FRANKLIN XXXXXXXXX INTERNATIONAL TRUST
on behalf of
FRANKLIN INDIA GROWTH FUND
INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT made between FRANKLIN XXXXXXXXX
INTERNATIONAL TRUST, a Delaware statutory trust (the "Trust"), on behalf of
FRANKLIN INDIA GROWTH FUND (the "Fund"), a series of the Trust, FRANKLIN
ADVISERS, INC., a California corporation (the "Adviser") and FT (Mauritius)
Offshore Investments Limited ("FT Mauritius"), a company incorporated under the
laws of the Republic of Mauritius.
WHEREAS, the Trust has been organized and intends to operate as an
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), for the purpose of investing and reinvesting its
assets in securities, as set forth in its Agreement and Declaration of Trust,
its By-Laws and its Registration Statement under the 1940 Act and the Securities
Act of 1933, all as heretofore and hereafter amended and supplemented; and the
Trust desires to avail itself of the services, information, advice, assistance
and facilities of an investment manager and to have an investment manager
perform various management, statistical, research, investment advisory and other
services for the Fund; and,
WHEREAS, FT Mauritius has been organized as a special purpose entity for
the purpose of investing in securities and other instruments traded in the
country of India, and is registered in Mauritius as a collective investment
vehicle; and FT Mauritius also desires to avail itself of the services,
information, advice, assistance and facilities of an investment manager and to
have an investment manager perform various management, statistical, research,
investment advisory and other services for FT Mauritius; and,
WHEREAS, the Fund intends to invest a substantial portion of its assets in
securities and other instruments traded in the country of India, by investing in
FT Mauritius;
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, is engaged in the business of rendering
management, investment advisory, counseling and supervisory services to
investment companies and other investment counseling clients, and desires to
provide these services to the Fund and to FT Mauritius.
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is mutually agreed as follows:
1. EMPLOYMENT OF THE ADVISER. The Trust and FT Mauritius each individually
hereby employs the Adviser to manage the investment and reinvestment of the
Fund's assets ("Fund Assets") and FT Mauritius' assets ("FT Mauritius Assets")
(collectively referred to herein as "Assets") and to administer its affairs,
subject to the direction of the Board of Trustees and the officers of the Trust
and the Board of Directors of FT Mauritius, for the period and on the terms
hereinafter set forth. The Adviser 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 Adviser 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, the Trust or FT Mauritius in any way
or otherwise be deemed an agent of the Fund, the Trust or FT Mauritius.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY THE ADVISER. The Adviser
undertakes to provide the services hereinafter set forth and to assume the
following obligations:
A. INVESTMENT MANAGEMENT SERVICES.
(a) The Adviser shall manage the Assets subject to and in
accordance with the investment objectives and policies of the Fund and any
directions which the Trust's Board of Trustees, with respect to Assets, or the
Board of Directors of FT Mauritius, with respect to FT Mauritius Assets, may
issue from time to time. In pursuance of the foregoing, the Adviser shall make
all determinations with respect to the investment of the Assets and the purchase
and sale of its investment securities, and shall take such steps as may be
necessary to implement the same. 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 and FT Mauritius'
investment securities shall be exercised. The Adviser shall render or cause to
be rendered regular reports to the Trust, at regular meetings of its Board of
Trustees and at such other times as may be reasonably requested by the Trust's
Board of Trustees or the Board of Directors of FT Mauritius, of (i) the
decisions made with respect to the investment of the Assets and the purchase and
sale of its investment securities, (ii) the reasons for such decisions, and
(iii) the extent to which those decisions have been implemented.
(b) The Adviser, subject to and in accordance with any
directions which the Trust's Board of Trustees, with respect to Assets, or the
Board of Directors of FT Mauritius, with respect to FT Mauritius Assets, may
issue from time to time, shall place, in the name of the Fund or FT Mauritius,
orders for the execution of the securities transactions. When placing such
orders, the Adviser shall seek to obtain the best net price and execution for
the Fund or FT Mauritius, but this requirement shall not be deemed to obligate
the Adviser 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 Adviser in accordance 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 of Trustees determines that the Fund will benefit, directly or
indirectly, by doing so, the Adviser 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 Trust, FT Mauritius and the Adviser agree that
the Adviser shall select brokers for the execution of the Fund's and FT
Mauritius' transactions from among:
(i) Those brokers and dealers who provide quotations and other
services, specifically including the quotations necessary to
determine the Fund's and FT Mauritius' net assets, in such
amount of total brokerage as may reasonably be required in
light of such services; and
(ii) Those brokers and dealers who supply research, statistical
and other data to the Adviser or its affiliates which the
Adviser or its affiliates may lawfully and appropriately use in
their investment management capacities, which relate directly
to securities, actual or potential, of the Fund and/or Ft
Mauritius, or which place the Adviser in a better position to
make decisions in connection with the management of the Assets
and securities, whether or not such data may also be useful to
the Adviser and its affiliates in managing other portfolios or
advising other clients, in such amount of total brokerage as
may reasonably be required.
