Exhibit h(iii)
FUND ADMINISTRATION
AGREEMENT dated as of January 1, 2001, between FRANKLIN XXXXXXXXX
VARIABLE INSURANCE PRODUCTS TRUST, a Massachusetts business trust (the "Trust"),
on behalf of MUTUAL SHARES SECURITIES FUND and MUTUAL DISCOVERY SECURITIES FUND
(each, the "Fund"), 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
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);
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(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 the Administrator 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 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 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 Administrator 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 Administrator 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).
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(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.
FRANKLIN XXXXXXXXX VARIABLE
INSURANCE PRODUCTS TRUST on behalf of
MUTUAL SHARES SECURITIES FUND and
MUTUAL DISCOVERY SECURITIES FUND
By /s/Xxxxx X. Xxxx
Vice President &
Assistant Secretary
FRANKLIN XXXXXXXXX SERVICES, LLC
By /s/ Xxxxxx X. Xxxxxxx
Senior Vice President
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