SUBADVISORY AGREEMENT
TEMPLETON VARIABLE PRODUCTS SERIES FUND
(on behalf of the Franklin Strategic Income Investments Fund)
THIS SUBADVISORY AGREEMENT made as of the 1st day of July, 1999, by and
between FRANKLIN ADVISERS, INC., a corporation organized and existing under the
laws of the State of California (hereinafter called "FAI"), and XXXXXXXXX
INVESTMENT COUNSEL, INC., a Florida corporation (hereinafter called "TICI").
W I T N E S S E T H
WHEREAS, FAI and TICI are each registered as an investment adviser under
the Investment Advisers Act of 1940 (the "Advisers Act"), and engaged in the
business of supplying investment advice, and investment management services, as
an independent contractor; and
WHEREAS, FAI has been retained to render investment advisory services to
Franklin Strategic Income Investments Fund (the "Fund"), a series of Templeton
Variable Products Series Fund (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, FAI desires to retain TICI to render investment advisory, research
and related services to the Fund pursuant to the terms and provisions of this
Agreement, and TICI 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. FAI hereby retains TICI and TICI 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 FAI, TICI 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 FAI
determine, on no less frequently than an annual basis, to grant the necessary
delegated authority to TICI, and subject to paragraph (b) below, TICI 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 FAI.
(b) In performing these services, TICI 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 FAI 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 FAI or the Board, and subject to the
provisions of this Agreement and to any guidelines or limitations specified from
time to time by FAI or by the Board, TICI shall report daily all transactions
effected by TICI on behalf of the Fund to FAI and to other entities as
reasonably directed by FAI or the Board.
(d) TICI 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. TICI 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, TICI shall comply with all
reasonable instructions of the Fund or FAI 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 TICI.
2. In performing the services described above, TICI 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, TICI 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, TICI 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) TICI shall, unless otherwise expressly provided and authorized, have
no authority to act for or represent FAI or the Fund in any way, or in any way
be deemed an agent for FAI or the Fund.
(b) It is understood that the services provided by TICI are not to be
deemed exclusive. FAI acknowledges that TICI 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. FAI agrees that TICI 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. TICI agrees to use its best efforts in performing the services to be
provided by it pursuant to this Agreement.
5. FAI has furnished or will furnish to TICI 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 Commonwealth of Massachusetts on December 16, 1986, 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 TICI 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 Fund and FAI.
FAI will furnish TICI with copies of all amendments of or supplements to the
foregoing documents.
6. TICI 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 TICI
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. (a) FAI shall pay a monthly fee in cash to TICI of 25% of the investment
advisory fee paid to FAI by the Fund, which fee shall be payable on the first
business day of each month in each year as compensation for the services
rendered and obligations assumed by TICI during the preceding month. The
advisory fee under this Agreement shall be payable on the first business day of
the first month following the effective date of this Agreement, and shall be
reduced by the amount of any advance payments made by FAI relating to the
previous month.
(b) FAI and TICI shall share equally in any voluntary reduction or waiver
by FAI of the management fee due FAI under the Investment Advisory Agreement
between FAI and the Fund.
(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.
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
TICI, neither TICI nor any of its directors, officers, employees or affiliates
shall be subject to liability to FAI 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 FAI 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 TICI pursuant to authority delegated as described in Paragraph 1(a), TICI
shall indemnify and save FAI 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 FAI or TICI, from liability in violation of Sections
17(h) or (i), respectively, of the 0000 Xxx.
10. During the term of this Agreement, TICI 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 FAI will be responsible for all of their respective expenses and
liabilities.
11. This Agreement shall be effective as of the date given above, 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 FAI and TICI,
and by FAI or TICI 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 FAI
and the Fund.
14. In compliance with the requirements of Rule 31a-3 under the 1940 Act,
TICI 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. TICI 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 FAI
and TICI.
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.
19. TICI 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. TICI agrees that the Trust's obligations hereunder shall
be limited to the assets of the Fund, and that TICI 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 and attested by their duly authorized officers.
FRANKLIN ADVISERS, INC.
By: ________________________
Xxxxxx X. Xxxxx
Executive Vice President
XXXXXXXXX INVESTMENT COUNSEL, INC.
By: _______________________
Xxxxxx X. Xxxx
President
Franklin Strategic Income Investments Fund hereby acknowledges and agrees to the
provisions of paragraphs 9(a) and 10 of this Agreement.
TEMPLETON VARIABLE PRODUCTS SERIES FUND
On behalf of FRANKLIN STRATEGIC INCOME INVESTMENTS FUND
By: __________________________
Xxxxxxx X. Xxxxxxx
President
