EXHIBIT 99-B.8.65
Aetna Life Insurance and Annuity Company
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Re: MASTER SHAREHOLDER SERVICES AGREEMENT FOR THE
FRANKLIN XXXXXXXXX FUNDS
------------------------
We understand that you currently issue group annuity contracts under which
you provide, among other things, recordkeeping and administrative services to
certain qualified defined contribution employee benefit plans ("Benefit Plans"),
and that under such group annuity contracts you establish and maintain Benefit
Plan participant investment accounts and provide other administrative and
personal services to Benefit Plans and their participants.
As principal underwriter and transfer agent, respectively, for the open-end
investment companies listed in Exhibit A, (collectively the "Funds" or
individually a "Fund") we desire to enter into an Agreement with you to allow
for the purchase of the Funds by your separate accounts to enable those Funds to
be used as investment options under the group annuity contracts, and to provide
for the servicing of certain annuity contract owners or participants who direct
investments into the Funds ("shareholders"). The terms and conditions of the
Agreement shall be as follows:
1.A. You shall provide shareholder and administrative services for certain
beneficial shareholders of the Funds who are participants in the Benefit Plans.
Such services shall include, without limitation, some or all of the following:
answering inquiries regarding the Funds; assistance in changing account
designations and addresses; performance of subaccounting; establishment and
maintenance of shareholder accounts and records; assistance in processing
purchase and redemption transactions; providing periodic statements showing a
shareholder's account balance and the integration of such statements with those
of other transactions and balances in the shareholder's other accounts serviced
by you, if any; and such other information and services as we reasonably may
request, to the extent you are permitted by applicable statute, rule or
regulation to provide such information or services.
B. Applicable provisions relating to agency services are set forth in
Exhibit B.
2. We shall recognize, and we shall instruct the Funds to recognize, each
separate account as a single shareholder and not to maintain separate accounts
for Benefit Plan participants. You may at your option elect to maintain an
omnibus account for more than one separate account, and we would then recognize
the account holder as a single shareholder. Neither we, nor the Funds, nor any
affiliate thereof (hereinafter "Franklin or Templeton entity"), shall have any
responsibility with respect to administrative services, including tax reporting,
for participants in each Benefit Plan.
3. You represent that you have notified the appropriate Benefit Plan
sponsors of the arrangements provided for in this Agreement and that the
appropriate sponsors have agreed to such arrangements.
4.A. You represent and warrant that your performance and receipt of
compensation or other benefits under this Agreement will not violate any
applicable law, rule or regulation, including federal and state securities laws.
B. You also represent that you are registered as a broker and as a
transfer agent under the Securities Exchange Act of 1934 or are not required to
be so registered.
5. Neither you nor any of your employees or agents are authorized to make
any representations concerning the shares of the Funds, without our prior
written consent, except those contained, and which have not been materially
altered from the form in which they appear, in the then current prospectuses and
statements of additional information, and in current printed sales literature of
the Funds, copies of which will be supplied to you by us upon request. You shall
have no authority to act as agent for the Funds or for us except where necessary
to perform specific services under this Agreement and as further described on
Exhibit B. Any materials which contain the names "Franklin/Xxxxxxxxx,"
"Xxxxxxxx," "Xxxxxxxxx," or "Mutual Series" (except when these names simply
appear in a list of funds) will be subject to review and approval by us, prior
to their use with the participants and / or Benefit Plans.
6. You agree to hold harmless and indemnify us, the Funds and any other
Franklin or Templeton entity, including any employees, officers, directors or
trustees, against any claims or actions resulting from your violation of any
law, rule, or regulation, or breach of any provisions of this Agreement, or any
misstatements or omissions to state a material fact by you, or your employees or
agents, which claims or actions result in liability to any of the aforementioned
parties, such indemnification to include the payment of any reasonable legal
fees incurred in connection with investigating or defending such claims or
actions; and, in addition, in the event we determine to refund any amounts paid
by any investor by reason of any such claims or actions on your part, you shall
return to us any fees previously paid by us to you under this Agreement with
respect to such refunded amounts.
