FRANKLIN TAX-FREE TRUST
Xxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Franklin/Xxxxxxxxx Distributors, Inc.
Xxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, XX 00000-0000
Re: Distribution Agreement
Gentlemen:
We, FRANKLIN TAX-FREE TRUST, (the "Trust"), comprised of the series
listed on Attachment A (each a "Fund", and collectively, the "Funds") are a
Delaware statutory trust operating as an open-end management investment company
or "mutual fund", which is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), and whose shares are registered under the
Securities Act of 1933, as amended (the "1933 Act"). We desire to issue one or
more series or classes of our authorized but unissued shares of beneficial
interest (the "Shares") to authorized persons in accordance with applicable
Federal and State securities laws. The Trust's Shares may be made available in
one or more separate series, each of which may have one or more classes.
You have informed us that your company is registered as a
broker-dealer under the provisions of the Securities Exchange Act of 1934, as
amended and that your company is a member of the National Association of
Securities Dealers, Inc. You have indicated your desire to act as the exclusive
selling agent and distributor for the Shares. We have been authorized to execute
and deliver this Distribution Agreement ("Agreement") to you by a resolution of
our Board of Trustees ("Board") passed at a meeting at which a majority of Board
members, including a majority who are not otherwise interested persons of the
Trust and who are not interested persons of our investment adviser, its related
organizations or with you or your related organizations, were present and voted
in favor of the said resolution approving this Agreement.
1. APPOINTMENT OF UNDERWRITER. Upon the execution of this Agreement and in
consideration of the agreements on your part herein expressed and upon the terms
and conditions set forth herein, we hereby appoint you as the exclusive sales
agent for our Shares and agree that we will deliver such Shares as you may sell.
You agree to use your best efforts to promote the sale of Shares, but are not
obligated to sell any specific number of Shares.
However, the Trust and each series retain the right to make direct
sales of its Shares without sales charges consistent with the terms of the then
current prospectus and statement of additional information and applicable law,
and to engage in other legally authorized transactions in its Shares which do
not involve the sale of Shares to the general public. Such other transactions
may include, without limitation, transactions between the Trust or any series or
class and its shareholders only, transactions involving the reorganization of
the Trust or any series, and transactions involving the merger or combination of
the Trust or any series with another corporation or trust.
2. INDEPENDENT CONTRACTOR. You will undertake and discharge your
obligations hereunder as an independent contractor and shall have no authority
or power to obligate or bind us by your actions, conduct or contracts except
that you are authorized to promote the sale of Shares. You may appoint
sub-agents or distribute through dealers or otherwise as you may determine from
time to time, but this Agreement shall not be construed as authorizing any
dealer or other person to accept orders for sale or repurchase on our behalf or
otherwise act as our agent for any purpose.
3. OFFERING PRICE. Shares shall be offered for sale at a price equivalent
to the net asset value per share of that series and class plus any applicable
percentage of the public offering price as sales commission, if any, or as
otherwise set forth in our then current prospectus. On each business day on
which the New York Stock Exchange is open for business, we will furnish you with
the net asset value of the Shares of each available series and class which shall
be determined in accordance with our then effective prospectus. All Shares will
be sold in the manner set forth in our then effective prospectus and statement
of additional information, and in compliance with applicable law.
4. COMPENSATION.
A. SALES COMMISSION. You shall be entitled to charge a sales
commission on the sale or redemption, as appropriate, of each series and class
of each Fund's Shares in the amount of any initial, deferred or contingent
deferred sales charge as set forth in our then effective prospectus. You may
allow any sub-agents or dealers such commissions or discounts from and not
exceeding the total sales commission as you shall deem advisable, so long as any
such commissions or discounts are set forth in our current prospectus to the
extent required by the applicable Federal and State securities laws. You may
also make payments to sub-agents or dealers from your own resources, subject to
the following conditions: (a) any such payments shall not create any obligation
for or recourse against the Trust or any series or class, and (b) the terms and
conditions of any such payments are consistent with our prospectus and
applicable federal and state securities laws and are disclosed in our prospectus
or statement of additional information to the extent such laws may require.
B. DISTRIBUTION PLANS. You shall also be entitled to compensation for
your services as provided in any Distribution Plan adopted as to any series and
class of any Trust's Shares pursuant to Rule 12b-1 under the 1940 Act.
