EXHIBIT (h)(4)(b)
Amendment to Participation Agreement
As of May 3, 2004
by and among
Franklin Xxxxxxxxx Variable Insurance Products Trust
Franklin/Xxxxxxxxx Distributors, Inc.
American International Life Assurance Company of New York
Franklin Xxxxxxxxx Variable Insurance Products Trust (the "Trust"),
Franklin/Xxxxxxxxx Distributors, Inc. (the "Underwriter," and together with the
Trust, "we" or "us") and AIG Life Insurance Company ("you"), on your behalf and
on behalf of certain Accounts, have previously entered into a Participation
Agreement dated May 1, 2000 (the "Agreement"). The parties now desire to amend
the Agreement in this amendment (the "Amendment").
Except as modified hereby, all other terms and conditions of the
Agreement shall remain in full force and effect. Unless otherwise indicated, the
terms defined in the Agreement shall have the same meaning in this Amendment.
A M E N D M E N T
For good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree to amend the Agreement as follows:
1. Section 2.1.6 of the Agreement is hereby amended to add the following
sentence at the end of the section:
"Without limiting the foregoing, you agree that in recommending to a
Contract owner the purchase, sale or exchange of any subaccount units
under the Contracts, you shall have reasonable grounds for believing
that the recommendation is suitable for such Contract owner."
2. A new Section 2.1.12 is hereby added to the Agreement as follows:
"2.1.12 As covered financial institutions we, only with respect
to Portfolio shareholders, and you each undertake and agree to comply,
and to take full responsibility in complying with any and all applicable
laws, regulations, protocols and other requirements relating to money
laundering including, without limitation, the International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001 (Title III
of the USA PATRIOT Act)."
3. Section 3 of the Agreement is hereby deleted in its entirety and
replaced with the following Section 3:
"3. Purchase and Redemption of Trust Portfolio Shares
3.1 Availability of Trust Portfolio Shares
3.1.1 We will make shares of the Portfolios available to
the Accounts for the benefit of the Contracts. The shares will be
available for purchase at the net asset value per share next computed
after we (or our agent, or you as our designee) receive a purchase
order, as established in accordance with the provisions of the then
current prospectus of the Trust. All orders are subject to acceptance by
us and by the Portfolio or its transfer agent, and become effective only
upon confirmation by us. Notwithstanding the foregoing, the Trust's
Board of Trustees ("Trustees") may refuse to sell shares of any
Portfolio to any person, or may suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole discretion
of the Trustees, they deem such action to be in the best interests of
the shareholders of such Portfolio.
3.1.2 Without limiting the other provisions of this
Section 3.1, among other delegations by the Trustees, the Trustees have
determined that there is a significant risk that the Trust and its
shareholders may be adversely affected by investors with short term
trading activity and/or whose purchase and redemption activity follows a
market timing pattern as defined in the prospectus for the Trust, and
have authorized the Trust, the Underwriter and the Trust's transfer
agent to adopt procedures and take other action (including, without
limitation, rejecting specific purchase orders in whole or in part) as
they deem necessary to reduce, discourage, restrict or eliminate such
trading and/or market timing activity. You agree that your purchases and
redemptions of Portfolio shares are subject to, and that you will assist
us in implementing, the Market Timing Trading Policy and Additional
Policies (as described in the Trust's prospectus) and the Trust's
restrictions on excessive and/or short term trading activity and/or
purchase and redemption activity that follows a market timing pattern.
3.1.3 We agree that shares of the Trust will be sold
only to life insurance companies which have entered into fund
participation agreements with the Trust ("Participating Insurance
Companies") and their separate accounts or to qualified pension and
retirement plans in accordance with the terms of the Shared Funding
Order. No shares of any Portfolio will be sold to the general public.