We agree to hold harmless and indemnify you, including any employees,
officers, directors, or trustees against any claims or actions resulting from
our violation of any law, rule, or regulation, or material violation of any
provisions of this Agreement or arise out of or are based upon any untrue
statement of any material fact contained in the registration statement,
prospectus or sales literature of the Funds or arise out of, or are based upon,
the omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make THE statements therein not misleading.
7.A. In consideration of the services described herein to be provided by
you which consist primarily of providing shareholder/personal services in
maintaining the accounts of Benefit Plans and Benefit Plan participants who
invest in shares of the Funds, you shall be entitled to receive from
Franklin/Xxxxxxxxx Distributors, Inc. ("Distributors") such fees as are set
forth in Exhibit A hereto. Such services may include distributing Fund
prospectuses, annual reports and other Fund related information or
communications to Benefit Plans and participants investing in the Funds, and
answering participant and Benefit Plan sponsor inquiries regarding the Funds.
These fees are paid in accordance with the Funds' Rule 12b-1 plans and may
change at any time, in Distributors' discretion or in the discretion of the
Funds' boards. In addition, if a securities dealer which has a dealer/ selling
agreement with Distributors, is requested by a particular Benefit
2
Plan to perform these and similar shareholder/personal services, or
provides distribution services for the Benefit Plan, such dealer would generally
be entitled to Rule 12b-1 plan fees. In those circumstances, Distributors would
not continue to pay you for such services. Distributors shall provide you with
reasonable advance notice of any change in fees payable to you. You agree to
waive payment of any shareholder/personal service fees payable to you hereunder,
until such time as Distributors is in receipt of such fees from the Funds.
Shareholder/personal service fees shall be payable on a quarterly basis,
accompanied by a statement showing the calculation of the amounts payable to
you, along with other supporting data reasonably requested by us.
B. In consideration of the services to be provided by you which consist
primarily of recordkeeping and subaccounting services for Benefit Plans and
participants investing in Class A shares of the Funds through the Benefit Plans,
similar to those which would be provided by Franklin /Xxxxxxxxx Investor
Services, Inc., ("Transfer Agent") the Funds' transfer agent, if each
participant invested directly in such Funds, you shall be entitled to receive
from Transfer Agent the subaccounting/recordkeeping fees according to the
schedule set forth in Exhibit A. Recordkeeping and subaccounting services
include establishing and maintaining participant account balances invested in
the Funds through Benefit Plans, processing and accounting for participant
exchanges among fund options, and processing redemptions in accordance with
Benefit Plan requirements. Such fees may be changed in Transfer Agent's
discretion or in the discretion of the Funds' boards of directors or trustees.
These fees shall be payable quarterly based on the average participant account
balance and the number of participant accounts invested in the Funds. The number
of accounts and the average account balance shall be certified each year in a
manner mutually agreeable to the parties, as of a quarterly period selected by
Transfer Agent, such certification to be at your expense. In order to receive
payment, you must present to Transfer Agent within 30 days of the end of a
quarter an invoice for that quarter accompanied by information providing
Transfer Agent an adequate basis for computation of the fees.
C. For the payment period in which this Agreement terminates, there shall
be an appropriate proration of the fees noted above, on the basis of the number
of days that the Agreement is in effect during the quarter.
8. Except as otherwise agreed in writing, you shall bear all expenses
incidental to the performance of the services described herein. We shall,
however, provide you with such copies of relevant prospectuses for all
participants making an initial Fund purchase as well as relevant prospectuses,
proxy material, periodic reports to shareholders, and other material as shall be
reasonably requested by you to disseminate to Benefit Plan participants who
purchase shares of the Funds.
9. We reserve the right, in our discretion and without notice, to refuse
an order for the purchase of shares or suspend the sale of shares or withdraw
the sale of shares of any or all of the Funds if such purchase or sale would
violate any applicable federal or state law or for other reasons we deem
appropriate. We will, however, use our best efforts to provide you with
reasonable advance notice of any such suspension or withdrawal.
10. This Agreement shall become effective as of the date dated by you
below. Subject to all applicable termination provisions, this Agreement shall
run for an initial period of one year from the date of its execution, and shall
be automatically renewed on the anniversary date of its execution for successive
one-year periods.
3
11. This Agreement shall terminate automatically (i) as to a Fund, the
provisions of paragraph 7A shall terminate in the event that the Fund terminates
its 12b-1 plan; or (ii) as to a Benefit Plan, in the event that your services to
the Benefit Plan terminate or the Benefit Plan ceases to be a shareholder of the
Funds.
12. This Agreement may be terminated, as to a Fund, (i) at any time
(without the payment of any penalty) upon instruction by a majority of the
"non-interested trustees" or "non-interested directors," as relevant, as defined
in the 12b-1 plan related to the Fund, or pursuant to a vote of a majority of
the outstanding voting securities, as defined in the 12b-1 plan of the Fund or,
(ii) upon no less than 60 days advance written notice to you at your principal
place of business by either Distributors or Transfer Agent, in their discretion.
You may terminate this Agreement upon no less than 60 days advance written
notice addressed to either Distributors or Transfer Agent at their principal
place of business. Either party may also terminate this Agreement for cause on
material violation by the other party of any provision of this Agreement.
Failure to terminate for any cause shall not constitute a waiver of any right to
terminate at a later date for any such cause.
13. In the event this Agreement is terminated, you will not continue to
use the Franklin/Xxxxxxxxx name or any other words which may be reasonably
construed to imply a continuing relationship with us or with the Funds.
14. This Agreement and any amendments hereto shall not be amended, except
by written instrument executed by all parties. This Agreement may not be
assigned by one party without the consent of the other party. This Agreement
contains the entire agreement between the parties with respect to the subject
matter and supersedes all prior agreements or understandings between the
parties.
15. We acknowledge and agree that you may enter into agreements similar to
this Agreement with organizations other than us which also serve as principal
underwriters for, or distributors of, or transfer agents for, mutual funds. You
acknowledge and agree that, nothing contained herein shall prohibit us, the
Funds or any Franklin or Templeton entity from entering into agreements similar
to this Agreement with organizations other than you or from soliciting any
employee benefit plan or sponsor thereof to enter into an arrangement with us,
the Funds or any other Franklin or Templeton entity for services similar to
those to be provided under this Agreement.
16. You agree that we may disclose to third parties that we have entered
into this arrangement with you, and we agree that you may disclose to third
parties that you have entered into this arrangement with us. You and we agree to
keep confidential all proprietary data, software, processes, information, and
documentation related to this Agreement, except as may be necessary or useful to
perform obligations under this Agreement or otherwise as may be agreed to, from
time to time, by the parties.
4
17. Communications with respect to this Agreement shall be sent as
follows:
If to you, to: Aetna Life Insurance and Annuity Company
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxxx, Esquire
If to us, to: Franklin/Xxxxxxxxx Distributors, Inc.
000 Xxxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Chairman of the
Board
and: Franklin/Xxxxxxxxx Investor Services, Inc.
000 Xxxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxx, Xx., President
with a copy to: Franklin Institutional Services Corporation
0000 Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Xx., Senior Vice
President
18. This Agreement and all the rights and obligations of the parties shall
be governed by and construed under the laws of the State of California without
giving effect to the principles of conflicts of laws and the provisions shall be
continuous. In the event that any provision of this Agreement, or the
application of any such provision to any person or set of circumstances, shall
be determined to be invalid, unlawful, void or unenforceable to any extent, the
remainder of this Agreement, and the application of such provision to persons or
circumstances other than those as to which it is determined to be invalid,
unlawful, void or unenforceable, shall not be impaired or otherwise affected and
shall continue to be valid and enforceable to the fullest extent permitted by
law.
19. Any controversy arising out of, or relating to, this Agreement or the
breach thereof, shall be settled by arbitration in San Mateo, California, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. Unless otherwise agreed, any arbitration hereunder shall be heard
by a three-member board of arbitration, with each party hereto selecting an
independent arbitrator within thirty (30) days following a notice to arbitrate
under this Agreement. If a party fails to select an arbitrator within such time
period, the other party may select such arbitrator. The two arbitrators selected
above shall select within thirty (30) days after their appointment a third
arbitrator. A decision of a majority of arbitrators shall be final and binding
upon the parties participating in the arbitration.
5
FRANKLIN/XXXXXXXXX DISTRIBUTORS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------------
Xxxxxxx X. Xxxxxxx, Chairman of the Board
FRANKLIN/XXXXXXXXX INVESTOR SERVICES, INC.
By: /s/ Xxxxx X. Xxx, Xx.
---------------------------------------------
Xxxxx X. Xxx, Xx., President
Accepted and agreed to:
AETNA IFE INSURANCE AND ANNUITY COMPANY
By: /s/ Xxxxxx X. XxXxxxx
----------------------------
Name: Xxxxxx X. XxXxxxx
----------------------------
Title: Vice President
----------------------------
Date: 8/28/00
----------------------------
6
EXHIBIT A
FRANKLIN/XXXXXXXXX FUNDS
PARTICIPATING IN SHAREHOLDER SERVICING ARRANGEMENTS
WITH AETNA LIFE INSURANCE AND ANNUITY COMPANY
AND FEE SCHEDULE
Shareholder/personal service fees are computed upon the below referenced
basis points per annum of the average daily net asset value of the shares
invested through your arrangements with Benefit Plans in each calendar quarter.
The average daily net assets invested through such arrangements over a
three-month period shall be computed in the same manner as each Fund uses to
compute its net assets as set forth in its then current Prospectus.
Certain Funds' 12b-1 plans provide for reduced fees with respect to assets
invested in such Funds prior to the adoption of 12b-1 plans. Fees payable to you
shall be computed at such lower rate with respect to assets attributable to
Benefit Plans invested in each such Funds prior to the adoption of its 12b-1
plan.
For your reference, we have also provided a listing of Funds by investment
strategy pursued.
I. 10 BASIS POINTS PER ANNUM
Xxxxxxxx Xxxxx-Intermediate U.S. Government Securities Fund
II. 15 BASIS POINTS PER ANNUM
Franklin Custodian Funds-Income Series
Franklin Custodian Funds-U.S. Government Securities Series
III. 25 BASIS POINTS PER ANNUM
Franklin Balance Sheet Fund
Xxxxxxxx Xxxx Reserves Money Market Fund
Franklin Equity Income Fund
Franklin Investment Grade Income Fund
Franklin Small Cap Growth Fund
Franklin/Xxxxxxxxx Conservative Target Fund
Franklin/Xxxxxxxxx Growth Target Fund
Franklin/Xxxxxxxxx Moderate Target Fund
Mutual Beacon Fund
Mutual Discovery Fund
Mutual European Fund
Mutual Qualified Fund
Mutual Shares Fund
A-1
Xxxxxxxxx Developing Markets Trust
Xxxxxxxxx Foreign Fund
Xxxxxxxxx Growth Fund, Inc.
Xxxxxxxxx Global Bond Fund
Xxxxxxxxx Global Smaller Companies Fund
GROUPING OF FUNDS BY TYPE OF INVESTMENT STRATEGY PURSUED
I. FUNDS FOR CAPITAL PRESERVATION
Xxxxxxxx Xxxx Reserves Money Market Fund
II. FUNDS FOR CURRENT INCOME
Franklin Investment Grade Income Fund
Xxxxxxxx Xxxxx-Intermediate U. S. Government Securities Fund
Franklin Custodian Funds-U.S. Government Securities Series
Xxxxxxxxx Global Bond Fund
III. FUNDS FOR CURRENT INCOME AND CAPITAL GROWTH
Franklin Balance Sheet Fund
Franklin Custodian Funds-Income Series
Franklin Equity Income Fund
Franklin/Xxxxxxxxx Conservative Target Fund
Franklin/Xxxxxxxxx Growth Target Fund
Franklin/Xxxxxxxxx Moderate Target Fund
IV. FUNDS FOR CAPITAL GROWTH
Franklin Small Cap Growth Fund
V. FUNDS FOR GLOBAL CAPITAL GROWTH
Mutual Discovery Fund
Mutual European Fund
VI. FUNDS FOR GLOBAL CAPITAL GROWTH AND INCOME
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Shares Fund
Xxxxxxxxx Growth Fund, Inc.
