FRANKLIN GROWTH AND INCOME FUND
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT made between FRANKLIN GROWTH AND INCOME FUND, a
Delaware business trust, hereinafter called the "Trust" and FRANKLIN ADVISERS,
INC., a California Corporation, hereinafter called the "Manager."
WHEREAS, the Fund has been organized and operates as an investment company
registered under the Investment Company Act of 1940 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 Statement under the
Investment Company Act of 1940 and the Securities Act of 1933, 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 perform for its various management, statistical,
research, investment advisory and other services; 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, counseling and supervisory services to investment companies
and other investment counseling clients, and desires to provide these services
to the Trust.
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 the Trust's assets and to administer its
affairs, 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.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY THE MANAGER. The Manager
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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 corporate affairs
and conducting the business of the Trust, including complying with the
corporate and securities 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 Trust, 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. 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.
B. INVESTMENT MANAGEMENT SERVICES.
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(a) The Manager shall manage the Trust's assets and portfolio
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, 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 corporate action and any other
rights pertaining to the Trust'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 the Trust'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 the Trust,
orders for the execution of the Trust's portfolio
transactions. When placing such orders the Manager shall
seek to obtain the best net price and execution for the
Trust, 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 accord 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 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 the Trust'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 the Trust'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 the Trust'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 Trust should tender
securities pursuant to a "tender offer solicitation,"
Franklin/Templeton Distributors, Inc. ("Distributors") shall be
designated as the "tendering dealer" so long as it is legally
permitted to act in such capacity under the Federal securities
laws and rules thereunder and the rules of any securities
exchange or association of which it may be a member. Neither the
Manager nor Distributors shall 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 and this Agreement shall
not obligate the Manager or Distributors (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
Trust shall enter into an agreement with the Manager 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 the
Trust.
C. PROVISION OF INFORMATION NECESSARY FOR PREPARATION OF SECURITIES
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REGISTRATION STATEMENTS,
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AMENDMENTS AND OTHER MATERIALS. The Manager, its officers and employees
will make available and provide accounting and statistical information
required by the Underwriter in the preparation of registration statements,
reports and other documents required by Federal and state securities laws
and with such information as the Underwriter 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 available its
officers and employees to the Board of Trustees and officers of the Trust
for consultation and discussions regarding the administrative 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
Trust's net assets;
E. Salaries and other compensation of any of its executive officers who
are not officers, trustees, 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 the Trust;
H. Costs, including the interest expense, of borrowing money;
I. Costs incident to corporate meetings of the Trust, reports to the
Trust to its shareholders, the filing of reports with regulatory
bodies and the maintenance of the Trust's corporate existence;
J. Legal fees, including the legal fees related to the registration and
continued qualification of the Trust shares for sale;
K. Costs of printing stock certificates representing shares of the Trust;
L. Trustees' fees and expenses to trustees who are not trustees,
officers, employees or stockholders of the Manager or any of its
affiliates; and
M. Its pro rata portion of the fidelity bond insurance premium.
4. COMPENSATION OF THE MANAGER. The Trust shall pay a monthly management fee in
cash to the Manager based upon a percentage of the value of the Trust's net
assets, calculated as set forth below, on the first business day of each
month in each year as compensation for the services rendered and obligations
assumed by the Manager during the preceding month. 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 the Trust relating to
the previous month.
A. For purposes of calculating such fee, the value of the net assets of the
Trust shall be the net assets computed as of the close of business on
the last business day of the month preceding the month in which the
payment is being made, determined in the same manner as the Trust uses
to compute the value of its net assets in connection with the
determination of the net asset value of Trust 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% 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 and
not over $250,000,000; and
9/240 of 1% of the value of net assets in excess of
$250,000,000.
B. The Management fee payable by the Trust shall be reduced or eliminated
to the extent that Franklin/Templeton 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 the Trust as set forth in the laws, regulations and administrative
interpretations of those states in which the Trust's shares are
registered.
C. If this Agreement is terminated prior to the end of any month, the
monthly management fee 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
fiscal quarter during which the Agreement is in effect bears to the
number of calendar days in the month, and shall be payable within ten
(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 Agreement and Declaration of Trust and By-Laws of
the Trust and to Section 10(a) of the Investment Company Act of 1940, it is
understood that Trustees, officers, agents and stockholders of the Trust are
or may be interested in the Manager or its affiliates as trustees, officers,
agents or stockholders, and that trustees, officers, agents or stockholders
of the Manager or its affiliates are or may be interested in the Trust as
trustees, officers, agents, stockholders or otherwise, that the Manager or
its affiliates may be interested in the Trust as stockholders or otherwise;
and that the effect of any such interests shall be governed by said
Agreement and Declaration of Trust, the By-Laws and the Act.
6. LIABILITIES OF THE MANAGER.
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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 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 Trust.
B. Notwithstanding the foregoing, the Manager agrees to reimburse the Trust
for any and all costs, expenses, and 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, trustees, employees or
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 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,
trustees, 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 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. Agreement within thirty (30) days after a bill or statement
has been received by the Trust therefore. This provision shall not be deemed
to be a waiver of any claim 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 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 the Manager, from liability in violation of
Sections 17(h) and (i) of the Investment Company Act of 1940.
7. RENEWAL AND TERMINATION.
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A. This Agreement shall become effective on the date written below and shall
continue in effect for two (2) years. The Agreement is renewable annually
thereafter for successive periods not to exceed one year (i) by a vote of a
majority of the outstanding voting securities of the Trust 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.
(i) may at any time be terminated 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 Trust, on thirty
(30) days' written notice to the Manager;
(ii) shall immediately terminate in the event of its assignment; and
(iii) may be terminated by the Manager on thirty (30) days' written
notice to the Trust.
C. As used in this Section the terms assignments "interested person" and
"vote of a majority of the outstanding voting securities" shall have the
meanings set forth for any such terms in the Investment Company Act of 1940,
as amended.
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. SEVERABILITY. If any provision of this Agreement shall be held or made
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invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
the 10TH day of August, 2000.
FRANKLIN GROWTH AND INCOME FUND
By: /S/ DAVID P. GOSS
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David P. Goss
Title:Vice President & Assistant Secretary
FRANKLIN ADVISERS, INC.
By: /S/HARMON E. BURNS
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Harmon E. Burns
Title:Executive Vice President
