent incurred in The By-Laws authorize the Corporation to
connection with any proceeding in which such purchase insurance on behalf of any person who
Agent becomes involved by virtue of such is or was a Director, officer, employee or agent
Agent's actions, or omissions to act, in its of the Corporation or who, while a Director,
capacity or former capacity with the Trust, officer, employee, or agent of the Corporation, is
whether or not the Trust would have the power or was serving at the request of the Corporation
to indemnify such Agent against such liability. as a director, officer, partner, trustee, employee,
(Art. VII, Sec. 3) or agent of another foreign or domestic
corporation, partnership, joint venture, trust,
other enterprise, or employee benefit plan
against any liability asserted against and
incurred by such person in any such capacity or
arising out of such person's position. However,
no insurance may be purchased which would
indemnify any Director or officer against any
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liability to the Corporation or its stockholders
arising from such person's Disabling Conduct.
(BL Art. V, Sec. 7)
Shareholder Under the Delaware Act, except to the extent Under Maryland Law, a stockholder may
Right of otherwise provided in the governing instrument inspect, during usual business hours, the
Inspection and subject to reasonable standards established corporation's by-laws, stockholder proceeding
by the trustees, each shareholder has the right, minutes, annual statements of affairs, voting
upon reasonable demand for any purpose trust agreements, and, if the corporation is not
reasonably related to the shareholder's interest an open-end investment company, a statement
as a shareholder, to obtain from the DST showing all stock and securities issued by the
certain information regarding the governance corporation for the previous 12 months. In
and affairs of the DST, including a copy of the addition, stockholders who have individually or
Declaration, By-Laws and certificate of trust together been holders of at least 5% of the
and all amendments thereto, with copies of any outstanding stock of any class for at least 6
written powers of attorney used for their months, may inspect and copy the corporation's
execution; the names and addresses of each books of account, its stock ledger and its
Shareholder and Trustee; information about the statement of affairs.
business and financial condition of the Trust;
and other information about the affairs of the The Charter grants stockholders inspection
Trust as is just and reasonable. rights only to the extent provided by Maryland
Law. Such rights are subject to reasonable
As permitted by Delaware law, the By-Laws regulations of the Board of Directors not
provide that a Shareholder, upon reasonable contrary to Maryland Law, as to whether and to
written demand to the Trust for any purpose what extent, and at what times and places, and
reasonably related to such Shareholder's under what conditions and regulations, such
interest as a Shareholder, may inspect certain rights shall be exercised. (Seventh Art.,
information as to the governance and affairs of Sec. (1))
the Trust during the Trust's regular business
hours. If information is requested by a
Shareholder, reasonable standards governing,
without limitation, the information and
documents to be furnished and the time and
location of furnishing the same, will be
established by the Board or any officer to
whom such power is delegated in the By-Laws.
In addition, as permitted by the Delaware Act,
the By-Laws also authorize the Board or an
officer to whom such power is delegated in the
By-Laws, to keep confidential from
Shareholders for such period of time as deemed
reasonable any information that the Board or
such officer reasonably believes would not be
in the best interest of the Trust to disclose or
that could damage the Trust or that the Trust is
required by law or by agreement with a third
party to keep confidential. (BL Art. VI,
Sec. 1-3)
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Derivative Under the Delaware Act, a shareholder may Under Maryland Law, in order to bring a
Actions bring a derivative action if trustees with derivative action, a stockholder (or his or her
authority to do so have refused to bring the predecessor if he or she became a stockholder by
action or if a demand upon the trustees to bring operation of law) must be a stockholder (a) at
the action is not likely to succeed. A shareholder the time of the acts or omissions complained
may bring a derivative action only if the about, (b) at the time the action is brought, and
shareholder is a shareholder at the time the (c) until the completion of the litigation. A
action is brought and: (i) was a shareholder at derivative action may be brought by a
the time of the transaction complained about or stockholder if (i) a demand upon the board of
(ii) acquired the status of shareholder by directors to bring the action is improperly
operation of law or pursuant to the governing refused or (ii) a request upon the board of
instrument from a person who was a shareholder directors would be futile.
at the time of the transaction. A shareholder's
right to bring a derivative action may be subject Under Maryland Law, a director of an
to such additional standards and restrictions, if investment company who "is not an interested
any, as are set forth in the governing instrument. person, as defined by the 1940 Act, shall be
deemed to be independent and disinterested
The Declaration provides that, in addition to the when making any determination or taking any
requirements set forth in the Delaware Act, a action as a director."
