FRANKLIN CUSTODIAN FUNDS, INC.
000 Xxxxxxxx Xxxxxx Xxxx.
Xxx Xxxxx, Xxxxxxxxxx 00000
Franklin/Xxxxxxxxx Distributors, Inc
000 Xxxxxxxx Xxxxxx Xxxx.
Xxx Xxxxx, XX 00000
Re: Amendment of Amended and Restated Distribution Agreement
Gentlemen:
We (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, as amended (the "1940 Act") and whose shares are
registered under the Securities Act of 1933, as amended (the "1933 Act"). 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 (the "1934 Act")
and that your company is a member of the National Association of Securities
Dealers, Inc.
This agreement is an amendment (the "Amendment") of the Amended and Restated
Distribution Agreement (the "Agreement") currently in effect between you and us.
As used herein all capitalized terms herein have the meanings set forth in the
Agreement. We have been authorized to execute and deliver the Amendment to you
by a resolution of our 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 of you or your related organizations, were present and voted in
favor of such resolution approving the Amendment.
To the extent that any provision of the Amendment conflicts with any provision
of the Agreement, the Amendment provision supersedes the Agreement provision.
The Agreement and the Amendment together constitute the entire agreement between
the parties hereto and supersede all prior oral or written agreements between
the parties hereto.
Section 4. entitled "Compensation" is amended by adding the following sentences
at the end
of Subsection 4.B:
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 for payment to dealers or others or directly to
others 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.
Section 4. entitled "Compensation" is amended by adding the following
Subsection 4.C. after Subsection 4.B.:
C. With respect to the sales commission on the redemption of Shares of each
series and class of the 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.
Section 11. entitled "Conduct of Business" is amended by replacing the
reference in the second paragraph to "Rules of Fair Practice" with a
reference to the "Conduct Rules".
Section 16. entitled "Miscellaneous" is amended in the first paragraph by
changing the first letter of each of the words in each of the terms in
quotations marks, except "Parent," to the lower case and giving to the term
"assignment" the meaning as set forth only in the 1940 Act and the Rules
and Regulations thereunder (and not as set forth in the 1933 Act and the
Rules and Regulations thereunder.)
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 CUSTODIAN FUNDS, INC.
By: /s/X.X. XXXXXX
Xxxxxxx X. Xxxxxx
Vice President &
Assistant Secretary
Accepted:
Franklin/Xxxxxxxxx Distributors, Inc.
By: /s/H.E. XXXXX
Xxxxxx X. Xxxxx
Executive Vice President
Dated: January 12, 1999
