MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT made between the FRANKLIN RISING DIVIDENDS FUND
(hereinafter called the "Fund") a series of the Franklin Managed Trust, a
Massachusetts business trust (hereinafter called the "Trust"), and FRANKLIN
ADVISORY SERVICES, LLC, a limited liability company organized and existing
under the laws of the State of Delaware (hereinafter called the "Manager").
W I T N E S S E T H :
WHEREAS, the Trust is an open-end management investment company,
registered as such under the Investment Company Act of 1940; and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, and is engaged in the business of supplying
investment advice, investment management and administrative services, as an
independent contractor; and
WHEREAS, the Trust desires to retain the Manager to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement,
and the Manager is interested in furnishing said advice and services.
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties hereto, intending to be legally bound
hereby, mutually agree as follows:
1. The Trust hereby employs the Manager and the Manager hereby accepts
such employment, to render investment advice and investment management
services with respect to the assets of the Fund, subject to the supervision
and direction of the Trust's Board of Trustees. The Manager shall, except as
otherwise provided for herein, render or make available all administrative
services needed for the management and operation of the Fund, and shall, as
part of its duties hereunder, (i) furnish the Fund with advice and
recommendations with respect to the investment of the Fund's assets and the
purchase and sale of its portfolio securities, including the taking of such
other steps as may be necessary to implement such advice and recommendations,
(ii) furnish the Fund with reports, statements and other data on securities,
economic conditions and other pertinent subjects which the Trust's Board of
Trustees may request, (iii) furnish such office space and personnel as is
needed by the Fund, and (iv) in general superintend and manage the
investments of the Fund, subject to the ultimate supervision and direction of
the Trust's Board of Trustees.
2. The Manager shall use its best judgment and efforts in rendering
the advice and services to the Fund as contemplated by this Agreement.
3. The Manager shall, for all purposes herein, be deemed to be an
independent contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the Fund in any way, or
in any way be deemed an agent for the Fund. It is expressly understood and
agreed that the services to be rendered by the Manager to the Fund under the
provisions of this Agreement are not to be deemed exclusive, and the Manager
shall be free to render similar or different services to others so long as
its ability to render the services provided for in this Agreement shall not
be impaired thereby.
4. The Manager agrees to use its best efforts in the furnishing of
such advice and recommendations to the Fund, in the preparation of reports
and information, and in the management of the Fund's assets, all pursuant to
this Agreement, and for this purpose the Manager shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Manager shall be
deemed to include persons employed or retained by the Manager to furnish
statistical, research, and other factual information, advice regarding
economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Manager may desire and request.
5. The Fund will from time to time furnish to the Manager detailed
statements of the investments and assets of the Fund and information as to
its investment objectives and needs, and will make available to the Manager
such financial reports, proxy statements, legal and other information
relating to its investments as may be in the possession of the Fund or
available to it and such other information as the Manager may reasonably
request.
6. The Manager shall bear and pay the costs of rendering the services
to be performed by it under this Agreement including the fees and costs of
any sub-adviser with which the Manager has contracted. The Fund shall bear
and pay for all other expenses of its operation, including, but not limited
to, expenses incurred in connection with the issuance, registration and
transfer of its shares; fees of its custodian, transfer and shareholder
servicing agent; costs and expenses of pricing and calculating its daily net
asset value and of maintaining its books of account required by the
Investment Company Act of 1940; expenditures in connection with meetings of
the Fund's Shareholders and Board of Trustees, except those called solely to
accommodate the Manager; salaries of officers and fees and expenses of Board
of Trustees or members of any advisory board or committee of the Fund who are
not members of, affiliated with or interested persons of the Manager;
salaries of personnel (who may be employed by the Manager) involved in
placing orders for the execution of the Fund's portfolio transactions or in
maintaining registration of its shares under applicable securities laws;
insurance premiums on property or personnel of the Fund which inure to its
benefit; the cost of preparing and printing reports, proxy statements,
prospectuses and statements of additional information of the Fund or other
communications for distribution to its shareholders; expenses incurred in the
distribution of the Fund's shares pursuant to the Rule 12b-1 Distribution
Plan between the Fund and Franklin Distributors, Inc.; legal, auditing and
accounting fees; trade association dues; fees and expenses of registering and
maintaining registration of its shares for sale under federal and applicable
state and foreign securities laws; and all other charges and costs of its
operation plus any extraordinary and non-recurring expenses, except as herein
otherwise prescribed. The Fund is obligated to pay for certain accounting,
bookkeeping and recordkeeping functions which are performed by the Manager.
The Fund shall pay to the Manager a separate fee of $40,000 per year for the
performance of such services. To the extent the Manager or an affiliate
thereof incurs any other costs or performs any other services which are an
obligation of the Fund, as set forth herein, the Fund shall promptly
reimburse the Manager or such affiliate for such costs and expenses.
7. (a) The Fund agrees to pay to the Manager, and the Manager agrees
to accept, as full compensation for all administrative and investment
management services furnished or provided to the Fund and as full
reimbursement for all expenses assumed by the Manager, a management fee
computed at the rate of 0.75% per annum on the first $500 million of the
average daily net assets of the Fund, 0.625% per annum on the next $500
million of the average daily net assets of the Fund, and 0.50% per annum on
the average daily net assets of the Fund in excess of $1 billion.
