FRANKLIN BALANCE SHEET INVESTMENT FUND
000 Xxxxxxxx Xxxxxx Xxxx.
San Mateo, California 94404
Franklin Distributors, Inc.
000 Xxxxxxxx Xxxxxx Xxxx.
San Mateo, California 94402
Re: Distribution Agreement
Gentlemen:
We are a Massachusetts business trust operating as an open-end management
investment company. As such, our company (referred to herein as the "Fund") is
registered under the Investment Company Act of 1940, (the "1940 Act"), and its
shares are registered under the Securities Act of 1933 (the "1933 Act"). We
desire to begin issuing our authorized but unissued shares of beneficial
interest (the "Shares") to authorized persons in accordance with applicable
Federal and State securities law.
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 Agreement to you
by a resolution of our Board of Trustees passed at a meeting at which a majority
of our Trustees, 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 (except for sales made directly by the Fund without sales
charge) 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.
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 accept orders for the purchase or repurchase of
Shares as our agent. 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. You
may allow such sub-agents or dealers such commissions or discounts 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.
3. Offering Price. The Shares shall be offered for sale at a price
equivalent to their respective net asset value plus a variable percentage of the
public offering price as sales commission. 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 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.
4. Sales Commission. You shall be entitled to charge a sales commission on
the sale of our Shares in the amount set forth in our then effective prospectus.
Such commission (subject to any quantity or other discounts or eliminations of
commission as set forth in our then current effective prospectus) shall be an
amount mutually agreed upon between us and equal to the difference between the
net asset value and the public offering price of our Shares.
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 of Trustees may
from time to time determine to be eligible to purchase such shares.
6. Payment of Shares. At or prior to the time of delivery of any of our
Shares you will pay or cause to be paid to our Custodian or its successor, for
our account, an amount in cash equal to the net asset value of such Shares. In
the event that you pay for Shares sold by you prior to your receipt of payment
from purchasers you are authorized to reimburse yourself for the net asset value
of such Shares from the offering price of such Shares when received by you.
7. Purchases for Your Own Account. You shall not purchase our Shares for
your own account for purposes of resale to the public, but your 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 of printing all
Amendments or supplements filed with the S.E.C., including the
copies of the prospectus included in the Amendments and the first 10
copies of the definitive prospectus 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 prospectus and any supplements thereto
and statement 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 prospectus and statement 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,
or 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 or Information. We will furnish to you such information
with respect to the Fund and its 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, 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 Rules of Fair
Practice 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 for successive periods not to exceed
one year (i) by a vote of a majority of the outstanding voting securities of the
Fund desiring to continue the Agreement or by a vote of the Board of Trustees of
the Fund, and (ii) by a vote of a majority of the Trustees of the Fund who are
not parties to the Agreement or interested persons of any parties to the
Agreement (other than as Trustees of the Fund), 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 without the
payment of any penalty, (i) either by vote of the Board of Trustees of the Fund
or by vote of a majority of the outstanding voting securities of the Fund, on
ninety days' written notice to you; or (ii) by you on ninety days' written
notice to the Fund; and shall immediately terminate 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 the 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. As used herein the
terms "Net Asset Value", "Offering Price", "Investment Company", "Open-End
Investment Company", Assignment", "Principal Underwriter", "Interested Person",
"Parents", "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.
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 or
wilful 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.
You have acknowledged that you have received notice of and accept the
limitations of the Fund's liability set forth in Article VIII of its Agreement
and Declaration of Trust. You agree that the Fund's obligations hereunder shall
be limited to the Fund and to its assets, and that you shall not seek
satisfaction of any such obligation from the shareholders of the Fund nor from
any Trustee, officer, employee or agent of the Fund.
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 BALANCE SHEET INVESTMENT FUND
/s/ Xxxxxx X. Xxxxx
By: Xxxxxx X. Xxxxx
Vice President
Accepted:
FRANKLIN DISTRIBUTORS, INC.
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
Senior Vice President
Dated: April 2, 1990
