Document:

MTGE 10Q 9/30/11 EX10.6

EXHIBIT 10.6

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (this “Agreement”) is effective as of August 3, 2011 (the “Effective Date”) by and between American Capital, Ltd., a Delaware Corporation having its principal offices at 2 Bethesda Metro, Bethesda, MD  20814 (“Licensor” or “ACAS”) and American Capital Mortgage Investment Corp., a Maryland corporation having its principal offices at 2 Bethesda Metro, Bethesda, MD  20814 (“Licensee”) (each a “Party” and collectively the “Parties”).  

WHEREAS, Licensor owns all right, title and interest in the service marks (including any and all variations and combinations thereof, and associated company names) listed at Exhibit A and attached hereto (each a “Mark” and collectively, the “Marks”), for use in connection with financial and investment services, including but not limited to, financial analysis and consultation, real estate investment services, real estate investment trust advisory and management services, and mortgage-related investment services, and other related services and activities (the “Business Activities”) together with the goodwill symbolized by the Marks, and has the exclusive right to use and to license others to use the Marks;  

WHEREAS, Licensor owns all right, title and interest in the domain name  mtge.com (the “Domain Name”) together with the goodwill symbolized by the Domain Name, and has the exclusive right to use and to license others to use the Domain Name;  

WHEREAS, Licensee is affiliated with Licensor and will enter into a Management Agreement (the “Management Agreement”) with American Capital Mortgage Management, LLC (“ACMM”), an entity in which Licensor has an indirect controlling equity interest; 

WHEREAS, Licensor desires that Licensee use the Marks and Domain Name in connection with Business Activities in accordance with the terms and conditions of this Agreement; 
WHEREAS, Licensee desires to obtain from Licensor a license for such use; 

WHEREAS, Licensee has been using the Marks and Domain Name with ACAS’s permission in conjunction with the Business Activities pursuant to an oral 

agreement; and 

WHEREAS, the Parties wish to memorialize in writing the permission and licenses that ACAS has granted to Licensee to use the Marks and Domain Name in connection with Licensee’s provision of the Business Activities and ACAS wishes to specify further the terms and conditions of this permission and licenses.    

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises hereinafter set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

1.    LICENSE GRANT.

(a)Subject to the terms and conditions specified herein, ACAS has granted and otherwise hereby grants to Licensee, and Licensee’s direct and indirect subsidiaries, a worldwide, nonexclusive, royalty free license, with no right to sublicense (except to direct and indirect subsidiaries of Licensee), to use the Marks as part of a trade name and in connection with the Business Activities (the “Trademark License”).  Any such sublicense shall be substantially in the form of this License Agreement and shall be subject to ACAS’ prior approval.  ACAS expressly retains any right to use and/or further license and authorize sublicenses of the Marks during the Term of this Agreement. 

(b)License of Domain Name.  Subject to the terms and conditions specified herein, ACAS has granted and otherwise hereby grants to Licensee, and Licensee’s direct and indirect subsidiaries, a worldwide, nonexclusive, royalty free license, with no right to sublicense (except to direct and indirect subsidiaries of Licensee), to use the Domain Name in connection with the Business Activities (the “Domain Name License,” and together with the Trademark License, the “Licenses”).   

		
	2.
	OWNERSHIP.

(a)Licensee acknowledges that ACAS owns all right, title and interest in and to the Marks and Domain Name and agrees that it will do nothing inconsistent with such ownership, including without limitation applying to register the Marks or any variations thereof with any tribunal or other entity worldwide, or registering the Domain Name or any variations thereof in combination with any top level domain.  Licensee 

further acknowledges that nothing in this Agreement shall give Licensee any right, title or interest in the Marks or Domain Name other than the right to use the Marks and Domain Name in accordance with this Agreement and that any benefit or value added to the Marks or Domain Name as a result of Licensee’s use shall inure to the benefit of ACAS.  Licensee shall not use the Marks in combination with any other mark without the prior written consent of ACAS.

(b) Licensor shall be responsible for maintaining and renewing the registration for the Domain Name.
    