(c) It is understood that the investment of Fund Assets in
securities and other instruments in the country of India shall
be made by the investment of Funds Assets in FT Mauritius. The
investment of FT Mauritius Assets directly in Indian securities
and other instruments will be made by the Adviser pursuant to
this Agreement in its capacity as investment manager of FT
Mauritius. All other investments of Fund Assets shall be made
by the Adviser in accordance with this Agreement in its
capacity as investment manager to the Fund.
(d) When the Adviser has determined that the Fund or FT
Mauritius should tender securities pursuant to a "tender offer
solicitation," Franklin/Xxxxxxxxx Distributors, Inc.
("Distributors") shall be designated as the "tendering dealer"
so long as it is legally permitted to 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. Neither the Adviser nor
Distributors shall 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 Financial Industry Regulatory Authority as of the date of
this Agreement. This Agreement shall not obligate the Adviser
or 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
Trust on behalf of the Fund or FT Mauritius shall enter into an
agreement with the Adviser and/or Distributors to reimburse
them for all such 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.
(e) The Adviser shall render regular reports to the Trust, not
more frequently than quarterly, of how much total brokerage
business has been placed by the Adviser, on behalf of the Fund,
with brokers falling into each of the categories referred to
above and the manner in which the allocation has been
accomplished.
(f) The Adviser 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
Adviser's paramount duty to obtain the best net price and
execution for the Fund and FT Mauritius.
(g) Decisions on proxy voting shall be made by the Adviser
unless the Board of Trustees determines otherwise. Pursuant to
its authority, Adviser shall have the power to vote, either in
person or by proxy, all securities in which the Fund or FT
Mauritius may be invested from time to time, and shall not be
required to seek or take instructions from the Fund with
respect thereto. Adviser shall not be expected or required to
take any action other than the rendering of investment-related
advice with respect to lawsuits involving securities presently
or formerly held in the Fund or FT Mauritius, or the issuers
thereof, including actions involving bankruptcy. Should Adviser
undertake litigation against an issuer on behalf of the Fund
and/or FT Mauritius, the Fund and FT Mauritius agree to pay
their respective portion of any applicable legal fees
associated with the action or to forfeit any claim to any
assets Adviser may recover and, in such case, agrees to hold
Adviser harmless for excluding the Fund and/or FT Mauritius
from such action. In the case of class action suits involving
issuers held in the Fund and/or FT Mauritius, Adviser may
include information about the Fund and FT Mauritius for
purposes of participating in any settlements.
B. PROVISION OF INFORMATION NECESSARY FOR PREPARATION OF SECURITIES
REGISTRATION STATEMENTS, AMENDMENTS AND OTHER MATERIALS. The Adviser, its
officers and employees will make available and provide accounting and
statistical information required by the Fund and FT Mauritius in the preparation
of registration statements, reports and other documents required by federal and
state securities laws and with such information as the Fund and FT Mauritius may
reasonably request for use in the preparation of such documents or of other
materials necessary or helpful for the underwriting and distribution of the
Fund's shares.
C. OTHER OBLIGATIONS AND SERVICES. The Adviser shall make its
officers and employees available to the Board of Trustees and officer of the
Trust, and Board of Directors of FT Mauritius for consultation and discussions
regarding the administration and management of the Fund, FT Mauritius and their
investment activities.
D. DELEGATION OF SERVICES. The Adviser may, at its expense, select
and contract with one or more investment advisers registered under the
Investment Advisers Act of 1940 ("Sub-Advisers") to perform some or all of the
services for the Fund and FT Mauritius for which it is responsible under this
Agreement. The Adviser will compensate any Sub-Adviser for its services to the
Fund and FT Mauritius. The Adviser may terminate the services of any Sub-Adviser
at any time in its sole discretion, and shall at such time assume the
responsibilities of such Sub-Adviser unless and until a successor Sub-Adviser is
selected and the requisite approval of the Fund's shareholders is obtained. The
Adviser will continue to have responsibility for all advisory services furnished
by any Sub-Adviser.
