[GRAPHIC OMITTED]
FRANKLIN XXXXXXXXX
DISTRIBUTORS, INC.
SELLING AGREEMENT
NOVEMBER 1, 2003
Dear Securities Dealer:
Franklin Xxxxxxxxx Distributors, Inc. ("we" or "us") invites you to participate
in the distribution of shares of the Franklin Xxxxxxxxx investment companies
(the "Funds") for which we now or in the future serve as principal underwriter,
subject to the terms of this Agreement. We will notify you from time to time of
the Funds that are eligible for distribution and the terms of compensation under
this Agreement. This Agreement supersedes any prior dealer or selling agreements
between us, as stated in Section 21, below.
1. LICENSING.
(a) You represent that you are (i) a broker or dealer validly registered
with U.S. Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, and a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD") and are
presently licensed to the extent necessary by the appropriate regulatory
agency of each jurisdiction in which you will offer and sell shares of
the Funds, or (ii) a broker, dealer or other company licensed,
registered or otherwise qualified to effect transactions in securities
in a country (a "foreign country") other than the United States of
America (the "U.S.") where you will offer or sell shares of the Funds.
You agree that termination or suspension of such membership with the
NASD, or of your license to do business by any regulatory agency having
jurisdiction, at any time shall terminate or suspend this Agreement
forthwith and shall require you to notify us in writing of such action.
If you are not a member of the NASD but are a broker, dealer or other
company subject to the laws of a foreign country, you agree to conform
to the Conduct Rules of the NASD. This Agreement is in all respects
subject to the Conduct Rules of the NASD, particularly Conduct Rule 2830
of the NASD, which shall control any provision to the contrary in this
Agreement.
(b) You agree to notify us immediately in writing if at any time you are not
a member in good standing of the Securities Investor Protection
Corporation ("SIPC").
2. SALES OF FUND SHARES. You may offer and sell shares of each Fund and class of
each Fund only at the public offering price which shall be applicable to, and in
effect at the time of, each transaction. The procedures relating to all orders
and the handling of them shall be subject to the terms of the applicable then
current prospectus and statement of additional information (hereafter, the
"Prospectus") and new account application, including amendments, for each such
Fund and each class of such Fund, and our written instructions from time to
time. This Agreement is not exclusive, and either party may enter into similar
agreements with third parties.
3. DUTIES OF DEALER: You agree:
(a) Except as otherwise provided herein, to act as principal, or as agent
on behalf of your customers, in all transactions in shares of the
Funds. Except as otherwise provided, you shall not have any authority
to act as agent for the issuer (the Funds), for the Principal
Underwriter, or for any other dealer in any respect, nor will you
represent to any third party that you have such authority or are
acting in such capacity.
(b) To purchase shares of the Funds only from us or from your customers.
(c) To enter orders for the purchase of shares of the Funds only from us and
only for the purpose of covering purchase orders you have already
received from your customers or for your own bona fide investment.
(d) To maintain records of all sales, redemptions and repurchases of shares
made through you and to furnish us with copies of such records on
request.
(e) To distribute Prospectuses and reports to your customers in compliance
with applicable legal requirements, except to the extent that we
expressly undertake to do so on your behalf.
(f) That you will not withhold placing customers' orders for shares so as to
profit yourself as a result of such withholding or place orders for
shares in amounts just below the point at which sales charges are
reduced so as to benefit from a higher sales charge applicable to an
amount below the breakpoint.
(g) That if any shares confirmed to you or your customer hereunder are
repurchased or redeemed by any of the Funds within seven (7) business
days after such confirmation of the original order, you shall forthwith
refund to us the full concession, allowed to you on such orders,
including any payments we made to you from our own resources as provided
in Section 6(b) hereof with respect to such orders. We shall notify you
of such repurchase or redemption within a reasonable time after
settlement. Termination or suspension of this Agreement shall not
relieve you or us from the requirements of this subsection.
(h) That if payment for the shares purchased is not received within the time
customary or the time required by law for such payment, the sale may be
canceled without notice or demand and without any responsibility or
liability on our part or on the part of the Funds, or at our option, we
may sell the shares which you ordered back to the Funds, in which latter
case we may hold you responsible for any loss to the Funds or loss of
profit suffered by us resulting from your failure to make payment as
aforesaid. We shall have no liability for any check or other item
returned unpaid to you after you have paid us on behalf of a purchaser.
We may refuse to liquidate the investment unless we receive the
purchaser's signed authorization for the liquidation.
(i) That you shall assume responsibility for any loss to the Funds caused by
a correction made subsequent to trade date, provided such correction was
not based on any error, omission or negligence on our part, and that you
will immediately pay such loss to the Funds upon notification.
(j) That if on a redemption which you have ordered, instructions in proper
form, including outstanding certificates, are not received within the
time customary or the time required by law, the redemption may be
canceled forthwith without any responsibility or liability on our part
or on the part of any Fund, or at our option, we may buy the shares
redeemed on behalf of the Fund, in which latter case we may hold you
responsible for any loss to the Fund or loss of profit suffered by us
resulting from your failure to settle the redemption.
(k) To obtain from your customers all consents required by applicable
privacy laws (1) to permit us, any of our affiliates or the Funds to
provide you either directly or through a service established for that
purpose with confirmations, account statements and other information
about your customers' investments in the Funds and (2) to permit you
and your registered representatives, agents, independent contractors
and/or employees to transmit and receive confidential information
concerning such customers to or from us and through our websites at
xxxxxxxxxxxxxxxxx.xxx, XxxxxxxXxxxxxx.xxx and such other URL(s)
through which we may permit you to conduct business concerning the
Funds from time to time (referred to collectively as the "Sites").
(l) That orders for the purchase of Fund shares shall be placed by you only
for customers for whom you have appropriate identification as required
by applicable anti-money laundering laws or policies in your
jurisdiction.
4. DUTIES OF DEALER: RETIREMENT ACCOUNTS. In connection with orders for the
purchase of shares on behalf of an individual retirement account, self-employed
retirement plan or other retirement accounts, by mail, telephone, wire or
through the Sites you shall act as agent for the custodian or trustee of such
plans and you shall not place such an order until you have received from your
customer payment for such purchase and, if such purchase represents the first
contribution to such a plan, the completed documents necessary to establish the
plan and enrollment in the plan. You agree to indemnify us and Franklin
Xxxxxxxxx Bank & Trust, F.S.B. and/or Fiduciary Trust International of the South
as applicable for any claim, loss, or liability resulting from incorrect
investment instructions received from you which cause a tax liability or other
tax penalty.
5. CONDITIONAL ORDERS; CERTIFICATES. We will not accept from you any conditional
orders for shares of any of the Funds. Delivery of certificates or confirmations
for shares purchased shall be made by the Funds only against constructive
receipt of the purchase price, subject to deduction for your concession and our
portion of the sales charge, if any, on such sale. No certificates for shares of
the Funds will be issued unless specifically requested.
6. DEALER COMPENSATION.
(a) On each purchase of shares by you from us, the total sales charges and
your dealer concessions shall be as stated in each Fund's then current
Prospectus, subject to NASD rules and applicable laws. Such sales
charges and dealer concessions are subject to reductions under a variety
of circumstances as described in the Funds' Prospectuses. For an
investor to obtain these reductions, we must be notified at the time of
the sale that the sale qualifies for the reduced charge. If you fail to
notify us of the applicability of a reduction in the sales charge at the
time the trade is placed, neither we nor any of the Funds will be liable
for amounts necessary to reimburse any investor for the reduction which
should have been effected.
(b) In accordance with the Funds' Prospectuses, we or our affiliates may,
but are not obligated to, make payments to you from our own resources
as compensation for certain sales which are made at net asset value
("Qualifying Sales"). If you notify us of a Qualifying Sale, we may
make a contingent advance payment up to the maximum amount available
for payment on the sale. If any of the shares purchased in a
Qualifying Sale are repurchased or redeemed within twelve (12) months
of the month of purchase, we shall be entitled to recover any advance
payment attributable to the repurchased or redeemed shares by reducing
any account payable or other monetary obligation we may owe to you or
by making demand upon you for repayment in cash. We reserve the right
to withhold advances to you, if for any reason we believe that we may
not be able to recover unearned advances from you. Termination or
suspension of this Agreement shall not relieve you or us from the
requirements of this subsection.
(c) You agree to waive payment of any dealer concessions payable to you by
us until such time as we are in receipt of such dealer concessions.
7. REDEMPTIONS OR REPURCHASES. Redemptions or repurchases of shares of the Funds
will be made at the net asset value of such shares, less any applicable deferred
sales or redemption charges, in accordance with the applicable Prospectuses of
the Funds. Except as permitted by applicable law, you agree not to purchase any
shares from your customers at a price lower than the net asset value of such
shares next computed by the Funds after the purchase is made by you (the
"Redemption/Repurchase Price"). You shall, however, be permitted to sell shares
of the Funds for the account of the record owner to the Funds at the
Redemption/Repurchase Price for such shares.
8. EXCHANGES. Exchange orders will be effective only for uncertificated shares
or for which share certificates have been previously deposited and may be
subject to any fees or other restrictions set forth in the applicable
Prospectuses. Exchanges from a Fund sold with no sales charge to a Fund which
carries a sales charge, and exchanges from a Fund sold with a sales charge to a
Fund which carries a higher sales charge may be subject to a sales charge in
accordance with the terms of the applicable Fund's Prospectus. You will be
obligated to comply with any additional exchange policies described in the
applicable Fund's Prospectus, including without limitation any policy
restricting or prohibiting excessive and/or short term trading activity, the
collection of redemption fees associated with such trading activity and the
prohibition of "market timing," as defined in the Prospectus.
9. TRANSACTION PROCESSING. All orders are subject to acceptance by us and by the
Fund or its transfer agent, and become effective only upon confirmation by us.
If required by law, each transaction shall be confirmed in writing on a fully
disclosed basis and if confirmed by us, a copy of each confirmation shall be
sent to you if you so request. All sales are made subject to receipt of shares
by us from the Funds. We reserve the right in our discretion, without notice, to
suspend the sale of shares of the Funds or withdraw the offering of shares of
the Funds entirely. Orders will be effected at the price(s) next computed on the
day they are received if, as set forth in the applicable Fund's current
Prospectus, the orders are received by us or an agent appointed by us or the
Fund prior to the close of trading on the New York Stock Exchange, generally
4:00 p.m. eastern time ("Close of Trading"). Orders received after that time
will be effected at the price(s) computed on the next business day. All orders
must be accompanied by payment in U.S. Dollars. Orders payable by check must be
drawn payable in U.S. Dollars on a U.S. bank, for the full amount of the
investment.
If you have entered into a FundSERV Agreement with us to effect
transactions in Fund shares through FundSERV, you are hereby authorized to act
on our behalf for the limited purpose of receiving purchase, exchange and
redemption orders for Fund shares executed through FundSERV. You represent and
warrant that all orders for the purchase, exchange or redemption of Fund shares
transmitted to FundSERV for processing on or as of a given business day (Day 1)
shall have been received by you prior to the Close of Trading on Day 1. Such
orders shall receive the share price next calculated following the Close of
Trading on Day 1. You represent and warrant that orders received by you after
the Close of Trading on Day 1 shall be treated by you and transmitted to
FundSERV as if received on the next business day (Day 2). Such orders shall
receive the share price next calculated following the Close of Trading on Day 2.
You represent that you have systems in place reasonably designed to prevent
orders received after the Close of Trading on Day 1 from being executed with
orders received before the Close of Trading on Day 1.
10. MULTIPLE CLASSES. We may from time to time provide to you written compliance
guidelines or standards relating to the sale or distribution of Funds offering
multiple classes of shares (each, a "Class") with different sales charges and
distribution related operating expenses. In addition, you will be bound by any
applicable rules or regulations of government agencies or self-regulatory
organizations generally affecting the sale or distribution of shares of
investment companies offering multiple classes of shares.
