Effective Date: February ___, 2002
American International Life Assurance Company of New York
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
AIG Life Insurance Company
One Xxxxx Plaza
000 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xx. Xxxxx Xxx
Re: Master Shareholder Services Agreement
for the Franklin Xxxxxxxxx Funds
We understand that you currently provide recordkeeping and administrative
services to certain Contract Owners ("Contract Owners").
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 for the
servicing of certain shareholders of, and the administration of certain
shareholder accounts in, the Funds. Such shareholders and accounts are those
which have been established on behalf of the Contract Owners which meet the
criteria stated in each Fund's prospectus to purchase Class A and/or Class R
shares of the Funds. These criteria, which also describe the conditions under
which Class A and/or Class R shares may be purchased, are set forth in each
Fund's prospectus and statement of additional information, which may be amended
from time to time. The terms and conditions of the Agreement shall be as
follows:
Such shareholders and accounts are those which have been established on behalf
of the Contract Owners which meet the criteria stated in each Fund's prospectus
to purchase shares of the Funds at net asset value. These criteria are set forth
in the Funds' prospectuses, which may be amended from time to time.
1.A. You shall provide shareholder and administrative services for certain
beneficial shareholders of the Funds. 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
sub-accounting; 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.
2. You agree to open and maintain an omnibus account for use by all
Contract Owners investing in a particular Fund. We shall instruct each Fund to
recognize such omnibus account as a single shareholder and not to maintain
separate accounts for each Contract Owner. Neither we, nor the Funds, nor any
affiliate thereof (hereinafter "Franklin or Xxxxxxxxx Entity"), shall have any
responsibility with respect to administrative services, including tax reporting,
for participants in each Contract Owner.
3. You represent that you have notified the appropriate Contract Owners of
the arrangements provided for in this Agreement.
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
and the Employee Retirement Income Security Act of 1974.
B. You also represent that you are registered as a broker and as a
transfer agent under the Securities Exchange Act of 1934, as amended, 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 in, and not taken out of context from,
in the then current prospectuses and statements of additional information, and
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 "Xxxxxxxx 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 Contract Owners.
6. A. You agree to hold harmless and indemnify the Funds, Xxxxxxxx
Xxxxxxxxx Distributors, Inc. ("Distributors"), Xxxxxxxx Xxxxxxxxx Investor
Services, LLC ("Transfer Agent"), and each of their respective employees,
officers, directors, trustees and agents from and against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating or
defending any alleged loss, liability, claim, damage or expense and reasonable
counsel fees incurred in connection therewith) (collectively, "Losses"), arising
from: (i) your violation of any law, rule or regulation; (ii) your breach of any
of the provisions of this Agreement; (iii) any misstatement or omission to state
a material fact relating to the Funds by you, your affiliates, employees or
agents; and (iv) your cancellation of or correction to, or error in the placing
of, an order or instruction for the purchase or redemption of Fund shares.
You agree that any gain to you attributable to the materially incorrect
calculation or reporting of the daily net asset value shall be promptly returned
to the Fund. You further agree to make a reasonable effort to recover from the
Contract Owners any material Losses incurred by us or the Funds as a result of
the forgoing.
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B. Distributors and Transfer Agent agree to hold harmless and indemnify
you and your employees, officers, directors, trustees and agents from and
against any Losses arising from: (i) our violation of any law, rule or
regulation; (ii) our breach of any of the provisions of this Agreement (iii) any
misstatement or omission to state a material fact relating to the Funds by us,
our affiliates, employees or agents; and (iv) our materially incorrect
calculation of the daily net asset value, dividend rate or capital gain
distribution rate for a Fund.
C. Notwithstanding the above, no party shall be responsible for any
consequential or special Losses.
D. Notwithstanding any other provisions of this Agreement to the contrary,
the parties hereto shall not be responsible for delays or errors caused by acts
of God or by circumstances beyond their control, including without limitation,
acts of governmental or military authority, national emergencies, labor unrest,
mechanical breakdown, insurrection, war, riots, failure or unavailability of
transportation, communication or power supply, fire, flood, earthquake or other
catastrophe, extreme market volatility or trading volumes.
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 Contract Owners who invest in Class A or Class R
shares of the Funds, you shall be entitled to receive from Distributors such
fees as are set forth in each Fund's prospectus. Such services may include
distributing Fund prospectuses, annual reports and other Fund related
information or communications to Contract Owners investing in the Funds, and
answering 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 Contract Owner to perform these and similar
shareholder/personal services, or provides distribution services for the
Contract Owner, 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.