3. EXPENSES OF THE FUND AND FT MAURITIUS. It is understood that the Fund
and FT Mauritius will pay all of their own expenses other than those expressly
assumed by the Adviser herein, which expenses payable by the Fund and/or FT
Mauritius shall include:
A. Fees and expenses paid to the Adviser as provided herein;
B. Expenses of all audits of the Fund and FT Mauritius by independent
public accountants;
C. Expenses of transfer agent, registrar, custodian, dividend
disbursing agent and shareholder record-keeping services, including the expenses
of issue, repurchase or redemption of shares with respect to the Fund and FT
Mauritius;
D. Expenses of obtaining quotations for calculating the value of the
Fund's and FT Mauritius' net assets;
E. Salaries and other compensations of executive officers of the
Trust or FT Mauritius who are not officers, directors, stockholders or employees
of the Adviser or its affiliates;
F. Taxes levied against the Fund or FT Mauritius;
G. Brokerage fees and commissions in connection with the purchase and
sale of securities for the Fund and for FT Mauritius;
H. Costs, including the interest expense, of borrowing money;
I. Costs incident to meetings of the Board of Trustees of the Trust
and shareholders of the Fund and the Board of Directors of FT Mauritius, reports
to the Fund's shareholders, the filing of reports with regulatory bodies and the
maintenance of the Fund's, the Trust's, and FT Mauritius' legal existence;
J. Legal fees, including the legal fees related to the registration
and continued qualification of the Fund's shares for sale and any legal fees
related to FT Mauritius;
K. Trustees' and Directors' fees and expenses to trustees who are not
directors, officers, employees or stockholders of the Adviser or any of its
affiliates;
L. Costs and expense of registering and maintaining the registration
of the Fund and its shares under federal and any applicable state laws;
including the printing and mailing of prospectuses to its shareholders and any
costs and expenses related to maintaining the registration of FT Mauritius with
the country of Mauritius and any other related regulatory expenses;
M. Trade association dues;
N. The Fund's pro rata portion of fidelity bond, errors and
omissions, and trustees and officer liability insurance premiums; and
O. The Fund's or FT Mauritius' portion of the cost of any proxy
voting service used on its behalf.
4. COMPENSATION OF THE ADVISER. The Fund and FT Mauritius shall pay a
management fee in cash to the Adviser 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 Adviser, during the preceding
month, on the first business day of the month in each year.
A. For purposes of calculating such fee, the value of the net assets
of the Fund shall be determined in the same manner as that Fund uses to compute
the value of its net assets in connection with the determination of the net
asset value of its shares, all as set forth more fully in the Fund's current
prospectus and statement of additional information. With respect to the
investment management services performed by the Adviser for FT Mauritius related
to the portion of the Fund's assets invested in FT Mauritius, the parties agree
that FT Mauritius will pay a fee to the Adviser equal to 80% of the total
management fee payable by the Fund to the Adviser hereunder with the remainder
of the total management fee to be paid by the Fund. The rate of the management
fee payable by the Fund shall be calculated daily at the following annual rates:
1.25% of the value of its net assets up to
and including $1 billion;
1.20% of the value of its net assets over $1
billion up to and including $5 billion;
1.15% of the value of its net assets over $5
billion up to and including $10 billion;
1.10% of the value of its net assets over $10
billion up to and including $15 billion;
1.05% of the value of its net assets over $15
billion up to and including $20 billion; and
1.00% of the value of its net assets over $20
billion
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 Adviser 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 Adviser 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 full set forth herein.
C. If this Agreement is terminated prior to the end of any month, the
accrued management fee shall be paid to the date of termination.
5. ACTIVITIES OF THE ADVISER. The services of the Adviser to the Fund and
FT Mauritius hereunder are not to be deemed exclusive, and the Adviser and any
of its affiliates shall be free to render similar services to others. Subject to
and in accordance with the Agreement and Declaration of Trust and By-Laws of the
Trust and Section 10(a) of the 1940 Act, it is understood that trustees,
officers, agents and shareholders of the Trust and of FT Mauritius are or may be
interested in the Adviser or its affiliates as directors, officers, agents or
stockholders; that directors, officers, agents or stockholders of the Adviser or
its affiliates are or may be interested in the Trust and FT Mauritius as
trustees, officers, agents, shareholders or otherwise; that the Adviser or its
affiliates may be interested in the Fund as shareholders or otherwise; and that
the effect of any such interests shall be governed by said Agreement and
Declaration of Trust, By-Laws and the 1940 Act.
