FORM OF
SUBADVISORY AGREEMENT
TEMPLETON INSTITUTIONAL FUNDS, INC.
(on behalf of Franklin Xxxxxxxxx Non-U.S. Core Equity Series)
THIS SUBADVISORY AGREEMENT made as of the ____ DAY OF ___________ ,
2006, by and between FRANKLIN XXXXXXXXX ALTERNATIVE STRATEGIES, INC., a Delaware
corporation (successor to Franklin Xxxxxxxxx Asset Strategies, LLC)(hereinafter
called "FTAS") and FRANKLIN XXXXXXXXX INSTITUTIONAL, LLC, a Delaware limited
liability company ("FT Institutional").
W I T N E S S E T H
WHEREAS, FTAS and FT Institutional are each registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and engaged in the business of supplying investment advice, and
investment management services, as an independent contractor; and
WHEREAS, FTAS has been retained to render investment advisory services
to the Franklin Xxxxxxxxx Non-U.S. Core Equity Series (the "Fund")(formerly
known as Templeton Fiduciary Non-U.S. Core Equity Series), a series of Templeton
Institutional Funds, Inc. (the "Company"), 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, FTAS desires to retain FT Institutional to render investment
advisory, research and related services to the Fund pursuant to the terms and
provisions of this Agreement, and FT Institutional 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. FTAS hereby retains FT Institutional and FT Institutional
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 Company's Board of Directors (the "Board") and to the
instructions and supervision of FTAS, FT Institutional will provide a continuous
investment program for the Fund with respect to that portion of the Fund's
assets designated by FTAS, 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 FTAS determine, on no less frequently than an annual basis, to
grant the necessary delegated authority to FT Institutional, and subject to
paragraph (b) below, FT Institutional will, with respect to the portion of the
Fund's assets over which it has been given responsibility, 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.
(b) In performing these services, FT Institutional
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 FTAS 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 FTAS or the Board, and
subject to the provisions of this Agreement and to any guidelines or limitations
specified from time to time by FTAS or by the Board, FT Institutional shall
report daily all transactions effected by FT Institutional on behalf of the Fund
to FTAS and to other entities as reasonably directed by FTAS or the Board.
(d) FT Institutional 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 in such form and detail as requested
by the Board. FT Institutional 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, FT
Institutional shall comply with all reasonable instructions of the Fund or FTAS
in connection therewith. Such instructions may be given by letter, telex,
telefax, telephone confirmed by telex, or other electronic means including
email, 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 FT
Institutional.
2. In performing the services described above, FT Institutional
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, FT Institutional 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, FT Institutional 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) FT Institutional shall, unless otherwise
expressly provided and authorized, have no authority to act for or represent
FTAS or the Fund in any way, or in any way be deemed an agent for FTAS or the
Fund.
(b) It is understood that the services provided by FT
Institutional are not to be deemed exclusive. FTAS acknowledges that FT
Institutional 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. FTAS
agrees that FT Institutional 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. FT Institutional agrees to use its best efforts in
performing the services to be provided by it pursuant to this Agreement.
5. FTAS has furnished or will furnish to FT Institutional as
soon as available copies properly certified or authenticated of each of the
following documents:
(a) the Company's Articles of Incorporation, as filed
with the Secretary of State of the State of Maryland on July 6, 1990, and any
other organizational documents and all amendments thereto or restatements
thereof;
(b) resolutions of the Company's Board of Directors
authorizing the appointment of FT Institutional and approving this Agreement;
(c) the Company's original Notification of Registration
on Form N-8A under the 1940 Act as filed with the SEC and all amendments
thereto;
(d) the Company'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 FTAS.
FTAS will furnish FT Institutional with copies of all amendments of or
supplements to the foregoing documents.
6. FT Institutional 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 FT Institutional 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) FTAS shall pay a monthly fee in cash to FT
Institutional of one-half of the investment advisory fee paid to FTAS 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 FT
Institutional 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 FTAS relating to the previous month.
(b) FTAS and FT Institutional shall share equally in
any voluntary reduction or waiver by FTAS of the management fee due FTAS under
the Investment Advisory Agreement between FTAS 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 FT Institutional, neither FT Institutional nor any of its directors,
officers, employees or affiliates shall be subject to liability to FTAS 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
FTAS 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 FT Institutional pursuant to authority delegated as
described in Paragraph 1(a), FT Institutional shall indemnify and save FTAS and
each of its directors, officers, employees or affiliates (each an "Indemnified
Party") harmless from, against, for and in respect of all losses, damages, costs
and expenses incurred by an Indemnified Party with respect to such liability,
together with all legal and other expenses reasonably incurred by any such
Indemnified Party, in connection with such liability.
(c) No provision of this Agreement shall be construed
to protect any director or officer of FTAS or FT Institutional, from liability
in violation of Sections 17(h) or (i), respectively, of the 0000 Xxx.
10. During the term of this Agreement, FT Institutional 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 FTAS 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 Directors of the Company 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 FTAS and
FT Institutional, and by FTAS or FT Institutional 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
FTAS and the Fund.
14. In compliance with the requirements of Rule 31a-3 under the
1940 Act, FT Institutional 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. FT Institutional 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
FTAS and FT Institutional.
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 Florida 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 XXXXXXXXX ALTERNATIVE STRATEGIES, INC.
By:_______________________
Xxxxx X. Xxxxxxx
Title: Vice President
FRANKLIN XXXXXXXXX INSTITUTIONAL, LLC
By: ________________________
Xxxxxxx X. Xxx
Title: President
Templeton Institutional Funds, Inc., on behalf of Franklin Xxxxxxxxx Non-U.S.
Core Equity Series, hereby acknowledges and agrees to the provisions of
paragraphs 9(a) and 10 of this Agreement.
Templeton Institutional Funds, Inc. on behalf of
Franklin Xxxxxxxxx Non-U.S. Core Equity Series
By: __________________________
Xxxxx X. Xxxx
Title: Vice President and Assistant Secretary