FRANKLIN VALUE INVESTORS TRUST
000 Xxxxxxxx Xxxxxx Xxxx.
Xxx Xxxxx, Xxxxxxxxxx 00000
Franklin/Xxxxxxxxx Distributors, Inc.
000 Xxxxxxx Xxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000-0000
Re: Amended and Restated Distribution Agreement
Gentlemen:
We, FRANKLIN VALUE INVESTORS TRUST, (the "Fund") are a
corporation or business trust operating as an open-end management
investment company or "mutual fund", which is registered under the
Investment Company Act of 1940 (the "1940 Act") and whose shares are
registered under the Securities Act of 1933 (the "1933 Act"). We desire
to issue one or more series or classes of our authorized but unissued
shares of capital stock or beneficial interest (the "Shares") to authorized
persons in accordance with applicable Federal and State securities laws. The
Fund's Shares may be made available in one or more separate series, each of
which may have one or more classes.
You have informed us that your company is registered as a
broker-dealer under the provisions of the Securities Exchange Act of 1934 and
that your company is a member of the National Association of Securities
Dealers, Inc. You have indicated your desire to act as the exclusive selling
agent and distributor for the Shares. We have been authorized to execute
and deliver this Distribution Agreement("Agreement") to you by a resolution
of our Board of Directors or Trustees ("Board") passed at a meeting at which
a majority of Board members, including a majority who are not otherwise
interested persons of the Fund and who are not interested persons of our
investment adviser, its related organizations or with you or your related
organizations, were present and voted in favor of the said resolution
approving this Agreement.
1. APPOINTMENT OF UNDERWRITER. Upon the execution of this
---------------------------
Agreement and in consideration of the agreements on your part herein
expressed and upon the terms and conditions set forth herein, we hereby
appoint you as the exclusive sales agent for our Shares and agree that
we will deliver such Shares as you may sell. You agree to use your best
efforts to promote the sale of Shares, but are not obligated to sell any
specific number of Shares.
However, the Fund and each series retain the right to make
direct sales of its Shares without sales charges consistent with the
terms of the then current prospectus and 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 Fund or any series or class
and its shareholders only, transactions involving the reorganization of
the Fund or any series, and transactions involving the merger or combination
of the Fund or any series with another corporation or trust.
2. INDEPENDENT CONTRACTOR. You will undertake and discharge
------------------------
your obligations hereunder as an independent contractor and shall have no
authority or power to obligate or bind us by your actions, conduct or contracts
except that you are authorized to promote the sale of Shares. You may appoint
sub-agents or distribute through dealers or otherwise as you may determine from
time to time, but this Agreement shall not be construed as authorizing any
dealer or other person to accept orders for sale or repurchase on our behalf or
otherwise act as our agent for any purpose.
3. OFFERING PRICE. Shares shall be offered for sale at a price
----------------
equivalent to the net asset value per share of that series and class plus any
applicable percentage of the public offering price as sales commission or as
otherwise set forth in our then current prospectus. On each business day on
which the New York Stock Exchange is open for business, we will furnish you
with the net asset value of the Shares of each available series and class
which shall be determined in accordance with our then effective prospectus.
All Shares will be sold in the manner set forth in our then effective prospectus
and statement of additional information, and in compliance with applicable law.
4. COMPENSATION.
-------------
A. SALES COMMISSION. You shall be entitled to charge a
-----------------
sales commission on the sale or redemption, as appropriate, of each series
and class of each Fund's Shares in the amount of any initial, deferred or
contingent deferred sales charge as set forth in our then effective prospectus.
You may allow any sub-agents or dealers such commissions or discounts from and
not exceeding the total sales commission as you shall deem advisable, so long
as any such commissions or discounts are set forth in our current prospectus
to the extent required by the applicable Federal and State securities laws.
You may also make payments to sub-agents or dealers from your own resources,
subject to the following conditions: (a) any such payments shall not create
any obligation for or recourse against the Fund or any series or class, and
(b) the terms and conditions of any such payments are consistent with our
prospectus and applicable federal and state securities laws and are disclosed
in our prospectus or statement of additional information to the extent such
laws may require.
B. DISTRIBUTION PLANS. You shall also be entitled to compensation
-------------------
for your services as provided in any Distribution Plan adopted as to any
series and class of any Fund's Shares pursuant to Rule 12b-1 under the 1940
Act.
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 Fund. 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 Fund of any claim the Fund
may have against you). You may direct the Fund 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 Fund. 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 Fund of any claim the Fund may have
against you). You may direct the Fund 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 Fund 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 Fund's shareholder services agent, for acceptance on
behalf of the Fund. At or prior to the time of delivery of any of our
Shares you will pay or cause to be paid to the custodian of the Fund's
assets, for our account, an amount in cash equal to the net asset value
of such Shares. Sales of Shares shall be deemed to be made when and
where accepted by the Fund's shareholder services agent. The Fund's
custodian and shareholder services agent shall be identified in its
prospectus.
7. PURCHASES FOR YOUR OWN ACCOUNT.
--------------------------------- You shall not purchase our
Shares for your own account for purposes of resale to the public, but
you may purchase Shares for your own investment account upon your
written assurance that the purchase is for investment purposes and that
the Shares will not be resold except through redemption by us.
