INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made effective as of the 31st day of March, 2008, between
TEMPLETON INSTITUTIONAL FUNDS (hereinafter referred to as the "Trust"), on
behalf of Foreign Equity Series (the "Fund"), and XXXXXXXXX INVESTMENT COUNSEL,
LLC (hereinafter referred to as the "Manager").
In consideration of the mutual agreements herein made, the Trust, 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 Trust Instrument of the Trust and the investment
policies adopted and declared by the Trust's Board of Trustees. 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 Foreign Fund's investment securities shall
be exercised, subject to guidelines adopted by the Board of Trustees.
(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 Trust'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 Trust'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 Trust'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 Trust 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
Trust'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 April 30, 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 Trust's
Board of Trustees 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 Trust's Board of Trustees 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 Trust
is approved by vote of a majority of the Trust's Board of Trustees 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 Trust
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 Trust 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 Trust's Board of
Trustees, 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 TRUST. The Trust's full name
and verified address is:
Xxxxxxxxx Institutional Funds
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 Trust.
(15) It is understood and expressly stipulated that neither the holders of
shares of the Fund, nor any Trustee, officer, agent or employee of the
Trust 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 Trust 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
By: /s/XXXXX X. XXXX
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Name: Xxxxx X. Xxxx
Title: Vice President and Assistant Secretary
XXXXXXXXX INVESTMENT COUNSEL, LLC
By: /s/XXXX X. XXXXX
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Name: Xxxx X. Xxxxx
Title: President
