As filed with the Securities and Exchange Commission on April 21,
1995
File Nos.
2-99112
811-4356
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 12 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 12 (X)
FRANKLIN CALIFORNIA TAX-FREE TRUST
(Exact Name of Registrant as Specified in Charter)
777 MARINERS ISLAND BLVD., SAN MATEO, CA 94404
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (415) 312-2000
Harmon E. Burns, 777 Mariners Island Blvd., San Mateo, CA 94404
(Name and Address of Agent for Service of Process)
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check
appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 1995 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Declaration Pursuant to Rule 24f-2. The Registrant has registered
an indefinite number or amount of securities under the Securities
Act of 1933 pursuant to Rule 24(f)(2) under the Investment Company
Act of 1940. The Rule 24f-2 Notice for the issuer's most recent
fiscal year was filed on August 27, 1994.
FRANKLIN CALIFORNIA TAX-FREE TRUST
CROSS REFERENCE SHEET
FORM N-1A
Part A: Information Required in the Prospectus
Franklin California Insured Tax-Free Income Fund
Franklin California Tax-Exempt Money Fund
N-1A Location in
Item No. Item Registration Statement
1. Cover Page Cover Page
2. Synopsis "Expense Table"
3. Condensed Financial "Financial Highlights";
Information "Performance"
4. General Description "About the Trust";
"Investment Objectives
and Policies of Each
Fund"; "General
Information"
5. Management of Trust "Management of the
Trust"; "Portfolio
Operations"
5A. Management's Contained in Registrant's
Discussion of Fund Annual Report to
Performance Shareholders
6. Capital Stock and "Distributions to
Other Securities Shareholders"; "General
Information"
7. Purchase of Securities "How to Buy Shares of the
Being Offered Funds"; "Taxation of the
Funds and Their
Shareholders"; "Other
Programs and Privileges
Available to Shareholders
of the Funds"; "Exchange
Privilege"; "Valuation of
Shares of Each of the
Funds"
8. Redemption or "How to Sell Shares of
Repurchase the Funds"; "Telephone
Transactions"; "Valuation
of Shares of Each of the
Funds"; "How to Get
Information Regarding an
Investment in the Funds";
"General Information"
9. Pending Legal Not Applicable
Proceedings
FRANKLIN CALIFORNIA TAX-FREE TRUST
CROSS REFERENCE SHEET
FORM N-1A
Part B: Information Required in the
Statement of Additional Information
N-1A Location in
Item No. Item Registration Statement
10. Cover Page Cover Page
11. Table of Contents Contents
12. General Information Cover Page; "About the
and History Trust"; see also section
"About the Trust" in the
Prospectus
13. Investment Objectives "The Funds' Investment
and Policies Objectives and Policies";
"Description of Municipal
and Other Securities";
"Investment Restrictions"
14. Management of the "Trustees and Officers"
Trust
15. Control Persons and "Trustees and Officers"
Principal Holders of
Securities
16. Investment Advisory "Investment Advisory and
and Other Services Other Services"
17. Brokerage Allocation "The Trust's Policies
Regarding Brokers Used on
Portfolio Transactions"
18. Capital Stock and See sections "General
Other Services Information" and "About
the Trust" in the
Prospectus
19. Purchase, Redemption "Additional Information
Pricing of Securities Regarding the Funds'
Being Offered Shares"
20. Tax Status "Additional Information
Regarding the Funds'
Shares" and "Additional
Information Regarding
Taxation"
21. Underwriters "The Trust's Underwriter"
22. Calculation of "General Information"
Performance Data
23. Financial Statements "Financial Statements"
CAT P
SUPPLEMENT DATED MAY 1, 1995
TO THE PROSPECTUS FOR
FRANKLIN CALIFORNIA TAX-FREE TRUST
Franklin California Insured Tax-Free Income Fund
Franklin California Tax-Exempt Money Fund
dated November 1, 1994
INTRODUCTION. As of May 1, 1995, the Franklin California Insured
Tax-Free Income Fund (the "Insured Fund") offers two classes to its
investors: Franklin California Insured Tax-Free Income Fund - Class
I ("Class I") and Franklin California Insured Tax-Free Income Fund
- - Class II ("Class II"). Investors can choose between Class I
shares, which generally bear a higher front-end sales charge and
lower ongoing Rule 12b-1 distribution fees ("Rule 12b-1 fees"), and
Class II shares, which generally have a lower front-end sales
charge and higher ongoing Rule 12b-1 fees. Investors should
consider the differences between the two classes, including the
impact of sales charges and distribution fees, in choosing the more
suitable class given their anticipated investment amount and time
horizon.
This Supplement must be read in conjunction with the Prospectus for
the Insured Fund and the Franklin California Tax-Exempt Money Fund
(the "Money Fund"). All investment objectives and policies of the
Insured Fund described in the Prospectus apply equally to both
classes of shares in the new multiclass structure. Further, all
operational procedures apply equally to both classes, unless
otherwise specified in the following discussion.
THE NEW APPLICATION FORM INCLUDED WITH THIS SUPPLEMENT MUST BE USED
FOR ALL PURCHASES OF THE INSURED FUND. DO NOT USE THE APPLICATION
FORM INCLUDED IN THE PROSPECTUS FOR THE INSURED FUND.
MULTICLASS FUND STRUCTURE. The Insured Fund has two classes of
shares available for investment: Class I and Class II. ALL INSURED
FUND SHARES OUTSTANDING BEFORE THE IMPLEMENTATION OF THE MULTICLASS
STRUCTURE HAVE BEEN REDESIGNATED AS CLASS I SHARES, AND WILL RETAIN
THEIR PREVIOUS RIGHTS AND PRIVILEGES. VOTING RIGHTS ATTRIBUTABLE TO
EACH CLASS WILL, HOWEVER, BE DIFFERENT. See the Prospectus for more
details about Class I shares. Class II shares are explained in
detail in the following discussion. Except as described below,
shares of both classes represent identical interests in the Insured
Fund's investment portfolio.
EXPENSE TABLE - INSURED FUND
The purpose of this table is to assist an investor in understanding
the various costs and expenses that a shareholder will bear
directly or indirectly in connection with an investment in the
Insured Fund. The figures for both classes of shares are based on
the aggregate operating expenses of the Class I shares for the
fiscal year ended June 30, 1994.
CLASS I CLASS II
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on
Purchases
(as a percentage of offering 4.25% 1.00%^
price)
Deferred Sales Charge NONE^^ 1.00%+
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.47% 0.47%
Rule 12b-1 Fees 0.09%* 0.65%*
Other Expenses:
Shareholder Servicing Costs 0.02% 0.02%
Reports to Shareholders 0.02% 0.02%
Other 0.01% 0.01%
Total Other Expenses 0.05% 0.05%
Total Fund Operating Expenses 0.61% 1.17%^
^Although Class II has a lower front-end sales charge than Class I,
over time the higher Rule 12b-1 fee for Class II may cause
shareholders to pay more for Class II shares than for Class I
shares. Given the maximum front-end sales charge and the rate of
Rule 12b-1 fees of each class, it is estimated that this will take
approximately six years for shareholders who maintain total shares
valued at less than $100,000 in the Franklin Templeton Funds.
Shareholders with larger investments in the Franklin Templeton
Funds will reach the crossover point more quickly.
^^Class I investments of $1 million or more are not subject to a
front-end sales charge; however, a contingent deferred sales charge
of 1%, which has not been reflected in the Example below, is
generally imposed on certain redemptions within a "contingency
period" of 12 months of the calendar month following such
investments. See "How to Sell Shares of the Funds - Contingent
Deferred Sales Charge - Insured Fund."
+Class II shares redeemed within a "contingency period" of 18
months of the calendar month following such investments are subject
to a 1% contingent deferred sales charge. See "How to Sell Shares
of the Funds - Contingent Deferred Sales Charge - Insured Fund."
*Rule 12b-1 fees for Class I are annualized. Actual Rule 12b-1 fees
incurred by Class I for the two months ended June 30, 1994 were
0.015%. Rule 12b-1 fees for Class II are based on the maximum
amount allowed under Class II's plan of distribution. Consistent
with National Association of Securities Dealers, Inc.'s rules, it
is possible that the combination of front-end sales charges and
Rule 12b-1 fees could cause long-term shareholders to pay more than
the economic equivalent of the maximum front-end sales charges
permitted under those same rules.
Investors should be aware that the above table is not intended to
reflect in precise detail the fees and expenses associated with an
individual's own investment in the Insured Fund. Rather, the table
has been provided only to assist investors in gaining a more
complete understanding of fees, charges and expenses that an
investor in the classes will bear directly or indirectly. For a
more detailed discussion of these matters, investors should refer
to the appropriate sections of the Prospectus and this Supplement.
EXAMPLE
As required by SEC regulations, the following example illustrates
the expenses, including the maximum front-end sales charge and
applicable contingent deferred sales charge, that apply to a $1,000
investment in the Insured Fund over various time periods assuming
(1) a 5% annual rate of return and (2) redemption at the end of
each time period.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
CLASS I^^ $48 $61 $75 $115
CLASS II+ $32 $47 $74 $151
THIS EXAMPLE IS BASED ON THE AGGREGATE OPERATING EXPENSES SHOWN
ABOVE AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
EXPENSES, WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. The operating
expenses are borne by the Insured Fund and only indirectly by
shareholders as a result of their investment in the Insured Fund.
(See "Management of the Trust" in the Prospectus for a description
of the Insured Fund's expenses.) In addition, federal securities
regulations require the example to assume an annual return of 5%,
but the Insured Fund's actual return may be more or less than 5%.
FINANCIAL HIGHLIGHTS
Set forth below is a table containing the unaudited financial
highlights for the Money Fund and a share of Class I of the Insured
Fund for the 6-month period ended December 31, 1994. Information
regarding Class II shares of the Insured Fund will be included in
this table after they have been offered to the public for a
reasonable period of time. See the discussion "Report to
Shareholders" under "General Information."
INSURED FUND MONEY FUND+
- CLASS I+
PER SHARE OPERATING
PERFORMANCE
Net asset value at $11.74 $ 1.00
beginning of period
Net investment income 0.34 0.013
Net realized & unrealized (0.454) ---
gain (loss) on securities
Total from investment (0.114) 0.013
operations
Distributions from net (0.336) 0.013
investment income
Net asset value at end of $11.29 $ 1.00
period
Total Return** (0.99)% 1.30%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period
(in 000's) $1,369,075 $692,157
Ratio of expenses to
average net assets .59%* .62%*
Ratio of net investment
income to average net
assets 5.85%* 2.59%*
Portfolio turnover rate 5.63% ---
+For the six months ended December 31, 1994.
*Annualized.
**Total return measures the change in value of an investment during
the period indicated. It is not annualized. It does not include the
Insured Fund's maximum front-end sales charge, and assumes
reinvestment of dividends at the offering price and capital gains,
if any, at net asset value for the Insured Fund and assumes
reinvestment of dividends and capital gains, if any, at net asset
value for the Money Fund. Effective May 1, 1994, with the
implementation of the Rule 12b-1 distribution plan for Class I of
the Insured Fund, the Insured Fund's sales charge on reinvested
dividends was eliminated.
DECIDING WHICH CLASS TO PURCHASE. Investors should carefully
evaluate their anticipated investment amount and time horizon prior
to determining which class of shares of the Insured Fund to
purchase. Generally, an investor who expects to invest less than
$100,000 in the Franklin Templeton Funds and who expects to make
substantial redemptions within approximately six years or less of
investment should consider purchasing Class II shares. Over time,
however, the higher annual Rule 12b-1 fees on Class II shares will
accumulate over time to outweigh the difference in front-end sales
charges. For this reason, Class I shares may be more attractive to
long-term investors even if no sales charge reductions are
available to them. Investors should also consider that the higher
Rule 12b-1 fees for Class II shares will generally result in lower
dividends and consequently lower yields for Class II shares. See
"General Information" in the SAI for more information regarding the
calculation of dividends and yields.
Investors who qualify to purchase Class I shares at reduced sales
charges definitely should consider purchasing Class I shares,
especially if they intend to hold their shares for six years or
more. Investors who qualify to purchase Class I shares at reduced
sales charges but who intend to hold their shares less than six
years should evaluate whether it is more economical to purchase
Class I shares through a Letter of Intent or under Rights of
Accumulation or other means rather than purchasing Class II shares.
INVESTORS INVESTING $1 MILLION OR MORE IN A SINGLE PAYMENT AND
OTHER INVESTORS WHO QUALIFY TO PURCHASE CLASS I SHARES AT NET ASSET
VALUE WILL BE PRECLUDED FROM PURCHASING CLASS II SHARES. See "How
to Buy Shares of the Funds" in the Prospectus.
Each class represents the same interest in the investment portfolio
of the Insured Fund and has the same rights, except that each class
has a different sales charge, bears the separate expenses of its
Rule 12b-1 distribution plan, and has exclusive voting rights with
respect to such plan. The two classes also have separate exchange
privileges.
Each class also has a separate schedule for compensating securities
dealers for selling Insured Fund shares. Investors should take all
of the factors regarding an investment in each class of the Insured
Fund into account before deciding which class of shares to
purchase.
ALTERNATIVE PURCHASE ARRANGEMENTS. The difference between Class I
and Class II shares lies primarily in their front-end and
contingent deferred sales charges and Rule 12b-1 fees as described
below.
A separate plan of distribution has been approved and adopted for
each class of the Insured Fund ("Class I Plan" and "Class II Plan,"
respectively) pursuant to Rule 12b-1 under the Investment Company
Act of 1940, as amended ("1940 Act"). The Rule 12b-1 fees charged
to each class of the Insured Fund will be based solely on the
distribution and servicing fees attributable to that particular
class. Any portion of fees remaining from either plan after
distribution to securities dealers of up to the maximum amount
permitted under each plan may be used by the class to reimburse
Franklin/Templeton Distributors, Inc. ("Distributors") for routine
ongoing promotion and distribution expenses incurred with respect
to such class. See "Plan of Distribution (Insured Fund)" under
"Management of the Trust" in the Prospectus for a description of
such expenses.
CLASS I. Class I shares are generally subject to a variable sales
charge upon purchase and not subject to any sales charge upon
redemption. Class I shares are subject to Rule 12b-1 fees of up to
an annual maximum of 0.10% of average daily net assets of such
shares. With this structure, Class I shares have higher front-end
sales charges than Class II shares and comparatively lower Rule 12b-
1 fees.
Plan of Distribution. Under the Class I Plan, the Insured Fund will
reimburse Distributors or other securities dealers for expenses
incurred in the promotion, servicing, and distribution of Class I
Fund shares. (See "Plan of Distribution (Insured Fund)" in the
Prospectus and "The Trust's Underwriter - Distribution Plan" in the
Statement of Additional Information ("SAI")).
Quantity Discounts and Purchases At Net Asset Value. Class I shares
may be purchased at a reduced front-end sales charge or at net
asset value if certain conditions are met. See "How to Buy Shares
of the Funds - Insured Fund."
Contingent Deferred Sales Charge. In most circumstances, a
contingent deferred sales charge will not be assessed against
redemptions of Class I shares. A contingent deferred sales charge
will be imposed on Class I shares only if shares valued at $1
million or more are purchased after February 1, 1995 without a
sales charge and are subsequently redeemed within 12 months of the
calendar month following their purchase. See "Contingent Deferred
Sales Charge - Insured Fund" under "How to Sell Shares of the
Funds" in this Supplement.
CLASS II. The current public offering price of Class II shares is
equal to the net asset value, plus a front-end sales charge of 1.0%
of the amount invested. Class II shares are also subject to a
contingent deferred sales charge of 1.0% if shares are redeemed
within 18 months of the calendar month following purchase. In
addition, Class II shares are subject to Rule 12b-1 fees of up to a
maximum of 0.65% of average daily net assets of such shares. Class
II shares have lower front-end sales charges than Class I shares
and comparatively higher Rule 12b-1 fees.
Purchases of Class II shares are limited to amounts below $1
million. Any purchases of $1 million or more will automatically be
invested in Class I shares, since that is more beneficial to
investors. Such purchases, however, may be subject to a contingent
deferred sales charge. Investors may exceed $1 million in Class II
shares by cumulative purchases over a period of time. Investors who
intend to make investments exceeding $1 million, however, should
consider purchasing Class I shares through a Letter of Intent
instead of purchasing Class II shares. See "How to Buy Shares of
the Funds - Insured Fund" in the Prospectus for more information.
Plan of Distribution. Class II's operating expenses will generally
be higher under the Class II Plan. During the first year following
a purchase of Class II shares, Distributors will keep a portion of
the Class II Plan fees attributable to those shares to partially
recoup fees Distributors pays to securities dealers. Distributors,
or its affiliates, may pay, from its own resources, a commission of
up to 1% of the amount invested to securities dealers who initiate
and are responsible for purchases of Class II shares.
Contingent Deferred Sales Charge. Unless a waiver applies, a
contingent deferred sales charge of 1% will be imposed on Class II
shares redeemed within 18 months of their purchase. See "Contingent
Deferred Sales Charge - Insured Fund" under "How to Sell Shares of
the Funds" in this Supplement.
MANAGEMENT OF THE TRUST
The subsidiaries of Resources are described as the "Franklin
Templeton Group."
The Board of Trustees has carefully reviewed the multiclass
structure to ensure that no material conflict exists between the
two classes of shares. Although the Board does not expect to
encounter material conflicts in the future, the Board will continue
to monitor the Insured Fund and will take appropriate action to
resolve such conflicts if any should later arise.
In developing the multiclass structure, the Insured Fund has
retained the authority to establish additional classes of shares.
It is the Insured Fund's present intention to offer only two
classes of shares, but new classes may be offered in the future.
For more information regarding the responsibilities of the Board
and the management of the Insured Fund, please see "Management of
the Trust" in the Prospectus.
CLASS II PLAN OF DISTRIBUTION
Under the Class II Plan, the maximum amount which the Insured Fund
is permitted to pay to Distributors or others for distribution and
related expenses is 0.50% per annum of Class II shares' average
daily net assets, payable quarterly. All expenses of distribution,
marketing and related services over that amount will be borne by
Distributors or others who have incurred them, without
reimbursement by the Insured Fund. In addition, the Class II Plan
provides for an additional payment by the Insured Fund of up to
0.15% per annum of the class' average daily net assets as a
servicing fee, payable quarterly. This fee will be used to pay
securities dealers or others for, among other things, assisting in
establishing and maintaining customer accounts and records;
assisting with purchase and redemption requests; receiving and
answering correspondence; monitoring dividend payments from the
Insured Fund on behalf of the customers, or similar activities
related to furnishing personal services and/or maintaining
shareholder accounts.
The Class II Plan also covers any payments to or by the Insured
Fund, Advisers, Distributors, or other parties on behalf of the
Insured Fund, Advisers or Distributors, to the extent such payments
are deemed to be for the financing of any activity primarily
intended to result in the sale of Class II shares issued by the
Insured Fund within the context of Rule 12b-1. The payments under
the Class II Plan are included in the maximum operating expenses
which may be borne by Class II of the Insured Fund.
During the first year after the purchase of Class II shares,
Distributors will keep a portion of the Class II Plan fees assessed
on Class II shares to partially recoup fees Distributors pays to
securities dealers.
See "Plan of Distribution (Insured Fund)" in the "Management of the
Trust" section in the Prospectus and "The Trust's Underwriter -
Distribution Plan" in the SAI for more information about both Class
I and Class II Plans.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends and capital gains will be calculated and distributed in
the same manner for Class I and Class II shares. The per share
amount of any income dividends will generally differ only to the
extent that each class is subject to different Rule 12b-1 fees.
Because ongoing Rule 12b-1 expenses will be lower for Class I than
Class II, the per share dividends distributed to Class I shares
will generally be higher than those distributed to Class II shares.
Unless otherwise requested in writing or on the Shareholder
Application, income dividends and capital gain distributions, if
any, will be automatically reinvested in the shareholder's account
in the form of additional shares, valued at the closing net asset
value (without a front-end sales charge) on the dividend
reinvestment date. Dividend and capital gain distributions are only
eligible for investment at net asset value in the same class of
shares of the Insured Fund or the same class of another of the
Franklin Templeton Funds. See "Distributions to Shareholders" in
the Prospectus and the SAI for more information.
HOW TO BUY SHARES OF THE FUNDS - INSURED FUND
The following discussion supplements the one included in the
Prospectus under "How to Buy Shares of the Funds - Insured Fund."
THE APPLICATION FORM INCLUDED WITH THIS SUPPLEMENT MUST ACCOMPANY
ANY PURCHASE OF SHARES OF THE INSURED FUND. DO NOT USE THE
APPLICATION INCLUDED IN THE PROSPECTUS.
PURCHASE PRICE OF INSURED FUND SHARES
Shares of both classes of the Insured Fund are offered at the
public offering price, which is the net asset value per share plus
a front-end sales charge, next computed (1) after the shareholder's
securities dealer receives the order which is promptly transmitted
to the Insured Fund, or (2) after receipt of an order by mail from
the shareholder directly in proper form (which generally means a
completed Shareholder Application accompanied by a negotiable
check).
CLASS I. The sales charge for Class I shares is a variable
percentage of the offering price depending upon the amount of the
sale. On orders for 100,000 shares or more, the offering price will
be calculated to four decimal places. On orders for less than
100,000 shares, the offering price will be calculated to two
decimal places using standard rounding criteria. A description of
the method of calculating net asset value per share is included
under the caption "Valuation of Shares of Each of the Funds" in the
Prospectus.
Set forth below is a table of total front-end sales charges or
underwriting commissions and dealer concessions for Class I shares:
TOTAL SALES CHARGE
SIZE OF AS A PERCENTAGE AS A PERCENTAGE DEALER
TRANSACTION AT OF OFFERING OF NET AMOUNT CONCESSION AS A
OFFERING PRICE PRICE INVESTED PERCENTAGE OF
OFFERING
PRICE*, ***
Less than 4.25% 4.44% 4.00%
$100,000
$100,000 but 3.50% 3.63% 3.25%
less than
$250,000
$250,000 but 2.75% 2.83% 2.50%
less than
$500,000
$500,000 but 2.15% 2.20% 2.00%
less than
$1,000,000
$1,000,000 or none none (see below)**
more
*Financial institutions or their affiliated brokers may receive an
agency transaction fee in the percentages set forth above.
**The following commissions will be paid by Distributors, out of
its own resources, to securities dealers who initiate and are
responsible for purchases of $1 million or more: 0.75% on sales of
$1 million but less than $2 million, plus 0.60% on sales of $2
million but less than $3 million, plus 0.50% on sales of $3 million
but less than $50 million, plus 0.25% on sales of $50 million but
less than $100 million, plus 0.15% on sales of $100 million or
more. Dealer concession breakpoints are reset every 12 months for
purposes of additional purchases.
***At the discretion of Distributors, all sales charges may at
times be allowed to the securities dealer. If 90% or more of the
sales commission is allowed, such securities dealer may be deemed
to be an underwriter as that term is defined in the Securities Act
of 1933, as amended.
No front-end sales charge applies on investments of $1 million or
more, but a contingent deferred sales charge of 1% is imposed on
certain redemptions of all or a portion of investments of $1
million or more within the contingency period. See "How to Sell
Shares of the Funds - Contingent Deferred Sales Charge - Insured
Fund" in this Supplement.
The size of a transaction which determines the applicable sales
charge on the purchase of Class I shares is determined by adding
the amount of the shareholder's current purchase plus the cost or
current value (whichever is higher) of a shareholder's existing
investment in one or more of the funds in the Franklin Group of
Funds(Registered Trademark) and the Templeton Group of Funds.
Included for these aggregation purposes are (a) the mutual funds in
the Franklin Group of Funds except Franklin Valuemark Funds and
Franklin Government Securities Trust (the "Franklin Funds"), (b)
other investment products underwritten by Distributors or its
affiliates (although certain investments may not have the same
schedule of sales charges and/or may not be subject to reduction),
and (c) the U.S. registered mutual funds in the Templeton Group of
Funds except Templeton Capital Accumulator Fund, Inc., Templeton
Variable Annuity Fund, and Templeton Variable Products Series Fund
(the "Templeton Funds"). (Franklin Funds and Templeton Funds are
collectively referred to as the "Franklin Templeton Funds.") Sales
charge reductions based upon aggregate holdings of (a), (b) and (c)
above ("Franklin Templeton Investments") may be effective only
after notification to Distributors that the investment qualifies
for a discount.
Distributors, or one of its affiliates, may make payments, out of
its own resources, of up to 1% of the amount purchased to
securities dealers who initiate and are responsible for purchases
made at net asset value by certain trust companies and trust
departments of banks. See "Description of Special Net Asset Value
Purchases" and the SAI.
CLASS II. Unlike Class I shares, the front-end sales charge and
dealer concessions for Class II shares do not vary depending on the
amount of purchase. See table below:
TOTAL SALES CHARGE
AS A DEALER
SIZE OF TRANSACTION AS A PERCENTAGE PERCENTAGE CONCESSION AS
AT OFFERING PRICE OF OFFERING OF NET A PERCENTAGE
PRICE AMOUNT OF OFFERING
INVESTED PRICE*
any amount (less
than $1 million) 1.00% 1.01% 1.00%
* During the first year following a purchase of Class II shares,
Distributors will keep a portion of the plan fees attributable to
those shares to partially recoup fees Distributors pays to
securities dealers. Distributors, or one of its affiliates, may
make an additional payment to the securities dealer, from its own
resources, of up to 1% of the amount invested.
Class II shares redeemed within eighteen months of their purchase
will be assessed a contingent deferred sales charge of 1.0% on the
lesser of the then-current net asset value or the net asset value
of such shares at the time of purchase, unless such charge is
waived as described under "How to Sell Shares of the Funds -
Contingent Deferred Sales Charge - Insured Fund."
PURCHASES AT NET ASSET VALUE
The following section, which supersedes that included in the
Prospectus, describes the categories of investors who may purchase
Class I shares of the Insured Fund at net asset value and when
Class I and Class II shares may be purchased at net asset value.
The sections in the Prospectus titled "Quantity Discounts in Sales
Charges" and "Group Purchases" only apply to Class I shares.
Although sales charges on Class II shares may not be reduced
through a Letter of Intent or Rights of Accumulation as described
under "Quantity Discounts in Sales Charges," the value of Class II
shares owned by an investor may be included in determining the
appropriate sales charges for Class I shares.
Class I shares may be purchased without the imposition of either a
front-end sales charge ("net asset value") or a contingent deferred
sales charge by (1) officers, trustees, directors and full-time
employees of the Trust, any of the Franklin Templeton Funds, or of
the Franklin Templeton Group, and by their spouses and family
members, including any subsequent payments made to such parties
after cessation of employment; (2) companies exchanging shares or
selling assets pursuant to a merger, acquisition or exchange offer;
(3) registered securities dealers and their affiliates, for their
investment account only; and (4) registered personnel and employees
of securities dealers and by their spouses and family members, in
accordance with the internal policies and procedures of the
employing securities dealer.
For either Class I or Class II, the same class of shares of the
Insured Fund may be purchased at net asset value by persons who
have redeemed, within the previous 120 days, their shares of the
Insured Fund or another of the Franklin Templeton Funds which were
purchased with a front-end sales charge or assessed a contingent
deferred sales charge on redemption. If a different class of shares
is purchased, the full front-end sales charge must be paid at the
time of purchase of the new shares. An investor may reinvest an
amount not exceeding the redemption proceeds. While credit will be
given for any contingent deferred sales charge paid on the shares
redeemed and subsequently repurchased, a new contingency period
will begin. Shares of the Insured Fund redeemed in connection with
an exchange into another fund (see "Exchange Privilege") are not
considered "redeemed" for this privilege. In order to exercise this
privilege, a written order for the purchase of shares of the
Insured Fund must be received by the Insured Fund or the Insured
Fund's Shareholder Services Agent within 120 days after the
redemption. The 120 days, however, do not begin to run on
redemption proceeds placed immediately after redemption in a
Franklin Bank Certificate of Deposit ("CD") until the CD (including
any rollover) matures. Reinvestment at net asset value may also be
handled by a securities dealer or other financial institution, who
may charge the shareholder a fee for this service. The redemption
is a taxable transaction but reinvestment without a sales charge
may affect the amount of gain or loss recognized and the tax basis
of the shares reinvested. If there has been a loss on the
redemption, the loss may be disallowed if a reinvestment in the
same fund is made within a 30-day period. Information regarding the
possible tax consequences of such a reinvestment is included in the
tax section of the Prospectus and the SAI.
For either Class I or Class II, the same class of shares of the
Insured Fund or of another of the Franklin Templeton Funds may be
purchased at net asset value and without a contingent deferred
sales charge by persons who have received dividends and capital
gain distributions in cash from investments in that class of shares
of the Insured Fund within 120 days of the payment date of such
distribution. To exercise this privilege, a written request to
reinvest the distribution must accompany the purchase order.
Additional information may be obtained from Shareholder Services at
1-800/632-2301. See "Distributions in Cash" under "Distributions to
Shareholders" in the Prospectus.
Class I shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by investors who
have, within the past 60 days, redeemed an investment in a mutual
fund which is not part of the Franklin Templeton Funds and which
charged the investor a contingent deferred sales charge upon
redemption and which has an investment objective similar to that of
the Insured Fund.
Class I shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by broker-dealers
who have entered into a supplemental agreement with Distributors,
or by registered investment advisors affiliated with such broker-
dealers, on behalf of their clients who are participating in a
comprehensive fee program (sometimes known as a wrap fee program).
Class I shares may also be purchased at net asset value and without
the imposition of a contingent deferred sales charge by any state,
county, or city, or any instrumentality, department, authority or
agency thereof which has determined that the Insured Fund is a
legally permissible investment and which is prohibited by
applicable investment laws from paying a sales charge or commission
in connection with the purchase of shares of any registered
management investment company ("an eligible governmental
authority"). SUCH INVESTORS SHOULD CONSULT THEIR OWN LEGAL ADVISORS
TO DETERMINE WHETHER AND TO WHAT EXTENT THE SHARES OF THE INSURED
FUND CONSTITUTE LEGAL INVESTMENTS FOR THEM. Municipal investors
considering investment of proceeds of bond offerings into the
Insured Fund should consult with expert counsel to determine the
effect, if any, of various payments made by the Insured Fund or its
investment manager on arbitrage rebate calculations. If an
investment by an eligible governmental authority at net asset value
is made through a securities dealer who has executed a dealer
agreement with Distributors, Distributors or one of its affiliates
may make a payment, out of its own resources, to such securities
dealer in an amount not to exceed 0.25% of the amount invested.
Contact Franklin's Institutional Sales Department for additional
information.
DESCRIPTION OF SPECIAL NET ASSET VALUE PURCHASES
Class I shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by trust companies
and bank trust departments for funds over which they exercise
exclusive discretionary investment authority and which are held in
a fiduciary, agency, advisory, custodial or similar capacity. Such
purchases are subject to minimum requirements with respect to
amount of purchase, which may be established by Distributors.
Currently, those criteria require that the amount invested or to be
invested during the subsequent 13-month period in the Insured Fund
or any of the Franklin Templeton Investments must total at least
$1,000,000. Orders for such accounts will be accepted by mail
accompanied by a check or by telephone or other means of electronic
data transfer directly from the bank or trust company, with payment
by federal funds received by the close of business on the next
business day following such order.
For a complete understanding of how to buy shares of the Insured
Fund, this Supplement must be read in conjunction with the
Prospectus. Refer to the SAI for further information regarding net
asset value purchases of Class I shares.
PURCHASING CLASS I AND CLASS II SHARES OF THE INSURED FUND
When placing purchase orders, investors should clearly indicate
which class of shares they intend to purchase. A purchase order
that fails to specify a class will automatically be invested in
Class I shares. Initial purchases of $1 million or more in a single
payment will be invested in Class I shares. There are no conversion
features attached to either class of shares.
Investors who qualify to purchase Class I shares at net asset value
should purchase Class I rather than Class II shares. See the
section "Purchases at Net Asset Value" and "Description of Special
Net Asset Value Purchases" above for a discussion of when shares
may be purchased at net asset value.
"Timing Accounts" are not currently permitted to buy shares of the
Insured Fund. See "Exchange Privilege" for a description.
GENERAL
Each Fund may impose a $10 charge for each returned item, against
any shareholder account which, in connection with the purchase of a
Fund's shares, submits a check or a draft which is returned unpaid
to such Fund.
OTHER PROGRAMS AND PRIVILEGES AVAILABLE TO SHAREHOLDERS OF THE
FUNDS
With the exception of Systematic Withdrawal Plans, all programs and
privileges detailed under the discussion of "Other Programs and
Privileges Available to Shareholders of the Funds" will remain in
effect as described in the Prospectus for the new multiclass
structure. For a complete discussion of these programs, see "Other
Programs and Privileges Available to Shareholders of the Funds" in
the Prospectus.
SYSTEMATIC WITHDRAWAL PLANS. Subject to the requirements outlined
in the Prospectus, a shareholder may establish a Systematic
Withdrawal Plan for his or her account. With respect to Class I
shares, the contingent deferred sales charge is waived for
redemptions through a Systematic Withdrawal Plan set up prior to
February 1, 1995. With respect to Systematic Withdrawal Plans set
up on or after February 1, 1995, the applicable contingent deferred
sales charge is waived for Class I and Class II share redemptions
of up to 1% monthly of an account's net asset value (12% annually,
6% semiannually, 3% quarterly). For example, if the account
maintained an annual balance of $10,000, only $1,200 could be
withdrawn through a once-yearly Systematic Withdrawal Plan free of
charge; any amount over that $1,200 would be assessed a 1% (or
applicable) contingent deferred sales charge.
EXCHANGE PRIVILEGE
"Timing Accounts" are not currently permitted to exchange into the
Insured Fund. This policy does not affect any other types of
investor. "Timing Accounts" generally include market timing or
allocation services; accounts administered as to redeem or purchase
shares based upon certain predetermined market indicators; or any
person whose transactions seem to follow a timing pattern.
Shareholders are entitled to exchange their shares for shares of
the same class of other Franklin Templeton Funds which are eligible
for sale in the shareholder's state of residence and in conformity
with such fund's stated eligibility requirements and investment
minimums. Some funds, however, may not offer Class II shares. Class
I shares may be exchanged for Class I shares of any Franklin
Templeton Funds. Class II shares may be exchanged for Class II
shares of any Franklin Templeton Funds. No exchanges between
different classes of shares will be allowed. A contingent deferred
sales charge will not be imposed on exchanges. If, however, the
exchanged shares were subject to a contingent deferred sales charge
in the original fund purchased and shares are subsequently redeemed
within twelve months (Class I shares) or eighteen months (Class II
shares) of the calendar month of the original purchase date, a
contingent deferred sales charge will be imposed. Investors should
review the prospectus of the fund they wish to exchange from and
the fund they wish to exchange into for all specific requirements
or limitations on exercising the exchange privilege, for example,
minimum holding periods or applicable sales charges.
