Participation Agreement
                             as of December 31, 1999
              Franklin Templeton Variable Insurance Products Trust
                     Templeton Variable Products Series Fund

                      Franklin Templeton Distributors, Inc.
                 Allianz Life Insurance Company of North America

                                    CONTENTS

       Section    Subject Matter

         1.       Parties and Purpose
         2.       Representations and Warranties

         3.       Purchase and Redemption of Trust Portfolio Shares
         4.       Fees, Expenses, Prospectuses, Proxy Materials and Reports
         5.       Voting
         6.       Sales Material, Information and Trademarks
         7.       Indemnification
         8.       Notices
         9.       Termination
         10.      Miscellaneous

                              Schedules to this Agreement

         A.       The Company
         B.       Accounts of the Company

         C-1.     Prior to May 1, 2000: Available Portfolios and Classes of
                  Shares of the Trust; Investment Advisers
         C-2.     After May 1, 2000: Available Portfolios and Classes of Shares
                  of the Trust; Investment Advisers
         D.       Contracts of the Company
         E.       Rule 12b-1 Plans of the Trust
         F.       Addresses for Notices
         G.       Shared Funding Order


1.       Parties and Purpose

         This  agreement  (the  "Agreement")  is  between  certain   portfolios,
specified  below and in Schedules  C-1 and C-2, of Franklin  Templeton  Variable
Insurance Products Trust, an open-end management investment company organized as
a business trust under  Massachusetts law ("FTVIP"),  and of Templeton  Variable
Products Series Fund, an open-end  management  investment company organized as a
business  trust under  Massachusetts  law ("TVP,"  referred to in this Agreement
together with FTVIP as the "Trust"),  Franklin Templeton  Distributors,  Inc., a
California  corporation  which is the principal  underwriter  for the Trust (the
"Underwriter,"  and  together  with the Trust,  "we" or "us") and the  insurance
companies  identified on Schedule a ("you"), on your own behalf and on behalf of
each segregated asset account maintained by you that is listed on Schedule B, as
that schedule may be amended from time to time ("Account" or "Accounts").

[redacted]

         The  purpose  of this  Agreement  is to entitle  you,  on behalf of the
Accounts,  to purchase the shares,  and classes of shares,  of portfolios of the
Trust  ("Portfolios")  that are identified on Schedules C-1 and C-2,  solely for
the purpose of funding  benefits of your  variable  life  insurance  policies or
variable annuity contracts ("Contracts") that are identified on Schedule D. This
Agreement does not authorize any other purchases or redemptions of shares of the
Trust.

2.       Representations and Warranties

         2.1      Representations and Warranties by You

         You represent and warrant that:

                  2.1.1 You are an insurance  company duly organized and in good
standing under the laws of your state of incorporation.

                  2.1.2    redacted

                  2.1.3    redacted

                  2.1.4 Each Account  either:  (i) has been registered or, prior
to any  issuance  or  sale  of  the  Contracts,  will  be  registered  as a unit
investment trust under the Investment  Company Act of 1940 ("1940 Act"); or (ii)
has  not  been  so  registered  in  proper   reliance  upon  an  exemption  from
registration  under  Section 3(c) of the 1940 Act; if the Account is exempt from
registration  as an  investment  company under Section 3(c) of the 1940 Act, you
will use your  best  efforts  to  maintain  such  exemption  and will  notify us
immediately  upon having a reasonable basis for believing that such exemption no
longer applies or might not apply in the future.

                  2.1.5 The Contracts or interests in the Accounts:  (i) are or,
prior to any  issuance  or sale  will be,  registered  as  securities  under the
Securities Act of 1933, as amended (the "1933 Act");  or (ii) are not registered
because they are properly exempt from registration  under Section 3(a)(2) of the
1933 Act or will be offered exclusively in transactions that are properly exempt
from  registration  under Section 4(2) or Regulation D of the 1933 Act, in which
case you will make every effort to maintain  such  exemption  and will notify us
immediately  upon having a reasonable basis for believing that such exemption no
longer applies or might not apply in the future.

                  2.1.6 The Contracts:  (i) will be sold by  broker-dealers,  or
their  registered  representatives,  who are registered  with the Securities and
Exchange  Commission  ("SEC") under the  Securities and Exchange Act of 1934, as
amended  (the "1934 Act") and who are members in good  standing of the  National
Association of Securities  Dealers,  Inc. (the "NASD");  (ii) will be issued and
sold in compliance  in all material  respects  with all  applicable  federal and
state laws;  and (iii) will be sold in compliance in all material  respects with
state insurance suitability requirements and NASD suitability guidelines.

                  2.1.7  The  Contracts  currently  are and will be  treated  as
annuity contracts or life insurance contracts under applicable provisions of the
Code and you will use your best  efforts to maintain  such  treatment;  you will
notify us immediately  upon having a reasonable  basis for believing that any of
the Contracts  have ceased to be so treated or that they might not be so treated
in the future.

                  2.1.8 The fees and charges  deducted under each  Contract,  in
the aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by you.

                  2.1.9 You will use shares of the Trust only for the purpose of
funding benefits of the Contracts through the Accounts.

                  2.1.10   Contracts will not be sold outside of the United
States.

                  2.1.11  With  respect to any  Accounts  which are exempt  from
registration  under the 1940 Act in  reliance  on  3(c)(1)  or  Section  3(c)(7)
thereof:

                           2.1.11.1         the principal  underwriter  for each
                                            such  Account  and  any  subaccounts
                                            thereof     is     a      registered
                                            broker-dealer with the SEC under the
                                            1934 Act;

                           2.1.11.2         the shares of the Portfolios of the
                                            Trust are and will continue to be
                                            the only investment securities held
                                            by the corresponding subaccounts;
                                            and

                           2.1.11.3         redacted,  with  regard to each
                                            Portfolio, you, on behalf of the
                                            corresponding subaccount, will:

                                            (a)      vote such shares held by it
                                                     in the same proportion as
                                                     the vote of all other
                                                     holders of such shares; and

                                            (b)      refrain  from  substituting
                                                     shares of another  security
                                                     for such shares  unless the
                                                     SEC   has   approved   such
                                                     substitution  in the manner
                                                     provided  in  Section 26 of
                                                     the 1940 Act.

         2.2      Representations and Warranties by the Trust

         The Trust represents and warrants that:

                  2.2.1 It is duly organized and in good standing under the laws
of the State of Massachusetts.

                  2.2.2 All of its  directors,  officers,  employees  and others
dealing with the money and/or  securities of a Portfolio are and shall be at all
times covered by a blanket  fidelity bond or similar coverage for the benefit of
the Trust in an amount not less that the minimum coverage required by Rule 17g-1
or other  regulations  under the 1940 Act. Such bond shall include  coverage for
larceny and embezzlement and be issued by a reputable bonding company.

                  2.2.3    It is registered as an open-end management investment
 company under the 1940 Act.

                  2.2.4    Each class of shares of the Portfolios of the Trust
is registered under the 1933 Act.

                  2.2.5 It will amend its registration  statement under the 1933
Act and the 1940 Act  from  time to time as  required  in  order to  effect  the
continuous offering of its shares.

                  2.2.6    It will comply, in all material respects, with the
1933 and 1940 Acts and the rules and regulations thereunder.

                  2.2.7    redacted

                  2.2.8    redacted

                  2.2.9 It  currently  intends for one or more classes of shares
(each,  a "Class")  to make  payments  to  finance  its  distribution  expenses,
including  service fees,  pursuant to a plan  ("Plan")  adopted under rule 12b-1
under the 1940 Act ("Rule 12b-1"), although it may determine to discontinue such
practice in the future.  To the extent that any Class of the Trust  finances its
distribution  expenses  pursuant to a Plan adopted  under rule 12b-1,  the Trust
undertakes to comply with any then current SEC  interpretations  concerning rule
12b-1 or any successor provisions.

         2.3      Representations and Warranties by the Underwriter

         The Underwriter represents and warrants that:

                  2.3.1    It is registered as a broker dealer with the SEC
under the 1934 Act, and is a member in good standing of the NASD.

                  2.3.2 Each  investment  adviser listed on Schedule C-1 and C-2
(each,  an  "Adviser") is duly  registered  as an  investment  adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
law.

                  2.4      Warranty and Agreement by Both You and Us

         We  received  an order from the SEC dated  November  16, 1993 (file no.
812-8546),  which was amended by a notice and an order we received on  September
17, 1999 and October 13, 1999, respectively (file no. 812-11698)  (collectively,
the "Shared  Funding  Order,"  attached to this  Agreement  as Schedule  G). The
Shared Funding Order grants  exemptions from certain  provisions of the 1940 Act
and the regulations  thereunder to the extent  necessary to permit shares of the
Trust to be sold to and held by variable  annuity and  variable  life  insurance
separate accounts of both affiliated and unaffiliated  life insurance  companies
and qualified pension and retirement plans outside the separate account context.
You and we both  warrant  and agree  that both you and we will  comply  with the
"Applicants'  Conditions"  prescribed in the Shared Funding Order as though such
conditions  were  set  forth  verbatim  in this  Agreement,  including,  without
limitation, the provisions regarding potential conflicts of interest between the
separate accounts which invest in the Trust and regarding  contract owner voting
privileges.  In order for the  Trust's  Board of Trustees to perform its duty to
monitor for conflicts of interest,  you agree to inform us of the  occurrence of
any of the events  specified in condition 2 of the Shared  Funding  Order to the
extent that such event may or does result in a material  conflict of interest as
defined in that order.

3.       Purchase and Redemption of Trust Portfolio Shares

         3.1 We will make shares of the Portfolios available to the Accounts for
the benefit of the  Contracts.  The shares will be available for purchase at the
net asset  value per  share  next  computed  after we (or our  agent)  receive a
purchase  order,  as established  in accordance  with the provisions of the then
current  prospectus of the Trust.  Notwithstanding  the  foregoing,  the Trust's
Board of Trustees ("Trustees") may refuse to sell shares of any Portfolio to any
person,  or may suspend or terminate  the offering of shares of any Portfolio if
such action is required by law or by regulatory  authorities having jurisdiction
or if, in the sole  discretion of the  Trustees,  they deem such action to be in
the best interests of the  shareholders of such Portfolio.  Without limiting the
foregoing,  the Trustees have determined  that there is a significant  risk that
the Trust and its  shareholders  may be adversely  affected by  investors  whose
purchase and  redemption  activity  follows a market  timing  pattern,  and have
authorized the Trust,  the Underwriter  and the Trust's  transfer agent to adopt
procedures  and take other  action  (including,  without  limitation,  rejecting
specific  purchase  orders)  as they deem  necessary  to reduce,  discourage  or
eliminate market timing activity. You agree to cooperate with us to assist us in
implementing the Trust's  restrictions on purchase and redemption  activity that
follows a market timing pattern.

         3.2 We  agree  that  shares  of the  Trust  will be  sold  only to life
insurance  companies which have entered into fund participation  agreements with
the Trust  ("Participating  Insurance Companies") and their separate accounts or
to qualified  pension and retirement  plans in accordance  with the terms of the
Shared  Funding  Order.  No shares of any Portfolio  will be sold to the general
public.

