FORM OF
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the ____ day of _________________, ____, between
TEMPLETON INSTITUTIONAL FUNDS, INC. (hereinafter referred to as the "Company"),
on behalf of Global Equity Series (the "Fund"), and Xxxxxxxxx Investment
Counsel, LLC (hereinafter referred to as the "Manager").
In consideration of the mutual agreements herein made, the Company, on
behalf of the Fund, and the Manager understand and agree as follows:
(1) The Manager agrees, during the life of this Agreement, to manage the
investment and reinvestment of the Fund's assets consistent with the
provisions of the Articles of Incorporation and Bylaws of the Company and
the investment policies adopted and declared by the Company's Board of
Directors. 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 its investment securities, and shall take such steps
as may be necessary to implement those determinations. Such determinations
and services shall include determining the manner in which any voting
rights, rights to consent to corporate action and any other rights
pertaining to the Fund's investment securities shall be exercised, subject
to guidelines adopted by the Board of Directors. It is understood that all
acts of the Manager in performing this Agreement are performed by it
outside the United States.
(2) The Manager is not required to furnish any personnel, overhead items or
facilities for the Fund, including trading desk facilities or daily pricing
of the Fund's portfolio.
(3) The Manager shall be responsible for selecting members of securities
exchanges, brokers and dealers (such members, brokers and dealers being
hereinafter referred to as "brokers") for the execution of the Fund's
portfolio transactions consistent with the Company's brokerage policies
and, when applicable, the negotiation of commissions in connection
therewith.
All decisions and placements shall be made in accordance with the following
principles:
A. Purchase and sale orders will usually be placed with brokers which
are selected by the Manager as able to achieve "best execution" of
such orders. "Best execution" shall mean prompt and reliable execution
at the most favorable security price, taking into account the other
provisions hereinafter set forth. The determination of what may
constitute best execution and price in the execution of a securities
transaction by a broker involves a number of considerations,
including, without limitation, the overall direct net economic result
to the Fund (involving both price paid or received and any commissions
and other costs paid), the efficiency with which the transaction is
effected, the ability to effect the transaction at all where a large
block is involved, availability of the broker to stand ready to
execute possibly difficult transactions in the future, and the
financial strength and stability of the broker. Such considerations
are judgmental and are weighed by the Manager in determining the
overall reasonableness of brokerage commissions.
B. In selecting brokers for portfolio transactions, the Manager shall
take into account its past experience as to brokers qualified to
achieve "best execution," including brokers who specialize in any
foreign securities held by the Fund.
C. The Manager is authorized to allocate brokerage business to brokers
who have provided brokerage and research services, as such services
are defined in Section 28(e) of the Securities Exchange Act of 1934
(the "1934 Act"), for the Fund and/or other accounts, if any, for
which the Manager exercises investment discretion (as defined in
Section 3(a)(35) of the 0000 Xxx) and, as to transactions for which
fixed minimum commission rates are not applicable, to cause the Fund
to pay a commission for effecting a securities transaction in excess
of the amount another broker would have charged for effecting that
transaction, if the Manager determines in good faith that such amount
of commission is reasonable in relation to the value of the brokerage
and research services provided by such broker, viewed in terms of
either that particular transaction or the Manager's overall
responsibilities with respect to the Fund and the other accounts, if
any, as to which it exercises investment discretion. In reaching such
determination, the Manager will not be required to place or attempt to
place a specific dollar value on the research or execution services of
a broker or on the portion of any commission reflecting either of said
services. In demonstrating that such determinations were made in good
faith, the Manager shall be prepared to show that all commissions were
allocated and paid for purposes contemplated by the Company's
brokerage policy; that the research services provide lawful and
appropriate assistance to the Manager in the performance of its
investment decision-making responsibilities; and that the commissions
paid were within a reasonable range. Whether commissions were within a
reasonable range shall be based on any available information as to the
level of commission known to be charged by other brokers on comparable
transactions, but there shall be taken into account the Company's
policies that (i) obtaining a low commission is deemed secondary to
obtaining a favorable securities price, since it is recognized that
usually it is more beneficial to the Fund to obtain a favorable price
than to pay the lowest commission; and (ii) the quality,
comprehensiveness and frequency of research studies that are provided
for the Manager are useful to the Manager in performing its advisory
services under this Agreement. Research services provided by brokers
to the Manager are considered to be in addition to, and not in lieu
of, services required to be performed by the Manager under this
Agreement. Research furnished by brokers through which the Fund
effects securities transactions may be used by the Manager for any of
its accounts, and not all research may be used by the Manager for the
Fund. When execution of portfolio transactions is allocated to brokers
trading on exchanges with fixed brokerage commission rates, account
may be taken of various services provided by the broker.
D. Purchases and sales of portfolio securities within the United
States other than on a securities exchange shall be executed with
primary market makers acting as principal, except where, in the
judgment of the Manager, better prices and execution may be obtained
on a commission basis or from other sources.
(4) The Fund agrees to pay to the Manager a monthly fee in dollars, at the
annual rate of the Fund's daily net assets, as listed below, payable at the
end of each calendar month:
0.70%, up to and including $1 billion;
0.68% over $1 billion, up to and including $5 billion;
0.66% over $5 billion, up to and including $10 billion;
0.64% over $10 billion, up to and including $15 billion;
0.62% over $15 billion, up to and including $20 billion; and
0.60% over $20 billion.
The Manager may waive all or a portion of its fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of its services.
The Manager shall be contractually bound hereunder by the terms of any publicly
announced waiver of its fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were fully set forth herein.