The compensation provided in the Class B Distribution Plan applicable
to Class B Shares (the "Class B Plan") is divided into a distribution fee and a
service fee, each of which fees is in compensation for different services to be
rendered to the Trust. Subject to the termination provisions in the Class B
Plan, the distribution fee with respect to the sale of a Class B Share shall be
earned when such Class B Share is sold and shall be payable from time to time as
provided in the Class B Plan. The distribution fee payable to you as provided in
the Class B Plan shall be payable without offset, defense or counterclaim (it
being understood by the parties hereto that nothing in this sentence shall be
deemed a waiver by the Trust of any claim the Trust may have against you). You
may direct the Trust to cause our custodian to pay such distribution fee to
Lightning Finance Company Limited ("LFL") or other persons providing funds to
you to cover expenses referred to in Section 2(a) of the Class B Plan and to
cause our custodian to pay the service fee to you to cover expenses referred to
in Section 2(b) of the Class B Plan.
We understand that you intend to assign your right to receive certain
distribution fees with respect to Class B Shares to LFL in exchange for funds
that you will use to cover expenses referred to in Section 2(a) of the Class B
Plan. In recognition that we will benefit from your arrangement with LFL, we
agree that, in addition to the provisions of Section 7(iii) of the Class B Plan,
we will not pay to any person or entity, other than LFL, any such assigned
distribution fees related to Class B Shares sold by you prior to the termination
of either the Agreement or the Class B Plan. We agree that the preceding
sentence shall survive termination of the Agreement.
The compensation provided in the Class C Distribution Plan applicable
to Class C Shares (the "Class C Plan") is divided into a distribution fee and a
service fee, each of which fees is in compensation for different services to be
rendered to the Trust. Subject to the termination provisions in the Class C
Plan, the distribution fee with respect to the sale of a Class C Share shall be
earned when such Class C Share is sold and shall be payable from time to time as
provided in the Class C Plan shall be payable without offset, defense or
counterclaim (it being understood by the parties hereto that nothing in this
sentence shall be deemed a waiver by the Trust of any claim the Trust may have
against you). You may direct the Trust to cause our custodian to pay such
distribution fee to Lightning Finance Company Limited ("LFL") or other persons
providing funds to you to cover expenses referred to in Section 2(a) of the
Class C Plan and to cause our custodian to pay the service fee to you to cover
expenses referred to in Section 2(b) of the Class C Plan.
We understand that you intend to assign your right to receive certain
distribution fees with respect to Class C Shares to LFL in exchange for funds
that you will use to cover expenses referred to in Section 2(a) of the Class C
Plan. In recognition that we will benefit from your arrangement with LFL, we
agree that, in addition to the provisions of Section 7(iii) of the Class C Plan,
we will not pay to any person or entity, other than LFL, any such assigned
distribution fees related to Class C Shares sold by you prior to the termination
of either the Agreement or the Class C Plan. We agree that the preceding
sentence shall survive termination of the Agreement.
C. With respect to the sales commission on the redemption of Shares
of each series and class of Trust as provided in Subsection 4.A. above, we will
cause our shareholder services agent (the "Transfer Agent") to withhold from
redemption proceeds payable to holders of the Shares all contingent deferred
sales charges properly payable by such holders in accordance with the terms of
our then current prospectuses and statements of additional information (each
such sales charge, a "CDSC"). Upon receipt of an order for redemption, the
Transfer Agent shall direct our custodian to transfer such redemption proceeds
to a general trust account. We shall then cause the Transfer Agent to pay over
to you or your assigns from the general trust account such CDSCs properly
payable by such holders as promptly as possible after the settlement date for
each such redemption of Shares. CDSCs shall be payable without offset, defense
or counterclaim (it being understood that nothing in this sentence shall be
deemed a waiver by us of any claim we may have against you.) You may direct that
the CDSCs payable to you be paid to any other person.
5. TERMS AND CONDITIONS OF SALES. Shares shall be offered for sale only in
those jurisdictions where they have been properly registered or are exempt from
registration, and only to those groups of people which the Board may from time
to time determine to be eligible to purchase such shares.