		
	3.
	QUALITY MAINTENANCE; FORM OF USE. 

(a)Quality Control.  ACAS shall have the right to supervise the nature and quality of the Business Activities associated with the Marks and Domain Name pursuant to this Agreement.  Licensee agrees to maintain the high quality of the Business Activities associated with the Marks and Domain Name, and to supervise the use of the Marks and Domain Name by its direct and indirect subsidiaries to ensure that the nature and quality of the Business Activities associated with the Marks and Domain Name comply with the terms of this Agreement.    

(b)Licensee shall not use, or allow others to use the Marks in any manner that would, in the sole discretion of ACAS, dilute or tarnish the Marks. 

(c)Wherever appropriate, Licensee shall cause uses of registered Marks hereunder to bear the registered service mark notice “®”.

(d)Licensee shall comply in all material respects with any applicable laws and regulations and shall obtain all appropriate government approvals pertaining to the performance, sale, distribution, promotion and advertising of the Business Activities.

(e)From time to time, the Parties may amend Exhibit A, in writing, to add further ACAS-owned marks and/or to delete any existing Marks.  

		
	4.
	REPRESENTATIONS AND WARRANTIES.

(a)ACAS represents and warrants that (i) it possesses all necessary rights to enter into this Agreement; (ii) to the best of ACAS’s knowledge, there are no adverse 

rulings by any tribunal regarding ACAS’s rights in the Marks or Domain Name; and (iii) to the best of ACAS’s knowledge, Licensee’s use of the Marks and Domain Name in connection with the Business Activities, as authorized by this Agreement, will not infringe any rights of any third parties, including, but not limited to, intellectual property rights arising under the laws of any jurisdiction in which Licensor has registered the Marks.  

(b)Licensee represents and warrants that (i) it has the full right to enter into this Agreement and fulfilling its obligations hereunder does not infringe on the rights of any person or entity; (ii) it shall comply in all material respects with any applicable laws and regulations and shall obtain all appropriate government approvals pertaining to the performance, sale, distribution, promotion and advertising of the Business Activities; and (iii) it shall use the Marks and Domain Name solely in accordance with this Agreement.

		
	5.
	INFRINGEMENT. 

		
	(a)
	The Parties agree to cooperate in their efforts to defend and 

protect the rights in and to the Marks and Domain Name.  Licensee shall promptly notify ACAS in writing of any potential or actual infringements of such rights as may come to Licensee’s attention.  In the event of any potential or actual infringement, ACAS reserves the exclusive right, but is not required, to take any legal action or other measures to protect the Marks and/or Domain Name against such infringement.  Licensee shall cooperate with ACAS in any such actions or measures at ACAS’s request and sole expense.  Licensee shall take no legal action or any other measures to protect the Marks or Domain Name without first obtaining ACAS’s prior written approval.  

(b)Licensee shall promptly notify ACAS in writing of any infringement claims made by third parties, as may come to Licensee’s attention, pertaining to Licensee’s right to use and/or ACAS’s ownership of the Marks or Domain Name.  In the event of any such infringement claims, Licensee shall cooperate with ACAS in defending ACAS’s rights in and to the Mark or Domain Name against such claims at ACAS’s request and sole expense.

6.    INDEMNIFICATION.

(a)ACAS.  ACAS shall indemnify and hold harmless Licensee and any of 

its directors, partners, officers, trustees, employees, agents, successors, and permitted assigns from and against any loss, damage or expense arising from any claim, suit, judgment or proceeding brought or asserted by any third party arising out of or in connection with (i) any use of the Marks or Domain Name by Licensee that is authorized expressly by this Agreement; and (ii) any material breach by ACAS of its agreements, representations, warranties or covenants set forth in this Agreement.  

(b)Licensee.  Licensee shall indemnify and hold harmless ACAS and any of its directors, officers, trustees, partners, employees, agents, successors, and assigns from and against any loss, damage or expense arising from any claim, suit, judgment or proceeding brought or asserted by any third party arising out of or in connection with (i) any use of the Marks or Domain Name by Licensee that is not authorized by this Agreement; and (ii) any material breach by Licensee of its agreements, representations, warranties or covenants set forth in this Agreement.

7.    ASSIGNABILITY

Licensee shall not assign, mortgage or otherwise hypothecate this Agreement or any of Licensee’s rights, nor shall Licensee delegate its obligations, under this Agreement without the prior written consent of ACAS. 

8.    TERM AND TERMINATION. 

(a)Term.  This Agreement shall continue in force and effect unless terminated by mutual agreement of the Parties as provided below. 

(b)Termination.  Either Party may terminate this Agreement, with or without cause upon sixty (60) days’ written notice to the other Party.  

		
	(c)
	Termination for Breach.  Either Party may terminate this Agreement for 

material breach by the other Party of such Party’s agreements, representations, warranties or covenants that remains uncured for thirty (30) days after receiving written notice from the non-breaching party.

(d)    Termination of Management Agreement.  Unless otherwise agreed in writing by the parties, this Agreement shall automatically terminate upon ACMM (or its successor or affiliate) ceasing for any reason to be Manager of Licensee pursuant to the 

Management Agreement.  

(e)    Termination of Licenses.  Upon termination or expiration of this Agreement, as the case may be, all rights granted herein shall terminate automatically and Licensee immediately shall: (i) cease using, in any way, the Marks and any marks or names confusingly similar thereto; (ii) uninstall from any and all websites under Licensee’s control the Marks and any marks or names confusingly similar thereto; (iii) destroy any and all copies of any material containing the Marks and any marks or names confusingly similar thereto; and (iv) cease using, in any way, the Domain Name.  Notwithstanding the foregoing, the Parties may agree in writing to implement “phase out” procedures for removing the Marks from websites and other materials and ceasing use of the Domain Name, based on terms and conditions mutually agreeable to both Parties. 

(e)    Other Remedies.  The Parties acknowledge that the right to terminate this Agreement for Breach, as set forth in Subsection 8(c), may be inadequate as a sole remedy.  The Parties therefore agree that either Party may avail itself of any and all remedies at law and in equity, including provisional remedies (i.e. injunctive relief). 

(f)    Survival. The provisions of Sections 2 (Ownership), 4 (Representations and Warranties), 6 (Indemnification), 8(e) (Termination of Licenses), 9 (Notices); and 12 (Miscellaneous) shall remain in effect after the expiration or termination of this Agreement, as the case may be.

9.    NOTICES.

All notices, demands or other communications pursuant to or in connection with this Agreement shall be in writing and shall be deemed given (“Delivered”) upon delivery or on the first date on which receipt is refused, regardless of the date of delivery of any copies indicated below, if Delivered either:  (a) by registered or certified mail, return receipt requested, and postage prepaid; (b) by a recognized overnight delivery service, with confirmation of delivery; (c) by hand with a written receipt; or (d) if the recipient has supplied a telecopy number, by telecopy, with confirmation of receipt; in each case at the appropriate address indicated in the preamble to this Agreement.

10.    GOVERNING LAW; VENUE.

This Agreement shall be governed in all respects by the internal laws of the State of Maryland, without regard to conflicts of law principles.  The jurisdictional venue for any legal proceedings involving this Agreement shall be held in any applicable state or federal court located in the State of Maryland.  

11.    ENTIRE AGREEMENT; NO WAIVER.

This Agreement and its exhibit contain the entire agreement of the Parties with respect to the subject matter hereof and no provisions of this Agreement may be changed or modified except by written instrument signed by the Parties.  The failure or delay of either Party in enforcing any of its rights under this Agreement shall not be deemed a continuing waiver or modification of such rights.  

12.    MISCELLANEOUS.

(a)Binding Effect.  This Agreement shall inure to the benefit of and be binding upon the Parties and their successors and permitted assigns.
(b)Headings.  The section headings inserted in this Agreement are for convenience only and are not intended to affect the meaning or interpretation of this Agreement.
(c)Severability.  The provisions of this Agreement are severable, and the unenforceability of any provision of this Agreement shall not affect the enforceability of the remainder of this Agreement.  The parties acknowledge that it is their intention that if any provision of this Agreement is determined by a court to be unenforceable as drafted, that provision should be construed in a manner designed to effectuate the purpose of that provision to the greatest extent possible under applicable law.
(d)Remedies Cumulative.  The rights and remedies provided in this Agreement and all other rights and remedies available to either party at law or in equity are, to the extent permitted by law, cumulative and not exclusive of any other right or remedy now or hereafter available at law or in equity.  Neither asserting a right nor employing a remedy shall preclude the concurrent assertion of any other right or employment of any other remedy, nor shall the failure to assert any right or remedy constitute a waiver of that right or remedy.
(e)Counterpart and Facsimile Signatures.  This Agreement may be executed 

in multiple counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same Agreement.  Facsimile signatures on this Agreement shall be as binding and enforceable as original signatures.