11. RULE 12B-1 PLANS. You are invited to participate in all distribution plans
(each, a "Plan") adopted for a Class of a Fund or for a Fund that has only a
single Class (each, a "Plan Class") pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "1940 Act").
To the extent you provide administrative and other services, including, but
not limited to, furnishing personal and other services and assistance to your
customers who own shares of a Plan Class, answering routine inquiries regarding
a Fund or Class, assisting in changing account designations and addresses,
maintaining such accounts or such other services as a Fund may require, to the
extent permitted by applicable statutes, rules, or regulations, we shall pay you
a Rule 12b-1 servicing fee. To the extent that you participate in the
distribution of Fund shares that are eligible for a Rule 12b-1 distribution fee,
we shall also pay you a Rule 12b-1 distribution fee. All Rule 12b-1 servicing
and distribution fees shall be based on the value of shares attributable to
customers of your firm and eligible for such payment, and shall be calculated on
the basis and at the rates set forth in the compensation schedule then in effect
for the applicable Plan (the "Schedule"). Without prior approval by a majority
of the outstanding shares of a particular Class of a Fund which has a Plan, the
aggregate annual fees paid to you pursuant to such Plan shall not exceed the
amounts stated as the "annual maximums" in such Plan Class' Prospectus, which
amount shall be a specified percent of the value of such Plan Class' net assets
held in your customers' accounts which are eligible for payment pursuant to this
Agreement (determined in the same manner as such Plan Class uses to compute its
net assets as set forth in its effective Prospectus).
You shall furnish us and each Fund that has a Plan Class (each, a "Plan
Fund") with such information as shall reasonably be requested by the Board of
Directors, Trustees or Managing General Partners (hereinafter referred to as
"Directors") of such Plan Fund with respect to the fees paid to you pursuant to
the Schedule of such Plan Fund. We shall furnish to the Directors of the Plan
Funds, for their review on a quarterly basis, a written report of the amounts
expended under the Plans and the purposes for which such expenditures were made.
Each Plan and the provisions of any agreement relating to such Plan must be
approved annually by a vote of the Directors of the Fund that has such Plan,
including such persons who are not interested persons of such Plan Fund and who
have no financial interest in such Plan or any related agreement ("Rule 12b-1
Directors"). Each Plan or the provisions of this Agreement relating to such Plan
may be terminated at any time by the vote of a majority of the Rule 12b-1
Directors, or by a vote of a majority of the outstanding shares of the Class
that has such Plan, on sixty (60) days' written notice, without payment of any
penalty. A Plan or the provisions of this Agreement may also be terminated by
any act that terminates the underwriting agreement between us and the Fund that
has such Plan, and/or the management or administration agreement between
Franklin Advisers, Inc. or Xxxxxxxxx Investment Counsel, LLC or their affiliates
and such Plan Fund. In the event of the termination of a Plan for any reason,
the provisions of this Agreement relating to such Plan will also terminate.
Continuation of a Plan and provisions of this Agreement relating to such
Plan are conditioned on Rule 12b-1 Directors being ultimately responsible for
selecting and nominating any new Rule 12b-1 Directors. Under Rule 12b-1,
Directors of any of the Plan Funds have a duty to request and evaluate, and
persons who are party to any agreement related to a Plan have a duty to furnish,
such information as may reasonably be necessary to an informed determination of
whether the Plan or any agreement should be implemented or continued. Under Rule
12b-1, a Plan Fund is permitted to implement or continue a Plan or the
provisions of this Agreement relating to such Plan from year to year only if,
based on certain legal considerations, the Directors of such Plan Fund is able
to conclude that such Plan will benefit the Plan Class. Absent such yearly
determination, such Plan and the provisions of this Agreement relating to such
Plan must be terminated as set forth above. In addition, any obligation assumed
by a Fund pursuant to this Agreement shall be limited in all cases to the assets
of such Fund and no person shall seek satisfaction thereof from shareholders of
a Fund. You agree to waive payment of any amounts payable to you by us under a
Fund's Plan until such time as we are in receipt of such fee from the Fund.
The provisions of the Plans between the Plan Funds and us shall control over
the provisions of this Agreement in the event of any inconsistency.
12. REGISTRATION OF SHARES. Upon request, we shall notify you of the states or
other jurisdictions in which each Fund's shares are currently noticed,
registered or qualified for offer or sale to the public. We shall have no
obligation to make notice filings of, register or qualify, or to maintain notice
filings of, registration of or qualification of, Fund shares in any particular
state or other jurisdiction. We shall have no responsibility, under the laws
regulating the sale of securities in any U.S. or foreign jurisdiction, for the
registration, qualification or licensed status of persons offering or selling
Fund shares or for the manner of offering or sale of Fund shares. If it is
necessary to file notice of, register or qualify Fund shares in any foreign
jurisdictions in which you intend to offer the shares of any Funds, it will be
your responsibility to arrange for and to pay the costs of such notice filing,
registration or qualification; prior to any such notice filing, registration or
qualification, you will notify us of your intent and of any limitations that
might be imposed on the Funds, and you agree not to proceed with such notice
filing, registration or qualification without the written consent of the
applicable Funds and of ourselves. Except as stated in this section, we shall
not, in any event, be liable or responsible for the issue, form, validity,
enforceability and value of such shares or for any matter in connection
therewith, and no obligation not expressly assumed by us in this Agreement shall
be implied. Nothing in this Agreement shall be deemed to be a condition,
stipulation or provision binding any person acquiring any security to waive
compliance with any provision of the Securities Act of 1933, as amended (the
"1933 Act"), the Securities Exchange Act of 1934, as amended (the "1934 Act"),
the 1940 Act, the rules and regulations of the U.S. Securities and Exchange
Commission ("SEC"), or any applicable laws or regulations of any government or
authorized agency in the U.S. or any other country having jurisdiction over the
offer or sale of shares of the Funds, or to relieve the parties hereto from any
liability arising under such laws, rules and regulations.
13. CONTINUOUSLY OFFERED CLOSED-END FUNDS. This Section 13 relates solely to
shares of Funds that represent a beneficial interest in shares issued by a fund
that is a closed-end investment company registered under the 1940 Act that makes
a continuous offering of its shares, for which we or an affiliate of ours serve
as principal underwriter, and that periodically repurchases its shares (each, a
"Trust"). Shares of a Trust that are offered to the public will be registered
under the 1933 Act, and are expected to be offered during an offering period
that may continue indefinitely ("Continuous Offering Period"). There is no
guarantee that such a continuous offering will be maintained by a Trust. The
Continuous Offering Period, shares of a Trust and certain of the terms on which
such shares are offered shall be as described in the Prospectus of the Trust.
As set forth in a Trust's then current Prospectus, we may, but are not
obligated to, provide you with appropriate compensation for selling shares of
the Trust. In addition, you may be entitled to a fee for servicing your clients
who are shareholders in a Trust, subject to applicable law and NASD Conduct
Rules. You agree that any repurchases of shares of a Trust that were originally
purchased as Qualifying Sales shall be subject to Subsection 6(b) hereof.
You expressly acknowledge and understand that, notwithstanding anything to
the contrary in this Agreement:
(a) No Trust has a Rule 12b-1 Plan and in no event will a Trust pay, or have
any obligation to pay, any compensation directly or indirectly to you.
(b) Shares of a Trust will not be repurchased by either the Trust (other
than through repurchase offers by the Trust from time to time, if any)
or by us and no secondary market for such shares exists currently, or is
expected to develop. Any representation as to a repurchase or tender
offer by a Trust, other than that set forth in the Trust's then current
Prospectus, notification letters, reports or other related material
provided by the Trust, is expressly prohibited.
(c) An early withdrawal charge payable by shareholders of a Trust to us may
be imposed on shares accepted for repurchase by the Trust that have been
held for less than a stated period, as set forth in the Trust's then
current Prospectus.
(d) In the event your customer cancels his or her order for shares of a
Trust after confirmation, such shares will not be repurchased,
remarketed or otherwise disposed of by or through us.
14. FUND INFORMATION. No person is authorized to give any information or make
any representations concerning shares of any Fund except those contained in the
Fund's then current Prospectus or in materials produced by us as information
supplemental to such Prospectus. We will supply reasonable quantities of
Prospectuses, supplemental sales literature, sales bulletins, and additional
information as issued by the Fund or us. You agree not to use other advertising
or sales material relating to the Funds except that which (a) conforms to the
requirements of any applicable laws or regulations of any government or
authorized agency in the U.S. or any other country having jurisdiction over the
offering or sale of shares of the Funds, and (b) is approved in writing by us in
advance of such use. Such approval may be withdrawn by us in whole or in part
upon notice to you, and you shall, upon receipt of such notice, immediately
discontinue the use of such sales literature, sales material and advertising.
You are not authorized to modify or translate any such materials without our
prior written consent.
15. USE OF SITE. Each of your registered representatives, agents, independent
contractors and employees will have access to the Sites as provided herein, (a)
upon registration by such individual on a Site (including providing certain data
and codes identifying you), (b) if you cause an MOS Site Access Request Form (an
"Access Form") to be signed by your authorized supervisory personnel and
submitted to us, as a Schedule to, and legally a part of, this Agreement, or (c)
if you provide such individual with the necessary access codes or other
information necessary to access the Sites through any generic or firm-wide
authorization we may grant you from time to time. Upon receipt by us of a
completed registration submitted by an individual through the Sites or a signed
Access Form referencing such individual, we shall be entitled to rely upon the
representations contained therein as if you had made them directly hereunder and
we will issue a user identification, express number and/or password
(collectively, "Access Code"). Any person to whom we issue an Access Code or to
whom you provide the necessary Access Codes or other information necessary to
access the Sites through any generic or firm-wide authorization we may grant you
from time to time shall be an "Authorized User." We shall be entitled to assume
that such person validly represents you and that all instructions received from
such person are authorized, in which case such person will have access to the
Site, including all services and information to which you are authorized to
access on the Site. All inquiries and transactions initiated by you (including
your Authorized Users) are your responsibility, are at your risk and are subject
to our review and approval (which could cause a delay in processing). You agree
that we do not have a duty to question information or instructions you
(including Authorized Users) give to us under this Agreement, and that we are
entitled to treat as authorized, and act upon, any such instructions and
information you submit to us. You agree to take all reasonable measures to
prevent any individual other than an Authorized User from obtaining access to
the Site. You agree to inform us if you wish to restrict or revoke the access of
any individual Access Code. If you become aware of any loss or theft or
unauthorized use of any Access Code, you agree to contact us immediately. You
also agree to monitor your (including Authorized Users') use of the Site to
ensure the terms of this Agreement are followed. You acknowledge that the Sites
are transmitted over the Internet on a reasonable efforts basis and we do not
warrant or guarantee their accuracy, timeliness, completeness, reliability or
non-infringement. Moreover, you acknowledge that the Sites are provided for
informational purposes only, and are not intended to comply with any
requirements established by any regulatory or governmental agency.
16. DEALER REPRESENTATION. You represent and warrant that you will comply with
all applicable U.S. federal, state and local laws and regulations in performing
your obligations hereunder. Without limiting the foregoing, you agree that in
recommending to a customer the purchase, sale or exchange of any shares, or
class of shares, of a Fund, you shall have reasonable grounds for believing that
the recommendation is suitable for such customer. You also agree that you will
comply with all policies and agreements concerning Site usage, including without
limitation the Terms of Use Agreement(s) posted on the Sites ("Site Terms"), as
may be revised and reposted on the Sites from time to time, and those Site Terms
(as in effect from time to time) are a part of this Agreement.
