FRANKLIN GOLD AND PRECIOUS METALS FUND
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT made between FRANKLIN GOLD AND PRECIOUS METALS
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/▇▇▇▇▇▇▇▇▇ 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
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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/▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇ 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 April, 2000.
FRANKLIN GOLD AND PRECIOUS METALS FUND
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President & Assistant Secretary
FRANKLIN ADVISERS, INC.
By: /s/ H. E. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President