EXCHANGES OF CLASS I SHARES
The contingency period of Class I shares will be tolled (or
stopped) for the period such shares are exchanged into and held in
a Franklin or Templeton money market fund. If a Class I account has
shares subject to a contingent deferred sales charge, Class I
shares will be exchanged into the new account on a "first-in, first-
out" basis. See also "How to Sell Shares of the Funds - Contingent
Deferred Sales Charge - Insured Fund."
EXCHANGES OF CLASS II SHARES
When an account is composed of Class II shares subject to the
contingent deferred sales charge, and shares that are not, the
shares will be transferred proportionately into the new fund.
Shares received from reinvestment of dividends and capital gains
are referred to as "free shares," shares which were originally
subject to a contingent deferred sales charge but to which the
contingent deferred sales charge no longer applies are called
"matured shares," and shares still subject to the contingent
deferred sales charge are referred to as "CDSC liable shares." CDSC
liable shares held for different periods of time are considered
different types of CDSC liable shares. For instance, if a
shareholder has $1,000 in free shares, $2,000 in matured shares,
and $3,000 in CDSC liable shares, and the shareholder exchanges
$3,000 into a new fund, $500 will be exchanged from free shares,
$1,000 from matured shares, and $1,500 from CDSC liable shares.
Similarly, if CDSC liable shares have been purchased at different
periods, a proportionate amount will be taken from shares held for
each period. If, for example, a shareholder holds $1,000 in shares
bought 3 months ago, $1,000 bought 6 months ago, and $1,000 bought
9 months ago, and the shareholder exchanges $1,500 into a new fund,
$500 from each of these shares will be deemed exchanged into the
new fund.
The only money market fund exchange option available to Class II
shareholders is the Franklin Templeton Money Fund II ("Money Fund
II"), a series of the Franklin Templeton Money Fund Trust. No
drafts (checks) may be written on Money Fund II accounts, nor may
shareholders purchase shares of Money Fund II directly. Class II
shares exchanged for shares of Money Fund II will continue to age
and a contingent deferred sales charge will be assessed if CDSC
liable shares are redeemed. No other money market funds, including
the Money Fund described in this Prospectus, are available for
Class II shareholders for exchange purposes. Class I shares may be
exchanged for shares of any of the money market funds in the
Franklin Templeton Funds except Money Fund II. Draft writing
privileges and direct purchases are allowed on these other money
market funds as described in their respective prospectuses.
To the extent shares are exchanged proportionately, as opposed to
another method, such as first-in first-out, or free-shares followed
by CDSC liable shares, the exchanged shares may, in some instances,
be CDSC liable even though a redemption of such shares, as
discussed elsewhere herein, may no longer be subject to a CDSC. The
proportional method is believed by management to more closely meet
and reflect the expectations of Class II shareholders in the event
shares are redeemed during the contingency period. For federal
income tax purposes, the cost basis of shares redeemed or exchanged
is determined under the Code without regard to the method of
transferring shares chosen by the Insured Fund for purposes of
exchanging or redeeming shares.
TRANSFERS
Transfers between identically registered accounts in the same fund
and class are treated as non-monetary and non-taxable events, and
are not subject to a contingent deferred sales charge. The
transferred shares will continue to age from the date of original
purchase. Like exchanges, shares will be moved proportionately
from each type of shares in the original account.
CONVERSION RIGHTS
It is not presently anticipated that Class II shares will be
converted to Class I shares. A shareholder may, however, sell his
or her Class II shares and use the proceeds to purchase Class I
shares, subject to all applicable sales charges.
See "Exchange Privilege" in the Prospectus for more information.
HOW TO SELL SHARES OF THE FUNDS
For a discussion regarding the sale of either class of Insured Fund
shares, refer to the section in the Prospectus titled "How to Sell
Shares of the Funds." In addition, the charges described in this
Supplement will also apply to the sale of all Insured Fund shares.
CONTINGENT DEFERRED SALES CHARGE - INSURED FUND
CLASS I. In order to recover commissions paid to securities dealers
on investments of $1 million or more, a contingent deferred sales
charge of 1% applies to redemptions of those investments within the
contingency period of 12 months of the calendar month following
their purchase. The charge is 1% of the lesser of the value of the
shares redeemed (exclusive of reinvested dividends and capital gain
distributions) or the total cost of such shares at the time of
purchase, and is retained by Distributors. The contingent deferred
sales charge is waived in certain instances. See below and
"Purchases at Net Asset Value" under "How to Buy Shares of the
Funds - Insured Fund."
CLASS II. Class II shares redeemed within the contingency period of
18 months of the calendar month following their purchase will be
assessed a contingent deferred sales charge, unless one of the
exceptions described below applies. The charge is 1% of the lesser
of the value of the shares redeemed (exclusive of reinvested
dividends and capital gain distributions) or the net asset value at
the time of purchase of such shares, and is retained by
Distributors. The contingent deferred sales charge is waived in
certain instances. See below.
CLASS I AND CLASS II. In determining if a contingent deferred sales
charge applies, shares not subject to a contingent deferred sales
charge are deemed to be redeemed first, in the following order: (i)
Shares representing amounts attributable to capital appreciation of
those shares held less than the contingency period (12 months in
the case of Class I shares and 18 months in the case of Class II
shares); (ii) shares purchased with reinvested dividends and
capital gain distributions; and (iii) other shares held longer than
the contingency period; and followed by any shares held less than
the contingency period, on a "first in, first out" basis. For tax
purposes, a contingent deferred sales charge is treated as either a
reduction in redemption proceeds or an adjustment to the cost basis
of the shares redeemed.
The contingent deferred sales charge on each class of shares is
waived, as applicable, for: exchanges; any account fees;
redemptions through a Systematic Withdrawal Plan set up for shares
prior to February 1, 1995, and for Systematic Withdrawal Plans set
up thereafter, redemptions of up to 1% monthly of an account's net
asset value (3% quarterly, 6% semiannually or 12% annually); and
redemptions initiated by the Insured Fund due to a shareholder's
account falling below the minimum specified account size.
All investments made during a calendar month, regardless of when
during the month the investment occurred, will age one month on the
last day of that month and each subsequent month.
Requests for redemptions for a SPECIFIED DOLLAR amount, unless
otherwise specified, will result in additional shares being
redeemed to cover any applicable contingent deferred sales charge,
while requests for redemption of a SPECIFIC NUMBER of shares will
result in the applicable contingent deferred sales charge being
deducted from the total dollar amount redeemed.
CONTINGENT DEFERRED SALES CHARGE - MONEY FUND
The Money Fund does not impose either a front-end sales charge or a
contingent deferred sales charge. If, however, the shares redeemed
were shares acquired by exchange from another of the Franklin
Templeton Funds which would have assessed a contingent deferred
sales charge upon redemption, such charge will be made by the Money
Fund, as described above. The 12-month contingency period will be
tolled (or stopped) for the period such shares are exchanged into
and held in the Money Fund.
VALUATION OF SHARES OF EACH OF THE FUNDS
The following sentence replaces the first sentence of the first
paragraph in this section; the subsequent paragraph is added to the
end of this section.
The net asset value per share of each class of the Insured Fund is
determined as of the scheduled closing time of the New York Stock
Exchange ("Exchange") (generally 1:00 p.m. Pacific time) each day
that the Exchange is open for trading. The net asset value per
share of the Money Fund is determined at 3:00 p.m. Pacific time
each day that the Exchange is open for trading.
Each of the Insured Fund's classes will bear, pro rata, all of the
common expenses of the Insured Fund. The net asset value of all
outstanding shares of each class of the Insured Fund will be
computed on a pro rata basis for each outstanding share based on
the proportionate participation in the Insured Fund represented by
the value of shares of such classes, except that the Class I and
Class II shares will bear the Rule 12b-1 expenses payable under
their respective plans. Due to the specific distribution expenses
and other costs that will be allocable to each class, the dividends
paid to each class of the Insured Fund may vary.
HOW TO GET INFORMATION REGARDING AN INVESTMENT IN THE FUNDS
The following paragraph replaces the second paragraph in this
section of the Prospectus:
From a touch tone phone, shareholders may access the automated
Franklin TeleFACTS system (day or night) at 1-800/247-1753 to
obtain current price, yield or other performance information
specific to a fund in the Franklin Funds, process an exchange as
discussed under the "Exchange Privilege" in the Prospectus, and
request duplicate confirmation or year-end statements, money fund
checks, if applicable, and deposit slips. Current prices for the
Templeton Funds are also available through TeleFACTS. The system
codes for the two classes of shares of the Insured Fund and the
share code for the Money Fund, which will be needed to access
system information, are 124 for Class I, 224 for Class II and 125
for the Money Fund followed by the # sign. The system's automated
operator will prompt the caller with easy to follow step-by-step
instructions from the main menu. Other features may be added in the
future.
PERFORMANCE (CLASS II)
Because Class II shares were not offered prior to May 1, 1995, no
performance data is available for these shares. After a sufficient
period of time has passed, Class II performance data as described
in the "Performance" section of the Prospectus will be available.
Except as noted, it is likely that the performance data relating to
Class II shares will reflect lower total return and yield figures
than those for Class I shares because Class II Rule 12b-1 fees are
higher than Class I Rule 12b-1 fees. During at least the first year
of operation, Class II share performance will be higher than Class
I in light of the higher initial sales charge applicable to Class I
shares.
GENERAL INFORMATION
With the exception of "Voting Rights" as they pertain to the
Insured Fund, all rights and privileges detailed under the
discussion of "General Information" will remain in effect as
described in the Prospectus for the new multiclass structure. For
a complete discussion of these rights and privileges, see "General
Information" in the Prospectus.
VOTING RIGHTS - INSURED FUND. Shares of each class represent
proportionate interests in the assets of the Insured Fund and have
the same voting and other rights and preferences as the other class
of the Insured Fund for matters that affect the Insured Fund as a
whole. For matters that only affect a certain class of the Insured
Fund's shares, however, only shareholders of that class will be
entitled to vote. Therefore, each class of shares will vote
separately on matters (1) affecting only that class, (2) expressly
required to be voted on separately by the state business trust law,
or (3) required to be voted on separately by the 1940 Act or the
rules adopted thereunder. For instance, if a change to the Rule 12b-
1 plan relating to Class I shares requires shareholder approval,
only shareholders of Class I may vote on changes to the Rule 12b-1
plan affecting that class. Similarly, if a change to the Rule 12b-1
plan relating to Class II shares requires shareholder approval,
only shareholders of Class II may vote on the change to such plan.
On the other hand, if there is a proposed change to the investment
objective of the Insured Fund, this affects all shareholders,
regardless of which class of shares they hold, and therefore, each
share has the same voting rights. For more information regarding
voting rights, see the "Voting Rights" discussion in the Prospectus
under the heading "General Information."
CFT S
SUPPLEMENT DATED MAY 1, 1995
TO THE STATEMENT OF ADDITIONAL INFORMATION OF
FRANKLIN CALIFORNIA TAX-FREE TRUST
dated November 1, 1994
As described in its Prospectus, the Franklin California Insured
Tax-Free Income Fund (the "Insured Fund") now offers two classes
of shares to its investors. This new structure allows investors
to consider, among other features, the impact of sales charges
and distribution fees ("Rule 12b-1 fees") on their investments in
the Insured Fund.
ADD THE FOLLOWING AS THE LAST SENTENCE OF THE PARAGRAPH
DESCRIBING FEES PAID TO THE MANAGER UNDER "INVESTMENT ADVISORY
AND OTHER SERVICES":
Each class of the Insured Fund will pay its share of the fee
as determined by the proportion of the Insured Fund that it
represents.
EACH NEW CLASS OF SHARES OF THE INSURED FUND HAS A SEPARATE
DISTRIBUTION PLAN. FOR THIS REASON, THE FIRST PARAGRAPH OF THE
SECTION "THE TRUST'S UNDERWRITER - DISTRIBUTION PLAN" HAS BEEN
REPLACED WITH THE FOLLOWING PARAGRAPH:
PLANS OF DISTRIBUTION
Each class of the Insured Fund has adopted a distribution
plan ("Class I Plan" and "Class II Plan," respectively,)
pursuant to Rule 12b-1 under the 1940 Act. The Franklin
California Intermediate-Term Tax-Free Income Fund has also
adopted a distribution plan pursuant to Rule 12b-1 (the
"Intermediate-Term Plan"). The distribution plans for each
Fund and class may be collectively referred to as the
"Plans."
THE FOLLOWING SENTENCE SHOULD BE ADDED AS THE FIRST SENTENCE IN
THE NEXT PARAGRAPH:
Pursuant to the Class I Plan and the Intermediate-Term Plan,
the Insured Fund and the Intermediate-Term Fund may each pay
up to a maximum of 0.10% per annum (0.10 of 1%) of its
average daily net assets for expenses incurred in the
promotion and distribution of its shares.
THE PARAGRAPH DESCRIBED ABOVE ONLY CONCERNS THE CLASS I PLAN
AND THE INTERMEDIATE-TERM PLAN. THE FOLLOWING PARAGRAPHS HAVE
BEEN ADDED TO THIS SECTION AFTER THE DISCUSSION OF THE CLASS I
PLAN AND THE INTERMEDIATE-TERM PLAN TO DESCRIBE THE CLASS II
PLAN:
THE CLASS II PLAN
Under the Class II Plan, the Insured Fund is permitted to
pay to Distributors or others annual distribution fees,
payable quarterly, of .50% of Class II's average daily
net assets, in order to compensate Distributors or others
for providing distribution and related services and
bearing certain expenses of the Class. All expenses of
distribution and marketing over that amount will be borne
by Distributors, or others who have incurred them,
without reimbursement by the Insured Fund. In addition to
this amount, under the Class II Plan, the Insured Fund
shall pay .15% per annum, payable quarterly, of the
Class' average daily net assets as a servicing fee. This
fee will be used to pay dealers or others for, among
other things, assisting in establishing and maintaining
customer accounts and records; assisting with purchase
and redemption requests; receiving and answering
correspondence; monitoring dividend payments from the
Insured Fund on behalf of the customers, and similar
activities related to furnishing personal services and
maintaining shareholder accounts. Distributors may pay
the securities dealer, from its own resources, a
commission of up to 1% of the amount invested.
THE SUBSEQUENT PARAGRAPHS IN THE SECTION "DISTRIBUTION PLAN"
APPLY EQUALLY TO THE PLANS, WITH THE EXCEPTION THAT (1) THE
SENTENCE REGARDING UNREIMBURSED EXPENSES REFERS TO THE CLASS I
PLAN AND THE INTERMEDIATE-TERM PLAN ONLY, AND (2) THE CLASS II
PLAN WAS APPROVED BY THE BOARD OF TRUSTEES AND THE SOLE INITIAL
SHAREHOLDER PRIOR TO MAY 1, 1995 AND IS EFFECTIVE FROM MAY 1,
1995.
THE "TRUSTEES AND OFFICERS" SECTION IS REVISED TO READ AS
FOLLOWS:
TRUSTEES AND OFFICERS
The Board of Trustees has the responsibility for the
overall management of the Trust, including general
supervision and review of its investment activities. The
trustees, in turn, elect the officers of the Trust who
are responsible for administering the day-to-day
operations of the Trust. The affiliations of the officers
and trustees and their principal occupations for the past
five years are listed below. Trustees who are deemed to
be "interested persons" of the Trust, as defined in the
1940 Act, are indicated by an asterisk (*).
NAME, POSITIONS AND
ADDRESS OFFICES WITH PRINCIPAL OCCUPATIONS
AND AGE THE TRUST DURING PAST FIVE YEARS
Frank H. Abbott, III (74)
1045 Sansome St.
San Francisco, CA 94111
Trustee
President and Director, Abbott Corporation (an investment
company); and director, trustee or managing general
partner, as the case may be, of 30 of the investment
companies in the Franklin Group of Funds.
Harris J. Ashton (62)
General Host Corporation
Metro Center, 1 Station Place
Stamford, CT 06904-2045
Trustee
President, Chief Executive Officer and Chairman of the
Board, General Host Corporation (nursery and craft
centers); Director, RBC Holdings, Inc. (a bank holding
company) and Bar-S Foods; and director, trustee or
managing general partner, as the case may be, of 54 of
the investment companies in the Franklin Templeton Group
of Funds.
*Harmon E. Burns (50)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President and Trustee
Executive Vice President, Secretary and Director,
Franklin Resources, Inc.; Executive Vice President and
Director, Franklin Templeton Distributors, Inc.;
Executive Vice President, Franklin Advisers, Inc.;
Director, Franklin/Templeton Investor Services, Inc.;
officer and/or director, as the case may be, of other
subsidiaries of Franklin Resources, Inc.; and officer
and/or director or trustee of 41 of the investment
companies in the Franklin Templeton Group of Funds.
S. Joseph Fortunato (62)
Park Avenue at Morris County
P. O. Box 1945
Morristown, NJ 07962-1945
Trustee
Member of the law firm of Pitney, Hardin, Kipp & Szuch;
Director of General Host Corporation; director, trustee
or managing general partner, as the case may be, of 56 of
the investment companies in the Franklin Templeton Group
of Funds.
David W. Garbellano (80)
111 New Montgomery St., #402
San Francisco, CA 94105
Trustee
Private Investor; Assistant Secretary/Treasurer and
Director, Berkeley Science Corporation (a venture capital
company); and director, trustee or managing general
partner, as the case may be, of 29 of the investment
companies in the Franklin Group of Funds.
*Charles B. Johnson (62)
777 Mariners Island Blvd.
San Mateo, CA 94404
Chairman of the Board and Trustee
President and Director, Franklin Resources, Inc.;
Chairman of the Board and Director, Franklin Advisers,
Inc. and Franklin Templeton Distributors, Inc.; Director,
Franklin/Templeton Investor Services, Inc. and General
Host Corporation; and officer and/or director, trustee or
managing general partner, as the case may be, of most
other subsidiaries of Franklin Resources, Inc. and of 55
of the investment companies in the Franklin Templeton
Group of Funds.
*Rupert H. Johnson, Jr. (54)
777 Mariners Island Blvd.
San Mateo, CA 94404
President and Trustee
Executive Vice President and Director, Franklin
Resources, Inc. and Franklin Templeton Distributors,
Inc.; President and Director, Franklin Advisers, Inc.;
Director, Franklin/Templeton Investor Services, Inc.; and
officer and/or director, trustee or managing general
partner, as the case may be, of most other subsidiaries
of Franklin Resources, Inc. and of 42 of the investment
companies in the Franklin Templeton Group of Funds.
Frank W. T. LaHaye (66)
20833 Stevens Creek Blvd.
Suite 102
Cupertino, CA 95014
Trustee
General Partner, Peregrine Associates and Miller &
LaHaye, which are General Partners of Peregrine Ventures
and Peregrine Ventures II (venture capital firms);
Chairman of the Board and Director, Quarterdeck Office
Systems, Inc.; Director, FischerImaging Corporation; and
director or trustee, as the case may be, of 25 of the
investment companies in the Franklin Group of Funds.
Gordon S. Macklin (66)
8212 Burning Tree Road
Bethesda, MD 20817
Trustee
Chairman, White River Corporation (information services);
Director, Fund American Enterprises Holdings, Inc.,
Martin Marietta Corporation, MCI Communications
Corporation, MedImmune, Inc. (biotechnology), and
Infovest Corporation (information services), and Fusion
Systems Corporation (industrial technology); and
director, trustee or managing general partner, as the
case may be, of 51 of the investment companies in the
Franklin Templeton Group of Funds; formerly, Chairman,
Hambrecht and Quist Group; Director, H & Q Healthcare
Investors; and President, National Association of
Securities Dealers, Inc.
Kenneth V. Domingues (62)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President - Financial Reporting and Accounting
Standards
Senior Vice President, Franklin Resources, Inc., Franklin
Advisers, Inc., and Franklin Templeton Distributors,
Inc.; officer and/or director, as the case may be, of
other subsidiaries of Franklin Resources, Inc.; and
officer and/or managing general partner, as the case may
be, of 36 of the investment companies in the Franklin
Group of Funds.
Martin L. Flanagan (34)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President and Chief Financial Officer
Senior Vice President, Chief Financial Officer and
Treasurer, Franklin Resources, Inc.; Executive Vice
President, Templeton Worldwide, Inc.; Senior Vice
President and Treasurer, Franklin Advisers, Inc. and
Franklin Templeton Distributors, Inc.;
Senior Vice President, Franklin/Templeton Investor
Services, Inc.; officer of most other subsidiaries of
Franklin Resources, Inc.; and officer of 60 of the
investment companies in the Franklin Templeton Group of
Funds.
Deborah R. Gatzek (46)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President and Secretary
Senior Vice President - Legal, Franklin Resources, Inc.
and Franklin Templeton Distributors, Inc.; Vice
President, Franklin Advisers, Inc. and officer of 36 of
the investment companies in the Franklin Group of Funds.
Diomedes Loo-Tam (56)
777 Mariners Island Blvd.
San Mateo, CA 94404
Treasurer and Principal Accounting Officer
Employee of Franklin Advisers, Inc.; and officer of 36 of
the investment companies in the Franklin Group of Funds.
Edward V. McVey (57)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President
Senior Vice President/National Sales Manager, Franklin
Templeton Distributors, Inc.; and officer of 31 of the
investment companies in the Franklin Group of Funds.
Trustees not affiliated with the investment manager
("nonaffiliated trustees") are currently paid fees of $640
per month plus $640 per meeting attended. During the fiscal
year ended June 30, 1994, fees totaling $93,440 were paid to
nonaffiliated trustees of the Trust. As indicated above,
certain of the trustees and officers hold positions with
other companies in the Franklin Group of Funds(Registered
Trademark) and the Templeton Funds ("Franklin Templeton
Funds"). The following table shows the fees paid by the
Trust to its nonaffiliated trustees and the total fees paid
to such trustees by the Trust and other Franklin Templeton
Funds for which they serve as directors, trustees or
managing general partners.
TOTAL
COMPENSATION
AGGREGATE NUMBER OF FRANKLIN FROM FRANKLIN
COMPENSATION TEMPLETON FUND BOARDS TEMPLETON FUNDS,
NAME FROM TRUST* ON WHICH EACH SERVES INCLUDING THE TRUST**
Mr. Abbott $16,000 30 $176,870
Mr. Ashton $15,360 54 $319,925
Mr. Fortunato $15,360 56 $336,065
Mr. Garbellano $16,000 29 $153,300
Mr. LaHaye $15,360 25 $150,817
Mr. Macklin $15,360 51 $303,685
* For the fiscal year ended June 30, 1994.
** For the calendar year ended December 31, 1994.
Nonaffiliated trustees are also reimbursed for expenses
incurred in connection with attending Board meetings, paid
pro rata by each Franklin Templeton Fund for which they
serve as directors, trustees or managing general partners.
No officer or trustee received any other compensation
directly from the Trust. As of March 31, 1995, the trustees
and officers, as a group, owned of record and beneficially
approximately 9,519,441 shares of the Franklin California
Tax-Exempt Money Fund, or 1.4% of the total outstanding
shares of such Fund, and did not own any shares of the
Insured Fund or the Intermediate-Term Fund. In addition,
many of the trustees own shares in various of the other
funds in the Franklin Templeton Funds. Certain officers and
trustees who are shareholders of Franklin Resources, Inc.
may be deemed to receive indirect remuneration by virtue of
their participation, if any, in the fees paid to its
subsidiaries. Charles B. Johnson and Rupert H. Johnson, Jr.
are brothers.
THE FOLLOWING SUBSTITUTES THE SUBSECTION "PURCHASES AT NET ASSET
VALUE (INTERMEDIATE-TERM AND INSURED FUNDS)" UNDER "ADDITIONAL
INFORMATION REGARDING THE FUNDS' SHARES":
SPECIAL NET ASSET VALUE PURCHASES
As discussed in the Prospectuses under "How to Buy Shares
of the Fund(s) - Description of Special Net Asset Value
Purchases," certain categories of investors may purchase
shares of the Intermediate-Term Fund and Class I shares
of the Insured Fund at net asset value (without a front-
end or contingent deferred sales charge). Distributors or
one of its affiliates may make payments, out of its own
resources, to securities dealers who initiate and are
responsible for such purchases. Distributors may make
these payments in the form of contingent advance
payments, which may require reimbursement from the
securities dealer with respect to certain redemptions
made within 12 months of the calendar month following
purchase, as well as other conditions, all of which may
be imposed by an agreement between Distributors, or its
affiliates, and the securities dealer. For purchases made
at net asset value by certain trust companies and trust
departments of banks, Distributors or one of its
affiliates, out of its own resources, may pay up to 1% of
the amount invested.
THE FOLLOWING PARAGRAPHS ARE ADDED TO "ADDITIONAL INFORMATION
REGARDING THE FUNDS' SHARES":
Each Fund may impose a $10 charge for each returned item,
against any shareholder account which, in connection with
the purchase of Fund shares, submits a check or a draft
which is returned unpaid to the Fund.
LETTER OF INTENT
An investor may qualify for a reduced sales charge on the
purchase of shares of the Intermediate-Term Fund and
Class I shares of the Insured Fund, as described in the
Prospectuses. At any time within 90 days after the first
investment which the investor wants to qualify for the
reduced sales charge, a signed Shareholder Application,
with the Letter of Intent ("Letter") section completed,
may be filed with the Insured Fund or the Intermediate-
Term Fund. After the Letter is filed, each additional
investment made will be entitled to the sales charge
applicable to the level of investment indicated on the
Letter. Sales charge reductions based upon purchases in
more than one company in the Franklin Templeton Group
will be effective only after notification to Distributors
that the investment qualifies for a discount. The
shareholder's holdings in the Franklin Templeton Group,
including class II shares, acquired more than 90 days
before the Letter is filed will be counted towards
completion of the Letter but will not be entitled to a
retroactive downward adjustment of sales charge. Any
redemptions made by the shareholder during the 13-month
period will be subtracted from the amount of the
purchases for purposes of determining whether the terms
of the Letter have been completed. If the Letter is not
completed within the 13-month period, there will be an
upward adjustment of the sales charge, depending upon the
amount actually purchased (less redemptions) during the
period. An investor who executes a Letter prior to a
change in the sales charge structure for the Insured Fund
or the Intermediate-Term Fund will be entitled to
complete the Letter at the lower of the new sales charge
structure or the sales charge structure in effect at the
time the Letter was filed with the Insured Fund or the
Intermediate-Term Fund.
As mentioned in the Prospectuses, five percent (5%) of
the amount of the total intended purchase will be
reserved in shares of the Insured Fund or the
Intermediate-Term Fund registered in the investor's name.
If the total purchases, less redemptions, equal the
amount specified under the Letter, the reserved shares
will be deposited to an account in the name of the
investor or delivered to the investor or the investor's
order. If the total purchases, less redemptions, exceed
the amount specified under the Letter and is an amount
which would qualify for a further quantity discount, a
retroactive price adjustment will be made by Distributors
and the dealer through whom purchases were made pursuant
to the Letter (to reflect such further quantity discount)
on purchases made within 90 days before and on those made
after filing the Letter. The resulting difference in
offering price will be applied to the purchase of
additional shares at the offering price applicable to a
single purchase or the dollar amount of the total
purchases. If the total purchases, less redemptions, are
less than the amount specified under the Letter, the
investor will remit to Distributors an amount equal to
the difference in the dollar amount of sales charge
actually paid and the amount of sales charge which would
have applied to the aggregate purchases if the total of
such purchases had been made at a single time. Upon such
remittance, the reserved shares held for the investor's
account will be deposited to an account in the name of
the investor or delivered to the investor or to the
investor's order. If within 20 days after written request
such difference in sales charge is not paid, the
redemption of an appropriate number of reserved shares to
realize such difference will be made. In the event of a
total redemption of the account prior to fulfillment of
the Letter, the additional sales charge due will be
deducted from the proceeds of the redemption, and the
balance will be forwarded to the investor.
THE "PURCHASES AND REDEMPTIONS THROUGH SECURITIES DEALERS" AND
"CALCULATION OF NET ASSET VALUE" SUBSECTIONS ARE MODIFIED TO
REFLECT THAT THE NET ASSET VALUE FOR THE INSURED FUND IS
CALCULATED FOR EACH CLASS SEPARATELY AND THE NET ASSET VALUE FOR
THE INTERMEDIATE-TERM FUND AND EACH CLASS OF THE INSURED FUND IS
CALCULATED AS OF THE SCHEDULED CLOSING OF THE NEW YORK STOCK
EXCHANGE (GENERALLY 1:00 P.M. PACIFIC TIME).
THE PARAGRAPH REGARDING PRINCIPAL SHAREHOLDERS UNDER
"MISCELLANEOUS INFORMATION - OWNERSHIP AND AUTHORITY DISPUTES" IS
REVISED TO READ AS FOLLOWS:
As of April 3, 1995, the only principal shareholder of any
of the Funds, beneficial or of record, the shareholder's
address and the amount of share ownership was as follows:
FUND NUMBER OF SHARES HELD PERCENTAGE
Money Fund
Kenneth Rainin
5400 Hollis St.
Emeryville, CA
94608-2508 53,485,744.156 7.6%
THE FOLLOWING SECTION HAS BEEN ADDED AFTER "APPENDICES."
FINANCIAL STATEMENTS
In addition to the financial statements that follow, see the
unaudited financial statements of the Trust for the six
months ended December 31, 1994, contained in the Trust's
Semi-Annual Report to Shareholders dated December 31, 1994,
which is incorporated herein by reference.
The current Prospectus and Statement of Additional Information are
incorporated herein by reference to Form Type 497 filed
electronically by Registrant with the U.S. Securities and Exchange
Commission on February 21, 1995, Accession Number 0000773478-95-
000002
FRANKLIN CALIFORNIA TAX-FREE TRUST
File Nos. 2-99112
811-4356
FORM N-1A
PART C
Other Information
Item 24 Financial Statements and Exhibits
a) Unaudited Financial Statements incorporated herein by
reference to the Registrant's Semi-Annual Report to
Shareholders dated December 31, 1994 as filed with the
SEC electronically on Form Type N-30D on February 24,
1995
(i) Statement of Investments in Securities and Net
Assets - December 31, 1994
(ii) Statements of Assets and Liabilities - December
31, 1994
(iii) Statements of Operations - for the six months
ended December 31, 1994
(iv) Statements of Changes in Net Assets - for the six
months ended December 31, 1994 and the year ended
June 30, 1994
(v) Notes to Financial Statements
b) Audited Financial Statements for Franklin California
Tax-Free Trust dated June 30, 1994 are incorporated
herein by reference to the Statement of Additional
Information in Form Type 497 filed electronically by
Registrant with the U.S. Securities and Exchange
Commission on February 21, 1995, Accession Number:
0000773478-95-000002
(i) Report of Independent Auditors - August 3, 1994
(ii) Statement of Investments in Securities and Net
Assets - June 30, 1994
(iii) Statements of Assets and Liabilities - June 30,
1994
(iv) Statements of Operations - for the year ended
June 30, 1994
(v) Statements of Changes in Net Assets - for the
years ended June 30, 1994 and 1993
(vi) Notes to Financial Statements
c) Exhibits:
The following exhibits are attached herewith, except
exhibits 6(ii), 8(iii) and 8(iv), which are incorporated
by reference as noted.
(1) copies of the charter as now in effect;
(i) Agreement and Declaration of Trust dated July 18,
1985
(ii) Certificate of Amendment of Agreement and
Declaration of Trust for the Franklin California
Tax-Free Trust dated July 22, 1992
(iii) Certificate of Amendment of Agreement and
Declaration of Trust of Franklin California Tax-
Free Trust dated March 21, 1995
(2) copies of the existing By-Laws or instruments
corresponding thereto;
(i) By-Laws
(ii) Amendment to By-Laws dated January 18, 1994
(3) copies of any voting trust agreement with respect to
more than five percent of any class of equity
securities of the Registrant;
N/A
(4) specimens or copies of each security issued by the
Registrant, including copies of all constituent
instruments, defining the rights of the holders of such
securities, and copies of each security being
registered;
N/A
(5) copies of all investment advisory contracts relating
to the management of the assets of the Registrant;
(i) Management Agreement between Registrant and
Franklin Advisers, Inc. dated November 1, 1986
(ii) Management Agreement between Registrant on
behalf of the Franklin California
Intermediate-Term Tax-Free Income Fund and
Franklin Advisers, Inc. dated September 21,
1992
(6) copies of each underwriting or distribution contract
between the Registrant and a principal underwriter, and
specimens or copies of all agreements between principal
underwriters and dealers;
(i) Form of Amended and Restated Distribution
Agreement between Registrant and
Franklin/Templeton Distributors, Inc.
(ii) Form of Dealer Agreement between
Franklin/Templeton Distributors, Inc. and
Securities Dealers
Registrant: Franklin Federal Tax-Free Income
Fund
Filing: Post-Effective Amendment No. 17 to
Registration on Form N-1A
File No. 2-75925
Filing Date: March 28, 1995
(7) copies of all bonus, profit sharing, pension or other
similar contracts or arrangements wholly or partly for
the benefit of directors or officers of the Registrant in
their capacity as such; any such plan that is not set
forth in a formal document, furnish a reasonably
detailed description thereof;
N/A
(8) copies of all custodian agreements and depository
contracts under Section 17(f) of the 1940 Act, with
respect to securities and similar investments of the
Registrant, including the schedule of remuneration;
(i) Custodian Agreement between Registrant and Bank
of America NT & SA dated August 15, 1985
(ii) Amendment to Custodian Agreement between
Registrant and Bank of America NT & SA dated
April 2, 1990
(iii) Copy of Custodian Agreements between Registrant
and Citibank Delaware:
1. Citicash Management ACH Customer
Agreement
2. Citibank Cash Management Services Master
Agreement
3. Short Form Bank Agreement - Deposits and
Disbursements of Funds
Registrant: Franklin Premier Return Fund
Filing: Post-Effective Amendment No. 54
to Registration on Form N-1A
File No. 2-12647
Filing Date: February 27, 1995
(iv) Amendment to Custodian Agreement between
Registrant and Bank of America NT & SA dated
December 1, 1994
Registrant: Franklin Premier Return Fund
Filing: Post-Effective Amendment No. 54 to
Registration on Form N-1A
File No. 2-12647
Filing Date: February 27, 1995
(9) Copies of all other material contracts not made in the
ordinary course of business which are to be performed in
whole or in part at or after the date of filing the
Registration Statement;
(i) Agreement between Registrant and Financial
Guaranty Insurance Company dated September 3,
1985
(ii) Amendment to Agreement between Registrant and
Financial Guaranty Insurance Company dated
November 24, 1992
(10) an opinion and consent of counsel as to the legality
of the securities being registered, indicating whether
they will when sold be legally issued, fully paid and
nonassessable;
N/A
(11) copies of any other opinions, appraisals or rulings
and consents to the use thereof relied on in the
preparation of this registration statement as required by
Section 7 of the 1933 Act;
(i) Consent of Independent Auditors dated April 14,
1995
(12) all financial statements omitted from Item 23;
N/A
(13) copies of any agreements or understandings made in
consideration for providing the initial capital between
or among the Registrant, the underwriter, adviser,
promoter or initial stockholders and written assurances
from promoters or initial stockholders that their
purchases were made for investment purposes without any
present intention of redeeming or reselling;
(i) Letter of Understanding dated April 12, 1995
(14) copies of the model plan used in the establishment of
any retirement plan in conjunction with which
Registrant offers its securities, any instructions
thereto and any other documents mailing up the model
plan. Such form(s) should disclose the costs and fees
charged in connection therewith;
N/A
(15) copies of any plan entered into by Registrant pursuant
to Rule 12b-1 under the 1940 Act, which describes all
material aspects of the financing of distribution of
Registrant's shares, and any agreements with any person
relating to implementation of such plan.