8. SALE OF SHARES TO AFFILIATES.
------------------------------ You may sell our Shares at net
asset value to certain of your and our affiliated persons pursuant to
the applicable provisions of the federal securities statutes and rules
or regulations thereunder (the "Rules and Regulations"), including Rule
22d-1 under the 1940 Act, as amended from time to time.
9. ALLOCATION OF EXPENSES. We will pay the expenses:
-----------------------
(a) Of the preparation of the audited and certified
financial statements of our company to be included in
any Post-Effective Amendments ("Amendments") to our
Registration Statement under the 1933 Act or 1940 Act,
including the prospectus and statement of additional
information included therein;
(b) Of the preparation, including legal fees, and printing
of all Amendments or supplements filed with the
Securities and Exchange Commission, including the copies
of the prospectuses included in the Amendments and the
first 10 copies of the definitive prospectuses or
supplements thereto, other than those necessitated by
your (including your "Parent's") activities or Rules and
Regulations related to your activities where such
Amendments or supplements result in expenses which we
would not otherwise have incurred;
(c) Of the preparation, printing and distribution of any
reports or communications which we send to our existing
shareholders; and
(d) Of filing and other fees to Federal and State securities
regulatory authorities necessary to continue offering
our Shares.
You will pay the expenses:
(a) Of printing the copies of the prospectuses and any
supplements thereto and statements of additional
information which are necessary to continue to offer our
Shares;
(b) Of the preparation, excluding legal fees, and printing
of all Amendments and supplements to our prospectuses
and statements of additional information if the
Amendment or supplement arises from your (including your
"Parent's")activities or Rules and Regulations related
to your activities and those expenses would not
otherwise have been incurred by us;
(c) Of printing additional copies, for use by you as sales
literature, of reports or other communications which we
have prepared for distribution to our existing
shareholders; and
(d) Incurred by you in advertising, promoting and selling
our Shares.
10. FURNISHING OF INFORMATION.
---------------------------- We will furnish to you such
information with respect to each series and class of Shares, in such
form and signed by such of our officers as you may reasonably request,
and we warrant that the statements therein contained, when so signed,
will be true and correct. We will also furnish you with such
information and will take such action as you may reasonably request in
order to qualify our Shares for sale to the public under the Blue Sky
Laws of jurisdictions in which you may wish to offer them. We will
furnish you with annual audited financial statements of our books and
accounts certified by independent public accountants, with semi-annual
financial statements prepared by us, with registration statements and,
from time to time, with such additional information regarding our
financial condition as you may reasonably request.
11. CONDUCT OF BUSINESS.
--------------------- Other than our currently effective
prospectus, you will not issue any sales material or statements except
literature or advertising which conforms to the requirements of Federal
and State securities laws and regulations and which have been filed,
where necessary, with the appropriate regulatory authorities. You will
furnish us with copies of all such materials prior to their use and no
such material shall be published if we shall reasonably and promptly
object.
You shall comply with the applicable Federal and State laws
and regulations where our Shares are offered for sale and conduct your
affairs with us and with dealers, brokers or investors in accordance
with the 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 Fund or, if the Fund has more than one series, with
respect to each series, for successive periods not to exceed one year
(i) by a vote of (a) a majority of the outstanding voting securities of
the Fund or, if the Fund has more than one series, of each series, or
(b) by a vote of the Board, AND (ii) by a vote of a majority of the
members of the Board who are not parties to the Agreement or interested
persons of any parties to the Agreement (other than as members of
the Board), cast in person at a meeting called for the purpose of voting
on the Agreement.
This Agreement may at any time be terminated by the Fund or
by any series without the payment of any penalty, (i) either by vote of
the Board or by vote of a majority of the outstanding voting securities
of the Fund or any series on 90 days' written notice to you; or (ii) by
you on 90 days' written notice to the Fund; and shall immediately
terminate with respect to the Fund and each series in the event of its
assignment.
15. SUSPENSION OF SALES.
--------------------- We reserve the right at all times to
suspend or limit the public offering of Shares upon two days' written
notice to you.
16. MISCELLANEOUS.
--------------- This Agreement shall be subject to the laws
of the State of California and shall be interpreted and construed to
further promote the operation of the Fund as an open-end investment
company. This Agreement shall supersede all Distribution Agreements and
Amendments previously in effect between the parties. As used herein,
the terms "net asset value," "offering price," "investment company,"
"open-end investment company," "principal underwriter," "interested
person," "Parent," "affiliated person," and "majority of the outstanding
voting securities" shall have the meanings set forth in the 1933 Act or
the 1940 Act and the Rules and Regulations thereunder 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 each of the enclosed copies, whereupon this
will become a binding agreement as of the date set forth below.
Very truly yours,
FRANKLIN VALUE INVESTORS TRUST
By:/s/Xxxxx X. Xxxx
----------------
Xxxxx X. Xxxx
Vice President &
Assistant Secretary
Accepted:
FRANKLIN/XXXXXXXXX DISTRIBUTORS, INC.
By:/s/Xxxxxxx X. Xxxxxxx
---------------------
Xxxxxxx X. Xxxxxxx
Senior Vice President
Dated as of: October 31, 2000