         3.3 You shall be the designee for us for receipt of purchase orders and
requests for  redemption  resulting  from  investment in and payments  under the
Contracts  ("Instructions").  The  Business Day on which such  Instructions  are
received in proper form by you and time  stamped by the close of trading will be
the date as of which Portfolio shares shall be deemed purchased,  exchanged,  or
redeemed as a result of such Instructions.  Instructions received in proper form
by you and time  stamped  after the close of trading on any given  Business  Day
shall be treated as if received on the next following  Business Day. You warrant
that all orders,  Instructions and  confirmations  received by you which will be
transmitted  to us for  processing on a Business Day will have been received and
time stamped prior to the Close of Trading on that Business Day. Instructions we
receive  after 9 a.m.  Eastern Time shall be processed on the next Business Day.
"Business  Day" shall mean any day on which the New York Stock  Exchange is open
for trading and on which the Trust  calculates  its net asset value  pursuant to
the rules of the SEC and its current prospectus.

         3.4 We shall  calculate the net asset value per share of each Portfolio
on each  Business  Day, and shall  communicate  these net asset values to you or
your designated agent on a daily basis as soon as reasonably practical after the
calculation is completed (normally by 6:30 p.m. Eastern time).

         3.5 You shall submit  payment for the purchase of shares of a Portfolio
on behalf of an Account no later than the close of business on the next Business
Day after we receive the purchase order.  Payment shall be made in federal funds
transmitted by wire to the Trust or to its designated custodian.

         3.6 We will redeem any full or fractional shares of any Portfolio, when
requested by you on behalf of an Account,  at the net asset value next  computed
after receipt by us (or our agent) of the request for redemption, as established
in accordance  with the provisions of the then current  prospectus of the Trust.
We shall make  payment for such shares in the manner we  establish  from time to
time,  but in no event  shall  payment be delayed  for a greater  period than is
permitted by the 1940 Act.  Payments for the purchase or redemption of shares by
you may be netted  against  one another on any  Business  Day for the purpose of
determining the amount of any wire transfer on that Business Day.

         3.7 Issuance and transfer of the Portfolio shares will be by book entry
only. Stock  certificates  will not be issued to you or the Accounts.  Portfolio
shares  purchased from the Trust will be recorded in the  appropriate  title for
each Account or the appropriate subaccount of each Account.


         3.8 We shall furnish,  on or before the ex-dividend date, notice to you
of any income dividends or capital gain  distributions  payable on the shares of
any Portfolio. You hereby elect to receive all such income dividends and capital
gain  distributions as are payable on shares of a Portfolio in additional shares
of that  Portfolio,  and you reserve  the right to change  this  election in the
future.  We will notify you of the number of shares so issued as payment of such
dividends and distributions.


         3.9      redacted

4.       Fees, Expenses, Prospectuses, Proxy Materials and Reports

         4.1      redacted

         4.2 We shall  prepare and be  responsible  for filing with the SEC, and
any state regulators  requiring such filing, all shareholder  reports,  notices,
proxy materials (or similar  materials such as voting  instruction  solicitation
materials),  prospectuses and statements of additional information of the Trust.
We shall bear the costs of preparation and filing of the documents listed in the
preceding sentence,  registration and qualification of the Trust's shares of the
Portfolios.

         4.3 We shall use reasonable  efforts to provide you, on a timely basis,
with such information about the Trust, the Portfolios and each Adviser,  in such
form  as  you  may  reasonably  require,  as you  shall  reasonably  request  in
connection  with  the  preparation  of  Disclosure   Documents  and  annual  and
semi-annual reports pertaining to the Contracts.

         4.4 At your request,  we shall provide you with camera ready copy, in a
form  suitable  for  printing,  of a copy of  portions  of the  Trust's  current
prospectus,   annual   report,   semi-annual   report   and  other   shareholder
communications, including any amendments or supplements to any of the foregoing,
pertaining specifically to the Portfolios.  We shall delete information relating
to series of the Trust other than the Portfolios to the extent  practicable.  We
shall  provide you with a copy of the Trust's  current  statement of  additional
information, including any amendments or supplements, in a form suitable for you
to duplicate.  You shall bear the costs of furnishing these documents (including
printing and mailing) to Contract owners or others.

         4.5  We  shall  provide  you,  at  our  expense,  with  copies  of  any
Trust-sponsored proxy materials in such quantity as you shall reasonably require
for distribution to Contract owners who are invested in a designated subaccount.
You shall bear the costs of distributing  proxy materials (or similar  materials
such as voting solicitation instructions) to Contract owners.

         4.6 You  assume  sole  responsibility  for  ensuring  that the  Trust's
prospectuses,  shareholder reports and  communications,  and proxy materials are
delivered to Contract  owners in accordance  with  applicable  federal and state
securities laws.

5.       Voting

         5.1 All  Participating  Insurance  Companies shall have the obligations
and  responsibilities  regarding  pass-through  voting and conflicts of interest
corresponding to those contained in the Shared Funding Order.

         5.2 If and to the extent required by law, you shall: (i) solicit voting
instructions from Contract owners; (ii) vote the Trust shares in accordance with
the instructions  received from Contract owners; and (iii) vote Trust shares for
which no instructions  have been received in the same proportion as Trust shares
of such Portfolio for which  instructions have been received;  so long as and to
the  extent  that  the SEC  continues  to  interpret  the  1940  Act to  require
pass-through  voting  privileges for variable  contract owners.  You reserve the
right to vote Trust shares held in any Account in your own right,  to the extent
permitted by law.

         5.3 So long as, and to the extent that, the SEC interprets the 1940 Act
to require pass-through voting privileges for Contract owners, you shall provide
pass-through  voting  privileges to Contract  owners whose  Contract  values are
invested,  through  the  Accounts,  in shares of one or more  Portfolios  of the
Trust.  We shall  require all  Participating  Insurance  Companies  to calculate
voting  privileges in the same manner and you shall be responsible  for assuring
that the Accounts  calculate voting privileges in the manner  established by us.
With  respect to each  Account,  you will vote shares of each  Portfolio  of the
Trust  held by an  Account  and for which no  timely  voting  instructions  from
Contract owners are received in the same proportion as those shares held by that
Account for which voting instructions are received.  You and your agents will in
no way  recommend or oppose or interfere  with the  solicitation  of proxies for
Portfolio  shares held to fund the Contracts  without our prior written consent,
which consent may be withheld in our sole discretion.

6.       Sales Material, Information and Trademarks

         6.1  For  purposes  of this  Section  6,  "Sales  literature  or  other
Promotional material" includes, but is not limited to, portions of the following
that use any logo or other  trademark  related  to the Trust or  Underwriter  or
refer to the Trust or affiliates of the Trust:  advertisements (such as material
published  or designed  for use in a  newspaper,  magazine or other  periodical,
radio,  television,  telephone or tape recording,  videotape  display,  signs or
billboards,  motion pictures,  electronic  communication or other public media),
sales literature (i.e., any written communication  distributed or made generally
available to customers or the public, including brochures,  circulars,  research
reports,  market letters,  form letters,  seminar texts, reprints or excerpts or
any other  advertisement,  sales  literature or published  article or electronic
communication),  educational  or  training  materials  or  other  communications
distributed  or made  generally  available to some or all agents or employees in
any media, and Disclosure Documents, shareholder reports and proxy materials.

          6.2 You shall furnish, or cause to be furnished to us or our designee,
at least one complete copy of each registration statement, prospectus, statement
of  additional  information,  private  placement  memorandum,   retirement  plan
disclosure information or other Disclosure Documents or similar information,  as
applicable  (collectively  "Disclosure  Documents"),  as  well  as  any  report,
solicitation  for voting  instructions,  Sales  literature or other  Promotional
materials,  and all  amendments to any of the above that relate to the Contracts
or the Accounts prior to its first use. You shall furnish,  or shall cause to be
furnished,  to us or our  designee  each  piece  of  Sales  literature  or other
Promotional  material  in which the Trust or an Adviser  is named,  at least ten
(10) Business  Days prior to its proposed  use. No such  material  shall be used
unless we or our designee  approve such material and its proposed use. You shall
send us a complete copy of each Disclosure Document and item of Sales literature
or other Promotional  materials in its final form within twenty (20) days of its
first use.

          6.3 You and your  agents  shall not give any  information  or make any
representations  or statements  on behalf of the Trust or concerning  the Trust,
the  Underwriter  or an  Adviser,  other  than  information  or  representations
contained  in  and  accurately  derived  from  the  registration   statement  or
prospectus for the Trust shares (as such  registration  statement and prospectus
may be  amended  or  supplemented  from time to time),  annual  and  semi-annual
reports of the Trust,  Trust-sponsored proxy statements,  or in Sales literature
or other Promotional  material approved by the Trust or its designee,  except as
required  by  legal  process  or  regulatory  authorities  or with  the  written
permission of the Trust or its designee.

         6.4 We shall not give any  information or make any  representations  or
statements  on behalf of you or  concerning  you, the Accounts or the  Contracts
other  than  information  or  representations,  including  naming you as a Trust
shareholder,  contained in and accurately derived from Disclosure  Documents for
the Contracts (as such Disclosure  Documents may be amended or supplemented from
time to time), or in materials approved by you for distribution, including Sales
literature or other Promotional  materials,  except as required by legal process
or regulatory authorities or with your written permission

         6.5  Except  as  provided  in  Section  6.2,  you  shall  not  use  any
designation  comprised  in whole or part of the  names  or marks  "Franklin"  or
"Templeton"  or any  logo  or  other  trademark  relating  to the  Trust  or the
Underwriter  without  prior  written  consent,  and  upon  termination  of  this
Agreement  for any  reason,  you shall cease all use of any such name or mark as
soon as reasonably practicable.

         6.6 You shall  furnish to us ten (10)  Business Days prior to its first
submission  to the  SEC or its  staff,  any  request  or  filing  for  no-action
assurance or exemptive  relief naming,  pertaining to, or affecting,  the Trust,
the Underwriter or any of the Portfolios.

