Exhibit 13(A)
ADMINISTRATION AGREEMENT
AGREEMENT made this 30th day of June 1971 by and between Franklin Life
Variable Annuity Fund A, a separate account established pursuant to Article
XIV-1/2 of the Illinois insurance code (the "Fund') and The Franklin Life
Insurance Company an Illinois corporation (the 'Company').
W I T N E S S E T H :
WHEREAS the Fund and the Company wish to enter into an agreement setting
forth the terms on which the Company will (1) perform sales and administrative
services for the Fund, (2) assume certain expenses of the Fund and (3) assume
certain mortality and expense risks under contracts which depend in whole or in
part on the investment performance of the Fund;
WHEREAS the Fund and Franklin Financial Services Corporation ("FFSC"), a
Delaware corporation and wholly-owned subsidiary of the Company, are this day
entering into an Agreement under which FFSC will serve as principal underwriter
for the Fund;
NOW, THEREFORE, in consideration of the covenants and mutual promises of
the parties made to each other, it is hereby covenanted and agreed as follows:
1. SERVICES TO BE PROVIDED AND EXPENSES TO BE ASSUMED BY THE COMPANY.
The Company hereby agrees that until the termination of the employment of FFSC
as principal underwriter for the Fund, the Company will provide, or provide for,
in its offices and will assume:
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(i) All services and expenses required for the administration of those
contracts of the Company which depend in whole or in part on the investment
performance of the Fund, and are sold by the Company prior to such termination
(the "Contracts"); and (ii) all services and expenses required for
administration of the Fund other than services and expenses relating to the
management of investments or the sale and administration of the Contracts, it
being understood that the services and expenses provided by the Company under
this clause (ii) include all legal and accounting services to the Fund for which
fees and expenses are incurred, and the bearing of the cost of such
indemnification to the members of the Board of managers of the Fund and the
officers agents or employees of the Fund as is provided by the Xxxx in its Rules
and Regulations.
In the event that the employment of FFSC as principal underwriter for
the Fund is terminated, the Company will thereafter (i) continue to provide or
provide for, in its offices and will assume all services and expenses required
for the administration of the Contracts and (ii) continue to assume its
allocable share of the expenses of the Fund for administrative services of the
nature set forth in Clause (ii) of the preceding paragraph. Such allocable
share shall be equal to the ratio of the value of the total assets of the Fund
which are attributable to the Contracts to the value of the total assets of the
Fund.
Notwithstanding the foregoing, however, the Company shall not be obligated
to pay, and the Fund shall pay, (i) taxes, if any, based on the income off'
capital gains of, assets in, or existence of, the Fund, (ii) taxes, if any, in
connection with the acquisition, disposition or transfer of assets of the Fund,
(iii) commissions or other capital items
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payable in connection with the purchase or sale of the Fund's investments, and
(iv) interest an account Of any borrowings by the Fund.
Furthermore, the Company shall not be obligated to pay under this agreement
the investment management fee referred to in the Fund's Investment Management
Agreement of even date herewith or the expenses of the nature borne by the
investment manager thereunder, or any other fee for investment management or
advisory services or investment expense.
The services of the Company to the Fund under this agreement are not to be
deemed exclusive and the Company shall be free to render similar services to
others, including without limitation such other separate accounts as are now or
may hereafter be established by the Company.
2. PUBLIC ACCOUNTANT'S REPORT. The Fund shall cause its books and
accounts to be audited at least once each year by a reputable, independent
public accountant or firm of public accountants who shall render a report to the
Fund.
3. ASSUMPTION OF MORTALITY AND EXPENSE RISKS BY THE COMPANY. The Company
hereby agrees to assume at its expense such mortality and expense risks as are
set forth in the Contracts.
4. COMPENSATION TO BE PAID TO THE COMPANY. For assuming the expenses and
providing the services and assuming the mortality and expense risks set forth
above, the Company shall receive and accept as full compensation therefor: All
charges, fees and deductions specified in the Contracts and described in a
Prospectus forming a part of an effective Registration Statement under the
Securities Act of 1933
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with respect to the Contracts (a "Prospectus"), other than the charges, fees and
deductions for investment management services and the sales deductions.
Due to the operation of the assumption of mortality and expense risks and
deductions therefor under the Contracts, imbalances may develop between the
total assets of the Fund attributable to the Contracts and the liabilities under
the Contracts. If such liabilities should exceed such assets, the Company will
from time to time, but not less often than annually make sufficient transfers of
cash to the Fund to eliminate the deficit. Conversely, if such assets should
exceed such liabilities, the Company shall be entitled for the account of its
general funds to withdraw such excess in cash from the Fund from time to time.
As between the Fund and the Company, the Fund shall provide funds for the
making of payments to the owners of Contracts pursuant to the terms of the
Contracts, except that the Company shall make.payment to the Fund, as specified
herein, to eliminate any deficit or imbalance in the Fund, pursuant to the
assumption of mortality and expense risks by the company as set forth in the
Contracts; but nothing herein contained affects the Company's liability to the
owner of a Contract pursuant to its terms.
5. INTERESTED AND AFFILIATED OFFICERS. It is understood that members of
the Board of Managers, officers, employees or agents of the Fund may also be
directors, officers, employees or agents of the Company. It is also understood
that the Company may have the financial interest in the Fund set forth in
Section 4 above.
6. AGREEMENT REGARDING INVESTMENT MANAGEMENT EXPENSES. The Fund hereby
agrees that it shall not pay compensation for investment management or
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advisory services with respect to Contracts which are issued by the Company
while the Investment Management Agreement between the Fund and the Company of
even date herewith is in effect, which compensation is in excess of the rate
specified in Section 2 of the Investment management Agreement of even date
herewith.
7. FORM OF CONTRACTS. As long as FFSC is acting as principal underwriter
for the Fund hereunder, FPSC and the Company will have the exclusive right as
between them and the Fund to determine the form and substance of the Contracts,
subject to all applicable, provisions of federal and state law; but no Contract
sold while the Investment Management Agreement between the Fund and the Company
of even date herewith remains in effect shall provide for a deduction, charge or
fee for investment management or advisory services at a rate in excess of the
rate specified in Section 2 of such Investment Management Agreement.
8. LIABILITY OF COMPANY. in the absence of gross negligence or willful
misconduct in the performance of its duties or of reckless disregard of its
obligations and duties under this agreement, neither the Company nor any of its
officers, directors, employees or agents shall be subject to liability for any
act or omission in the course of, or connected with, rendering services or
performing its obligations hereunder.
9. TERMINATION AND AMENDMENT. Anything in this agreement to the
contrary notwithstanding, in the event that the employment of FFSC as
principal underwriter is terminated, all of the provisions hereof and the
rights and obligations of the parties hereunder shall continue in effect so
long as any of the Contracts are outstanding. This agreement may be amended
or terminated at any time by mutual consent of the parties.
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IN WITNESS WHEREOF the parties hereto have caused this agreement to be
executed on the day and year first above written.
FRANKLIN LIFE VARIABLE ANNUITY FUND A
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Chairman of the Board of Managers
THE FRANKLIN LIFE INSURANCE COMPANY
By:
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