TEMPLETON FUNDS INC
485BPOS, EX-99.(E)(I), 2000-12-29
Previous: TEMPLETON FUNDS INC, 485BPOS, 2000-12-29
Next: TEMPLETON FUNDS INC, 485BPOS, EX-99.(J)(I), 2000-12-29






                              TEMPLETON FUNDS, INC.
                               700 CENTRAL AVENUE
                       ST. PETERSBURG, FLORIDA 33701-3628


Franklin Templeton Distributors, Inc.
700 Central Avenue
St. Petersburg, Florida  33701-3628

Re:      Amended and Restated Distribution Agreement

Gentlemen:

We, TEMPLETON FUNDS, INC. (the "Company"), comprised of TEMPLETON WORLD FUND AND
TEMPLETON FOREIGN FUND, (each a "Fund" and collectively the "Funds") are a
Maryland corporation 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 Funds' 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
("Board") passed at a meeting at which a majority of Board members, including a
majority who are not otherwise interested persons of the Company 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  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
Funds'  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 Funds 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 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 Lighting  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.

             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 statement 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 Funds' 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 Funds'  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 Funds'  shareholder  services
agent. The Funds'  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,

Templeton Funds, Inc.




By:/s/JOHN R. KAY
  -------------------------
   John R. Kay
   Vice President


Accepted:

Franklin Templeton Distributors, Inc.



By:/s/CHARLES E. JOHNSON
  -------------------------
     Charles E. Johnson
     Senior Vice President




DATED:  April 1, 1999




© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission