INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made effective as of the 3rd day of December, 2007, between
TEMPLETON INCOME TRUST (hereinafter referred to as the "Trust"), on behalf of
Xxxxxxxxx Global Bond Fund (the "Fund"), and FRANKLIN ADVISERS, INC.
(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
the Fund's investment securities shall be exercised, subject to
guidelines adopted by the Board of Trustees. 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 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 an
annual rate of 0.50% of the first $200 million of the daily net assets of the
Fund during the month preceding each payment, reduced as follows: on such net
assets in excess of $200 million up to and including $1.3 billion, a monthly fee
equal on an annual basis to 0.45%; on such net assets in excess of $1.3 billion,
a monthly fee equal on an annual basis to 0.40%, payable at the end of each
calendar month. 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 [November 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:
Franklin Advisers, Inc.
Xxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, XX 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 Income Trust
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.
XXXXXXXXX INCOME TRUST
By:/s/XXXXX X. XXXX
---------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President and
Assistant Secretary
FRANKLIN ADVISERS, INC.
By:/s/XXXXXXX X. XXXXXXXXX, PH.D
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, Ph.D
Title: Senior Vice President