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
    
        
	
		
	AMERICAN CAPITAL, LTD.
	AMERICAN CAPITAL MORTGAGE INVESTMENT CORP.

	 
	 

	By:     /s/ Samuel A. Flax        
	By:     /s/ Samuel A. Flax        

	Name:  Samuel A. Flax
	Name:  Samuel A. Flax

	Title:  Executive Vice President and Secretary
	Title:  Executive Vice President and Secretary

	Date: August 3, 2011
	Date: August 3, 2011Exhibit 10.12 9.30.11

Exhibit 10.12

FORM OF INVESTMENT MANAGEMENT AGREEMENT
FOR SEPARATE ACCOUNT CLIENTS

This Agreement is made this ____ day of ______________, 20[  ] (the “Agreement”), by and between [Name of Adviser] (the “Manager”), a [  ] company, and ____________________________ (the “Client”).
1.    Appointment.  Client hereby appoints the Manager as an investment manager to manage such of Client's assets as Client shall from time to time assign to it, the proceeds from the sale of such assets, and the income attributable to such assets (the “Account”).  Client shall promptly notify the Manager in writing of any increase or reduction in the amount of the Account's assets subject to the Manager's investment direction.
2.    Authority of Manager.  The Manager is authorized to supervise and direct the investment and reinvestment of the assets in the Account, subject to such limitations as are contained in the Guidelines described in Section 3 of this Agreement, as they may be from time to time amended, and subject to Client's right to direct the investment of the Account by means of Instructions as described in Section 3 of this Agreement.  The Manager, as Client's agent and attorney-in-fact with respect to the Account, when it deems appropriate and without prior consultation with Client, may: (a) buy, sell, exchange, convert and otherwise invest or trade in any stocks, bonds, options, units and other securities, including money market instruments, whether the issuer is organized in the United States or outside the United States, at such times and in such manner as Manager determines; (b) place orders for the execution of such securities transactions with or through such brokers, dealers or issuers as the Manager may select, which brokers or dealers are entitled to receive compensation out of the Account for their services; (c) execute any documentation as the Account's agent and attorney-in-fact as Manager may deem necessary to facilitate any such investment or reinvestment; and (d) purchase, sell, exchange or convert foreign currency in the spot or forward markets in connection with portfolio trades as agent or principal, at the market rate, as determined by the Manager in its sole discretion.  Conversion of currencies into and out of the base currency of the Account in restricted markets and generally income repatriation will be the responsibility of the Account's Custodian (defined below).  To the extent that the Custodian performs such transactions, the Manager shall not have the ability to control such transactions and will be limited in its ability to assess the quality of such transactions.  In addition, whether a market is considered to be restricted will depend on a number of factors, including, but not limited to, country specific statutory documentation requirements, country specific structural risks and convertibility. Accordingly, the Manager shall be entitled to consult with third parties, including, but not limited to, broker-dealers and custodians, and rely upon such information in making a good faith determination on whether a market is considered restricted.  The Manager, as Client's agent and attorney-in-fact with respect to the Account, when it deems appropriate and without prior consultation with Client, may engage external legal counsel to review trade-related documentation for bank loans and other over-the-counter instruments, and charge the Account for such costs.  The Manager may give a copy of this Agreement to any broker, dealer or other party to a transaction, as evidence of its authority to act on the Account's behalf.
The Manager is not authorized to accept delivery of cash or securities for the Account or to establish or maintain custodial arrangements for the Account.  Client shall choose a custodian (the “Custodian”) to hold physical custody of the Account.  Client shall direct the Custodian to segregate the assets in the Account and to invest and reinvest them in accordance with the directions transmitted by the Manager and received by the Custodian.  Such directions shall be given in writing, or given orally and confirmed in writing promptly thereafter.  Client shall not change the Custodian without giving the Manager reasonable advance written notice of its intention to do so, together with the name and other relevant information with respect to the new Custodian.  The Manager shall not be liable for any act or omission of the Custodian.  