6. LIABILITIES OF THE ADVISER.
A. In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties hereunder on the part
of the Adviser, the Adviser shall not be subject to liability to the Trust, the
Fund, or FT Mauritius 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 or FT Mauritius.
B. Notwithstanding the foregoing, the Adviser agrees to reimburse the
Trust and FT Mauritius for any and all costs, expenses, and counsel and
trustees' fees reasonably incurred by the Trust or FT Mauritius in the
preparation, printing and distribution of proxy statements or amendments to its
Registration Statement or similar documents, holdings of meetings of its
shareholders or trustees, 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 Trust or FT
Mauritius incurs as the result of action or inaction of the Adviser or any of
its affiliates or any of their officers, directors, employees or stockholders
where the action or inaction necessitating such expenditures (i) is directly or
indirectly related to any transactions or proposed transaction in the stock or
control of the Adviser 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 Trust's Board of
Trustees or FT Mauritius' Board of Directors; or, (ii) is within the control of
the Adviser or any of its affiliates or any of their officers, directors,
employees or stockholders. The Adviser shall not be obligated pursuant to the
provisions of this Subparagraph 6.B., to reimburse the Trust or FT Mauritius for
any expenditures related to the institution of an administrative proceeding or
civil litigation by the Trust or FT Mauritius or a shareholder seeking to
recover all or a portion of the proceeds derived by any stockholder of the
Adviser or any of its affiliates from the sale of his shares of the Adviser, or
similar matters. So long as this Agreement is in effect, the Adviser shall pay
to the Trust or FT Mauritius, as relevant, the amount due for expenses subject
to this Subparagraph 6.B. within thirty (30) days after a xxxx or statement has
been received by the Adviser therefore. This provision shall not be deemed to be
a waiver of any claim the Trust or FT Mauritius may have or may assert against
the Adviser or others for costs, expenses or damages heretofore incurred by the
Trust or FT Mauritius or for costs, expenses or damages the Trust or FT
Mauritius may hereafter incur which are not reimbursable to it hereunder.
C. No provision of this Agreement shall be construed to protect any
trustee or officer of the Trust, or director or officer of the Adviser, from
liability in violation of Sections 17(h) and (i) of the 1940 Act.
7. RENEWAL AND TERMINATION.
A. This Agreement shall become effective on the date written below
and, with respect to the provisions relating to the Fund, shall continue in
effect for two (2) years thereafter, unless sooner terminated as hereinafter
provided and shall continue in effect thereafter for periods not exceeding one
(1) year so long as such continuation is approved at least annually (i) by a
vote of a majority of the outstanding voting securities of the Fund or by a vote
of the Board of Trustees of the Trust, and (ii) by a vote of a majority of the
Trustees of the Trust who are not parties to the Agreement or "interested
persons" as defined in the Investment Company Act of 1940, as amended of such
party (other than as Trustees of the Trust), cast in person at a meeting called
for the purpose of voting on the Agreement. With respect to FT Mauritius, this
Agreement shall remain in effect until terminated by either party as set forth
below.
B. This Agreement:
(i) may at any time be terminated without the payment of any
penalty, with respect to the Fund, either by vote of the Board of Trustees of
the Trust or by vote of a majority of the outstanding voting securities of the
Fund, and with respect to FT Mauritius, by vote of the Board of Directors of FT
Mauritius, on not more than sixty (60) days' written notice to the Adviser;
(ii) shall immediately terminate with respect to the Fund in
the event of its assignment; and
(iii) may be terminated by the Adviser on sixty (60) days'
written notice to the Fund and FT Mauritius.
C. As used in this Paragraph 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 in the 1940 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. 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. The termination of this Agreement with
respect to the provision of investment management services to FT Mauritius shall
not affect the status of this Agreement with respect to the provision of
investment management services to the Fund.
9. 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
and effective on the 31st day of January 2008.
FRANKLIN XXXXXXXXX INTERNATIONAL TRUST
on behalf of FRANKLIN INDIA GROWTH FUND
By: /S/XXXXX X. XXXXXXXX
--------------------
Xxxxx X. Xxxxxxxx
Title: Vice President & Secretary
FRANKLIN ADVISERS, INC.
By: /S/XXXXXX X. XXXXXXXX
---------------------
Xxxxxx X. Xxxxxxxx
Title: President & Chief Investment Officer
FT (MAURITIUS) OFFSHORE INVESTMENTS LIMITED
By: /S/XXXXX X. XXXXXX
------------------
Xxxxx X. Xxxxxx
Title: Director