17. INDEMNIFICATION; DEFENSE OF CLAIMS; ATTORNEYS' FEES. You agree to indemnify
and hold harmless us and the Funds, as well as our and the Funds' respective
officers, directors and employees (collectively, "Indemnitees"), from any and
all actual and/or alleged losses, claims, liabilities and expenses (including
reasonable attorneys' fees and expenses) (collectively, "Losses") arising from
or as the result of (1) any actual or alleged violation of any statute or
regulation (including without limitation U.S. and state securities laws and
regulations and consumer protection laws, as well as the laws of any foreign
country where you offer or sell shares of the Funds) and/or any actual or
alleged violation of common law (including without limitation all tort and/or
contract claims), which in any way relate to any offer, sale, redemption,
transfer or exchange of shares of the Funds (including any actual and/or alleged
mishandling of the transaction and/or misappropriation of the proceeds in
connection therewith) by you and/or by or through any of your officers,
directors, employees, independent contractors or agents; (2) the breach by you
or any of your officers, directors, employees, independent contractors or agents
of any of the terms and conditions of this Agreement and/or (3) any use,
including unauthorized access obtained through you, of the Sites by you or your
officers, directors, employees, or agents, provided, however, that an Indemnitee
shall not be entitled to indemnification hereunder to the extent the actual and
proximate cause of any such Losses is attributed to such Indemnitee's own
negligence, willful misconduct or breach.
In addition, you agree that in the event that the Indemnitees are named in
any legal proceedings (including, but not limited to lawsuits filed in court and
statements of claim filed in an arbitration forum) which involve claims and/or
liabilities that are the subject of this indemnification agreement, we and the
Fund(s) may, following notice to you, retain attorneys of our choice to
represent us and/or the Fund(s) in such legal proceedings at your expense, and
you will promptly reimburse us and/or the Fund(s) for the attorneys' fees and
expenses incurred in connection with the defense of any such legal proceedings.
This Section 17 shall survive the termination of this Agreement.
18. TERMINATION; SUCCESSION; ASSIGNMENT; AMENDMENT. Each party to this Agreement
may terminate its participation in this Agreement by giving written notice to
the other parties. Such notice shall be deemed to have been given and to be
effective on the date on which it was either delivered personally to the other
parties or any officer or member thereof, or was mailed postpaid or delivered by
electronic transmission to the other parties' chief legal officers at the
addresses shown herein or in the most recent NASD Manual. This Agreement shall
terminate immediately upon the appointment of a Trustee under the Securities
Investor Protection Act or any other act of insolvency by you. The termination
of this Agreement by any of the foregoing means shall have no effect upon
transactions entered into prior to the effective date of termination. A trade
placed by you subsequent to your voluntary termination of this Agreement will
not serve to reinstate the Agreement. Reinstatement, except in the case of a
temporary suspension of a dealer, will be effective only upon written
notification by us to you. This Agreement will terminate automatically in the
event of its assignment by us. For purposes of the preceding sentence, the word
"assignment" shall have the meaning given to it in the 1940 Act. This Agreement
may not be assigned by you without our prior written consent. This Agreement may
be amended by us at any time by written notice to you at the address given below
(or such other address as specified in writing by you) and your placing of an
order for shares of a Fund or acceptance of payments of any kind after the
effective date and receipt of notice of any such Amendment shall constitute your
acceptance of such Amendment. Notwithstanding the foregoing, the Site Terms may
be separately amended as provided therein and as so amended and in effect from
time to time shall be a part of this Agreement.
19. PRIVACY. Each party to this Agreement agrees to limit the disclosure of
nonpublic personal information of shareholders and customers consistent with its
policies on privacy with respect to such information and Regulation S-P of the
SEC. Each party hereby agrees that it will comply with all applicable
requirements under the regulations implementing Title V of the
Xxxxx-Xxxxx-Xxxxxx Act and any other applicable federal and state consumer
privacy acts, rules and regulations. Each party further represents that it has
in place, and agrees that it will maintain, information security policies and
procedures for protecting nonpublic personal customer information adequate to
conform to applicable legal requirements.
20. SETOFF; DISPUTE RESOLUTION. Should any of your concession accounts with us
have a debit balance, we may offset and recover the amount owed to us or the
Funds from any other account you have with us, without notice or demand to you.
In the event of a dispute concerning any provision of this Agreement, either
party may require the dispute to be submitted to binding arbitration under the
commercial arbitration rules of the NASD or the American Arbitration
Association. Judgment upon any arbitration award may be entered by any court
having jurisdiction. This Agreement shall be construed in accordance with the
laws of the State of California, not including any provision that would require
the general application of the law of another jurisdiction.
21. ACCEPTANCE; CUMULATIVE EFFECT. This Agreement is cumulative and supersedes
any similar agreement previously in effect. It shall be binding upon the parties
hereto when signed by us and accepted by you. If you have a current dealer or
selling agreement with us, your first trade or acceptance of payments from us
after your receipt of this Agreement, as it may be amended pursuant to Section
18, above, shall constitute your acceptance of its terms. Otherwise, your
signature below shall constitute your acceptance of its terms.
FRANKLIN XXXXXXXXX DISTRIBUTORS, INC.
By
-----------------------------------
Xxxxx X. Xxxxx, President
Xxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, XX 00000-0000
Attention: Chief Legal Officer (for legal notices only)
650/312-2000
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000-0000
727/299-8712
Dealer: If you have NOT previously signed a dealer or selling agreement with us,
please complete and sign this
section and return the original to us.
---------------------------------------- --------------------------
DEALER NAME: Address:
By:------------------------------------- ----------------------------------
(Signature)
Name: Telephone:
---------------------------------- -----------------------
Title: NASD CRD #
---------------------------------- -----------------------
Date:
----------------------------------
Franklin Xxxxxxxxx Dealer #
(Internal Use Only)
---------------------------------------------------------------------------
PAGE
BANK SELLING AGREEMENT
NOVEMBER 1, 2003
1. INTRODUCTION
The parties to this Agreement are the undersigned bank or trust company
("Bank") and Franklin Xxxxxxxxx Distributors, Inc. ("FTDI"). This Agreement sets
forth the terms and conditions under which FTDI will execute purchases and
redemptions of shares of the Franklin or Templeton investment companies or
series of such investment companies for which FTDI now or in the future serves
as principal underwriter (each, a "Fund"), at the request of Bank upon the order
and for the account of Bank's customers ("Customers"). In this Agreement,
"Customer" shall include the beneficial owners of an account and any agent or
attorney-in-fact duly authorized or appointed to act on the owner's behalf with
respect to the account; and "redemptions" shall include redemptions of shares of
Funds that are open-end management investment companies and repurchases of
shares of Funds that are closed-end investment companies by the Fund that is the
issuer of such shares. FTDI will notify Bank from time to time of the Funds that
are eligible for distribution and the terms of compensation under this
Agreement. This Agreement is not exclusive, and either party may enter into
similar agreements with third parties.
2. REPRESENTATIONS AND WARRANTIES OF BANK
Bank warrants and represents to FTDI and the Funds that:
a) Bank is a "bank" as defined in section 3(a)(6) of the Securities
Exchange Act of 1934, as amended (the "1934 Act");
b) Bank is authorized to enter into this Agreement as agent for
Customers, and Bank's performance of its obligations and receipt of
consideration under this Agreement will not violate any law,
regulation, charter, agreement or regulatory restriction to which Bank
is subject;
c) Bank has received all regulatory agency approvals and taken all legal
and other steps necessary for offering the services Bank will provide
to Customers and receiving any applicable compensation in connection
with this Agreement; and
d) Bank will comply with all applicable U.S. federal, state and local
laws and regulations in performing its obligations hereunder. Without
limiting the foregoing, Bank agrees that in recommending to a customer
the purchase, sale or exchange of any shares, or class of shares, of a
Fund, Bank shall have reasonable grounds for believing that the
recommendation is suitable for such customer. Bank also agrees that it
will comply with all policies and agreements concerning Site (as
defined in Paragraph 4(b)(4) below) usage, including, without
limitation, the Terms of Use Agreement(s) posted on the Sites ("Site
Terms") as may be revised and reposted on the Sites from time to time,
and those Site Terms (as in effect from time to time) are part of this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL UNDERWRITER
FTDI warrants and represents to Bank that:
a) FTDI is a broker/dealer registered under the 1934 Act; and
b) FTDI is the principal underwriter of the Funds.
4. COVENANTS OF BANK
a) For each purchase, redemption or exchange transaction under this
Agreement (each, a "Transaction"), Bank will:
1) be authorized to engage in the Transaction;
2) except as otherwise provided herein, act as agent for Customer,
unless Bank is the Customer;
3) act solely for the account of Customer, unless Bank is the
Customer;
4) not submit an order unless Bank has already received the order
from Customer, unless Bank is the Customer;
5) not withhold placing any Customer's order for the purpose of
profiting from the delay or place orders for Fund shares in
amounts just below the point at which sales charges are reduced
so as to benefit from a higher Fee (as defined in Paragraph 5(e)
below) applicable to a Transaction in an amount below the
breakpoint;
6) have no beneficial ownership of the securities in any purchase
Transaction (Customer will have the full beneficial ownership),
unless Bank is the Customer (in which case, Bank will not engage
in the Transaction unless the Transaction is legally permissible
for Bank);
7) not accept or withhold any Fee (as defined in Paragraph 5(e) of
this Agreement) otherwise allowed under Paragraphs 5(d) and (e)
of this Agreement, if prohibited by the Employee Retirement
Income Security Act of 1974, as amended, or trust or similar laws
to which Bank is subject, in the case of Transactions of Fund
shares involving retirement plans, trusts, or similar accounts;
8) maintain records of all Transactions of Fund shares made through
Bank and furnish FTDI with copies of such records upon request;
and
9) distribute Prospectuses, statements of additional information and
reports to Customers in compliance with applicable legal
requirements, except to the extent that FTDI expressly undertakes
to do so on behalf of Bank.
b) While this Agreement is in effect, Bank will:
1) not purchase any Fund shares from any person at a price lower
than the redemption or repurchase price, as applicable, next
determined by the applicable Fund;
2) repay FTDI the full Fee received by Bank under Paragraphs 5(d)
and (e) of this Agreement, and any payments FTDI or its
affiliates made to Bank from their own resources under Paragraph
5(e) of this Agreement ("FTDI Payments"), for any Fund shares
purchased under this Agreement which are redeemed or repurchased
by the Fund within seven (7) business days after the purchase; in
turn, FTDI shall pay to the Fund the amount repaid by Bank (other
than any portion of such repayment that is a repayment of FTDI
Payments) and will notify Bank of any such redemption within a
reasonable time (termination or suspension of this Agreement
shall not relieve Bank or FTDI from the requirements of this
subparagraph);
3) in connection with orders for the purchase of Fund shares on
behalf of an individual retirement account, self-employed
retirement plan or other retirement accounts, by mail, telephone,
wire or through the Sites, act as agent for the custodian or
trustee of such plans and shall not place such an order until
Bank has received from its Customer payment for such purchase
and, if such purchase represents the first contribution to such a
plan, the completed documents necessary to establish the plan and
enrollment in the plan (Bank agrees to indemnify FTDI and
Franklin Xxxxxxxxx Bank & Trust, F.S.B. and/or Fiduciary Trust
International of the South, as applicable, for any claim, loss,
or liability resulting from incorrect investment instructions
received from Bank which cause a tax liability or other tax
penalty);
4) obtain from its Customers any consents required by applicable
federal and/or state privacy laws to (a) permit FTDI, any of its
affiliates or the Funds to provide Bank with confirmations,
account statements and other information about Customers'
investments in the Funds, and (b) permit Bank and its registered
representatives, agents, independent contractors and/or employees
to transmit and receive confidential information concerning such
Customers to or from FTDI and through its websites at
xxxxxxxxxxxxxxxxx.xxx, XxxxxxxXxxxxxx.xxx and such other URL(s)
through which FTDI may permit Bank to conduct business concerning
the Funds from time to time (referred to collectively as the
"Sites"); and
5) place orders for the purchase of Fund shares by Bank only for
Customers for whom Bank has appropriate identification as
required by applicable anti-money laundering laws or policies in
Bank's jurisdiction.