6. ORDERS AND PAYMENT FOR SHARES. Orders for Shares shall be directed to
the Trust's shareholder services agent, for acceptance on behalf of the Trust.
At or prior to the time of delivery of any of our Shares you will pay or cause
to be paid to the custodian of the Trust's assets, for our account, an amount in
cash equal to the net asset value of such Shares. Sales of Shares shall be
deemed to be made when and where accepted by the Trust's shareholder services
agent. The Trust's custodian and shareholder services agent shall be identified
in its prospectus.
7. PURCHASES FOR YOUR OWN ACCOUNT. You shall not purchase our Shares for
your own account for purposes of resale to the public, but you may purchase
Shares for your own investment account upon your written assurance that the
purchase is for investment purposes and that the Shares will not be resold
except through redemption by us.
8. SALE OF SHARES TO AFFILIATES. You may sell our Shares at net asset
value to certain of your and our affiliated persons pursuant to the applicable
provisions of the federal securities statutes and rules or regulations
thereunder (the "Rules and Regulations"), including Rule 22d-1 under the 1940
Act, as amended from time to time.
9. ALLOCATION OF EXPENSES. We will pay the expenses:
(a) Of the preparation of the audited and certified financial
statements of our company to be included in any Post-Effective
Amendments ("Amendments") to our Registration Statement under
the 1933 Act or 1940 Act, including the prospectus and statement
of additional information included therein;
(b) Of the preparation, including legal fees, and printing of all
Amendments or supplements filed with the Securities and Exchange
Commission, including the copies of the prospectuses included in
the Amendments and the first 10 copies of the definitive
prospectuses or supplements thereto, other than those
necessitated by your (including your "Parent's") ____ activities
or Rules and Regulations related to your activities where such
Amendments or supplements result in expenses which we would not
otherwise have incurred;
(c) Of the preparation, printing and distribution of any reports or
communications which we send to our existing shareholders; and
(d) Of filing and other fees to Federal and State securities
regulatory authorities necessary to continue offering our
Shares.
You will pay the expenses:
(a) Of printing the copies of the prospectuses and any supplements
thereto and statements of additional information which are
necessary to continue to offer our Shares;
(b) Of the preparation, excluding legal fees, and printing of all
Amendments and supplements to our prospectuses and
statements of additional information if the Amendment or
supplement arises from your (including your "Parent's"
activities or Rules and Regulations related to your activities
and those expenses would not otherwise have been incurred by us;
(c) Of printing additional copies, for use by you as sales
literature, of reports or other communications
which we have prepared for distribution to our existing
shareholders; and
(d) Incurred by you in advertising, promoting and selling our
Shares.
10. FURNISHING OF INFORMATION. We will furnish to you such information
with respect to each series and class of Shares, in such form and signed by such
of our officers as you may reasonably request, and we warrant that the
statements therein contained, when so signed, will be true and correct. We will
also furnish you with such information and will take such action as you may
reasonably request in order to qualify our Shares for sale to the public under
the Blue Sky Laws of jurisdictions in which you may wish to offer them. We will
furnish you with annual audited financial statements of our books and accounts
certified by independent public accountants, with semi-annual financial
statements prepared by us, with registration statements and, from time to time,
with such additional information regarding our financial condition as you may
reasonably request.
11. CONDUCT OF BUSINESS. Other than our currently effective prospectus,
you will not issue any sales material or statements except literature or
advertising which conforms to the requirements of Federal and State securities
laws and regulations and which have been filed, where necessary, with the
appropriate regulatory authorities. You will furnish us with copies of all such
materials prior to their use and no such material shall be published if we shall
reasonably and promptly object.
You shall comply with the applicable Federal and State laws and
regulations where our Shares are offered for sale and conduct your affairs with
us and with dealers, brokers or investors in accordance with the Conduct Rules
of the National Association of Securities Dealers, Inc.
12. REDEMPTION OR REPURCHASE WITHIN SEVEN DAYS. If Shares are tendered to
us for redemption or repurchase by us within seven business days after your
acceptance of the original purchase order for such Shares, you will immediately
refund to us the full sales commission (net of allowances to dealers or brokers)
allowed to you on the original sale, and will promptly, upon receipt thereof,
pay to us any refunds from dealers or brokers of the balance of sales
commissions reallowed by you. We shall notify you of such tender for redemption
within 10 days of the day on which notice of such tender for redemption is
received by us.