(i) Distribution Plan pursuant to Rule 12b-1
dated July 1, 1993 between
Franklin/Templeton Distributors, Inc. and
the Registrant on behalf of the Franklin
California Intermediate-Term Tax-Free Income
Fund
(ii) Distribution Plan pursuant to Rule 12b-1
dated May 1, 1994 between Franklin/Templeton
Distributors, Inc. and the Registrant on
behalf of the Franklin California Insured
Tax-Free Income Fund
(iii) Form of Distribution Plan pursuant to Rule
12b-1 between Franklin/Templeton
Distributors, Inc. and the Registrant on
behalf of the Franklin California Insured
Tax-Free Income Fund - Class II
(16) schedule for computation of each performance quotation
provided in the registration statement in response to
item 22.
(i) Schedule for Computation of Performance
Quotations
(17) Power of Attorney
(i) Power of Attorney dated February 16, 1995
(ii) Certificate of Secretary dated February 16, 1995
Item 25 Persons Controlled by or under Common Control with
Registrant
NONE
Item 26 Number of Holders of Securities
As of February 28, 1995 the number of record holders of each class
of securities of the Registrant was as follows:
Title of Class Number of Record Holders
Shares of Beneficial Interest CLASS I CLASS II
of the Franklin California
Insured Tax-Free Income Fund: 21,359 NONE
Shares of Beneficial Interest
of the Franklin California
Tax-Exempt Money Fund: 26,132 NONE
Shares of Beneficial Interest
of the Franklin California
Intermediate-Term Tax-Free
Income Fund: 1,771 NONE
Item 27 Indemnification
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Trustees, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, enforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a Trustee, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such Trustee,
officer or controlling person in connection with securities being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court or appropriate jurisdiction the question whether
such indemnification is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
Item 28 Business and Other Connections of Investment Adviser
The officers and trustees of the Registrant's investment adviser
also serve as officers and/or directors for (1) the adviser's
corporate parent, Franklin Resources, Inc., and/or (2) other
investment companies in the Franklin Group of Funds. In addition,
Mr. Charles B. Johnson is a director of General Host Corporation.
For additional information please see Part B.
Item 29 Principal Underwriters
a) Franklin/Templeton Distributors, Inc., ("Distributors") also
acts as principal underwriter of shares of AGE High Income Fund,
Inc., Franklin Premier Return Fund, Franklin Custodian Funds, Inc.,
Franklin Gold Fund, Franklin Equity Fund, Franklin New York Tax-
Free Income Fund, Inc., Franklin California Tax-Free Income Fund,
Inc., Franklin Municipal Securities Trust, Franklin Federal Tax-
Free Income Fund, Franklin Investors Securities Trust, Franklin Tax-
Advantaged High Yield Securities Fund, Franklin Tax-Advantaged
International Bond Fund, Franklin Tax-Advantaged U.S. Government
Securities Fund, Franklin Tax-Free Trust, Franklin New York Tax-
Free Trust, Franklin Strategic Series, Franklin International
Trust, Franklin Managed Trust, Franklin Balance Sheet Investment
Fund, Franklin Strategic Mortgage Portfolio, Institutional
Fiduciary Trust, Franklin Money Fund, Franklin Federal Money Fund,
Franklin Tax Exempt Money Fund, Franklin Real Estate Securities
Trust, Franklin Templeton Global Trust, Templeton Variable Products
Series Fund, Templeton Real Estate Securities Fund, Templeton
Growth Fund, Inc., Templeton Funds, Inc., Templeton Smaller
Companies Growth Fund, Inc., Templeton Income Trust, Templeton
Global Opportunities Trust, Templeton Institutional Funds, Inc.,
Templeton American Trust, Inc., Templeton Capital Accumulator Fund,
Inc., Templeton Developing Markets Trust, Templeton Global
Investment Trust, Templeton Variable Annuity Fund, Franklin
Templeton Japan Fund
b) The information required by this Item 29 with respect to each
director and officer of Distributors is incorporated by reference
to Part B of this N-1A and Schedule A of Form BD filed by
Distributors with the Securities and Exchange Commission pursuant
to the Securities Act of 1934 (SEC File No. 8-5889)
c) Not Applicable. Registrant's principal underwriter is an
affiliated person of the Registrant.
Item 30 Location of Accounts and Records
The accounts, books or other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 are kept by the
Trust or its shareholder services agent, Franklin/Templeton Investor
Services, Inc., both of whose address is 777 Mariners Island Blvd.,
San Mateo, CA. 94404.
Item 31 Management Services
There are no management-related service contracts not discussed in
Part A or Part B.
Item 32 Undertakings
The Registrant hereby undertakes to comply with the information
requirement in Item 5A of the Form N-1A by including the required
information in the Fund's annual report and to furnish each person
to whom a prospectus is delivered a copy of the annual report upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, the Registrant
certifies that it meets all of the requirements for effectiveness
of this Post-Effective Amendment to the Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized
in the City of San Mateo and the State of California, on the 21th
day of April 1995.
FRANKLIN CALIFORNIA TAX-FREE TRUST
(Registrant)
By: Rupert H. Johnson, Jr.*
Rupert H. Johnson, Jr.
President
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to its Registration Statement has been signed below
by the following persons in the capacities and on the dates
indicated:
Rupert H. Johnson, Jr.* Principal Executive Officer and
Rupert H. Johnson, Jr. Trustee
Dated: April 21, 1995
Frank H. Abbott, III* Trustee
Frank H. Abbott, III Dated: April 21, 1995
Harris J. Ashton* Trustee
Harris J. Ashton Dated: April 21, 1995
Harmon E. Burns* Trustee
Harmon E. Burns Dated: April 21, 1995
Martin L. Flanagan* Principal Financial Officer
Martin L. Flanagan Dated: April 21, 1995
S. Joseph Fortunato* Trustee
S. Joseph Fortunato Dated: April 21, 1995
David W. Garbellano* Trustee
David W. Garbellano Dated: April 21, 1995
Charles B. Johnson* Trustee
Charles B. Johnson Dated: April 21, 1995
Frank W.T. LaHaye* Trustee
Frank W.T. LaHaye Dated: April 21, 1995
Diomedes Loo-Tam* Principal Accounting Officer
Diomedes Loo-Tam Dated: April 21, 1995
Gordon S. Macklin* Trustee
Gordon S. Macklin Dated: April 21, 1995
*BY /s/ Larry L. Greene
Larry L. Greene, Attorney-in-Fact
(Pursuant to Power of Attorney filed herewith)
FRANKLIN CALIFORNIA TAX-FREE TRUST
REGISTRATION STATEMENT
EXHIBITS INDEX
EXHIBIT NO. DESCRIPTION LOCATION
EX-99.B1(i) Agreement and Declaration of Attached
Trust dated July 18, 1985
EX-99.B1(ii) Certificate of Amendment of Attached
Agreement and Declaration of
Trust for the Franklin
California Tax-Free Trust
dated July 22, 1992
EX-99.B1(iii) Certificate of Amendment of Attached
Agreement and Declaration of
Trust of Franklin California
Tax-Free Trust dated March 21,
1995
EX-99.B2(i) By-Laws Attached
EX-99.B2(ii) Amendment to By-Laws dated Attached
January 18, 1994
EX-99.B5(i) Management Agreement between Attached
Registrant and Franklin
Advisers, Inc. dated November
1, 1986
EX-99.B5(ii) Management Agreement between Attached
Registrant on behalf of the
Franklin California
Intermediate-Term Tax-Free
Income Fund and Franklin
Advisers, Inc. dated September
21, 1992
EX-99.B6(i) Form of Amended and Restated Attached
Distribution Agreement between
Registrant and
Franklin/Templeton
Distributors, Inc.
EX-99.B6(ii) Form of Dealer Agreement *
between Franklin/Templeton
Distributors, Inc. and
Securities Dealers
EX-99.B8(i) Custodian Agreement between Attached
Registrant and Bank of America
NT & SA dated August 15, 1985
EX-99.B8(ii) Amendment to Custodian Attached
Agreement between Registrant
and Bank of America NT & SA
dated April 2, 1990
EX-99.B8(iii) Copy of Custodian Agreements *
between Registrant and
Citibank Delaware
EX-99.B8(iv) Amendment to Custodian *
Agreement between Registrant
and Bank of America NT & SA
dated December 1, 1994
EX-99.B9(i) Agreement between Registrant Attached
and Financial Guaranty
Insurance Company dated
September 3, 1985
EX-99.B9(ii) Amendment to Agreement between Attached
Registrant and Financial
Guaranty Insurance Company
dated November 24, 1992
EX-99.B11(i) Consent of Independent Attached
Auditors dated April 14, 1995
EX-99.B13(i) Letter of Understanding dated Attached
April 12, 1995
EX-99.B15(i) Distribution Plan pursuant to Attached
Rule 12b-1 dated July 1, 1993
between Franklin/Templeton
Distributors, Inc. and the
Registrant on behalf of the
Franklin California
Intermediate-Term Tax-Free
Income Fund
EX-99.B15(ii) Distribution Plan pursuant to Attached
Rule 12b-1 dated May 1, 1994
between Franklin/Templeton
Distributors, Inc. and the
Registrant on behalf of the
Franklin California Insured
Tax-Free Income Fund
EX-99.B15(iii) Form of Distribution Plan Attached
pursuant to Rule 12b-1 between
Franklin/Templeton
Distributors, Inc. and the
Registrant on behalf of the
Franklin California Inusred
Tax-Free Income Fund - Class
II
EX-99.B16(i) Schedule for Computation of Attached
Performance Quotations
EX-99.B17(i) Power of Attorney dated Attached
February 16, 1995
EX-99.B17(ii) Certificate of Secretary dated Attached
February 16, 1995
* Incorporated by Reference
FRANKLIN CALIFORNIA TAX-FREE TRUST
AGREEMENT AND DECLARATION OF TRUST
ARTICLE I Name and Definitions
1. Name
2. Definitions
(a) Trust
(b) Trustees
(c) Shares
(d) Shareholder
(e) 1940 Act
(f) Commission and Principal Underwriter
(g) Declaration of Trust
(h) By-Laws
(i) Series Company
(j) Series
ARTICLE II Purpose of Trust
ARTICLE III Shares
1. Division of Beneficial Interest
2. Ownership of Shares
3. Investments in the Trust
4. Status of Shares and Limitation of Personal Liability
5. Power of Trustees to Change Provisions Relating to Shares
6. Establishment and Designation of Series
(a) Assets Belonging to Series
(b) Liabilities Belonging to Series
(c) Dividends, Distributions, Redemptions, and Repurchases
(d) Voting
(e) Equality
(f) Fractions
(g) Exchange Privilege
(h) Combination of Series
(i) Elimination of Series
7. Indemnification of Shareholders
8. Initial Designation of Series
ARTICLE IV The Trustees
1. Election and Tenure
2. Effect of Death, Resignation, etc. of a Trustee
3. Powers
4. Payment of Expenses by the Trust
5. Payment of Expenses by Shareholders
6. Ownership of Assets of the Trust
7. Service Contracts
ARTICLE V Shareholders' Voting Powers and Meetings
1. Voting Powers
2. Voting Power and Meetings
3. Quorum and Required Vote
4. Action by Written Consent
5. Record Dates
6. Additional Provisions
ARTICLE VI Net Asset Value, Distributions, and Redemptions
1. Determination of Net Asset Value, Net Income and
Distributions
2. Redemptions and Repurchases
3. Redemptions at the Option of the Trust
ARTICLE VII Compensation and Limitation of Liability of Trustees
1. Compensation
2. Limitation of Liability
3. Indemnification
ARTICLE VIII Miscellaneous
1. Trustees, Shareholders, etc. Not Personally Liable; Notice
2. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety
3. Liability of Third Persons Dealing with Trustees
4. Termination of Trust or Series
5. Merger and Consolidation
6. Filing of Copies, References, Headings
7. Applicable Law
8. Amendments
9. Trust Only
10. Use of the Name "Franklin"
AGREEMENT AND DECLARATION OF TRUST OF
FRANKLIN CALIFORNIA TAX-FREE TRUST
THIS AGREEMENT AND DECLARATION OF TRUST made at San Mateo,
California this 18th day of July, 1985 by the Trustees hereunder.
WHEREAS the Trustees desire and have agreed to manage all property
coming into their hands as trustees of a Massachusetts business trust in
accordance with the provisions hereinafter set forth,
NOW, THEREFORE, the Trustees hereby direct that this Agreement and
Declaration of Trust be filed with the Secretary of The Commonwealth of
Massachusetts and do hereby declare that they will hold all cash,
securities and other assets, which they may from time to time acquire in
any manner as Trustees hereunder, IN TRUST, and manage and dispose of
the same upon the following terms and conditions for the pro rata
benefit of the holders of Shares in this Trust.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as the FRANKLIN
CALIFORNIA TAX-FREE TRUST and the Trustees shall conduct the business of
the Trust under that name or any other name as they may from time to
time determine.
Section 2. Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust
established by this Agreement and Declaration of Trust, as amended from
time to time;
(b) "Trustees" refers to the Trustees of the Trust named in Article
IV hereof or elected or appointed in accordance with such Article;
(c) "Shares" means the equal proportionate units of interest into
which the beneficial interest in the Trust or in the Trust property
belonging to any Series of the Trust (as the context may require) shall
be divided from time to time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time to time;
(f) The terms "Commission" and "Principal Underwriter" shall have
the meanings given them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust, as amended or restated from time to time;
(h) "By-Laws" shall mean the By-Laws of the Trust as amended from
time to time;
(i) "Series Company" refers to the form of registered open-end
investment company described in Section 18(f)(2) of the 1940 Act or in
any successor statutory provision; and
(j) "Series" refers to each Series of Shares established and
designated under or in accordance with the provisions of Article III.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to provide investors a managed
investment company registered under the 1940 Act and investing one or
more portfolios primarily in securities and debt instruments.
ARTICLE III
Shares
Section 1. Division of Beneficial Interest. The beneficial
interest in the Trust shall at all times be divided into an unlimited
number of Shares, without par value. Subject to the provisions of
Section 6 of this Article III, each Share shall have voting rights as
provided in Article V hereof, and holders of the Shares of any Series
shall be entitled to receive dividends, when and as declared with
respect thereto in the manner provided in Article VI, Section 1 hereof.
No Shares shall have any priority or preference over any other Share of
the same Series with respect to dividends or distributions upon
termination of the Trust or of such Series made pursuant to Article
VIII, Section 4 hereof. All dividends and distributions shall be made
ratably among all Shareholders of a particular Series from the assets
belonging to such Series according to the number of Shares of such
Series held of record by such Shareholder on the record date for any
dividend or on the date of termination, as the case may be.
Shareholders shall have no preemptive or other right to subscribe to any
additional Shares or other securities issued by the Trust or any Series.
The Trustees may from time to time divide or combine the Shares of any
particular Series into a greater or lesser number of Shares of that
Series without thereby changing the proportionate beneficial interest of
the Shares of that Series in the assets belonging to that Series or in
any way affecting the rights of Shares of any other Series.
Section 2. Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or a transfer or similar agent for
the Trust, which books shall be maintained separately for the Shares of
each Series. No certificates certifying the ownership of Shares shall
be issued except as the Trustees may otherwise determine from time to
time. The Trustees may make such rules as they consider appropriate for
the transfer of Shares of each Series and similar matters. The record
books of the Trust as kept by the Trust or any transfer or similar
agent, as the case may be, shall be conclusive as to who are the
Shareholders of each Series and as to the number of Shares of each
Series held from time to time by each.
Section 3. Investments in the Trust. The Trustees may accept
investments in the Trust from such persons, at such times, on such
terms, and for such consideration as they from time to time authorize.
Section 4. Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights
provided in this instrument. Every Shareholder by virtue of having
become a Shareholder shall be held to have expressly assented and agreed
to the terms hereof and to have become a party hereto. The death of a
Shareholder during the existence of the Trust shall not operate to
terminate the Trust, nor entitle the representative of any deceased
Shareholder to an accounting or to take any action in court or elsewhere
against the Trust or the Trustees, but entitles such representative only
to the rights of said deceased Shareholder under this Trust. Ownership
of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust property or right to call for a partition
or division of the same or for an accounting, nor shall the ownership of
Shares constitute the Shareholders as partners. Neither the Trust nor
the Trustees, nor any officer, employee or agent of the Trust shall have
any power to bind personally any Shareholders, nor, except as
specifically provided herein, to call upon any Shareholder for the
payment of any sum of money or assessment whatsoever other than such as
the Shareholder may at any time personally agree to pay.
Section 5. Power of Trustees to Change Provisions Relating to
Shares. Notwithstanding any other provision of this Declaration of
Trust and without limiting the power of the Trustees to amend the
Declaration of Trust as provided elsewhere herein, the Trustees shall
have the power to amend this Declaration of Trust, at any time and from
time to time, in such manner as the Trustees may determine in their sole
discretion, without the need for Shareholder action, so as to add to,
delete, replace or otherwise modify any provisions relating to the
Shares contained in this Declaration of Trust, provided that before
adopting any such amendment without Shareholder approval the Trustees
shall determine that it is consistent with the fair and equitable
treatment of all Shareholders or that Shareholder approval is not
otherwise required by the 1940 Act or other applicable law.
Without limiting the generality of the foregoing, the Trustees may,
for the above-stated purposes, amend the Declaration of Trust to:
(a) create one or more Series of Shares (in addition to any Series
already existing or otherwise) with such rights and preferences and such
eligibility requirements for investment therein as the Trustees shall
determine and reclassify any or all outstanding Shares as shares of
particular Series in accordance with such eligibility requirements;
(b) amend any of the provisions set forth in paragraphs (a) through
(i) of Section 6 of this Article III;
(c) combine one or more Series of Shares into a single Series on
such terms and conditions as the Trustees shall determine;
(d) change or eliminate any eligibility requirements for investment
in Shares of any Series, including without limitation, to provide for
the issue of Shares of any Series in connection with any merger or
consolidation of the Trust with another trust or company or any
acquisition by the Trust of part or all of the assets of another trust
or investment company;
(e) change the designation of any Series of Shares;
(f) change the method of allocating dividends among the various
Series of Shares;
(g) allocate any specific assets or liabilities of the Trust or any
specific items of income or expense of the Trust to one or more Series
of Shares;
(h) specifically allocate assets to any or all Series of Shares or
create one or more additional Series of Shares which are preferred over
all other Series of Shares in respect of assets specifically allocated
thereto or any dividends paid by the Trust with respect to any net
income, however determined, earned from the investment and reinvestment
of any assets so allocated or otherwise and provide for any special
voting or other rights with respect to such Series.
Section 6. Establishment and Designation of Series. Except as set
forth in Section 8 of this Article III, the establishment and
designation of any other Series of Shares shall be effective upon the
resolution by a majority of the then Trustees, setting forth such
establishment and designation and the relative rights and preferences of
such Series, or as otherwise provided in such resolution. Such
establishment and designation shall be set forth in an amendment to this
Declaration of Trust as provided in Section 8 of Article VIII.
Shares of each Series established pursuant to this Section 6,
unless otherwise provided in the resolution establishing such Series,
shall have the following relative rights and preferences:
(a) Assets Belonging to Series. All consideration received by the
Trust for the issue or sale of Shares of a particular Series, together
with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof from whatever source
derived, including, without limitation, any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same
may be, shall irrevocably belong to that Series for all purposes,
subject only to the rights of creditors, and shall be so recorded upon
the books of account of the Trust. Such consideration, assets, income,
earnings, profits and proceeds thereof, from whatever source derived,
including, without limitation, any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds, in whatever form the
same may be, are herein referred to as "assets belonging to" that
Series. In the event that there are any assets, income, earnings,
profits and proceeds thereof, funds or payments which are not readily
identifiable as belonging to any particular Series (collectively
"General Assets"), the Trustees shall allocate such General Assets to,
between or among any one or more of the Series in such manner and on
such basis as they, in their sole discretion, deem fair and
equitable, and any General Asset so allocated to a particular Series
shall belong to that Series. Each such allocation by the Trustees shall
be conclusive and binding upon the Shareholders of all Series for all
purposes.
(b) Liabilities Belonging to Series. The assets belonging to each
particular Series shall be charged with the liabilities of the Trust in
respect to that Series and all expenses, costs, charges and reserves
attributable to that Series, and any general liabilities of the Trust
which are not readily identifiable as belonging to any particular Series
shall be allocated and charged by the Trustees to and among any one or
more of the Series in such manner and on such basis as the Trustees in
their sole discretion deem fair and equitable. The liabilities,
expenses, costs, charges, and reserves so charged to a Series are herein
referred to as "liabilities belonging to" that Series. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustee
shall be conclusive and binding upon the holders of all Series for all
purposes. Under no circumstances shall the assets allocated or
belonging to any particular Series be charged with liabilities
attributable to any other Series. All persons who have extended credit
which has been allocated to a particular Series, or who have a claim or
contract which has been allocated to any particular Series, shall look
only to the assets of that particular Series for payment of such credit,
claim, or contract.
(c) Dividends, Distributions, Redemptions, and Repurchases.
Notwithstanding any other provisions of this Declaration, including,
without limitation, Article VI, no dividend or distribution (including,
without limitation, any distribution paid upon termination of the Trust
or of any Series) with respect to, nor any redemption or repurchase of,
the Shares of any Series shall be effected by the Trust other than from
the assets belonging to such Series, nor, except as specifically
provided in Section 7 of this Article III, shall any Shareholder of any
particular Series otherwise have any right or claim against the assets
belonging to any other Series except to the extent that such Shareholder
has such a right or claim hereunder as a Shareholder of such other
Series. The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be
treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon the
Shareholders.
(d) Voting. All Shares of the Trust entitled to vote on a matter
shall vote separately by Series. That is, the Shareholders of each
Series shall have the right to approve or disapprove matters affecting
the Trust and each respective Series as if the Series were separate
companies. There are, however, two exceptions to voting by separate
Series. First, if the 1940 Act requires all Shares of the Trust to be
voted in the aggregate without differentiation between the separate
Series, then all the Trust's Shares shall be entitled to vote on a one-
vote-per-Share basis. Second, if any matter affects only the interests
of some but not all Series, then only such affected Series shall be
entitled to vote on the matter.
(e) Equality. All the Shares of each particular Series shall
represent an equal proportionate interest in the assets belonging to
that Series (subject to the liabilities belonging to that Series), and
each Share of any particular Series shall be equal to each other Share
of that Series.
(f) Fractions. Any fractional Share of a Series shall carry
proportionately all the rights and obligations of a whole share of that
Series, including rights with respect to voting, receipt of dividends
and distributions, redemption of Shares and termination of the Trust.
(g) Exchange Privilege. The Trustees shall have the authority to
provide that the holders of Shares of any Series shall have the right to
exchange said Shares for Shares of one or more other Series of Shares in
accordance with such requirements and procedures as may be established
by the Trustees.
(h) Combination of Series. The Trustees shall have the authority,
without the approval of the Shareholders of any Series unless otherwise
required by applicable law, to combine the assets and liabilities
belonging to any two or more Series into assets and liabilities
belonging to a single Series.
(i) Elimination of Series. At any time that there are no Shares
outstanding of any particular Series previously established and
designated, the Trustees may amend this Declaration of Trust to abolish
that Series and to rescind the establishment and designation thereof,
such amendment to be effected in the manner provided in Section 5 of
this Article III.
Section 7. Indemnification of Shareholders. In case any
Shareholder or former Shareholder shall be held to be personally liable
solely by reason of his or her being or having been a Shareholder and
not because of his or her acts or omissions or for some other reason,
the Shareholder or former Shareholder (or his or her heirs, executors,
administrators, or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor)
shall be entitled out of the assets of the Trust to be held harmless
from and indemnified against all loss and expense arising from such
liability.
Section 8. Initial Designation of Series. Subject to the relative
rights and preferences and other terms of this Agreement and Declaration
of Trust, the Trustees authorize the establishment of two (2) initial
Series to be designated as follows: Franklin California Insured Tax-Free
Income Fund and Franklin California Tax-Exempt Money Fund.
ARTICLE IV
The Trustees
Section 1. Number, Election and Tenure. The number of Trustees
shall be nine (9), unless such number shall be changed from time to time
by a written instrument signed by a majority of the Trustees, provided,
however, that the number of Trustees shall in no event be less than
three nor more than 15. The initial Trustees shall be Frank H. Abbott,
III, Harris J. Ashton, Zadoc W. Brown David W. Garbellano, Samuel G.
Hanson, Henry L. Jamieson, Charles B. Johnson, Rupert H. Johnson, Jr.,
and Frank W.T. LaHaye. The Trustees may fill vacancies in the Trustees
or remove Trustees with or without cause. Each Trustee shall serve
during the continued lifetime of the Trust until he dies, resigns or is
removed, or, if sooner, until the next meeting of Shareholders called
for the purpose of electing Trustees and until the election and
qualification of his successor. Any Trustee may resign at any time by
written instrument signed by him and delivered to any officer of the
Trust or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other
time. Except to the extent expressly provided in a written agreement
with the Trust, no Trustee resigning and no Trustee removed shall have
any right to any compensation for any period following his resignation
or removal, or any right to damages on account of such removal. The
Shareholders may fix the number of Trustees and elect Trustees at any
meeting of Shareholders called by the Trustees for that purpose.
Section 2. Effect of Death, Resignation, etc. of a Trustee. The
death, declination, resignation, retirement, removal, or incapacity of
the Trustees, or any of them, shall not operate to annul the Trust or to
revoke any existing agency created pursuant to the terms of this
Declaration of Trust. Whenever a vacancy in the number of Trustees
shall occur, until such vacancy is filled as provided in Article IV,
Section 1, the Trustees in office, regardless of their number, shall
have all the powers granted to the Trustees and shall discharge all the
duties imposed upon the Trustees by this Declaration of Trust. A
written instrument certifying the existence of such vacancy signed by a
majority of the Trustees shall be conclusive evidence of such vacancy.
In the event of the death, declination, resignation, retirement,
removal, or incapacity of all the then Trustees within a short period of
time and without the opportunity for at least one Trustee being able to
appoint additional Trustees to fill vacancies, the Trust's investment
adviser or investment advisers jointly, if there is more than one, are
empowered to appoint new Trustees.
Section 3. Powers. Subject to the provisions of this Declaration
of Trust, the business of the Trust shall be managed by the Trustees,
and they shall have all powers necessary or convenient to carry out that
responsibility including the power to engage in securities transactions
of all kinds on behalf of the Trust. Without limiting the foregoing,
the Trustees may adopt By-Laws not inconsistent with this Declaration of
Trust providing for the regulation and management of the affairs of the
Trust and may amend and repeal them to the extent that such By-Laws do
not reserve that right to the Shareholders; they may fill vacancies in
or remove from their number, and may elect and remove such officers and
appoint and terminate such agents as they consider appropriate; they may
appoint from their own number and establish and terminate one or more
committees consisting of two or more Trustees which may exercise the
powers and authority of the Trustees to the extent that the Trustees
determine; they may employ one or more custodians of the assets of the
Trust and may authorize such custodians to employ subcustodians and to
deposit all or any part of such assets in a system or systems for the
central handling of securities or with a Federal Reserve Bank, retain a
transfer agent or a Shareholder servicing agent, or both, provide for
the distribution of Shares by the Trust, through one or more Principal
Underwriters or otherwise, set record dates for the determination of
Shareholders with respect to various matters, and in general delegate
such authority as they consider desirable to any officer of the Trust,
to any committee of the Trustees and to any agent or employee of the
Trust or to any such custodian, transfer or Shareholder servicing agent,
or Principal Underwriter. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be
conclusive. In construing the provisions of this Declaration of Trust,
the presumption shall be in favor of a grant of power to the Trustees.
Without limiting the foregoing, the Trustees shall have power and
authority:
(a) To invest and reinvest cash, to hold cash uninvested, and to
subscribe for, invest in, reinvest in, purchase or otherwise acquire,
own, hold, pledge, sell, assign, transfer, exchange, distribute, lend or
otherwise deal in or dispose of contracts for the future acquisition or
delivery of fixed income or other securities, and securities of every
nature and kind, including, without limitation, all types of bonds,
debentures, stocks, negotiable or non-negotiable instruments,
obligations, evidences of indebtedness, certificates of deposit or
indebtedness, commercial paper, repurchase agreements, bankers'
acceptances, and other securities of any kind, issued, created,
guaranteed, or sponsored by any and all persons, including, without
limitation, states, territories, and possessions of the United States
and the District of Columbia and any political subdivision, agency, or
instrumentality thereof, any foreign government or any political
subdivision of the U.S. Government or any foreign government, or any
international instrumentality, or by any bank or savings institution, or
by any corporation or organization organized under the laws of the
United States or of any state, territory, or possession thereof, or by
any corporation or organization organized under any foreign law, or in
"when issued" contracts for any such securities, to change the
investments of the assets of the Trust; and to exercise any and all
rights, powers, and privileges of ownership or interest in respect of
any and all such investments of every kind and description, including,
without limitation, the right to consent and otherwise act with respect
thereto, with power to designate one or more persons, firms,
associations, or corporations to exercise any of said rights, powers,
and privileges in respect of any of said instruments;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease,
or write options with respect to or otherwise deal in any property
rights relating to any or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property; and to execute
and deliver proxies or powers of attorney to such person or persons as
the Trustees shall deem proper, granting to such person or persons such
power and discretion with relation to securities or property as the
Trustees shall deem proper;
(d) To exercise powers and right of subscription or otherwise
which in any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in
its own name or in the name of a custodian or subcustodian or a nominee
or nominees or otherwise;
(f) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer of
any security which is held in the Trust; to consent to any contract,
lease, mortgage, purchase or sale of property by such corporation or
issuer; and to pay calls or subscriptions with respect to any security
held in the Trust;
(g) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that
connection to deposit any security with, or transfer any security to,
any such committee, depositary or trustee, and to delegate to them such
power and authority with relation to any security (whether or not so
deposited or transferred) as the Trustees shall deem proper, and to
agree to pay, and to pay, such portion of the expenses and compensation
of such committee, depositary or trustee as the Trustees shall deem
proper;
(h) To compromise, arbitrate or otherwise adjust claims in favor
of or against the Trust or any matter in controversy, including but not
limited to claims for taxes;
(i) To enter into joint ventures, general or limited partnerships
and any other combinations or associations;
(j) To borrow funds or other property;
(k) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or suretyship,
or otherwise assume liability for payment thereof;
(l) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of
the business, including, without limitation, insurance policies insuring
the assets of the Trust or payment of distributions and principal on its
portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers, principal
underwriters, or independent contractors of the Trust, individually
against all claims and liabilities of every nature arising by reason of
holding, being or having held any such office or position, or by reason
of any action alleged to have been taken or omitted by any such person
as Trustee, officer, employee, agent, investment adviser, principal
underwriter, or independent contractor, including any action taken or
omitted that may be determined to constitute negligence, whether or not
the Trust would have the power to indemnify such person against
liability; and
(m) to pay pensions as deemed appropriate by the Trustees and to
adopt, establish and carry out pension, profit-sharing, share bonus,
share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life
insurance and annuity contracts as a means of providing such retirement
and other benefits, for any or all of the Trustees, officers, employees
and agents of the Trust.
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust or one or more of
its Series. The Trustees shall not in any way be bound or limited by
any present or future law or custom in regard to investment by
fiduciaries. The Trustees shall not be required to obtain any court
order to deal with any assets of the Trust or take any other action
hereunder.
Section 4. Payment of Expenses by the Trust. The Trustees are
authorized to pay or cause to be paid out of the principal or income of
the Trust, or partly out of the principal and partly out of income, as
they deem fair, all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust, or in connection with
the management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the
Trust's officers, employees, investment adviser or manager, principal
underwriter, auditors, counsel, custodian, transfer agent, Shareholder
servicing agent, and such other agents or independent contractors and
such other expenses and charges as the Trustees may deem necessary or
proper to incur.
Section 5. Payment of Expenses by Shareholders. The Trustees
shall have the power, as frequently as they may determine, to cause each
Shareholder, or each Shareholder of any particular Series, to pay
directly, in advance or arrears, for charges of the Trust's custodian or
transfer, Shareholder servicing or similar agent, an amount fixed from
time to time by the Trustees, by setting off such charges due from such
Shareholder from declared but unpaid dividends owed such Shareholder
and/or by reducing the number of shares in the account of such
Shareholder by that number of full and/or fractional Shares which
represents the outstanding amount of such charges due from such
Shareholder.
Section 6. Ownership of Assets of the Trust. Title to all of the
assets of the Trust shall at all times be considered as vested in the
Trustees.
Section 7. Service Contracts.
(a) Subject to such requirements and restrictions as may be set
forth in the By-Laws, the Trustees may, at any time and from time to
time, contract for exclusive or nonexclusive advisory and/or management
services for the Trust or for any Series with Franklin Distributors,
Inc. or any other corporation, trust, association or other organization
(the "Manager"); and any such contract may contain such other terms as
the Trustees may determine, including without limitation, authority for
the Manager to determine from time to time without prior consultation
with the Trustees what investments shall be purchased, held, sold or
exchanged and what portion, if any, of the assets of the Trust shall be
held uninvested and to make changes in the Trust' s investments.
(b) The Trustees may also, at any time and from time to time,
contract with Franklin Distributors, Inc., or any other corporation,
trust, association or other organization, appointing it exclusive or
nonexclusive distributor or Principal Underwriter for the Shares of one
or more of the Series. Every such contract shall comply with such
requirements and restrictions as may be set forth in the By-Laws; and
any such contract may contain such other terms as the Trustees may
determine.