7.       Indemnification

         7.1      Indemnification By You

                  7.1.1  You  agree  to   indemnify   and  hold   harmless   the
Underwriter,  the Trust and each of its Trustees, officers, employees and agents
and each person, if any, who controls the Trust within the meaning of Section 15
of the 1933 Act  (collectively,  the "Indemnified  Parties" and individually the
"Indemnified  Party" for purposes of this Section 7) against any and all losses,
claims,  damages,  liabilities  (including  amounts paid in settlement with your
written consent,  which consent shall not be unreasonably  withheld) or expenses
(including the reasonable  costs of investigating or defending any alleged loss,
claim,  damage,  liability or expense and reasonable legal counsel fees incurred
in connection  therewith)  (collectively,  "Losses"),  to which the  Indemnified
Parties may become subject under any statute or regulation,  or at common law or
otherwise,  insofar as such  Losses are  related to the sale or  acquisition  of
shares of the Trust or the Contracts and

                           7.1.1.1  arise  out of or are based  upon any  untrue
         statements or alleged untrue  statements of any material fact contained
         in a  Disclosure  Document  for  the  Contracts  or  in  the  Contracts
         themselves  or in sales  literature  generated  or  approved  by you on
         behalf of the  Contracts or Accounts (or any amendment or supplement to
         any  of the  foregoing)  (collectively,  "Company  Documents"  for  the
         purposes  of this  Section  7), or arise  out of or are based  upon the
         omission  or the  alleged  omission  to state  therein a material  fact
         required  to be stated  therein  or  necessary  to make the  statements
         therein not misleading, provided that this indemnity shall not apply as
         to any Indemnified  Party if such statement or omission or such alleged
         statement  or  omission  was made in reliance  upon and was  accurately
         derived  from written  information  furnished to you by or on behalf of
         the  Trust  for  use in  Company  Documents  or  otherwise  for  use in
         connection with the sale of the Contracts or Trust shares; or

                           7.1.1.2  arise out of or result  from  statements  or
         representations (other than statements or representations  contained in
         and accurately derived from Trust Documents as defined below in Section
         7.2) or wrongful  conduct of you or persons  under your  control,  with
         respect to the sale or acquisition of the Contracts or Trust shares; or

                           7.1.1.3  arise  out  of or  result  from  any  untrue
         statement or alleged  untrue  statement of a material fact contained in
         Trust  Documents  as defined  below in Section  7.2 or the  omission or
         alleged omission to state therein a material fact required to be stated
         therein or necessary to make the  statements  therein not misleading if
         such  statement  or omission was made in reliance  upon and  accurately
         derived from written information furnished to the Trust by or on behalf
         of you; or

                           7.1.1.4  arise out of or result  from any  failure by
         you to provide the services or furnish the materials required under the
         terms of this Agreement;

                           7.1.1.5  arise  out of or  result  from any  material
         breach  of any  representation  and/or  warranty  made  by you in  this
         Agreement or arise out of or result from any other  material  breach of
         this Agreement by you; or

                           7.1.1.6  arise  out  of or  result  from  a  Contract
         failing  to be  considered  a  life  insurance  policy  or  an  annuity
         Contract, whichever is appropriate,  under applicable provisions of the
         Code thereby  depriving the Trust of its compliance with Section 817(h)
         of the Code.

                  7.1.2  You  shall not be  liable  under  this  indemnification
provision  with  respect  to any  Losses  to which an  Indemnified  Party  would
otherwise be subject by reason of such Indemnified Party's willful  misfeasance,
bad faith, or gross  negligence in the performance of such  Indemnified  Party's
duties  or  by  reason  of  such  Indemnified   Party's  reckless  disregard  of
obligations  and duties  under this  Agreement  or to the Trust or  Underwriter,
whichever is applicable. You shall also not be liable under this indemnification
provision  with  respect to any claim made against an  Indemnified  Party unless
such  Indemnified  Party shall have notified you in writing  within a reasonable
time after the summons or other first legal process  giving  information  of the
nature of the claim shall have been served upon such Indemnified Party (or after
such  Indemnified  Party  shall  have  received  notice of such  service  on any
designated agent), but failure to notify you of any such claim shall not relieve
you from any liability which it may have to the  Indemnified  Party against whom
such  action  is  brought  otherwise  than on  account  of this  indemnification
provision.  In case any such action is brought against the Indemnified  Parties,
you shall be entitled to  participate,  at your own  expense,  in the defense of
such  action.  Unless  the  Indemnified  Party  releases  you from  any  further
obligations  under this  Section  7.1,  you also shall be entitled to assume the
defense  thereof,  with counsel  satisfactory  to the party named in the action.
After  notice from you to such party of the your  election to assume the defense
thereof,  the  Indemnified  Party  shall  bear  the  fees  and  expenses  of any
additional  counsel  retained  by it,  and you will not be liable to such  party
under this  Agreement for any legal or other expenses  subsequently  incurred by
such party  independently  in  connection  with the defense  thereof  other than
reasonable costs of investigation.

                  7.1.3 The Indemnified  Parties will promptly notify you of the
commencement  of any litigation or proceedings  against them in connection  with
the  issuance or sale of the Trust shares or the  Contracts or the  operation of
the Trust.

         7.2      Indemnification By The Underwriter

                  7.2.1 The  Underwriter  agrees to indemnify  and hold harmless
you,  and each of your  directors  and  officers  and each  person,  if any, who
controls you within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified  Parties" and  individually an "Indemnified  Party" for purposes of
this  Section  7.2)  against any and all losses,  claims,  damages,  liabilities
(including   amounts  paid  in  settlement  with  the  written  consent  of  the
Underwriter,  which  consent  shall not be  unreasonably  withheld)  or expenses
(including the reasonable  costs of investigating or defending any alleged loss,
claim,  damage,  liability or expense and reasonable legal counsel fees incurred
in  connection  therewith)  (collectively,  "Losses")  to which the  Indemnified
Parties  may become  subject  under any  statute,  at common  law or  otherwise,
insofar as such Losses are related to the sale or  acquisition  of the shares of
the Trust or the Contracts and:

                           7.2.1.1  arise  out of or are based  upon any  untrue
         statements or alleged untrue  statements of any material fact contained
         in the  Registration  Statement,  prospectus or sales literature of the
         Trust  (or  any  amendment  or  supplement  to any  of  the  foregoing)
         (collectively, the "Trust Documents") or arise out of or are based upon
         the omission or the alleged  omission to state  therein a material fact
         required  to be stated  therein  or  necessary  to make the  statements
         therein not misleading, provided that this agreement to indemnify shall
         not apply as to any Indemnified  Party if such statement or omission of
         such alleged  statement  or omission  was made in reliance  upon and in
         conformity with information  furnished to us by or on behalf of you for
         use in the  Registration  Statement or  prospectus  for the Trust or in
         sales  literature (or any amendment or supplement) or otherwise for use
         in connection with the sale of the Contracts or Trust shares; or

                           7.2.1.2  arise out of or as a result of statements or
         representations (other than statements or representations  contained in
         the  Disclosure  Documents or sales  literature  for the  Contracts not
         supplied by the  Underwriter  or persons under its control) or wrongful
         conduct of the Trust,  Adviser or  Underwriter  or persons  under their
         control,  with respect to the sale or  distribution of the Contracts or
         Trust shares; or

                           7.2.1.3 arise out of any untrue  statement or alleged
         untrue statement of a material fact contained in a Disclosure  Document
         or sales literature covering the Contracts, or any amendment thereof or
         supplement  thereto,  or the  omission  or  alleged  omission  to state
         therein a material fact  required to be stated  therein or necessary to
         make the  statement  or  statements  therein  not  misleading,  if such
         statement or omission was made in reliance upon  information  furnished
         to you by or on behalf of the Trust; or

                           7.2.1.4  arise as a result  of any  failure  by us to
         provide the services and furnish the materials  under the terms of this
         Agreement (including a failure,  whether unintentional or in good faith
         or otherwise to comply with the qualification  representation specified
         above in Section 2.2.7 and the diversification  requirements  specified
         above in Section 2.2.8); or

                           7.2.1.5  arise  out of or  result  from any  material
         breach of any representation and/or warranty made by the Underwriter in
         this Agreement or arise out of or result from any other material breach
         of this Agreement by the  Underwriter;  as limited by and in accordance
         with the provisions of Sections 7.2.2 and 7.2.3 hereof.

                  7.2.2  The   Underwriter   shall  not  be  liable  under  this
indemnification  provision  with  respect to any Losses to which an  Indemnified
Party would otherwise be subject by reason of such  Indemnified  Party's willful
misfeasance,  bad  faith,  or  gross  negligence  in  the  performance  of  such
Indemnified  Party's duties or by reason of such  Indemnified  Party's  reckless
disregard  of  obligations  and  duties  under this  Agreement  or to you or the
Accounts, whichever is applicable.

                  7.2.3  The   Underwriter   shall  not  be  liable  under  this
indemnification  provision with respect to any claim made against an Indemnified
Party  unless such  Indemnified  Party shall have  notified the  Underwriter  in
writing within a reasonable  time after the summons or other first legal process
giving  information  of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated  agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against  the  Indemnified   Parties,   the  Underwriter   will  be  entitled  to
participate,  at its own expense, in the defense thereof. Unless the Indemnified
Party releases the Underwriter from any further  obligations  under this Section
7.2, the Underwriter also shall be entitled to assume the defense thereof,  with
counsel  satisfactory  to the party named in the action.  After  notice from the
Underwriter  to such party of the  Underwriter's  election to assume the defense
thereof, the Indemnified Party shall bear the expenses of any additional counsel
retained by it, and the Underwriter  will not be liable to such party under this
Agreement for any legal or other  expenses  subsequently  incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.

                  7.2.4 You agree  promptly  to notify  the  Underwriter  of the
commencement  of any  litigation or proceedings  against you or the  Indemnified
Parties  in  connection  with  the  issuance  or  sale of the  Contracts  or the
operation of each Account.

         7.3      Indemnification By The Trust

                  7.3.1 The Trust agrees to indemnify and hold harmless you, and
each of your  directors  and officers and each person,  if any, who controls you
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for  purposes of this Section 7.3) against any and all losses,  claims,
damages,  liabilities  (including  amounts paid in  settlement  with the written
consent of the Trust,  which  consent  shall not be  unreasonably  withheld)  or
litigation (including legal and other expenses) to which the Indemnified Parties
may become  subject under any statute,  at common law or  otherwise,  insofar as
such losses,  claims,  damages,  liabilities  or expenses (or actions in respect
thereof) or settlements  result from the gross negligence,  bad faith or willful
misconduct of the Board or any member thereof,  are related to the operations of
the  Trust,  and  arise  out  of or  result  from  any  material  breach  of any
representation  and/or warranty made by the Trust in this Agreement or arise out
of or result from any other material  breach of this Agreement by the Trust;  as
limited by and in accordance  with the  provisions  of Sections  7.3.2 and 7.3.3
hereof.  It is understood and expressly  stipulated  that neither the holders of
shares of the Trust nor any  Trustee,  officer,  agent or  employee of the Trust
shall be  personally  liable  hereunder,  nor shall  any  resort be had to other
private property for the satisfaction of any claim or obligation hereunder,  but
the Trust only shall be liable.

                  7.3.2 The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed  against any Indemnified  Party as such may arise from such
Indemnified Party's willful  misfeasance,  bad faith, or gross negligence in the
performance of such Indemnified  Party's duties or by reason of such Indemnified
Party's reckless  disregard of obligations and duties under this Agreement or to
you, the Trust, the Underwriter or each Account, whichever is applicable.