5. TERMS AND CONDITIONS FOR TRANSACTIONS
a) Price
Purchase orders for Fund shares received from Bank will be accepted
only at the public offering price and in compliance with procedures applicable
to each purchase order as set forth in the then current prospectus and statement
of additional information (hereinafter, collectively, "Prospectus") for the
applicable Fund. All purchase orders must be accompanied by payment in U.S.
Dollars. Orders payable by check must be drawn payable in U.S. Dollars on a U.S.
bank, for the full amount of the investment. All sales are made subject to
receipt of shares by FTDI from the Funds. FTDI reserves the right in its
discretion, without notice, to suspend the sale of shares or withdraw the
offering of shares entirely.
b) Orders and Confirmations
Except as otherwise provided, Bank shall not have any authority to act
as agent for the Funds, FTDI, or any other dealer in any respect, nor will Bank
represent to any third party that it has such authority or is acting in such
capacity. All orders are subject to acceptance or rejection by FTDI and by the
Fund or its transfer agent at their sole discretion, and become effective only
upon confirmation by one of them. Transaction orders shall be made using the
procedures and forms provided by FTDI from time to time. Orders will be effected
at the price(s) next computed on the day they are received if, as set forth in
the applicable Fund's current Prospectus, the orders are received by FTDI or an
agent appointed by FTDI or the Funds prior to the close of trading on the New
York Stock Exchange, generally 4:00 p.m. eastern time ("Close of Trading").
Orders received after that time will be effected at the price determined on the
next business day. No order will be accepted unless Bank or Customer shall have
provided FTDI with Customer's full name, address and other information normally
required by FTDI to open a customer account, and FTDI shall be entitled to rely
on the accuracy of the information provided by Bank. A written confirming
statement will be sent to the shareholder of record upon settlement of each
Transaction.
If Bank has entered into a FundSERV Agreement with FTDI to effect
Transactions in Fund shares through FundSERV, Bank is hereby authorized to act
on FTDI's behalf for the limited purpose of receiving purchase, exchange and
redemption orders for Fund shares executed through FundSERV. Bank represents and
warrants that all orders for the purchase, exchange or redemption of Fund shares
transmitted to FundSERV for processing on or as of a given business day (Day 1)
shall have been received by Bank prior to the Close of Trading on Day 1. Such
orders shall receive the share price next calculated following the Close of
Trading on Day 1. Bank represents and warrants that orders received by Bank
after the Close of Trading on Day 1 shall be treated by Bank and transmitted to
FundSERV as if received on the next business day (Day 2). Such orders shall
receive the share price next calculated following the Close of Trading on Day 2.
Bank represents that it has systems in place reasonably designed to prevent
orders received after the Close of Trading on Day 1 from being executed with
orders received before the Close of Trading on Day 1.
c) Multiple Class Guidelines
FTDI may from time to time provide to Bank written compliance
guidelines or standards relating to the sale or distribution of Funds offering
multiple classes of shares (each, a "Class") with different sales charges and
distribution-related operating expenses. Bank will comply with FTDI's written
compliance guidelines and standards, as well as with any applicable rules or
regulations of government agencies or self-regulatory organizations generally
affecting the sale or distribution of investment companies offering multiple
classes of shares, whether or not Bank deems itself otherwise subject to such
rules or regulations.
d) Payments by Bank for Purchases
On the settlement date for each purchase, Bank shall either (i) remit
the full purchase price by wire transfer to an account designated by FTDI, or
(ii) following FTDI's procedures, wire the purchase price less the Fee allowed
by Paragraph 5(e) of this Agreement. Twice monthly, FTDI will pay Bank Fees not
previously paid to or withheld by Bank. Each calendar month, FTDI, as
applicable, will prepare and mail an activity statement summarizing all
Transactions.
e) Fees and Payments
Where permitted by the Prospectus for a Fund, a charge, concession, or
fee (each of the foregoing forms of compensation, a "Fee") may be paid to Bank,
related to services provided by Bank in connection with Transactions in shares
of such Fund. The amount of the Fee, if any, is set by the relevant Prospectus.
Adjustments in the Fee are available for certain purchases, and Bank is solely
responsible for notifying FTDI when any purchase or redemption order is
qualified for such an adjustment. If Bank fails to notify FTDI of the
applicability of a reduction in the sales charge at the time the trade is
placed, neither FTDI nor any of the Funds will be liable for amounts necessary
to reimburse any Customer for the reduction which should have been effected.
In accordance with the Funds' Prospectuses, FTDI or its affiliates
may, but are not obligated to, make payments from their own resources to Bank as
compensation for certain sales that are made at net asset value ("Qualifying
Sales"). If Bank notifies FTDI of a Qualifying Sale, FTDI may make a contingent
advance payment up to the maximum amount available for payment on the sale. If
any of the shares purchased in a Qualifying Sale are redeemed or repurchased
within twelve (12) months of the month of purchase, FTDI shall be entitled to
recover any advance payment attributable to the redeemed or repurchased shares
by reducing any account payable or other monetary obligation FTDI may owe to
Bank or by making demand upon Bank for repayment in cash. FTDI reserves the
right to withhold any one or more advances, if for any reason FTDI believes that
FTDI may not be able to recover unearned advances. Termination or suspension of
this Agreement does not relieve Bank from the requirements of this paragraph.
Bank agrees to waive payment of any amounts of dealer concessions payable to
Bank by FTDI until such time as FTDI is in receipt of such dealer concessions.
f) Rule 12b-1 Plans
Bank is also invited to participate in all distribution plans (each, a
"Plan") adopted for a Class of a Fund or for a Fund that has only a single Class
(each, a "Plan Class") pursuant to Rule 12b-1 under the Investment Company Act
of 1940, as amended (the "1940 Act").
To the extent Bank provides administrative and other services,
including, but not limited to, furnishing personal and other services and
assistance to Customers who own shares of a Plan Class, answering routine
inquiries regarding a Fund or Class, assisting in changing account designations
and addresses, maintaining such accounts or such other services as a Fund may
require, to the extent permitted by applicable statutes, rules, or regulations,
FTDI shall pay Bank a Rule 12b-1 servicing fee. To the extent that Bank
participates in the distribution of Fund shares that are eligible for a Rule
12b-1 distribution fee, FTDI shall also pay Bank a Rule 12b-1 distribution fee.
All Rule 12b-1 servicing and distribution fees shall be based on the value of
shares attributable to Customers and eligible for such payment, and shall be
calculated on the basis and at the rates set forth in the compensation schedule
then in effect for the applicable Plan (the "Schedule"). Without prior approval
by a majority of the outstanding shares of a particular Class of a Fund, the
aggregate annual fees paid to Bank pursuant to such Plan shall not exceed the
amounts stated as the "annual maximums" in such Plan Class' Prospectus, which
amount shall be a specified percent of the value of such Plan Class' net assets
held in Customers' accounts which are eligible for payment pursuant to this
Agreement (determined in the same manner as such Plan Class uses to compute its
net assets, as set forth in its effective Prospectus).
Bank shall furnish FTDI and each Fund that has a Plan Class (each, a
"Plan Fund") with such information as shall reasonably be requested by the Board
of Directors, Trustees or Managing General Partners (hereinafter referred to as
"Directors") of such Plan Fund with respect to the fees paid to Bank pursuant to
the Schedule of such Plan Fund. FTDI shall furnish to the Directors of the Plan
Funds, for their review on a quarterly basis, a written report of the amounts
expended under the Plans and the purposes for which such expenditures were made.
Each Plan and the provisions of any agreement relating to such Plan
must be approved annually by a vote of the Directors of the Fund that has such
Plan, including such persons who are not interested persons of such Plan Fund
and who have no financial interest in such Plan or any related agreement ("Rule
12b-1 Directors"). Each Plan or the provisions of this Agreement relating to
such Plan may be terminated at any time by the vote of a majority of Rule 12b-1
Directors of the Fund that has such Plan, or by a vote of a majority of the
outstanding shares of the Class that has such Plan on sixty (60) days' written
notice, without payment of any penalty. A Plan or the provisions of this
Agreement may also be terminated by any act that terminates the underwriting
agreement between FTDI and the Fund that has such Plan, and/or the management or
administration agreement between Franklin Advisers, Inc. or Xxxxxxxxx Investment
Counsel, LLC or their affiliates and such Plan Fund. In the event of the
termination of a Plan for any reason, the provisions of this Agreement relating
to such Plan will also terminate.
Continuation of a Plan and the provisions of this Agreement relating
to such Plan are conditioned on Rule 12b-1 Directors being ultimately
responsible for selecting and nominating any new Rule 12b-1 Directors. Under
Rule 12b-1, Directors of any of the Plan Funds have a duty to request and
evaluate, and persons who are party to any agreement related to a Plan have a
duty to furnish, such information as may reasonably be necessary to an informed
determination of whether the Plan or any agreement should be implemented or
continued. Under Rule 12b-1, a Plan Fund is permitted to implement or continue a
Plan or the provisions of this Agreement relating to such Plan from year-to-year
only if, based on certain legal considerations, the Board of Directors of such
Plan Fund is able to conclude that the Plan will benefit the Plan Class. Absent
such yearly determination, a Plan and the provisions of this Agreement relating
to such Plan must be terminated as set forth above. In addition, any obligation
assumed by a Fund pursuant to this Agreement shall be limited in all cases to
the assets of such Fund and no person shall seek satisfaction thereof from
shareholders of a Fund. Bank agrees to waive payment of any amounts payable to
Bank by FTDI under a Fund's Plan until such time as FTDI is in receipt of such
fee from the Fund.
In the event of any inconsistency, the provisions of the Plans between
the Plan Funds and FTDI shall control over the provisions of this Agreement.
g) Other Distribution Services
From time to time, FTDI may offer telephone and other augmented
services in connection with Transactions under this Agreement. If Bank uses any
such service, Bank will be subject to the procedures applicable to the service,
whether or not Bank has executed any agreement required for the service.
h) Conditional Orders; Certificates
FTDI will not accept any conditional Transaction orders. Delivery of
certificates or confirmations for shares purchased shall be made by a Fund only
against constructive receipt of the purchase price, subject to deduction of any
Fee and FTDI's portion of the sales charge, if any, on such sale. No
certificates for shares of the Funds will be issued unless specifically
requested.
i) Cancellation of Orders
If payment for shares purchased is not received within the time
customary or the time required by law for such payment, the sale may be canceled
without notice or demand, and neither FTDI nor the Fund(s) shall have any
responsibility or liability for such a cancellation; alternatively, at FTDI's
option, the unpaid shares may be sold back to the Fund, and Bank shall be liable
for any resulting loss to FTDI or to the Fund(s). FTDI shall have no liability
for any check or other item returned unpaid to Bank after Bank has paid FTDI on
behalf of a purchaser. FTDI may refuse to liquidate the investment unless FTDI
receives the purchaser's signed authorization for the liquidation.
j) Order Corrections
Bank shall assume responsibility for any loss to a Fund(s) caused by a
correction made subsequent to the trade date, provided such correction was not
based on any error, omission or negligence on FTDI's part, and Bank will
immediately pay such loss to the Fund(s) upon notification.
k) Redemptions; Cancellation
Redemptions or repurchases of shares will be made at the net asset
value of such shares, less any applicable deferred sales or redemption charges,
in accordance with the applicable Fund Prospectuses. If Bank sells shares for
the account of the record owner to the Fund(s), Bank shall be deemed to
represent to FTDI that Bank is doing so as agent for Customer and that Bank is
authorized to do so in such capacity. Such sales to the Fund(s) shall be at the
redemption or repurchase price then currently in effect for such shares. If on a
redemption which Bank has ordered, instructions in proper form, including
outstanding certificates, are not received within the time customary or the time
required by law, the redemption may be canceled forthwith without any
responsibility or liability on the part of FTDI or any Fund, or at the option of
FTDI, FTDI may buy the shares redeemed on behalf of the Fund(s), in which latter
case, FTDI may hold Bank responsible for any loss to the Fund(s) or loss of
profit suffered by FTDI resulting from Bank's failure to settle the redemption.
l) Exchanges
Exchange orders will be effective only for uncertificated shares or
for which share certificates have been previously deposited and may be subject
to any fees or other restrictions set forth in the applicable Prospectuses.
Exchanges from a Fund sold with no sales charge to a Fund which carries a sales
charge, and exchanges from a Fund sold with a sales charge to a Fund which
carries a higher sales charge may be subject to a sales charge in accordance
with the terms of the applicable Fund's Prospectus. Bank will be obligated to
comply with any additional exchange policies described in the applicable Fund's
Prospectus, including without limitation any policy restricting or prohibiting
excessive and/or short term trading activity, the collection of redemption fees
associated with such trading activity and the prohibition of "market timing," as
defined in the Prospectus.
m) Qualification of Shares
Upon request, FTDI shall notify Bank of the states or other
jurisdictions in which each Fund's shares are currently noticed, registered or
qualified for offer or sale to the public. FTDI shall have no obligation to make
notice filings of, register or qualify, or to maintain notice filings of,
registration of or qualification of, Fund shares in any particular state or
other jurisdiction. FTDI shall have no responsibility, under the laws regulating
the sale of securities in any U.S. or foreign jurisdiction, for the
registration, qualification or licensed status of Bank or any of its agents or
sub-agents in connection with the purchase or sale of Fund shares or for the
manner of offering, sale or purchase of Fund shares. Except as stated in this
paragraph, FTDI shall not, in any event, be liable or responsible for the issue,
form, validity, enforceability and value of such shares or for any matter in
connection therewith, and no obligation not expressly assumed by FTDI in this
Agreement shall be implied. If it is necessary to file notice, register or
qualify shares of any Fund in any country, state or other jurisdiction having
authority over the purchase or sale of Fund shares that are purchased by a
Customer, it will be Bank's responsibility to arrange for and to pay the costs
of such notice filing, registration or qualification; prior to any such notice
filing, registration or qualification, Bank will notify FTDI of its intent and
of any limitations that might be imposed on the Funds, and Bank agrees not to
proceed with such notice filing, registration or qualification without the
written consent of the applicable Fund(s) and of FTDI. Nothing in this Agreement
shall be deemed to be a condition, stipulation, or provision binding any person
acquiring any security to waive compliance with any provision of the Securities
Act of 1933, as amended (the "1933 Act"), the 1934 Act, the 1940 Act, the rules
and regulations of the U.S. Securities and Exchange Commission ("SEC"), or any
applicable laws or regulations of any government or authorized agency in the
U.S. or any other country having jurisdiction over the offer or sale of shares
of the Funds, or to relieve the parties hereto from any liability arising under
such laws, rules or regulations.
n) Indemnification
Bank agrees to indemnify, and hold harmless FTDI, and the Funds, as
well as FTDI's and the Funds' respective officers, directors and employees
(collectively "Indemnitees"), from any and all actual or alleged losses, claims,
liabilities and expenses (including reasonable attorneys' fees and
expenses)(collectively, "Losses") arising from or as the result of (1) any
actual or alleged violation of any statute or regulation (including without
limitation U.S. and state securities laws and regulations and consumer
protection laws, as well as the laws of any foreign country where Bank offers or
sells shares of the Funds) and/or any actual and/or alleged violation of common
law (including without limitation all tort and/or contract claims), which in any
way relate to any offer, sale, redemption, transfer or exchange of shares of the
Funds (including any actual and/or alleged mishandling of the Transaction and/or
misappropriation of the proceeds in connection therewith) by Bank and/or by or
through any of Bank's registered representatives, agents, independent
contractors and/or employees; (2) the breach by Bank or any of Bank's registered
representatives, agents, independent contractors and/or employees of any of the
terms and conditions of this Agreement; and/or (3) any use of, including
unauthorized access obtained through Bank, of the Sites by Bank or Bank's
officers, directors, employees or agents; provided, however, that an Indemnitee
shall not be entitled to indemnification hereunder to the extent the actual and
proximate cause of any such Losses is attributed to such Indemnitee's own
negligence, willful misconduct or breach of this Agreement.
In addition, Bank agrees that in the event that Indemnitees are named
in any legal proceedings (including, but not limited to, lawsuits filed in court
and statements of claim filed in an arbitration forum) which involve claims
and/or liabilities that are the subject of this indemnification agreement, FTDI
and the Funds may, following notice to Bank, retain attorneys of FTDI's choice
to represent FTDI and/or the Funds in such legal proceedings at Bank's expense,
and Bank will promptly reimburse FTDI and/or the Funds for the attorneys' fees
and expenses incurred in connection with the defense of any such legal
proceedings. This Paragraph 5(n) shall survive the termination of this
Agreement.
o) Prospectus and Sales Materials; Limit on Advertising
No person is authorized to give any information or make any
representations concerning shares of any Fund except those contained in the
Fund's current Prospectus or in materials produced by FTDI as information
supplemental to such Prospectus. FTDI will supply Prospectuses, reasonable
quantities of supplemental sale literature, sales bulletins, and additional
information as issued. Bank agrees not to use other advertising or sales
material or other material or literature relating to the Funds except that which
(a) conforms to the requirements of any applicable laws or regulations of any
government or authorized agency in the U.S. or any other country having
jurisdiction over the offering or sale of shares of the Funds, and (b) is
approved in writing by FTDI in advance of such use. Such approval may be
withdrawn by FTDI in whole or in part upon notice to Bank, and Bank shall, upon
receipt of such notice, immediately discontinue the use of such sales
literature, sales material and advertising. Bank is not authorized to modify or
translate any such materials without the prior written consent of FTDI.
p) Customer Information
Each party to this Agreement agrees to limit the disclosure of
non-public personal information of shareholders and customers consistent with
its policies on privacy with respect to such information and Regulation S-P of
the SEC. Each party hereby agrees that it will comply with all applicable
requirements under the regulations implementing Title V of the
Xxxxx-Xxxxx-Xxxxxx Act and any other applicable federal and state consumer
privacy acts, rules and regulations. Each party further represents that it has
in place, and agrees that it will maintain, information security policies and
procedures for protecting nonpublic personal customer information adequate to
conform to applicable legal requirements.
q) Use of Site
Each of Bank's representatives, agents, independent contractors and
employees will have access to the Sites as provided herein, (a) upon
registration by such individual on a Site (including providing certain data and
codes identifying Bank), (b) if Bank causes an MOS Site Access Request Form (an
"Access Form") to be signed by Bank's authorized supervisory personnel and
submitted to FTDI, as a Schedule to, and legally a part of, this Agreement, or
(c) if Bank provides such individual with the necessary access codes or other
information necessary to access the Sites through any generic or firm-wide
authorization FTDI may grant Bank from time to time. Upon receipt by FTDI of a
completed registration submitted by an individual through the Sites or a signed
Access Form referencing such individual, FTDI shall be entitled to rely upon the
representations contained therein as if Bank had made them directly hereunder
and FTDI will issue a user identification, express number and/or password
(collectively, "Access Code"). Any person to whom FTDI issues an Access Code or
to whom Bank provides the necessary Access Codes or other information necessary
to access the Sites through any generic or firm-wide authorization FTDI may
grant Bank from time to time shall be an "Authorized User." FTDI shall be
entitled to assume that such person validly represents Bank and that all
instructions received from such person are authorized, in which case such person
will have access to the Site, including all services and information to which
Bank is authorized to access on the Site. All inquiries and Transactions
initiated by Bank (including Bank's Authorized Users) are Bank's responsibility,
are at Bank's risk and are subject to FTDI's review and approval (which could
cause a delay in processing). Bank agrees that FTDI does not have a duty to
question information or instructions Bank (including Authorized Users) gives to
FTDI under this Agreement, and that FTDI is entitled to treat as authorized, and
act upon, any such instructions and information Bank submits to FTDI. Bank
agrees to take all reasonable measures to prevent any individual other than an
Authorized User from obtaining access to the Site. Bank agrees to inform FTDI if
Bank wishes to restrict or revoke the access of any individual Access Code. If
Bank becomes aware of any loss or theft or unauthorized use of any Access Code,
Bank agrees to contact FTDI immediately. Bank also agrees to monitor its
(including Authorized Users') use of the Site to ensure the terms of this
Agreement are followed. Bank acknowledges that the Sites are transmitted over
the Internet on a reasonable efforts basis and FTDI does not warrant or
guarantee their accuracy, timeliness, completeness, reliability or
non-infringement. Moreover, Bank acknowledges that the Sites are provided for
informational purposes only, and are not intended to comply with any
requirements established by any regulatory or governmental agency.
6. CONTINUOUSLY OFFERED CLOSED-END FUNDS
This Paragraph 6 relates solely to shares of Funds that represent a
beneficial interest in shares that are issued by a Fund that is a closed-end
investment company registered under the 1940 Act that makes a continuous
offering of it shares, for which FTDI or an affiliate of FTDI serves as
principal underwriter and that periodically repurchases its shares (each, a
"Trust"). Shares of a Trust being offered to the public will be registered under
the 1933 Act and are expected to be offered during an offering period that may
continue indefinitely ("Continuous Offering Period"). There is no guarantee that
such a continuous offering will be maintained by the Trust. The Continuous
Offering Period, shares of a Trust and certain of the terms on which such shares
are being offered are more fully described in the Prospectus of the Trust.
As set forth in a Trust's then current Prospectus, FTDI shall provide Bank
with appropriate compensation for purchases of shares of the Trust made by Bank
for the account of Customers or by Customers. In addition, Bank may be entitled
to a fee for servicing Customers who are shareholders in a Trust, subject to
applicable law. Bank agrees that any repurchases of shares of a Trust that were
originally purchased as Qualifying Sales shall be subject to Paragraph 5(e)
hereof.
Bank expressly acknowledges and understands that, notwithstanding anything
to the contrary in this Agreement:
a) No Trust has a Rule 12b-1 Plan and in no event will a Trust pay, or
have any obligation to pay, any compensation directly or indirectly to
Bank.
b) Shares of a Trust will not be repurchased by either the Trust (other
than through repurchase offers by the Trust from time to time, if any)
or by FTDI and no secondary market for such shares exists currently,
or is expected to develop. Any representation as to a repurchase or
tender offer by the Trust, other than that set forth in the Trust's
then current Prospectus, notification letters, reports or other
related material provided by the Trust, is expressly prohibited.
c) An early withdrawal charge payable by shareholders of a Trust to FTDI
may be imposed on shares accepted for repurchase by the Trust that
have been held for less than a stated period, as set forth in the
Trust's then current Prospectus.
d) In the event a Customer cancels his or her order for shares of a Trust
after confirmation, such shares will not be repurchased, remarketed or
otherwise disposed of by or through FTDI.
7. GENERAL
a) Successors and Assignments
This Agreement shall extend to and be binding upon the parties hereto
and their respective successors and assigns; provided that this Agreement will
terminate automatically in the event of its assignment by FTDI. For purposes of
the preceding sentence, the word "assignment" shall have the meaning given to it
in the 1940 Act. Bank may not assign this Agreement without the advance written
consent of FTDI.
b) Paragraph Headings
The paragraph headings of this Agreement are for convenience only, and
shall not be deemed to define, limit, or describe the scope or intent of this
Agreement.
c) Severability
Should any provision of this Agreement be determined to be invalid or
unenforceable under any law, rule, or regulation, that determination shall not
affect the validity or enforceability of any other provision of this Agreement.
d) Waivers
There shall be no waiver of any provision of this Agreement except a
written waiver signed by Bank and FTDI. No written waiver shall be deemed a
continuing waiver or a waiver of any other provision, unless such written waiver
expresses such intention.
e) Sole Agreement
This Agreement is the entire agreement of Bank and FTDI and supersedes
all oral negotiations and prior writings, including any prior bank selling
agreements.
f) Governing Law
This Agreement shall be construed in accordance with the laws of the
State of California, not including any provision which would require the general
application of the law of another jurisdiction, and shall be binding upon the
parties hereto when signed by FTDI and accepted by Bank, either by Bank's
signature in the space provided below or by Bank's first trade entered after
receipt of this Agreement.
g) Setoff; Arbitration
Should Bank owe any sum of money to FTDI under or in relation to this
Agreement for the purchase, sale, redemption or repurchase of any Fund shares,
FTDI may offset and recover the amount owed by Bank to FTDI or the Funds from
any amount owed by FTDI to Bank or from any other account Bank has with FTDI,
without notice or demand to Bank. Either party may submit any dispute under this
Agreement to binding arbitration under the commercial arbitration rules of the
American Arbitration Association. Judgment upon any arbitration award may be
entered by any court having jurisdiction.
h) Amendments
FTDI may amend this Agreement at any time by depositing a written
notice of the amendment in the U.S. mail, first class postage pre-paid,
addressed to Bank's address given below (or such other address as specified in
writing by Bank). Bank's placement of any Transaction order for shares of a Fund
or acceptance of any payments after the effective date and receipt of notice of
any such amendment shall constitute Bank's acceptance of the amendment.
