EXHIBIT (d) xviii
SUBADVISORY AGREEMENT
FRANKLIN XXXXXXXXX VARIABLE INSURANCE PRODUCTS TRUST
(on behalf of the Franklin Strategic Income Securities Fund)
THIS SUBADVISORY AGREEMENT made as of the May 1, 2000 by and between
FRANKLIN ADVISERS, INC., a corporation organized and existing under the laws of
the State of California (hereinafter called "FAV"), and XXXXXXXXX INVESTMENT
COUNSEL, INC., a Florida corporation (hereinafter called "TICI").
W I T N E S S E T H
WHEREAS, FAV 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, FAV has been retained to render investment advisory services
to Franklin Strategic Income Securities Fund (the "Fund"), a series of 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 (the "1940 Act"); and
WHEREAS, FAV 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. FAV 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 FAV, 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 FAV 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 FAV.
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(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 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, TICI shall report daily all
transactions effected by TICI on behalf of the Fund to FAV and to other entities
as reasonably directed by FAV 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 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 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 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 TICI are
not to be deemed exclusive. FAV 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
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invest in the same type of securities as the Fund. FAV 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. FAV 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 May 23, 1988, 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
FAV.
FAV 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) FAV shall pay a monthly fee in cash to TICI of 25% of the
investment advisory fee paid to FAV 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
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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
FAV relating to the previous month.
(b) FAV and TICI shall share equally in any voluntary
reduction or waiver by FAV of the management fee due FAV under the Investment
Advisory Agreement between FAV 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 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 TICI pursuant to authority delegated as described in Paragraph
1(a), TICI 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 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 FAV 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
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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 TICI,
and by FAV 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 FAV
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 FAV
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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers.
FRANKLIN ADVISERS, INC.
/S/ XXXXXX X. XXXXX
-------------------------------------
Xxxxxx X. Xxxxx
Executive Vice President
XXXXXXXXX INVESTMENT COUNSEL, INC.
/S/ XXXXXX X. XXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxx
Executive Vice President
Franklin Strategic Income Securities Fund hereby acknowledges and agrees to the
provisions of paragraphs 9(a) and 10 of this Agreement.
FRANKLIN XXXXXXXXX VARIABLE
INSURANCE PRODUCTS TRUST on behalf of
FRANKLIN STRATEGIC INCOME SECURITIES
FUND
/S/ XXXXX X. XXXX
-------------------------------------
Xxxxx X. Xxxx
Vice President
& Assistant Secretary
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