FRANKLIN MUTUAL SERIES FUNDS on behalf of MUTUAL SHARES FUND AMENDED AND RESTATED INVESTMENT MANAGEMENT AGREEMENT
on behalf of
MUTUAL SHARES FUND
AMENDED AND RESTATED INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT, dated as of July 1, 2014, is made between FRANKLIN MUTUAL SERIES FUNDS, a Delaware statutory trust (the “Trust”), on behalf of MUTUAL SHARES FUND (the “Fund”), a series of the Trust, and FRANKLIN MUTUAL ADVISERS, LLC, a Delaware limited liability company (the “Adviser”), and amends and restates the prior Investment Management Agreement between the Trust, on behalf of the Fund, and the Adviser, dated as of May 1, 2008, and amended as of July 1, 2012.
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, as amended, 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, administrative and other services for the Fund; and,
WHEREAS, the Adviser is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, 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.
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 hereby
employs the Adviser to manage the investment and reinvestment of the Fund’s
assets, to administer its affairs, and to provide or procure, as applicable,
the administrative and other services described in Section 2.C. of this
Agreement, as may be supplemented from time to time, subject to the direction
of the Board of Trustees and the officers of the Trust, 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 or the Trust in any way or otherwise
be deemed an agent of the Fund or the Trust.
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:
IMA Mutual Shares (Amended and Restated)
A. Investment Management Services.
(a) The Adviser shall manage the
Fund’s 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 may
issue from time to time. In pursuance of the foregoing, the Adviser 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 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 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, of (i) the decisions made with respect to the investment of the
Fund’s 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 may issue
from time to time, shall place, in the name of the Fund, orders for the
execution of the Fund’s securities transactions. When placing such orders, the
Adviser shall seek to obtain the best net price and execution for the Fund, 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 Fund and 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, as amended) provided by that broker.
Accordingly, the Trust and the Adviser agree that the Adviser shall select brokers for the execution of the Fund’s transactions from among:
(i) Those brokers and dealers who provide quotations and other services to the Fund, specifically including the quotations necessary to determine the Fund’s 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, or which place the Adviser in a better position to make decisions in connection with the management of the Fund’s 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.
- 2 –
IMA Mutual Global Discovery (Amended and Restated)
(c) When the Adviser has determined that the Fund 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 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.
(d) 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.
(e) 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.
(f) Decisions on proxy voting shall
be made by the Adviser unless the Board of Trustees determines otherwise.
Pursuant to its authority, the Adviser shall have the power to vote, either in
person or by proxy, all securities in which the Fund may be invested from time
to time, and shall not be required to seek or take instructions from the Fund
with respect thereto. The 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 the
issuers thereof, including actions involving bankruptcy. Should the Adviser
undertake litigation against an issuer on behalf of the Fund, the Fund agrees
to pay its portion of any applicable legal fees associated with the action or
to forfeit any claim to any assets the Adviser may recover and, in such case,
agrees to hold the Adviser harmless for excluding the Fund from such action. In
the case of class action suits involving issuers held in the
Fund, the Adviser may include information about the Fund for purposes of
participating in any settlements.
- 3 –
IMA Mutual Global Discovery (Amended and Restated)
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 in the preparation of registration statements, reports and other documents required by federal and state securities laws and with such information as the Fund 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. Administrative Services. The Adviser agrees, during the term of this Agreement, to provide or procure, as applicable, at its own expense (unless otherwise agreed to by the parties), the following services to the Fund to the extent that any such services are not otherwise provided by any sub-adviser or other service provider to the Fund: (a) providing office space, equipment and supplies appropriate for the effective administration of the Fund as contemplated in this Agreement; (b) providing trading desk facilities; (c) authorizing expenditures on behalf of the Fund; (d) supervising preparation of periodic reports to Fund shareholders, notices of distributions and attending to routine shareholder communications; (e) coordinating and supervising the daily pricing and valuation of the Fund’s investment portfolio; (f) providing fund accounting services, including preparing and supervising publication of daily net asset value quotations and other financial data; (g) monitoring and coordinating relationships with unaffiliated service providers; (h) supervising the Fund’s compliance with recordkeeping requirements under the federal securities, state and foreign laws and regulations and maintaining books and records for the Fund; (i) preparing and filing of domestic and foreign tax reports and monitoring the Fund’s compliance with all applicable tax laws and regulations; (j) establishing, maintaining and monitoring the Fund’s compliance program with respect to the federal securities, state and foreign laws and regulations applicable to the operation of investment companies; the Fund’s investment goals, policies and restrictions; and the Code of Ethics and other policies applicable to the Fund; (k) preparing regulatory reports; (l) preparing and arranging for the filing of registration statements and other documents with the U.S. Securities and Exchange Commission and other federal, state and foreign or other regulatory authorities; (m) maintaining a review and certification program and internal controls and procedures in accordance with the Sarbanes Oxley Act of 2002 as applicable; and (n) providing executive, clerical and other personnel needed to carry out the above responsibilities.
Nothing in this Agreement shall obligate the Trust or the Fund to pay any compensation to the officers of the Trust who are officers, directors, stockholders or employees of the Adviser or its affiliates. Nothing in this Agreement shall obligate the Adviser to pay for the services of third parties, including attorneys, auditors, printers, pricing services or others, engaged directly by the Trust to perform services on behalf of the Fund.
D. Other Obligations and Services. The
Adviser shall make its officers and employees available to the Board of
Trustees and officers of the Trust for consultation and discussions regarding
the administration and management of the Fund and its investment activities.
E. 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 for which it is responsible
under Section 2.A. of this Agreement. The Adviser will compensate any
Sub-Adviser for its services to the Fund. 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.
- 4 –
IMA Mutual Global Discovery (Amended and Restated)
The Adviser may, at its expense, also delegate to one or more entities some or all of the services for the Fund for which the Adviser is responsible under Section 2.C. of this Agreement. The Adviser will be responsible for the compensation, if any, of any such entities for such services to the Fund, unless otherwise agreed to by the parties. Notwithstanding any delegation pursuant to this paragraph, the Adviser will continue to have responsibility and liability for all such services provided to the Fund under this Agreement and will supervise each delegate in its performance of its duties for the Fund with a view to preventing violations of the federal securities laws.
3. Expenses of the Fund. It is understood that the
Fund will pay all of its own expenses other than those expressly assumed by the
Adviser herein, which expenses payable by the Fund shall include:
A. Fees and expenses paid to the Adviser as
provided herein;
B. Expenses of all audits 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 its shares;
D. Expenses of obtaining quotations for
calculating the value of the Fund’s net assets;
E. Salaries and other compensations of
executive officers of the Trust who are not officers, directors, stockholders
or employees of the Adviser or its affiliates;
F. Taxes levied against the Fund;
G. Brokerage fees and commissions in connection
with the purchase and sale of securities for the Fund;
H. Costs, including the interest expense, of borrowing money;
- 5 –
IMA Mutual Global Discovery (Amended and Restated)
I. Costs incident to meetings of the Board of Trustees and shareholders of the Fund, reports to the Fund’s shareholders, the filing of reports with regulatory bodies and the maintenance of the Fund’s and the Trust’s legal existence;
J. Legal fees, including the legal fees
related to the registration and continued qualification of the Fund’s shares
for sale;
K. Trustees’ 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;
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 portion of the cost of any proxy
voting service used on its behalf.
4. Compensation of the Adviser. The Fund 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. The
management fee payable by the Fund shall be calculated daily at the following
annual rates:
0.675% of the value of net assets up to and including $5 billion;
0.645% of the value of net assets over $5 billion, up to and including $10 billion;
0.625% of the value of net assets over $10 billion, up to and including $15 billion;
0.595% of the value of net assets over $15 billion, up to and including $20 billion;
0.585% of the value of net assets over $20 billion, up to and including $25 billion;
0.565% of the value of net assets over $25 billion, up to and including $30 billion;
- 6 –
IMA Mutual Global Discovery (Amended and Restated)
0.555% of the value of net assets over $30 billion, up to and including $35 billion; and
0.545% of the value of net assets in excess of $35 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. 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 fully 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 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 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 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. Performance of Services in Accordance with Regulatory Requirements; Furnishing of Books and Records. In performing the services set forth in this Agreement, the Adviser:
A. shall conform with the 1940 Act and all rules and regulations thereunder, with all other applicable federal, state and foreign laws and regulations, with any applicable procedures adopted by the Trust’s Board, and with the provisions of the Trust’s Registration Statement filed on Form N-1A as supplemented or amended from time to time;
B. will make available to the Trust, promptly upon request, any of the Fund’s books and records as are maintained under this Agreement, and will furnish to regulatory authorities having the requisite authority any such books and records and any information or reports in connection with the Adviser’s services under this Agreement that may be requested in order to ascertain whether the operations of the Trust are being conducted in a manner consistent with applicable laws and regulations.
- 7 –
IMA Mutual Global Discovery (Amended and Restated)
7. 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 or the Fund 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.
B. Notwithstanding the foregoing, the Adviser
agrees to reimburse the Trust for any and all costs, expenses, and counsel and
trustees’ fees reasonably incurred by the Trust in the preparation, printing
and distribution of proxy statements, amendments to its Registration Statement,
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 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, (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 7.B., to reimburse the Trust for any
expenditures related to the institution of an administrative proceeding or
civil litigation by the Trust 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 the
amount due for expenses subject to this Subparagraph 7.B. within thirty (30)
days after a xxxx or statement has been received by the Adviser therefor. This
provision shall not be deemed to be a waiver of any claim the Trust may have or
may assert against the Adviser or others for costs, expenses or damages
heretofore incurred by the Trust or for costs, expenses or damages the Trust
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.
8. Renewal and Termination.
A. This Agreement shall become effective on the
date written below and shall continue in effect for one (1) year 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 (other than as Trustees of
the Trust) or “interested persons” of any such party, cast in person at a
meeting called for the purpose of voting on the Agreement.
- 8 –
IMA Mutual Global Discovery (Amended and Restated)
B. This Agreement:
(i) may at any time be terminated without
the payment of any penalty 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 on
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.
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 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.
9. 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.
10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.
11. Limitation of Liability. Each party acknowledges and agrees that all obligations of the Trust under this Agreement are binding only with respect to the assets of the Fund; that any liability of the Trust under this Agreement with respect to the Trust, or in connection with the matters contemplated herein with respect to the Fund, shall be discharged only out of the assets of the Fund; that no other series of the Trust shall be liable with respect to this Agreement or in connection with the matters contemplated herein; and the Adviser shall not seek satisfaction of any such obligation or liability from the shareholders of the Trust, the trustees, officers, employees or agents of the Trust, or from any other series of the Trust.
- 9 –
IMA Mutual Global Discovery (Amended and Restated)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and effective on July 1, 2014.
FRANKLIN MUTUAL SERIES
FUNDS
on behalf of MUTUAL SHARES FUND
By: /s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
Title: Vice
President and Secretary
FRANKLIN MUTUAL ADVISERS, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
- 10 –
IMA Mutual Global Discovery (Amended and Restated)
