Exhibit d(v)
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the "Agreement") made between the RISING
DIVIDENDS FUND (hereinafter called the "Fund") a series of the Franklin
Valuemark Funds, a Massachusetts business trust (hereinafter called the
"Trust"), and FRANKLIN ADVISORY SERVICES, LLC, a Delaware limited liability
company, (hereinafter called the "Manager").
W I T N E S S E T H
WHEREAS, the Trust is an open-end management investment company,
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, and is engaged in the business of supplying
investment advice, investment management and administrative services, as an
independent contractor; and
WHEREAS, the Trust desires to retain the Manager to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Manager is interested in furnishing said advice and services.
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
mutually agree as follows:
l. The Trust hereby employs the Manager and the Manager hereby accepts
such employment, to render investment advice and investment management services
with respect to the assets of the Fund, subject to the supervision and direction
of the Trust's Board of Trustees. The Manager shall, except as otherwise
provided for herein, render or make available all administrative services needed
for the management and operation of the Fund, and shall, as part of its duties
hereunder, (i) furnish the Fund with advice and recommendations with respect to
the investment of the Fund's assets and the purchase and sale of its portfolio
securities, including the taking of such other steps as may be necessary to
implement such advice and recommendations, (ii) furnish the Fund with reports,
statements and other data on securities, economic conditions and other pertinent
subjects which the Trust's Board of Trustees may request, (iii) furnish such
office space and personnel as is needed by the Fund, and (iv) in general super
intend and manage the investments of the Fund, subject to the ultimate
supervision and direction of the Trust's Board of Trustees.
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2. The Manager shall use its best judgment and efforts in rendering the
advice and services to the Fund as contemplated by this Agreement.
3. The Manager shall, for all purposes herein, be deemed to be an
independent contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the Fund in any way, or in
any way be deemed an agent for the Fund. It is expressly understood and agreed
that the services to be rendered by the Manager to the Fund under the provisions
of this Agreement are not to be deemed exclusive, and the Manager shall be free
to render similar or different services to others so long as its ability to
render the services provided for in this Agreement shall not be impaired
thereby.
4. The Manager agrees to use its best efforts in the furnishing of such
advice and recommendations to the Fund, in the preparation of reports and
information, and in the management of the Fund's assets, all pursuant to this
Agreement, and for this purpose the Manager shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Manager shall be
deemed to include persons employed or retained by the Manager to furnish
statistical, research, and other factual information, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice and assistance as the Manager
may desire and request.
5. The Fund will from time to time furnish to the Manager detailed
statements of the investments and assets of the Fund and information as to its
investment objectives and needs, and will make available to the Manager such
financial reports, proxy statements, legal and other information relating to its
investments as may be in the possession of the Fund or available to it and such
other information as the Manager may reasonably request.
6. The Manager shall bear and pay the costs of rendering the services to
be performed by it under this Agreement including the fees and costs of any
sub-adviser with which the Manager has contracted. The Fund shall bear and pay
for all other expenses of its operation, including, but not limited to, expenses
incurred in connection with the issuance, registration and transfer of its
shares; fees of its custodian, transfer and shareholder servicing agent; costs
and expenses of pricing and calculating its daily net asset value and of
maintaining its books of account required by the 1940 Act; expenditures in
connection with meetings of the Fund's Shareholders and Board of Trustees,
except those called
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solely to accommodate the Manager; salaries of officers and fees and expenses
of Board of Trustees or members of any advisory board or committee of the Fund
who are not members of, affiliated with or interested persons of the Manager;
salaries of personnel (who may be employed by the Manager) involved in placing
orders for the execution of the Fund's portfolio transactions or in maintaining
registration of its shares under applicable securities laws; insurance premiums
on property or personnel of the Fund which inure to its benefit; the cost of
preparing and printing reports, proxy statements, prospectuses and statements
of additional information of the Fund or other communications for distribution
to its shareholders; expenses incurred in the distribution of the Fund's shares
pursuant to the Rule l2b-l Distribution Plan as set forth in section 15 below;
legal, auditing and accounting fees; trade association dues; fees and expenses
of registering and maintaining registration of its shares for sale under
federal and applicable state and foreign securities laws; and all other charges
and costs of its operation plus any extraordinary and non-recurring expenses,
except as herein otherwise prescribed.