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3.    Guidelines and Instructions.  Attached hereto as Exhibit A is a statement of the investment objectives of Client, together with a statement of any and all specific investment restrictions applicable to the investment of the Account (the “Guidelines”).  Client shall have the right at all times to modify the Guidelines or to give the Manager instructions (“Instructions”) to buy, sell or retain any investment, but no modification of the Guidelines and no Instructions or modifications of Instructions shall be binding upon the Manager unless the Manager has received written notice of them from an Authorized Person (as defined in Section 5(d)).  The Manager shall have a reasonable period to bring the Account into compliance with any changes to the Guidelines.  The Manager shall be under no duty to make any investigation or inquiry as to any statement contained in any written Guidelines or Instruction given and, unless and until specifically advised otherwise, the Manager may accept the same as conclusive evidence of the truth and accuracy of the statements contained therein.  The Guidelines and all Instructions, unless they expressly provide otherwise, shall continue to be effective until duly canceled by subsequent modifications duly communicated to the Manager in writing.
4.    Fees.  As full compensation for its services under this Agreement, the Manager shall be paid quarterly a fee equal to one-fourth of the annual rates specified in Exhibit B, based on the asset value of the Account as of the last day of each calendar quarter on which the New York Stock Exchange is open for trading (the “Valuation Date”).  The initial billing period will begin when this Agreement is signed by Client and accepted by the Manager, and initial funding has been received by the Custodian (the “Inception Date”).  The initial fee will be pro-rated to cover the period from the Inception Date through the Valuation Date for that calendar quarter and will be based on the valuation as of that Valuation Date.  Future quarterly fees will be calculated similarly in arrears.  If the Manager shall serve for less than the whole of any quarter, its compensation shall be determined as provided above on the basis of the value of the assets in the Account as of the end of the date of termination and shall be payable on a pro rata basis for the period of the quarter for which it served as the Manager hereunder.  Client shall direct the Custodian automatically to charge to the Account and pay directly to the Manager all of the Manager's fees upon the Custodian's receipt of an invoice from the Manager.
5.    Representations and Warranties.  Client hereby acknowledges, represents and warrants to, and agrees with the Manager, as follows: 
(a)Client Assets.  Client is the sole owner of all assets in the Account and (i) there are no restrictions on the transfer, sale or public distribution of any such assets and (ii) no option, lien, charge, security or encumbrance exists over such assets, except as disclosed to the Manager in writing.
(b)Authority.  The Client has full authority and power to engage the Manager under the terms and conditions of this Agreement, and such engagement does not violate Client's constituent documents, any other material agreement, order or judgment of any court or governmental authority, or any law applicable to Client.  Client further represents that all investments permitted herein are within its power to enter into and have been duly authorized.  
(c)Form ADV.  Client acknowledges receipt of Part II of the Manager's Form ADV. Notwithstanding anything to the contrary herein, if Client did not receive a copy of the Form ADV at least forty-eight (48) hours prior to execution of this Agreement, Client shall have the right to terminate this Agreement without penalty within five (5) business days of the execution of this Agreement; provided, however, that Client shall be at risk for any market fluctuations in the Account up to the time of such termination. 
(d)Authorized Persons.  Any individual whose signature is affixed to this Agreement on Client's behalf has full authority and power to execute this Agreement on Client's behalf.  Client represents that the officer specified on the attached Certification of Authorized Persons (Exhibit C) is authorized to act for Client and to certify to the Manager from time to time, by listing on, and delivering to the Manager Exhibit C or a substantially similar form, those other persons who also are so authorized to act on Client's behalf (“Authorized Persons”).  The Client shall promptly notify the Manager in writing of any event that could reasonably be anticipated to affect any such individual's authority under this Agreement.   
(e)Qualified Institutional Buyer.  That it is a Qualified Institutional Buyer (“QIB”) as that term is defined under Rule 144A of the Securities Act of 1933.1 
____________________ 
1    This section should be deleted if the client is not a QIB.