Shareholder may bring a derivative action on
behalf of the Trust only if (i) the Shareholder
first makes a pre-suit demand upon the Board of
Trustees to bring the subject action unless an
effort to cause the Board of Trustees to bring
such action is excused, (ii) unless such demand
is not required, Shareholders eligible to bring
such action who hold at least 10% of the
outstanding Shares of the Trust join in the
request to the Board, and (iii) unless such
demand is not required, the Board is afforded a
reasonable amount of time to consider and
investigate such request and claims. A demand
on the Board of Trustees shall only be excused if
a majority of the Board of Trustees, or a
majority of any committee established to
consider the merits of such action, is composed
of Trustees who are not "independent trustees"
as described in the Delaware Act. (Art. VII,
Sec. 4)
C-20
EXHIBIT D
AUDIT COMMITTEE CHARTER
I. The Committee.
The Audit Committee ("Committee") is a committee of, and established by, the
Board of Directors/Trustees of the Fund (the "Board"). The Committee shall
consist of such number of members as set by the Board from time to time, but in
no event less than three, and its members shall be selected by the Board. The
Committee shall be comprised entirely of "independent" members, as defined in
Item 3(a)(2) of SEC Form N-CSR ("Disinterested Board members"). Members shall
be financially literate, meaning that each member is able to read and
understand fundamental financial statements, including the Fund's balance sheet
and income statement. At least one member of the Committee shall be designated
by the Board as an "audit committee financial expert," as defined in Item 3(b)
of SEC Form N-CSR, unless the Board determines that the Fund does not have an
audit committee financial expert on the Committee.
II.Purposes of the Committee.
The function of the Committee is to be directly responsible for overseeing
the Fund's accounting and auditing processes, which shall include the
appointment, compensation, retention and oversight of the work of the Fund's
independent registered public accounting firm ("auditors") engaged (including
resolution of disagreements between management and the auditors regarding
financial reporting) for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Fund. It is
management's responsibility to maintain appropriate systems for accounting and
internal controls. It is the auditors' responsibility to plan and carry out an
audit in accordance with the standards of the Public Company Accounting
Oversight Board and to report directly to the Committee. It is not the duty of
the Committee to plan or conduct audits or to determine that the Fund's
financial statements are complete and in accordance with generally accepted
accounting principles; it is the responsibility of the auditors to conduct
audits and the responsibility of management to prepare the Fund's financial
statements in accordance with generally accepted accounting principles.
In giving its recommendations to the Board with respect to the Fund's
financial statements, the Committee will rely on:
1. management's representation that such financial statements have been
prepared with integrity and objectivity and in conformity with
generally accepted accounting principles,
2. the report of the Fund's auditors with respect to such financial
statements.
Consistent with such allocation of functions, the purposes of the Committee
are:
(a) To oversee the Fund's accounting and financial reporting policies and
practices and its internal controls, and to obtain, where it deems
appropriate, reports on internal controls of service providers to the Fund;
(b) To oversee the quality, objectivity and integrity of the Fund's
financial statements and the independent audit thereof;
(c) To act as a liaison between the Fund's auditors and the Board; and
D-1
(d) To consider such other matters as it deems appropriate in carrying
out its purpose and any other matters that may be assigned to it by the
Board.
In addition, the Committee shall serve as the Fund's Qualified Legal
Compliance Committee ("QLCC") pursuant to Section 205 of the SEC's Standards of
Professional Conduct for Attorneys (the "Standards"). In this capacity, the
Committee is required to adopt and maintain written procedures for the
confidential receipt, retention and consideration of any report of evidence of
a material violation. "Evidence of a material violation" means credible
evidence, based upon which it would be unreasonable, under the circumstances,
for a prudent and competent attorney not to conclude that it is reasonably
likely that a material violation of an applicable U.S. federal or state
securities law, a material breach of fiduciary (or similar duty) to the Fund
arising under U.S. federal or state law, or a similar material violation of any
U.S. federal or state law has occurred, is ongoing, or is about to occur.
III.Powers and Duties.
