EXHIBIT 99.h.4
[FORM OF] AFTER-MARKET SERVICES AGREEMENT
August __, 2003
CITIGROUP GLOBAL MARKETS INC.
[OTHER UNDERWRITERS]
c/o Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated the date hereof (the
"Underwriting Agreement"), by and among Franklin Xxxxxxxxx Limited Duration
Income Trust (the "Trust"), Franklin Advisers, Inc. (the "Adviser") and each of
the Underwriters named therein, with respect to the issue and sale of the
Trust's Common Shares, as described therein. Reference is also made to (i) the
Investment Management Agreement (the "Investment Management Agreement") between
the Adviser and the Trust and (ii) the registration statement on Form N-2 with
respect to the Common Shares of the Trust (the "Registration Statement").
Capitalized terms used herein and not otherwise defined shall have the meanings
given to them in the Underwriting Agreement.
1. AGREEMENT. The Adviser hereby confirms its agreement with each of
Citigroup Global Markets Inc. and [the other underwriters listed in Schedule I]
(collectively, the "Primary Underwriters") with respect to the service fees
referred to in the "Underwriting" section of the Registration Statement, payable
by the Adviser to the Primary Underwriters. The Adviser agrees to pay to the
Primary Underwriters a fee (collectively, the "Service Fees") at an aggregate
rate of 0.15% per annum of the Trust's Managed Assets (as defined in Section
3(b) hereof); provided, however, that such payments shall not, in the aggregate,
exceed the "Maximum Service Fees Amount" (as defined in Section 4 hereof). In
exchange for the Service Fees, each Primary Underwriter: (a) will provide to the
Adviser certain after-market shareholder support services on an ongoing basis
designed to maintain the visibility of the Trust in the investor community,
including but not limited to services such as making available public
information pertaining to the Trust (such as market price, net asset value,
yield and other information if reasonably obtainable) and to communicate to
investors and prospective investors the Trust's features and benefits (including
periodic seminars or conference calls, responses to questions from current or
prospective shareholders and shareholder contact where appropriate); (b) on a
periodic basis or at the request of the Adviser or the Trust, will provide
relevant statistical, financial, comparative or other information, studies or
reports regarding the Trust and other closed-end management investment
companies, and the closed-end investment company industry (including but not
limited to comparisons of the market performance and net asset values of similar
investment companies); and (c) will provide information to and consult with the
Adviser with respect to applicable strategies designed to address market value
discounts of the Trust, if any (which may
include share repurchases, tender offers, modifications to dividend policies or
capital structure, repositioning or restructuring of the Trust, conversion of
the Trust to an open-end investment, liquidation or merger; including providing
information concerning the use and impact of the above strategic alternatives by
other market participants).
2. PRO RATA PERCENTAGE. Each Primary Underwriter shall be assigned a "Pro
Rata Percentage" based on the number of Common Shares sold by such Primary
Underwriter in the Fund's initial public offering and calculated in the manner
listed on Schedule I hereto.
3. PAYMENT OF SERVICE FEES. (a) The Adviser shall pay the Service Fees,
payable in arrears at the end of each calendar quarter, as follows: to each
Primary Underwriter, Service Fees in an amount equal to such Primary
Underwriter's Pro Rata Percentage multiplied by 0.0375% of the Trust's Managed
Assets for such quarter; provided, however, that in the event that, at any time
after the fifth anniversary of the Closing Date, the contractual advisory fee
rate payable by the Trust to the Adviser or such successor or affiliate under
the Investment Management Agreement is reduced below an annual rate of 0.50% of
the Trust's Managed Assets, the fee payable by the Adviser to such Primary
Underwriter shall be reduced in proportion to, and for the period of, such
reduction of the advisory fee, and this After-Market Services Agreement shall be
deemed to be amended automatically to reflect the same.
(b) For the purposes of this After-Market Services Agreement, "Managed
Assets" means the average daily value of the total assets of the Trust
(including any assets attributable to leverage) minus the sum of accrued
liabilities (other than debt representing financial leverage).
(c) All Service Fees payable hereunder shall be paid to each Primary
Underwriter by wire transfer of immediately available funds within 30 days
following the end of each calendar quarter to a bank account designated by such
Primary Underwriter. At the time of each payment of the Service Fees hereunder,
the Adviser shall deliver to each Primary Underwriter receiving an installment
of the Service Fees a statement indicating the amount of Managed Assets on which
such payment was based.
(d) The initial payments of the Service Fees hereunder shall be with
respect to the calendar quarter ending September 30, 2003, pro-rated in respect
of the period from the Closing Date to September 30, 2003. In the event that
this After-Market Services Agreement terminates prior to the end of a calendar
quarter, the Service Fees required to be paid hereunder shall be due and payable
within 30 days following the termination hereof and shall be pro-rated in
respect of the period prior to such termination. Notwithstanding the foregoing,
if any payment hereunder would otherwise fall on a day which is not a business
day, it shall be due on the next day that is a business day. All Service Fees
payable hereunder shall be in addition to any fees paid by the Adviser pursuant
to the Underwriting Agreement.