(b) The management fee shall be accrued daily by the Fund and paid
to the Manager on the first business day of the succeeding month. The
initial monthly fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this
Agreement. The fee to the Manager 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. If this Agreement is terminated prior to the end of any month,
the fee to the Manager shall be payable within ten (10) days after the date
of termination.
(c) To the extent that the gross operating costs and expenses of
the Fund (excluding any interest, taxes, brokerage commissions, amortization
of organization expense, and, with the prior written approval of any state
securities commission requiring same, any extraordinary expenses, such as
litigation), exceed the most stringent expense limitation requirements of the
states in which shares of the Fund are qualified for sale, the Manager shall
reimburse the Fund for the amount of such excess.
(d) The Manager may waive any portion of the compensation or
reimbursement of expenses due to it pursuant to this Agreement. Any such
waiver shall be applicable only with respect to the specific items waived and
shall not constitute a waiver of any future compensation or reimbursement due
to the Manager hereunder.
8. The Manager agrees that neither it nor any of its officers or
employees shall take any short position in the shares of the Fund. This
prohibition shall not prevent the purchase of such shares by any of the
officers and directors or bona fide employees of the Manager or any trust,
pension, profit sharing or other benefit plan for such persons or affiliates
thereof, at a price not less than the net asset value thereof at the time of
purchase, as allowed pursuant to rules promulgated under the Investment
Company Act of 1940, as amended.
9. Nothing herein contained shall be deemed to require the Fund to
take any action contrary to its Declaration of Trust or By-Laws or any
applicable statute or regulation, or to relieve or deprive the Board of
Trustees of the Trust of its responsibility for and control of the conduct of
the affairs of the Fund.
10. (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
Fund or to any shareholder of the Fund for any act or 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 the Fund.
(b) Notwithstanding the foregoing, the Manager agrees to reimburse
the Fund for any and all costs, expenses, and counsel fees reasonably
incurred by the Fund in the preparation, printing and distribution of proxy
statements, amendments to its Registration Statement, the holding of meetings
of the shareholders, or Board of 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 Fund incurs as the result of action or inaction of the
Manager or any of its shareholders where the action 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 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 sole 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 Subparagraph 10(b), to
reimburse the Fund for any expenditures related to the institution of an
administrative proceeding or civil litigation by the Fund or a Fund
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 similar matters. So long as this Agreement is in
effect, the Manager shall pay to the Fund the amount due for expenses subject
to this Subparagraph 10(b) within thirty (30) days after a xxxx or statement
has been received by the Fund therefor. This provision shall not be deemed
to be a waiver of any claim the Fund may have or may assert against the
Manager or others for costs, expenses, or damages heretofore incurred by the
Fund or for costs, expenses, or damages the Fund 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 officer, director or employee of the
Manager, from liability in violation of Sections 17(h) and (i) of the
Investment Company Act of 1940, as amended.
11. This Agreement shall remain in effect for a period of two years
from its effective date, unless sooner terminated as hereinafter provided,
and shall continue in effect thereafter for periods not exceeding one year so
long as such continuation is approved at least annually by (i) the Board of
Trustees of the Trust or by the vote of a majority of the outstanding voting
securities of the Trust, and (ii) the vote of a majority of the Trustees of
the Trust who are not parties to this Agreement or interested persons
thereof, cast in person at a meeting called for the purpose of voting on such
approval.
12. This Agreement may be terminated at any time, without payment of
any penalty, by the Board of Trustees of the Trust or by vote of a majority
of the outstanding voting securities of the Fund, upon sixty (60) days'
written notice to the Manager, and by the Manager upon sixty (60) days'
written notice to the Trust.
13. This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act of
1940, as amended.
14. This Agreement may not be transferred, assigned, sold or in any
manner hypothecated or pledged without the affirmative vote or written
consent of the holders of a majority of the outstanding voting securities of
the Fund.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
16. 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.
17. The term "majority of the outstanding voting securities" of the
Fund shall have the meaning as set forth in the Investment Company Act of
1940, as amended.
18. In consideration of the execution of this Agreement, the Manager
hereby grants to the Fund and to the Trust the right to use the name
"Franklin" as part of their names. The Trust agrees that in the event this
Agreement is terminated, the Fund shall immediately take such steps as are
necessary to remove the reference to "Franklin" from its name.
19. The Manager acknowledges that it has received notice of and accepts
the limitations of liability set forth in the Declaration of Trust of the
Trust, and it agrees that the Fund's obligations hereunder shall be limited
to the Fund and the assets of the Fund, and no party shall seek satisfaction
of any such obligation from any shareholder, Trustee, officer, employee or
agent of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and effective on the 1st day of April, 1999.
FRANKLIN MANAGED TRUST on behalf of the
FRANKLIN RISING DIVIDENDS FUND
By: /S/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
Title: Vice President & Secretary
FRANKLIN ADVISORY SERVICES, LLC
By: /S/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Title: Secretary
