FRANKLIN CALIFORNIA 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 CALIFORNIA 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 CALIFORNIA TAX-FREE TRUST
By: /s/ XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx
Title: Vice President & Secretary
Accepted:
FRANKLIN/XXXXXXXXX DISTRIBUTORS, INC.
By: /s/ XXXXX X. XXXXX
Xxxxx X. Xxxxx
Title: President
DATED: November 1, 2007
ATTACHMENT A
Franklin California Insured Tax-Free Income Fund
Franklin California Intermediate-Term Tax-Free Income Fund
Franklin California Limited- Term Tax-Free Income Fund
Franklin California Tax-Exempt Money Fund