(e) The Adviser shall be permitted to terminate this agreement at any time
upon making a prepayment to the Primary Underwriters of amounts otherwise
payable hereunder. The amount of any such prepayment will be determined by
mutual agreement of the Adviser and the Primary Underwriters.
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(f) Each Primary Underwriter agrees that it shall promptly notify the
Adviser in writing if it learns of any material inaccuracy or misstatement in,
or material omission from, any written information provided by such Primary
Underwriter to the Adviser in connection with the performance of services by
such Primary Underwriter under this Agreement. Each Primary Underwriter agrees
that in performing its services under this Agreement, it shall comply with all
applicable laws, rules and regulations.
4. MAXIMUM SERVICE FEES AMOUNT. The "Maximum Service Fees Amount" payable
by the Adviser hereunder shall be four and one-half percent (4.5%) of the
aggregate initial public offering price for the Common Shares purchased pursuant
to the Underwriting Agreement (including all Firm Securities and Option
Securities), minus the amount payable by the Trust to the Underwriters pursuant
to Section ___ of the Underwriting Agreement for partial reimbursement of
certain Underwriter expenses.
5. TERM. This After-Market Services Agreement shall terminate on the
earliest to occur of (a) the payment by the Adviser hereunder of the Maximum
Service Fees Amount, (b) the prepayment by the Adviser of an agreed upon amount
in accordance with Section 3(e) hereof, (c) the dissolution and winding up of
the Trust and (d) the date on which the Investment Management Agreement or other
advisory agreement between that Trust and the Adviser or any successor in
interest to the Adviser, including but not limited to an affiliate of the
Adviser, shall terminate.
6. NOT AN INVESTMENT ADVISER. The Adviser acknowledges that the Primary
Underwriters are not providing any advice hereunder as to the value of
securities or regarding the advisability of purchasing or selling any securities
for the Trust's portfolio. No provision of this Agreement shall be considered as
creating, nor shall any provision create, any obligation on the part of any
Primary Underwriter, and the Primary Underwriters are not hereby agreeing, to:
(i) furnish any advice or make any recommendations regarding the purchase or
sale of portfolio securities or (ii) render any opinions, valuations or
recommendations of any kind or to perform any such similar services.
7. NOT EXCLUSIVE. Nothing herein shall be construed as prohibiting any
Primary Underwriter or its respective affiliates from acting as an underwriter
for any other persons (including other registered investment companies or other
investment advisers).
8. ASSIGNMENT. This After-Market Services Agreement may not be assigned
by any party without the prior written consent of each other party.
9. AMENDMENT; WAIVER. No provision of this After-Market Services
Agreement may be amended or waived except by an instrument in writing signed by
the parties hereto.
10. GOVERNING LAW. This After-Market Services Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York.
11. COUNTERPARTS. This After-Market Services Agreement may be executed in
any number of counterparts, each of which shall be an original, and all of
which, when taken together, shall constitute one agreement. Delivery of an
executed signature page of this After-
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Market Services Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
12. NOTICE. Notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (a) if to the Adviser, c/o Franklin
Advisers, Inc., Xxx Xxxxxxxx Xxxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000-0000,
Attention: General Counsel; or (b) if to Citigroup Global Markets Inc., as
representative of the Primary Underwriters, at Citigroup Capital Markets Inc.,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Equity Syndicate
Desk.
This Agreement shall be effective as of the date first written above.
[END OF TEXT]
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FRANKLIN ADVISERS, INC.
By:
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Name:
Title:
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Agreed and Accepted:
CITIGROUP GLOBAL MARKETS INC.
By:
-----------------------------
Authorized Signatory
[OTHER UNDERWRITER]
By:
-----------------------------
Authorized Signatory
[OTHER UNDERWRITER]
By:
-----------------------------
Authorized Signatory
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Schedule I
For each Primary Underwriter, the "Pro Rata Percentage" shall be the total
number of shares sold by such Primary Underwriter divided by the total number of
shares issued by the Trust in the initial public offering (including the amount
of shares sold pursuant to an over-allotment option).
To qualify as a Primary Underwriter, an underwriter must have sold at least ___%
(the "Minimum Sale Rate") of the total number of shares issued by the Trust in
the initial public offering. The Minimum Sale Rate may be adjusted downward by
the mutual written consent of the Adviser and Citigroup Capital Markets Inc.
PRO RATA
NAME OF PRIMARY UNDERWRITER PERCENTAGE
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Citigroup Global Markets Inc.
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