                  7.3.3 The Trust shall not be liable under this indemnification
provision  with  respect to any claim made against an  Indemnified  Party unless
such  Indemnified  Party  shall  have  notified  the Trust in  writing  within a
reasonable   time  after  the  summons  or  other  first  legal  process  giving
information  of the  nature  of the  claims  shall  have been  served  upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any  designated  agent),  but failure to notify the Trust of any
such claim shall not relieve the Trust from any  liability  which it may have to
the  Indemnified  Party  against whom such action is brought  otherwise  than on
account of this  indemnification  provision.  In case any such action is brought
against the Indemnified Parties,  the Trust will be entitled to participate,  at
its own expense,  in the defense thereof.  Unless the Indemnified Party releases
the Trust from any further  obligations  under this  Section 7.3, the Trust also
shall be entitled to assume the defense  thereof,  with counsel  satisfactory to
the party named in the action.  After notice from the Trust to such party of the
Trust's election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any  additional  counsel  retained by it, and the Trust
will not be liable to such  party  under this  Agreement  for any legal or other
expenses  subsequently  incurred by such party  independently in connection with
the defense thereof other than reasonable costs of investigation.

                  7.3.4  You  agree   promptly   to  notify  the  Trust  of  the
commencement  of any  litigation or proceedings  against you or the  Indemnified
Parties  in  connection  with  this  Agreement,  the  issuance  or  sale  of the
Contracts,  with  respect  to the  operation  of the  Account,  or the  sale  or
acquisition of shares of the Trust.

8.       Notices

Any notice shall be sufficiently given when sent by registered or certified mail
to the other party at the address of such party set forth in Schedule F below or
at such other  address as such party may from time to time specify in writing to
the other party.

9.       Termination

         9.1      redacted

         9.2      redacted

         9.3      redacted

         9.4 If this Agreement is terminated for any reason,  except as required
by the Shared Funding Order or pursuant to Section 9.2, above, we shall, at your
option, continue to make available additional shares of any Portfolio and redeem
shares of any  Portfolio  pursuant  to all of the terms and  conditions  of this
Agreement for all Contracts in effect on the effective  date of  termination  of
this  Agreement.  If this  Agreement  is  terminated  as  required by the Shared
Funding Order, its provisions shall govern.

         9.5 The provisions of Sections 2 (Representations and Warranties) and 7
(Indemnification)  shall survive the  termination of this  Agreement.  All other
applicable  provisions of this Agreement  shall survive the  termination of this
Agreement,  as long as shares of the Trust are held on behalf of Contract owners
in accordance with Section 9.4, except that we shall have no further  obligation
to sell Trust shares with respect to Contracts issued after termination.

         9.6 You shall not redeem Trust shares attributable to the Contracts (as
opposed to Trust shares attributable to your assets held in the Account) except:
(i) as necessary to implement Contract owner initiated or approved transactions;
(ii) as required by state  and/or  federal  laws or  regulations  or judicial or
other  legal  precedent  of general  application  (hereinafter  referred to as a
"Legally  Required  Redemption");  or (iii) as  permitted by an order of the SEC
pursuant to Section  26(b) of the 1940 Act.  Upon  request,  you shall  promptly
furnish to us the opinion of your counsel  (which  counsel  shall be  reasonably
satisfactory  to us) to the effect that any  redemption  pursuant to clause (ii)
above is a Legally Required Redemption. redacted

10.      Miscellaneous

         10.1 The captions in this  Agreement  are included for  convenience  of
reference  only and in no way define or delineate any of the  provisions of this
Agreement or otherwise affect their construction or effect.

         10.2  This  Agreement  may be  executed  simultaneously  in two or more
counterparts,  all of which taken  together  shall  constitute  one and the same
instrument.

         10.3 If any provision of this  Agreement  shall be held or made invalid
by a court decision,  statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.

         10.4 This Agreement  shall be construed and its provisions  interpreted
under and in accordance with the laws of the State of California.  It shall also
be subject to the  provisions of the federal  securities  laws and the rules and
regulations thereunder, to any orders of the SEC on behalf of the Trust granting
it exemptive  relief,  and to the  conditions of such orders.  We shall promptly
forward copies of any such orders to you.

         10.5 The  parties  to this  Agreement  acknowledge  and agree  that all
liabilities of the Trust arising, directly or indirectly,  under this Agreement,
of any and every nature whatsoever,  shall be satisfied solely out of the assets
of the  Trust  and that no  Trustee,  officer,  agent or  holder  of  shares  of
beneficial  interest  of the  Trust  shall  be  personally  liable  for any such
liabilities.

         10.6  The  parties  to  this  Agreement   agree  that  the  assets  and
liabilities  of each  Portfolio of the Trust are separate and distinct  from the
assets and liabilities of each other Portfolio.  No Portfolio shall be liable or
shall be charged for any debt, obligation or liability of any other Portfolio.

         10.7 Each party to this Agreement shall cooperate with each other party
and all appropriate  governmental  authorities (including without limitation the
SEC, the NASD, and state insurance regulators) and shall permit such authorities
reasonable  access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.

         10.8  redacted

         10.9 The rights,  remedies and obligations  contained in this Agreement
are  cumulative  and  are in  addition  to any  and  all  rights,  remedies  and
obligations,  at law or in  equity,  which the  parties  to this  Agreement  are
entitled to under state and federal laws.

         10.10    redacted

         10.11 Neither this Agreement nor any rights or  obligations  created by
it may be assigned by any party without the prior written  approval of the other
parties.

         10.12 No provisions of this Agreement may be amended or modified in any
manner except by a written  agreement  properly  authorized  and executed by the
parties to it.

         10.13    redacted



         IN  WITNESS  WHEREOF,  each  of the  parties  have  caused  their  duly
authorized officers to execute this Agreement.

         The Company:   Allianz Life Insurance Company of North America



                                            By: /s/ Christopher H. Pinkerton
                                            Name:
                                            Title:



         The Trust: only on behalf of each Portfolio listed on Schedules C-1 and
                    C-2 hereof

                  FTVIP: Franklin Templeton Variable Insurance Products Trust

                                            By: /s/ Karen L. Skidmore
                                            Name: Karen L. Skidmore
                                            Title: Assistant Vice President,
                                                   Assistant Secretary

                  and TVP:          Templeton Variable Products Series Fund

                                            By: /s/ Karen L. Skidmore
                                            Name: Karen L. Skidmore
                                            Title:Assistant Vice President,
                                                  Assistant Secretary

         The Underwriter:           Franklin Templeton Distributors, Inc.

                                            By:/s/ PJ Kearns
                                            Name:
                                            Title:





                                   Schedule A

                                   The Company

Allianz Life Insurance Company of North America
1750 Hennepin Avenue

Minneapolis, Minnesota  55403

Organized pursuant to the laws of the State of Minnesota.





                                   Schedule B

                             Accounts of the Company

1.       Name:                                       Allianz Variable Account A
         Date Established:
         SEC Registration Number:           811-04965

2.       Name:                                       Allianz Variable Account B
         Date Established:
         SEC Registration Number:           811- 05618







                                  Schedule C-1

redacted





                                  Schedule C-2

redacted






                                   Schedule D
                            Contracts of the Company
<TABLE>
<CAPTION>

------------------------- --------------------------------- -------------------------------- -------------------------------
                                     Contract 1                       Contract 2                       Contract 3
------------------------- --------------------------------- -------------------------------- -------------------------------
<S>                       <C>                               <C>                              <C>
Contract/                 Valuemark Life                    Allianz Value Life               Valuemark Charter
Product Name

------------------------- --------------------------------- -------------------------------- -------------------------------
Registered (Y/N)          Yes                               Yes                              Yes
------------------------- --------------------------------- -------------------------------- -------------------------------
SEC Registration Number   33-15464                          33-11158                         333-63719
------------------------- --------------------------------- -------------------------------- -------------------------------
Representative Form
Numbers

------------------------- --------------------------------- -------------------------------- -------------------------------
Separate Account          Allianz Variable                  Allianz Variable Account A       Allianz Variable Account B
Name/Date Established     Account A

------------------------- --------------------------------- -------------------------------- -------------------------------
SEC Registration Number   811-04965                         811-04965                        811-05618
------------------------- --------------------------------- -------------------------------- -------------------------------



                                   Schedule D
                            Contracts of the Company

------------------------- ---------------------------------- ------------------------------ --------------------------------
                                 Contract 1 (cont.)               Contract 2 (cont.)              Contract 3 (cont.)
------------------------- ---------------------------------- ------------------------------ --------------------------------
Portfolios and Classes    o        redacted                 o        redacted               o        redacted
------------------------- --------------------------------- ------------------------------- --------------------------------



                                   Schedule D
                            Contracts of the Company

--------------------------- ------------------------------- -------------------------------- -------------------------------
                                      Contract 4                      Contract 5                       Contract 6
--------------------------- ------------------------------- -------------------------------- -------------------------------
Contract/                            Valuemark II                    Valuemark III                    Valuemark IV
Product Name

--------------------------- ------------------------------- -------------------------------- -------------------------------
Registered (Y/N)            Yes                             Yes                              Yes
--------------------------- ------------------------------- -------------------------------- -------------------------------
SEC Registration Number     33-23035                        33-72046                         333-06709
--------------------------- ------------------------------- -------------------------------- -------------------------------
Representative Form
Numbers

--------------------------- ------------------------------- -------------------------------- -------------------------------
Separate Account            Allianz Variable Account B      Allianz Variable Account B       Allianz Variable Account B
Name/Date Established

--------------------------- ------------------------------- -------------------------------- -------------------------------
SEC Registration Number     811-05618                       811-05618                        811-05618
--------------------------- ------------------------------- -------------------------------- -------------------------------


                                Schedule D cont.
                            Contracts of the Company

------------------------- --------------------------------- ------------------------------- --------------------------------
                                 Contract 4 (cont.)               Contract 5 (cont.)              Contract 6 (cont.)
------------------------- --------------------------------- ------------------------------- --------------------------------
Portfolios and Classes    o        redacted                 o        redacted                o        redacted

------------------------- --------------------------------- -------------------------------- -------------------------------


                                Schedule D cont.
                            Contracts of the Company

--------------------------- ------------------------------- -------------------------------- -------------------------------
                                      Contract 7                      Contract 8                       Contract 9
--------------------------- ------------------------------- -------------------------------- -------------------------------
Contract/                   Valuemark Income Plus           Valuemark II (NY)                Valuemark IV (NY)
Product Name

--------------------------- ------------------------------- -------------------------------- -------------------------------
Registered (Y/N)            Yes                             Yes                              Yes
--------------------------- ------------------------------- -------------------------------- -------------------------------
SEC Registration Number     33-76190                        33-26646                         333-19699
--------------------------- ------------------------------- -------------------------------- -------------------------------
Representative Form
Numbers

--------------------------- ------------------------------- -------------------------------- -------------------------------
Separate Account            Allianz Variable Account B      Preferred Variable Account C     Preferred Variable Account C
Name/Date Established

--------------------------- ------------------------------- -------------------------------- -------------------------------
SEC Registration Number     811-05618                       811-05716                        811-05716
--------------------------- ------------------------------- -------------------------------- -------------------------------



                                Schedule D cont.
                            Contracts of the Company

------------------------- ---------------------------------- ------------------------------ --------------------------------
                                 Contract 7 (cont.)               Contract 8 (cont.)              Contract 9 (cont.)
------------------------- ---------------------------------- ------------------------------ --------------------------------
Portfolios and Classes    o        redacted                 o        redacted                o        redacted

------------------------- --------------------------------- -------------------------------- -------------------------------



