FRANKLIN TAX-EXEMPT MONEY FUND
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT made between FRANKLIN TAX-EXEMPT MONEY FUND, a
California Corporation, hereinafter called the "Fund" and FRANKLIN ADVISERS,
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 (the "Act") for the
purpose of investing and reinvesting its assets insecurities, as set forth in
its Articles of Incorporation, its By-Laws and its Registration Statements
under the Act and the Securities Act of 1933, all as heretofore amended and
supplemented; and the Fund 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, counselling and supervisory services to
investment companies and other investment counselling clients, and desires to
provide these services to the Fund.
NOW THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is agreed as follows:
1. Employment of the Manager. The Fund hereby employs the Manager to manage
the investment and reinvestment of the Fund's assets and to administer its
affairs, subject to the direction of the Board of Directors and the
officers of the Fund, 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 Fund in any way or otherwise
be deemed an agent of the 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. Administrative Services. The Manager shall furnish to the Fund 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 Fund, including conducting correspondence and other
communications with the shareholders of the Fund, maintaining all
internal bookkeeping, accounting and auditing services and records in
connection with the Fund's investment and business activities. 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
Fund who are officers or employees of the Manager.
B. Investment Management Services.
(a) The Manager shall manage the Fund's assets and portfolio subject
to and in accordance with the investment objectives and policies
of the Fund and any directions which the Fund's Board of
Directors may issue from time to time. In pursuance of the
foregoing, the Manager shall make all determinations with respect
to the investment of the Fund'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 Fund's portfolio securities shall be exercised.
The Manager shall render regular reports to the Fund, at regular
meetings of the Board of Directors and at such other times as may
be reasonably requested by the Fund's Board of Directors, of (i)
the decisions which it has made with respect to the investment of
the 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 Fund's Board of Directors may issue from time to time,
shall place, in the name of the Fund, orders for the execution of
the Fund's portfolio transactions. When placing such orders the
Manager shall seek to obtain the best net price and execution for
the 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
Fund 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 Fund 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 Fund and the Manager agree that
the Manager shall select brokers for the execution of the Fund's
portfolio transactions from among:
(i) Those brokers and dealers who provide quotations and other
services to the Fund, specifically including the quotations
necessary to determine the 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 Fund or which place the Manager in a
better position to make decisions in connection with the
management of the 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.
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
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 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 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.
The Manager shall render regular reports to the Fund, 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.
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
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 Fund in the preparation of
registration statements, reports and other documents required by
Federal and state securities laws and with such information as the Fund
may reasonably request for use in the preparation of such documents or
of other materials necessary or helpful for the offering of the Fund's
shares.
D. Other Obligations and Services. The Manager shall make available its
officers and employees to the Board of Directors and officers of the
Fund for consultation and discussions regarding the administrative
management of the Fund and its investment activities.
3. Expenses of the Fund. It is understood that the Fund will pay all its
expenses other than those expressly assumed by the Manager herein, which
expenses payable by the Fund 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, including the expense of
issue, repurchase or redemption of its shares;
D. Expenses of obtaining quotations for calculating the value of the
Fund's net assets;
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 Fund;
G. Brokerage fees and commissions in connection with the purchase and sale
of portfolio securities for the Fund;
H. Costs, including the interest expense, of borrowing money;
I. Costs incident to corporate meetings of the Fund, reports to the Fund
to its shareholders, the filing of reports with regulatory bodies and
the maintenance of the Fund's corporate existence;
J. Legal fees, including the legal fees related to the registration and
continued qualification of the Fund shares for sale;
K. Costs of printing stock certificates representing shares of the Fund;
L. Directors' fees and expenses to directors who are not directors,
officers, employees or stockholders of the Manager or any of its
affiliates; and
M. Costs and expense of registering and maintaining the registration of
the Fund and its shares under Federal and applicable state laws;
including the printing and mailing of prospectuses to its shareholders;
and
N. Its pro rata portion of the fidelity bond insurance premium.
4. Compensation of the Manager. The Fund shall pay a daily management fee in
cash to the Manager based upon a percentage of the value of the Fund's net
assets, calculated as set forth below, as compensation for the services
rendered and obligations assumed by the Manager payable at the request of
the Manager.
A. For purposes of calculating such fee,-the value of the net assets of
the Fund shall be determined in the same manner as the Fund uses to
compute the value of its net assets in connection with the
determination of the net asset value of Fund shares, all as set forth
more fully in the Fund's current prospectus. The rate of the daily
management fee shall be as follows:
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 1% of the value of net assets in excess of $250,000,000.
B. The Management fee payable by the 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 the Fund as set forth in
the laws, regulations and administrative interpretations of those
states in which the Fund's shares are registered. The Manager may, from
time to time, voluntarily reduce or waive any management fee due to it
hereunder.
5. Activities of the Manager. The services of the Manager to the Fund
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 Articles of Incorporation and By-Laws of the
Fund and to Section 10(a) of the Act, it is understood that directors,
officers, agents and stockholders of the Fund 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 Fund as
directors, officers, agents, stockholders or otherwise, that the Manager
or its affiliates may be interested in the Fund as stockholders or
otherwise; and that the effect of any such interests shall be governed by
said Articles of Incorporation, the By-Laws and the 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 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 and directors' fees
reasonably incurred by the Fund in the preparation, printing and
distribution of proxy statements, amendments to its Registration
Statement, holdings of meetings of its shareholders or directors, 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 affiliates or any of their officers, directors, 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 Fund's Board of Directors;
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 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 Subsection 6(B)
Agreement within 30 days after a xxxx or statement has been received by
the Fund therefore. 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
director or officer of the Fund, or the Manager, from liability in
violation of Sections 17(h) and (i) of the Act.