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(f)Notice of Certain Events.  Client will promptly notify the Manager in writing of any occurrence that results, or threatens to result, in any representations by Client contained in this Agreement becoming inaccurate, false, misleading or incomplete.    
6.    Non-Exclusive Agreement.  Nothing in this Agreement shall be deemed to limit or restrict the Manager's right, or the right of any of its officers, directors or employees, to engage in any other business or to devote time and attention to the management or other aspects of any business, whether of a similar or dissimilar nature, or to render investment advisory services or services of any kind to any other corporation, firm, association or individual.  Client understands that the Manager provides investment advisory services to numerous other clients and accounts.  Client also understands that the Manager may give advice and take action with respect to any of its other clients or for its own account which may differ from the timing or nature of action taken by the Manager with respect to the Account.
Nothing in this Agreement shall impose upon the Manager any obligation to purchase or sell or to recommend for purchase or sale, with respect to the Account, any security (including long and short positions) which the Manager, or its affiliates, or its or their shareholders, directors, officers or employees may purchase or sell for its or their own account(s) or for the account of any other client.  Client acknowledges that the Manager's ability and that of its affiliates to effect or recommend transactions may be restricted by applicable regulatory requirements in the United States and elsewhere or its or their internal policies designed to comply with such requirements.  Consequently, there may be periods when the Manager may not initiate or recommend certain types of transactions in certain investments when the Manager or its affiliates are performing services or when aggregated position limits have been reached, and Client will not be advised of that fact. 
7.    Liability of the Manager.  Except as may otherwise be provided by law, Client specifically agrees that the Manager shall not be liable for: (a) any loss that Client may suffer by reason of any investment decision made or other action taken or omitted in good faith and with that degree of care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity would use in the conduct of an enterprise of a like character and with like aims; (b) any loss, expense or other liability (including but not limited to attorneys' fees) incurred by Client or Manager arising from or in connection with the Manager's compliance with the Guidelines or Instructions believed by the Manager to be accurate; (c) any act or failure to act by any broker or other person with whom the Manager or Client may deal in connection with the subject matter of this Agreement; or (d) any loss or failure or delay in performance of any obligation under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond the Manager's reasonable control, including, without limitation, acts of God, earthquakes, fires, floods, wars, terrorism, civil or military disturbances, sabotage, epidemics, riots, interruptions, loss or malfunctions of utility, computer software or hardware, transportation or communication service, accidents, labor disputes, acts of civil or military authority, governmental actions and inability to obtain labor, material, equipment or transportation; or (e) any special, consequential or punitive damages.  
8.    Brokerage.  Where the Manager places orders, or directs the placement of orders, for the purchase or sale of portfolio securities for the Account, in selecting brokers or dealers to execute such orders, the Manager is expressly authorized to consider, among other factors, the fact that a broker or dealer has furnished statistical, research or other information or services which enhance the Manager's investment research and portfolio management capability generally.  It is further understood in accordance with Section 28(e) of the Securities Exchange Act of 1934, as amended, that the Manager may negotiate with and assign to a broker a commission which may exceed the commission which another broker would have charged for effecting the transaction if the Manager determines in good faith that the amount of commission charged was reasonable in relation to the value of brokerage and research services (as defined in Section 28(e)) provided by such broker, viewed in terms either of the Account or the Manager's overall responsibilities to the Manager's discretionary accounts.
Nothing herein shall preclude the aggregation or “bunching” of orders for the sale or purchase of portfolio securities in the Account with other accounts managed by the Manager.  With respect to the allocation of trades, the Manager shall not favor any account over any other and purchase or sale orders executed contemporaneously shall be allocated in a manner it deems equitable among the accounts involved.  In some cases, prevailing trading activity may cause the Manager to receive various execution prices on the entire volume of any security sold for the accounts of its clients.  In such cases, the Manager may, but shall not be obligated to, average the various prices and charge or credit the Account with the average price, even though the effect of this aggregation of price may sometimes work to the disadvantage of the Account.  Client understands and acknowledges that the Manager or its affiliates may, based upon 