(c) The Trustees are also empowered, at any time and from time to
time, to contract with Franklin Administrative Services, Inc., or any
other corporations, trusts, associations or other organizations,
appointing it or them the transfer agent and/or shareholder servicing
agent for the Trust or one or more of its Series. Every such contract
shall comply with such requirements and restrictions as may be set forth
in the By-Laws or stipulated by resolution of the Trustees.
(d) The fact that:
(i) any of the Shareholders, Trustees, or officers of the
Trust is a shareholder, director, officer, partner, trustee,
employee, manager, adviser, principal underwriter, distributor or
affiliate or agent of or for any corporation, trust, association,
or other organization, or for any parent or affiliate of any
organization with which an advisory or management contract, or
principal underwriter's or distributor's contract, or transfer,
shareholder servicing or other agency contract may have been or may
hereafter be made, or that any such organization, or any parent or
affiliate thereof, is a Shareholder or has an interest in the
Trust, or that
(ii) any corporation, trust, association or other organization
with which an advisory or management contract or principal
underwriter's or distributor's contract, or transfer, shareholder
servicing or other agency contract may have been or may hereafter
be made also has an advisory or management contract, or principal
underwriter's or distributor's contract, or transfer, Shareholder
servicing or other agency contract with one or more other
corporations, trust, associations, or other organizations, or has
other business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or
executing the same or create any liability or accountability to the
Trust or its Shareholders.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. Subject to the provisions of Article
III, Section 6(d), the Shareholders shall have power to vote only (i)
for the election of Trustees as provided in Article IV, Section 1, (ii)
to the same extent as the stockholders of a California business
corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivatively or as a class
action on behalf of the Trust or the Shareholders, (iii) with respect to
the termination of the Trust or any Series to the extent and as provided
in Article VIII, Section 4, and (iv) with respect to such additional
matters relating to the Trust as may be required by this Declaration of
Trust, the By-Laws or any registration of the Trust with the Commission
(or any successor agency) or any state, or as the Trustees may consider
necessary or desirable. Each whole Share shall be entitled to one vote
as to any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote. There shall
be no cumulative voting in the election of Trustees. Shares may be
voted in person or by proxy. A proxy with respect to Shares held in the
name of two or more persons shall be valid if executed by any one of
them unless at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of them. A proxy
purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger. At any time
when no Shares of a Series are outstanding, the Trustees may exercise
all rights of Shareholders of that Series with respect to matters
affecting that Series, take any action required by law, this Declaration
of Trust or the By-Laws to be taken by the Shareholders.
Section 2. Voting Power and Meetings. Meetings of the
Shareholders may be called by the Trustees for the purpose of electing
Trustees as provided in Article IV, Section 1 and for such other
purposes as may be prescribed by law, by this Declaration of Trust or by
the By-Laws. Meetings of the Shareholders may also be called by the
Trustees from time to time for the purpose of taking action upon any
other matter deemed by the Trustees to be necessary or desirable. A
meeting of Shareholders may be held at any place designated by the
Trustees. Written notice of any meeting of Shareholders shall be given
or caused to be given by the Trustees by mailing such notice at least
seven days before such meeting, postage prepaid, stating the time and
place of the meeting, to each Shareholder at the Shareholder's address
as it appears on the records of the Trust. Whenever notice of a meeting
is required to be given to a Shareholder under this Declaration of Trust
or the By-Laws, a written waiver thereof, executed before or after the
meeting by such Shareholder or his attorney thereunto authorized and
filed with the records of the meeting, shall be deemed equivalent to
such notice.
Section 3. Quorum and Required Vote. Except when a larger quorum
is required by applicable law, by the By-Laws or by this Declaration of
Trust, forty percent (40%) of the Shares entitled to vote shall
constitute a quorum at a Shareholders' meeting. When any one or more
Series is to vote as a single class separate from any other Shares which
are to vote on the same matters as a separate class or classes, forty
percent (40%) of the Shares of each such Series entitled to vote shall
constitute a quorum at a Shareholder's meeting of that Series. Any
meeting of Shareholders may be adjourned from time to time by a majority
of the votes properly cast upon the question, whether or not a quorum is
present, and the meeting may be held as adjourned within a reasonable
time after the date set for the original meeting without further notice.
Subject to the provisions of Article III, Section 6(d), when a quorum is
present at any meeting, a majority of the Shares voted shall decide any
questions and a plurality shall elect a Trustee, except when a larger
vote is required by any provision of this Declaration of Trust or the By-
Laws or by applicable law.
Section 4. Action by Written Consent. Any action taken by
Shareholders may be taken without a meeting if Shareholders holding a
majority of the Shares entitled to vote on the matter (or such larger
proportion thereof as shall be required by any express provision of this
Declaration of Trust or by the By-Laws) and holding a majority (or such
larger proportion as aforesaid) of the Shares of any Series entitled to
vote separately on the matter consent to the action in writing and such
written consents are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as a vote
taken at a meeting of Shareholders.
Section 5. Record Dates. For the purpose of determining the
Shareholders of any Series who are entitled to vote or act at any
meeting or any adjournment thereof, the Trustees may from time to time
fix a time, which shall be not more than 75 days before the date of any
meeting of Shareholders, as the record date for determining the
Shareholders of such Series having the right to notice of and to vote at
such meeting and any adjournment thereof, and in such case only
Shareholders of record on such record date shall have such right,
notwithstanding any transfer of shares on the books of the Trust after
the record date. For the purpose of determining the Shareholders of any
Series who are entitled to receive payment of any dividend or of any
other distribution, the Trustees may from time to time fix a date, which
shall be before the date for the payment of such dividend or such other
payment, as the record date for determining the Shareholders of such
Series having the right to receive such dividend or distribution.
Without fixing a record date the Trustees may for voting and/or
distribution purposes close the register or transfer books for one or
more Series for all or any part of the period between a record date and
a meeting of Shareholders or the payment of a distribution. Nothing in
this section shall be construed as precluding the Trustees from setting
different record dates for different Series.
Section 6. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions, and Redemptions
Section 1. Determination of Net Asset Value, Net Income, and
Distributions. Subject to Article III, Section 6 hereof, the Trustees,
in their absolute discretion, may prescribe and shall set forth in the
By-Laws or in a duly adopted vote of the Trustees such bases and time
for determining the per Share or net asset value of the Shares of any
Series or net income attributable to the Shares of any Series, or the
declaration and payment of dividends and distributions on the Shares of
any Series, as they may deem necessary or desirable.
Section 2. Redemptions and Repurchases. The Trust shall purchase
such Shares as are offered by any Shareholder for redemption, upon the
presentation of a proper instrument of transfer together with a request
directed to the Trust or a person designated by the Trust that the Trust
purchase such Shares or in accordance with such other procedures for
redemption as the Trustees may from time to time authorize; and the
Trust will pay therefor the net asset value thereof, as determined in
accordance with the By-Laws and applicable law, next determined.
Payment for said Shares shall be made by the Trust to the Shareholder
within seven days after the date on which the request is made in proper
form. The obligation set forth in this Section 2 is subject to the
provision that in the event that any time the New York Stock Exchange is
closed for other than weekends or holidays, or if permitted by the rules
of the Commission during periods when trading on the Exchange is
restricted or during any emergency which makes it impracticable for the
Trust to dispose of the investments of the applicable Series or to
determine fairly the value of the net assets belonging to such Series or
during any other period permitted by order of the Commission for the
protection of investors, such obligations may be suspended or postponed
by the Trustees.
The redemption price may in any case or cases be paid wholly or
partly in kind if the Trustees determine that such payment is advisable
in the interest of the remaining Shareholders of the Series for which
the Shares are being redeemed. Subject to the foregoing, the fair
value, selection and quantity of securities or other property so paid or
delivered as all or part of the redemption price may be determined by or
under authority of the Trustees. In no case shall the Trust be liable
for any delay of any corporation or other person in transferring
securities selected for delivery as all or part of any payment in kind.
Section 3. Redemptions at the Option of the Trust. The Trust
shall have the right at its option and at any time to redeem Shares of
any Shareholder at the net asset value thereof as described in Section 1
of this Article VI: (i) if at such time such Shareholder owns Shares of
any Series having an aggregate net asset value of less than an amount,
not to exceed $1,000, determined from time to time by the Trustees; or
(ii) to the extent that such Shareholder owns Shares equal to or in
excess of a percentage determined from time to time by the Trustees of
the outstanding Shares of the Trust or of any Series.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Section 1. Compensation. The Trustees as such shall be entitled
to reasonable compensation from the Trust, and they may fix the amount
of such compensation. Nothing herein shall in any way prevent the
employment of any Trustee for advisory, management, legal, accounting,
investment banking or other services and payment for the same by the
Trust.
Section 2. Limitation of Liability. The Trustees shall not be
responsible or liable in any event for any neglect or wrongdoing of any
officer, agent, employee, manager or Principal Underwriter of the Trust,
nor shall any Trustee be responsible for the act or omission of any
other Trustee, but nothing herein contained shall protect any Trustee
against any liability to which he would otherwise be subject by reason
of wilful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
Every note, bond, contract, instrument, certificate or undertaking
and every other act or thing whatsoever issued, executed or done by or
on behalf of the Trust or the Trustees or any of them in connection with
the Trust shall be conclusively deemed to have been issued, executed or
done only in or with respect to their or his capacity as Trustees or
Trustee, and such Trustees or Trustee shall not be personally liable
thereon.
Section 3. Indemnification. The Trustees shall be entitled and
empowered to the fullest extent permitted by law to purchase insurance
for and to provide by resolution or in the By-Laws for indemnification
out of Trust assets for liability and for all expenses reasonably
incurred or paid or expected to be paid by a Trustee or officer in
connection with any claim, action, suit or proceeding in which he
becomes involved by virtue of his capacity or former capacity with the
Trust. The provisions, including any exceptions and limitations
concerning indemnification, may be set forth in detail in the By-Laws or
in a resolution of the Trustees.
ARTICLE VIII
Miscellaneous
Section 1. Trustees, Shareholders, etc. Not Personally Liable;
Notice. All persons extending credit to, contracting with or having any
claim against the Trust or any Series shall look only to the assets of
the Trust, or, to the extent that the liability of the Trust may have
been expressly limited by contract to the assets of a particular Series,
only to the assets belonging to the relevant Series, for payment under
such credit, contract or claim; and neither the Shareholders nor the
Trustees, nor any of the Trust's officers, employees or agents, whether
past, present or future, shall be personally liable therefor. Nothing
in this Declaration of Trust shall protect any Trustee against any
liability to which such Trustee would otherwise be subject by reason or
wilful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate or undertaking
made or issued on behalf of the Trust by the Trustees, by any officers
or officer or otherwise may include a notice that this Declaration of
Trust is on file with the Secretary of The Commonwealth of Massachusetts
and may recite that the note, bond, contract, instrument, certificate,
or undertaking was executed or made by or on behalf of the Trust or by
them as Trustee or Trustees or as officers or officer or otherwise and
not individually and that the obligations of such instrument are not
binding upon any of them or the Shareholders individually but are
binding only upon the assets and property of the Trust or upon the
assets belonging to the Series for the benefit of which the Trustees
have caused the note, bond, contract, instrument, certificate or
undertaking to be made or issued, and may contain such further recital
as he or they may deem appropriate, but the omission of any such recital
shall not operate to bind any Trustee or Trustees or officer or officers
or Shareholders or any other person individually.
Section 2. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. A Trustee shall be
liable for his own wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office
of Trustee, and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operation of
this Declaration of Trust, and shall be under no liability for any act
or omission in accordance with such advice or for failing to follow such
advice. The Trustees shall not be required to give any bond as such,
nor any surety if a bond is required.
Section 3. Liability of Third Persons Dealing with Trustees. No
person dealing with the Trustees shall be bound to make any inquiry
concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
Section 4. Termination of Trust or Series. Unless terminated as
provided herein, the Trust shall continue without limitation of time.
The Trust may be terminated at any time by vote of at least two-thirds
(66-2/3%) of the Shares of each Series entitled to vote, voting
separately by Series, or by the Trustees by written notice to the
Shareholders. Any Series may be terminated at any time by vote of at
least two-thirds (66-2/3%) of the Shares of that Series or by the
Trustees by written notice to the Shareholders of that Series.
Upon termination of the Trust (or any Series, as the case may be),
after paying or otherwise providing for all charges, taxes, expenses and
liabilities belonging, severally, to each Series (or the applicable
Series, as the case may be), whether due or accrued or anticipated as
may be determined by the Trustees, the Trust shall, in accordance with
such procedures as the Trustees consider appropriate, reduce the
remaining assets belonging, severally, to each Series (or the applicable
Series, as the case may be), to distributable form in cash or shares or
other securities, or any combination thereof, and distribute the
proceeds belonging to each Series (or the applicable Series, as the case
may be), to the Shareholders of that Series, as a Series, ratably
according to the number of Shares of that Series held by the several
Shareholders on the date of termination.
Section 5. Merger and Consolidation. The Trustees may cause the
Trust or one or more of its Series to be merged into or consolidated
with another Trust or company or the Shares exchanged under or pursuant
to any state or Federal statute, if any, or otherwise to the extent
permitted by law. Such merger or consolidation or share exchange must
be authorized by vote of a majority of the outstanding Shares of the
Trust as a whole or any affected Series, as may be applicable; provided
that in all respects not governed by statute or applicable law, the
Trustees shall have power to prescribe the procedure necessary or
appropriate to accomplish a sale of assets, merger or consolidation.
Section 6. Filing of Copies, References, Headings. The original
or a copy of this instrument and of each amendment hereto shall be kept
at the office of the Trust where it may be inspected by any Shareholder.
A copy of this instrument and of each amendment hereto shall be filed by
the Trust with the Secretary of The Commonwealth of Massachusetts and
with any other governmental office where such filing may from time to
time be required. Anyone dealing with the Trust may rely on a
certificate by an officer of the Trust as to whether or not any such
amendments have been made and as to any matters in connection with the
Trust hereunder; and, with the same effect as if it were the original,
may rely on a copy certified by an officer of the Trust to be a copy of
this instrument or of any such amendments. In this instrument and in
any such amendment, references to this instrument, and all expressions
like "herein", "hereof" and "hereunder", shall be deemed to refer to
this instrument as amended or affected by any such amendments. Headings
are placed herein for convenience of reference only and shall not be
taken as a part hereof or control or affect the meaning, construction or
effect of this instrument. This instrument may be executed in any
number of counterparts each of which shall be deemed an original.
Section 7. Applicable Law. This Agreement and Declaration of
Trust is created under and is to be governed by and construed and
administered according to the laws of The Commonwealth of Massachusetts.
The Trust shall be of the type commonly called a Massachusetts business
trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust.
Section 8. Amendments. This Declaration of Trust may be amended
at any time by an instrument in writing signed by a majority of the then
Trustees.
Section 9. Trust Only. It is the intention of the Trustees to
create only the relationship of Trustee and beneficiary between the
Trustees and each Shareholder from time to time. It is not the
intention of the Trustees to create a general partnership, limited
partnership, joint stock association, corporation, bailment, or any form
of legal relationship other than a trust. Nothing in this Agreement and
Declaration of Trust shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
Section 10. Use of the Name "Franklin". Franklin Distributors,
Inc. ("Distributors") has consented to the use by the Trust of the
indentifying word or name "Franklin" in the name of the Trust. Such
consent is conditioned upon the employment of Distributors, its
successors or any affiliate thereof, as Manager of the Trust. As
between the Trust and itself, Distributors controls the use of the name
of the Trust insofar as such name contains "Franklin." The name or
identifying word "Franklin" may be used from time to time in other
connections and for other purposes by Distributors or affiliated
entities. Distributors may require the Trust to cease using "Franklin"
in the name of the Trust if the Trust ceases to employ, for any reason,
Distributors, an affiliate, or any successor as Manager of the Trust.
IN WITNESS WHEREOF, a majority of the Trustees as aforesaid do
hereto set their hands this 18th day of July, 1985.
/s/ Frank H. Abbott, III /s/ Harris J. Ashton
Frank H. Abbott, III Harris J. Ashton
/s/ David W. Garbellano
Zadoc W. Brown David W. Garbellano
/s/ Samuel G. Hanson /s/ Henry L. Jamieson
Samuel G. Hanson Henry L. Jamieson
/s/ Charles B. Johnson /s/ Rupert H. Johnson, Jr.
Charles B. Johnson Rupert H. Johnson, Jr.
/s/ Frank W.T. LaHaye
Frank W.T. LaHaye
CERTIFICATE OF AMENDMENT
OF
AGREEMENT AND DECLARATION OF TRUST
FOR THE
FRANKLIN CALIFORNIA TAX-FREE TRUST
The undersigned certify that:
1. They constitute a majority of the Trustees of the Franklin
California Tax-Free Trust, a Massachusetts business trust; and
2. They hereby adopt the following amendment to the Agreement and
Declaration of Trust of this Trust:
a) Article III, Section 8, is hereby amended to read as
follows:
"Section 8. Designation of Series. Subject to the
relative rights and preferences and other terms of this
Declaration of Trust, the Trust shall have Three (3)
Series, designated as follows:
Franklin California Insured Tax-Free Income Fund
Franklin California Tax-Exempt Money Fund
Franklin California Intermediate-Term Tax-Free Income
Fund."
b) The first paragraph of Article III, Section 6 is amended to
delete the second sentence thereof and to read as follows:
"Section 6. Establishment and Designation of Series.
Except as set forth in Section 8 of this Article III, the
establishment and designation of any other Series of
Shares or change in the existing Series shall be effective
upon the resolution by a majority of the then Trustees,
setting forth such amendment, establishment and
designation and the relative rights and preferences of
such Series, or as otherwise provided in such resolution."
3. It is the determination of the Trustees that approval of the
shareholders of the Trust is not required by the Investment
Company Act of 1940, as amended, or other applicable law.
These amendments are made pursuant to Article III, Section 5
and Article VIII, Section 8 of the Agreement and Declaration of
Trust which empowers the Trustees to change provisions relating
to shares of the Trust.
IN WITNESS WHEREOF, the Trustees named below do hereby set their
hands as of the 22nd day of July, 1992.
Frank H. Abbott, III Harris J. Ashton
/s/ S. Joseph Fortunato /s/ David W. Garbellano
S. Joseph Fortunato David W. Garbellano
/s/ Henry L. Jamieson /s/ Charles B. Johnson
Henry L. Jamieson Charles B. Johnson
/s/ Rupert H. Johnson, Jr.
Rupert H. Johnson, Jr. Edmund H. Kerr
/s/ Frank W. T. LaHaye
Frank W. T. LaHaye
IN WITNESS WHEREOF, the Trustees named below do hereby set their
hands as of the 22nd day of July, 1992.
Frank H. Abbott, III Harris J. Ashton
/s/ S. Joseph Fortunato /s/ David W. Garbellano
S. Joseph Fortunato David W. Garbellano
/s/ Henry L. Jamieson /s/ Charles B. Johnson
Henry L. Jamieson Charles B. Johnson
/s/ Rupert H. Johnson, Jr.
Rupert H. Johnson, Jr. Edmund H. Kerr
Frank W.T. LaHaye
IN WITNESS WHEREOF, the Trustees named below do hereby set their
hands as of the 22nd day of July, 1992.
/s/ Frank H. Abbott, III
Frank H. Abbott, III Harris J. Ashton
/s/ S. Joseph Fortunato /s/ David W. Garbellano
S. Joseph Fortunato David W. Garbellano
/s/ Henry L. Jamieson /s/ Charles B. Johnson
Henry L. Jamieson Charles B. Johnson
/s/ Rupert H. Johnson, Jr.
Rupert H. Johnson, Jr. Edmund H. Kerr
Frank W.T. LaHaye
IN WITNESS WHEREOF, the Trustees named below do hereby set their
hands as of the 22nd day of July, 1992.
/s/ Harris J. Ashton
Frank H. Abbott, III Harris J. Ashton
/s/ David W. Garbellano
S. Joseph Fortunato David W. Garbellano
/s/ Henry L. Jamieson /s/ Charles B. Johnson
Henry L. Jamieson Charles B. Johnson
/s/ Rupert H. Johnson, Jr.
Rupert H. Johnson, Jr. Edmund H. Kerr
Frank W.T. LaHaye
IN WITNESS WHEREOF, the Trustees named below do hereby set their
hands as of the 22nd day of July, 1992.
Frank H, Abbott, III Harris J. Ashton
/s/ David W. Garbellano
S. Joseph Fortunato David W. Garbellano
/s/ Henry L. Jamieson /s/ Charles B. Johnson
Henry L. Jamieson Charles B. Johnson
/s/ Rupert H. Johnson, Jr.
Rupert H. Johnson, Jr. Edmund H. Kerr
Frank W.T. LaHaye
98089.1
CERTIFICATE OF AMENDMENT
OF
AGREEMENT AND DECLARATION OF TRUST
OF
FRANKLIN CALIFORNIA TAX-FREE TRUST
The undersigned certify that:
They constitute a majority of the Trustees of
FRANKLIN CALIFORNIA TAX-FREE TRUST, a Massachusetts business
trust (the "Trust").
They hereby adopt the following amendment to the
Agreement and Declaration of Trust of the Trust, which deletes in
its entirety the Section of the Agreement and Declaration of
Trust entitled "Section 1. Division of Beneficial Interest." of
Article III and replaces such Section of Article III with the
following:
"Section 1. Division of Beneficial Interest.
The beneficial interest in the Trust shall at all times
be divided into an unlimited number of Shares, without
par value. The Trustees may authorize the division of
the Shares into separate Series and the division of
Series into separate classes or sub-series of Shares
(subject to any applicable rule, regulation or order of
the Commission or other applicable law or regulation).
The different Series and classes shall be established
and designated and shall have such preference,
conversion or other rights, voting powers,
restrictions, limitations as to dividends,
qualifications, terms and conditions of redemption and
other characteristics as the Trustees may determine.
Notwithstanding any other provision of this Agreement
and Declaration of Trust, if any matter submitted to
shareholders for a vote affects only the interests of
one class of a Series then only such affected class
shall be entitled to vote on the matter. Each Share of
a Series shall have equal rights with each other Share
of that Series with respect to the assets of the Trust
pertaining to that Series. Notwithstanding any other
provision of this Agreement and Declaration of Trust,
the dividends payable to the holders of any Series (or
class) (subject to any applicable rule, regulation or
order of the Commission or any other applicable law or
regulation) shall be determined by the Trustees and
need not be individually declared, but may be declared
and paid in accordance with a formula adopted by the
Trustees. Except as otherwise provided herein, all
references in this Agreement and Declaration of Trust
to Shares or Series of Shares shall apply without
discrimination to the Shares of each Series.
Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities
issued by the Trust or any Series or class. The
Trustees may from time to time divide or combine the
Shares of any particular Series or class into a greater
or lesser number of Shares of that Series or class
without thereby changing the proportionate beneficial
interest of the Shares of that Series or class in the
assets belonging to that Series or class or in any way
affecting the rights of Shares of any other Series or
class."
It is the determination of the Trustees that
approval of the shareholders of the Trust is not required by the
Investment Company Act of 1940, as amended, or other applicable
law. This Amendment is made pursuant to Article III, Section 5
of this Agreement and Declaration of Trust which empowers the
Trustees to change provisions relating to Shares of the Trust.
We declare under penalty of perjury that the matters
set forth in this certificate are true and correct of our own
knowledge.
Dated: March 21, 1995
/s/ Frank H. Abbott, III /s/ David W. Garbellano
Frank H. Abbott, III David W. Garbellano
/s/ Harris J. Ashton /s/ Charles B. Johnson
Harris J. Ashton Charles B. Johnson
/s/ S. Joseph Fortunato /s/ Rupert H. Johnson, Jr.
S. Joseph Fortunato Rupert H. Johnson, Jr.
/s/ Frank W.T. LaHaye /s/ Gordon S. Macklin
Frank W.T. LaHaye Gordon S. Macklin
Harmon E. Burns
FRANKLIN CALIFORNIA TAX-FREE TRUST
BY-LAWS
ARTICLE I Offices
1. Principal Office
2. Other Offices
ARTICLE II Meetings of Shareholders
1. Place of Meetings
2. Call of Meeting
3. Notice of Shareholders' Meeting
4. Manner of Giving Notice; Affidavit of Notice
5. Adjourned Meeting; Notice
6. Voting
7. Waiver of Notice and Consent by Absent Shareholders
8. Shareholder Action by Written Consent without a Meeting
9. Record Date for Shareholder Notice, Voting and Giving
Consents.
10. Proxies
11. Inspectors of Election
ARTICLE III Trustees
1. Powers
2. Number and Qualification of Trustees
3. Vacancies
4. Place of Meetings and Meetings by Telephone
5. Regular Meetings
6. Special Meetings
7. Quorum
8. Waiver of Notice
9. Adjournment
10. Notice of Adjournment
11. Action Without a Meeting
12. Fees and Compensation of Trustees
ARTICLE IV Committees
1. Committees of Trustees
2. Meetings and Action of Committees
ARTICLE V Officers
1. Officers
2. Election of Officers
3. Subordinate Officers
4. Removal and Resignation of Officers
5. Vacancies in Offices
6. Chairman of the Board
7. President
8. Vice President
9. Secretary
10. Treasurer
ARTICLE VI Indemnification of Trustees, Officers, Employees and
Other Agents
1. Agents, Proceedings and Expenses
2. Actions Other than by Trust
3. Actions by the Trust
4. Exclusion and Indemnification
5. Successful Defense by Agent
6. Required Approval
7. Advance of Expenses
8. Other Contractual Rights
9. Limitations
10. Insurance
11. Fiduciaries of Corporate Employee Benefit Plan
ARTICLE VII Records and Reports
1. Maintenance and Inspection of Share Register
2. Maintenance and Inspection of By-Laws
3. Maintenance and Inspection of Other Records
4. Inspection by Trustees
5. Financial Statements
ARTICLE VIII General Matters
1. Checks, Drafts, Evidence of Indebtedness
2. Contracts and Instruments; How Executed
3. Certificate of Shares
4. Lost Certificates
5. Representation of Shares of Other Entities
ARTICLE IX Amendments
1. Amendment by Shareholders
2. Amendment by Trustees
BY-LAWS
OF
FRANKLIN CALIFORNIA TAX-FREE TRUST
A Massachusetts Business Trust
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The Board of Trustees shall fix
the location of the principal executive office of the Trust at any
place within or outside The Commonwealth of Massachusetts.
Section 2. OTHER OFFICES. The Board of Trustees may at any time
establish branch or subordinate offices at any place or places where
the Trust intends to do business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of shareholders shall be
held at any place within or outside The Commonwealth of Massachusetts
designated by the Board of Trustees. In the absence of any such
designation, shareholders' meetings shall be held at the principal
executive office of the Trust.
Section 2. CALL OF MEETING. A meeting of the shareholders may
be called at any time by the Board of Trustees or by the chairman of
the Board or by the president.
Section 3. NOTICE OF SHAREHOLDERS' MEETING. All notices of
meetings of shareholders shall be sent or otherwise given in
accordance with Section 4 of this Article II not less than ten (10)
nor more than seventy-five (75) days before the date of the meeting.
The notice shall specify (i) the place, date and hour of the meeting,
and (ii) the general nature of the business to be transacted. The
notice of any meeting at which trustees are to be elected also shall
include the name of any nominee or nominees whom at the time of the
notice are intended to be presented for election.
If action is proposed to be taken at any meeting for approval of
(i) a contract or transaction in which a trustee has a direct or
indirect financial interest, (ii) an amendment of the Declaration of
Trust, (iii) a reorganization of the Trust, or (iv) a voluntary
dissolution of the Trust, the notice shall also state the general
nature of that proposal.
Section 4. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Notice
of any meeting of shareholders shall be given either personally or by
first-class mail or telegraphic or other written communication,
charges prepaid, addressed to the shareholder at the address of that
shareholder appearing on the books of the Trust or its transfer agent
or given by the shareholder to the Trust for the purpose of notice.
If no such address appears on the Trust's books or is given,
notice shall be deemed to have been given if sent to that shareholder
by first-class mail or telegraphic or other written communication to
the Trust's principal executive office, or if published at least once
in a newspaper of general circulation in the county where that office
is located. Notice shall be deemed to have been given at the time
when delivered personally or deposited in the mail or sent by telegram
or other means of written communication.
If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the Trust is returned to the
Trust by the United States Postal Service marked to indicate that the
Postal Service is unable to deliver the notice to the shareholder at
that address, all future notices or reports shall be deemed to have
been duly given without further mailing if these shall be available to
the shareholder on written demand of the shareholder at the principal
executive office of the Trust for a period of one year from the date
of the giving of the notice.
An affidavit of the mailing or other means of giving any notice
of any shareholder's meeting shall be executed by the secretary,
assistant secretary or any transfer agent of the Trust giving the
notice and shall be filed and maintained in the minute book of the
Trust.
Section 5. ADJOURNED MEETING; NOTICE. Any shareholder's meeting,
whether or not a quorum is present, may be adjourned from time to time
by the vote of the majority of the shares represented at that meeting,
either in person or by proxy.
When any meeting of shareholders is adjourned to another time or
place, notice need not be given of the adjourned meeting at which the
adjournment is taken, unless a new record date of the adjourned
meeting is fixed or unless the adjournment is for more than sixty (60)
days from the date set for the original meeting, in which case the
Board of Trustees shall set a new record date. Notice of any such
adjourned meeting shall be given to each shareholder of record
entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 3 and 4 of this Article II. At any adjourned
meeting, the Trust may transact any business which might have been
transacted at the original meeting.
Section 6. VOTING. The shareholders entitled to vote at any
meeting of shareholders shall be determined in accordance with the
provisions of the Declaration of Trust, as in effect at such time. The
shareholders' vote may be by voice vote or by ballot, provided,
however, that any election for trustees must be by ballot if demanded
by any shareholder before the voting has begun. On any matter other
than elections of trustees, any shareholder may vote part of the
shares in favor of the proposal and refrain from voting the remaining
shares or vote them against the proposal, but if the shareholder fails
to specify the number of shares which the shareholder is voting
affirmatively, it will be conclusively presumed that the shareholder's
approving vote is with respect to the total shares that the
shareholder is entitled to vote on such proposal.
Section 7. WAIVER OF NOTICE BY CONSENT OF ABSENT SHAREHOLDERS.
The transactions of the meeting of shareholders, however called and
noticed and wherever held, shall be as valid as though had at a
meeting duly held after regular call and notice if a quorum be present
either in person or by proxy and if either before or after the
meeting, each person entitled to vote who was not present in person or
by proxy signs a written waiver of notice or a consent to a holding of
the meeting or an approval of the minutes. The waiver of notice or
consent need not specify either the business to be transacted or the
purpose of any meeting of shareholders.
Attendance by a person at a meeting shall also constitute a
waiver of notice of that meeting, except when the person objects at
the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened and except that
attendance at a meeting is not a waiver of any right to object to the
consideration of matters not included in the notice of the meeting if
that objection is expressly made at the beginning of the meeting.
Section 8. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A
MEETING. Any action which may be taken at any meeting of shareholders
may be taken without a meeting and without prior notice if a consent
in writing setting forth the action so taken is signed by the holders
of outstanding shares having not less than the minimum number of votes
that would be necessary to authorize or take that action at a meeting
at which all shares entitled to vote on that action were present and
voted. All such consents shall be filed with the Secretary of the
Trust and shall be maintained in the Trust's records. Any shareholder
giving a written consent or the shareholder's proxy holders or a
transferee of the shares or a personal representative of the
shareholder or their respective proxy holders may revoke the consent
by a writing received by the Secretary of the Trust before written
consents of the number of shares required to authorize the proposed
action have been filed with the Secretary.
If the consents of all shareholders entitled to vote have not
been solicited in writing and if the unanimous written consent of all
such shareholders shall not have been received, the Secretary shall
give prompt notice of the action approved by the shareholders without
a meeting. This notice shall be given in the manner specified in
Section 4 of this Article II. In the case of approval of (i)
contracts or transactions in which a trustee has a direct or indirect
financial interest, (ii) indemnification of agents of the Trust, and
(iii) a reorganization of the Trust, the notice shall be given at
least ten (10) days before the consummation of any action authorized
by that approval.
Section 9. RECORD DATE FOR SHAREHOLDER NOTICE, VOTING AND GIVING
CONSENTS. For purposes of determining the shareholders entitled to
notice of any meeting or to vote or entitled to give consent to action
without a meeting, the Board of Trustees may fix in advance a record
date which shall not be more than seventy-five (75) days nor less than
ten (10) days before the date of any such meeting as provided in the
Declaration of Trust.
If the Board of Trustees does not so fix a record date:
(a) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be
at the close of business on the business day next preceding
the day on which notice is given or if notice is waived, at
the close of business on the business day next preceding the
day on which the meeting is held.
(b) The record date for determining shareholders entitled to
give consent to action in writing without a meeting, (i)
when no prior action by the Board of Trustees has been
taken, shall be the day on which the first written consent
is given, or (ii) when prior action of the Board of Trustees
has been taken, shall be at the close of business on the day
on which the Board of Trustees adopt the resolution relating
to that action or the seventy-fifth day before the date of
such other action, whichever is later.
Section 10. PROXIES. Every person entitled to vote for trustees
or on any other matter shall have the right to do so either in person
or by one or more agents authorized by a written proxy signed by the
person and filed with the Secretary of the Trust. A proxy shall be
deemed signed if the shareholder's name is placed on the proxy
(whether by manual signature, typewriting, telegraphic transmission or
otherwise) by the shareholder or the shareholder's attorney-in-fact.
A validly executed proxy which does not state that it is irrevocable
shall continue in full force and effect unless (i) revoked by the
person executing it before the vote pursuant to that proxy by a
writing delivered to the Trust stating that the proxy is revoked or by
a subsequent proxy executed by or attendance at the meeting and voting
in person by the person executing that proxy; or (ii) written notice
of the death or incapacity of the maker of that proxy is received by
the Trust before the vote pursuant to that proxy is counted; provided
however, that no proxy shall be valid after the expiration of eleven
(11) months from the date of the proxy unless otherwise provided in
the proxy. The revocability of a proxy that states on its face that
it is irrevocable shall be governed by the provisions of the
California General Corporation Law.
Section 11. INSPECTORS OF ELECTION. Before any meeting of
shareholders, the Board of Trustees may appoint any persons other than
nominees for office to act as inspectors of election at the meeting or
its adjournment. If no inspectors of election are so appointed, the
chairman of the meeting may and on the request of any shareholder or a
shareholder's proxy shall, appoint inspectors of election at the
meeting. The number of inspectors shall be either one (1) or three
(3). If inspectors are appointed at a meeting on the request of one
or more shareholders or proxies, the holders of a majority of shares
or their proxies present at the meeting shall determine whether one
(1) or three (3) inspectors are to be appointed. If any person
appointed as inspector fails to appear or fails or refuses to act, the
chairman of the meeting may and on the request of any shareholder or a
shareholder's proxy, shall appoint a person to fill the vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the
existence of a quorum and the authenticity, validity and
effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election
or vote with fairness to all shareholders.
ARTICLE III
TRUSTEES
Section 1. POWERS. Subject to the applicable provisions of the
Declaration of Trust and these By-Laws relating to action required to
be approved by the shareholders or by the outstanding shares, the
business and affairs of the Trust shall be managed and all powers
shall be exercised by or under the direction of the Board of Trustees.
Section 2. NUMBER AND QUALIFICATION OF TRUSTEES. The authorized
number of trustees shall be nine (9), until changed by a duly adopted
amendment to the Declaration of Trust and these By-Laws.
Section 3. VACANCIES. Vacancies in the Board of Trustees may be
filled by a majority of the remaining trustees, though less than a
quorum, or by a sole remaining trustee, unless the Board of Trustees
calls a meeting of shareholders for the purposes of electing trustees.
In the event that at any time less than a majority of the trustees
holding office at that time were so elected by the holders of the
outstanding voting securities of the Trust, the Board of Trustees
shall forthwith cause to be held as promptly as possible, and in any
event within sixty (60) days, a meeting of such holders for the
purpose of electing trustees to fill any existing vacancies in the
Board of Trustees, unless such period is extended by order of the
United States Securities and Exchange Commission.
Notwithstanding the above, whenever and for so long as the Trust
is a participant in or otherwise has in effect a Plan under which the
Trust may be deemed to bear expenses of distributing its shares as
that practice is described in Rule 12b-1 under the Investment Company
Act of 1940, then the selection and nomination of the trustees who are
not interested persons of the Trust (as that term is defined in the
Investment Company Act of 1940) shall be, and is, committed to the
discretion of such disinterested trustees.
Section 4. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE. All
meetings of the Board of Trustees may be held at any place within or
outside The Commonwealth of Massachusetts that has been
designated from time to time by resolution of the Board. In the
absence of such a designation, regular meetings shall be held at the
principal executive office of the Trust. Any meeting, regular or
special, may be held by conference telephone or similar communication
equipment, so long as all trustees participating in the meeting can
hear one another and all such trustees shall be deemed to be present
in person at the meeting.
Section 5. REGULAR MEETINGS. Regular meetings of the Board of
Trustees shall be held without call at such time as shall from time to
time be fixed by the Board of Trustees. Such regular meetings may be
held without notice.
Section 6. SPECIAL MEETINGS. Special meetings of the Board of
Trustees for any purpose or purposes may be called at any time by the
chairman of the board or the president or any vice president or the
secretary or any two (2) trustees.
Notice of the time and place of special meetings shall be
delivered personally or by telephone to each trustee or sent by first-
class mail or telegram, charges prepaid, addressed to each trustee at
that trustee's address as it is shown on the records of the Trust. In
case the notice is mailed, it shall be deposited in the United States
mail at least four (4) days before the time of the holding of the
meeting. In case the notice is delivered personally or by telephone
or to the telegraph company, it shall be given at least forty-eight
(48) hours before the time of the holding of the meeting. Any oral
notice given personally or by telephone may be communicated either to
the trustee or to a person at the office of the trustee who the person
giving the notice has reason to believe will promptly communicate it
to the trustee. The notice need not specify the purpose of the
meeting or the place if the meeting is to be held at the principal
executive office of the Trust.
Section 7. QUORUM. A majority of the authorized number of
trustees shall constitute a quorum for the transaction of business,
except to adjourn as provided in Section 10 of this Article III. Every
act or decision done or made by a majority of the trustees present at
a meeting duly held at which a quorum is present shall be regarded as
the act of the Board of Trustees, subject to the provisions of the
Declaration of Trust. A meeting at which a quorum is initially
present may continue to transact business notwithstanding the
withdrawal of trustees if any action taken is approved by at least a
majority of the required quorum for that meeting.
Section 8. WAIVER OF NOTICE. Notice of any meeting need not be
given to any trustee who either before or after the meeting signs a
written waiver of notice, a consent to holding the meeting, or an
approval of the minutes. The waiver of notice or consent need not
specify the purpose of the meeting. All such waivers, consents, and
approvals shall be filed with the records of the Trust or made a part
of the minutes of the meeting. Notice of a meeting shall also be
deemed given to any trustee who attends the meeting without protesting
before or at its commencement the lack of notice to that trustee.
Section 9. ADJOURNMENT. A majority of the trustees present,
whether or not constituting a quorum, may adjourn any meeting to
another time and place.
Section 10. NOTICE OF ADJOURNMENT. Notice of the time and place
of holding an adjourned meeting need not be given unless the meeting
is adjourned for more than forty-eight (48) hours, in which case
notice of the time and place shall be given before the time of the
adjourned meeting in the manner specified in Section 7 of this Article
III to the trustees who were present at the time of the adjournment.
Section 11. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken by the Board of Trustees may be taken without a
meeting if a majority of the members of the Board of Trustees shall
individually or collectively consent in writing to that action. Such
action by written consent shall have the same force and effect as a
majority vote of the Board of Trustees. Such written consent or
consents shall be filed with the minutes of the proceedings of the
Board of Trustees.
Section 12. FEES AND COMPENSATION OF TRUSTEES. Trustees and
members of committees may receive such compensation, if any, for their
services and such reimbursement of expenses as may be fixed or
determined by resolution of the Board of Trustees. This Section 12
shall not be construed to preclude any trustee from serving the Trust
in any other capacity as an officer, agent, employee, or otherwise and
receiving compensation for those services.
ARTICLE IV
COMMITTEES
Section 1. COMMITTEES OF TRUSTEES. The Board of Trustees may by
resolution adopted by a majority of the authorized number of trustees
designate one or more committees, each consisting of two (2) or more
trustees, to serve at the pleasure of the Board. The Board may
designate one or more trustees as alternate members of any committee
who may replace any absent member at any meeting of the committee. Any
committee to the extent provided in the resolution of the Board, shall
have the authority of the Board, except with respect to:
(a) the approval of any action which under applicable law also
requires shareholders' approval or approval of the
outstanding shares, or requires approval by a majority of
the entire Board or certain members of said Board;
(b) the filling of vacancies on the Board of Trustees or in any
committee;
(c) the fixing of compensation of the trustees for serving on
the Board of Trustees or on any committee;
(d) the amendment or repeal of the Declaration of Trust or of
the By-Laws or the adoption of new By-Laws;
(e) the amendment or repeal of any resolution of the Board of
Trustees which by its express terms is not so amendable or
repealable;
(f) a distribution to the shareholders of the Trust, except at a
rate or in a periodic amount or within a designated range
determined by the Board of Trustees; or
(g) the appointment of any other committees of the Board of
Trustees or the members of these committees.
Section 2. MEETINGS AND ACTION OF COMMITTEES. Meetings and
action of committees shall be governed by and held and taken in
accordance with the provisions of Article III of these By-Laws, with
such changes in the context thereof as are necessary to substitute the
committee and its members for the Board of Trustees and its members,
except that the time of regular meetings of committees may be
determined either by resolution of the Board of Trustees or by
resolution of the committee. Special meetings of committees may also
be called by resolution of the Board of Trustees, and notice of
special meetings of committees shall also be given to all alternate
members who shall have the right to attend all meetings of the
committee. The Board of Trustees may adopt rules for the government
of any committee not inconsistent with the provisions of these By-
Laws.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the Trust shall be a
president, a secretary, and a treasurer. The Trust may also have, at
the discretion of the Board of Trustees, a chairman of the Board, one
or more vice presidents, one or more assistant secretaries, one or
more assistant treasurers, and such other officers as may be appointed
in accordance with the provisions of Section 3 of this Article V. Any
number of offices may be held by the same person.
Section 2. ELECTION OF OFFICERS. The officers of the Trust,
except such officers as may appointed in accordance with the
provisions of Section 3 or Section 5 of this Article V, shall be
chosen by the Board of Trustees, and each shall serve at the pleasure
of the Board of Trustees, subject to the rights, if any, of an officer
under any contract of employment.
Section 3. SUBORDINATE OFFICERS. The Board of Trustees may
appoint and may empower the president to appoint such other officers
as the business of the Trust may require, each of whom shall hold
office for such period, have such authority and perform such duties as
are provided in these By-Laws or as the Board of Trustees may from
time to time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the
rights, if any, of an officer under any contract of employment, any
officer may be removed, either with or without cause, by the Board of
Trustees at any regular or special meeting of the Board of Trustees or
except in the case of an officer upon whom such power of removal may
be conferred by the Board of Trustees.
Any officer may resign at any time by giving written notice to
the Trust. Any resignation shall take effect at the date of the
receipt of that notice or at any later time specified in that notice;
and unless otherwise specified in that notice, the acceptance of the
resignation shall not be necessary to make it effective. Any
resignation is without prejudice to the rights, if any, of the Trust
under any contract to which the officer is a party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office because
of death, resignation, removal, disqualification or other cause shall
be filled in the manner prescribed in these By-Laws for regular
appointment to that office.
Section 6. CHAIRMAN OF THE BOARD. The chairman of the board, if
such an officer is elected, shall if present preside at meetings of
the Board of Trustees and exercise and perform such other powers and
duties as may be from time to time assigned to him by the Board of
Trustees or prescribed by the By-Laws.
Section 7. PRESIDENT. Subject to such supervisory powers, if
any, as may be given by the Board of Trustees to the chairman of the
board, if there be such an officer, the president shall be the chief
executive officer of the Trust and shall, subject to the control of
the Board of Trustees, have general supervision, direction and control
of the business and the officers of the Trust. He shall preside at all
meetings of the shareholders and in the absence of the chairman of the
board or if there be none, at all meetings of the Board of Trustees.
He shall have the general powers and duties of management usually
vested in the office of president of a corporation and shall have such
other powers and duties as may be prescribed by the Board of Trustees
or these By-Laws.
Section 8. VICE PRESIDENTS. In the absence or disability of the
president, the vice presidents, if any, in order of their rank as
fixed by the Board of Trustees or if not ranked, a vice president
designated by the Board of Trustees, shall perform all the duties of
the president and when so acting shall have all powers of and be
subject to all the restrictions upon the president. The vice
presidents shall have such other powers and perform such other duties
as from time to time may be prescribed for them respectively by the
Board of Trustees or by these By-Laws and the president or the
chairman of the board.
Section 9. SECRETARY. The secretary shall keep or cause to be
kept at the principal executive office of the Trust or such other
place as the Board of Trustees may direct a book of minutes of all
meetings and actions of trustees, committees of trustees and
shareholders with the time and place of holding, whether regular
or special, and if special, how authorized, the notice given, the
names of those present at trustees' meetings or committee meetings,
the number of shares present or represented at shareholders' meetings,
and the proceedings.
The secretary shall keep or cause to be kept at the principal
executive office of the Trust or at the office of the Trust's transfer
agent or registrar, as determined by resolution of the Board of
Trustees, a share register or a duplicate share register showing the
names of all shareholders and their addresses, the number and classes
of shares held by each, the number and date of certificates issued for
the same and the number and date of cancellation of every certificate
surrendered for cancellation.
The secretary shall give or cause to be given notice of all
meetings of the shareholders and of the Board of Trustees required by
these By-Laws or by applicable law to be given and shall have such
other powers and perform such other duties as may be prescribed by the
Board of Trustees or by these By-Laws.
Section 10. TREASURER. The treasurer shall be the chief financial
officer of the Trust and shall keep and maintain or cause to be kept
and maintained adequate and correct books and records of accounts of
the properties and business transactions of the Trust, including
accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital, retained earnings and shares. The books of account
shall at all reasonable times be open to inspection by any trustee.
The treasurer shall deposit all monies and other valuables in the
name and to the credit of the Trust with such depositaries as may be
designated by the Board of Trustees. He shall disburse the funds of
the Trust as may be ordered by the Board of Trustees, shall render to
the president and trustees, whenever they request it, an account of
all of his transactions as chief financial officer and of the
financial condition of the Trust and shall have other powers and
perform such other duties as may be prescribed by the Board of
Trustees or these By-Laws.
ARTICLE VI
INDEMNIFICATION OF TRUSTEES, OFFICERS,
EMPLOYEES AND OTHER AGENTS
Section 1. AGENTS, PROCEEDINGS AND EXPENSES. For the purpose of
this Article, "agent" means any person who is or was a trustee,
officer, employee or other agent of this Trust or is or was serving at
the request of this Trust as a trustee, director, officer, employee or
agent of another foreign or domestic corporation, partnership, joint
venture, trust or other enterprise or was a trustee, director,
officer, employee or agent of a foreign or domestic corporation which
was a predecessor of another enterprise at the request of such
predecessor entity; "proceeding" means any threatened, pending or
completed action or proceeding, whether civil, criminal,
administrative or investigative; and "expenses" includes without
limitation attorney's fees and any expenses of establishing a right to
indemnification under this Article.
Section 2. ACTIONS OTHER THAN BY TRUST. This Trust shall
indemnify any person who was or is a party or is threatened to be made
a party to any proceeding (other than an action by or in the right of
this Trust) by reason of the fact that such person is or was an agent
of this Trust, against expenses, judgments, fines, settlements and
other amounts actually and reasonably incurred in connection with such
proceeding if that person acted in good faith and in a manner that
person reasonably believed to be in the best interests of this Trust
and in the case of a criminal proceeding, had no reasonable cause to
believe the conduct of that person was unlawful. The termination of
any proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent shall not of itself create a
presumption that the person did not act in good faith and in a manner
which the person reasonably believed to be in the best interests of
this Trust or that the person had reasonable cause to believe that the
person's conduct was unlawful.
Section 3. ACTIONS BY THE TRUST. This Trust shall indemnify any
person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action by or in the right of this
Trust to procure a judgment in its favor by reason of the fact that
that person is or was an agent of this Trust, against expenses
actually and reasonably incurred by that person in connection with the
defense or settlement of that action if that person acted in good
faith, in a manner that person believed to be in the best interests of
this Trust and with such care, including reasonable inquiry, as an
ordinarily prudent person in a like position would use under similar
circumstances.
Section 4. EXCLUSION OF INDEMNIFICATION. Notwithstanding any
provision to the contrary contained herein, there shall be no right to
indemnification for any liability arising by reason of willful
misfeasance, bad faith, gross negligence, or the reckless disregard of
the duties involved in the conduct of the agent's office with this
Trust.
No indemnification shall be made under Sections 2 or 3 of this
Article:
(a) In respect of any claim, issue or matter as to which that
person shall have been adjudged to be liable in the
performance of that person's duty to this Trust, unless and
only to the extent that the court in which that action was
brought shall determine upon application that in view of all
the circumstances of the case, that person was not liable by
reason of the disabling conduct set forth in the preceding
paragraph and is fairly and reasonably entitled to indemnity
for the expenses which the court shall determine; or
(b) Of amounts paid in settling or otherwise disposing of a
threatened or pending action, with or without court
approval, or of expenses incurred in defending a threatened
or pending action which is settled or otherwise disposed of
without court approval, unless the required approval set
forth in Section 6 of this Article is obtained.
Section 5. SUCCESSFUL DEFENSE BY AGENT. To the extent that an
agent of this Trust has been successful on the merits in defense of
any proceeding referred to in Sections 2 or 3 of this Article or in
defense of any claim, issue or matter therein, before the court or
other body before whom the proceeding was brought, the agent shall be
indemnified against expenses actually and reasonably incurred by the
agent in connection therewith, provided that the Board of Trustees,
including a majority who are disinterested, non-party trustees, also
determines that based upon a review of the facts, the agent was not
liable by reason of the disabling conduct referred to in Section 4 of
this Article.
Section 6. REQUIRED APPROVAL. Except as provided in Section 5
of this Article, any indemnification under this Article shall be made
by this Trust only if authorized in the specific case on a
determination that indemnification of the agent is proper in the
circumstances because the agent has met the applicable standard of
conduct set forth in Sections 2 or 3 of this Article and is not
prohibited from indemnification because of the disabling conduct set
forth in Section 4 of this Article, by:
(a) A majority vote of a quorum consisting of trustees who are
not parties to the proceeding and are not interested persons
of the Trust (as defined in the Investment Company Act of
1940); or
(b) written opinion by an independent legal counsel.
Section 7. ADVANCE OF EXPENSES. Expenses incurred in defending
any proceeding may be advanced by this Trust before the final
disposition of the proceeding on receipt of an undertaking by or on
behalf of the agent to repay the amount of the advance unless it shall
be determined ultimately that the agent is entitled to be indemnified
as authorized in this Article, provided the agent provides a security
for his undertaking, or a majority of a quorum of the disinterested,
non-party trustees, or an independent legal counsel in a written
opinion, determine that based on a review of readily available facts,
there is reason to believe that said agent ultimately will be found
entitled to indemnification.
Section 8. OTHER CONTRACTUAL RIGHTS. Nothing contained in this
Article shall affect any right to indemnification to which persons
other than trustees and officers of this Trust or any subsidiary
hereof may be entitled by contract or otherwise.
Section 9. LIMITATIONS. No indemnification or advance shall be
made under this Article, except as provided in Sections 5 or 6 in any
circumstances where it appears:
(a) That it would be inconsistent with a provision of the
Declaration of Trust, a resolution of the shareholders, or
an agreement in effect at the time of accrual of the alleged
cause of action asserted in the proceeding in which the
expenses were incurred or other amounts were paid which
prohibits or otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
Section 10. INSURANCE. Upon and in the event of a determination
by the Board of Trustees of this Trust to purchase such insurance,
this Trust shall purchase and maintain insurance on behalf of any
agent of this Trust against any liability asserted against or incurred
by the agent in such capacity or arising out of the agent's status as
such, but only to the extent that this Trust would have the power to
indemnify the agent against that liability under the provisions of
this Article.
Section 11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN. This Article
does not apply to any proceeding against any trustee, investment
manager or other fiduciary of an employee benefit plan in that
person's capacity as such, even though that person may also be an
agent of this Trust as defined in Section 1 of this Article. Nothing
contained in this Article shall limit any right to indemnification to
which such a trustee, investment manager, or other fiduciary may be
entitled by contract or otherwise which shall be enforceable to the
extent permitted by applicable law other than this Article.
ARTICLE VII
RECORDS AND REPORTS
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER. This
Trust shall keep at its principal executive office or at the office of
its transfer agent or registrar, if either be appointed and as
determined by resolution of the Board of Trustees, a record of its
shareholders, giving the names and addresses of all shareholders and
the number and series of shares held by each shareholder.
Section 2. MAINTENANCE AND INSPECTION OF BY-LAWS. The Trust
shall keep at its principal executive office the original or a copy of
these By-Laws as amended to date, which shall be open to inspection by
the shareholders at all reasonable times during office hours.
Section 3. MAINTENANCE AND INSPECTION OF OTHER RECORDS. The
accounting books and records and minutes of proceedings of the
shareholders and the Board of Trustees and any committee or committees
of the Board of Trustees shall be kept at such place or places
designated by the Board of Trustees or in the absence of such
designation, at the principal executive office of the Trust. The
minutes shall be kept in written form and the accounting books and
records shall be kept either in written form or in any other form
capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection upon the
written demand of any shareholder or holder of a voting trust
certificate at any reasonable time during usual business hours for a
purpose reasonably related to the holder's interests as a shareholder
or as the holder of a voting trust certificate. The inspection may be
made in person or by an agent or attorney and shall include the right
to copy and make extracts.
Section 4. INSPECTION BY TRUSTEES. Every trustee shall have the
absolute right at any reasonable time to inspect all books, records,
and documents of every kind and the physical properties of the Trust.
This inspection by a trustee may be made in person or by an agent or
attorney and the right of inspection includes the right to copy and
make extracts of documents.
Section 5. FINANCIAL STATEMENTS. A copy of any financial
statements and any income statement of the Trust for each quarterly
period of each fiscal year and accompanying balance sheet of the Trust
as of the end of each such period that has been prepared by the Trust
shall be kept on file in the principal executive office of the Trust
for at least twelve (12) months and each such statement shall be
exhibited at all reasonable times to any shareholder demanding an
examination of any such statement or a copy shall be mailed to any
such shareholder.
The quarterly income statements and balance sheets referred to in
this section shall be accompanied by the report, if any, of any
independent accountants engaged by the Trust or the certificate of an
authorized officer of the Trust that the financial statements were
prepared without audit from the books and records of the Trust.
ARTICLE VIII
GENERAL MATTERS
Section 1. CHECKS, DRAFTS, EVIDENCE OF INDEBTEDNESS. All checks,
drafts, or other orders for payment of money, notes or other evidences
of indebtedness issued in the name of or payable to the Trust shall be
signed or endorsed by such person or persons and in such manner as
from time to time shall be determined by resolution of the Board of
Trustees.
Section 2. CONTRACTS AND INSTRUMENTS; HOW EXECUTED. The Board
of Trustees, except as otherwise provided in these By-Laws, may
authorize any officer or officers, agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
Trust and this authority may be general or confined to specific
instances; and unless so authorized or ratified by the Board of
Trustees or within the agency power of an officer, no officer, agent,
or employee shall have any power or authority to bind the Trust by any
contract or engagement or to pledge its credit or to render it liable
for any purpose or for any amount.
Section 3. CERTIFICATES FOR SHARES. A certificate or certificates
for shares of beneficial interest in any series of the Trust shall be
issued to each shareholder when any of these shares are fully paid.
All certificates shall be signed in the name of the Trust by the
chairman of the board or the president or vice president and by the
treasurer or an assistant treasurer or the secretary or any assistant
secretary, certifying the number of shares and the series of shares
owned by the shareholders. Any or all of the signatures on the
certificate may be facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed
on a certificate shall have ceased to be that officer, transfer agent,
or registrar before that certificate is issued, it may be issued by
the Trust with the same effect as if that person were an officer,
transfer agent or registrar at the date of issue. Notwithstanding the
foregoing, the Trust may adopt and use a system of issuance,
recordation and transfer of its shares by electronic or other means.
Section 4. LOST CERTIFICATES. Except as provided in this Section
4, no new certificates for shares shall be issued to replace an old
certificate unless the latter is surrendered to the Trust and
cancelled at the same time. The Board of Trustees may in case any
share certificate or certificate for any other security is lost,
stolen, or destroyed, authorize the issuance of a replacement
certificate on such terms and conditions as the Board of Trustees may
require, including a provision for indemnification of the Trust
secured by a bond or other adequate security sufficient to protect the
Trust against any claim that may be made against it, including any
expense or liability on account of the alleged loss, theft, or
destruction of the certificate or the issuance of the replacement
certificate.
Section 5. REPRESENTATION OF SHARES OF OTHER ENTITIES. The
chairman of the board, the president or any vice president or any
other person authorized by resolution of the Board of Trustees or by
any of the foregoing designated officers, is authorized to vote on
behalf of the Trust any and all shares of any corporation or
corporations, partnership, trusts, or other entities, foreign or
domestic, standing in the name of the Trust. The authority granted to
these officers to vote or represent on behalf of the Trust any and all
shares held by the Trust in any form of entity may be exercised by any
of these officers in person or by any person authorized to do so by a
proxy duly executed by these officers.
ARTICLE IX
AMENDMENTS
Section 1. AMENDMENT BY SHAREHOLDERS. New By-Laws may be amended
or repealed by the affirmative vote or written consent of a majority
of the outstanding shares entitled to vote, except as otherwise
provided by applicable law or by the Declaration of Trust or these By-
Laws.
Section 2. AMENDMENT BY TRUSTEES. Subject to the right of
shareholders as provided in Section 1 of this Article to adopt, amend
or repeal By-Laws, and except as otherwise provided by applicable law
or by the Declaration of Trust, these By-Laws may be adopted, amended,
or repealed by the Board of Trustees.
CERTIFICATE OF SECRETARY
I, Deborah R. Gatzek, Secretary of Franklin California Tax-
Free Trust (the "Trust"), a business trust organized under the
laws of the State of Massachusetts, do hereby certify that the
following resolution was adopted by a majority of the trustees
present at a meeting held at the offices of the Trust at 777
Mariners Island Boulevard, San Mateo, California, on January 18,
1994.
WHEREAS, the Trustees have determined that it is necessary
to amend Section 4 of Article II of the Trust's By-Laws in
order to remove the specification of using first class mail
for notice of any meeting of shareholders; it is
RESOLVED, that in accordance with Article IX, Section 2 of
the Trust's By-Laws, such By-Laws are hereby amended by
deleting reference to first class mail in the first
paragraph of Section 4 of Article II so that such paragraph
now reads as follows:
Section 4. MANNER OF GIVING NOTICE; AFFIDAVIT OF
NOTICE. Notice of any meeting of shareholders shall be
given either personally or by mail or telegraphic or
other written communication, charges prepaid, addressed
to the shareholder appearing on the books of the Trust
or its transfer agent or given by the shareholder to
the Trust for the purpose of notice. If no such
address appears on the Trust's books or is given,
notice shall be deemed to have been given if sent to
that shareholder by mail or telegraphic or other
written communication to the Trust's principal
executive office, or if published at least once in a
newspaper of general circulation in the county where
that office is located. Notice shall be deemed to have
been given at the time when delivered personally or
deposited in the mail or sent by telegram or other
means of written communication.
and it is
FURTHER RESOLVED, that the officers of the Trust be, and
they hereby are, authorized and directed to execute and
deliver any and all documents and take any and all other
actions that they may deem necessary or advisable in order
to effectuate the foregoing resolution.
I declare under penalty of perjury that the matters set forth in
this certificate are true and correct of my own knowledge.
Dated: February 28, 1994 /s/ Deborah R. Gatzek
Deborah R. Gatzek
Secretary
FRANKLIN CALIFORNIA TAX-FREE TRUST
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made between FRANKLIN CALIFORNIA TAX-
FREE TRUST, a Massachusetts Business Trust, hereinafter called
the "Trust" and FRANKLIN ADVISERS, INC., a California
corporation, hereinafter called the "Manager."
WHEREAS, the Trust has been organized and intends to operate as
an investment company registered under the Investment Company Act
of 1940 (the "1940 Act") for the purpose of investing and
reinvesting its assets in securities, as set forth in its
Agreement and Declaration of Trust, its By-Laws and its
Registration Statements under the 1940 Act and the Securities Act
of 1933 (the "1933 Act"), all as heretofore amended and
supplemented; and the Trust desires to avail itself of the
services, information, advice, assistance and facilities of an
investment manager and to have an investment manager render
various management, statistical, research, investment advisory,
and other services to the Trust and to each of the separate
Series formed under the Trust (such Series hereinafter referred
to individually as a "Fund" and collectively as the "Funds");
and,
WHEREAS, the Manager is registered as an investment adviser under
the Investment Advisors Act of 1940, is engaged in the business
of rendering management, investment advisory, counselling and
supervisory services to investment companies and other investment
counselling clients, and desires to provide these services to the
Trust and the Funds.
NOW THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
1. Employment of the Manager. The Trust hereby employs the
Manager to manage the investment and reinvestment of each Fund's
assets and to administer the affairs of the Trust and the Funds,
subject to the direction of the Board of Trustees and the
officers of the Trust, for the period and on the terms
hereinafter set forth. The Manager hereby accepts such
employment and agrees during such period to render the services
and to assume the obligations herein set forth for the
compensation herein provided. The Manager shall for all purposes
herein be deemed to be an independent contractor and shall,
except as expressly provided or authorized (whether herein or
otherwise), have no authority to act for or represent the Trust
in any way or otherwise be deemed an agent of the Trust or any
Fund.
2. Obligations of and Services to be Provided by the Manager.
The Manager undertakes to provide the services hereinafter set
forth and to assume the following obligations:
A. Office Space, Furnishings, Facilities, Equipment,
and Personnel. The Manager shall furnish to the Trust
adequate (i) office space, which may be space within
the offices of the Manager or in such other place as
may be agreed upon from time to time, (ii) office
furnishings, facilities and equipment as may be
reasonably required for managing the affairs and
conducting the business of the Trust, including
complying with the reporting requirements of the United
States and the various states in which the Trust does
business, conducting correspondence and other
communications with the shareholders of the Funds,
maintaining all internal bookkeeping, accounting and
auditing services and records in connection with the
Trust's investment and business activities, and
computing net asset value for each Fund. The Manager
shall employ or provide and compensate the executive,
secretarial and clerical personnel necessary to provide
such services. The Manager shall also compensate all
officers and employees of the Trust who are officers or
employees of the Manager or affiliates thereof.
B. Investment Management Services.
(a) The Manager shall manage the Trust's
assets and the portfolio of each Fund subject to
and in accordance with the investment objectives
and policies of the Trust and any directions which
the Trust's Board of Trustees may issue from time
to time. In pursuance of the foregoing, the
Manager shall make all determinations with respect
to the investment of the Trust's assets and the
purchase and sale of portfolio securities of each
Fund, and shall take such steps as may be
necessary to implement the same. Such
determinations and services shall also include
determining the manner in which voting rights,
rights to consent to action and any other rights
pertaining to each Fund's portfolio securities
shall be exercised. The Manager shall render
regular reports to the Trust, at regular meetings
of the Board of Trustees and at such other times
as may be reasonably requested by the Trust's
Board of Trustees, of (i) the decisions which it
has made with respect to the investment of each
Fund's assets and the purchase and sale of
portfolio securities, (ii) the reasons for such
decisions
and (iii) the extent to which those
decisions have been implemented.
(b) The Manager, subject to and in
accordance with any directions which the Trust's
Board of Trustees may issue from time to time,
shall place, in the name of each Fund, orders for
the execution of that Fund's portfolio
transactions. When placing such orders, the
Manager shall seek to obtain the best net price
and execution for each Fund, but this requirement
shall not be deemed to obligate the Manager to
place any order solely on the basis of obtaining
the lowest commission rate if the other standards
set forth in this section have been satisfied.
The parties recognize that there are likely to be
many cases in which different brokers are equally
able to provide such best price and execution and
that, in selecting among such brokers with respect
to particular trades, it is desirable to choose
those brokers who furnish research, statistical
quotations and other information to the Trust and
the Manager in accordance with the standards set
forth below. Moreover, to the extent that it
continues to be lawful to do so and so long as the
Board of Trustees determines that the Trust will
benefit, directly or indirectly, by doing so, the
Manager may place orders with a broker who charges
a commission for that transaction which is in
excess of the amount of commission that another
broker would have charged for effecting that
transaction, provided that the excess commission
is reasonable in relation to the value of
"brokerage and research services" (as defined in
Section
28(e)(3) of the Securities Exchange Act
of 1934) provided by that broker. Accordingly,
the Trust and the Manager agree that the Manager
shall select brokers for the execution of each
Fund's portfolio transactions from among:
(i) Those brokers and dealers who
provide quotations and other services to the
Trust, specifically including the quotations
necessary to determine each Fund's net
assets, in such amount of total brokerage as
may reasonably be required in light of such
services;
(ii) Those brokers and dealers who
supply research, statistical and other data
to the Manager or its affiliates which relate
directly to portfolio securities, actual or
potential, of the Trust or
which place the Manager in a better position
to make decisions in connection with the
management of each Fund's assets and
portfolio, whether or not such data may also
be useful to the Manager and its affiliates
in managing other portfolios or advising
other clients, in such amount of total
brokerage as may reasonably be required.
Provided that the Trust's officers are
satisfied that the best execution is obtained, the
sale of Trust shares may also be considered as a
factor in the selection of broker-dealers to
execute the Trust's portfolio transactions.
(c) When the Manager has determined that the
Fund should tender securities pursuant to a
"tender offer solicitation," the Manager shall
designate Franklin Distributors, Inc.
("Distributors") as the "tendering dealer" so long
as it is legally permissible for the Manager to do
so, and act in such capacity under the Federal
securities laws and rules thereunder and the rules
of any securities exchange or association of which
Distributors may be a member. Distributors shall
not be obligated to make any additional
commitments of capital, expense or personnel
beyond that already committed (other than normal
periodic fees or payments necessary to maintain
its corporate existence and membership in the
National Association of Securities Dealers, Inc.)
as of the date of this Agreement. This Agreement
shall not obligate the Manager or Distributor (i)
to act pursuant to the foregoing requirement under
any circumstances in which they might reasonably
believe that liability might be imposed upon them
as a result of so acting, or (ii) to institute
legal or other proceedings to collect fees which
may be considered to be due from others to it as a
result of such a tender, unless the Fund shall
enter into an agreement with the Manager and/or
Distributors to reimburse them for all expenses
connected with attempting to collect such fees
including legal fees and expenses and that portion
of the compensation due to their employees which
is attributable to the time involved in attempting
to collect such fees.
(d) The Manager shall render regular reports
to the Trust, not more frequently than quarterly,
of how much total brokerage business has been
placed by
the Manager with brokers falling into
each of the foregoing categories and the manner in
which the allocation has been accomplished.
(e) The Manager agrees that no investment
decision will be made or influenced by a desire to
provide brokerage for allocation in accordance
with the foregoing, and that the right to make
such allocation of brokerage shall not interfere
with the Manager's paramount duty to obtain the
best net price and execution for each Fund.
C. Provision of Information Necessary for Preparation
of Securities Registration Statements, Amendments and
Other Materials. The Manager, its officers and
employees will make available and provide accounting
and statistical information required by the Trust in
the preparation of registration statements, reports and
other documents required by federal and state
securities laws and with such information as the Trust
may reasonably request for use in the preparation of
such documents or of other materials necessary or
helpful for the underwriting and distribution of the
Trust's shares.
D. Other Obligations and Services. The Manager shall
make its officers and employees available to the Board
of Trustees and officers of the Trust for consultation
and discussions regarding the administration and
management of the Trust and its investment activities.
3. Expenses of the Trust. It is understood that the Trust will
pay all its expenses other than those expressly assumed by the
Manager herein, which expenses payable by the Trust shall
include:
A. Fees to the Manager as provided herein;
B. Expenses of all audits by independent public
accountants;
C. Expenses of transfer agent, registrar, custodian,
dividend disbursing agent and shareholder record
keeping services;
D. Expenses of obtaining quotations for calculating
the value of the net assets of each Fund;
E. Salaries and other compensation of any of its
executive officers who are not officers, directors,
stockholders or employees of the Manager;
F. Taxes levied against the Trust;
G. Brokerage fees and commissions in connection with
the purchase and sale of portfolio securities for each
Fund;
H. Costs, including the interest expense, of
borrowing money;
I. Costs incident to shareholder or trustee meetings
of the Trust, reports by the Trust to its shareholders,
the filing of reports with regulatory bodies and the
maintenance of the Trust's legal existence;
J. Legal fees, including the legal fees related to
the registration and continued qualification of the
Trust's shares for sale;
K. Costs of printing certificates representing shares
of beneficial interest of the Trust;
L. Fees and expenses of trustees who are not
directors, officers, employees or stockholders of
the Manager or any of its affiliates;
M. Trade association dues;
N. Its pro rata portion of the fidelity bond
insurance premium; and
O. The cost of portfolio insurance obtained by any of
the Funds.
4. Compensation of the Manager. Each Fund shall pay a
management fee in cash to the Manager based upon a percentage of
the value of that Fund's net assets, calculated as set forth
below, as compensation for the services rendered and obligations
assumed by the Manager. The initial management fee under this
Agreement shall be payable on the first business day of the first
month following the effective date of this Agreement, and shall
be reduced by the amount of any advance payments made by each
Fund relating to the month.
A. For purposes of calculating such fee, the value of
the net assets of each Fund shall be determined in the
same manner as such Fund uses to compute the value of
its net assets in connection with the determination of
the net asset value of such Fund's shares, all as set
forth more fully in the Trust's current prospectus.
The rate of the management fee for each Fund shall be
as follows:
(a) For the Insured Fund, as of the close of
business on the last business day of each month:
5/96 of 1% of the value of net assets up
to and including $100,000,000; and
1/24 of 1% of the value of net assets
over $100,000,000 up to and including
$250,000,000; and
9/240 of 1% of the value of net assets
in excess of $250,000,000.
(b) For the Money Fund, as of each calendar
day (payable at the request of the Manager):
1/584 of 1% of the value of net assets
up to and including $100,000,000; and
1/730 of 1% of the value of net assets
over $100,000,000 up to and including
$250,000,000; and
1/811 of l% of the value of net assets
in excess of $250,000,000.
B. The management fee payable by each Fund shall be
reduced or eliminated to the extent that Franklin
Distributors, Inc. has actually received cash payments
of tender offer solicitation fees less certain costs
and expenses incurred in connection therewith; and to
the extent necessary to comply with the limitations on
expenses which may be borne by each Fund as set forth
in the laws, regulations and administrative
interpretations of those states in which such Fund's
shares are registered.
C. If this Agreement is terminated prior to the end
of any month, the management fee for the Insured Fund
shall be prorated for the portion of any month in which
this Agreement is in effect which is not a complete
month according to the proportion which the number of
calendar days in the month during which the Agreement
is in effect bears to the number of calendar days in
the month, and shall be payable within 10 days after
the date of termination.
5. Activities of the Manager. The services of the Manager to
the Trust hereunder are not to be deemed exclusive, and the
Manager and any of its affiliates shall be free to render similar
services to others. Subject to and in accordance with the
Declaration of Trust and By-Laws of the Trust and to Section
10(a) of the 1940 Act it is understood that trustees, officers,
agents and shareholders of the Trust are or may be interested in
the Manager or its affiliates as directors, officers, agents or
stockholders, and that directors, officers, agents or
stockholders of the Manager or its affiliates are or may be
interested in the Trust as trustees, officers, agents,
shareholders or otherwise, that the Manager or its affiliates may
be interested in the Trust as shareholders or otherwise; and that
the effect of any such interests shall be governed by said
Declaration of Trust, the By-Laws or the 1940 Act.
6. Liabilities of the Manager.
A. In the absence of willful misfeasance, bad faith,
gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Manager, the
Manager shall not be subject to liability to the Trust
or to any shareholder of the Trust for any act of
omission in the course of, or connected with, rendering
services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any
security by any Fund.
B. Notwithstanding the foregoing, the Manager agrees
to reimburse the Trust for any and all costs, expenses,
legal counsel and trustees' fees reasonably incurred by
the Trust in the preparation, printing and distribution
of proxy statements, amendments to its Registration
Statement, holdings of meetings of its shareholders or
trustees, the conduct of factual investigations, any
legal or administrative proceedings (including any
applications for exemptions or determinations by the
Securities and Exchange Commission) which the Trust
incurs as the result of action or inaction of the
Manager or any of its affiliates or any of their
officers, directors, employees or shareholders where
the actions or inaction necessitating such expenditures
(i) is directly or indirectly related to any
transactions or proposed transaction in the shares or
control of the Manager or its affiliates (or litigation
related to any pending or proposed or future
transaction in such shares or control) which shall have
been undertaken without the prior, express approval of
the Trust's Board of Trustees; or, (ii) is within the
control of the Manager or any of its affiliates or any
of their officers, directors, employees or
shareholders. The Manager shall not be obligated
pursuant to the provisions of this Subsection 6(B), to
reimburse the Trust for any expenditures related to the
institution of an administrative proceeding or civil
litigation by the Trust or a Trust shareholder seeking
to recover all or a portion of the proceeds derived by
any shareholder of the Manager or any of its affiliates
from the sale of his shares of the Manager or any of
its affiliates, or similar matters. So long as
this Agreement is in effect, the Manager shall pay to
the Trust the amount due for expenses subject to this
Subsection 6(B) within 30 days after a bill or
statement has been received by the Trust therefor.
This provision shall not be deemed to be a waiver of
any claim which the Trust may have or may assert
against the Manager or others for costs, expenses or
damages heretofore incurred by the Trust or for costs,
expenses or damages which the Trust may hereafter incur
which are not reimbursable to it hereunder.
C. No provision of this Agreement shall be construed
to protect any trustee or officer of the Trust, or
director or officer of the Manager, from liability in
violation of Sections 17(h) and (i) of the 1940 Act.
D. The Trust's employment of the Manager is not an
exclusive arrangement, and one or more Funds may from
time to time employ other individuals or entities to
furnish them with the services provided for herein. In
the event that one or more of the Funds elect to
terminate or not continue this Agreement with the
Manager, then the Manager shall have no duty and be
under no obligation to continue providing such Fund or
Funds the services provided for herein.
7. Renewal and Termination.
A. This Agreement shall become effective on the date
of its execution written below and shall continue in
effect for two (2) years. The Agreement is renewable
annually thereafter with respect to each of the Funds
for successive periods not to exceed one (1) year (i)
by a vote of a majority of the outstanding voting
securities of each Fund desiring to continue the
Agreement or by a vote of the Board of Trustees of the
Trust, and (ii) by a vote of a majority of the Trustees
of the Trust who are not parties to the Agreement or
interested persons of any parties to the Agreement
(other than as Trustees of the Trust), cast in person
at a meeting called for the purpose of voting on the
Agreement.
B. This Agreement:
(a) may at any time be terminated by each of
the Funds without the payment of any penalty
either by vote of the Board of Trustees of the
Trust or by vote of a majority of the outstanding
voting securities of the terminating Fund or
Funds, on 30 days' written notice to the Manager;
(b) shall immediately terminate with respect
to all Funds in the event of its assignment; and
(c) may be terminated at any time without
payment of any penalty by the Manager on 30 days'
written notice to the respective Fund.
C. As used in this Agreement, the terms "assignment,"
"interested persons" and "vote of a majority of the
outstanding voting securities" shall have the meanings
set forth for such terms in the 1940 Act.
D. Any notice under this Agreement shall be.given in
writing addressed and delivered, or mailed post-paid,
to the other party at any office of such party.
8. Limitation of Trust's Liability. The Manager acknowledges
that it has received notice of and accepts the limitations of the
Trust's liability set forth in its Agreement and Declaration of
Trust. The Manager agrees that the Trust's obligations hereunder
shall be limited to the Trust and to the assets of each
respective Fund, and that the Manager shall not seek satisfaction
of any such obligation from the shareholders of the Trust nor
from any Trustee, officer, employee or agent of the Trust.
9. Severability. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected
thereby.
10. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the 1st day of November, 1986.
FRANKLIN CALIFORNIA TAX-FREE TRUST
By /s/ Charles B. Johnson
FRANKLIN ADVISERS, INC.
By /s/ Rupert H. Johnson
FRANKLIN CALIFORNIA TAX-FREE TRUST
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made between FRANKLIN
CALIFORNIA TAX-FREE TRUST, a Massachusetts Business Trust,
hereinafter called the "Trust", and FRANKLIN ADVISERS, INC., a
California corporation, hereinafter called the "Manager".
WHEREAS, the Trust has been organized and operates as an
investment company registered under the Investment Company Act of
1940 (the "1940 Act") for the purpose of investing and
reinvesting its assets in securities, as set forth in its
Agreement and Declaration of Trust, its By-Laws and its
Registration Statements under the 1940 Act and the Securities Act
of 1933 (the "1933 Act"), all as heretofore amended and
supplemented; and the Trust desires to avail itself of the
services, information, advice, assistance and facilities of an
investment manager and to have an investment manager render
various management, statistical, research, investment advisory,
and other services to FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-
FREE INCOME FUND and to any subsequent Series formed under the
Trust (such Series hereinafter referred to individually as a
"Fund" and collectively as the "Funds"); and,
WHEREAS, the Manager is registered as an investment adviser
under the Investment Advisor's Act of 1940, is engaged in the
business of rendering management, investment advisory,
counselling and supervisory services to investment companies and
other investment counselling clients, and desires to provide
these services to the Trust and the Funds.
NOW THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
1. Employment of the Manager. The Trust hereby employs the
Manager to manage the investment and reinvestment of each Fund's
assets and to administer the affairs of the Trust and the Funds,
subject to the direction of the Board of Trustees and the
officers of the Trust, for the period and on the terms
hereinafter set forth. The Manager hereby accepts such
employment and agrees during such period to render the services
and to assume the obligations herein set forth for the
compensation herein provided. The Manager shall for all purposes
herein be deemed to be an independent contractor and shall,
except as expressly provided or authorized (whether herein or
otherwise), have no authority to act for or represent the Trust
in any way or otherwise be deemed an agent of the Trust or any
Fund.
2. Obligations of and Services to be Provided by the Manager.
The Manager undertakes to provide the services hereinafter set
forth and to assume the following obligations:
A. Office Space, Furnishings, Facilities, Equipment, and
Personnel. The Manager shall furnish to the Trust adequate (i)
office space, which may be space within the offices of the
Manager or in such other place as may be agreed upon from time to
time, (ii) office furnishings, facilities and equipment as may be
reasonably required for managing the affairs and conducting the
business of the Trust, including complying with the reporting
requirements of the United States and the various states in which
the Trust does business, conducting correspondence and other
communications with the shareholders of the Funds, maintaining
all internal bookkeeping, accounting and auditing services and
records in connection with the Trust's investment and business
activities, and computing net asset value for each Fund. The
Manager shall employ or provide and compensate the executive,
secretarial and clerical personnel necessary to provide such
services. The Manager shall also compensate all officers and
employees of the Trust who are officers or employees of the
Manager or affiliates thereof.
B. Investment Management Services.
(a) The Manager shall manage the Trust's assets and
the portfolio of each Fund subject to and in accordance with the
investment objectives and policies of the Trust and any
directions which the Trust's Board of Trustees may issue from
time to time. In pursuance of the foregoing, the Manager shall
make all determinations with respect to the investment of the
Trust's assets and the purchase and sale of portfolio securities
of each Fund, and shall take such steps as may be necessary to
implement the same. Such determinations and services shall also
include determining the manner in which voting rights, rights to
consent to action and any other rights pertaining to each Fund's
portfolio securities shall be exercised. The Manager shall
render regular reports to the Trust, at regular meetings of the
Board of Trustees and at such other times as may be reasonably
requested by the Trust's Board of Trustees, of (i) the decisions
which it has made with respect to the investment of each Fund's
assets and the purchase and sale of portfolio securities, (ii)
the reasons for such decisions, and (iii) the extent to which
those decisions have been implemented.
(b) The Manager, subject to and in accordance with any
directions which the Trust's Board of Trustees may issue from
time to time, shall place, in the name of each Fund, orders for
the execution of that Fund's portfolio transactions. When
placing such orders, the Manager shall seek to obtain the best
net price and execution for each Fund, but this requirement shall
not be deemed to obligate the Manager to place any order solely
on the basis of obtaining the lowest commission rate if the other
standards set forth in this section have been satisfied. The
parties recognize that there are likely to be many cases in which
different brokers are equally able to provide such best price and
execution and that, in selecting among such brokers with respect
to particular trades, it is desirable to choose those brokers who
furnish research, statistical quotations and other information to
the Trust and the Manager in accordance with the standards set
forth below. Moreover, to the extent that it continues to be
lawful to do so and so long as the Board of Trustees determines
that the Trust will benefit, directly or indirectly, by doing so,
the Manager may place orders with a broker who charges a
commission for that transaction which is in excess of the amount
of commission that another broker would have charged for
effecting that transaction, provided that the excess commission
is reasonable in relation to the value of "brokerage and research
services" (as defined in Section 28(e)(3) of the Securities
Exchange Act of 1934) provided by that broker. Accordingly, the
Trust and the Manager agree that the Manager shall select brokers
for the execution of each Fund's portfolio transactions from
among:
(i) Those brokers and dealers who provide
quotations and other services to the Trust, specifically
including the quotations necessary to determine each Fund's net
assets, in such amount of total brokerage as may reasonably be
required in light of such services;
(ii) Those brokers and dealers who supply
research, statistical and other data to the Manager or its
affiliates which relate directly to portfolio securities, actual
or potential, of the Trust or which place the Manager in a better
position to make decisions in connection with the management of
each Fund's assets and portfolio, whether or not such data may
also be useful to the Manager and its affiliates in managing
other portfolios or advising other clients, in such amount of
total brokerage as may reasonably be required.
Provided that the Trust's officers are
satisfied that the best execution is obtained, the sale of Trust
shares may also be considered as a factor in the selection of
broker-dealers to execute the Trust's portfolio transactions.
(c) When the Manager has determined that the Fund
should tender securities pursuant to a "tender offer
solicitation," the Manager shall designate Franklin Distributors,
Inc. ("Distributors") as the "tendering dealer" so long as it is
legally permissible for the Manager to do so, and act in such
capacity under the Federal securities laws and rules thereunder
and the rules of any securities exchange or association of which
Distributors may be a member. Distributors shall not be
obligated to make any additional commitments of capital, expense
or personnel beyond that already committed (other than normal
periodic fees or payments necessary to maintain its corporate
existence and membership in the National Association of
Securities Dealers, Inc.) as of the date of this Agreement. This
Agreement shall not obligate the Manager or Distributor (i) to
act pursuant to the foregoing requirement under any circumstances
in which they might reasonably believe that liability might be
imposed upon them as a result of so acting, or (ii) to institute
legal or other proceedings to collect fees which may be
considered to be due from others to it as a result of such a
tender, unless the Fund shall enter into an agreement with the
Manager and/or Distributors to reimburse them for all expenses
connected with attempting to collect such fees including legal
fees and expenses and that portion of the compensation due to
their employees which is attributable to the time involved in
attempting to collect such fees.
(d) The Manager shall render regular reports to the
Trust, not more frequently than quarterly, of how much total
brokerage business has been placed by the Manager with brokers
falling into each of the foregoing categories and the manner in
which the allocation has been accomplished.
(e) The Manager agrees that no investment decision
will be made or influenced by a desire to provide brokerage for
allocation in accordance with the foregoing, and that the right
to make such allocation of brokerage shall not interfere with the
Manager's paramount duty to obtain the best net price and
execution for each Fund.
C. Provision of Information Necessary for Preparation of
Securities Registration Statements, Amendments and Other
Materials. The Manager, its officers and employees will make
available and provide accounting and statistical information
required by the Trust in the preparation of registration
statements, reports and other documents required by Federal and
State securities laws and with such information as the Trust may
reasonably request for use in the preparation of such documents
or of other materials necessary or helpful for the underwriting
and distribution of the Trust's shares.
D. Other Obligations and Services. The Manager shall make
its officers and employees available to the Board of Trustees and
officers of the Trust for consultation and discussions regarding
the administration and management of the Trust and its investment
activities.
3. Expenses of the Trust. It is understood that the Trust will
pay all its expenses other than those expressly assumed by the
Manager herein, which expenses payable by the Trust shall
include:
A. Fees to the Manager as provided herein;
B. Expenses of all audits by independent public
accountants;
C. Expenses of transfer agent, registrar, custodian,
dividend disbursing agent and shareholder record keeping
services;
D. Expenses of obtaining quotations for calculating the
value of the net assets of each Fund;
E. Salaries and other compensation of any of its executive
officers who are not officers, directors, stockholders or
employees of the Manager;
F. Taxes levied against the Trust;
G. Brokerage fees and commissions in connection with the
purchase and sale of portfolio securities for each Fund;
H. Costs, including the interest expense, of borrowing
money;
I. Costs incident to shareholder or trustee meetings of
the Trust, reports by the Trust to its shareholders, the filing
of reports with regulatory bodies and the maintenance of the
Trust's legal existence;
J. Legal fees, including the legal fees related to the
registration and continued qualification of the Trust's shares
for sale;
K. Costs of printing certificates representing shares of
beneficial interest of the Trust;
L. Fees and expenses of trustees who are not directors,
officers, employees or stockholders of the Manager or any of its
affiliates;
M. Trade association dues;
N. Its pro rata portion of the fidelity bond insurance
premium; and
O. The cost of portfolio insurance obtained by any of the
Funds.
4. Compensation of the Manager. Each Fund shall pay a
management fee in cash to the Manager based upon a percentage of
the value of that Fund's net assets, calculated as set forth
below, as compensation for the services rendered and obligations
assumed by the Manager. The initial management fee under this
Agreement shall be payable on the first business day of the first
month following the effective date of this Agreement, and shall
be reduced by the amount of any advance payments made by each
Fund relating to the month.
A. For purposes of calculating such fee, the value of the
net assets of each Fund shall be determined in the same manner as
such Fund uses to compute the value of its net assets in
connection with the determination of the net asset value of such
Fund's shares, all as set forth more fully in the Trust's current
prospectus. The rate of the monthly management fee shall be as
follows:
5/96 of 1% (approximately 5/8 of 1% per
year) of the value of net assets up to and
including $100,000,000; and
1/24 of 1% (approximately 1/2 of 1% per
year) of the value of net assets over $100,000,000
up to and including $250,000,000; and
9/240 of 1% (approximately 45/100 of 1%
per year) of the value of net assets in excess of
$250,000,000.
B. The management fee payable by each Fund shall be
reduced or eliminated to the extent that Distributors has
actually received cash payments of tender offer solicitation fees
less certain costs and expenses incurred in connection therewith;
and to the extent necessary to comply with the limitations on
expenses which may be borne by each Fund as set forth in the
laws, regulations and administrative interpretations of those
states in which such Fund's shares are registered.
C. If this Agreement is terminated prior to the end of any
month, the management fee for the Insured Fund shall be prorated
for the portion of any month in which this Agreement is in effect
which is not a complete month according to the proportion which
the number of calendar days in the month during which the
Agreement is in effect bears to the number of calendar days in
the month, and shall be payable within 10 days after the date of
termination.
5. Activities of the Manager. The services of the Manager to
the Trust hereunder are not to be deemed exclusive, and the
Manager and any of its affiliates shall be free to render similar
services to others. Subject to and in accordance with the
Declaration of Trust and By-Laws of the Trust and to Section
10(a) of the 1940 Act it is understood that trustees, officers,
agents and shareholders of the Trust are or may be interested in
the Manager or its affiliates as directors, officers, agents or
stockholders, and that directors, officers, agents or
stockholders of the Manager or its affiliates are or may be
interested in the Trust as trustees, officers, agents,
shareholders or otherwise, that the Manager or its affiliates may
be interested in the Trust as shareholders or otherwise; and that
the effect of any such interests shall be governed by said
Declaration of Trust, the By-Laws or the 1940 Act.
6. Liabilities of the Manager.
A. In the absence of wilful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties
hereunder on the part of the Manager, the Manager shall not be
subject to liability to the Trust or to any shareholder of the
Trust for any act of omission in the course of, or connected
with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security by any
Fund.
B. Notwithstanding the foregoing, the Manager agrees to
reimburse the Trust for any and all costs, expenses, legal
counsel and trustees' fees reasonably incurred by the Trust in
the preparation, printing and distribution of proxy statements,
amendments to its Registration Statement, holdings of meetings of
its shareholders or trustees, the conduct of factual
investigations, any legal or administrative proceedings
(including any applications for exemptions or determinations by
the Securities and Exchange Commission) which the Trust incurs as
the result of action or inaction of the Manager or any of its
affiliates or any of their officers, directors, employees or
shareholders where the actions or inaction necessitating such
expenditures (i) is directly or indirectly related to any
transactions or proposed transaction in the shares or control of
the Manager or its affiliates (or litigation related to any
pending or proposed or future transaction in such shares or
control) which shall have been undertaken without the prior,
express approval of the Trust's Board of Trustees; or, (ii) is
within the control of the Manager or any of its affiliates or any
of their officers, directors, employees or shareholders. The
Manager shall not be obligated pursuant to the provisions of this
Subsection 6(B), to reimburse the Trust for any expenditures
related to the institution of an administrative proceeding or
civil litigation by the Trust or a Trust shareholder seeking to
recover all or a portion of the proceeds derived by any
shareholder of the Manager or any of its affiliates from the sale
of his shares of the Manager or any of its affiliates, or similar
matters. So long as this Agreement is in effect, the Manager
shall pay to the Trust the amount due for expenses subject to
this Subsection 6(B) within 30 days after a bill or statement has
been received by the Trust therefor. This provision shall not be
deemed to be a waiver of any claim which the Trust may have or
may assert against the Manager or others for costs, expenses or
damages heretofore incurred by the Trust or for costs, expenses
or damages which the Trust may hereafter incur which are not
reimbursable to it hereunder.
C. No provision of this Agreement shall be construed to
protect any trustee or officer of the Trust, or director or
officer of the Manager, from liability in violation of Sections
17(h) and (i) of the 1940 Act.
D. The Trust's employment of the Manager is not an
exclusive arrangement, and one or more Funds may from time to
time employ other individuals or entities to furnish them with
the services provided for herein. In the event that one or more
of the Funds elect to terminate or not continue this Agreement
with the Manager, then the Manager shall have no duty and be
under no obligation to continue providing such Fund or Funds the
services provided for herein.
7. Renewal and Termination.
A. This Agreement shall become effective on the date of
its execution written below and shall continue in effect for two
(2) years. The Agreement is renewable annually thereafter with
respect to each of the Funds for successive periods not to exceed
one (1) year (i) by a vote of a majority of the outstanding
voting securities of each Fund desiring to continue the Agreement
or by a vote of the Board of Trustees of the Trust, and (ii) by a
vote of a majority of the Trustees of the Trust who are not
parties to the Agreement or interested persons of any parties to
the Agreement (other than as Trustees of the Trust), cast in
person at a meeting called for the purpose of voting on the
Agreement.
B. This Agreement:
(a) may at any time be terminated by each of the Funds
without the payment of any penalty either by vote of the Board of
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the terminating Fund or Funds, on 30 days'
written notice to the Manager;
(b) shall immediately terminate with respect to all
Funds in the event of its assignment; and
(c) may be terminated at any time without payment of
any penalty by the Manager on 30 days' written notice to the
respective Fund.
C. As used in this Agreement, the terms "assignment,"
"interested persons" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth for such
terms in the 1940 Act.
D. Any notice under this Agreement shall be given in
writing addressed and delivered, or mailed post-paid, to the
other party at any office of such party.
8. Limitation of Trust's Liability. The Manager acknowledges
that it has received notice of and accepts the limitations of the
Trust's liability set forth in its Agreement and Declaration of
Trust. The Manager agrees that the Trust's obligations hereunder
shall be limited to the Trust and to the assets of each
respective Fund, and that the Manager shall not seek satisfaction
of any such obligation from the shareholders of the Trust nor
from any Trustee, officer, employee or agent of the Trust.
9. Severability. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected
thereby.
10. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed effective the 21st day of September, 1992.
FRANKLIN CALIFORNIA TAX-FREE TRUST on behalf of
FRANKLIN CALIFORNIA INTERMEDIATE-TERM TAX-FREE INCOME FUND
By /s/ Charles B. Johnson
FRANKLIN ADVISERS, INC.
By /s/ Rupert H. Johnson
FRANKLIN CALIFORNIA TAX-FREE TRUST
777 Mariners Island Blvd.
San Mateo, California 94404
Franklin/Templeton Distributors, Inc.
777 Mariners Island Blvd.
San Mateo, California 94404
Re: 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 (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 Fund'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 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 or Trustees ("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 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 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 Fund 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.
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 Fund's 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 Fund'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
Fund's shareholder services agent. The Fund'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 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, 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," "Assignment," "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.
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,
FRANKLIN CALIFORNIA TAX-FREE TRUST
By:_______________________________
Accepted:
Franklin/Templeton Distributors, Inc.
By:__________________________________
DATED: ______________
AGREEMENT
AGREEMENT, made as of August 15, 1985, between Franklin
California Tax-Free Trust, a Massachusetts Business Trust
(hereinafter called the "Fund"), and Bank of America NT & SA, a
national banking association (hereinafter called the
"Custodian").
WITNESSETH:
WHEREAS, the Fund is registered as an investment
company under the Investment Company Act of 1940, as amended (the
"1940 Act"), as a diversified, open-end management company and
desires that its securities and cash shall be held and
administered by the Custodian pursuant to the terms of this
Agreement; and
WHEREAS, the Custodian has an aggregate capital,
surplus, and undivided profits in excess of Two Million Dollars
($2,000,000), and has its functions and physical facilities
supervised by federal authority and is ready and willing to serve
pursuant to and subject to the terms of this Agreement:
NOW, THEREFORE, in consideration of the mutual
agreements herein made, the Fund, and Custodian agree as follows:
Sec. 1 .Definitions:
The word "securities" as used herein includes stocks,
shares, bonds, debentures, notes, mortgages and other obligations
and any certificates, receipts, warrants or other instruments
representing rights to receive, purchase, or subscribe for the
same, or evidencing or representing any other rights or interests
therein, or in any property or assets.
The term "proper instructions" shall mean a request or
direction by telephone or any other communication device from an
authorized Fund designee to be followed by a certification in
writing signed in the name of the Fund by any two of the
following persons: the Chairman of the Board of Trustees, the
President, a Vice-President, the Secretary and Treasurer of the
Fund, or any other persons duly authorized to sign by the Board
of Trustees of the Fund and for whom authorization has been
communicated in writing to the Custodian. The term "proper
officers" shall mean the officers authorized above to give proper
instructions.
Sec. 2. Names, Titles and Signatures of Authorized Signers:
An officer of the Fund will certify to Custodian the
names and signatures of those persons authorized to sign in
accordance with Sec. 1 hereof, and on a timely basis, of any
changes which thereafter may occur.
Sec. 3. Receipt and Disbursement off Money:
A. Custodian shall open and maintain a separate account
or accounts in the name of the Fund, subject only to draft or
order by Custodian acting pursuant to the terms of this
Agreement, ("Direct Demand Deposit Account"). Custodian shall
hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the accounts of the
Fund. This shall include, without limitation, the proceeds from
the sale of shares of the capital stock of the Fund which shall
be received along with proper instructions from the Fund. All
such payments received by Custodian shall be converted to Federal
Funds no later than the day after receipt and deposited to such
Direct Demand Deposit Account.
B. Custodian shall make payments of cash to, or for the
account of, the Fund from such cash or Direct Demand Deposit
Account only (a) for the purchase of securities for the portfolio
of the Fund upon the delivery of such securities to Custodian
registered in the name of the Custodian or of the nominee or
nominees thereof, in the proper form for transfer, (b) for the
redemption of shares of the capital stock of the Fund, (c) for
the payment of interest, dividends, taxes, management or
supervisory fees or any operating expenses (including, without
limitations thereto, insurance premiums, fees for legal,
accounting and auditing services), (d) for payments in connection
with the conversion, exchange or surrender of securities owned or
subscribed to by the Fund held by or to be delivered to
Custodian; or (e) for other proper Fund purposes. Before making
any such payment Custodian shall receive and may rely upon,
proper instructions requesting such payment and setting forth the
purposes of such payment.
Custodian is hereby authorized to endorse and collect
for the account of the Fund all checks, drafts or other orders
for the payment of money received by Custodian for the account of
the Fund.
Sec. 4. Holding of Securities:
Custodian shall hold all securities received by it for
the account of the Fund, pursuant to the provisions hereof, in
accordance with the provisions of Section 17(f) of the Investment
Company Act of 1940 and the regulations thereunder. All such
securities are to be held or disposed of by the Custodian for,
and subject at all times to the proper instructions of, the Fund,
pursuant to the terms of this Agreement. The Custodian shall have
no power of authority to assign, hypothecate, pledge or otherwise
dispose of any such securities and investments, except pursuant
to the proper instructions of the Fund and only for the account
of the Fund as set forth in Sec. 5 of this Agreement.
Sec. 5. Transfer, Exchange or Delivery, of Securities:
Custodian shall have sole power to release or to
deliver any securities of the Fund held by it pursuant to this
Agreement. Custodian agrees to transfer, exchange, or deliver
securities held by it hereunder only (a) for the sales of such
securities for the account of the Fund upon receipt by Custodian
of payment therefor, (b) when such securities are called,
redeemed or retired or otherwise become payable, (c) for
examination by any broker selling any such securities in
accordance with "street delivery" custom, (d) in exchange for or
upon conversion into other securities alone or other securities
and cash whether pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment, or otherwise,
(e) upon conversion of such securities pursuant to their terms
into other securities, (f) upon exercise of subscription,
purchase or other similar rights represented by such securities,
(g) for the purpose of exchanging interim receipts or temporary
securities for definitive securities, (h) for the purpose of
redeeming in kind shares of beneficial interest of the Fund upon
delivery thereof to Custodian, or (i) for other proper Fund
purposes. Any securities or cash receivable in exchange for such
deliveries made by Custodian, shall be deliverable to Custodian.
Before making any such transfer, exchange or delivery, the
Custodian shall receive, and may rely upon, proper instructions
authorizing such transfer, exchange or delivery and setting forth
the purpose thereof.
Sec. 6. Other Actions of Custodians:
(a) The Custodian shall collect, receive and deposit
income dividends, interest and other payments or distribution of
cash or property of whatever kind with respect to the securities
held hereunder; receive and collect securities received as a
distribution upon portfolio securities as a result of a stock
dividend, share split-up, reorganization, recapitalization,
consolidation, merger, readjustment, distribution of rights and
other items of like nature, or otherwise, and execute ownership
and other certificates and affidavits for all federal and state
tax purposes in connection with the collection of coupons upon
corporate securities, setting forth in any such certificate or
affidavit the name of the Fund as owner of such securities; and
do all other things necessary or proper in connection with the
collection, receipt and deposit of such income and securities,
including without limiting the generality of the foregoing,
presenting for payment all coupons and other income items
requiring presentation and presenting for payment all securities
which may be called, redeemed, retired or otherwise become
payable. Amounts to be collected hereunder shall be credited to
the account of the Fund according to the following formula:
(1) Periodic interest payments and final payments on
maturities of Federal instruments such as U.S. Treasury bills,
bonds and notes; interest payments and final payments on
maturities of other money market instruments including tax-exempt
money market instruments payable in federal or depository funds;
and payments on final maturities of GNMA instruments, shall be
credited to the account of the Fund on payable or maturity date.
(2) Dividends on equity securities and interest
payments, and payments on final maturities of municipal bonds
(except called bonds) shall be credited to the account of the
Fund on payable or maturity date plus one.
(3) Payments for the redemption of called bonds,
including called municipal bonds shall be credited to the account
of the Fund on the payable date except that called municipal
bonds paid in other than Federal or depository funds shall be
credited on payable date plus one.
(4) Periodic payments of interest and/or of partial
principal on GNMA instruments (other than payments on final
maturity) shall be credited to the account of the Fund on payable
date plus three.
(5) Proceeds of insurance in lieu of any payments on
municipal securities in default shall be credited to the account
of the Fund on date of receipt.
(6) Should the Custodian fail to credit the account of
the Fund on the date specified in paragraphs (1) - (5) above, the
Fund may at its option, require compensation from the Custodian
of foregone interest (at the rate of prime plus one) and for
damages, if any.
(b) Payments to be received or to be paid in connection
with purchase and sale transactions shall be debited or credited
to the account of the Fund on the contract settlement date with
the exception of "when-issued" municipal bonds. Payments to be
made for purchase by the Fund of when-issued municipal bonds
shall be debited to the account of the Fund on actual settlement
date.
(1) In the event a payment is wrongfully debited to the
account of the Fund due to an error by the Custodian, the
Custodian will promptly credit such amount to the Fund, plus
interest (prime plus one) and damages, if any.
(2) In the event a payment is credited to the account
of the Fund and the Custodian is unable to deliver securities
being sold due to an error on the part of the Fund, such payment
shall be debited to the account of the Fund, and an appropriate
charge for costs of the transaction may be sent by the Custodian
to the Fund.
Sec. 7. Reports by Custodian:
Custodian shall each business day furnish the Fund with
a statement summarizing all transactions and entries for the
account of the Fund for the preceding day. At the end of every
month Custodian shall furnish the Fund with a list of the
portfolio securities showing the quantity of each issue owned,
the cost of each issue and the market value of each issue at the
end of each month. Such monthly report shall also contain
separate listings of (a) unsettled trades and (b) when-issued
securities. Custodian shall furnish such other reports as may be
mutually agreed upon from time-to-time.
Sec. 8. Compensation:
Custodian shall be paid as compensation for its
services pursuant to this Agreement such compensation as may from
time-to-time be agreed upon in writing between the two parties.
Sec. 9. Liabilities and Indemnifications:
(a) Custodian shall not be liable for any action taken
in good faith upon any proper instructions herein described or
certified copy of any resolution of, the Board of Trustees of the
Fund, and may rely on the genuineness of any such document which
it may in good faith believe to have been validly executed.
(b) The Fund agrees to indemnify and hold harmless the
Custodian and its nominee from all taxes, charges, expenses,
assessments, claims and liabilities (including counsel fees)
incurred or assigned against it or its nominee in connection with
the performance of this Agreement, except such as may arise from
negligent action, negligent failure to act or willful misconduct
of Custodian or its nominee.
Sec. 10. Records:
The Custodian hereby acknowledges that all of the
records it shall prepare and maintain pursuant to this Agreement
shall be the property of the Fund and, if and to the extent
applicable, of the principal underwriter of the shares of the
Fund, and that upon proper instructions of the Fund or such
principal underwriter, if any, or both, it shall:
(a) Deliver said records to the Fund, principal
underwriter or a successor custodian, as appropriate:
(b) Provide the auditors of the Fund or principal
underwriter or any securities regulatory agency with a copy of
such records without charge; and provide the Fund and successor
custodian With a reasonable number of reports and copies of such
records at a mutually agreed upon charge appropriate to the
circumstances.
(c) Permit any securities regulatory agency to inspect
or copy during normal business hours of the Custodian any such
records.
Sec. 11. Appointment of Agents:
(a) The Custodian shall have the authority, in its
discretion, to appoint an agent or agents to do and perform any
acts or things for and on behalf of the Custodian, pursuant at
all times to its instructions, as the Custodian is permitted to
do under this Agreement.
(b) Any agent or agents appointed to have physical
custody of securities held under this Agreement or any part
thereof must be: (1) a bank or banks, as that term is defined in
Section 2(a)(5) of the 1940 Act, having an aggregate, surplus and
individual profits of not less than $2,000,000 (or such greater
sum as may then be required by applicable laws), or (2) a
securities depository, (the "Depository") as that term is defined
in Rule 17f-4 under the 1940 Act, upon proper instructions from
the Fund and subject to any applicable regulations, or (3) the
book-entry system of the U.S. Treasury Department and Federal
Reserve Board, (the "System") upon proper instructions and
subject to any applicable regulations.
(c) With respect to portfolio securities deposited or
held in the System or the Depository, Custodian shall:
1) hold such securities in a nonproprietary account
which shall not include securities owned by
Custodian;
2) on each day on which there is a transfer to or
from the Fund in such portfolio securities, send a
written confirmation to the Fund;
3) upon receipt by Custodian, send promptly to
Fund(i) a copy of any reports Custodian receives
from the System or the Depository concerning
internal accounting controls, and (ii) a copy of
such reports on Custodian's systems of internal
accounting controls as Fund may reasonably
request.
(d) The delegation of any responsibilities or
activities by the Custodian to any agent or agents shall not
relieve the Custodian from any liability which would exist if
there were no such delegation.
Sec. 12. Assignment and Termination:
(a) This Agreement may not be assigned by the Fund or
the Custodian without written consent of the other party.
(b) Either the Custodian or the Fund may terminate this
Agreement without payment of any penalty, at any time upon one
hundred twenty (120) days written notice thereof delivered by the
one to the other, and upon the expiration of said one hundred
twenty (120) days, this Agreement shall terminate; provided,
however, that this Agreement shall continue thereafter for such
period as may be necessary for the complete divestiture of all
assets held hereinunder, as next herein provided. In the event of
such termination, the Custodian will immediately upon the receipt
or transmittal of such notice, as the case may be, commence and
prosecute diligently to completion the transfer of all cash and
the delivery of all portfolio securities, duly endorsed, to the
successor of the Custodian when appointed by the Fund. The Fund
shall select such successor custodian within sixty (60) days
after the giving of such notice of termination, and the
obligation of the Custodian named herein to deliver and transfer
over said assets directly to such successor custodian shall
commence as soon as such successor is appointed and shall
continue until completed, as aforesaid. At any time after
termination hereof the Fund may have access to the records of the
administration of this custodianship whenever the same may be
necessary.
(c) If, after termination of the services of the
Custodian, no successor custodian has been appointed within the
period above provided, the Custodian may deliver the cash and
securities owned by the Fund to a bank or trust company of its
own selection having an aggregate capital, surplus and undivided
profits of not less than Two Million Dollars ($2,000,000) (or
such greater sum as may then be required by the laws and
regulations governing the conduct by the Fund of its business as
an investment company) and having its functions and physical
facilities supervised by federal or state authority, to be held
as the property of the Fund under the terms similar to those on
which they were held by the retiring Custodian, whereupon such
bank or trust company so selected by the Custodian shall become
the successor custodian with the same effect as though selected
by the Board of Trustees of the Fund.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement.
Franklin California Tax-Free Trust
By: /s/ Harmon E. Burns
Attest:
/s/ David P. Goss
Bank of America, NT & SA
By: /s/ illegible
FRANKLIN
GROUP OF FUNDS
(FRANKLIN LOGO)
777 Mariners Island Blvd.
San Mateo, CA 94404-1585
415/570-3000
April 2, 1990
Lee D. Harbert, Vice President & Mgr.
Bank of America NT & SA
555 California St. 4th Floor
San Francisco, CA 94104
Dear Lee:
This will confirm our agreement to modify the Custodian
Agreement for the funds listed below as follows:
Section 6(a) (4) will be modified to read: "Periodic
payments of interest and/or of partial principal on GNMA
instruments (other than payments on final maturity) shall be
credited to the account of the Fund on payable date plus two."
FRANKLIN GROUP OF FUNDS
Franklin Investors Securities Trust
Franklin Tax-Free Trust
Franklin California Tax-Free Income Fund, Inc.
Franklin Federal Tax-Free Income Fund
AGE High Income Fund, Inc.
Franklin New York Tax-Free Income Fund, Inc.
Franklin Equity Fund
Franklin California Tax-Free Trust
Institutional Fiduciary Trust
Franklin Gold Fund
Franklin Tax-Exempt Money Fund
Franklin Pennsylvania Investors Fund
Franklin Money Fund
Franklin Federal Money Fund
Franklin Custodian Funds, Inc.
Franklin Option Fund
Franklin Tax-Advantaged U.S. Government Securities Fund
Franklin Tax-Advantaged High Yield Securities Fund
Franklin Managed Trust
Franklin Valuemark Funds
Franklin Government Securities Trust
Franklin New York Tax-Exempt Money Fund
Franklin Balance Sheet Investment Fund
Please sign the enclosed copy of this letter in the space
indicated and return it to me. If you have any questions,
please call me.
Sincerely,
/s/ Deborah R. Gatzek
Deborah R. Gatzek
Approved and agreed:
/s/ Lee D. Harbert
By: Lee D. Harbert
AGREEMENT
This Agreement is made this 3rd day of September, 1985 by
and between FRANKLIN CALIFORNIA TAX-FREE TRUST, a Massachusetts
business trust with principal offices at 155 Bovet Road, San
Mateo, California 94402 ("Franklin") and FINANCIAL GUARANTY
INSURANCE COMPANY, a New York stock insurance company, with
principal offices at 175 Water Street, New York, New York 10038
("Financial Guaranty"), with reference to the following facts:
A. Franklin is a diversified, open-end investment company
(mutual fund), organized as a Massachusetts business trust.
Franklin currently consists of two separate Funds (collectively
the "Funds"): Franklin California Insured Tax-Free Income Fund
(the "Insured Fund") and Franklin California Tax-Exempt Money
Fund (the "Money Fund"). Each of the Funds issues a separate
series of Franklin's shares and will maintain a totally separate
investment portfolio. The Insured Fund is currently the only
Fund intended to be insured under this Agreement Other Insured
Funds may be organized by Franklin from time to time and may be
covered by this Agreement as herein provided. The Money Fund
will not be an insured fund.
B. The Insured Fund will invest primarily in securities
of the State of California and its political subdivisions,
agencies, and instrumentalities, the interest on which is exempt
from federal and California personal income taxes (referred to
herein as "municipal securities" or "bonds") Franklin desires to
have certain of the Insured Fund's investments in municipal
securities be covered by portfolio insurance guaranteeing their
scheduled payment of interest and of principal while held by the
Insured Fund.
C. Financial Guaranty is in the business of providing
insurance and financial guaranties for a variety of investment
instruments. Financial Guaranty desires to provide to Franklin
the portfolio insurance described in the preceding paragraph (B).
In consideration of the mutual covenants and conditions
set forth below, Franklin and Financial Guaranty agree as
follows:
1. Agreement to Insure.
1.1 Financial Guaranty agrees to insure the municipal
securities purchased in accordance with the terms of this
Agreement from time to time by Franklin for the Insured Fund,
which municipal securities Financial Guaranty has approved in
advance of such purchase as eligible for insurance.
1.2 Notwithstanding Section 1.1, Franklin may purchase any
principal securities covered by insurance ,obtained, by the
issuer applicable to the "securities purchased by Franklin
regardless of the insurance company providing such insurance,
without purchasing insurance therefor from Financial Guaranty.
1.3 Notwithstanding Section 1.1, Franklin may purchase any
short-term instruments, such as Project Notes or tax exempt
commercial paper, which have the highest rating issued by Moody's
and Standard & Poor's, or any fully defeased municipal securities
secured by escrow accounts invested in U. S. Government
obligations, without purchasing insurance therefor from Financial
Guaranty.
2. Issuance of Master Policies.
2.1 Financial Guaranty agrees to issue a master insurance
policy ("the Master Policy") for the Insured Fund, and future
Insured Funds which may be organized, on the date Franklin
informs Financial Guaranty it desires to have Financial Guaranty
issue a Master Policy for a given Insured Fund. (The form of the
Master Policy is attached hereto as Exhibit "1.") A schedule will
be issued by Financial Guaranty and attached to and made a part
of each Master Policy which lists all bonds insured in a given
Insured Fund ("Schedule A"). Each Schedule A will list the
following information for each insured bond in the given Fund:
item number, par value, full name of issuer, full name of bond,
interest rate, date of bond, stated maturity date of bond, CUSIP
number, secondary market premium rate, annual premium rate,
annual premium amount, date bond first insured under policy, and
date bond sold (including, for all purposes in this Agreement,
municipal securities not delivered or paid prior to maturity). As
bonds are added to and/or sold from the Insured Funds, Financial
Guaranty agrees to issue updated addendums to Schedule A
reflecting such deletions and/or additions. Financial Guaranty
agrees to deliver to Franklin updated Schedule A's on a monthly
basis for each Insured Fund. In addition, Financial Guaranty
agrees to provide Franklin for each Insured Fund on a monthly
basis a summary which contains the same information specified
above for inclusion in Schedule A but on a cumulative basis for
all insured bonds which have been sold by an Insured Fund.
2.2 Financial Guaranty's obligation to insure any particular
bond which it has agreed to insure is subject only to Franklin' s
becoming the bondholder (within the meaning of the Master
Policies) (i) on or before the 100th day following the Purchase
Date or (ii) on or before the 150th day following the Purchase
Date in the case of "when, as and if issued" bonds which the
issuer thereof has failed timely to deliver in definitive form to
the original purchasers thereof. So long as Franklin becomes the
bondholder on or before the 100th or 150th day following the
Purchase Date, as the case may be, such municipal security shall
be insured as of the Purchase Date.
3. Exclusivity of Insurance.
3.1 With respect to any insurance purchased on municipal
securities by Franklin, Franklin agrees to acquire such insurance
only from Financial Guaranty, subject to Franklin's rights under
Section 8.3 herein.
4. Premium Payment.
4.1 Financial Guaranty agrees to provide Franklin on the
fifth business day of each month with a premium payment statement
for each Insured Fund containing an accounting of the premium due
for that month, including adjustments for (i) any premium refund
due Franklin because of the sale of bond(s) by an Insured Fund
during the previous month (including bonds for which Secondary
Market Insurance has been purchased), (ii) any additional premium
due Financial Guaranty because of a purchase of bond(s) by an
Insured Fund during the previous month, and (iii) any single
premium due for Secondary Market Insurance acquired during the
prior month.
4.2 Franklin agrees to pay Financial Guaranty on behalf of
each Insured Fund within five business days of Franklin's receipt
of the premium statement provided for in Section 4.1, one-twelfth
(1/12) of the aggregate of the annual premiums for the bonds
listed on the Schedule A to the Master Policy for each such
Insured Fund as of the last business day of the prior month.
4.3 If Financial Guaranty does not receive the premium
payment within five business days of Franklin's receipt of the
premium statement, then Financial Guaranty agrees to notify
Franklin that it has not received said premium payment by the end
of the sixth business day following Franklin's receipt of the
premium statement. All premium payments due Financial Guaranty
which are received by Financial Guaranty on or before the close
of business on the fifth business day following Franklin's
receipt of the premium statement shall not be considered late.
However, if a premium payment is received after the fifth
business day following Franklin's receipt of the premium
statement, Franklin agrees to pay Financial Guaranty in addition
to the premium due, interest at a rate equal to that rate of
interest publicly announced as its base rate from time to time by
Citibank, N.A. in New York, New York, plus one percent per annum
for each 24-hour period or portion thereof payment of the premium
is delayed after the fifth business day following Franklin's
receipt of the premium statement.
4.4 Financial Guaranty agrees that once an Insured Fund
purchases a bond and begins paying a premium for that bond based
upon a stated annual premium rate, neither the annual premium
rate nor the secondary market premium rate for that bond can be
changed by Financial Guaranty so long as the bond is owned by
Franklin and insured by Financial Guaranty under one of the
Master Policies of the Insured Funds or the Secondary Market
Policy referred to in Section 9 herein.
4.5 With each premium payment, Franklin shall, to the extent
Franklin has notice thereof, notify Financial Guaranty as to any
bond which has been paid prior to maturity, defeased (whether
legally or economically), sold by an Insured Fund or never
purchased by such Fund during the preceding thirty days. Such
notification must specify the amount of bonds affected and
identify such bonds by their item number in Schedule A to the
applicable Master Policy. Such notification shall be deemed
sufficient for purposes of entitling Franklin to any premium
refunds pursuant to the Master Policies. No such notice need be
given as to bonds with respect to which Financial Guaranty has
previously been notified to the same effect.
5. Definitions.
Financial Guaranty and Franklin agree that the following
definitions shall apply to the interpretation of the Master
Policies and the interpretation of this Agreement.
5.1 "Approved List" is the then current list of municipal
securities or bonds, including premium rate and allocation
information, which Financial Guaranty will insure under the terms
of the Master Policies if Franklin purchases such municipal
securities or bonds.
5.2 "Bonds" or "municipal securities" are all of the
municipal securities or bonds purchased by Franklin which are
insured under one of the Master Policies issued to the Insured
Funds.
5.3 "Interest Coupons" are the coupons, if any, attached to
each of the bonds.
5.4 "Policy Period" is the period of time commencing with
the policy effective date of a given Master Policy and continuing
until the date of cancellation of said Master Policy under
Section 8.1, 8.2, or 8.3 herein.
5.5 "Policy Effective Date" is the first day on which
Franklin has coverage under a given Master Policy issued to an
Insured Fund. Each Master Policy takes effect at 12:01 Pacific
Standard Time on the policy effective date.
5.6 "Purchase Date" is the date on which an Insured Fund
purchases a municipal security and is the first day on which such
municipal security is insured under a given Master Policy.
5.7 In addition to the definitions contained in the Master
Policies and any endorsements thereto, "Due for Payment," when
referring to the principal of a bond, does not refer to any
extension or delay in payment by reason of court order,
legislation, or governmental action of any nature.
6. Bond Purchase Allocations.
Financial Guaranty agrees to provide Franklin by a method
capable of producing a written record with an allocation of bonds
which Franklin may purchase and have insured by Financial
Guaranty during any calendar quarter. Once Financial Guaranty
makes the allocation, it agrees not to reduce an allocation for
any bond during the course of that quarter for which the
allocation is made. Furthermore, if Franklin exhausts its
allocation for a given bond during a quarter and if it desires to
purchase additional amounts of said bond during the quarter,
Financial Guaranty agrees to use its best efforts to increase
Franklin's allocation of said bonds so as to allow Franklin to
make the additional purchases. However, Financial Guaranty
reserves the right to remove from the allocation lists of all its
clients, any bond the credit of which, in the judgment of
Financial Guaranty, materially deteriorated after it made the
quarterly allocations.
7. Financial Guaranty Broadcast Network.
Financial Guaranty agrees to provide Franklin with access to
its broadcast network system which will communicate to Franklin
the Approved List of bond issues eligible for insurance.
Financial Guaranty further agrees to incur all costs in providing
Franklin with access to and use of the broadcast network, except
for the receiving terminal at Franklin. If the broadcast network
is not in place and operational at the time the Master Policies
are issued, Financial Guaranty agrees to pay any and all costs
associated in communicating in another mode its Approved List of
bond issues on a regular, timely basis to Franklin up to the time
the broadcast network is, in fact, in place and operational.
8. Cancellation of Master Policies.
8.1 Each Master Policy is non-cancellable by Financial
Guaranty except for non-payment of premium. If Financial
Guaranty has not received a premium payment for any bond by the
15th business day following the date on which it was due, it
agrees to notify Franklin again of Franklin's nonpayment. If
Financial Guaranty has not received any such overdue premium
payment on or before the next succeeding premium due date, then
the Master Policy(ies) of the Insured Fund(s) with respect only
to the bond or bonds for which the premium payment has not been
received shall be cancelled. The effective date of such
cancellation shall be as of the date on which the premium payment
was originally due and all such bonds previously insured
thereunder shall have ceased to be insured as of that date.
8.2 Franklin reserves the right to cancel any Master Policy
upon sixty (60) days' prior written notice to Financial Guaranty.
8.3 Franklin reserves the right upon thirty (30) days' prior
written notice to Financial Guaranty to discontinue insuring
bonds under any or all of the Master Policies which Franklin
purchases after the effective date of the notice. If Franklin
discontinues insuring bonds with Financial Guaranty, it shall
have the right to continue to pay premiums to Financial Guaranty
and thereby keep any and/or all of the Master Policies in force
for the bonds which it had purchased and previously insured under
a Master Policy prior to the effective date of the notice. In
this situation, a Master Policy will terminate (i) on the date on
which the last principal payment of the last bonds, together with
accrued interest, are received by Franklin or (ii) on the date
the last bond insured under a Master Policy is sold by Franklin,
whichever occurs later. During the period of time in which
Franklin keeps the Master Policies in force, it shall also retain
the right to purchase a Secondary Market Policy for any bonds
insured under such Master Policy.
9. Secondary Market Insurance Conversion Option.
9.1 Financial Guaranty hereby grants Franklin the right to
purchase, on a bond-by-bond basis for each and every bond owned
by Franklin which is insured under one of the Master Policies,
Financial Guaranty's Municipal Bond Secondary Market Insurance
Policy ("Secondary Market Policy") in substantially the form
attached to this Agreement as Exhibit "2." The premium with
respect to any Secondary Market Policy for any bond is payable
with the premium payment due in the next succeeding month
following the month in which the bond was sold.
9.2 Franklin's right to purchase the Secondary Market
Policy shall apply to each and every bond held by Franklin under
one or more of the Master Policies, regardless of whether
Franklin intends to hold or sell such bond and regardless of the
then existing credit status or rating of the issuer of said bond.
9.3 Contemporaneously with the issuance of a Secondary
Market Policy for any bond, the coverage of such bond under one
or more Master Policies shall cease and such bond shall be
treated as sold for purposes of the accounting therefor in
Section 4.1 herein and no further premium shall be due under the
Master Policy or Policies.
10. Approval of Bond Purchase Request.
Financial Guaranty agrees to use its best efforts to promptly
research, investigate, and approve or disapprove any request of
Franklin to purchase a bond which is not on Financial Guaranty's
then current Approved List.
11. Time for Payment by Fiscal Agent.
Financial Guaranty will cause its Fiscal Agent to pay
Franklin any principal and/or interest due Franklin because of
nonpayment by an issuer within 30 calendar days after Financial
Guaranty has paid the Fiscal Agent under the provisions of
paragraph 2 of each Master Policy, so long as the evidence
requirements under such paragraph are met. Within 15 days of
Financial Guaranty's payment to the Fiscal Agent, Financial
Guaranty is to ascertain if there are any problems between
Franklin and the Fiscal Agent with respect to the necessary
evidence Franklin is to provide the Fiscal Agent. If there are
any problems, Financial Guaranty agrees to work with Franklin and
the Fiscal Agent to resolve such problems so that the Fiscal
Agent can make payment within the 30-calendar-day period.
12. Confidentiality: Financial Guaranty Staff.
12.1 Financial Guaranty hereby agrees that (except for
disclosures required by law) its staff, while employed by
Financial Guaranty, will not reveal to any other Financial
Guaranty clients, directly or indirectly, the amount and/or types
of municipal bonds purchased by Franklin. In addition, Financial
Guaranty agrees that (except for disclosures required by law) its
staff will not reveal to other Financial Guaranty clients any
information received from Franklin's staff, as a result of the
relationship between Financial Guaranty and Franklin created
under this Agreement, regarding Franklin's business, trading
strategy and/or business practices, and/or any other information
which might lessen Franklin's competitive place in the mutual
fund market.
12.2 So that it can fulfill its obligations under Section
12.1, Financial Guaranty further agrees to institute an internal
confidentiality program. Financial Guaranty also agrees that a
part of its internal confidentiality program will inform its
staff members of their obligation to keep confidential all
information they obtain about Franklin after they leave the
employ of Financial Guaranty.
13. Confidentiality: Franklin Staff.
13.1 Franklin hereby agrees that (except for disclosures
required by law) its staff, while employed by Franklin, will not
reveal to any individuals and/or entities outside Franklin,
directly or indirectly, any information concerning the names of
the bonds and the issuers on Financial Guaranty's Approved List
or concerning its Broadcast System, which information the staff
obtains as a result of the relationship between Financial
Guaranty and Franklin created under this Agreement.
13.2 So that it can fulfill its obligations under Section
13.1, Franklin further agrees to institute an internal
confidentiality program. Franklin also agrees that a part of its
internal confidentiality program will inform its staff members of
their obligation to keep confidential the information they obtain
about Financial Guaranty's Approved List after they leave the
employ of Franklin.
14. Information Notification.
Financial Guaranty agrees promptly to provide Franklin in
writing, from time to time or upon the reasonable written request
of Franklin, with (a) any information concerning any change which
would make the statements in the Registration Statement of
Franklin on Form N-1A ("Registration Statement") under the
caption "Insurance" relating to Financial Guaranty and the Master
Policies fail to present accurately and fairly the summary
information set forth therein or omit any material fact with
respect to the description of Financial Guaranty relevant to the
material terms of the Master Policies and/or Financial Guaranty's
ability to meet its obligations under the Master Policies and (b)
any information concerning any material adverse change in
Financial Guaranty's financial condition since the date of the
financial information relating to Financial Guaranty which was
included in the Registration Statement. The purpose for
providing this information to Franklin is to keep the information
in the Registration Statement current for so long as the
Prospectus and Statement of Additional Information in such
Registration Statement, as amended or supplemented, is required
to be delivered in connection with the offer, sale, or resale of
shares of the Funds.
15. General Provisions.
15.1 Headings. Headings and subheadings are provided in this
Agreement for convenience only and are not to be taken to modify
in any way the provisions with which they are associated or any
other provisions.
15.2 Severability of Provisions. If any provision of this
Agreement is held to be unenforceable or in conflict with the law
of any state or of the United States of America, the remainder of
this Agreement is to be considered valid and enforceable
according to its terms, and the Agreement is to be construed as
if such unenforceable provision(s) had never been contained in
it.
15.3 Waiver. A waiver of any breach of any provision of this
Agreement is not to be construed as a continuing waiver of other
breaches of the same or other provisions of this Agreement.
Furthermore, performance of any obligation required of a party
under this Agreement may be waived only by written waiver signed
by the other party. Such a waiver is to be effective only with
respect to the specific obligations described in the waiver.
15.4 Limitation of Franklin's Liability. Financial Guaranty
acknowledges that it has received notice of and accepts the
limitations of Franklin's liability set forth in Article VIII of
its Agreement and Declaration of Trust. Financial Guaranty
agrees that Franklin's obligations hereunder shall be limited to
Franklin and to its assets and that Financial Guaranty shall not
seek satisfaction of any such obligation from the shareholders of
Franklin nor from any Trustee, officer, employee, or agent of
Franklin.
15.5 Remedy. Unless specifically provided in this Agreement,
no remedy available to either party under this Agreement is
intended to be exclusive of any other remedy. Furthermore, each
and every remedy is to be cumulative and is to be in addition to
every other remedy provided under this Agreement or available at
law or in equity.
15.6 Amendments. All amendments or modifications of this
Agreement are to be binding upon the parties so long as such
amendments are in writing and executed by both parties.
15.7 Successor and Assigns. This Agreement is to be binding
upon and inure to the benefit of each of the parties, and, except
as otherwise provided in this Agreement, to their respective
legal successors and assigns.
15.8 Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement,
the prevailing party is to be entitled to reasonable attorneys'
fees, costs, and necessary disbursements in addition to any other
relief to which such party is entitled.
15.9 General Assurances. The parties agree to execute,
acknowledge, and deliver all such further instruments and do all
such other acts as may be appropriate in order to carry out the
intent and purposes of this Agreement, including the intent and
purposes of any applicable exhibit to it.
15.10 Notices. Any notice, request, or communication
required under this Agreement is to be in writing and is for all
purposes deemed to be fully given if sent by telegram, if
delivered personally, or if mailed, postage prepaid, return
receipt requested by certified or registered mail, to the
respective parties at the addresses set forth at the beginning of
this Agreement. Either party may change its address for the
purposes of this Agreement by giving the other party written
notice of its new address. A communication, if received after the
date on which it is due, will nevertheless be considered timely
if it was mailed at least seven (7) days prior to the date on
which it was due.
15.11 Counterparts. This Agreement may be executed in one or
more counterparts, each of which is to be deemed an original, but
all such counterparts together constitute one and the same
instrument.
15.12 Force Majeure. Neither party will be liable in damages
or will be considered in breach for any delay or default in
performing under this Agreement if such delay or default is
caused by conditions beyond its control, including but not
limited to acts of God, government restriction, wars or
insurrections, strikes, fires, floods, severe weather, work
stoppages, lockouts, lack of materials, default of a common
carrier, or similar occurrences.
15.13 Governing Law. This Agreement is to be interpreted and
construed, and the legal relations created by it are to be
determined, in accordance with the laws of the State of New York.
15.14 Entire Agreement. This Agreement and the Exhibits
thereto constitute the sole and only Agreement of the parties
with respect to the subject matter hereof. They supercede any and
all prior or contemporaneous oral or written Agreements,
proposals, understandings,. promises, negotiations,
representations, or communications between the parties relating
to this Agreement and all past course of dealing or industry
custom, all of which are merged herein. If any provision in
the Financial Guaranty Operations Manual is in conflict with this
Agreement, this Agreement will control.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
FRANKLIN CALIFORNIA TAX-FREE TRUST
By: /s/ Charles B. Johnson
Title: President
FINANCIAL GUARANTY INSURANCE COMPANY
By: /s/ illegible
Title: Vice President
Financial Guaranty insurance
Company
175 Water Street
New York, New York 10038
Telephone (212)607-3000
EXHIBIT 1
Municipal Bond Mutual Fund Portfolio insurance Policy
Name of .Mutual Fund:
Policy Number:
Control Number:
Premium: As shown on Schedule A hereto
Financial Guaranty Insurance Company* ("Financial Guaranty"),
a New York stock insurance company, in consideration of the
payment of the premium shown on Schedule A hereto and subject to
the terms of this Policy, hereby unconditionally and irrevocably
agrees to pay to Citibank, N.A., or its successor, as its agent
(the "Fiscal Agent"), for the benefit of the Mutual Fund
described above (the "Fund"), that portion of the principal of
and interest on the debt obligations described in Schedule A to
this Policy (the "Bonds") which shall become Due for Payment but
shall be unpaid by reason of Nonpayment by the Issuer.
Financial Guaranty will make such payments to the Fiscal Agent on
the date such principal or interest becomes Due for Payment or on
the Business Day next following the day on which Financial
Guaranty shall have received Notice of Nonpayment, whichever is
later. The Fiscal Agent will disburse to the Fund the face amount
of principal and interest which is then Due for Payment but is
unpaid by reason of Nonpayment by the Issuer but only upon
receipt by the Fiscal Agent, in form reasonably satisfactory to
it, of (i) evidence of the Fund's right to receive payment of the
principal or interest Due for Payment and (ii) evidence,
including any appropriate instruments of assignment, that all of
the Fund's rights to payment of such principal or interest Due
for Payment shall thereupon vest in Financial Guaranty. Upon such
disbursement, Financial Guaranty shall become the owner of the
Bond, appurtenant coupon or right to payment of principal or
interest on such Bond and shall be fully subrogated to all of the
Fund's rights thereunder, including the Fund's right to payment
thereof.
Page 1 of 3 Form 9006
*Doing business in California as
FGIC Insurance Company.
Financial Guaranty Insurance
Company
175 Water Street
New York, New York 10038
Telephone (212)607-3000
Municipal Bond Mutual Fund Portfolio Insurance Policy
This Policy is non-cancellable for any reason, except failure to
pay any premium. This Policy shall be terminated as to any Bond
which has been paid prior to maturity, sold by the Fund or never
deposited in the Fund because the contract to purchase such Bond
has failed, and Financial Guaranty shall not thereafter have any
liability under this Policy on account of Nonpayment of any such
Bond. When Financial Guaranty is notified by the Fund that any
Bond has been paid prior to maturity, sold by the Fund or never
deposited in the Fund, Financial Guaranty shall refund any
prepaid premium thereon to the Fund. Any such notification must
specify the amount of Bonds affected, identify such Bonds by
their Item Number in Schedule A hereto, and designate the date of
the event giving rise to a refund of premium. This Policy does
not insure against loss of any prepayment premium which may at
any time be payable with respect to any Bond.
"Due for Payment" means, when referring to the principal of a
Bond, the stated maturity date thereof or the date on which the
same shall have been duly called for mandatory sinking fund
redemption and does not refer to any earlier date on which
payment is due by reason of call for redemption (other than by
mandatory sinking fund redemption), acceleration or other
advancement of maturity and means, when referring to interest on
a Bond, the stated date for payment of interest. "Nonpayment" in
respect of a Bond means the failure of the Issuer to have
provided sufficient funds to the paying agent for payment in full
of all principal and interest Due for Payment on such Bond.
"Notice" means telephonic or telegraphic notice, subsequently
confirmed in writing, or written notice by registered or
certified mail, from the Fund or a paying agent for the Bonds to
Financial Guaranty. "Business Day" means any day other than a
Saturday, Sunday or day on which the Fiscal Agent is authorized
by law to remain closed. "Issuer" means each issuer of the Bonds
described in Schedule A hereto.
Page 2 of 3 Form 9006
Financial Guaranty Insurance
Company
175 Water Street
New York, New York 10038
Telephone (212)607-3000
SPECIMEN
Municipal Bond Mutual Fund Portfolio Insurance Policy
In Witness Whereof, Financial Guaranty has caused this Policy to
be affixed with its corporate seal and to be signed by its duly
authorized officers in facsimile to become effective and binding
upon Financial Guaranty by virtue of the countersignature of its
duly authorized representative.
/s/ illegible /s/ Roger K. Taylor
President Executive Vice President
Effective Date: Authorized Representative
Citibank, N.A., acknowledges that it has agreed to perform the
duties of Fiscal Agent under this Policy.
/s/ illegible
Authorized Officer
Page 3 of 3 Form 9006
Financial Guaranty Insurance
Company
551 Fifth Avenue
New York New York 10017
Telephone (212) 682-0880
SPECIMEN
Endorsement
Financial Guaranty Insurance Company Insurance Policy
Policy Number:
Control Number:
Notwithstanding the terms and conditions contained in this Policy
it is further understood that the term "Due for Payment" shall
also include when referring to the principal of a Bond any date
on which the same shall have been duly called for mandatory
redemption as a result of the interest on such Bond having been
determined as provided in the Bond documentation to have become
subject to Federal income taxation and shall also include when
referring to interest on a Bond the accrued interest at the rate
provided in the Bond documentation to the date on which such Bond
shall have been duly called for such mandatory redemption
together with any applicable redemption premium.
In witness Whereof Financial Guaranty has caused this Endorsement
to be affixed with its corporate seal and to be signed by its
duly authorized officers in facsimile to become effective and
binding upon Financial Guaranty by virtue of the countersignature
of authorized representative.
/s/ illegible /s/ Roger K. Taylor
President Executive Vice President
Effective Date: Authorized Representative
Acknowledged as of the Effective Date written above:
/s/ illegible
Authorized Officer
Citibank N.A. as Fiscal Agent
Financial Guaranty Insurance
Company
175 Water Street
New York, New York 10038
Telephone: (212)607-3000
Endorsement
To Financial Guaranty Insurance Company
Policy Number:
Control Number:
It is further understood that the term "Nonpayment" in respect of
a Bond includes any payment of principal or interest made by or
on behalf of the issuer of such Bond to the Fund which has been
recovered from such Fund or its shareholders pursuant to the
United States Bankruptcy Code by a trustee in bankruptcy in
accordance with a final, nonappealable order of a court having
competent jurisdiction.
In Witness Whereof, Financial Guaranty has caused this
Endorsement to be affixed with its corporate seal and to be
signed by its duly authorized officers in facsimile to become
effective and binding upon Financial Guaranty by virtue of the
counter-signature of its duly authorized representative.
/s/ illegible /s/ Roger K. Taylor
President Executive Vice President
Effective Date: Authorized Representative
acknowledged as of the Effective
Date written above:
/s/ illegible
Authorized Officer
Citibank, N.A., as Fiscal Agent
DATE OF POLICY:
Name of Mutual Fund NUMBER OF POLICY:
CONTROL NUMBER:
Item Par Full Name Full Name Interest Date of Stated
No. Value of Issuer of Bonds Rate (1) Bonds Maturity
($) (%) Date of
Bonds
CUSIP Rating Premium
Numbers (2) Annual Annual Secondary Date Date of
Premium Premium Market First Disposition
Rate ($) Premium Insured
(3) (%) Rate (3)
(%)
(1) If variable rate is applicable, briefly describe method of
determination.
(2) Without benefit of the portfolio insurance. First rating by
Standards & Poor's Corporation.
(3) Expressed as a percentage of the par value of the bonds.
FINANCIAL GUARANTY INSURANCE COMPANY
175 Water Street
New York, New York 10038
(212) 607-3000
MUNICIPAL BOND
SECONDARY MARKET
INSURANCE POLICY
EXHIBIT 2
Issuer: Each of the Issuers
described in column
(C) of Schedule I hereto
Policy Number:
Control Number:
Bonds: Each of the Bonds
described in columns
(D), (E), (F) and (G)
of Schedule I hereto
Premium: The sum total of
the premiums listed in Column
(J) of Schedule I hereto
Financial Guaranty Insurance Company ("Financial
Guaranty"), a New York stock insurance company, in consideration
of the payment of the premium and subject to the terms of this
Policy, hereby unconditionally and irrevocably agrees to pay to
Citibank, N.A., or its successor, as its agent (the "Fiscal
Agent" ), for the benefit of Citibank, N.A., as custodian of
Bonds covered by Transferable Custodial Receipts for Insured
Bonds and of the records pertaining to insurance beneficiaries
under the Custody Agreement (the "Custodian"), that portion of
the principal and interest on the above-described debt
obligations (the "Bonds") which shall become Due for Payment but
shall be unpaid by reason of Nonpayment by the Issuer.
Financial Guaranty will make such payments to the Fiscal
Agent on the date such principal or interest becomes Due for
Payment or on the Business Day next following the day on which
Financial Guaranty shall have received Notice of Nonpayment,
whichever is later. The Fiscal Agent will disburse to the
Custodian the face amount of principal and interest which is then
Due for Payment but is unpaid by reason of Nonpayment by the
Issuer but only upon receipt by the Fiscal Agent in form
reasonably satisfactory to it, of (i) evidence of the Custodian's
right to receive payment of the principal or interest Due for
Payment and (ii) evidence, including any appropriate instruments
of assignment, that all of the Custodian's rights and the rights
of the registered owner of the Transferable Custodial Receipt for
Insured Bonds or the Holder of Insured Bonds, as the case may be,
to payment of such principal or interest Due for Payment shall
thereupon vest in Financial Guaranty. Upon such disbursement,
Financial Guaranty shall become the owner of the Bond,
appurtenant coupon or right to payment of principal or interest
on such Bond and shall be fully subrogated to all of the
Custodian's rights and rights of the registered owner of the
Transferable Custodial Receipt for Insured Bonds or the Holder of
Insured Bonds, as the case may be, thereunder, including the
right to payment thereof.
This Policy is non-cancellable for any reason. The
premium on this Policy is not refundable for any reason,
including the payment of the Bonds prior to their maturity. This
Policy does not insure against loss of any prepayment premium
which may at any time be payable with respect to any Bond or the
failure of the Custodian to remit amounts received hereunder to
the registered owner of a Transferable Custodial Receipt for
Insured Bonds or the Holder of Insured Bonds, as the case may be.
No payment shall be made under this Policy with respect to a Bond
if the registered owner of the Transferable Custodial Receipt for
Insured Bonds evidencing ownership of such Bond or if the holder
or registered owner of such Bond is the Issuer of such Bond.
As used herein, "Custody Agreement" means that certain
Custody Agreement dated as of December 1, 1984, as amended, by
and between Financial Guaranty and Citibank, N.A., as Custodian
relating to the Bonds. "Due for Payment" means, when referring to
the principal of a Bond, the stated maturity date thereof, or the
date on which the same shall have been duly called for mandatory
sinking fund redemption, and does not refer to any earlier date
on which payment is due by reason of call for redemption (other
than by mandatory sinking fund redemption), acceleration or other
advancement of maturity and means, when referring to interest on
a Bond, the stated date for payment of interest. "Holder of
Insured Bonds" means the holder or registered owner, as the case
may be, of Bonds insured under this Policy which are not being
held by the Custodian, but as to which the Custodian has the duty
under the Custody Agreement of recording the insurance
beneficiaries; provided however that the name of such holder or
registered owner is recorded on the books of the Custodian as the
insurance beneficiary of said Bonds. "Nonpayment" in respect of
a Bond means the failure of the Issuer to have provided
sufficient funds to the paying agent of such Bond for payment in
full of all principal and interest Due for Payment on such Bond.
"Notice" means telephonic or telegraphic notice, subsequently
confirmed in writing, or written notice by registered or
certified mail, from the Custodian to Financial Guaranty.
"Business Day" means any day other than a Saturday, Sunday or a
day on which the Fiscal Agent is authorized by law to remain
closed. "Transferable Custodial Receipt for Insured Bonds" means
a Transferable Custodial Receipt for Insured Bonds issued
pursuant to the Custody Agreement.
In Witness Whereof, Financial Guaranty has caused this
Policy to be affixed with its corporate seal and to be signed by
its duly authorized officers in facsimile to become effective and
binding upon Financial Guaranty by virtue of the countersignature
of its duly authorized representative.
/s/ illegible /s/ Roger K. Taylor
President Executive Vice President
/s/ illegible
Effective Date: Authorized Representative
Citibank, N.A., acknowledges that it has agreed to
perform the duties of Fiscal Agent under this Policy.
/s/ illegible
Authorized Officer
Financial Guaranty Insurance
Company
175 Water Street
New York, New York 10038
Telephone (212) 607-3000
Endorsement
To Financial Guaranty Insurance Company Insurance Policy
Policy Number:
Control Number:
Notwithstanding the terms and conditions contained in this
Policy, it is further understood that the terms "Due for Payment"
shall also include when referring to the principal of a bond, any
date on which the same shall have been duly called for mandatory
redemption as a result of the interest on such Bond having been
determined, as provided in the Bond documentation, to have become
subject to Federal income taxation, and shall also include, when
referring to interest on a Bond, the accrued interest at the rate
provided in the Bond documentation, to the date on which such
Bond shall have been duly called for such mandatory redemption,
together with any applicable redemption premium.
In Witness Whereof, Financial Guaranty has caused this
Endorsement to be affixed with its corporate seal and to be
signed by its duly authorized officers in facsimile to become
effective and binding upon Financial Guaranty by virtue of the
countersignature of its duly authorized representative.
/s/ illegible /s/ Roger K. Taylor
President Executive Vice President
/s/ illegible
Effective date: Authorized Representative
Acknowledged as of the Effective Date written above:
/s/ illegible
Authorized Officer
Citibank N.A., as Fiscal Agent
To Financial Guaranty Insurance Policy
Policy Number Control Number
It is further understood that the term "Nonpayment" in respect of
a Bond includes any payment of principal or interest made to the
Custodian by or on behalf of the Issuer which has been recovered
from the Custodian or a registered owner of a Custodial Receipt
for Insured Bonds or a Holder of Insured Bonds, as the case may
be, to which such payment was remitted by the Custodian, pursuant
to the United States Bankruptcy Code by a trustee in bankruptcy
in accordance with a final, nonappealable order of a court having
competent jurisdiction.
In Witness Whereof, Financial Guaranty has caused this
Endorsement to be affixed with its corporate seal and to be
signed by its duly authorized officers in facsimile to become
effective and binding upon Financial Guaranty by virtue of the
countersignature of its duly authorized representative.
/s/ illegible /s/ Roger K. Taylor
President Executive Vice President
/s/ illegible
Effective Date: Authorized Representative
Acknowledged as of the Effective Date written above:
/s/ illegible
Authorized Officer
Citibank, N.A., as Fiscal Agent
SCHEDULE 1 DATE OF POLICY:
to FORM 9004 NUMBER OF POLICY:
CONTROL NUMBER:
A B C D E F G
Item Par Full Name Full Name Interest Date of Stated
No. Value of Issuer of Bonds Rate Bonds Maturity
Date of
Bonds
H I J K L M
CUSIP Premium Premium Bond Bond Paying
Numbers Rate Trustee Registrant Agent(s)
AMENDMENT TO MUTUAL FUND AGREEMENT
Financial Guaranty Insurance Company ("Financial Guaranty") and
Franklin Advisers, Inc. have previously entered into mutual fund
agreement(s) (the "Agreement") in respect of municipal securities
held in mutual funds which Financial Guaranty has contracted to
provide insurance for. Such Agreement may contain provisions
obligating Franklin Advisers, Inc. to exclusively purchase annual
portfolio insurance from Financial Guaranty and not any other
provider of similar insurance. As of the date hereof, the parties
hereto hereby agree that such exclusivity provisions shall no
longer be in effect. This agreement shall be deemed to amend any
previous outstanding Agreement in respect of such provisions.
In witness hereof the parties have hereunto set their hands this
24th day of November, 1992.
FINANCIAL GUARANTY INSURANCE COMPANY
/s/ Richard A. Price
Richard A. Price
Managing Director
FRANKLIN TAX FREE TRUST
FRANKLIN NEW YORK TAX FREE TRUST
FRANKLIN CALIFORNIA TAX FREE TRUST
FRANKLIN ADVISERS, INC.
/s/ Andrew R. Johnson
By: Andrew R. Johnson
Title: Vice President
CONSENT OF INDEPENDENT AUDITORS
To the Board of Trustees of
Franklin California Tax-Free Trust:
We consent to the incorporation by reference in Post-
Effective Amendment No. 12 to the Registration Statement of
Franklin California Tax-Free Trust on Form N-1A (File No. 2-
99112) of our report dated August 3, 1994 on our audit of
the financial statements and financial highlights of the
Fund, which report is included in the Annual Report to
Shareholders for the year ended June 30, 1994, which is
incorporated by reference in the Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
San Francisco, California
April 14, 1995
To: All Franklin Templeton Funds Listed on Schedule A
777 Mariners Island Blvd.
San Mateo, CA 94404
Gentlemen:
We propose to invest $100.00 in the Class II shares (the "Shares") of
each of the Funds listed on the attached Schedule A (the "Funds"), on the
business day immediately preceding the effective date for each Fund's Class
II shares, at a purchase price per share equivalent to the net asset value
per share of each Fund's Class I shares on the date of purchase. We will
purchase the Shares in a private offering prior to the effectiveness of the
post-effective amendment to the Form N-1A registration statement under which
each Fund's Class II shares are initially offered, as filed by the Fund under
the Securities Act of 1933. The Shares are being purchased to serve as the
seed money for each Fund's Class II shares prior to the commencement of the
public offering of Class II shares.
In connection with such purchase, we understand that we, the purchaser,
intend to acquire the Shares for our own account as the sole beneficial owner
thereof and have no present intention of redeeming or reselling the Shares so
acquired.
We consent to the filing of this Investment Letter as an exhibit to the
form N-1A registration statement of each Fund.
Sincerely,
FRANKLIN RESOURCES, INC.
By: /s/ Harmon E. Burns
Harmon E. Burns
Executive Vice President
Date: April 12, 1995
SCHEDULE A
INVESTMENT COMPANY FUND & CLASS; TITAN NUMBER
Franklin Gold Fund Franklin Gold Fund - Class II; 232
Franklin Equity Fund Franklin Equity Fund - Class II; 234
AGE High Income Fund, Inc. AGE High Income Fund - Class II; 205
Franklin Custodian Funds, Inc. Growth Series - Class II; 206
Utilities Series - Class II; 207
Income Series - Class II; 209
U.S. Government Securities
Series - Class II; 210
Franklin California Tax-Free Franklin California Tax-Free Income
Income Fund, Inc. Fund - Class II; 212
Franklin New York Tax-Free Franklin New York Tax-Free Income
Income Fund, Inc. Fund - Class II; 215
Franklin Federal Tax-Free Franklin Federal Tax-Free Income
Income Fund Fund -Class II; 216
Franklin Managed Trust Franklin Rising Dividends
Fund - Class II; 258
Franklin California Tax-Free Franklin California Insured Tax-Free
Trust
Income Fund - Class II; 224
Franklin New York Tax-Free Trust Franklin New York Insured Tax-Free
Income Fund - Class II; 281
Franklin Investors Securities Franklin Global Government Income
Trust
Fund - Class II; 235
Franklin Equity Income
Fund - Class II; 239
Franklin Strategic Series Franklin Global Utilities
Fund - Class II; 297
Franklin Real Estate Securities Franklin Real Estate Securities
Trust
Fund - Class II; 292
INVESTMENT COMPANY FUND AND CLASS; TITAN NUMBER
Franklin Tax-Free Franklin Alabama Tax-Free Income Fund - Class II; 264
Trust Franklin Arizona Tax-Free Income Fund - Class II; 226
Franklin Colorado Tax-Free Income Fund - Class II; 227
Franklin Connecticut Tax Free Income
Fund - Class II; 266
Franklin Florida Tax-Free Income Fund - Class II; 265
Franklin Georgia Tax-Free Income Fund - Class II; 228
Franklin High Yield Tax-Free Income Fund - Class II; 230
Franklin Insured Tax-Free Income Fund - Class II; 221
Franklin Louisiana Tax-Free Income Fund - Class II; 268
Franklin Maryland Tax-Free Income Fund - Class II; 269
Franklin Massachusetts Insured Tax-Free Income
Fund - Class II; 218
Franklin Michigan Insured Tax-Free Income
Fund - Class II; 219
Franklin Minnesota Insured Tax-Free Income
Fund - Class II; 220
Franklin Missouri Tax-Free Income Fund - Class II; 260
Franklin New Jersey Tax-Free Income
Fund - Class II; 271
Franklin North Carolina Tax-Free Income
Fund - Class II; 270
Franklin Ohio Insured Tax-Free Income
Fund - Class II; 222
Franklin Oregon Tax-Free Income Fund - Class II; 261
Franklin Pennsylvania Tax-Free Income
Fund - Class II; 229
Franklin Puerto Rico Tax-Free Income
Fund - Class II; 223
Franklin Texas Tax-Free Income Fund - Class II; 262
Franklin Virginia Tax-Free Income Fund - Class II; 263
FRANKLIN CALIFORNIA TAX-FREE TRUST
Preamble to Amended and Restated Distribution Plan
The following Amended and Restated Distribution Plan (the
"Plan") has been adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "Act") by Franklin California
Tax-Free Trust (the "Trust") for the use of a series entitled
Franklin California Intermediate-Term Tax-Free Income Fund (the
"Fund"). The Plan has been approved by a majority vote of the
Board of Trustees of the Trust (the "Board of Trustees"),
including a majority of the trustees who are not interested
persons of the Trust and who have no direct or indirect financial
interest in the operation of the Plan (the "non-interested
trustees"), cast in person at a meeting called for the purpose of
voting on such Plan.
In reviewing the Plan, the Board of Trustees considered the
schedule and nature of payments and terms of the Management
Agreement between the Trust, on behalf of the Fund, and Franklin
Advisers, Inc. (the "Manager") and the terms of the Underwriting
Agreement between the Trust and Franklin/Templeton Distributors,
Inc. ("Distributors"). The Board of Trustees concluded that the
compensation of the Manager, under the Management Agreement was
fair and not excessive; however, the Board of Trustees also
recognized that uncertainty may exist from time to time with
respect to whether payments to be made by the Fund to the Manager
or to Distributors or others or by the Manager or Distributors to
others may be deemed to constitute distribution expenses.
Accordingly, the Board of Trustees determined that the Plan
should provide for such payments and that adoption of the Plan
would be prudent and in the best interests of the Fund and its
shareholders. Such approval included a determination that, in
the exercise of their reasonable business judgment and in light
of their fiduciary duties, there is a reasonable likelihood that
the Plan will benefit the Fund and its shareholders.
AMENDED AND RESTATED DISTRIBUTION PLAN
1. The Fund shall reimburse Distributors or others for all
expenses incurred by Distributors or others in the promotion and
distribution of the shares of the Fund, including, but not
limited to, the printing of prospectuses and reports used for
sales purposes, expenses of preparation and distribution of sales
literature and related expenses, advertisements, and other
distribution-related expenses, including a prorated portion of
Distributors' overhead expenses attributable to the distribution
of Fund shares, as well as any distribution or service fees paid
to securities dealers or their firms or others who have executed
a servicing agreement with the Fund, Distributors or its
affiliates, which form of agreement has been approved from time
to time by the trustees, including the non-interested trustees.
2. The maximum amount which may be reimbursed by the Fund
to Distributors or others pursuant to Paragraph 1 herein shall be
1/10 of 1% per annum of the average daily net assets of the Fund.
Said reimbursement shall be made quarterly by the Fund to
Distributors or others.
3. In addition to the payments which the Fund is
authorized to make pursuant to paragraphs 1 and 2 hereof, to the
extent that the Fund, the Manager, Distributors or other parties
on behalf of the Fund, the Manager or Distributors make payments
that are deemed to be payments for the financing of any activity
primarily intended to result in the sale of shares issued by the
Fund within the context of Rule 12b-1 under the Act, then such
payments shall be deemed to have been made pursuant to the Plan.
In no event shall the aggregate asset-based sales charges,
which include payments specified in paragraphs 1 and 2, plus any
other payments deemed to be made pursuant to the Plan under this
paragraph, exceed the amount permitted to be paid pursuant to the
Rules of Fair Practice of the National Association of Securities
Dealers, Inc., Article III, Section 26(d).
4. Distributors shall furnish to the Board of Trustees,
for their review, on a quarterly basis, a written report of the
monies reimbursed to it and to others under the Plan, and shall
furnish the Board of Trustees with such other information as the
Board of Trustees may reasonably request in connection with the
payments made under the Plan in order to enable the Board of
Trustees to make an informed determination of whether the Plan
should be continued.
5. The Plan shall continue in effect for a period of more
than one year only so long as such continuance is specifically
approved at least annually by a vote of the Board of Trustees,
including the non-interested trustees, cast in person at a
meeting called for the purpose of voting on the Plan.
6. The Plan, and any agreement entered into pursuant to
this Plan, may be terminated at any time, without penalty, by
vote of a majority of the outstanding voting securities of the
Fund, or by vote of a majority of the non-interested trustees, on
not more than sixty (60) days' written notice, or by Distributors
on not more than sixty (60) days' written notice and shall
terminate automatically in the event of any act that constitutes
an assignment of the Management Agreement between the Trust, on
behalf of the Fund, and the Manager or the Underwriting Agreement
between the Trust and Distributors.
7. The Plan, and any agreements entered into pursuant to
this Plan, may not be amended to increase materially the amount
to be spent for distribution pursuant to Paragraph 2 hereof
without approval by a majority of the Fund's outstanding voting
securities.
8. All material amendments to the Plan, or any agreements
entered into pursuant to this Plan, shall be approved by a vote
of the non-interested trustees, cast in person at a meeting
called for the purpose of voting on any such amendment.
9. So long as the Plan is in effect, the selection and
nomination of the Trust's non-interested trustees shall be
committed to the discretion of such non-interested trustees.
10. This Plan shall take effect on the 1st day of July, 1993.
This Plan and the terms and provisions thereof are hereby
accepted and agreed to by the Trust, on behalf of the Fund, and
Distributors as evidenced by their execution hereof.
FRANKLIN CALIFORNIA TAX-FREE TRUST on behalf of
Franklin California Intermediate-Term Tax-Free Income Fund
By:/s/ Deborah R.Gatzek
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
By: /s/ Harmon E. Burns
FRANKLIN CALIFORNIA TAX-FREE TRUST
Preamble to Distribution Plan
The following Distribution Plan (the "Plan") has been
adopted pursuant to Rule 12b-1 under the Investment Company Act
of 1940 (the "Act") by Franklin California Tax-Free Trust (the
"Trust") for the use of Franklin California Insured Tax-Free
Income Fund (the "Fund"), which Plan shall take effect on the 1st
day of May, 1994 (the "Effective Date of the Plan"). The Plan has
been approved by a majority of the Board of Trustees of the Trust
(the "Board of Trustees"), including a majority of the trustees
who are not interested persons of the Trust and who have no
direct or indirect financial interest in the operation of the
Plan (the "non-interested trustees"), cast in person at a meeting
called for the purpose of voting on such Plan.
In reviewing the Plan, the Board of Trustees considered the
schedule and nature of payments and terms of the Management
Agreement between the Trust on behalf of the Fund and Franklin
Advisers, Inc. ("Advisers") and the terms of the Underwriting
Agreement between the Trust on behalf of the Fund and
Franklin/Templeton Distributors, Inc. ("Distributors"). The Board
of Trustees concluded that the compensation of Advisers, under
the Management Agreement, and of Distributors, under the
Underwriting Agreement, was fair and not excessive; however, the
Board of Trustees also recognized that uncertainty may exist from
time to time with respect to whether payments to be made by the
Fund to Advisers, Distributors, or others or by Advisers or
Distributors to others may be deemed to constitute distribution
expenses of the Fund. Accordingly, the Board of Trustees
determined that the Plan should provide for such payments and
that adoption of the Plan would be prudent and in the best
interest of the Fund and its shareholders. Such approval included
a determination that in the exercise of their reasonable business
judgment and in light of their fiduciary duties, there is a
reasonable likelihood that the Plan will benefit the Fund and its
shareholders.
DISTRIBUTION PLAN
1. The Fund shall reimburse Distributors or others for all
expenses incurred by Distributors or others in the promotion and
distribution of the shares of the Fund, including but not limited
to, the printing of prospectuses and reports used for sales
purposes, expenses of preparing and distributing sales literature
and related expenses, advertisements, and other distribution-
related expenses, including a prorated portion of Distributors'
overhead expenses attributable to the distribution of Fund
shares, as well as any distribution or service fees paid to
securities dealers or their firms or others who have executed a
servicing agreement with the Trust on behalf of the Fund,
Distributors or its affiliates, which form of agreement has been
approved from time to time by the trustees, including the non-
interested trustees.
2. The maximum amount which may be reimbursed by the Fund to
Distributors or others pursuant to Paragraph 1 herein shall be
0.10% per annum of the average daily net assets of the Fund. Said
reimbursement shall be made quarterly by the Fund to Distributors
or others.
3. In addition to the payments which the Fund is authorized to
make pursuant to paragraphs 1 and 2 hereof, to the extent that
the Fund, Advisers, Distributors or other parties on behalf of
the Fund, Advisers or Distributors make payments that are deemed
to be payments by the Fund for the financing of any activity
primarily intended to result in the sale of shares issued by the
Fund within the context of Rule 12b-1 under the Act, then such
payments shall be deemed to have been made pursuant to the Plan.
In no event shall the aggregate asset-based sales charges
which include payments specified in paragraphs 1 and 2, plus any
other payments deemed to be made pursuant to the Plan under this
paragraph, exceed the amount permitted to be paid pursuant to the
Rules of Fair Practice of the National Association of Securities
Dealers, Inc., Article III, Section 26(d).
4. Distributors shall furnish to the Board of Trustees, for
their review, on a quarterly basis, a written report of the
monies reimbursed to it and to others under the Plan, and shall
furnish the Board of Trustees with such other information as the
Board of Trustees may reasonably request in connection with the
payments made under the Plan in order to enable the Board of
Trustees to make an informed determination of whether the Plan
should be continued.
5. The Plan shall continue in effect for a period of more than
one year only so long as such continuance is specifically
approved at least annually by a vote of the Board of Trustees,
including the non-interested trustees, cast in person at a
meeting called for the purpose of voting on the Plan.
6. The Plan, and any agreements entered into pursuant to this
Plan, may be terminated at any time, without penalty, by vote of
a majority of the outstanding voting securities of the Fund or by
vote of a majority of the non-interested trustees, on not more
than sixty (60) days' written notice, or by Distributors on not
more than sixty (60) days' written notice, and shall terminate
automatically in the event of any act that constitutes an
assignment of the Management Agreement between the Trust on
behalf of the Fund and Advisers.
7. The Plan, and any agreements entered into pursuant to this
Plan, may not be amended to increase materially the amount to be
spent for distribution pursuant to Paragraph 2 hereof without
approval by a majority of the Fund's outstanding voting
securities.
8. All material amendments to the Plan, or any agreements
entered into pursuant to this Plan, shall be approved by a vote
of the non-interested trustees cast in person at a meeting called
for the purpose of voting on any such amendment.
9. So long as the Plan is in effect, the selection and
nomination of the Trust's non-interested trustees shall be
committed to the discretion of such non-interested trustees.
This Plan and the terms and provisions thereof are hereby
accepted and agreed to by the Trust and Distributors as evidenced
by their execution hereof.
FRANKLIN CALIFORNIA TAX-FREE TRUST
on behalf of Franklin California Insured Tax-Free Income Fund
By: /s/ Deborah R. Gatzek
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
By: /s/ Harmon E. Burns
CLASS II DISTRIBUTION PLAN
I. Investment Company: FRANKLIN CALIFORNIA TAX-FREE TRUST
II. Fund: FRANKLIN CALIFORNIA INSURED TAX-FREE
INCOME FUND
III. Maximum Per Annum Rule 12b-1 Fees for Class II Shares
(as a percentage of average daily net assets of the class)
A. Distribution Fee: 0.50%
B. Service Fee: 0.15%
PREAMBLE TO CLASS II DISTRIBUTION PLAN
The following Distribution Plan (the "Plan") has been
adopted pursuant to Rule 12b-1 under the Investment Company Act
of 1940 (the "Act") by the Investment Company named above
("Investment Company") for the class II shares (the "Class") of
each Fund named above ("Fund"), which Plan shall take effect as
of the date class II shares are first offered (the "Effective
Date of the Plan"). The Plan has been approved by a majority of
the Board of Directors or Trustees of the Investment Company (the
"Board"), including a majority of the Board members who are not
interested persons of the Investment Company and who have no
direct, or indirect financial interest in the operation of the
Plan (the "non-interested Board members"), cast in person at a
meeting called for the purpose of voting on such Plan.
In reviewing the Plan, the Board considered the schedule and
nature of payments and terms of the Management Agreement between
the Investment Company and Franklin Advisers, Inc. and the terms
of the Underwriting Agreement between the Investment Company and
Franklin/Templeton Distributors, Inc. ("Distributors"). The
Board concluded that the compensation of Advisers, under the
Management Agreement, and of Distributors, under the Underwriting
Agreement, was fair and not excessive. The approval of the Plan
included a determination that in the exercise of their reasonable
business judgment and in light of their fiduciary duties, there
is a reasonable likelihood that the Plan will benefit the Fund
and its shareholders.
DISTRIBUTION PLAN
1. (a) The Fund shall pay to Distributors a quarterly fee
not to exceed the above-stated maximum distribution fee per annum
of the Class' average daily net assets represented by shares of
the Class, as may be determined by the Board from time to time.
(b) In addition to the amounts described in (a) above,
the Fund shall pay (i) to Distributors for payment to dealers or
others, or (ii) directly to others, an amount not to exceed the
above-stated maximum service fee per annum of the Class' average
daily net assets represented by shares of the Class, as may be
determined by the Fund's Board from time to time, as a service
fee pursuant to servicing agreements which have been approved
from time to time by the Board, including the non-interested
Board members.
2. (a) Distributors shall use the monies paid to it
pursuant to Paragraph 1(a) above to assist in the distribution
and promotion of shares of the Class. Payments made to
Distributors under the Plan may be used for, among other things,
the printing of prospectuses and reports used for sales purposes,
expenses of preparing and distributing sales literature and
related expenses, advertisements, and other distribution-related
expenses, including a pro-rated portion of Distributors' overhead
expenses attributable to the distribution of Class shares, as
well as for additional distribution fees paid to securities
dealers or their firms or others who have executed agreements
with the Investment Company, Distributors or its affiliates,
which form of agreement has been approved from time to time by
the Trustees, including the non-interested trustees. In
addition, such fees may be used to pay for advancing the
commission costs to dealers or others with respect to the sale of
Class shares.
(b) The monies to be paid pursuant to paragraph 1(b)
above shall be used to pay dealers or others for, among other
things, furnishing personal services and maintaining shareholder
accounts, which services include, among other things, assisting
in establishing and maintaining customer accounts and records;
assisting with purchase and redemption requests; arranging for
bank wires; monitoring dividend payments from the Fund on behalf
of customers; forwarding certain shareholder communications from
the Fund to customers; receiving and answering correspondence;
and aiding in maintaining the investment of their respective
customers in the Class. Any amounts paid under this paragraph
2(b) shall be paid pursuant to a servicing or other agreement,
which form of agreement has been approved from time to time by
the Board.
3. In addition to the payments which the Fund is authorized
to make pursuant to paragraphs 1 and 2 hereof, to the extent that
the Fund, Advisers, Distributors or other parties on behalf of
the Fund, Advisers or Distributors make payments that are deemed
to be payments by the Fund for the financing of any activity
primarily intended to result in the sale of Class shares issued
by the Fund within the context of Rule 12b-1 under the Act, then
such payments shall be deemed to have been made pursuant to the
Plan.
In no event shall the aggregate asset-based sales charges
which include payments specified in paragraphs 1 and 2, plus any
other payments deemed to be made pursuant to the Plan under this
paragraph, exceed the amount permitted to be paid pursuant to the
Rules of Fair Practice of the National Association of Securities
Dealers, Inc., Article III, Section 26(d).
4. Distributors shall furnish to the Board, for its review,
on a quarterly basis, a written report of the monies reimbursed
to it and to others under the Plan, and shall furnish the Board
with such other information as the Board may reasonably request
in connection with the payments made under the Plan in order to
enable the Board to make an informed determination of whether the
Plan should be continued.
5. The Plan shall continue in effect for a period of more
than one year only so long as such continuance is specifically
approved at least annually by the Board, including the non-
interested Board members, cast in person at a meeting called for
the purpose of voting on the Plan.
6. The Plan, and any agreements entered into pursuant to
this Plan, may be terminated at any time, without penalty, by
vote of a majority of the outstanding voting securities of the
Fund or by vote of a majority of the non-interested Board
members, on not more than sixty (60) days' written notice, or by
Distributors on not more than sixty (60) days' written notice,
and shall terminate automatically in the event of any act that
constitutes an assignment of the Management Agreement between the
Fund and Advisers.
7. The Plan, and any agreements entered into pursuant to
this Plan, may not be amended to increase materially the amount
to be spent for distribution pursuant to Paragraph 1 hereof
without approval by a majority of the Fund's outstanding voting
securities.
8. All material amendments to the Plan, or any agreements
entered into pursuant to this Plan, shall be approved by the non-
interested Board members cast in person at a meeting called for
the purpose of voting on any such amendment.
9. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested Board members shall be
committed to the discretion of such non-interested Board members.
This Plan and the terms and provisions thereof are hereby
accepted and agreed to by the Investment Company and Distributors
as evidenced by their execution hereof.
Date: __________________, 1995
Investment Company
By:________________________________
Franklin/Templeton Distributors, Inc.
By:_____________________________________
SEC STANDARD TOTAL RETURN
AS OF: 3/31/95
MAX OFFER NAV
ONE YEAR 1.82% 6.40%
P= 1000.00 1000.00
T= 0.0182 0.0640
n= 1 1
ERV= 1018.20 1064.00
FIVE YEAR 6.72% 7.66%
P= 1000.00 1000.00
T= 0.0672 0.0766
n= 5 5
ERV= 1384.30 1446.34
TEN YEAR 8.33% 8.79%
P= 1000.00 1000.00
T= 0.0833 0.0879
n= 10 10
ERV= 2225.81 2322.15
FROM INCEPTION 02/01/77 5.75% 6.00%
P= 1000.00 1000.00
T= 0.0575 0.0600
n= 18.1726 18.1726
ERV= 2762.09 2883.19
AGGREGATE TOTAL RETURN
1 YEAR 1.82% 6.40%
5 YEAR 38.40% 44.63%
10 YEAR 122.48 132.23
FROM INCEPTION 176.01% 188.16%
30-DAY SEC YIELD 5.43%
30-DAY SEC YIELD W/O WAIVER NA
TAXABLE EQUIVALENT SEC 10.10%
YIELD
FISCAL YEAR-END 5.98%
DISTRIBUTION RATE (ON MAX
OFFERING)
FISCAL YEAR-END 6.24%
DISTRIBUTION RATE (ON NAV)
SEC - YIELD CALCULATION
a = interest/dividends earned 66,055,858
b = expenses accrued 5,442,410
c = avg # of shares o/s 1,878,917,345
d = maximum offering price 7,411
a - b 6
SEC Yield= 2[(------------------------- + 1) -1]
cd
66,055.858 - 5,442,410 6
= 2[(----------------------------------- + 1) -1]
1,878,917,345 * 7.411
60,613,448 6
= 2[(------------------------- + 1) -1]
13,924,656,444
6
= 2[( 1.00435295823956 ) -1]
= 2( 1.02640362813221 - 1)
= 0.0528072563
= 5.28%
TAXABLE EQUIVALENT YIELD CALCULATION
TAXABLE EQUIVALENT YIELD = tax-exempt current yield
------------------------
1 - f + s x (1 - f)) ]
WHERE:
f = federal income tax rate
s = state and local income tax rate
yield = 5.28%
f = 39.60%
s = 11.00%
TAXABLE EQUIVALENT YIELD = 5.28%
------------------------
1 - [.395+(.1 X (1-.396))]
= 5.28%
-------------------
1 - ( 0.396 + 0.66 )
5.28%
= -------------------
0.538
= 9.81%
POWER OF ATTORNEY
The undersigned officers and trustees of Franklin California
Tax-Free Trust (the "Registrant") hereby appoint MARK H. PLAFKER,
HARMON E. BURNS, DEBORAH R. GATZEK, KAREN L. SKIDMORE AND LARRY
L. GREENE (with full power to each of them to act alone) his
attorney-in-fact and agent, in all capacities, to execute, and to
file any of the documents referred to below relating to Post-
Effective Amendments to the Registrant's registration statement
on Form N-1A under the Investment Company Act of 1940, as
amended, and under the Securities Act of 1933 covering the sale
of shares by the Registrant under prospectuses becoming effective
after this date, including any amendment or amendments increasing
or decreasing the amount of securities for which registration is
being sought, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory
authority. Each of the undersigned grants to each of said
attorneys, full authority to do every act necessary to be done in
order to effectuate the same as fully, to all intents and
purposes as he could do if personally present, thereby ratifying
all that said attorneys-in-fact and agents, may lawfully do or
cause to be done by virtue hereof.
The undersigned officers and trustees hereby execute this
Power of Attorney as of this 16th day of February 1995.
/s/ Rupert H. Johnson /s/ Charles B. Johnson
Rupert H. Johnson, Jr., Charles B. Johnson,
Principal Executive Officer Trustee
and Trustee
/s/ Frank H. Abbott, III /s/ Harris J. Ashton
Frank H. Abbott, III, Harris J. Ashton,
Trustee Trustee
/s/ Harmon E. Burns /s/ S. Joseph Fortunato
Harmon E. Burns, S. Joseph Fortunato,
Trustee Trustee
/s/ David W. Garbellano /s/ Frank W. T. LaHaye
David W. Garbellano, Frank W. T. LaHaye,
Trustee Trustee
/s/ Gordon S. Macklin /s/ Martin L. Flanagan
Gordon S. Macklin, Martin L. Flanagan,
Trustee Principal Financial Officer
Diomedes Loo Tam
Diomedes Loo Tam,
Principal Accounting Officer
CERTIFICATE OF SECRETARY
I, Deborah R. Gatzek, certify that I am Secretary of
Franklin California Tax-Free Trust (the "Trust").
As Secretary of the Trust, I further certify that the following
resolution was adopted by a majority of the Trustees of the Trust
present at a meeting held at 777 Mariners Island Boulevard, San
Mateo, California, on February 16, 1995.
RESOLVED, that a Power of Attorney, substantially in
the form of the Power of Attorney presented to this
Board, appointing Harmon E. Burns, Deborah R. Gatzek,
Karen L. Skidmore, Larry L. Greene and Mark H. Plafker
as attorneys-in-fact for the purpose of filing
documents with the Securities and Exchange Commission,
be executed by each Trustee and designated officer.
I declare under penalty of perjury that the matters set forth in
this certificate are true and correct of my own knowledge.
/s/ Deborah R. Gatzek
Dated: February 16, 1995 Deborah R. Gatzek
Secretary