Notwithstanding the foregoing, the Site Terms may be separately amended as
provided therein and as so amended and in effect from time to time shall be a
part of this Agreement.
i) Term and Termination
This Agreement shall continue in effect until terminated and shall
terminate automatically in the event that Bank ceases to be a "bank" as set
forth in paragraph 2(a) of this Agreement. FTDI or Bank may terminate this
Agreement at any time by written notice to the other, but such termination shall
not affect the payment or repayment of Fees on Transactions prior to the
termination date. Termination also will not affect the indemnities given under
this Agreement.
j) Acceptance; Cumulative Effect
This Agreement is cumulative and supersedes any similar agreement
previously in effect. It shall be binding upon the parties hereto when signed by
FTDI and accepted by Bank. If Bank has a current selling agreement with FTDI,
Bank's first trade or acceptance of payments from FTDI after receipt of this
Agreement, as it may be amended pursuant to paragraph 7(h), above, shall
constitute Bank's acceptance of the terms of this Agreement.
Otherwise, Bank's signature below shall constitute Bank's acceptance of these
terms.
FRANKLIN XXXXXXXXX DISTRIBUTORS, INC.
By
-----------------------------------
Xxxxx X. Xxxxx, President
Xxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, XX 00000-0000
Attention: Chief Legal Officer
(for legal notices only)
650/312-2000
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx
00000-0000 727/299-8712
To the Bank or Trust Company: If you have NOT previously signed an agreement
with FTDI for the sale of mutual fund shares to your customers, please complete
and sign this section and return the original to us.
BANK OR TRUST COMPANY:
(Bank's name)
By
------------------------------------
(Signature)
Name:
Title:
Date:
BANK SELLING AGREEMENT
NOVEMBER 1, 2003
1. INTRODUCTION
The parties to this Agreement are the undersigned bank or trust company
("Bank") and Franklin Xxxxxxxxx Distributors, Inc. ("FTDI"). This Agreement sets
forth the terms and conditions under which FTDI will execute purchases and
redemptions of shares of the Franklin or Templeton investment companies or
series of such investment companies for which FTDI now or in the future serves
as principal underwriter (each, a "Fund"), at the request of Bank upon the order
and for the account of Bank's customers ("Customers"). In this Agreement,
"Customer" shall include the beneficial owners of an account and any agent or
attorney-in-fact duly authorized or appointed to act on the owner's behalf with
respect to the account; and "redemptions" shall include redemptions of shares of
Funds that are open-end management investment companies and repurchases of
shares of Funds that are closed-end investment companies by the Fund that is the
issuer of such shares. FTDI will notify Bank from time to time of the Funds that
are eligible for distribution and the terms of compensation under this
Agreement. This Agreement is not exclusive, and either party may enter into
similar agreements with third parties.
2. REPRESENTATIONS AND WARRANTIES OF BANK
Bank warrants and represents to FTDI and the Funds that:
a) Bank is a "bank" as defined in section 3(a)(6) of the Securities
Exchange Act of 1934, as amended (the "1934 Act");
b) Bank is authorized to enter into this Agreement as agent for
Customers, and Bank's performance of its obligations and receipt of
consideration under this Agreement will not violate any law,
regulation, charter, agreement or regulatory restriction to which Bank
is subject;
c) Bank has received all regulatory agency approvals and taken all legal
and other steps necessary for offering the services Bank will provide
to Customers and receiving any applicable compensation in connection
with this Agreement; and
d) Bank will comply with all applicable U.S. federal, state and local
laws and regulations in performing its obligations hereunder. Without
limiting the foregoing, Bank agrees that in recommending to a customer
the purchase, sale or exchange of any shares, or class of shares, of a
Fund, Bank shall have reasonable grounds for believing that the
recommendation is suitable for such customer. Bank also agrees that it
will comply with all policies and agreements concerning Site (as
defined in Paragraph 4(b)(4) below) usage, including, without
limitation, the Terms of Use Agreement(s) posted on the Sites ("Site
Terms") as may be revised and reposted on the Sites from time to time,
and those Site Terms (as in effect from time to time) are part of this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL UNDERWRITER
FTDI warrants and represents to Bank that:
a) FTDI is a broker/dealer registered under the 1934 Act; and
b) FTDI is the principal underwriter of the Funds.
4. COVENANTS OF BANK
a) For each purchase, redemption or exchange transaction under this
Agreement (each, a "Transaction"), Bank will:
1) be authorized to engage in the Transaction;
2) except as otherwise provided herein, act as agent for Customer,
unless Bank is the Customer;
3) act solely for the account of Customer, unless Bank is the
Customer;
4) not submit an order unless Bank has already received the order
from Customer, unless Bank is the Customer;
5) not withhold placing any Customer's order for the purpose of
profiting from the delay or place orders for Fund shares in
amounts just below the point at which sales charges are reduced
so as to benefit from a higher Fee (as defined in Paragraph 5(e)
below) applicable to a Transaction in an amount below the
breakpoint;
6) have no beneficial ownership of the securities in any purchase
Transaction (Customer will have the full beneficial ownership),
unless Bank is the Customer (in which case, Bank will not engage
in the Transaction unless the Transaction is legally permissible
for Bank);
7) not accept or withhold any Fee (as defined in Paragraph 5(e) of
this Agreement) otherwise allowed under Paragraphs 5(d) and (e)
of this Agreement, if prohibited by the Employee Retirement
Income Security Act of 1974, as amended, or trust or similar laws
to which Bank is subject, in the case of Transactions of Fund
shares involving retirement plans, trusts, or similar accounts;
8) maintain records of all Transactions of Fund shares made through
Bank and furnish FTDI with copies of such records upon request;
and
9) distribute Prospectuses, statements of additional information and
reports to Customers in compliance with applicable legal
requirements, except to the extent that FTDI expressly undertakes
to do so on behalf of Bank.
b) While this Agreement is in effect, Bank will:
1) not purchase any Fund shares from any person at a price lower
than the redemption or repurchase price, as applicable, next
determined by the applicable Fund;
2) repay FTDI the full Fee received by Bank under Paragraphs 5(d)
and (e) of this Agreement, and any payments FTDI or its
affiliates made to Bank from their own resources under Paragraph
5(e) of this Agreement ("FTDI Payments"), for any Fund shares
purchased under this Agreement which are redeemed or repurchased
by the Fund within seven (7) business days after the purchase; in
turn, FTDI shall pay to the Fund the amount repaid by Bank (other
than any portion of such repayment that is a repayment of FTDI
Payments) and will notify Bank of any such redemption within a
reasonable time (termination or suspension of this Agreement
shall not relieve Bank or FTDI from the requirements of this
subparagraph);
3) in connection with orders for the purchase of Fund shares on
behalf of an individual retirement account, self-employed
retirement plan or other retirement accounts, by mail, telephone,
wire or through the Sites, act as agent for the custodian or
trustee of such plans and shall not place such an order until
Bank has received from its Customer payment for such purchase
and, if such purchase represents the first contribution to such a
plan, the completed documents necessary to establish the plan and
enrollment in the plan (Bank agrees to indemnify FTDI and
Franklin Xxxxxxxxx Bank & Trust, F.S.B. and/or Fiduciary Trust
International of the South, as applicable, for any claim, loss,
or liability resulting from incorrect investment instructions
received from Bank which cause a tax liability or other tax
penalty);
4) obtain from its Customers any consents required by applicable
federal and/or state privacy laws to (a) permit FTDI, any of its
affiliates or the Funds to provide Bank with confirmations,
account statements and other information about Customers'
investments in the Funds, and (b) permit Bank and its registered
representatives, agents, independent contractors and/or employees
to transmit and receive confidential information concerning such
Customers to or from FTDI and through its websites at
xxxxxxxxxxxxxxxxx.xxx, XxxxxxxXxxxxxx.xxx and such other URL(s)
through which FTDI may permit Bank to conduct business concerning
the Funds from time to time (referred to collectively as the
"Sites"); and
5) place orders for the purchase of Fund shares by Bank only for
Customers for whom Bank has appropriate identification as
required by applicable anti-money laundering laws or policies in
Bank's jurisdiction.
5. TERMS AND CONDITIONS FOR TRANSACTIONS
a) Price
Purchase orders for Fund shares received from Bank will be accepted
only at the public offering price and in compliance with procedures applicable
to each purchase order as set forth in the then current prospectus and statement
of additional information (hereinafter, collectively, "Prospectus") for the
applicable Fund. All purchase orders must be accompanied by payment in U.S.
Dollars. Orders payable by check must be drawn payable in U.S. Dollars on a U.S.
bank, for the full amount of the investment. All sales are made subject to
receipt of shares by FTDI from the Funds. FTDI reserves the right in its
discretion, without notice, to suspend the sale of shares or withdraw the
offering of shares entirely.
b) Orders and Confirmations
Except as otherwise provided, Bank shall not have any authority to act
as agent for the Funds, FTDI, or any other dealer in any respect, nor will Bank
represent to any third party that it has such authority or is acting in such
capacity. All orders are subject to acceptance or rejection by FTDI and by the
Fund or its transfer agent at their sole discretion, and become effective only
upon confirmation by one of them. Transaction orders shall be made using the
procedures and forms provided by FTDI from time to time. Orders will be effected
at the price(s) next computed on the day they are received if, as set forth in
the applicable Fund's current Prospectus, the orders are received by FTDI or an
agent appointed by FTDI or the Funds prior to the close of trading on the New
York Stock Exchange, generally 4:00 p.m. eastern time ("Close of Trading").
Orders received after that time will be effected at the price determined on the
next business day. No order will be accepted unless Bank or Customer shall have
provided FTDI with Customer's full name, address and other information normally
required by FTDI to open a customer account, and FTDI shall be entitled to rely
on the accuracy of the information provided by Bank. A written confirming
statement will be sent to the shareholder of record upon settlement of each
Transaction.
If Bank has entered into a FundSERV Agreement with FTDI to effect
Transactions in Fund shares through FundSERV, Bank is hereby authorized to act
on FTDI's behalf for the limited purpose of receiving purchase, exchange and
redemption orders for Fund shares executed through FundSERV. Bank represents and
warrants that all orders for the purchase, exchange or redemption of Fund shares
transmitted to FundSERV for processing on or as of a given business day (Day 1)
shall have been received by Bank prior to the Close of Trading on Day 1. Such
orders shall receive the share price next calculated following the Close of
Trading on Day 1. Bank represents and warrants that orders received by Bank
after the Close of Trading on Day 1 shall be treated by Bank and transmitted to
FundSERV as if received on the next business day (Day 2). Such orders shall
receive the share price next calculated following the Close of Trading on Day 2.