                                Schedule D cont.
                            Contracts of the Company

--------------------------- ------------------------------- -------------------------------- -------------------------------
                                     Contract 10                      Contract 11                     Contract 12
--------------------------- ------------------------------- -------------------------------- -------------------------------
Contract/                              Alterity             Rewards                            Valuemark Income Plus (NY)
Product Name

--------------------------- ------------------------------- -------------------------------- -------------------------------
Registered (Y/N)            Yes                             Yes                              Yes
--------------------------- ------------------------------- -------------------------------- -------------------------------
SEC Registration Number     333-82329                       333-95729                        333-19173
--------------------------- ------------------------------- -------------------------------- -------------------------------
Representative Form
Numbers

--------------------------- ------------------------------- -------------------------------- -------------------------------
Separate Account            Allianz Variable Account B      Allianz Variable Account B       Preferred Variable Account C
Name/Date Established

--------------------------- ------------------------------- -------------------------------- -------------------------------
SEC Registration Number     811-05618                       811-05618                        811-05716
--------------------------- ------------------------------- -------------------------------- -------------------------------



                                Schedule D cont.
                            Contracts of the Company

------------------------- --------------------------------- ------------------------------- --------------------------------
                                Contract 10 (cont.)              Contract 11 (cont.)              Contract 12 (cont.)
------------------------- --------------------------------- ------------------------------- --------------------------------
Portfolios and Classes         redacted                     o        redacted                 o        redacted

------------------------- --------------------------------- --------------------------------- ------------------------------



                                Schedule D cont.
                            Contracts of the Company

--------------------------- ------------------------------- -------------------------------- -------------------------------
                                     Contract 13

--------------------------- ------------------------------- -------------------------------- -------------------------------
Contract/                             Advantage
Product Name

--------------------------- ------------------------------- -------------------------------- -------------------------------
Registered (Y/N)            Yes

--------------------------- ------------------------------- -------------------------------- -------------------------------
SEC Registration Number     333-19699
--------------------------- ------------------------------- -------------------------------- -------------------------------
Representative Form
Numbers

--------------------------- ------------------------------- -------------------------------- -------------------------------
Separate Account            Preferred Variable Account C

Name/Date Established

--------------------------- ------------------------------- -------------------------------- -------------------------------
SEC Registration Number     811-05716
--------------------------- ------------------------------- -------------------------------- -------------------------------



                                                           Schedule D cont.
                                                       Contracts of the Company

------------------------- --------------------------------- ------------------------------- --------------------------------
                                Contract 13 (cont.)

------------------------- --------------------------------- ------------------------------- --------------------------------
Portfolios and Classes    o        redacted

------------------------- --------------------------------- --------------------------------- ------------------------------

</TABLE>




                                   Schedule E

redacted


<PAGE>


                                   Schedule F
                              Addresses for Notices

         To the Company:        Allianz Life Insurance Company of North America
                                            1750 Hennepin Avenue
                                            Minneapolis, Minnesota  55403
                                            Attention:  Robert W. Macdonald
                                            Chairman and Chief Executive Officer

         To the Trust:      Franklin Templeton Variable Insurance Products Trust
                                            777 Mariners Island Boulevard
                                            San Mateo, California 94404
                                            Attention:  Karen L. Skidmore
                                                     Assistant Vice President

         To the Underwriter:  Franklin Templeton Distributors, Inc.
                                            777 Mariners Island Boulevard
                                            San Mateo, California  94404
                                            Attention:  Philip J. Kearns
                                                       Vice President





                                   Schedule G

                              Shared Funding Order

                 Templeton Variable Products Series Fund, et al.

                               File No. 812-11698

                       SECURITIES AND EXCHANGE COMMISSION

                              Release No. IC-24018

                               1999 SEC LEXIS 1887

                               September 17, 1999

ACTION:  Notice of  application  for an amended  order of exemption  pursuant to
Section  6(c) of the  Investment  Company  Act of 1940 (the "1940 Act") from the
provisions of Sections  9(a),  13(a),  15(a) and 15(b) of the 1940 Act and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder.

TEXT:  Summary of  Application:  Templeton  Variable  Products  Series Fund (the
"Templeton  Trust"),   Franklin  Templeton  Variable  Insurance  Products  Trust
(formerly  Franklin  Valuemark  Funds) (the "VIP Trust," and  together  with the
Templeton Trust,  the "Funds"),  Templeton Funds Annuity Company ("TFAC") or any
successor to TFAC, and any future open-end  investment company for which TFAC or
any  affiliate  is the  administrator,  sub-administrator,  investment  manager,
adviser,  principal  underwriter,  or sponsor  ("Future  Funds") seek an amended
order of the  Commission  to (1) add as  parties to that order the VIP Trust and
any  Future  Funds and (2)  permit  shares of the Funds and  Future  Funds to be
issued  to and held by  qualified  pension  and  retirement  plans  outside  the
separate account context.

   Applicants:  Templeton  Variable  Products  Series Fund,  Franklin  Templeton
Variable  Insurance  Products  Trust,  Templeton  Funds  Annuity  Company or any
successor to TFAC, and any future open-end  investment company for which TFAC or
any  affiliate  is the  administrator,  sub-administrator,  investment  manager,
adviser, principal underwriter, or sponsor (collectively, the "Applicants").

     Filing Date:  The  application  was filed on July 14, 1999, and amended and
restated on September 17, 1999.

   Hearing or Notification of Hearing: An order granting the application will be
issued unless the Commission orders a hearing.  Interested persons may request a
hearing by writing to the  Secretary of the  Commission  and serving  Applicants
with a copy of the request,  personally or by mail.  Hearing  requests should be
received by the  Commission  by 5:30 p.m.,  on October 12,  1999,  and should be
accompanied  by proof of service on the  Applicants  in the form of an affidavit
or, for lawyers,  a certificate of service.  Hearing  requests  should state the
nature of the  writer's  interest,  the reason for the  request,  and the issues
contested. Persons who wish to be notified of a hearing may request notification
by writing to the Secretary of the Commission.

   Addresses: Secretary, Securities and Exchange Commission, 450 Fifth Street,
NW, Washington, D.C. 20549-0609.

     Applicants:  Templeton Variable Products Series Fund and Franklin Templeton
Variable  Insurance  Products Trust, 777 Mariners Island  Boulevard,  San Mateo,
California 94404, Attn: Karen L. Skidmore, Esq.

     For Further Information Contact: Kevin P. McEnery, Senior Counsel, or Susan
M. Olson,  Branch Chief,  Office of Insurance  Products,  Division of Investment
Management, at (202) 942-0670.

     Supplementary  Information:  The following is a summary of the application.
The complete  application is available for a fee from the SEC's Public Reference
Branch,  450  Fifth  Street,  N.W.,  Washington,  D.C.  20549-0102  (tel.  (202)
942-8090).

   Applicants' Representations:

   1.  Each of the  Funds  is  registered  under  the  1940  Act as an  open-end
management  investment  company and was  organized as a  Massachusetts  business
trust. The Templeton Trust currently  consists of eight separate series, and the
VIP Trust consists of twenty-five  separate series.  Each Fund's  Declaration of
Trust  permits the Trustees to create  additional  series of shares at any time.
The Funds  currently  serve as the  underlying  investment  medium for  variable
annuity  contracts  and  variable  life  insurance  policies  issued by  various
insurance  companies.   The  Funds  have  entered  into  investment   management
agreements with certain investment managers ("Investment  Managers") directly or
indirectly owned by Franklin  Resources,  Inc.  ("Resources"),  a publicly owned
company engaged in the financial services industry through its subsidiaries.

   2. TFAC is an indirect,  wholly owned  subsidiary of  Resources.  TFAC is the
sole insurance company in the Franklin Templeton  organization,  and specializes
in the writing of variable  annuity  contracts.  The Templeton Trust has entered
into a Fund Administration Agreement with Franklin Templeton Services, Inc. ("FT
Services"),  which  replaced  TFAC  in 1998 as  administrator,  and FT  Services
subcontracts  certain services to TFAC. FT Services also serves as administrator
to  all  series  of  the  VIP  Trust.  TFAC  and  FT  Services  provide  certain
administrative facilities and services for the VIP and Templeton Trusts.

   3. On November 16, 1993,  the Commission  issued an order granting  exemptive
relief  to  permit  shares  of the  Templeton  Trust  to be sold to and  held by
variable  annuity  and  variable  life  insurance   separate  accounts  of  both
affiliated and unaffiliated  life insurance  companies  (Investment  Company Act
Release  No.  19879,  File No.  812-8546)  (the  "Original  Order").  Applicants
incorporate by reference into the  application  the Application for the Original
Order and each amendment  thereto,  the Notice of  Application  for the Original
Order,  and the Original  Order,  to the extent  necessary,  to  supplement  the
representations  made in the  application  in support of the  requested  relief.
Applicants  represent that all of the facts asserted in the  Application for the
Original  Order and any  amendments  thereto  remain  true and  accurate  in all
material  respects to the extent  that such facts are  relevant to any relief on
which Applicants continue to rely. The Original Order allows the Templeton Trust
to offer its shares to insurance  companies as the investment  vehicle for their
separate  accounts  supporting  variable  annuity  contracts  and variable  life
insurance contracts (collectively,  the "Variable Contracts").  Applicants state
that the  Original  Order does not (i) include the VIP Trust or Future  Funds as
parties,  nor (ii)  expressly  address  the sale of  shares  of the Funds or any
Future  Funds to qualified  pension and  retirement  plans  outside the separate
account context including,  without limitation,  those trusts, plans,  accounts,
contracts or annuities  described in Sections 401(a),  403(a),  403(b),  408(b),
408(k),  414(d),  457(b),  501(c)(18)  of the Internal  Revenue Code of 1986, as
amended (the "Code"),  and any other trust, plan,  contract,  account or annuity
that  is   determined   to  be   within   the  scope  of   Treasury   Regulation
1.817.5(f)(3)(iii) ("Qualified Plans").

   4. Separate  accounts owning shares of the Funds and their insurance  company
depositors  are  referred  to in  the  application  as  "Participating  Separate
Accounts" and "Participating  Insurance Companies,"  respectively.  The use of a
common  management  investment  company as the underlying  investment medium for
both variable annuity and variable life insurance  separate accounts of a single
insurance company (or of two or more affiliated insurance companies) is referred
to as "mixed funding." The use of a common management  investment company as the
underlying investment medium for variable annuity and/or variable life insurance
separate accounts of unaffiliated  insurance companies is referred to as "shared
funding."

   Applicants' Legal Analysis:

   1. Applicants  request that the Commission issue an amended order pursuant to
Section  6(c) of the 1940 Act,  adding  the VIP Trust  and  Future  Funds to the
Original Order and exempting  scheduled premium variable life insurance separate
accounts and flexible  premium  variable  life  insurance  separate  accounts of
Participating  Insurance Companies (and, to the extent necessary,  any principal
underwriter  and depositor of such an account) and the Applicants  from Sections
9(a),  13(a),  15(a)  and  15(b) of the 1940  Act,  and  Rules  6e-2(b)(15)  and
6e-3(T)(b)(15) (and any comparable rule) thereunder, respectively, to the extent
necessary  to permit  shares of the Funds and any Future Funds to be sold to and
held by Qualified  Plans.  Applicants  submit that the exemptions  requested are
appropriate in the public interest, consistent with the protection of investors,
and consistent with the purposes fairly intended by the policy and provisions of
the 1940 Act.