B. In consideration of the services to be provided by you which consist
primarily of recordkeeping and subaccounting services for Contract Owners
investing in Class A or Class R shares of the Funds through the Contracts,
similar to those which would be provided by Transfer Agent, the Funds' transfer
agent, if each participant invested directly in such Funds, you shall be
entitled to receive from Transfer Agent a subaccounting/recordkeeping fee of 15
basis points per annum of the average daily net asset value of the shares
invested through your Contract Owners in each 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. Recordkeeping and subaccounting services
include establishing and maintaining participant account balances invested in
the Funds, processing and accounting for exchanges among fund options, and
processing redemptions in accordance with
3
requirements. Such fees may be changed in Transfer Agent's discretion or in the
discretion of the Funds' boards of directors or trustees.
Subaccounting/recordkeeping fees shall be payable on a quarterly basis. At
the end of each quarter you shall provide Transfer Agent with a statement
("Statement"), setting forth the total number of Contracts invested in each Fund
as of the end of the quarter, along with any other supporting data reasonably
requested by Transfer Agent. For any new account(s) established within any given
quarter, the account number(s) must be submitted to Transfer Agent no later than
five (5) business days prior to the end of the quarter in which the account was
established. Payment of subaccounting/recordkeeping fees for a quarter shall be
subject to our receipt of a Statement for the prior quarter(s). Upon our
request, which may occur no more frequently than annually, you shall have an
officer or auditor certify that the Statements provided to us for the prior four
quarters are accurate and correct.
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 Contract Owners.
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.
10. Upon our request, you shall provide copies of historical records
relating to transactions between the Funds and the Contract Owners investing in
such Funds, written communications regarding the Funds to or from such Contract
Owners 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
Xxxxxxxxx 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.
11. You may delegate your obligation to provide recordkeeping and
administrative services under this Agreement to another entity, provided that
such entity has all appropriate and necessary licenses, registrations and
authorizations to perform the services delegated. Notwithstanding any such
delegation, you shall remain responsible for the performance of such services.
12.A. This Agreement shall become effective as of the date indicated on
page one.
B. This Agreement shall terminate automatically (i) in the event of its
"assignment," as defined in Section 2(a)(4) of the Investment Company Act of
1940, as amended; or (ii) as to a Fund, the provisions of paragraph 7A shall
terminate in the event that the Fund terminates its 12b-1 plan;
4
C. 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 seven (7) days advance written notice to you by either
Distributors or Transfer Agent, in their discretion. You may terminate this
Agreement upon no less than seven (7) days advance written notice to either
Distributors or Transfer Agent. 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. Termination as a
result of any cause listed in this paragraph shall not affect the Funds'
obligation to furnish shares of the Funds to Contracts then in force for which
shares of the Funds serve or may serve as the underlying investment medium
unless such further sale of Fund shares is prohibited by law or the SEC or other
regulatory body.
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 contains the
entire agreement between the parties and supersedes all prior agreements or
understandings between the parties relating to the same subject matter.
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 Xxxxxxxxx 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 Xxxxxxxxx Entity for services similar to
those to be provided under this Agreement.
16. 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 required by law or agreed to by the parties.
17. Communications with respect to this Agreement shall be sent as
follows:
If to you, to: American International Group, Inc.
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxx, Management Associate
Pension Investments
5
If to us, to: Franklin Xxxxxxxxx Distributors, Inc.
Xxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, XX 00000-1906
Attention: Xxxxxxx X. Xxxxxxx, Chairman of the Board
and: Franklin Xxxxxxxxx Investor Services, LLC
0000 Xxxxxxx Xxxxx
Xxxxxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxx, Xx., President
with a copy to: Xxxxxxxx Xxxxxxxxx Investments
Xxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, XX 00000-1906
Attention: Xxxxxx X. Xxxxxxx, 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.
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FRANKLIN XXXXXXXXX DISTRIBUTORS, INC.
By: __________________________________________
Xxxxxxx X. Xxxxxxx, Chairman of the Board
XXXXXXXX XXXXXXXXX INVESTOR SERVICES, LLC
By: __________________________________________
Xxxxx X. Xxx, Xx., President
Accepted and agreed to:
AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK
By: _____________________________________________
Name: ___________________________________________
Title: __________________________________________
Date: ___________________________________________
AIG LIFE INSURANCE COMPANY
By: _____________________________________________
Name: ___________________________________________
Title: __________________________________________
Date: ___________________________________________
7
EXHIBIT A
Xxxxxxxx Xxxxxxxxx Funds
Participating in Shareholder Servicing Arrangements with
American International Life Assurance Company of New York and
AIG Life Insurance Company
and Fee Schedule
For your convenience, we have listed below the Funds that are subject to
this Agreement as of the effective date of this Agreement. The 12b-1 fees for
each Fund are stated in each Fund's prospectus. The list of Funds and fees paid
are subject to change. In the event of a conflict between the text of the
Agreement and this Exhibit, the text of the Agreement shall govern.
Franklin Adjustable U.S. Government Securities Fund
Xxxxxxxx'x Age High Income Fund (R)
Franklin Aggressive Growth Fund (R)
Franklin Balance Sheet Investment Fund (R)
Franklin Blue Chip Fund (R)
Franklin California Growth Fund (R)
Xxxxxxxx Xxxx Reserves Fund
Franklin Convertible Securities Fund
Franklin DynaTech Fund
Franklin Equity Income Fund
Franklin Global Communications Fund
Franklin Global Health Care Fund
Franklin Gold and Precious Metals Fund
Franklin Growth and Income Fund (R)
Franklin Growth Fund (R)
Franklin Income Fund (R)
Franklin Large Cap Growth Fund (R)
Franklin MicroCap Value Fund
Franklin Natural Resources Fund Franklin
Real Estate Securities Fund
Franklin Rising Dividends Fund (R)
Xxxxxxxx Xxxxx-Intermediate U.S. Government Securities Fund
Franklin Small Cap Growth Fund II (R)
Franklin Small Cap Value Fund*
---------------------
* Franklin Small Cap Value Fund was formerly known as Franklin Value Fund.
** Franklin Small-Mid Cap Growth Fund was formerly known as Franklin Small
Cap Growth Fund I.
*** Xxxxxxxxx International (Ex EM) Fund was formerly known as Xxxxxxxxx
International Fund.
(R) Indicates that both Class R and Class A shares are available.
A-1
Franklin Small-Mid Cap Growth Fund ** (R)
Franklin Strategic Income Fund (R)
Franklin Technology Fund (R)
Xxxxxxxx Xxxxxxxxx Conservative Target Fund (R)
Franklin Xxxxxxxxx Growth Target Fund (R)
Xxxxxxxx Xxxxxxxxx Hard Currency Fund
Franklin Xxxxxxxxx Moderate Target Fund (R)
Franklin U.S. Government Securities Fund (R)
Franklin U.S. Government Securities Money Market Portfolio
Franklin Utilities Fund (R)
Mutual Beacon Fund
Mutual Discovery Fund (R)
Mutual European Fund
Mutual Qualified Fund
Mutual Shares Fund (R)
Xxxxxxxxx Developing Markets Trust (R)
Xxxxxxxxx Foreign Fund (R)
Xxxxxxxxx Foreign Smaller Companies Fund
Xxxxxxxxx Global Bond Fund
Xxxxxxxxx Global Opportunities Trust
Xxxxxxxxx Global Smaller Companies Fund, Inc.
Xxxxxxxxx Growth Fund, Inc. (R)
Xxxxxxxxx International (Ex EM) Fund ***
Templeton Latin America Fund
Xxxxxxxxx Pacific Growth Fund
Xxxxxxxxx World Fund
---------------------
* Franklin Small Cap Value Fund was formerly known as Franklin Value Fund.
** Franklin Small-Mid Cap Growth Fund was formerly known as Franklin Small
Cap Growth Fund I.
*** Xxxxxxxxx International (Ex EM) Fund was formerly known as Xxxxxxxxx
International Fund.
(R) Indicates that both Class R and Class A shares are available.
A-2
EXHIBIT B
Provisions Relating to Agency Services
A. You, or your agent or designee, agree, in connection with establishing
an account or accounts, to complete a Franklin Xxxxxxxxx Institutional Services
Application 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 Xxxxxxxx Xxxxxxxxx Funds shall: (1) receive
from the Accounts for acceptance as of the Close of Trading on each Business Day
(based upon the Accounts' receipt of instructions from Contract Owners 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 Contract
Owners ("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 (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
on a Business Day will have been received and time stamped prior to the Close of
Trading on that Business Day. Instructions received after the 9 a.m. cut off
time set forth above shall be processed on the next Business Day.
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 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.
E. Generally, when net redemptions of shares of the Funds are the result
of Contract Owners exchanges among investment alternatives offered we will wire
payment, or arrange for
B-1
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 Contract Owners investing in the Funds or as amended in writing,
as soon as possible but in any event no later than 1:00 p.m. East Coast time,
10:00 a.m. Pacific Coast time on the Business Day as of which such redemption
orders are communicated to us, in conformance with Paragraph C. However, when
redemptions (and to the extent such redemptions) are the result of a decision to
eliminate a Fund as an investment choice or when redemption amounts exceed the
lesser of $1,000,000.00 or 50% of the amount invested by a Contract in a Fund,
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.
F. 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-2