Bank represents that it has systems in place reasonably designed to prevent
orders received after the Close of Trading on Day 1 from being executed with
orders received before the Close of Trading on Day 1.
c) Multiple Class Guidelines
FTDI may from time to time provide to Bank written compliance
guidelines or standards relating to the sale or distribution of Funds offering
multiple classes of shares (each, a "Class") with different sales charges and
distribution-related operating expenses. Bank will comply with FTDI's written
compliance guidelines and standards, as well as with any applicable rules or
regulations of government agencies or self-regulatory organizations generally
affecting the sale or distribution of investment companies offering multiple
classes of shares, whether or not Bank deems itself otherwise subject to such
rules or regulations.
d) Payments by Bank for Purchases
On the settlement date for each purchase, Bank shall either (i) remit
the full purchase price by wire transfer to an account designated by FTDI, or
(ii) following FTDI's procedures, wire the purchase price less the Fee allowed
by Paragraph 5(e) of this Agreement. Twice monthly, FTDI will pay Bank Fees not
previously paid to or withheld by Bank. Each calendar month, FTDI, as
applicable, will prepare and mail an activity statement summarizing all
Transactions.
e) Fees and Payments
Where permitted by the Prospectus for a Fund, a charge, concession, or
fee (each of the foregoing forms of compensation, a "Fee") may be paid to Bank,
related to services provided by Bank in connection with Transactions in shares
of such Fund. The amount of the Fee, if any, is set by the relevant Prospectus.
Adjustments in the Fee are available for certain purchases, and Bank is solely
responsible for notifying FTDI when any purchase or redemption order is
qualified for such an adjustment. If Bank fails to notify FTDI of the
applicability of a reduction in the sales charge at the time the trade is
placed, neither FTDI nor any of the Funds will be liable for amounts necessary
to reimburse any Customer for the reduction which should have been effected.
In accordance with the Funds' Prospectuses, FTDI or its affiliates
may, but are not obligated to, make payments from their own resources to Bank as
compensation for certain sales that are made at net asset value ("Qualifying
Sales"). If Bank notifies FTDI of a Qualifying Sale, FTDI may make a contingent
advance payment up to the maximum amount available for payment on the sale. If
any of the shares purchased in a Qualifying Sale are redeemed or repurchased
within twelve (12) months of the month of purchase, FTDI shall be entitled to
recover any advance payment attributable to the redeemed or repurchased shares
by reducing any account payable or other monetary obligation FTDI may owe to
Bank or by making demand upon Bank for repayment in cash. FTDI reserves the
right to withhold any one or more advances, if for any reason FTDI believes that
FTDI may not be able to recover unearned advances. Termination or suspension of
this Agreement does not relieve Bank from the requirements of this paragraph.
Bank agrees to waive payment of any amounts of dealer concessions payable to
Bank by FTDI until such time as FTDI is in receipt of such dealer concessions.
f) Rule 12b-1 Plans
Bank is also invited to participate in all distribution plans (each, a
"Plan") adopted for a Class of a Fund or for a Fund that has only a single Class
(each, a "Plan Class") pursuant to Rule 12b-1 under the Investment Company Act
of 1940, as amended (the "1940 Act").
To the extent Bank provides administrative and other services,
including, but not limited to, furnishing personal and other services and
assistance to Customers who own shares of a Plan Class, answering routine
inquiries regarding a Fund or Class, assisting in changing account designations
and addresses, maintaining such accounts or such other services as a Fund may
require, to the extent permitted by applicable statutes, rules, or regulations,
FTDI shall pay Bank a Rule 12b-1 servicing fee. To the extent that Bank
participates in the distribution of Fund shares that are eligible for a Rule
12b-1 distribution fee, FTDI shall also pay Bank a Rule 12b-1 distribution fee.
All Rule 12b-1 servicing and distribution fees shall be based on the value of
shares attributable to Customers and eligible for such payment, and shall be
calculated on the basis and at the rates set forth in the compensation schedule
then in effect for the applicable Plan (the "Schedule"). Without prior approval
by a majority of the outstanding shares of a particular Class of a Fund, the
aggregate annual fees paid to Bank pursuant to such Plan shall not exceed the
amounts stated as the "annual maximums" in such Plan Class' Prospectus, which
amount shall be a specified percent of the value of such Plan Class' net assets
held in Customers' accounts which are eligible for payment pursuant to this
Agreement (determined in the same manner as such Plan Class uses to compute its
net assets, as set forth in its effective Prospectus).
Bank shall furnish FTDI and each Fund that has a Plan Class (each, a
"Plan Fund") with such information as shall reasonably be requested by the Board
of Directors, Trustees or Managing General Partners (hereinafter referred to as
"Directors") of such Plan Fund with respect to the fees paid to Bank pursuant to
the Schedule of such Plan Fund. FTDI shall furnish to the Directors of the Plan
Funds, for their review on a quarterly basis, a written report of the amounts
expended under the Plans and the purposes for which such expenditures were made.
Each Plan and the provisions of any agreement relating to such Plan
must be approved annually by a vote of the Directors of the Fund that has such
Plan, including such persons who are not interested persons of such Plan Fund
and who have no financial interest in such Plan or any related agreement ("Rule
12b-1 Directors"). Each Plan or the provisions of this Agreement relating to
such Plan may be terminated at any time by the vote of a majority of Rule 12b-1
Directors of the Fund that has such Plan, or by a vote of a majority of the
outstanding shares of the Class that has such Plan on sixty (60) days' written
notice, without payment of any penalty. A Plan or the provisions of this
Agreement may also be terminated by any act that terminates the underwriting
agreement between FTDI and the Fund that has such Plan, and/or the management or
administration agreement between Franklin Advisers, Inc. or Xxxxxxxxx Investment
Counsel, LLC or their affiliates and such Plan Fund. In the event of the
termination of a Plan for any reason, the provisions of this Agreement relating
to such Plan will also terminate.
Continuation of a Plan and the provisions of this Agreement relating
to such Plan are conditioned on Rule 12b-1 Directors being ultimately
responsible for selecting and nominating any new Rule 12b-1 Directors. Under
Rule 12b-1, Directors of any of the Plan Funds have a duty to request and
evaluate, and persons who are party to any agreement related to a Plan have a
duty to furnish, such information as may reasonably be necessary to an informed
determination of whether the Plan or any agreement should be implemented or
continued. Under Rule 12b-1, a Plan Fund is permitted to implement or continue a
Plan or the provisions of this Agreement relating to such Plan from year-to-year
only if, based on certain legal considerations, the Board of Directors of such
Plan Fund is able to conclude that the Plan will benefit the Plan Class. Absent
such yearly determination, a Plan and the provisions of this Agreement relating
to such Plan must be terminated as set forth above. In addition, any obligation
assumed by a Fund pursuant to this Agreement shall be limited in all cases to
the assets of such Fund and no person shall seek satisfaction thereof from
shareholders of a Fund. Bank agrees to waive payment of any amounts payable to
Bank by FTDI under a Fund's Plan until such time as FTDI is in receipt of such
fee from the Fund.
In the event of any inconsistency, the provisions of the Plans between
the Plan Funds and FTDI shall control over the provisions of this Agreement.
g) Other Distribution Services
From time to time, FTDI may offer telephone and other augmented
services in connection with Transactions under this Agreement. If Bank uses any
such service, Bank will be subject to the procedures applicable to the service,
whether or not Bank has executed any agreement required for the service.
h) Conditional Orders; Certificates
FTDI will not accept any conditional Transaction orders. Delivery of
certificates or confirmations for shares purchased shall be made by a Fund only
against constructive receipt of the purchase price, subject to deduction of any
Fee and FTDI's portion of the sales charge, if any, on such sale. No
certificates for shares of the Funds will be issued unless specifically
requested.
i) Cancellation of Orders
If payment for shares purchased is not received within the time
customary or the time required by law for such payment, the sale may be canceled
without notice or demand, and neither FTDI nor the Fund(s) shall have any
responsibility or liability for such a cancellation; alternatively, at FTDI's
option, the unpaid shares may be sold back to the Fund, and Bank shall be liable
for any resulting loss to FTDI or to the Fund(s). FTDI shall have no liability
for any check or other item returned unpaid to Bank after Bank has paid FTDI on
behalf of a purchaser. FTDI may refuse to liquidate the investment unless FTDI
receives the purchaser's signed authorization for the liquidation.
j) Order Corrections
Bank shall assume responsibility for any loss to a Fund(s) caused by a
correction made subsequent to the trade date, provided such correction was not
based on any error, omission or negligence on FTDI's part, and Bank will
immediately pay such loss to the Fund(s) upon notification.
k) Redemptions; Cancellation
Redemptions or repurchases of shares will be made at the net asset
value of such shares, less any applicable deferred sales or redemption charges,
in accordance with the applicable Fund Prospectuses. If Bank sells shares for
the account of the record owner to the Fund(s), Bank shall be deemed to
represent to FTDI that Bank is doing so as agent for Customer and that Bank is
authorized to do so in such capacity. Such sales to the Fund(s) shall be at the
redemption or repurchase price then currently in effect for such shares. If on a
redemption which Bank has ordered, instructions in proper form, including
outstanding certificates, are not received within the time customary or the time
required by law, the redemption may be canceled forthwith without any
responsibility or liability on the part of FTDI or any Fund, or at the option of
FTDI, FTDI may buy the shares redeemed on behalf of the Fund(s), in which latter
case, FTDI may hold Bank responsible for any loss to the Fund(s) or loss of
profit suffered by FTDI resulting from Bank's failure to settle the redemption.
l) Exchanges
Exchange orders will be effective only for uncertificated shares or
for which share certificates have been previously deposited and may be subject
to any fees or other restrictions set forth in the applicable Prospectuses.
Exchanges from a Fund sold with no sales charge to a Fund which carries a sales
charge, and exchanges from a Fund sold with a sales charge to a Fund which
carries a higher sales charge may be subject to a sales charge in accordance
with the terms of the applicable Fund's Prospectus. Bank will be obligated to
comply with any additional exchange policies described in the applicable Fund's
Prospectus, including without limitation any policy restricting or prohibiting
excessive and/or short term trading activity, the collection of redemption fees
associated with such trading activity and the prohibition of "market timing," as
defined in the Prospectus.
m) Qualification of Shares
Upon request, FTDI shall notify Bank of the states or other
jurisdictions in which each Fund's shares are currently noticed, registered or
qualified for offer or sale to the public. FTDI shall have no obligation to make
notice filings of, register or qualify, or to maintain notice filings of,
registration of or qualification of, Fund shares in any particular state or
other jurisdiction. FTDI shall have no responsibility, under the laws regulating
the sale of securities in any U.S. or foreign jurisdiction, for the
registration, qualification or licensed status of Bank or any of its agents or
sub-agents in connection with the purchase or sale of Fund shares or for the
manner of offering, sale or purchase of Fund shares. Except as stated in this
paragraph, FTDI shall not, in any event, be liable or responsible for the issue,
form, validity, enforceability and value of such shares or for any matter in
connection therewith, and no obligation not expressly assumed by FTDI in this
Agreement shall be implied. If it is necessary to file notice, register or
qualify shares of any Fund in any country, state or other jurisdiction having
authority over the purchase or sale of Fund shares that are purchased by a
Customer, it will be Bank's responsibility to arrange for and to pay the costs
of such notice filing, registration or qualification; prior to any such notice
filing, registration or qualification, Bank will notify FTDI of its intent and
of any limitations that might be imposed on the Funds, and Bank agrees not to
proceed with such notice filing, registration or qualification without the
written consent of the applicable Fund(s) and of FTDI. Nothing in this Agreement
shall be deemed to be a condition, stipulation, or provision binding any person
acquiring any security to waive compliance with any provision of the Securities
Act of 1933, as amended (the "1933 Act"), the 1934 Act, the 1940 Act, the rules
and regulations of the U.S. Securities and Exchange Commission ("SEC"), or any
applicable laws or regulations of any government or authorized agency in the
U.S. or any other country having jurisdiction over the offer or sale of shares
of the Funds, or to relieve the parties hereto from any liability arising under
such laws, rules or regulations.
n) Indemnification
Bank agrees to indemnify, and hold harmless FTDI, and the Funds, as
well as FTDI's and the Funds' respective officers, directors and employees
(collectively "Indemnitees"), from any and all actual or alleged losses, claims,
liabilities and expenses (including reasonable attorneys' fees and
expenses)(collectively, "Losses") arising from or as the result of (1) any
actual or alleged violation of any statute or regulation (including without
limitation U.S. and state securities laws and regulations and consumer
protection laws, as well as the laws of any foreign country where Bank offers or
sells shares of the Funds) and/or any actual and/or alleged violation of common
law (including without limitation all tort and/or contract claims), which in any
way relate to any offer, sale, redemption, transfer or exchange of shares of the
Funds (including any actual and/or alleged mishandling of the Transaction and/or
misappropriation of the proceeds in connection therewith) by Bank and/or by or
through any of Bank's registered representatives, agents, independent
contractors and/or employees; (2) the breach by Bank or any of Bank's registered
representatives, agents, independent contractors and/or employees of any of the
terms and conditions of this Agreement; and/or (3) any use of, including
unauthorized access obtained through Bank, of the Sites by Bank or Bank's
officers, directors, employees or agents; provided, however, that an Indemnitee
shall not be entitled to indemnification hereunder to the extent the actual and
proximate cause of any such Losses is attributed to such Indemnitee's own
negligence, willful misconduct or breach of this Agreement.