   2. The  Original  Order  does not  include  the VIP Trust or Future  Funds as
parties  nor  expressly  address  the sale of shares of the Funds or any  Future
Funds to Qualified Plans. Applicants propose that the VIP Trust and Future Funds
be added as parties to the Original  Order and the Funds and any Future Funds be
permitted to offer and sell their shares to Qualified Plans.

   3. Section 6(c) of the 1940 Act provides,  in part, that the  Commission,  by
order upon application,  may conditionally or unconditionally exempt any person,
security  or  transaction,  or any class or classes of  persons,  securities  or
transactions  from any  provisions  of the 1940 Act or the rules or  regulations
thereunder, if and to the extent that such exemption is necessary or appropriate
in the public  interest and consistent  with the protection of investors and the
purposes fairly intended by the policy and provisions of the 1940 Act.

   4. In  connection  with  the  funding  of  scheduled  premium  variable  life
insurance  contracts issued through a separate account registered under the 1940
Act as a unit  investment  trust  ("UIT"),  Rule  6e-2(b)(15)  provides  partial
exemptions from various provisions of the 1940 Act, including the following: (1)
Section  9(a),  which makes it unlawful  for certain  individuals  to act in the
capacity  of  employee,  officer,  or  director  for  a  UIT,  by  limiting  the
application  of the  eligibility  restrictions  in  Section  9(a) to  affiliated
persons  directly  participating  in the  management of a registered  management
investment  company;  and (2) Sections 13(a), 15(a) and 15(b) of the 1940 Act to
the extent that those sections might be deemed to require  "pass-through" voting
with respect to an underlying fund's shares, by allowing an insurance company to
disregard the voting instructions of contractowners in certain circumstances.

   5.  These  exemptions  are  available,  however,  only  where the  management
investment  company  underlying  the separate  account (the  "underlying  fund")
offers its shares  "exclusively to variable life insurance  separate accounts of
the life insurer, or of any affiliated life insurance company." Therefore,  Rule
6e-2 does not permit either mixed funding or shared  funding  because the relief
granted by Rule 6e-2(b)(15) is not available with respect to a scheduled premium
variable life insurance  separate account that owns shares of an underlying fund
that also offers its shares to a variable annuity or a flexible premium variable
life insurance  separate  account of the same company or of any affiliated  life
insurance  company.  Rule 6e-2(b)(15) also does not permit the sale of shares of
the underlying fund to Qualified Plans.

   6. In connection  with flexible  premium  variable life  insurance  contracts
issued through a separate  account  registered under the 1940 Act as a UIT, Rule
6e-3(T)(b)(15) also provides partial exemptions from Sections 9(a), 13(a), 15(a)
and 15(b) of the 1940 Act. These exemptions,  however,  are available only where
the  separate  account's  underlying  fund  offers  its shares  "exclusively  to
separate  accounts of the life  insurer,  or of any  affiliated  life  insurance
company,  offering either scheduled contracts or flexible contracts, or both; or
which also offer their shares to variable annuity separate  accounts of the life
insurer or of an affiliated  life insurance  company."  Therefore,  Rule 6e-3(T)
permits  mixed  funding  but does not permit  shared  funding  and also does not
permit the sale of shares of the underlying  fund to Qualified  Plans.  As noted
above, the Original Order granted the Templeton Trust exemptive relief to permit
mixed and shared funding,  but did not expressly  address the sale of its shares
to Qualified Plans.

   7.  Applicants  note  that if the Funds  were to sell  their  shares  only to
Qualified Plans,  exemptive relief under Rule 6e-2 and Rule 6e-3(T) would not be
necessary.  Applicants state that the relief provided for under Rule 6e-2(b)(15)
and Rule  6e-3(T)(b)(15)  does not relate to  qualified  pension and  retirement
plans or to a registered investment company's ability to sell its shares to such
plans.

   8.  Applicants  state that  changes in the federal  tax law have  created the
opportunity for each of the Funds to increase its asset base through the sale of
its shares to  Qualified  Plans.  Applicants  state that  Section  817(h) of the
Internal  Revenue  Code of  1986,  as  amended  (the  "Code"),  imposes  certain
diversification standards on the assets underlying Variable Contracts.  Treasury
Regulations  generally require that, to meet the  diversification  requirements,
all of the  beneficial  interests in the underlying  investment  company must be
held by the segregated  asset accounts of one or more life insurance  companies.
Notwithstanding this, Applicants note that the Treasury Regulations also contain
an exception to this  requirement  that permits  trustees of a Qualified Plan to
hold  shares  of an  investment  company,  the  shares of which are also held by
insurance company  segregated asset accounts,  without  adversely  affecting the
status  of  the  investment  company  as an  adequately  diversified  underlying
investment of Variable  Contracts  issued through such segregated asset accounts
(Treas. Reg. 1.817-5(f)(3)(iii)).

   9.  Applicants  state  that  the   promulgation  of  Rules   6e-2(b)(15)  and
6e-3(T)(b)(15)  under  the 1940 Act  preceded  the  issuance  of these  Treasury
Regulations.  Thus,  Applicants  assert  that  the  sale of  shares  of the same
investment  company  to both  separate  accounts  and  Qualified  Plans  was not
contemplated   at  the  time  of  the   adoption   of  Rules   6e-2(b)(15)   and
6e-3(T)(b)(15).

   10.  Section  9(a)  provides  that it is unlawful for any company to serve as
investment  adviser  or  principal   underwriter  of  any  registered   open-end
investment  company  if an  affiliated  person of that  company  is subject to a
disqualification  enumerated in Section  9(a)(1) or (2). Rules  6e-2(b)(15)  and
6e-3(T)(b)(15) provide exemptions from Section 9(a) under certain circumstances,
subject to the limitations on mixed and shared funding.  These  exemptions limit
the  application of the eligibility  restrictions  to affiliated  individuals or
companies  that  directly  participate  in  the  management  of  the  underlying
portfolio investment company.

   11.  Applicants  state  that  the  relief  granted  in Rule  6e-2(b)(15)  and
6e-3(T)(b)(15)  from the requirements of Section 9 limits, in effect, the amount
of monitoring  of an insurer's  personnel  that would  otherwise be necessary to
ensure  compliance  with Section 9 to that which is  appropriate in light of the
policy and purposes of Section 9.  Applicants  submit that those Rules recognize
that it is not necessary for the protection of investors or the purposes  fairly
intended by the policy and provisions of the 1940 Act to apply the provisions of
Section 9(a) to the many individuals  involved in an insurance  company complex,
most of whom  typically  will  have no  involvement  in  matters  pertaining  to
investment companies funding the separate accounts.

   12. Applicants to the Original Order previously requested and received relief
from  Section  9(a) and  Rules  6e-2(b)(15)  and  6e-3(T)(b)(15)  to the  extent
necessary  to permit  mixed and shared  funding.  Applicants  maintain  that the
relief  previously  granted  from Section 9(a) will in no way be affected by the
proposed sale of shares of the Funds to Qualified Plans.  Those  individuals who
participate  in the  management or  administration  of the Funds will remain the
same  regardless of which Qualified  Plans use such Funds.  Applicants  maintain
that  more  broadly  applying  the  requirements  of  Section  9(a)  because  of
investment by Qualified Plans would not serve any regulatory purpose.  Moreover,
Qualified  Plans,  unlike  separate  accounts,  are  not  themselves  investment
companies and therefore are not subject to Section 9 of the 1940 Act.

   13.  Applicants  state that Rules  6e-2(b)(15)(iii)  and  6e-3(T)(b)(15)(iii)
provide  exemptions from the  pass-through  voting  requirement  with respect to
several  significant  matters,  assuming  the  limitations  on mixed and  shared
funding  are  observed.  Rules  6e-2(b)(15)(iii)(A)  and  6e-3(T)(b)(15)(iii)(A)
provide that the insurance company may disregard the voting  instructions of its
contractowners  with respect to the  investments  of an  underlying  fund or any
contract between a fund and its investment adviser, when required to do so by an
insurance   regulatory  authority  (subject  to  the  provisions  of  paragraphs
(b)(5)(i)  and  (b)(7)(ii)(A)  of  the  Rules).  Rules  6e-2(b)(15)(iii)(B)  and
6e-3(T)(b)(15)(iii)(A)(2)  provide  that the  insurance  company  may  disregard
contractowners' voting instructions if the contractowners initiate any change in
such company's investment  policies,  principal  underwriter,  or any investment
adviser (provided that  disregarding such voting  instructions is reasonable and
subject to the other provisions of paragraphs  (b)(5)(ii) and  (b)(7)(ii)(B) and
(C) of the Rules).

   14.  Applicants  assert that  Qualified  Plans,  which are not  registered as
investment companies under the 1940 Act, have no requirement to pass-through the
voting  rights  to plan  participants.  Applicants  state  that  applicable  law
expressly  reserves voting rights to certain  specified  persons.  Under Section
403(a) of the Employment  Retirement Income Security Act ("ERISA"),  shares of a
fund sold to a  Qualified  Plan must be held by the  trustees  of the  Qualified
Plan.  Section  403(a) also provides  that the  trustee(s)  must have  exclusive
authority  and  discretion  to manage and  control the  Qualified  Plan with two
exceptions:  (1) when the Qualified Plan expressly  provides that the trustee(s)
are subject to the direction of a named fiduciary who is not a trustee, in which
case the trustees are subject to proper  directions  made in accordance with the
terms  of the  Qualified  Plan  and not  contrary  to  ERISA;  and (2)  when the
authority  to manage,  acquire or  dispose  of assets of the  Qualified  Plan is
delegated to one or more investment  managers  pursuant to Section  402(c)(3) of
ERISA.  Unless one of the two above exceptions stated in Section 403(a) applies,
Qualified  Plan  trustees have the exclusive  authority and  responsibility  for
voting  proxies.  Where  a named  fiduciary  to a  Qualified  Plan  appoints  an
investment  manager,  the investment  manager has the responsibility to vote the
shares held unless the right to vote such shares is reserved to the  trustees or
the named fiduciary.  Where a Qualified Plan does not provide  participants with
the right to give voting  instructions,  Applicants do not see any potential for
material irreconcilable conflicts of interest between or among variable contract
holders and Qualified  Plan  investors  with respect to voting of the respective
Fund's  shares.  Accordingly,  Applicants  state  that,  unlike  the  case  with
insurance  company  separate  accounts,  the issue of the resolution of material
irreconcilable  conflicts  with respect to voting is not present with respect to
such Qualified  Plans since the Qualified Plans are not entitled to pass-through
voting privileges.