7. (a) The Fund agrees to pay to the Manager, and the Manager agrees to
accept, as full compensation for all administrative and investment management
services furnished or provided to the Fund and as full reimbursement for all
expenses assumed by the Manager, a management fee computed at the rate of 0.75%
per annum on the first $500 million of the average daily net assets of the Fund,
0. 625% per annum on the next $500 million of the average daily net assets of
the Fund, and 0.50% per annum on the average daily net assets of the Fund in
excess of $1 billion.
(b) The management fee shall be accrued daily by the Fund and paid
to the Manager on the first business day of the succeeding month. The initial
monthly fee under this Agreement shall be payable on the first business day of
the first month following the effective date of this Agreement. The fee to the
Manager shall be prorated for the portion of any month in which this Agreement
is in effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect
bears to the number of calendar days in the month. If this Agreement is
terminated prior to the end of any month, the fee to the Manager shall be
payable within ten (l0) days after the date of termination.
(c) To the extent that the gross operating costs and expenses of the
Fund (excluding any interest, taxes, brokerage commissions, amortization of
organization expense, and, with the prior written approval of any state
securities commission requiring same, any extraordinary expenses, such as
litigation), exceed the most stringent expense limitation requirements of the
states in which shares of the Fund are qualified for sale, the Manager shall
reimburse the Fund for the amount of such excess.
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(d) The Manager may waive any portion of the compensation or
reimbursement of expenses due to it pursuant to this Agreement. Any such waiver
shall be applicable only with respect to the specific items waived and shall not
constitute a waiver of any future compensation or reimbursement due to the
Manager hereunder.
8. The Manager agrees that neither it nor any of its officers or employees
shall take any short position in the shares of the Fund. This prohibition shall
not prevent the purchase of such shares by any of the officers and directors or
bona fide employees of the Manager or any trust, pension, profit sharing or
other benefit plan for such persons or affiliates thereof, at a price not less
than the net asset value thereof at the time of purchase, as allowed pursuant to
rules promulgated under the 1940 Act.
9. Nothing herein contained shall be deemed to require the Fund to take
any action contrary to its Declaration of Trust or By-Laws or any applicable
statute or regulation, or to relieve or deprive the Board of Trustees of the
Trust of its responsibility for and control of the conduct of the affairs of the
Fund.
10. (a) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties hereunder on the part
of the Manager, the Manager shall not be subject to liability to the Fund or to
any shareholder of the Fund for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security by the Fund.
(b) Notwithstanding the foregoing, the Manager agrees to reimburse
the Fund for any and all costs, expenses, and counsel fees reasonably incurred
by the Fund in the preparation, printing and distribution of proxy statements,
amendments to its Registration Statement, the holding of meetings of the
shareholders, or Board of Trustees, the conduct of factual investigations, any
legal or administrative proceedings (including any applications for exemptions
or determinations by the Securities and Exchange Commission) which the Fund
incurs as the result of action or inaction of the Manager or any of its
shareholders where the action or inaction necessitating such expenditures (i) is
directly or indirectly related to any transactions or proposed transaction in
the shares or control of the Manager or its affiliates (or litigation related to
any pending or proposed future transaction in such shares or control) which
shall have been undertaken without the prior, express approval of the Trust's
Board of Trustees; or (ii) is within the sole control of the Manager or any of
its affiliates or any of their officers, directors, employees or shareholders.
The Manager
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shall not be obligated pursuant to the provisions of this Subparagraph 10(b),
to reimburse the Fund for any expenditures related to the institution of an
administrative proceeding or civil litigation by the Fund or a Fund shareholder
seeking to recover all or a portion of the proceeds derived by any shareholder
of the Manager or any of its affiliates from the sale of his shares of the
Manager, or similar matters. So long as this Agreement is in effect, the
Manager shall pay to the Fund the amount due for expenses subject to this
Subparagraph 10(b) within thirty (30) days after a xxxx or statement has
been received by the Fund therefor. This provision shall not be deemed to be a
waiver of any claim the Fund may have or may assert against the Manager or
others for costs, expenses, or damages heretofore incurred by the Fund or for
costs, expenses, or damages the Fund may hereafter incur which are not
reimbursable to it hereunder.
(c) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or officer, director or employee of the
Manager, from liability in violation of Sections 17(h) and (i) of the 1940 Act.
11. This Agreement shall remain in effect for a period of two years from
its effective date, unless sooner terminated as hereinafter provided, and shall
continue in effect thereafter for periods not exceeding one year so long as such
continuation is approved at least annually by (i) the Board of Trustees of the
Trust or by the vote of a majority of the outstanding voting securities of the
Trust, and (ii) the vote of a majority of the Trustees of the Trust who are not
parties to this Agreement or interested persons thereof, cast in person at a
meeting called for the purpose of voting on such approval.
12. This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Fund, upon sixty (60) days' written notice
to the Manager, and by the Manager upon sixty (60) days' written notice to the
Trust.
13. This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the 1940 Act.
14. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged without the affirmative vote or written consent of the
holders of a majority of the outstanding voting securities of the Fund.
15. The provisions set forth in this section number 15 (hereinafter
referred to as the "Plan") have been adopted pursuant to Rule 12b-1 under the
1940 Act, by the Trust, having been approved by a majority of the Trust's Board
of Trustees, including a majority of the Trustees who are not interested persons
of the
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Trust and who have no direct or indirect financial interest in the
operation of the Plan (the "non-interested Trustees"), cast in person at a
meeting called for the purpose of voting on such Plan. The Board of Trustees
concluded that the rate of compensation to be paid to the Manager by the Fund
was fair and not excessive, but that due solely to the uncertainty that may
exist from time to time with respect to whether payments made by the Fund to the
Manager or to other firms may nevertheless be deemed to constitute distribution
expenses, it was determined that adoption of the Plan would be prudent and in
the best interests of the Fund and its shareholders or policyholders having an
interest in the Fund. The Trustees' approval included a determination that in
the exercise of their reasonable business judgment and in light of their
fiduciary duties, there is a reasonable likelihood that the Plan will benefit
the Fund and its shareholders or policyholders investing in the Fund.
No additional payments are to be made by the Fund as a result of the
Plan other than the payments the Fund is otherwise obligated to make (i) to the
Manager pursuant to section 7 of this Agreement, (ii) to its Transfer and
Dividend Paying Agents or Custodian, pursuant to the Agreements with each such
party as in effect at any time, and (iii) in payment of any expenses of the Fund
in the ordinary course of business that may be deemed primarily intended to
result in the sale of shares issued by the Fund. However, to the extent any of
such other payments by the Fund, to or by the Manager, or to the Fund's Agents,
are nevertheless deemed to be payments for the financing of any activity
primarily intended to result in the sale of shares issued by the Fund within the
context of Rule 12b-1 under the 1940 Act, then such payments shall be deemed to
have been made pursuant to the Plan as set forth herein. The costs and
activities, the payment of which are intended to be within the scope of the
Plan, shall include, but not necessarily be limited to, the following:
(a) the costs of the preparation, printing and mailing of all
required reports and notices to shareholders or policyholders investing in
the Fund;
(b) the costs of the preparation, printing and mailing of all
prospectuses and statements of additional information;
(c) the costs of preparation, printing and mailing of any proxy
statements and proxies;
(d) all legal and accounting fees relating to the preparation
of any such reports, prospectuses, proxies and proxy statements;
(e) all fees and expenses relating to the qualification of the
