FUND ADMINISTRATION AGREEMENT BETWEEN
FRANKLIN VALUEMARK FUNDS
AND
FRANKLIN XXXXXXXXX SERVICES, INC.
AGREEMENT dated as of October 18,1996, between FRANKLIN
VALUEMARK FUNDS, a Massachusetts business trust (the "Trust"), on behalf of
MUTUAL DISCOVERY SECURITIES FUND and MUTUAL SHARES SECURITIES FUND (each, a
"Fund"), separate series of the Trust, and Franklin Xxxxxxxxx Services, Inc.
("FTS" or "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
provide the following services to each Fund:
(a) providing office space, telephone, office equipment and
supplies for the Fund;
(b) providing trading desk facilities for the Fund, unless these
facilities are provided by the Fund's investment adviser;
(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, other than those
handled by the Fund's shareholder servicing agent;
(e) coordinating the daily pricing of the Fund's investment
portfolio, including collecting quotations from pricing services
engaged by the Fund; providing fund accounting services,
including preparing and supervising publication of daily
quotations of the net asset value 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) supervising compliance by the Fund with recordkeeping
requirements under the federal securities laws, including 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);
(h) 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;
(i) monitoring the Fund's compliance with: 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;
(j) providing executive, clerical and secretarial personnel
needed to carry out the above responsibilities; and
(k) preparing regulatory reports, including without limitation
NSARs, proxy statements and U.S. and foreign ownership reports.
Nothing in this Agreement shall obligate the Trust or any Fund to pay any
compensation to the officers of the Trust. Nothing in this Agreement shall
obligate FTS to pay for the services of third parties, including attorneys,
auditors, printers, pricing services or others, engaged directly by the Fund to
perform services on behalf of the Fund.
(2) The Trust agrees, during the life of this Agreement, to pay to FTS
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 each 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%.
The Manager may waive all or a portion of its fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of its services.
The Manager shall be contractually bound hereunder by the terms of any publicly
announced waiver of its fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were full set forth herein.
(3) This Agreement shall remain in full force and effect through for
one year after its execution 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 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 FTS, or of reckless disregard of its duties and
obligations hereunder, FTS 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 VALUEMARK FUNDS FRANKLIN XXXXXXXXX SERVICES, INC.
By: /s/Xxxxxxx X. Xxxxxx By: /s/Xxxxxx X. Xxxxxxx
