SUBADVISORY AGREEMENT
FRANKLIN XXXXXXXXX INTERNATIONAL TRUST
on behalf of the
TEMPLETON GLOBAL LONG-SHORT FUND
THIS SUBADVISORY AGREEMENT made as of the 1st day of July 2001, by and
between FRANKLIN ADVISERS, INC., a corporation organized and existing under the
laws of the State of California (hereinafter called "FAV"), and XXXXXXXXX GLOBAL
ADVISORS LIMITED, a Bahamian corporation (hereinafter called "TGAL").
W I T N E S S E T H
WHEREAS, FAV is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act"), and is engaged in the
business of supplying investment advice, and investment management services, as
an independent contractor; and
WHEREAS, FAV has been retained to render investment management services to
Templeton Global Long-Short Fund (the "Fund"), a series of Franklin Xxxxxxxxx
International 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 (the "1940 Act"); and
WHEREAS, FAV desires to retain TGAL to render investment advisory,
research and related services to the Fund pursuant to the terms and provisions
of this Agreement, and TGAL is interested in furnishing said services.
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. FAV hereby retains TGAL and TGAL 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 FAV, TGAL will provide a continuous investment program for
the Fund, including allocation of the Fund's assets among the various securities
markets of the world and, investment research and advice with respect to
securities and investments and cash equivalents in the Fund. So long as the
Board and FAV determine, on no less frequently than an annual basis, to grant
the necessary delegated authority to TGAL, and subject to paragraph (b) below,
TGAL will determine what securities and other investments will be
purchased, retained or sold by the Fund, and will place all purchase and sale
orders on behalf of the Fund except that orders regarding U.S. domiciled
securities and money market instruments may also be placed on behalf of the Fund
by FAV.
(b) In performing these services, TGAL shall adhere to the
Fund's investment objectives, policies and restrictions as contained in its
Prospectus and Statement of Additional Information, and in the Trust's
Declaration of Trust, and to the investment guidelines most recently
established by FAV 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.
(c) Unless otherwise instructed by FAV or the Board, and subject
to the provisions of this Agreement and to any guidelines or limitations
specified from time to time by FAV or by the Board, TGAL shall report daily all
transactions effected by TGAL on behalf of the Fund to FAV and to other entities
as reasonably directed by FAV or the Board.
(d) TGAL 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. TGAL shall also make an investment
officer available to attend such meetings of the Board as the Board may
reasonably request.
(e) In carrying out its duties hereunder, TGAL shall comply with
all reasonable instructions of the Fund or FAV 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 TGAL.
2. In performing the services described above, TGAL 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, TGAL 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 services provided by
the broker. To the extent authorized by applicable law, TGAL 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) TGAL shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent FAV or the Fund in any
way, or in any way be deemed an agent for FAV or the Fund.
(b) It is understood that the services provided by TGAL are not
to be deemed exclusive. FAV acknowledges that TGAL may have investment
responsibilities, or render investment advice to, or perform other investment
advisory services, for individuals or entities including other investment
companies registered pursuant to the 1940 Act ("Clients"), which may invest in
the same type of securities as the Fund. FAV agrees that TGAL 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.
4. TGAL agrees to use its best efforts in performing the services to be
provided by it pursuant to this Agreement.
5. FAV has furnished or will furnish to TGAL as soon as available copies
properly certified or authenticated of each of the following documents:
(a) the Trust's Declaration of Trust, as filed with the
Secretary of State of the State of Delaware on March 22, 1991, and any other
organizational documents and all amendments thereto or restatements thereof;
(b) resolutions of the Trust's Board of Trustees authorizing
the appointment of TGAL and approving this Agreement;
(c) the Trust's original Notification of Registration on Form
N-8A under the 1940 Act as filed with the SEC and all amendments thereto;
(d) the Trust's current Registration Statement on Form N-1A
under the Securities Act of 1933, as amended and under the 1940 Act as filed
with the SEC, and all amendments thereto, as it relates to the Fund;
(e) the Fund's most recent Prospectus and Statement of
Additional Information; and
(f) the Investment Advisory Agreement between the Trust, on
behalf of the Fund, and FAV dated July 1, 2001, as may be amended from time to
time (the "Investment Advisory Agreement").
FAV will furnish TGAL with copies of all amendments of or supplements to the
foregoing documents.
6. TGAL 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 TGAL 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.
7. FAV shall pay a monthly fee in cash to TGAL equal to [ninety percent
(90%)] of the advisory fee received by FAV from the Fund pursuant to the
Investment Advisory Agreement
(a) For purposes of calculating such fee, FAV and TGAL shall share,
on a pro rata basis determined by the percentage of the management fee retained
by FAV or paid over to TGAL, in any voluntary reduction or waiver by FAV of the
management fee due FAV under the Investment Advisory Agreement.
(b) 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.
8. Nothing herein contained shall be deemed to relieve or deprive the
Board of its responsibility for and control of the conduct of the affairs of the
Fund.
9. (a) In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of its obligations or duties hereunder on the part of
TGAL, neither TGAL nor any of its directors, officers, employees or affiliates
shall be subject to liability to FAV or the Fund or to any shareholder of the
Fund for any error of judgment 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 9(a), to the extent that FAV 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 TGAL pursuant to authority delegated as described in
Paragraph 1(a), TGAL shall indemnify and save FAV 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 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 FAV or TGAL, from liability in violation of Sections
17(h) or (i), respectively, of the 0000 Xxx.
10. During the term of this Agreement, TGAL will pay all expenses
incurred by it in connection with its activities under this Agreement other than
the cost of securities (including brokerage commissions, if any) purchased for
the Fund. The Fund and FAV will be responsible for all of their respective
expenses and liabilities.
11. This Agreement shall be effective as of July 1, 2001, and shall
continue in effect for two years. It is renewable annually thereafter for
successive periods not to exceed one year each (i) by a vote of the Board or by
the vote of a majority of the outstanding voting securities of the Fund, and
(ii) by the vote of a majority of the Trustees of the Trust who are not parties
to this Agreement or interested persons thereof, cast in person at a meeting
called for the purpose of voting on such approval.
12. This Agreement may be terminated at any time, without payment of any
penalty, by the Board or by vote of a majority of the outstanding voting
securities of the Fund, upon sixty (60) days' written notice to FAV and TGAL,
and by FAV or TGAL upon sixty (60) days' written notice to the other party.
13. 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 FAV
and the Fund.
14. In compliance with the requirements of Rule 31a-3 under the 1940 Act,
TGAL 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. TGAL further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
15. This Agreement may not be materially amended, transferred,
assigned, sold or in any manner hypothecated or pledged without the affirmative
vote or written consent of the holders of a majority of the outstanding voting
securities of the Fund and may not be amended without the written consent of FAV
and TGAL.
16. 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.
17. The terms "majority of the outstanding voting securities" of the
Fund and "interested persons" shall have the meanings as set forth in the 1940
Act.
18. This Agreement shall be interpreted in accordance with and
governed by the laws of the State of California of the United States of America.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers.
FRANKLIN ADVISERS, INC.
By: /s/Xxxxxxx X. Xxxxxxx
Title: President
XXXXXXXXX GLOBAL ADVISORS LIMITED
By: /s/Xxxxxx X. Xxxxxxxx
Title: Executive Vice President
Templeton Global Long-Short Fund hereby acknowledges and agrees to the
provisions of paragraphs 9(a) and 10 of this Agreement.
FRANKLIN XXXXXXXXX INTERNATIONAL TRUST on behalf of
TEMPLETON GLOBAL LONG-SHORT FUND
By: /s/Xxxxxx X. Xxxxxxx
Title: Vice President