Fund and/or its shares under the securities or "Blue Sky" laws of any
jurisdiction;
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(f) all fees under the Securities Act of 1933 and the 1940 Act,
including fees in connection with any application for exemption relating to or
directed toward the sale of the Fund's shares;
(g) all fees and assessments of the Investment Company Institute or
any successor organization, irrespective of whether some of its activities are
designed to provide sales assistance;
(h) all costs of the preparation and mailing of confirmations
of shares sold or redeemed, and reports of share balances;
(i) all costs of responding to telephone or mail inquiries of
investors or prospective investors; and
(j) payments to dealers, financial institutions, advisers, or other
firms, any one of whom may receive monies in respect of the Fund's shares held
in accounts for policyholders for whom such firm is the dealer of record or
holder of record, or with whom such firm has a servicing relationship. Servicing
may include, among other things: (i) answering client inquiries regarding the
Fund; (ii) assisting clients in changing account designations and addresses;
(iii) performing sub-accounting; (iv) establishing and maintaining shareholder
or policyholder accounts and records; (v) processing purchase and redemption
transactions; (vi) providing periodic statements showing a client's account
balance and integrating such statements with those of other transactions and
balances in the client's other accounts serviced by such firm; (vii) arranging
for bank wires; and (viii) such other services as the Fund may request, to the
extent such are permitted by applicable statute, rule or regulation.
The terms and provisions of the Plan are as follows:
(a) The Manager shall report to the Board of Trustees of the
Trust at least quarterly on payments for any of the activities in the second
subparagraph of this section number 15, and shall furnish the Board of Trustees
of the Trust with such other information as the Board may reasonably request in
connection with such payments in order to enable the Board to make an informed
determination of whether the Plan should be continued.
(b) The Plan shall continue in effect for a period of more
than one year from the date of this Agreement only so long as such continuance
is specifically approved at least annually (from the date of this Agreement) by
the Trust's Board of Trustees, including the non-interested Trustees, cast in
person at a meeting called for the purpose of voting on the Plan.
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(c) The Plan may be terminated with respect to the Fund at
any time by vote of a majority of non-interested Trustees or by vote of a
majority of the Fund's outstanding voting securities on not more than sixty (60)
days written notice to any other party to the Plan, and the Plan shall terminate
automatically with respect to the Fund in the event of any act that constitutes
an assignment of this Management Agreement.
(d) The Plan may not be amended to increase materially the
amount deemed to be spent for distribution without approval by a majority of the
Fund's outstanding shares (as defined by the 0000 Xxx) and all material
amendments to the Plan shall be approved by the non-interested Trustees cast in
person at a meeting called for the purpose of voting on such amendment.
(e) So long as the Plan is in effect, the selection and
nomination of the Trust's non-interested Trustees shall be committed to the
discretion of such non-interested Trustees.
(f) Any termination of the Plan shall not terminate this
Management Agreement or affect the validity of any of the provisions of this
Agreement other than this section 15.
16. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
17. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule, or otherwise, the remainder of this
Agreement shall not be affected thereby.
18. The term "majority of the outstanding voting securities"
of the Fund shall have the meaning as set forth in the 1940 Act.
19. In consideration of the execution of this Agreement, the Manager
hereby grants to the Fund and to the Trust the right to use the name "Franklin"
as part of their names. The Trust agrees that in the event this Agreement is
terminated, the Fund shall immediately take such steps as are necessary to
remove the reference to "Franklin" from its name.
20. The Manager acknowledges that it has received notice of and
accepts the limitations of liability set forth in the Declaration of Trust of
the Trust, and it agrees that the Fund's obligations hereunder shall be limited
to the Fund and the assets of the Fund, and no party shall seek satisfaction of
any such obligation from any shareholder, Trustee, officer, employee or agent of
the Trust.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and effective on the 1st day of April, 1999.
FRANKLIN VALUEMARK FUNDS on behalf
RISING DIVIDENDS FUND
By: /s/ Xxxxxxx X. Xxxxxx
Vice President & Secretary
FRANKLIN ADVISORY SERVICES, LLC
By/s/ Xxxxxx X. Xxxxxxx
Secretary
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