13. OTHER ACTIVITIES. Your services pursuant to this Agreement shall not
be deemed to be exclusive, and you may render similar services and act as an
underwriter, distributor or dealer for other investment companies in the
offering of their shares.
14. TERM OF AGREEMENT. This Agreement shall become effective on the date
of its execution, and shall remain in effect for a period of two (2) years. The
Agreement is renewable annually thereafter, with respect to the Trust or, if the
Trust has more than one series, with respect to each series, for successive
periods not to exceed one year (i) by a vote of (a) a majority of the
outstanding voting securities of the Trust or, if the Trust has more than one
series, of each series, or (b) by a vote of the Board, AND (ii) by a vote of a
majority of the members of the Board who are not parties to the Agreement or
interested persons of any parties to the Agreement (other than as members of the
Board), cast in person at a meeting called for the purpose of voting on the
Agreement.
This Agreement may at any time be terminated by the Trust or by any
series without the payment of any penalty, (i) either by vote of the Board or by
vote of a majority of the outstanding voting securities of the Trust or any
series on 90 days' written notice to you; or (ii) by you on 90 days' written
notice to the Trust; and shall immediately terminate with respect to the Trust
and each series in the event of its assignment.
15. SUSPENSION OF SALES. We reserve the right at all times to suspend or
limit the public offering of Shares upon two days' written notice to you.
16. MISCELLANEOUS. This Agreement shall be subject to the laws of the
State of California and shall be interpreted and construed to further promote
the operation of the Trust as an open-end investment company. This Agreement
shall supersede all Distribution Agreements and Amendments previously in effect
between the parties. As used herein, the terms "net asset value," "offering
price," "investment company," "open-end investment company," "assignment"
"principal underwriter," "interested person," "Parent," "affiliated
person," and "vote of a majority of the outstanding voting securities" shall
have the meanings set forth in the 1933 Act or the 1940 Act and the Rules and
Regulations thereunder and the term "assignment" shall have the meaning as set
forth in the 1940 Act and the Rules and Regulations thereunder.
Nothing herein shall be deemed to protect you against any liability
to us or to our securities holders to which you would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of your duties hereunder, or by reason of your reckless disregard of your
obligations and duties hereunder.
If the foregoing meets with your approval, please acknowledge your
acceptance by signing the enclosed copy, whereupon this will become a binding
agreement as of the date set forth below.
Very truly yours,
FRANKLIN TAX-FREE TRUST
By: ____________________________
Xxxxx X. Xxxxxxxx
Title: Vice President & Secretary
Accepted:
FRANKLIN/XXXXXXXXX DISTRIBUTORS, INC.
By: _____________________________
Xxxxx X. Xxxxx
Title: President
DATED: JULY 2, 2007
ATTACHMENT A
Franklin Alabama Tax-Free Income Fund
Franklin Arizona Tax-Free Income Fund
Franklin Colorado Tax-Free Income Fund
Franklin Connecticut Tax-Free Income Fund
Franklin Double Tax-Free Income Fund
Franklin Federal Limited-Term Tax-Free Income Fund
Franklin Florida Insured Tax-Free Income Fund
Franklin Florida Tax-Free Income Fund
Franklin Georgia Tax-Free Income Fund
Franklin High Yield Tax-Free Income Fund
Franklin Kentucky Tax-Free Income Fund
Franklin Insured Tax-Free Income Fund
Franklin Louisiana Tax-Free Income Fund
Franklin Maryland Tax-Free Income Fund
Franklin Massachusetts Insured Tax-Free Income Fund
Franklin Michigan Insured Tax-Free Income Fund
Franklin Minnesota Insured Tax-Free Income Fund
Franklin Missouri Tax-Free Income Fund
Franklin New Jersey Tax-Free Income Fund
Franklin North Carolina Tax-Free Income Fund
Franklin Ohio Insured Tax-Free Income Fund
Franklin Oregon Tax-Free Income Fund
Franklin Pennsylvania Tax-Free Income Fund
Franklin Virginia Tax-Free Income Fund