The Committee shall have the following powers and duties to carry out its
purposes:
(a) To select the auditors, subject to approval both by the Board and by
a separate vote of the Disinterested Board members, and, in connection
therewith, to evaluate the independence and qualifications of the auditors
in accordance with applicable federal securities laws and regulations and
the rules and standards of the Independence Standards Board and American
Institute of Certified Public Accountants.
(b) To be directly responsible for approving the services to be provided
by, and the compensation of, the auditors, including:
(i)pre-approval of all audit and audit related services;
(ii)pre-approval of all non-audit related services to be provided to
the Fund by the auditors;
(iii)pre-approval of all non-audit related services to be provided by
the auditors to the Fund's investment adviser or to any entity
that controls, is controlled by or is under common control with
the Fund's investment adviser and that provides ongoing services
to the Fund where the non-audit services relate directly to the
operations or financial reporting of the Fund; and
(iv)establishment by the Committee, if deemed necessary or
appropriate, as an alternative to Committee pre-approval of
services to be provided by the auditors, as required by
paragraphs (ii) and (iii) above, of policies and procedures to
permit such services to be pre-approved by other means, such as
through establishment of guidelines or by action of a designated
member or members of the Committee; provided the policies and
procedures are detailed as to the particular service and the
Committee is informed of each service and such policies and
procedures do not include delegation of audit committee
responsibilities, as contemplated under the Securities Exchange
Act of 1934, to management; subject, in the case of (ii) through
(iv), to any waivers, exceptions or exemptions that may be
available under applicable law or rules.
(c) To meet with the auditors, including private meetings, as necessary
to (i) review the arrangements for and scope of the annual audit and any
special audits; (ii) discuss any matters or concerns relating to the Fund's
financial statements, including any recorded and/or unrecorded adjustments
to such statements recommended by the auditors, or other results of audits;
(iii) consider the auditors' comments with respect
D-2
to the Fund's financial, accounting and reporting policies, procedures and
internal controls and management's responses thereto; and (iv) to review the
form of opinion the auditors propose to render.
(d) To receive and consider reports from the auditors:
(i)as required by generally accepted accounting standards; and
(ii)annually and by update as required by SEC Regulation S-X,
regarding: (w) all critical accounting policies and practices of
the Fund to be used; (x) alternative treatments within generally
accepted accounting principles for policies and practices related
to material items that have been discussed with management of the
Fund, including ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the
auditors; (y) other material written communications between the
auditors and management of the Fund, such as any management
letter or schedule of unadjusted differences; and (z) all
non-audit services provided to any entity in an investment
company complex, as defined in SEC Regulation S-X, that were not
pre-approved by the Committee pursuant to SEC Regulation S-X.
(e) To consider the effect upon the Fund of any changes in accounting
principles or practices proposed by management or the auditors.
(f) In considering the independence of the auditors, to request from, and
discuss with, the auditors a written statement, and other reports as
necessary, describing all relationships between the auditors and the Fund,
the Fund's investment adviser and service providers, and other entities
advised or serviced by, including any entities controlling, controlled by or
under common control with, the investment adviser or any other service
providers to the Fund that, in the auditors' judgment, could be thought to
bear upon the auditors' independence; to receive and consider, if
applicable, periodic reports from the auditors regarding whether the
provision of non-audit services is compatible with maintaining the auditors'
independence; and to request from the auditors a certificate that they are
independent auditors under the Federal securities laws and are in compliance
with all standards adopted by the Independence Standards Board.
(g) To require that the auditors regularly provide timely information to
the Committee with respect to new rules and pronouncements by applicable
regulatory and accounting standards agencies, along with an explanation of
how such developments may affect the Fund's financial statements and
accounting principles and practices.
(h) To review, at such times and in the manner deemed appropriate by the
Committee, the results of the annual audit of, and the report of the
auditors on the Fund's annual financial statements, including footnotes and
any significant audit findings.
(i) To consider any reports of difficulties that may have arisen during
the course of the audit, including any limitations of the scope of the
audit, and management's response thereto.
(j) To review certifications of the Fund's Chief Executive
Officer--Finance and Administration, and Chief Financial Officer and Chief
Accounting Officer concerning (i) all significant deficiencies and material
weaknesses in the design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect the Fund's ability
to record, process, summarize and report financial information; and (ii) any
fraud, whether or not material, that involves management or other employees
who have a significant role in the Fund's internal controls over financial
reporting , and for any other purposes the Committee deems appropriate, as
required by (S) 302 of the Sarbanes-Oxley Act.
