INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT dated as of the 30th day of October, 1992, and
amended and restated as of the 6th day of December, 1994, and the 25th day of
May, 1995, between TEMPLETON CAPITAL ACCUMULATOR FUND, INC. (hereinafter
referred to as the "Fund") and XXXXXXXXX INVESTMENT COUNSEL, INC. (hereinafter
referred to as the "Investment Manager").
In consideration of the mutual agreements herein made, the
Fund and the Investment Manager understand and agree as follows:
(1) The Investment 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 of the Fund and
the investment policies adopted and declared by the Fund's Board of Directors.
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. 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.
(2) The Investment 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 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 consistent with the Fund'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 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 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.
B. In selecting brokers for portfolio transactions, the
Investment 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 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) of the Securities
Exchange Act of 1934 (the "1934 Act"), for the Fund
and/or other accounts, if any, for which the
Investment 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 Investment 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
terms of either that particular transaction or the
Investment 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 Investment
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 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.
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 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 Agreement. 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 Agreement. Research
furnished by brokers through which the Fund effects
securities transactions may be used by the Investment
Manager for any of its accounts, and not all
research may be used by the Investment 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
Investment Manager, better prices and execution may
be obtained on a commission basis or from other
sources.
E. Sales of the Fund's shares (which shall be deemed to
include also shares of other registered investment
companies which have either the same adviser or an
investment adviser affiliated with the Investment
Manager) 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 subparagraph A
above, and that such allocation shall be within the
scope of the Fund's policies as stated above;
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
subparagraph C above, on the basis of best execution
alone or 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 to pay to the Investment Manager a
monthly fee in dollars at an annual rate of 0.75% of the Fund's average
daily net assets, payable at the end of each calendar 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
Trust'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 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,
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 Investment Manager's fee will be reduced by the
amount of such excess, subject to adjustment month by month during the balance
of the Fund's fiscal year if accrued expenses thereafter fall below the limit.
(5) This Agreement shall continue in effect through December
31, 1996. 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 Fund's Board of Directors who are not parties to this Agreement or
"interested persons" (as defined in 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 Fund'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 Fund is approved by vote of a majority of the Fund'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
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) 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 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 Investment 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 Investment Manager's
part or by reason of reckless disregard of the Investment Manager's duties under
this Agreement. It is hereby understood and acknowledged by the Fund that the
value of the investments made for the Fund may increase as well as decrease and
are not guaranteed by the Investment Manager. It is further understood and
acknowledged by the Fund that investment decisions made on behalf of the Fund by
the Investment Manger are subject to a variety of factors which 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 Investment manager will not always be
profitable or prove to have been correct.
(10) It is understood that the services of the Investment Manager
are not deemed to be exclusive, and nothing in this Agreement shall prevent the
Investment Manager, or any affiliate thereof, from providing similar services to
other investment companies and other clients, including clients which may invest
in the same types of securities as the Fund, or, in providing such services,
from using information furnished by others. When the Investment Manager
determines to buy or sell the same security for the Fund that the Investment
Manager or one or more of its affiliates has selected for clients of the
Investment Manager or its affiliates, the orders for all such security
transactions shall be placed for execution by methods determined by the
Investment Manager, with approval by the Fund's Board of Directors, to be
impartial and fair.
(11) This Agreement shall be construed in accordance with the laws
of the State of Maryland, provided that nothing
herein shall be construed as being inconsistent with applicable Federal and
state securities laws and any rules, regulations and orders thereunder.
(12) 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.
(13) Nothing herein shall be construed as constituting the
Investment Manager an agent of the Fund.
(14) It is understood and expressly stipulated that neither the
holders of shares of the Fund nor any Director, officer, agent or employee of
the Fund 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 Fund only shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers and their
respective corporate seals to be hereunto duly affixed and attested.
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
/s/XXXX X. XXX
By: Xxxx X. Xxx
XXXXXXXXX INVESTMENT COUNSEL, INC.
/s/XXXXXXX X. XXXXXXX
By: Xxxxxxx X. Xxxxxxx
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