   15. Even if a Qualified  Plan were to hold a  controlling  interest in one of
the Funds,  Applicants  believe that such control would not  disadvantage  other
investors  in  such  Fund  to any  greater  extent  than is the  case  when  any
institutional  shareholder  holds a  majority  of the voting  securities  of any
open-end management  investment company. In this regard,  Applicants submit that
investment  in a Fund by a  Qualified  Plan will not  create  any of the  voting
complications  occasioned  by mixed funding or shared  funding.  Unlike mixed or
shared  funding,  Qualified Plan investor  voting rights cannot be frustrated by
veto rights of insurers or state regulators.

   16. Applicants state that some of the Qualified Plans,  however,  may provide
for the  trustee(s),  an  investment  adviser (or  advisers),  or another  named
fiduciary  to  exercise  voting  rights in  accordance  with  instructions  from
participants.  Where a Qualified  Plan provides  participants  with the right to
give voting instructions,  Applicants see no reason to believe that participants
in Qualified Plans generally or those in a particular  Qualified Plan, either as
a single group or in combination  with  participants in other  Qualified  Plans,
would vote in a manner that would  disadvantage  Variable Contract  holders.  In
sum,  Applicants  maintain that the purchase of shares of the Funds by Qualified
Plans  that  provide  voting  rights  does not  present  any  complications  not
otherwise occasioned by mixed or shared funding.

   17.  Applicants  do not  believe  that the sale of the shares of the Funds to
Qualified  Plans  will  increase  the  potential  for  material   irreconcilable
conflicts  of  interest  between  or  among  different  types of  investors.  In
particular,  Applicants see very little potential for such conflicts beyond that
which would otherwise exist between variable annuity and variable life insurance
contractowners.

   18.  As  noted   above,   Section   817(h)  of  the  Code   imposes   certain
diversification standards on the underlying assets of variable contracts held in
an underlying  mutual fund. The Code provides that a variable contract shall not
be treated as an annuity  contract or life  insurance,  as  applicable,  for any
period  (and any  subsequent  period)  for which  the  investments  are not,  in
accordance with regulations  prescribed by the Treasury  Department,  adequately
diversified.

   19. Treasury Department Regulations issued under Section 817(h) provide that,
in  order  to  meet  the  statutory  diversification  requirements,  all  of the
beneficial  interests in the  investment  company must be held by the segregated
asset  accounts of one or more insurance  companies.  However,  the  Regulations
contain certain exceptions to this requirement, one of which allows shares in an
underlying  mutual fund to be held by the  trustees  of a  qualified  pension or
retirement  plan  without  adversely  affecting  the  ability  of  shares in the
underlying fund also to be held by separate  accounts of insurance  companies in
connection with their variable contracts (Treas. Reg. 1.817-5(f)(3)(iii)). Thus,
Applicants believe that the Treasury Regulations  specifically permit "qualified
pension  or  retirement  plans"  and  separate  accounts  to  invest in the same
underlying  fund.  For this reason,  Applicants  have concluded that neither the
Code nor the Treasury  Regulations or revenue  rulings  thereunder  presents any
inherent conflict of interest.

   20.  Applicants  note that while there are differences in the manner in which
distributions  from  Variable  Contracts and  Qualified  Plans are taxed,  these
differences will have no impact on the Funds. When distributions are to be made,
and a Separate  Account or Qualified Plan is unable to net purchase  payments to
make the  distributions,  the Separate  Account and  Qualified  Plan will redeem
shares of the Funds at their  respective net asset value in conformity with Rule
22c-1 under the 1940 Act (without the imposition of any sales charge) to provide
proceeds to meet distribution needs. A Qualified Plan will make distributions in
accordance with the terms of the Qualified Plan.

   21. Applicants  maintain that it is possible to provide an equitable means of
giving voting rights to  Participating  Separate Account  contractowners  and to
Qualified Plans. In connection with any meeting of shareholders,  the Funds will
inform each  shareholder,  including each  Participating  Insurance  Company and
Qualified  Plan,  of  information  necessary  for the meeting,  including  their
respective share of ownership in the relevant Fund. Each Participating Insurance
Company will then solicit voting  instructions in accordance with Rules 6e-2 and
6e-3(T), as applicable,  and its participation agreement with the relevant Fund.
Shares held by Qualified  Plans will be voted in accordance with applicable law.
The voting  rights  provided to  Qualified  Plans with  respect to shares of the
Funds  would be no  different  from the  voting  rights  that  are  provided  to
Qualified Plans with respect to shares of funds sold to the general public.

   22.  Applicants  have  concluded  that even if there should arise issues with
respect  to  a  state  insurance  commissioner's  veto  powers  over  investment
objectives where the interests of contractowners  and the interests of Qualified
Plans are in conflict,  the issues can be almost immediately  resolved since the
trustees of (or  participants  in) the Qualified Plans can, on their own, redeem
the shares out of the Funds.  Applicants note that state insurance commissioners
have  been  given  the veto  power in  recognition  of the fact  that  insurance
companies  usually cannot simply redeem their separate  accounts out of one fund
and invest in another. Generally,  time-consuming,  complex transactions must be
undertaken  to  accomplish  such  redemptions  and  transfers.  Conversely,  the
trustees  of  Qualified  Plans  or  the  participants  in   participant-directed
Qualified  Plans can make the decision  quickly and redeem their interest in the
Funds and  reinvest  in another  funding  vehicle  without  the same  regulatory
impediments  faced by separate  accounts or, as is the case with most  Qualified
Plans, even hold cash pending suitable investment.

   23.  Applicants  also state that they do not see any  greater  potential  for
material irreconcilable  conflicts arising between the interests of participants
under Qualified Plans and contractowners of Participating Separate Accounts from
possible  future  changes in the federal tax laws than that which  already exist
between   variable   annuity   contractowners   and  variable   life   insurance
contractowners.

   24.  Applicants state that the sale of shares of the Funds to Qualified Plans
in addition  to separate  accounts of  Participating  Insurance  Companies  will
result in an increased  amount of assets  available for investment by the Funds.
This may benefit  variable  contractowners  by promoting  economies of scale, by
permitting increased safety of investments through greater diversification,  and
by making the addition of new portfolios more feasible.

   25.  Applicants  assert that,  regardless of the type of shareholders in each
Fund, each Fund's Investment  Manager is or would be contractually and otherwise
obligated  to manage the Fund solely and  exclusively  in  accordance  with that
Fund's  investment  objectives,   policies  and  restrictions  as  well  as  any
guidelines  established by the Board of Trustees of such Fund (the "Board"). The
Investment  Manager  works with a pool of money and  (except in a few  instances
where this may be required in order to comply  with state  insurance  laws) does
not take into account the identity of the shareholders.  Thus, each Fund will be
managed in the same manner as any other mutual fund. Applicants therefore see no
significant  legal  impediment to permitting  the sale of shares of the Funds to
Qualified Plans.

   26.  Applicants  state that the  Commission  has permitted the amendment of a
substantially  similar  original  order for the purpose of adding a party to the
original order and has permitted  open-end  management  investment  companies to
offer their shares  directly to Qualified Plan in addition to separate  accounts
of affiliated or  unaffiliated  insurance  companies  which issue either or both
variable  annuity  contracts or variable life  insurance  contracts.  Applicants
state that the amended order sought in the application is identical to precedent
with respect to the conditions Applicants propose should be imposed on Qualified
Plans in connection with investment in the Funds.

   Applicants' Conditions:

   If  the  requested  amended  order  is  granted,  Applicants  consent  to the
following conditions:

   1. A majority of the Board of each Fund shall  consist of persons who are not
"interested  persons"  thereof,  as defined by Section 2(a)(19) of the 1940 Act,
and the  rules  thereunder  and as  modified  by any  applicable  orders  of the
Commission,  except  that if this  condition  is not met by reason of the death,
disqualification  or bona fide resignation of any Board Member or Members,  then
the operation of this condition shall be suspended:  (a) for a period of 45 days
if the vacancy or vacancies may be filled by the remaining  Board  Members;  (b)
for a  period  of 60 days if a vote of  shareholders  is  required  to fill  the
vacancy  or  vacancies;  or (c) for such  longer  period as the  Commission  may
prescribe by order upon application.

   2. The Board will  monitor  their  respective  Fund for the  existence of any
material  irreconcilable  conflict among the interests of the Variable  Contract
owners of all Separate Accounts investing in the Funds and of the Qualified Plan
participants  investing in the Funds.  The Board will determine what action,  if
any,  shall be taken in response to such  conflicts.  A material  irreconcilable
conflict  may arise for a variety of  reasons,  including:  (a) an action by any
state  insurance  regulatory  authority;  (b) a change in applicable  federal or
state  insurance,  tax or securities  laws or  regulations,  or a public ruling,
private letter ruling,  no-action or interpretive  letter, or any similar action
by insurance, tax or securities regulatory authorities; (c) an administrative or
judicial  decision  in any  relevant  proceeding;  (d) the  manner  in which the
investments  of  the  Funds  are  being  managed;  (e) a  difference  in  voting
instructions given by variable annuity contract owners,  variable life insurance
contract  owners,  and trustees of Qualified Plans; (f) a decision by an insurer
to disregard the voting  instructions  of Variable  Contract  owners;  or (g) if
applicable,  a decision by a Qualified Plan to disregard the voting instructions
of Qualified Plan participants.

   3.  Participating  Insurance  Companies,  the  Investment  Managers,  and any
Qualified  Plan that executes a fund  participation  agreement  upon becoming an
owner of 10 percent or more of the assets of an Fund (a "Participating Qualified
Plan"),  will report any  potential  or existing  conflicts  of which it becomes
aware to the Board of any relevant Fund.  Participating Insurance Companies, the
Investment  Managers and the  Participating  Qualified Plans will be responsible
for  assisting  the  Board in  carrying  out its  responsibilities  under  these
conditions by providing the Board with all information  reasonably necessary for
the Board to consider any issues raised.  This responsibility  includes,  but is
not limited to, an obligation by each Participating  Insurance Company to inform
the Board whenever voting  instructions of Contract owners are disregarded  and,
if  pass-through  voting is  applicable,  an  obligation  by each  Participating
Qualified  Plan to inform the Board  whenever  it has  determined  to  disregard
Qualified Plan participant  voting  instructions.  The  responsibility to report
such  information  and conflicts,  and to assist the Board,  will be contractual
obligations  of all  Participating  Insurance  Companies  investing in the Funds
under their agreements governing participation in the Funds, and such agreements
shall provide that these  responsibilities  will be carried out with a view only
to the interests of the Variable Contract owners.  The  responsibility to report
such  information  and conflicts,  and to assist the Board,  will be contractual
obligations  of  all  Participating   Qualified  Plans  under  their  agreements
governing  participation  in the Funds,  and such  agreements  will provide that
their  responsibilities will be carried out with a view only to the interests of
Qualified Plan participants.

