Exhibit d (xxii)
SUBADVISORY AGREEMENT
FRANKLIN XXXXXXXXX VARIABLE INSURANCE PRODUCTS TRUST
(on behalf of the Xxxxxxxxx International Smaller Companies Fund)
This SUBADVISORY AGREEMENT made as of January 1, 2001, (this "Agreement")
by and between XXXXXXXXX INVESTMENT COUNSEL, LLC, a Delaware limited liability
company ("TIC") and XXXXXXXXX ASSET MANAGEMENT LIMITED ("TAML"), a corporation
existing under the laws of Singapore.
W I T N E S S E T H
WHEREAS, TIC and TAML are each registered as an investment adviser under
the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and are
engaged in the business of supplying investment management services, each as an
independent contractor;
WHEREAS, TIC, pursuant to an investment management agreement, has been
retained to render investment advisory services to the Xxxxxxxxx International
Smaller Companies Fund (the "Fund"), a series of the Franklin Xxxxxxxxx Variable
Insurance Products Trust (the "Trust"), an investment management company
registered with the U.S. Securities and Exchange Commission (the "SEC") pursuant
to the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, Xxxxx Xxxxxxx, Senior Vice President of TIC and lead portfolio
manager for the Fund, will temporarily be residing in Hong Kong during which
time he will be employed by TAML and TIC wishes to enter into this agreement
with TAML to enable Xx. Xxxxxxx to continue to perform his responsibilities as
lead portfolio manager of the Fund during his employment with TAML.
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
mutually agree as follows:
1. TIC hereby retains TAML, and TAML hereby accepts such engagement, to
furnish certain investment advisory services with respect to the assets of the
Fund, as more fully set forth herein.
(a) Subject to the overall policies, control, direction and review
of the Trust's Board of Trustees (the "Board") and to the instructions and
supervision of TIC,
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TAML agrees to provide certain investment advisory services with respect to
securities and investments and cash equivalents in the Fund. TIC will continue
to have full responsibility for all investment advisory services provided to
the Fund. TIC acknowledges that the only services that TAML will provide under
this agreement are the portfolio management services of Xxxxx Xxxxxxx while he
remains employed by TAML. Nothing in this agreement grants to TIC any right to
receive any research undertaken by TAML's Emerging Markets Group.
(b) Both TAML and TIC may place all purchase and sale orders on
behalf of the Fund. The placement of these orders will take place exclusively in
the State of Florida or in Hong Kong.
(c) Unless otherwise instructed by TIC or the Board, and subject to
the provisions of this Agreement and to any guidelines or limitations specified
from time to time by TIC or by the Board, TAML shall report daily all
transactions effected by TAML on behalf of the Fund to TIC and to other entities
as reasonably directed by TIC or the Board.
(d) For the term of this Agreement, TIC shall provide the Board at
least quarterly, in advance of the regular meetings of the Board, a report of
its activities hereunder on behalf of the Fund and its proposed strategy for the
next quarter, all in such form and detail as requested by the Board. Xxxxx
Xxxxxxx shall also be available to attend such meetings of the Board as the
Board may reasonably request.
(e) In performing its services under this Agreement, TAML shall
adhere to the Fund's investment objective, policies and restrictions as
contained in the Fund's Prospectus and Statement of Additional Information, and
in the Trust's Agreement and Declaration of Trust and to the investment
guidelines most recently established by TIC and shall comply with the provisions
of the 1940 Act and the rules and regulations of the SEC thereunder in all
material respects and with the provisions of the United States Internal Revenue
Code of 1986, as amended, which are applicable to regulated investment
companies.
(f) In carrying out its duties hereunder, TAML shall comply with all
reasonable instructions of the Fund or TIC in connection therewith. Such
instructions may be given by letter, telex, telefax or telephone confirmed by
telex, by the Board or by any other person authorized by a resolution of the
Board, provided a certified copy of such resolution has been supplied to TAML.
2. In performing the services described above, TAML shall use its best
efforts to obtain for the Fund the most favorable price and execution available.
Subject to prior authorization of appropriate policies and procedures by the
Board, TAML may, to the extent authorized by law and in accordance with the
terms of the Fund's Prospectus and Statement of Additional Information, cause
the Fund to pay a broker who provides brokerage and research services an amount
of commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker would have charged for effecting that
transaction, in recognition of the brokerage and research
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services provided by the broker. To the extent authorized by applicable law,
TAML shall not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of such action.
3. (a) TIC shall pay to TAML a monthly fee in U.S. dollars based on a
percentage of the Fund's average daily net assets. The advisory fee under this
Agreement shall be payable on the first business day of each month as
compensation for the services to be rendered and obligations assumed by TAML
during the preceding month and shall be reduced by the amount of any advance
payments made by TIC relating to the previous month. This fee shall be
calculated daily at the following annual rates:
0.60% of the value of the Fund's net assets up to and including $200
million;
0.535% of the value of the Fund's net assets over $200 million up to and
including $1.3 billion;
0.48% of the value of the Fund's net assets over $1.3 billion.
(b) If the management fee due under the investment advisory
agreement between TIC and the Fund ("Advisory Agreement") is voluntarily reduced
or waived by TIC, the fee due to TAML pursuant to this Agreement shall be
adjusted so that it is in the same proportion to such fee reduced or waived by
TIC as the fee provided in Paragraph 3(a), above, of this Agreement is to the
fee due to TIC provided for in the Advisory Agreement.
(c) If this Agreement is terminated prior to the end of any month,
the monthly fee shall be prorated for the portion of any month in which this
Agreement is in effect which is not a complete month according to the proportion
which the number of calendar days in the month during which the Agreement is in
effect bears to the total number of calendar days in the month, and shall be
payable within 10 days after the date of termination.
4. It is understood that the services provided by TAML are not to be
deemed exclusive. TIC acknowledges that TAML may have investment
responsibilities, render investment advice to, or perform other investment
advisory services to other investment companies and clients, which may invest in
the same type of securities as the Fund (collectively, "Clients"). TIC agrees
that TAML may give advice or exercise investment responsibility and take such
other action with respect to such Clients which may differ from advice given or
the timing or nature of action taken with respect to the Fund. In providing
services, TAML may use information furnished by others to TIC and TAML in
providing services to other such Clients
5. TIC agrees to use its best efforts in performing the services to
be provided by it pursuant to this Agreement.
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6. During the term of this Agreement, TAML will pay all expenses incurred
by it in connection with the services to be provided by it under this Agreement
other than the cost of securities (including brokerage commissions, if any)
purchased for the Fund. The Fund and TIC will be responsible for all of their
respective expenses and liabilities.
7. TAML shall, unless otherwise expressly provided and authorized, have no
authority to act for or represent TIC or the Fund in any way, or in any way be
deemed an agent for TIC or the Fund.
8. TAML will treat confidentially and as proprietary information of the
Fund all records and other information relative to the Fund and prior, present
or potential shareholders, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be withheld where TAML
may be exposed to civil or criminal contempt proceedings for failure to comply
when requested to divulge such information by duly constituted authorities, or
when so requested by the Fund.
9. This Agreement shall be effective on the date of Xxxxx Xxxxxxx'x
employment by TAML and shall continue in effect until Xxxxx Xxxxxxx ceases to be
employed by TAML, for whatever reason.
10. (a) Notwithstanding the foregoing, this Agreement may be terminated at
any time, without the payment of any penalty, by the Board upon not less than
sixty (60) days' written notice to TIC and TAML, and by TIC or TAML upon not
less than sixty (60) days' written notice to the other party.
(b) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the 1940 Act, and in the event of
any act or event that terminates the Investment Advisory Agreement between TIC
and the Fund.
11. (a) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations or duties hereunder on the
part of TAML, neither TAML nor any of its directors, officers, employees or
affiliates shall be subject to liability to TIC or the Fund or to any
shareholder of the Fund for any error of judgement or mistake of law or any
other 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 paragraph 11(a), to the extent that TIC is found
by a court of competent jurisdiction, or the SEC or any other regulatory agency
to be liable to the Fund or any shareholder (a "liability"), for any acts
undertaken by TAML pursuant to authority delegated as described in Paragraph
1(a), TAML shall indemnify TIC and each of its affiliates, officers, directors
and employees (each a "Franklin Indemnified Party") harmless from, against, for
and in respect of all losses, damages, costs and expenses incurred by a Franklin
Indemnified Party with respect to such liability, together with all
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legal and other expenses reasonably incurred by any such Franklin Indemnified
Party, in connection with such liability.
(c) No provision of this Agreement shall be construed to protect any
director or officer of TIC or TAML from liability in violation of Sections 17(h)
or (i), respectively, of the 0000 Xxx.
12. In compliance with the requirements of Rule 31a-3 under the 1940 Act,
TAML hereby agrees that all records which it maintains for the Fund are the
property of the Fund and further agrees to surrender promptly to the Fund, or to
any third party at the Fund's direction, any of such records upon the Fund's
request. TAML further agrees to preserve for periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
13. Upon termination of TAML's engagement under this Agreement or at the
Fund's direction, TAML shall forthwith deliver to the Fund, or to any third
party at the Fund's direction, all records, documents and books of accounts
which are in the possession or control of TAML and relate directly and
exclusively to the performance by TAML of its obligations under this Agreement;
provided, however, that TAML shall be permitted to keep such records or copies
thereof for such periods of time as are necessary to comply with applicable
laws, in which case TAML shall provide the Fund or a designated third party with
copies of such retained documents unless providing such copies would contravene
such rules, regulations and laws.
Termination of this Agreement or of TAML's engagement hereunder shall be
without prejudice to the rights and liabilities created hereunder prior to such
termination.
14. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, in whole or in part, the other
provisions hereof shall remain in full force and effect. Invalid provisions
shall, in accordance with the intent and purpose of this Agreement, be replaced
by such valid provisions which in their economic effect come as closely as
legally possible to such invalid provisions.
15. TIC will furnish to TAML properly certified or authenticated copies of
the resolutions of the board authorizing the appointment of TAML and approving
this Agreement as soon as such copies are available.
16. Any notice or other communication required to be given pursuant to
this Agreement shall be in writing and given by personal delivery or by
facsimile transmission and shall be effective upon receipt. Notices and
communications shall be given:
to TAML: 0 Xxxxxxx Xxxxxxxxx #00-00
Xxxxxx Xxxxx Xxx
Xxxxxxxxx 000000
Facsimile: 000-00-000-0000
to TIC: Broward Financial Centre, Suite 2100
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Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: 0-000-000-0000
17. This Agreement shall be interpreted in accordance with and
governed by the laws of the State of Florida.
18. TAML acknowledges that it has received notice of and accepts the
limitations of the Trust's liability as set forth in its Agreement and
Declaration of Trust. TAML agrees that the Trust's obligations hereunder shall
be limited to the assets of the Fund, and that TAML shall not seek satisfaction
of any such obligation from any shareholders of the Fund nor from any trustee,
officer, employee or agent of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers.
XXXXXXXXX ASSET MANAGEMENT LIMITED
By: /s/Xxxxxxx X. XxXxxxx
Name: Xxxxxxx X. XxXxxxx
Title: Director
XXXXXXXXX INVESTMENT COUNSEL, LLC
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: President
FRANKLIN XXXXXXXXX VARIABLE INSURANCE PRODUCTS TRUST On Behalf of Xxxxxxxxx
International Smaller Companies Fund
By _/s/ Xxxxx X.Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President
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