INVESTMENT MANAGEMENT CONTRACT
AGREEMENT made as of the 30th day of October, 1992, and
amended and restated as of the 1st day of April, 1993, and the 6th day of
December, 1994, and the 5th day of December, 1995 between TEMPLETON INCOME
TRUST, a Massachusetts business trust (the "Trust"), on behalf of its series of
shares called TEMPLETON MONEY FUND (the "Fund") and XXXXXXXXX INVESTMENT
COUNSEL, INC., a Florida corporation (the "Investment Manager").
WHEREAS, this Contract was originally made between the Trust
on behalf of the Fund and Xxxxxxxxx Global Bond Managers, Inc. ("TGBM");
WHEREAS, TGBM is being merged with and into the Investment
Manager in a transaction that will not result in a change of actual control or
management with respect to the Fund's investment management arrangements;
WHEREAS, the purpose of this amendment and restatement is to
identify the Investment Manager as the investment manager hereunder as a result
of said transaction;
NOW THEREFORE, in consideration of the mutual agreements
herein made, the parties hereto understand and agree as follows:
(1) The Investment Manager agrees, during the life of this
Contract, to manage the investment and reinvestment of the Fund's assets
consistent with the provisions of the Trust's Declaration of Trust and the
investment policies adopted and declared by the Trust's Board of Trustees. In
pursuance of the foregoing, the Investment 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 all such steps as may be necessary to
implement those determinations.
(2) The Investment Manager is not required to furnish any
personnel, overhead items or facilities for the Fund.
(3) The Investment 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 and, when applicable, the negotiation of
commissions in connection therewith.
All recommendations, decisions and placements shall be made in
accordance with the following principles:
1. Purchase and sale orders will usually be placed with
brokers which are selected by the Investment 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 as
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
Investment Manager in determining the overall reasonableness
of brokerage commissions; 2. In selecting brokers for
portfolio transactions, the Investment Manager shall take into
account its experience as to brokers qualified to achieve
"execution," including brokers who specialize in any foreign
securities held by the Fund; 3. The Investment 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)(3) of the Securities Exchange Act of
1934 (the "1934 Act"), for the Fund and/or other accounts, if
any, for which the Investment exercises investment discretion
(as defined in Section 3(a)(35) of the 0000 Xxx) and, as to
transactions as to which fixed minimum commission rates are
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 that transaction, if the
Investment Manager in making the selection in question
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 particular transaction or the Investment 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 Investment
Manager will not be required to place or attempt to place a
specific dollar value on 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 Investment Manager shall be
prepared to show that all commissions were allocated and paid
for purposes contemplated by the Fund's brokerage policy; that
the research services provide lawful and appropriate
assistance to the Investment Manager in the performance of its
investment decision - making responsibilities; and that the
commissions paid were within a reasonable range. The
determination that commissions are within a reasonable range
shall be based on any available information as to the level of
commissions known to be charged by other brokers on comparable
transactions, but there shall be taken into account the Fund'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 Investment Manager
are useful to the Investment Manager in performing its
advisory services under this Contract. Research services
provided by brokers to the Investment Manager are considered
to be in addition to, and not in lieu of, services required to
be performed by the Investment Manager under this Contract; 4.
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 Investment Manager, better prices and
execution may be obtained on a commission basis or from other
sources; and 5. Sales of the Fund's shares (which shall be
deemed to include also shares of other companies registered
under the Investment Company Act of 1940 (the "1940 Act")
which have either the same investment manager or an investment
manager affiliated with the Investment Manager) made by a
broker are one factor among others to be taken into account in
deciding to allocate portfolio transactions (including agency
transactions, principal transactions, purchases in
underwritings or tenders in response to tender offers) for the
account of the Fund to that broker; provided that the broker
shall furnish "best execution," as defined in paragraph 1
above, and that such allocation shall be within the scope of
the Fund's other policies as stated above; and provided
further, that in every allocation made to a broker in which
the sale of Fund shares is taken into account, there shall be
no increase in the amount of the commissions or other
compensation paid to such broker beyond a reasonable
commission or other compensation determined, as set forth in
paragraph 3 above, on the basis of best execution plus
research services, without taking account of or placing any
value upon such sale of the Fund's shares. (4) The Fund agrees
during the term of this Contract to pay to the Investment
Manager the
monthly pro-rated portion of an annual fee equivalent 0.35% of the first
$200,000,000 of the Fund's average daily net assets, reduced for such assets
over $200,000,000 to 0.30%, and further reduced for such assets in excess of
$1,300,000,000 to 0.25%, the monthly portion in each case to be based on the
Fund's average daily net assets during the preceding month. The Investment
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
Investment 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.
If the total expenses of the Fund (including the fee to the
Investment Manager) in any fiscal year of the Fund exceed any expense limitation
imposed by applicable State law, the Investment 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, 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.
(5) This Contract shall continue in effect until December 31,
1996. If not sooner terminated, this Contract 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 Contract or interested
persons (as such term is defined in the 0000 Xxx) of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (a)
either the vote of a majority of the outstanding voting securities of the Fund,
or (b) a majority of the Trust's Board of Trustees as a whole.
(6) Notwithstanding the foregoing, this Contract may be
terminated at any time by the Fund, without the payment of any penalty, upon
vote of a majority of the Trust's Board of Trustees or a majority of the
outstanding voting securities of the Fund, or by the Investment Manager, on
sixty (60) days' written notice to the other party.
(7) This Contract shall automatically and immediately
terminate in the event of its assignment (as such term is defined in the 1940
Act).
(8) In the event this Contract is terminated and the
Investment Manager no longer acts as Investment Manager to the Fund, the
Investment Manager reserves the right to withdraw from the Fund the use of the
name "Templeton" or any name misleadingly implying a continuing relationship
between the Fund and the Investment Manager or any of its affiliates.
(9) The Fund may purchase and/or sell securities which are
also purchased or sold by the Investment Manager or its owners or their
affiliates or other investment advisory clients of theirs.
(10) The Investment Manager may rely on the information
reasonably believed by it to be accurate and reliable. Except as may otherwise
be provided by the 1940 Act, neither the Investment Manager nor its officers,
directors, employees or agents shall be subject to any liability to the Fund or
any Shareholder of the Fund for any error of judgment, mistake of law or any
loss arising out of any investment or other act or omission in the course of,
connected with or arising out of any service to be rendered hereunder, except by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the Investment Manager's duties or by reason of reckless disregard of the
Investment Manager's obligations and duties under this Contract.
(11) It is understood that the services of the Investment
Manager are not deemed to be exclusive, and nothing in this Contract shall
prevent the Investment Manager, or any affiliate thereof, from providing similar
services to other investment companies and other clients (whether or not their
investment objectives and policies are similar to those of the Fund) or from
engaging in other activities. When other clients of the Investment Manager
desire to purchase or sell a security at the same time such security is
purchased or sold for the Fund, it is understood that such purchases and sales
will be made in a manner designed to be fair to all parties.
(12) This Contract shall be construed in accordance with the
laws of the State of Florida, 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 Contract shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Contract shall not be affected thereby and, to this extent, the provisions of
this Contract shall be deemed to be severable.
(14) Nothing herein shall be construed as constituting the
Investment Manager an agent of the Fund or 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 cuased this
Agreement to be duly executed by their duly authorized officers and their
respective corporate seals to be hereunto duly affixed and attested.
TEMPLETON INCOME TRUST
on behalf of Templeton Money Fund
By:/s/XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx
Secretary
XXXXXXXXX INVESTMENT COUNSEL, INC.
By:/s/XXXXXX X. XXXX
Xxxxxx X. Xxxx
President