   4. If it is determined by a majority of the Board of a Fund, or by a majority
of the  disinterested  Board Members,  that a material  irreconcilable  conflict
exists,  the  relevant  Participating   Insurance  Companies  and  Participating
Qualified  Plans  will,  at  their  own  expense  and to the  extent  reasonably
practicable as determined by a majority of the disinterested Board Members, take
whatever steps are necessary to remedy or eliminate the material  irreconcilable
conflict,  which steps could include: (a) in the case of Participating Insurance
Companies,  withdrawing  the  assets  allocable  to some or all of the  Separate
Account s from the Fund or any portfolio  thereof and reinvesting such assets in
a different investment medium, including another portfolio of an Fund or another
Fund,  or  submitting  the  question as to whether  such  segregation  should be
implemented  to a  vote  of  all  affected  Variable  Contract  owners  and,  as
appropriate,  segregating  the assets of any appropriate  group (i.e.,  variable
annuity  contract  owners or variable life insurance  contract  owners of one or
more Participating Insurance Companies) that votes in favor of such segregation,
or offering to the affected Variable Contract owners the option of making such a
change; (b) in the case of Participating Qualified Plans, withdrawing the assets
allocable to some or all of the  Qualified  Plans from the Fund and  reinvesting
such  assets  in a  different  investment  medium;  and (c)  establishing  a new
registered  management  investment  company or managed  Separate  Account.  If a
material irreconcilable conflict arises because of a decision by a Participating
Insurance Company to disregard Variable Contract owner voting instructions,  and
that decision  represents a minority position or would preclude a majority vote,
then the insurer  may be  required,  at the Fund's  election,  to  withdraw  the
insurer's  Separate  Account  investment in such Fund,  and no charge or penalty
will be imposed  as a result of such  withdrawal.  If a material  irreconcilable
conflict  arises  because  of  a  Participating  Qualified  Plan's  decision  to
disregard  Qualified Plan participant voting  instructions,  if applicable,  and
that decision  represents  minority  position or would preclude a majority vote,
the  Participating  Qualified Plan may be required,  at the Fund's election,  to
withdraw its  investment in such Fund,  and no charge or penalty will be imposed
as a result of such withdrawal.  The  responsibility  to take remedial action in
the event of a determination  by a Board of a material  irreconcilable  conflict
and to bear the cost of such remedial action will be a contractual obligation of
all Participating  Insurance  Companies and Participating  Qualified Plans under
their   agreements   governing   participation   in   the   Funds,   and   these
responsibilities  will  be  carried  out  with a view  only to the  interest  of
Variable Contract owners and Qualified Plan participants.

   5. For purposes of Condition 4, a majority of the disinterested Board Members
of the  applicable  Board  will  determine  whether or not any  proposed  action
adequately remedies any material  irreconcilable  conflict, but in no event will
the  relevant  Fund or the  Investment  Managers be required to  establish a new
funding medium for any Contract.  No  Participating  Insurance  Company shall be
required by  Condition 4 to  establish  a new  funding  medium for any  Variable
Contract  if any offer to do so has been  declined  by vote of a majority of the
Variable  Contract  owners  materially  and  adversely  affected by the material
irreconcilable  conflict.  Further,  no  Participating  Qualified  Plan shall be
required by Condition 4 to establish a new funding medium for any  Participating
Qualified Plan if (a) a majority of Qualified Plan  participants  materially and
adversely affected by the irreconcilable  material conflict vote to decline such
offer, or (b) pursuant to governing Qualified Plan documents and applicable law,
the  Participating  Qualified Plan makes such decision  without a Qualified Plan
participant vote.

   6.  The   determination   of  the  Board  of  the  existence  of  a  material
irreconcilable  conflict  and its  implications  will be made  known in  writing
promptly to all Participating  Insurance  Companies and Participating  Qualified
Plans.

   7.  Participating   Insurance  Companies  will  provide  pass-through  voting
privileges  to  Variable  Contract  owners  who  invest in  registered  Separate
Accounts so long as and to the extent that the Commission continues to interpret
the 1940 Act as requiring  pass-through  voting privileges for Variable Contract
owners.  As to Variable  Contracts  issued by  unregistered  Separate  Accounts,
pass-through  voting  privileges  will be extended to participants to the extent
granted by issuing insurance  companies.  Each  Participating  Insurance Company
will also vote shares of the Funds held in its  Separate  Accounts  for which no
voting instructions from Contract owners are timely received,  as well as shares
of the Funds which the Participating  Insurance Company itself owns, in the same
proportion  as those  shares of the Funds for  which  voting  instructions  from
contract owners are timely received.  Participating  Insurance Companies will be
responsible  for  assuring  that  each of  their  registered  Separate  Accounts
participating in the Funds calculates  voting  privileges in a manner consistent
with other Participating Insurance Companies. The obligation to calculate voting
privileges in a manner  consistent with all other registered  Separate  Accounts
investing in the Funds will be a  contractual  obligation  of all  Participating
Insurance Companies under their agreements  governing their participation in the
Funds. Each Participating Qualified Plan will vote as required by applicable law
and governing Qualified Plan documents.

   8. All reports of potential or existing  conflicts received by the Board of a
Fund and all action by such Board with regard to determining  the existence of a
conflict,   notifying   Participating   Insurance  Companies  and  Participating
Qualified  Plans of a conflict,  and  determining  whether any  proposed  action
adequately remedies a conflict,  will be properly recorded in the minutes of the
meetings of such Board or other appropriate  records,  and such minutes or other
records shall be made available to the Commission upon request.

   9. Each Fund will notify all Participating  Insurance Companies that separate
disclosure in their respective Separate Account  prospectuses may be appropriate
to advise  accounts  regarding the potential  risks of mixed and shared funding.
Each Fund shall disclose in its prospectus that (a) the Fund is intended to be a
funding  vehicle for variable  annuity and  variable  life  insurance  contracts
offered by various insurance  companies and for qualified pension and retirement
plans;  (b) due to  differences of tax treatment and other  considerations,  the
interests  of  various  Contract  owners  participating  in the Fund  and/or the
interests  of  Qualified  Plans  investing  in the Fund  may at some  time be in
conflict;  and (c) the  Board  of such  Fund  will  monitor  events  in order to
identify the existence of any material irreconcilable conflicts and to determine
what action, if any, should be taken in response to any such conflict.

   10.  Each Fund will  comply  with all  provisions  of the 1940 Act  requiring
voting by shareholders (which, for these purposes,  will be the persons having a
voting interest in the shares of the Funds), and, in particular,  the Funds will
either provide for annual shareholder meetings (except insofar as the Commission
may interpret Section 16 of the 1940 Act not to require such meetings) or comply
with Section 16(c) of the 1940 Act, although the Funds are not the type of trust
described in Section 16(c) of the 1940 Act, as well as with Section 16(a) of the
1940 Act and, if and when  applicable,  Section 16(b) of the 1940 Act.  Further,
each Fund will act in accordance  with the  Commission's  interpretation  of the
requirements  of Section  16(a)  with  respect to  periodic  elections  of Board
Members and with  whatever  rules the  Commission  may  promulgate  with respect
thereto.

   11. If and to the extent Rules 6e-2 or 6e-3(T) under the 1940 Act is amended,
or proposed Rule 6e-3 under the 1940 Act is adopted, to provide exemptive relief
from any  provision of the 1940 Act or the rules  promulgated  thereunder,  with
respect to mixed or shared funding on terms and conditions  materially different
from any exemptions granted in the order requested in the application,  then the
Funds and/or  Participating  Insurance  Companies  and  Participating  Qualified
Plans, as appropriate,  shall take such steps as may be necessary to comply with
such Rules 6e-2 and 6e-3(T),  as amended,  or proposed Rule 6e-3, as adopted, to
the extent that such Rules are applicable.

   12. The Participating  Insurance Companies and Participating  Qualified Plans
and/or the Investment Managers, at least annually, will submit to the Board such
reports, materials or data as the Board may reasonably request so that the Board
may fully carry out obligations  imposed upon it by the conditions  contained in
the  application.  Such  reports,  materials  and data  will be  submitted  more
frequently  if  deemed   appropriate  by  the  Board.  The  obligations  of  the
Participating  Insurance Companies and Participating  Qualified Plans to provide
these  reports,  materials  and data to the Board,  when the Board so reasonably
requests,  shall be a  contractual  obligation  of all  Participating  Insurance
Companies and  Participating  Qualified Plans under their  agreements  governing
participation in the Funds.

   13. If a Qualified Plan should ever become a holder of ten percent or more of
the assets of a Fund, such Qualified Plan will execute a participation agreement
with the Fund  that  includes  the  conditions  set forth  herein to the  extent
applicable.   A  Qualified  Plan  will  execute  an  application  containing  an
acknowledgment  of this condition upon such Qualified Plan's initial purchase of
the shares of any Fund.

   Conclusion:

   Applicants  assert that,  for the reasons  summarized  above,  the  requested
exemptions  are  appropriate  in the public  interest  and  consistent  with the
protection  of  investors  and the  purposes  fairly  intended by the policy and
provisions of the 1940 Act.

   For the  Commission,  by the Division of Investment  Management,  pursuant to
delegated authority.



                 Templeton Variable Products Series Fund, et al.

                               File No. 812-11698

                       SECURITIES AND EXCHANGE COMMISSION

                              Release No. IC-24079

                               1999 SEC LEXIS 2177

                                October 13, 1999

ACTION:  Order Granting Exemptions

TEXT:  Templeton  Variable  Products Series Fund ("Templeton  Trust"),  Franklin
Templeton  Variable  Insurance  Products  Trust ("VIP Trust"),  Templeton  Funds
Annuity  Company  ("TFAC") or any  successor  to TFAC,  and any future  open-end
investment  company  for  which  TFAC  or any  affiliate  is the  administrator,
sub-administrator,   investment  manager,  adviser,  principal  underwriter,  or
sponsor ("Future Funds") filed an application on July 14, 1999, and an amendment
on September  17, 1999 seeking an amended  order of the  Commission  pursuant to
Section 6(c) of the Investment  Company Act of 1940 ("1940 Act")  exempting them
from the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act and
Rules  6e-2(b)(15)  and  6e-3(T)(b)(15).  The prior  order (Rel.  No.  IC-19879)
granted  exemptive  relief to permit shares of the Templeton Trust to be sold to
and held by variable  annuity and variable life insurance  separate  accounts of
both affiliated and unaffiliated life insurance  companies.  The proposed relief
would  amend the prior  order to add as  parties to that order the VIP Trust and
any Future Funds and to permit shares of the Templeton Trust, the VIP Trust, and
Future Funds to be issued to and held by qualified  pension and retirement plans
outside the separate account context.

     A notice of the filing of the  application was issued on September 17, 1999
(Rel.  No.  IC-24018).  The notice gave  interested  persons an  opportunity  to
request a hearing and stated that an order  granting  the  application  would be
issued  unless a hearing  should be  ordered.  No request for a hearing has been
filed, and the Commission has not ordered a hearing.

   The matter has been  considered,  and it is found that granting the requested
exemptions  is  appropriate  in the  public  interest  and  consistent  with the
protection of investors and the purposes  intended by the policy and  provisions
of the 1940 Act.

   Accordingly,

   IT IS ORDERED,  pursuant to Section 6(c) of the 1940 Act,  that the requested
exemptions from Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules
6e-2(b)(15)  and  6e-3(T)(b)(15)   thereunder,  be,  and  hereby  are,  granted,
effective forthwith.

   For the  Commission,  by the Division of Investment  Management,  pursuant to
delegated authority.