7. Renewal and Termination.
A. This Agreement shall become effective on the date written below and
shall continue in effect for one year. 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
Fund or by a vote of the Board of Directors of the Fund, and (ii) by a
vote of a majority of the directors of the Fund who are not parties to
the Agreement or interested persons of any parties to the Agreement
(other than as Directors of the Fund) 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 Directors of the Fund or by vote
of a majority of the outstanding voting securities of the Fund,
on 60 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 60 days' written notice to the
Fund.
C. As used in this Section the terms "assignment," "interested person" and
"vote of a majority of the outstanding voting securities" shall have
the meanings set forth for any such terms 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. Distribution Plan
A. The provisions set forth in this paragraph 8 (hereinafter referred to
as the "Plan") have been adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "Act") by the Fund, having been
approved by a majority of the Fund's Board of Directors, including a
majority of the Directors who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation
of the Plan (the "non-interested directors"), cast in person at a
meeting called for the purpose of voting on such Plan. The Board of
Directors concluded that the existing compensation to the Manager was
fair and not excessive, and that due solely to the uncertainty that may
exist from time to time with respect to whether payments made by the
Fund to the Manager or other firms may be deemed to constitute
distribution expenses, it was determined that adoption of the Plan
would be prudent and in the best interests of the Fund and its
shareholders. The directors' 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 Plan has also been
approved by a vote of at least a majority of the Fund's outstanding
voting securities.
B. No additional payments are to be made by the Fund as a result of the
Plan other than the compensation the Fund is otherwise obligated to
make (i) to the Manager pursuant to paragraph 4 of this Agreement and
(ii) to its Shareholder Servicing Agent pursuant to their respective
Agreement as in effect at any time. However, to the extent any payments
to or by the Manager or the Fund's Shareholder Servicing Agent which
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 be made pursuant to the Plan as set forth herein. Such activities,
the payment of which are intended to be within the scope of the Plan,
shall include, but not necessarily be limited to, the following:
(a) the costs of the preparation, printing and mailing of all
required reports and notices to shareholders;
(b) the costs of the preparation, printing and mailing of all
prospectuses;
(c) the costs of preparation, printing and mailing of any proxy
statements and proxies;
(d) all legal and accounting fees relating to the preparation of any
such reports, prospectuses, proxies and proxy statements.
(e) all fees and expenses relating to the qualification of the Fund
and/or its shares under the securities or "Blue Sky" laws of any
jurisdiction;
(f) all fees under the Securities Act of 1933 and the Act, including
fees in connection with any application for exemption relating to
or directed toward the sale of the Fund's shares;
(g) all fees and assessments of the Investment Company Institute or
any successor organization, irrespective of whether some of its
activities are designed to provide sales assistance.
(h) all costs of the preparation and mailing of confirmations of
shares sold or redeemed or share certificates, and reports of
share balances;
(i) all costs of responding to telephone or mail inquiries of
investors or prospective investors; and
(j) payments to dealers, financial institutions, advisers, or other
firms, any one of whom may receive monies in respect of the
Fund's shares owned by shareholders for whom such firm is the
dealer of record or holder of record, or with whom such firm has
a servicing relationship. Servicing may include, among other
things: (i) answering client inquiries regarding the Fund; (ii)
assisting clients in changing dividend options, account
designations and addresses; (iii) performing sub-accounting; (iv)
establishing and maintaining shareholder accounts and records;
(v) processing purchase and redemption transactions; (vi)
automatic investment in Fund shares of client cash account
balances; (vii) providing periodic statements showing a client's
account balance and integrating such statements with those of
other transactions and balances in the client's other accounts
serviced by such firm; (viii) arranging for bank wires; and (ix)
such other services as the Fund may request, to the extent such
firms are permitted by applicable statute, rule or regulation.
C. The terms and provisions of the Plan are as follows:
(a) The Manager shall report to the Board of Directors of the Fund at
least quarterly on payments for any of the activities in
subparagraph B of this paragraph 8, and shall furnish the Board
of Directors of the Fund with such other information as the Board
may reasonably request in connection with such payments in order
to enable the Board to make an informed determination of whether
the Plan should be continued.
(b) The Plan shall continue in effect for a period of more than one
year from the date written below only so long as such continuance
is specifically approved at least annually by the Fund's Board of
Directors, including the non-interested directors, cast in person
at a meeting called for the purpose of voting on the Plan.
(c) The Plan may be terminated at any time by vote of a majority of
the non-interested directors or by vote of a majority of the
Fund's outstanding voting securities on not more than sixty (60)
days' written notice to any other party to the Plan, and shall
terminate automatically in the event of any act that constitutes
an assignment of this Management Agreement.
(d) The Plan may not be amended to increase materially the amount
deemed to be spent for distribution without approval by the
Fund's shareholders, and all material amendments to the Plan
shall be approved by the non-interested directors cast in person
at a meeting called for the purpose of voting on such amendment.
(e) So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested directors shall be committed to the
discretion of such non-interested directors.
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 the 1st day of December, 1986.
FRANKLIN TAX-EXEMPT MONEY FUND
/s/ Xxxxxxx X. Xxxxxxx
By: Xxxxxxx X. Xxxxxxx
XXXXXXXX ADVISERS, INC.
/s/ Xxxxxx X. Xxxxxxx, Xx.
By: Xxxxxx X. Xxxxxxx, Xx.