A-2
VII. FUNDS FOR INTERNATIONAL (NON-U.S.) GROWTH
Xxxxxxxxx Developing Markets Trust
Xxxxxxxxx Foreign Fund
Xxxxxxxxx Global Smaller Companies Fund
A-3
SUBACCOUNTING/RECORDKEEPING FEES
Subaccounting/recordkeeping fees are computed according to the following
schedule and are subject to change at any time.
AVERAGE ACCOUNT BALANCE PAYOUT PER ACCOUNT
----------------------- ------------------
$0 - $999 $ __
$1,000 - $2,499 $ __
$2,500 - $4,999 $ __
$5,000 - $9,999 $ __
$10,000 + $ __
The above fees, which are payable per participant account per year, vary
depending on the average account size for participant accounts. They are also
payable quarterly upon presentment of participant fund account data providing us
with an-.adequate basis for the computation of the fee.
A-4
EXHIBIT B
PROVISIONS RELATING TO AGENCY SERVICES
A. You, or your agent or designee, agree, in connection with establishing
an account or accounts for the separate accounts which fund the group annuity
contracts, to complete a Franklin/Xxxxxxxxx Institutional Services Application
and an Institutional Telephone Privileges Agreement for each Account
registration.
B. We agree to furnish or cause to be furnished to you, for each Fund (1)
confirmed net asset value information as of the close of trading (currently 4:00
P.M. East Coast time, 1:00 P.M. Pacific Coast time) on the New York Stock
Exchange (the "Close of Trading") on each business day that the New York Stock
Exchange is open for business (each a "Business Day") or at such other time as
the net asset value of a Fund is calculated, as disclosed in the relevant then
current prospectus(es), in a format which includes the Fund's name and the
change from the last calculated net asset value, (2) dividend and capital gains
information as it arises, and (3) in the case of fixed income funds, the daily
accrual or the distribution rate factor. We shall use our best efforts to
provide or cause to be provided to you such information by 6:30 p.m. East Coast
time, 3:30 p.m. Pacific Coast time.
C. You, as agent for the Franklin Xxxxxxxxx Funds shall: (1) receive from
the Benefit Plans for acceptance as of the Close of Trading on each Business Day
(based upon the Benefit Plans' receipt of instructions from Benefit Plan
participants prior to the Close of Trading on such Business Days): (a) orders
for the purchase of shares of the Funds, (b) exchange orders, and (c) redemption
requests and redemption directions with respect to shares of the Funds held by
the Benefit Plans ("Instructions"); (2) transmit to us such net purchase and/or
net redemption Instructions no later than 9:00 a.m. East Coast time, 6:00 a.m.
Pacific Coast time on the next following Business Day; and (3) upon acceptance
of any such Instructions, communicate such acceptance to the applicable Benefit
Plans (a "Confirmation"). The Business Day on which such Instructions are
received in proper form by you and time stamped by the Close of Trading will be
the date as of which Fund shares shall be deemed purchased, exchanged, or
redeemed as a result of such Instructions. Instructions received in proper form
by you and time stamped after the Close of Trading on any given Business Day
shall be treated as if received on the next following Business Day. You warrant
that all orders, Instructions and Confirmations received by you which will be
transmitted to us for processing as of a particular Business Day will have been
received and time stamped prior to the Close of Trading on that previous
Business Day. Instructions received later than the cut off times established in
this paragraph C shall be processed as of the next Business Day following the
Business Day originally intended.