Notwithstanding the foregoing, if the total expenses of the Fund (including the
fee to the Manager) in any fiscal year of the Company exceed any expense
limitation imposed by applicable State law, the Manager shall reimburse the Fund
for such excess in the manner and to the extent required by applicable State
law. The term "total expenses," as used in this paragraph, does not include
interest, taxes, litigation expenses, distribution expenses, brokerage
commissions or other costs of acquiring or disposing of any of the Fund's
portfolio securities or any costs or expenses incurred or arising other than in
the ordinary and necessary course of the Fund's business. When the accrued
amount of such expenses exceeds this limit, the monthly payment of the Manager's
fee will be reduced by the amount of such excess, subject to adjustment month by
month during the balance of the Company's fiscal year if accrued expenses
thereafter fall below the limit.
(5) This Agreement shall be effective as of the date first written above
and shall continue in effect until ____________________, 2009. If not
sooner terminated, this Agreement shall continue in effect for successive
periods of 12 months each thereafter, provided that each such continuance
shall be specifically approved annually by the vote of a majority of the
Company's Board of Directors who are not parties to this Agreement or
"interested persons" (as defined in the Investment Company Act of 1940 (the
"1940 Act")) of any such party, cast in person at a meeting called for the
purpose of voting on such approval and either the vote of (a) a majority of
the outstanding voting securities of the Fund, as defined in the 1940 Act,
or (b) a majority of the Company's Board of Directors as a whole.
(6) Notwithstanding the foregoing, this Agreement may be terminated by
either party at any time, without the payment of any penalty, on sixty (60)
days' written notice to the other party, provided that termination by the
Company is approved by vote of a majority of the Company's Board of
Directors in office at the time or by vote of a majority of the outstanding
voting securities of the Fund (as defined by the 1940 Act).
(7) This Agreement will terminate automatically and immediately in the
event of its assignment (as defined in the 1940 Act).
(8) In the event this Agreement is terminated and the Manager no longer
acts as Manager to the Fund, the Manager reserves the right to withdraw
from the Fund the use of the name "Xxxxxxxxx" or any name misleadingly
implying a continuing relationship between the Fund and the Manager or any
of its affiliates.
(9) Except as may otherwise be provided by the 1940 Act, neither the
Manager nor its officers, directors, employees or agents shall be subject
to any liability for any error of judgment, mistake of law, or any loss
arising out of any investment or other act or omission in the performance
by the Manager of its duties under the Agreement or for any loss or damage
resulting from the imposition by any government of exchange control
restrictions which might affect the liquidity of the Fund's assets, or from
acts or omissions of custodians, or securities depositories, or from any
war or political act of any foreign government to which such assets might
be exposed, or for failure, on the part of the custodian or otherwise,
timely to collect payments, except for any liability, loss or damage
resulting from willful misfeasance, bad faith or gross negligence on the
Manager's part or by reason of reckless disregard of the Manager's duties
under this Agreement. It is hereby understood and acknowledged by the
Company that the value of the investments made for the Fund may increase as
well as decrease and are not guaranteed by the Manager. It is further
understood and acknowledged by the Company that investment decisions made
on behalf of the Fund by the Manager are subject to a variety of factors
that may affect the values and income generated by the Fund's portfolio
securities, including general economic conditions, market factors and
currency exchange rates, and that investment decisions made by the Manager
will not always be profitable or prove to have been correct.
(10) It is understood that the services of the Manager are not deemed to be
exclusive, and nothing in this Agreement shall prevent the Manager, or any
affiliate thereof, from providing similar services to other investment
companies and other clients, including clients that may invest in the same
types of securities as the Fund, or, in providing such services, from using
information furnished by others. When the Manager determines to buy or sell
the same security for the Fund that the Manager or one or more of its
affiliates has selected for clients of the Manager or its affiliates, the
orders for all such security transactions shall be placed for execution by
methods determined by the Manager, with approval by the Company's Board of
Directors, to be impartial and fair.
(11) Pursuant to Section 6.2 of the Code of Conduct for Persons Registered
with the Securities and Futures Commission (the "SFC"), the following
information is included in this Agreement:
Undertakings. Each party undertakes to notify the other party in the event
of any material change to the information provided in this Agreement.
Certain Information About the Manager.
(i) The Manager's full name and address is:
Xxxxxxxxx Investment Counsel, LLC
000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000-0000
(ii) The Manager's registration status with the SFC is active.
Certain Information About the Company. The Company's full name
and verified address is:
Xxxxxxxxx Institutional Funds, Inc.
000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000-0000
(12) This Agreement shall be construed in accordance with the laws of the
State of Delaware, provided that nothing herein shall be construed as being
inconsistent with applicable Federal and State securities laws and any
rules, regulations and orders thereunder.
(13) 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 and, to this extent, the provisions of this
Agreement shall be deemed to be severable.
(14) Nothing herein shall be construed as constituting the Manager an agent
of the Company.
(15) It is understood and expressly stipulated that neither the holders of
shares of the Fund, nor any Directors, officer, agent or employee of the
Company shall be personally liable hereunder, nor shall any resort be had
to other private property for the satisfaction of any claim or obligation
hereunder, but the Company only shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers as of the date
first written above.
TEMPLETON INSTITUTIONAL FUNDS, INC.
By:
--------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President and Assistant
Secretary
XXXXXXXXX INVESTMENT COUNSEL, LLC.
By:
------------------------------
Name: Xxxx X. Xxxxx
Title: President