D-3
(k) To inform the chief legal officer ("CLO") and chief executive officer
("CEO") of the Fund (or the equivalents thereof) of any report of evidence
of a material violation by the Fund, its officers, directors/trustees,
employees (if any), or agents (collectively, "affiliates"). In connection
therewith, the Committee shall:
(i)determine whether an investigation is necessary regarding any
report of evidence of a material violation by the Fund or its
affiliates;
(ii)if the Committee determines such an investigation is necessary or
appropriate, (A) notify the Board; (B) initiate an investigation,
which may be conducted by either the CLO or by outside attorneys;
and (C) retain such additional expert personnel as the Committee
deems necessary to assist in the investigation;
(iii)at the conclusion of any such investigation, (A) recommend by a
majority vote, that the Fund implement an appropriate response
(as defined in Section 205.2(b) of the Standards) to evidence of
a material violation, and (B) inform the CLO and the CEO and the
Board of the results of such investigation and the appropriate
remedial measures to be adopted;
(iv)acting by majority vote, take all other appropriate action,
including the authority to notify the SEC in the event the Fund
fails in any material respect to implement an appropriate
response that the Committee has recommended the Fund to take; and
(v)otherwise respond to evidence of a material violation.
IV.Other Functions and Procedures of the Committee.
(a) The Committee shall meet at least twice each year or more frequently,
in open or executive sessions, as may be necessary to fulfill its
responsibilities. The Committee shall meet as frequently as circumstances
require with (i) the auditors as provided in III (c), above; and
(ii) management's internal audit department to review and discuss internal
audit functions and reports. The Committee may invite members of management,
the auditors, counsel, advisers and others to attend its meetings as it
deems appropriate. The Committee shall have separate sessions with the
auditors, management and others, as and when it deems appropriate.
(b) The Committee shall establish procedures for (i) the receipt,
retention and treatment of complaints received by the Fund or the Fund's
adviser regarding accounting, internal accounting controls, or accounting
matters relating to the Fund; and (ii) the confidential, anonymous
submission by employees of the Fund or the Fund's adviser, administrator,
principal underwriter or any other provider of accounting related services
for the Fund, of concerns regarding questionable accounting or auditing
matters.
(c) The Committee shall have the authority to engage special counsel,
experts and advisers as and when it determines necessary to carry out its
duties and the Fund must provide for appropriate funding, as determined by
the Committee, for payment of (i) compensation to any auditors engaged for
the purpose of preparing or issuing an audit report or performing other
audit, review or attest services for the Fund; (ii) compensation to any
advisers employed by the Committee; and (iii) ordinary administrative
expenses of the Committee that are necessary or appropriate in carrying out
its duties.
(d) The Committee shall have unrestricted access to the Fund's management
and management of the Fund's adviser, including, but not limited to, their
chief executive officer(s), chief financial officer(s), internal auditors
and any other executives and financial officers.
D-4
(e) The Committee shall report its activities to the Board and make such
recommendations as the Committee may deem necessary or appropriate.
(f) The Committee shall review and assess the adequacy of this Charter
annually, or more frequently if it chooses, and recommend any changes to the
Board.
ADDITIONAL STATEMENTS FOR CLOSED-END FUNDS ONLY
(The provisions set forth in Appendix A hereto are intended to cover specific
requirements and wording mandated by applicable Stock Exchange listing
requirements.)
D-5
Appendix A
In addition to the purposes set forth above, the purposes of the Committee
include:
(a) preparation of the Audit Committee Disclosure Report required to be
included in the Fund's annual proxy statement; and
(b) the assistance of oversight, as either part of the full Board or as a
Committee, of the Fund's compliance with legal and regulatory requirements.