D. You will wire payment, or arrange for payment to be wired by your
designated bank, for such purchase orders, in immediately available funds, to a
Fund custodial account or accounts designated by us. Such wires must be received
no later than the close of the Federal Reserve Bank, which is 6:00 p.m. East
Coast time, on the Business Day following the Business Day as of which such
purchase orders are made in conformance with Paragraph C.
B-1
E. Generally, when net redemptions of shares of the Funds are the result
of participant-initiated exchanges among investment alternatives offered to a
Benefit Plan or distributions to participants leaving the employ of a sponsor of
a Benefit Plan, we will wire payment, or arrange for payment to be wired, for
redemption orders, in immediately available funds, to an account or accounts
designated by you, as indicated on the original application for Benefit Plans
investing in the Funds or as amended in writing, as soon as possible but in any
event no later than 4:00 p.m. East Coast time, on the Business Day on which such
redemption orders are communicated to us in conformance with Paragraph C. In the
event that a redemption request exceeds 1 million dollars, we reserve the right
to delay settlement in accordance with standard securities transactions
settlement guidelines of the Securities and Exchange Commission as then in
effect. However, to the extent that you provide us with advance notice of a
redemption request exceeding 1 million dollars, we will waive our right to delay
settlement.
F. Upon our request, you shall provide copies of historical records
relating to transactions between the Funds and the participants investing in
such Funds, written communications regarding the Funds to or from such
shareholders and other materials, in each case as may reasonably be requested to
enable us or any other designated entity, including, without limitation,
auditors, investment advisers or transfer agents for the Funds to monitor and
review the services being provided under this Agreement, or to comply with any
request of a governmental body or self-regulatory organization or a shareholder.
You also agree that you will permit us or the Funds or any other Franklin or
Templeton entity, or any duly designated representative to have reasonable
access to your personnel and records in order to facilitate the monitoring of
the quality of the services being provided under this Agreement.
G. You shall assume responsibility for any loss to us or to a Fund caused
by a cancellation or correction made subsequent to the date as of which an order
or Instruction has been placed, and you will immediately pay such loss to us or
such Fund upon notification. You agree to indemnify and hold us harmless with
respect to any such losses including losses resulting from Instructions
involving investments in incorrect Funds. We shall indemnify and hold you
harmless from the effective date of this Agreement against any amount you are
required to pay to Benefit Plans participants due to (1) the Fund's incorrect
calculation of the daily net asset value, dividend rate, or capital gains
distribution rate; or, (2) incorrect reporting of the daily net asset value,
dividend rate, or capital gain distribution rate. You will submit an invoice to
us for any such amounts paid by you as a result of the foregoing, which shall be
payable by us within sixty (60) days of receipt. Any gain or overpayment to you,
the Benefit Plans or Benefit Plan participants attributable to the incorrect
calculation or reporting of the daily net asset value, to the extent such gains
or overpayments are able to be returned to the Fund by adjusting the number of
Fund shares held in Benefit Plan participant accounts, shall be returned to the
Fund promptly upon notification of such incorrect calculation or reporting. In
the event that a Benefit Plan participant has redeemed all his or her shares
from a mispriced Fund, you agree to make a reasonable effort to recover any
material overpayments from the Benefit Plan participants; however, when recovery
of an overpayment from such participant will cause you to incur significant
administrative expenses, such as personnel and mailing expenses, you will not be
required to pursue such overpayment unless we agree to reimburse you for such
related administrative expenses, which shall be quantified in advance and shall
not exceed $_______ per Benefit Plan participant.
B-2
H. Each party shall notify the other of any errors or omissions in any
information including the net asset value and distribution information set forth
above, and interruptions in or delay or unavailability of, the means of
transmittal of any such information as promptly as possible. You agree to
maintain reasonable Errors and Omissions insurance coverage commensurate with
your responsibilities under this Agreement.
B-3