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such factors as the Manager deems to be important, such as the Manager's or its affiliates' respective trading strategies or their respective accounts' relative sizes or investment objectives or investment restrictions, restrict to certain accounts purchases and sales of securities acquired in initial public offerings, including those that trade or are expected to trade at a premium in the secondary market.
In no event shall the Manager be obligated to effect or place an order for any transaction for Client which the Manager believes would violate any applicable state or federal law, rule, or regulation, or of the regulations of any regulatory or self-regulatory body to which the Manager or any of its affiliates is subject to at the time of the proposed transaction.
 9.    Confidential Relationship.  Each party agrees that all non-public confidential information concerning the other party which may become available to such party in connection with services, transactions or relationships contemplated in this Agreement shall at all times be treated in strictest confidence and shall not be disclosed to third persons except as (a) may be required by law or regulatory authority, including but not limited to any subpoena, administrative, regulatory or judicial demand or court order, (b) as otherwise set forth in this Agreement, or (c) upon the prior written approval of the other party to this Agreement.  Client authorizes the Manager (i) to include Client's name in a representative or sample client list prepared by the Manager, provided the Manager shall not disclose Client contact information or any information about Client's holdings, and (ii) to use the Manager's investment experience with respect to the Account, or the Account's performance, in composite performance presentations, marketing materials, attribution analyses, statistical compilations, or other similar compilations or presentations, provided such use does not disclose Client's identity except to the extent permitted by Client.
10.    Reports.  The Manager shall send to Client a written report of the Account as of the Valuation Date of each calendar quarter.  Such reports shall be submitted within a reasonable period following such Valuation Date.  For the purposes of all reports made by the Manager to Client, foreign securities denominated in foreign currencies will be valued in United States dollars, unless otherwise agreed by the Manager and Client.  Client shall examine promptly each such report and any other report provided by the Manager.  To the extent permissible under applicable law, upon the expiration of the sixty (60) day period immediately following the date of such report, or the termination of this Agreement as provided herein, if earlier, the Manager shall be forever released and discharged from all liability and accountability to anyone with respect to each such report, including, without limitation, all acts and omissions of the Manager shown or reflected in each such report, except with respect to any acts or omissions as to which Client shall have filed written objections with the Manager within such sixty (60) day period.  Nothing herein shall impair the right of the Manager to a judicial settlement of any report rendered by it.
11.    Valuation.  In computing the asset value of the Account, if market quotations are readily available for securities listed on a securities exchange or on the NASDAQ National Market or NASDAQ Small Cap Market, the Manager shall value those securities at the last quoted sales price or the official closing price, respectively, on the Valuation Date, or, if there is no reported sale, within the range of the most recently quoted bid and ask prices.  The Manager shall value over-the-counter securities within the range of the most recent bid and ask prices.  If securities trade both in the over-the-counter market and on a stock exchange, the Manager shall value them according to the broadest and most representative market as determined by the Manager.  Any security for which a current market quotation cannot be established or a market event occurs that calls into question the reliability of current market quotations, or any other security or asset, shall be valued in a manner determined in good faith by the Manager to reflect its fair market value.
12.        Proxies and Other Legal Notices.  Decisions on proxy voting will be made by the Manager unless such decisions are expressly reserved by Client.  The Manager shall vote proxies related to securities held in the Account in accordance with the Manager's proxy voting policies and procedures, as amended from time to time, which are available on request. The Manager shall not be expected or required to take any action with respect to legal proceedings (including, without limitation, class action lawsuits, governmental or regulatory victim funds, and bankruptcy proceedings) involving securities presently or formerly held in the Account, or the issuers of such securities or related parties.  

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13.    Acknowledgment of Investment Risk.  Notwithstanding any provision herein to the contrary, Client understands that the value of investments made for the Account may go down as well as up and is not guaranteed.  Client agrees that the Manager has not made and is not making any guarantees, including without limitation a guarantee as to any specific level of performance of the Account.  Client further understands and acknowledges that investment decisions made on behalf of the Account by the Manager are subject to various market, currency, economic, and business risks as well as the risk that those investment decision will not always be profitable.  Client acknowledges that past performance results achieved by accounts supervised or managed by the Manager are not indicative of the future performance of the Account.  Client understands that securities, mutual funds and other non-deposit investments are not deposits or other obligations of, or guaranteed by, the Manager or any affiliate, are not insured by the Federal Deposit Insurance Corporation (“FDIC”) or any other government agency, and are subject to investment risk, including possible loss of principal amounts invested. 
14.    Termination; Survival.  This Agreement may be terminated by either party upon thirty (30) days' written notice to the other party.  Such termination will not, however, affect the liabilities or obligations of the parties under this Agreement arising from transactions initiated prior to such termination.  Sections 4, 7, 9, 10, 17, and 18 shall survive the termination of this Agreement.  Upon any termination of this Agreement, the Manager shall have no further obligations hereunder, provided that: (a) any liability under this Agreement of one party to the other shall survive and remain in full force and effect, notwithstanding such termination, with respect to any claim or matter on which either of the parties has given the other written notice prior to such termination (except that the Manager may render to Client a statement of fees due the Manager through the date of termination after such date), until such liability has been finally settled; (b) the Manager retains the right to complete any transactions open as of the termination date and to retain amounts in the Account sufficient to effect such completion; and (c) the Manager shall be entitled to its fees and expenses, pro rated to the date of termination.  Upon termination, it shall be Client's exclusive responsibility to issue instructions in writing regarding any assets in the Account.
15.    Assignment.  This Agreement may not be assigned (within the meaning of the Investment Advisers Act of 1940, as amended), in whole or in part, by the Manager without the prior written consent of Client.  Subject to the preceding sentence, the Manager may delegate all or part of its duties under this Agreement to any affiliate.
16.    Communications.  All reports and other communications required hereunder to be in writing shall be delivered in person or sent by first-class mail postage prepaid, overnight courier, or confirmed facsimile with original to follow or email with original to follow.
If to Client:

Attention:    _______________________________

    
If to Manager:

[Insert Name of Manager] 
c/o Franklin Templeton Institutional
Global Client Service Support
One Franklin Parkway, 960/3
San Mateo, CA  94403
Fax: 650.312.4000
Email:  GCSSBusinessSupport@frk.com
 
With a Copy to:

[ __________________]

Either party to this Agreement may, by written notice given at any time, designate a different address for the receipt of reports and other communications due hereunder.

5

17.    Governing Law; Venue.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the United States and with the laws of the State of [California] [New York] without giving effect to the choice of law or conflict of law provisions thereof.  The parties hereby consent to jurisdiction and venue in the federal and state courts located in [the State of California] [New York County of the State of New York].
18.   Entire Agreement; Modification.  This Agreement: (a) sets forth the entire understanding of the parties with respect to the subject matter hereof; (b) supercedes any and all previous agreements, understandings and communications, oral or written, regarding this subject matter; and (c) may not be modified, amended, or waived except by a specific written instrument duly executed by the party against whom such modification, amendment, or waiver is sought to be enforced.  In the event of any conflict or inconsistency with this Agreement and any instructions or investment guidelines that are not made part of this Agreement or any investment policy statement, this Agreement will control.
19.    Headings.  The headings of the sections of this Agreement are for convenience of reference only and will not affect the meaning or operation of this Agreement.  As used herein, references in the singular shall, as and if appropriate, include the plural.
20.    Counterparts.  This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
21.    Severability.  In the event that any provision of this Agreement is deemed to be void, voidable, illegal, or invalid for any reason, such provision will be of no force and effect only to the extent that it is so declared void, voidable, illegal, or invalid.  All of the provisions of this Agreement not specifically found to be so deficient shall remain in full force and effect. 

 [SIGNATURE PAGE FOLLOWS]

6

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized officers to be effective as of the date first written above.
	
				
	 
	[NAME OF CLIENT]
	 

	 
	By:
	 
	 

	 
	Name:
	[Authorized officer]

	 
	Title:
	 
	 

	 
	 
	 
	 

	 
	[NAME OF ADVISER]
	 

	 
	By:
	 
	 

	 
	Name:
	 
	 

	 
	Title:
	 
	 

7

EXHIBIT A
Statement of Investment Objectives
[To be provided by Client]

Statement of Client Account Restrictions
[To be provided by Client]
Exhibit A

EXHIBIT B

FEE SCHEDULE

Manager Name: 
Strategy:    
Investment Management Fee: As compensation for managing the Account, the Manager shall be paid as follows:
     % of the first $      million assets
     % of the next $      million assets
     % of the balance of the assets
Exhibit B

EXHIBIT C

CERTIFICATION OF AUTHORIZED PERSONS

	
					
	I certify, as the ______________________________________________________ (specify title; e.g., general partner [of a partnership]; president, secretary [of a corporation]) that the following persons are "Authorized Persons" under the Agreement:

	 
	 
	 
	 
	 

	NAME
	 
	TITLE
	 
	SPECIMEN SIGNATURE

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

                        	
			
	 
	 

	 
	Name of Legal Entity (Please Print)

	 
	By:
	 

	 
	 
	Signature

	 
	 

	 
	Name and Title (Please Print)

	 
	Date:
	 

	 
	 
	 

Exhibit C

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