In addition to the powers and duties set forth above, the Committee shall
have the following powers and duties to carry out its purposes:
(a) To obtain and review a report by the auditors, at least annually,
describing:
(i)All relationships between the auditors and the Fund, the Fund's
adviser, and any control affiliate of the adviser that provides
ongoing services to the Fund;
(ii)Any material issues raised by the most recent internal
quality-control review, or peer review, of the auditors, or by
any inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or
more independent audits carried out by the auditors, and any
steps taken to deal with any such issues; and
(iii)The auditors' internal quality-control procedures;
(b) To discuss generally, to the extent the Fund issues any earnings
press releases or any financial information and earnings guidance provided
to analysts and rating agencies, any such releases or information and
guidance;
(c) To discuss in a general manner, as either part of the full Board or
as a Committee, the Fund's processes with respect to risk assessment and
risk management;
(d) To review and approve, as either part of the full Board or as a
Committee, clear policies relating to the hiring by entities within Franklin
Templeton Investments of employees or former employees of the auditors;
(e) To evaluate, as either part of the full Board or as a Committee, its
performance at least annually; and
(f) Upon appointment of a member (i) to the Committee or (ii) to the
audit committee of another public company, who simultaneously serves on the
audit committees of three or more public companies, to request the Board to
determine that such simultaneous service would not impair the ability of
such member to effectively serve on the Committee.
The Committee shall comply with such other rules of the New York Stock
Exchange LLC, other applicable national securities exchanges and the U.S.
Securities and Exchange Commission applicable to closed-end funds, as such may
be adopted and amended from time to time.
D-6
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TLTRF PROXY 08/08
TEMPLETON RUSSIA AND EAST EUROPEAN FUND, INC.
ANNUAL MEETING OF SHAREHOLDERS - AUGUST 22, 2008
The undersigned hereby revokes all previous proxies for his/her shares and
appoints SHEILA M. BARRY, ROBERT C. ROSSELOT and LORI A. WEBER, and each of
them, proxies of the undersigned with full power of substitution to vote all
shares of Templeton Russia and East European Fund, Inc. (the "Fund") that the
undersigned is entitled to vote at the Fund's Annual Meeting of Shareholders
(the "Meeting") to be held at 500 East Broward Boulevard, 12th Floor, Fort
Lauderdale, Florida 33394 at 12 Noon Eastern time, on August 22, 2008, including
any postponements or adjournments thereof, upon the matters set forth below and
instructs them to vote upon any other matters that may properly be acted upon at
the Meeting.
This Proxy is solicited on behalf of the Board of Directors. It will be
voted as specified. If no specification is made, this Proxy shall be voted FOR
Proposal 1 (including all nominees for director) and Proposal 2. If any other
matters properly come before the Meeting to be voted on, the proxy holders will
vote, act and consent on those matters in accordance with the views of
management.
(Continued and to be signed on the other side)
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You can now access your
Templeton Russia and East European Fund, Inc. account online.
Access your Fund account online via Investor ServiceDirect(R) (ISD).
BNY Mellon Shareowner Services, Transfer Agent for the Fund, now makes it easy
and convenient to get current information on your shareholder account.
o View account status o Make address changes
o View certificate history o Obtain a duplicate 1099 tax form
o View book-entry information o Establish/change your PIN
o View payment history for dividends
Visit us on the web at http://www.bnymellon.com/isd
For Technical Assistance Call 1-877-978-7778 between 9 a.m. and 7 p.m.
Monday-Friday Eastern Time
Investor ServiceDirect(R) is a registered trademark of
BNY Mellon Shareowner Services
Please mark here if address |_|
change or comment noted on
proxy
The Board of Directors unanimously recommends a vote FOR Proposals 1 and 2.
Proposal 1 - Election of Directors.
WITHHOLD Nominees: 01 Harris J. Ashton, 02 Ann Torre Bates,
FOR all nominees AUTHORITY 03 Larry D. Thompson and
listed (except as to vote for 04 Constantine D. Tseretopoulos
marked to the right) all nominees listed
|_| |_| To withhold authority to vote for any individual
nominee, write that nominee's name on the line below.
-----------------------------------------------------
FOR AGAINST ABSTAIN
Proposal 2 - Approval of an Agreement and [ ] [ ] [ ]
Plan of Reorganization that provides for
the reorganization of the Fund from a Maryland
corporation to a Delaware statutory trust.
YES NO
I PLAN TO ATTEND THE MEETING. |_| |_|
Signature(s): Dated , 2008
----------------------------------------------- -------
Please sign exactly as your name appears on this Proxy. If signing for estates,
trusts or corporations, title or capacity should be stated. If shares are held
jointly, each holder should sign.
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