> I think it should be sufficient to use
>
> <?xml version="1.0" encoding="UTF-8"?>
> <xsl:stylesheet version="2.0"
> xmlns:xsl="http://www.w3.org/1999/XSL/Transform">
> 	<xsl:output method="xml" version="1.0" encoding="UTF-8"
> indent="yes"/>
> 	<xsl:template match="/">
> 		Age exists=
> 		<xsl:call-template name="subtemp">
> 			<xsl:with-param name="parm"
> select="//myelement[@name = 'karl']"/>
> 		</xsl:call-template>
> 	</xsl:template>
> 	<xsl:template name="subtemp">
> 		<xsl:param name="parm"/>
> 		<xsl:value-of select="exists(@age)"/>
> 	</xsl:template>
> </xsl:stylesheet>

..but here you aren't doing anything with the parameter 'parm', the
exists() test would applied to the root and not to <myelement>.

The whole thing could be rewritten as:

<xsl:template match="/">
  Age exists = <xsl:value-of select="boolean(//myelement[@name =
'karl'])"/>
</xsl:template>

If you really wanted it as a named template then you would need:

<xsl:template name="subtemp">
    <xsl:param name="parm"/>
    <xsl:for-each select="$parm">
        <xsl:value-of select="boolean(@age)"/>
    </xsl:for-each>
</xsl:template>

cheers
andrew