Exhibit h(i)
BUSINESS MANAGEMENT AGREEMENT
BETWEEN
FRANKLIN XXXXXXXXX VARIABLE INSURANCE PRODUCTS TRUST
(XXXXXXXXX INTERNATIONAL SMALLER COMPANIES FUND)
AND
FRANKLIN XXXXXXXXX SERVICES, LLC
AGREEMENT dated as of January 1, 2001, between Franklin Xxxxxxxxx
Variable Insurance Products Trust, a Massachusetts business trust (the "Trust"),
on behalf of the Xxxxxxxxx International Smaller Companies Fund (the "Fund"), a
separate series of the Trust, and Franklin Xxxxxxxxx Services, LLC
("Administrator").
In consideration of the mutual promises herein made, the parties
hereby agree as follows:
(1) The Administrator agrees, during the life of this Agreement, to be
responsible for:
(a) providing office space, telephone, office equipment and
supplies for the Fund;
(b) paying compensation of the Fund's officers for services
rendered as such;
(c) authorizing expenditures and approving bills for payment on
behalf of the Fund;
(d) supervising preparation of periodic reports to Shareholders,
notices of dividends, capital gains distributions and tax credits, and attending
to routine correspondence and other communications with individual Shareholders;
(e) daily pricing of the Fund's investment portfolio and preparing
and supervising publication of daily quotations of the bid and asked prices of
the Fund's Shares, earnings reports and other financial data;
(f) monitoring relationships with organizations serving the Fund,
including custodians, transfer agents, public accounting firms, law firms,
printers and other third party service providers;
(g) providing trading desk facilities for the Fund;
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(h) supervising compliance by the Fund with recordkeeping
requirements under the Investment Company Act of 1940 (the "1940 Act") and the
rules and regulations thereunder, supervising compliance with recordkeeping
requirements imposed by state laws or regulations, and maintaining books and
records for the Fund (other than those maintained by the custodian and transfer
agent);
(i) preparing and filing of tax reports including the Fund's income
tax returns, and monitoring the Fund's compliance with subchapter M of the
Internal Revenue Code, provisions of the Code applicable to insurance company
separate accounts, and other applicable tax laws and regulations;
(j) monitoring the Fund's compliance with: the 1940 Act and rules
and regulations thereunder; state and foreign laws and regulations applicable to
the operation of investment companies funding variable insurance products; the
Fund's investment objectives, policies and restrictions; and the Code of Ethics
and other policies adopted by the Fund's Board of Trustees or by the Adviser and
applicable to the Fund;
(k) providing executive, clerical and secretarial personnel
needed to carry out the above responsibilities; and
(l) preparing regulatory reports, including without limitation
NSARs, proxy statements and U.S. and foreign ownership reports.
(2) The Trust agrees, during the life of this Agreement, to pay to the
Administrator as compensation for the foregoing a monthly fee equal on an annual
basis to 0.15% of the first $200 million of the average daily net assets of the
Fund during the month preceding each payment, reduced as follows: on such net
assets in excess of $200 million up to $700 million, a monthly fee equal on an
annual basis to 0.135%; on such net assets in excess of $700 million up to $1.2
billion, a monthly fee equal on an annual basis to 0.10%; and on such net assets
in excess of $1.2 billion, a monthly fee equal on an annual basis to 0.075%.
(3) This Agreement shall remain in full force and effect through April 30,
2002 and thereafter from year to year to the extent continuance is approved
annually by the Board of Trustees of the Trust.
(4) This Agreement may be terminated by the Trust at any time on sixty
(60) days' written notice without payment of penalty, provided that such
termination by the Trust shall be directed or approved by the vote of a majority
of the Trustees of the Trust in office at the time or by the vote of a majority
of
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the outstanding voting securities of the Trust (as defined by the 1940 Act);
and shall automatically and immediately terminate in the event of its assignment
(as defined by the 1940 Act).
(5) In the absence of willful misfeasance, bad faith or gross negligence
on the part of the Administrator, or of reckless disregard of its duties and
obligations hereunder, the Administrator shall not be subject to liability for
any act or omission in the course of, or connected with, rendering services
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized officers and their respective
corporate seals to be hereunto duly affixed and attested.
FRANKLIN XXXXXXXXX VARIABLE
INSURANCE PRODUCTS TRUST
By/s/Xxxxxx X. Xxxxxxx
Secretary
FRANKLIN XXXXXXXXX SERVICES, LLC
By /s/Xxxxxx X. Xxxxxxx
Senior Vice President
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