In addition, Bank agrees that in the event that Indemnitees are named
in any legal proceedings (including, but not limited to, lawsuits filed in court
and statements of claim filed in an arbitration forum) which involve claims
and/or liabilities that are the subject of this indemnification agreement, FTDI
and the Funds may, following notice to Bank, retain attorneys of FTDI's choice
to represent FTDI and/or the Funds in such legal proceedings at Bank's expense,
and Bank will promptly reimburse FTDI and/or the Funds for the attorneys' fees
and expenses incurred in connection with the defense of any such legal
proceedings. This Paragraph 5(n) shall survive the termination of this
Agreement.
o) Prospectus and Sales Materials; Limit on Advertising
No person is authorized to give any information or make any
representations concerning shares of any Fund except those contained in the
Fund's current Prospectus or in materials produced by FTDI as information
supplemental to such Prospectus. FTDI will supply Prospectuses, reasonable
quantities of supplemental sale literature, sales bulletins, and additional
information as issued. Bank agrees not to use other advertising or sales
material or other material or literature relating to the Funds except that which
(a) conforms to the requirements of any applicable laws or regulations of any
government or authorized agency in the U.S. or any other country having
jurisdiction over the offering or sale of shares of the Funds, and (b) is
approved in writing by FTDI in advance of such use. Such approval may be
withdrawn by FTDI in whole or in part upon notice to Bank, and Bank shall, upon
receipt of such notice, immediately discontinue the use of such sales
literature, sales material and advertising. Bank is not authorized to modify or
translate any such materials without the prior written consent of FTDI.
p) Customer Information
Each party to this Agreement agrees to limit the disclosure of
non-public personal information of shareholders and customers consistent with
its policies on privacy with respect to such information and Regulation S-P of
the SEC. Each party hereby agrees that it will comply with all applicable
requirements under the regulations implementing Title V of the
Xxxxx-Xxxxx-Xxxxxx Act and any other applicable federal and state consumer
privacy acts, rules and regulations. Each party further represents that it has
in place, and agrees that it will maintain, information security policies and
procedures for protecting nonpublic personal customer information adequate to
conform to applicable legal requirements.
q) Use of Site
Each of Bank's representatives, agents, independent contractors and
employees will have access to the Sites as provided herein, (a) upon
registration by such individual on a Site (including providing certain data and
codes identifying Bank), (b) if Bank causes an MOS Site Access Request Form (an
"Access Form") to be signed by Bank's authorized supervisory personnel and
submitted to FTDI, as a Schedule to, and legally a part of, this Agreement, or
(c) if Bank provides such individual with the necessary access codes or other
information necessary to access the Sites through any generic or firm-wide
authorization FTDI may grant Bank from time to time. Upon receipt by FTDI of a
completed registration submitted by an individual through the Sites or a signed
Access Form referencing such individual, FTDI shall be entitled to rely upon the
representations contained therein as if Bank had made them directly hereunder
and FTDI will issue a user identification, express number and/or password
(collectively, "Access Code"). Any person to whom FTDI issues an Access Code or
to whom Bank provides the necessary Access Codes or other information necessary
to access the Sites through any generic or firm-wide authorization FTDI may
grant Bank from time to time shall be an "Authorized User." FTDI shall be
entitled to assume that such person validly represents Bank and that all
instructions received from such person are authorized, in which case such person
will have access to the Site, including all services and information to which
Bank is authorized to access on the Site. All inquiries and Transactions
initiated by Bank (including Bank's Authorized Users) are Bank's responsibility,
are at Bank's risk and are subject to FTDI's review and approval (which could
cause a delay in processing). Bank agrees that FTDI does not have a duty to
question information or instructions Bank (including Authorized Users) gives to
FTDI under this Agreement, and that FTDI is entitled to treat as authorized, and
act upon, any such instructions and information Bank submits to FTDI. Bank
agrees to take all reasonable measures to prevent any individual other than an
Authorized User from obtaining access to the Site. Bank agrees to inform FTDI if
Bank wishes to restrict or revoke the access of any individual Access Code. If
Bank becomes aware of any loss or theft or unauthorized use of any Access Code,
Bank agrees to contact FTDI immediately. Bank also agrees to monitor its
(including Authorized Users') use of the Site to ensure the terms of this
Agreement are followed. Bank acknowledges that the Sites are transmitted over
the Internet on a reasonable efforts basis and FTDI does not warrant or
guarantee their accuracy, timeliness, completeness, reliability or
non-infringement. Moreover, Bank acknowledges that the Sites are provided for
informational purposes only, and are not intended to comply with any
requirements established by any regulatory or governmental agency.
6. CONTINUOUSLY OFFERED CLOSED-END FUNDS
This Paragraph 6 relates solely to shares of Funds that represent a
beneficial interest in shares that are issued by a Fund that is a closed-end
investment company registered under the 1940 Act that makes a continuous
offering of it shares, for which FTDI or an affiliate of FTDI serves as
principal underwriter and that periodically repurchases its shares (each, a
"Trust"). Shares of a Trust being offered to the public will be registered under
the 1933 Act and are expected to be offered during an offering period that may
continue indefinitely ("Continuous Offering Period"). There is no guarantee that
such a continuous offering will be maintained by the Trust. The Continuous
Offering Period, shares of a Trust and certain of the terms on which such shares
are being offered are more fully described in the Prospectus of the Trust.
As set forth in a Trust's then current Prospectus, FTDI shall provide Bank
with appropriate compensation for purchases of shares of the Trust made by Bank
for the account of Customers or by Customers. In addition, Bank may be entitled
to a fee for servicing Customers who are shareholders in a Trust, subject to
applicable law. Bank agrees that any repurchases of shares of a Trust that were
originally purchased as Qualifying Sales shall be subject to Paragraph 5(e)
hereof.
Bank expressly acknowledges and understands that, notwithstanding anything
to the contrary in this Agreement:
a) No Trust has a Rule 12b-1 Plan and in no event will a Trust pay, or
have any obligation to pay, any compensation directly or indirectly to
Bank.
b) Shares of a Trust will not be repurchased by either the Trust (other
than through repurchase offers by the Trust from time to time, if any)
or by FTDI and no secondary market for such shares exists currently,
or is expected to develop. Any representation as to a repurchase or
tender offer by the Trust, other than that set forth in the Trust's
then current Prospectus, notification letters, reports or other
related material provided by the Trust, is expressly prohibited.
c) An early withdrawal charge payable by shareholders of a Trust to FTDI
may be imposed on shares accepted for repurchase by the Trust that
have been held for less than a stated period, as set forth in the
Trust's then current Prospectus.
d) In the event a Customer cancels his or her order for shares of a Trust
after confirmation, such shares will not be repurchased, remarketed or
otherwise disposed of by or through FTDI.
7. GENERAL
a) Successors and Assignments
This Agreement shall extend to and be binding upon the parties hereto
and their respective successors and assigns; provided that this Agreement will
terminate automatically in the event of its assignment by FTDI. For purposes of
the preceding sentence, the word "assignment" shall have the meaning given to it
in the 1940 Act. Bank may not assign this Agreement without the advance written
consent of FTDI.
b) Paragraph Headings
The paragraph headings of this Agreement are for convenience only, and
shall not be deemed to define, limit, or describe the scope or intent of this
Agreement.
c) Severability
Should any provision of this Agreement be determined to be invalid or
unenforceable under any law, rule, or regulation, that determination shall not
affect the validity or enforceability of any other provision of this Agreement.
d) Waivers
There shall be no waiver of any provision of this Agreement except a
written waiver signed by Bank and FTDI. No written waiver shall be deemed a
continuing waiver or a waiver of any other provision, unless such written waiver
expresses such intention.
e) Sole Agreement
This Agreement is the entire agreement of Bank and FTDI and supersedes
all oral negotiations and prior writings, including any prior bank selling
agreements.
f) Governing Law
This Agreement shall be construed in accordance with the laws of the
State of California, not including any provision which would require the general
application of the law of another jurisdiction, and shall be binding upon the
parties hereto when signed by FTDI and accepted by Bank, either by Bank's
signature in the space provided below or by Bank's first trade entered after
receipt of this Agreement.
g) Setoff; Arbitration
Should Bank owe any sum of money to FTDI under or in relation to this
Agreement for the purchase, sale, redemption or repurchase of any Fund shares,
FTDI may offset and recover the amount owed by Bank to FTDI or the Funds from
any amount owed by FTDI to Bank or from any other account Bank has with FTDI,
without notice or demand to Bank. Either party may submit any dispute under this
Agreement to binding arbitration under the commercial arbitration rules of the
American Arbitration Association. Judgment upon any arbitration award may be
entered by any court having jurisdiction.
h) Amendments
FTDI may amend this Agreement at any time by depositing a written
notice of the amendment in the U.S. mail, first class postage pre-paid,
addressed to Bank's address given below (or such other address as specified in
writing by Bank). Bank's placement of any Transaction order for shares of a Fund
or acceptance of any payments after the effective date and receipt of notice of
any such amendment shall constitute Bank's acceptance of the amendment.
Notwithstanding the foregoing, the Site Terms may be separately amended as
provided therein and as so amended and in effect from time to time shall be a
part of this Agreement.
i) Term and Termination
This Agreement shall continue in effect until terminated and shall
terminate automatically in the event that Bank ceases to be a "bank" as set
forth in paragraph 2(a) of this Agreement. FTDI or Bank may terminate this
Agreement at any time by written notice to the other, but such termination shall
not affect the payment or repayment of Fees on Transactions prior to the
termination date. Termination also will not affect the indemnities given under
this Agreement.
j) Acceptance; Cumulative Effect
This Agreement is cumulative and supersedes any similar agreement
previously in effect. It shall be binding upon the parties hereto when signed by
FTDI and accepted by Bank. If Bank has a current selling agreement with FTDI,
Bank's first trade or acceptance of payments from FTDI after receipt of this
Agreement, as it may be amended pursuant to paragraph 7(h), above, shall
constitute Bank's acceptance of the terms of this Agreement.
Otherwise, Bank's signature below shall constitute Bank's acceptance of these
terms.
FRANKLIN XXXXXXXXX DISTRIBUTORS, INC.
By
-----------------------------------
Xxxxx X. Xxxxx, President
Xxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, XX 00000-0000
Attention: Chief Legal Officer
(for legal notices only)
650/312-2000
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx
00000-0000 727/299-8712
To the Bank or Trust Company: If you have NOT previously signed an agreement
with FTDI for the sale of mutual fund shares to your customers, please complete
and sign this section and return the original to us.
BANK OR TRUST COMPANY:
(Bank's name)
By
------------------------------------
(Signature)
Name:
Title:
Date:
