EXHIBIT 10.2

FORM OF CLASS C DISTRIBUTION PLAN

 

I.

  

Investment Company:

   [NAME OF CORPORATION OR TRUST]

II.

  

Fund:

   [NAME OF AFFECTED FUND OR SERIES - -       MAY BE SAME AS ABOVE]

III.

  

Maximum Per Annum Rule 12b-1 Fees for Class C Shares

(as a percentage of average daily net assets of the class)

  

A.     Distribution Fee:

  

[0.75% equity; 0.50% fixed income]

  

B.     Service Fee:

  

[0.25% equity; 0.15% fixed income]

Preamble to Class C Distribution Plan

The following Distribution Plan (the “Plan”) has been adopted pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended (the “1940 Act”) by
the Investment Company named above (“Investment Company”) for the Class C shares
(the “Class”) of the Fund named above (“Fund”), which Plan shall take effect as
of the date Class C shares are first offered (the “Effective Date of the Plan”).
The Plan has been approved by a majority of the Board of Trustees of the
Investment Company (the “Board”), including a majority of the Board members who
are not interested persons (as defined in the 1940 Act) of the Investment
Company and who have no direct, or indirect financial interest in the operation
of the Plan (the “independent 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 Investment Management Agreement between the Investment Company
and Franklin Advisers, Inc. (“Advisers”) and the terms of the Distribution
Agreement between the Investment Company and Franklin/Templeton Distributors,
Inc. (“Distributors”). The Board concluded that the compensation of Advisers,
under the Investment Management Agreement, and of Distributors, under the
Distribution Agreement, was fair and not excessive. The Board’s 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.

The Board recognizes that Distributors has entered into an arrangement with a
third party in order to pay for the distribution activities of the Class
pursuant to which Distributors may sell, transfer, convey and assign its rights
to the fees payable hereunder to such third party. The Board further recognizes
that it has an obligation to act in good faith and in the best interests of the
Fund and its shareholders when considering the continuation or termination of
the Plan and any payments to be made thereunder.

 

Class C 12b-1 Distribution Plan   1  

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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 Investment Company’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 independent Board members.

2. (a) The monies paid to Distributors pursuant to Paragraph 1(a) above shall be
treated as compensation for Distributors’ distribution-related services
including compensation for amounts advanced to securities dealers or their firms
or others selling shares of the Class who have executed an agreement with the
Investment Company, Distributors or its affiliates, which form of agreement has
been approved from time to time by the Board, including the independent Board
members, with respect to the sale of Class shares. In addition, Distributors may
use such 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, additional distribution fees paid to securities
dealers or their firms or others who have executed agreements with the
Investment Company, Distributors or its affiliates, or for certain promotional
distribution charges paid to broker-dealer firms or others, or for participation
in certain distribution channels.

(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.

 

Class C 12b-1 Distribution Plan   2  

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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 Rules of the Financial Industry Regulatory Authority (“FINRA”).

4. Distributors shall furnish to the Board, for its review, on a quarterly
basis, a written report of the monies paid 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. (a) Distributors may assign, transfer or pledge (“Transfer”) to one or more
designees (each an “Assignee”), its rights to all or a designated portion of the
fees to which it is entitled under paragraph 1 of this Plan from time to time
(but not Distributors’ duties and obligations pursuant hereto or pursuant to any
distribution agreement in effect from time to time, if any, between Distributors
and the Fund), free and clear of any offsets or claims the Fund may have against
Distributors. Each such Assignee’s ownership interest in a Transfer of a
specific designated portion of the fees to which Distributors is entitled is
hereafter referred to as an “Assignee’s 12b-1 Portion.” A Transfer pursuant to
this Section 5(a) shall not reduce or extinguish any claims of the Fund against
Distributors.

(b) Distributors shall promptly notify the Fund in writing of each such Transfer
by providing the Fund with the name and address of each such Assignee.

(c) Distributors may direct the Fund to pay any Assignee’s 12b-1 Portion
directly to each Assignee. In such event, Distributors shall provide the Fund
with a monthly calculation of the amount to which each Assignee is entitled (the
“Monthly Calculation”). In such event, the Fund shall, upon receipt of such
notice and Monthly Calculation from Distributors, make all payments required
directly to the Assignee in accordance with the information provided in such
notice and Monthly Calculation upon the same terms and conditions as if such
payments were to be paid to Distributors.

(d) Alternatively, in connection with a Transfer, Distributors may direct the
Fund to pay all or a portion of the fees to which Distributors is entitled from
time to time to a depository or collection agent designated by any Assignee,
which depository or collection agent may be delegated the duty of dividing such
fees between the Assignee’s 12b-1 Portion and the balance (such balance, when
distributed to Distributors by the depository or collection agent, the
“Distributors’ 12b-1 Portion”), in which case only Distributors’ 12b-1 Portion
may be subject to offsets or claims the Fund may have against Distributors.

6. 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 independent Board members, cast in person at a meeting
called for the purpose of voting on the Plan. In determining whether there is a
reasonable likelihood that the continuation of the Plan will benefit the Fund
and its shareholders, the Board may, but is not obligated to, consider that
Distributors has incurred substantial costs and has entered into an arrangement
with a third party

 

Class C 12b-1 Distribution Plan   3  

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which third party has agreed to purchase from Distributors the entitlement of
Distributors to receive the payments described in Paragraph 1(a) above, which
purchase will generate the cash flow needed to pay for the distribution
activities for the Class.

7. The Plan, and any agreements entered into pursuant to this Plan, may be
terminated with respect to the shares of the Class at any time, without penalty,
by vote of a majority of the outstanding voting securities of such Class or by
vote of a majority of the independent Board members of the Investment Company,
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
Investment Management Agreement between the Fund and the Adviser. Upon
termination of this Plan with respect to the Class, the obligation of the Fund
to make payments pursuant to this Plan with respect to such Class shall
terminate, and the Fund shall not be required to make payments hereunder beyond
such termination date with respect to expenses incurred in connection with Class
shares sold prior to such termination date, provided, in each case that each of
the requirements of a Complete Termination of this Plan in respect of such
Class, as defined below, are met. For purposes of this Section 7, a “Complete
Termination” of this Plan in respect of the Class shall mean a termination of
this Plan in respect of such Class, provided that: (i) the independent Board
members of the Investment Company shall have acted in good faith and shall have
determined that such termination is in the best interest of the Investment
Company and the shareholders of the Fund and the Class; (ii) the Investment
Company does not alter the terms of the contingent deferred sales charges
applicable to Class shares outstanding at the time of such termination; and
(iii) unless Distributors at the time of such termination was in material breach
under the distribution agreement in respect of the Fund, the Fund shall not, in
respect of such Fund, pay to any person or entity, other than Distributors or
its designee, the payments described in either paragraph 1(a) or 1(b) in respect
of the Class shares sold by Distributors prior to such termination.

8. 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 outstanding voting
securities of the Class of the Fund.

9. All material amendments to the Plan, or any agreements entered into pursuant
to this Plan, shall be approved by the independent Board members cast in person
at a meeting called for the purpose of voting on any such amendment.

10. So long as the Plan is in effect, the selection and nomination of the Fund’s
independent Board members shall be committed to the discretion of such
independent Board members.

 

Class C 12b-1 Distribution Plan   4  

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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:

 

 

[Name of Investment Company]

By:

 

 

Franklin/Templeton Distributors, Inc.

By:

 

 

 

Class C 12b-1 Distribution Plan   5