3.2 Manual or Automated Portfolio Share Transactions
3.2.1 Section 3.3 of this Agreement shall govern and
Section 3.4 shall not be operative, unless we receive from you at the
address provided in the
next sentence, written notice that you wish to communicate, process and
settle purchase and redemptions for shares (collectively, "share
transactions") via the Fund/SERV and Networking systems of the National
Securities Clearing Corporation ("NSCC"). The address for you to send
such written notice shall be: Retirement Services, Franklin Xxxxxxxxx
Investments, 000 Xxxx Xxxxx, 0xx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx
00000-0000. After giving ten (10) days' advance written notice at the
address provided in the previous sentence of your desire to use NSCC
processing, Section 3.4 of this Agreement shall govern and Section 3.3
shall not be operative.
3.2.2 At any time when, pursuant to the preceding
paragraph, Section 3.4 of this Agreement governs, any party to this
Agreement may send written notice to the other parties that it chooses
to end the use of the NSCC Fund/SERV and Networking systems and return
to manual handling of share transactions. Such written notice shall be
sent: (i) if from you to us, to the address provided in the preceding
paragraph; (ii) if from us to you, to your address in Schedule G of this
Agreement. After giving ten (10) days' advance written notice at the
address as provided in the previous sentence, Section 3.3 of this
Agreement shall govern and Section 3.4 shall not be operative.
3.3 Manual Purchase and Redemption
3.3.1 You are hereby appointed as our designee for the
sole purpose of receiving from Contract owners purchase and exchange
orders and requests for redemption resulting from investment in and
payments under the Contracts that pertain to subaccounts that invest in
Portfolios ("Instructions"). "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading and on which the Trust
calculates its net asset value pursuant to the rules of the SEC and its
current prospectus. "Close of Trading" shall mean the close of trading
on the New York Stock Exchange, generally 4:00 p.m. Eastern Time. You
represent and warrant that all Instructions transmitted to us for
processing on or as of a given Business Day ("Day 1") shall have been
received in proper form and time stamped by you prior to the Close of
Trading on Day 1. Such Instructions shall receive the share price next
calculated following the Close of Trading on Day 1, provided that we
receive such Instructions from you before 9 a.m. Eastern Time on the
next Business Day ("Day 2"). You represent and warrant that Instructions
received in proper form and time stamped by you after the Close of
Trading on Day 1 shall be treated by you and transmitted to us as if
received on Day 2. Such Instructions shall receive the share price next
calculated following the Close of Trading on Day 2. You represent and
warrant that you have, maintain and periodically test, procedures and
systems in place reasonably designed to prevent Instructions received
after the Close of Trading on Day 1 from being executed with
Instructions received before the Close of Trading on Day 1. All
Instructions we receive from you after 9 a.m. Eastern Time on Day 2
shall be processed by us on the following Business Day and shall receive
the share price next calculated following the Close of Trading on Day 2.
3.3.2 We shall calculate the net asset value per share
of each Portfolio on each Business Day, and shall communicate these net
asset values to you or your designated agent on a daily basis as soon as
reasonably practical after the calculation is completed (normally by
6:30 p.m. Eastern Time).
3.3.3 You shall submit payment for the purchase of
shares of a Portfolio on behalf of an Account in federal funds
transmitted by wire to the Trust or to its designated custodian, which
must receive such wires no later than the close of the Reserve Bank,
which is 6:00 p.m. Eastern Time, on the Business Day following the
Business Day as of which such purchases orders are made.
3.3.4 We will redeem any full or fractional shares of
any Portfolio, when requested by you on behalf of an Account, at the net
asset value next computed after receipt by us (or our agent or you as
our designee) of the request for redemption, as established in
accordance with the provisions of the then current prospectus of the
Trust. We shall make payment for such shares in the manner we establish
from time to time, but in no event shall payment be delayed for a
greater period than is permitted by the 0000 Xxx.
3.3.5 Issuance and transfer of the Portfolio shares will
be by book entry only. Stock certificates will not be issued to you or
the Accounts. Portfolio shares purchased from the Trust will be recorded
in the appropriate title for each Account or the appropriate subaccount
of each Account.
3.3.6 We shall furnish, on or before the ex-dividend
date, notice to you of any income dividends or capital gain
distributions payable on the shares of any Portfolio. You hereby elect
to receive all such income dividends and capital gain distributions as
are payable on shares of a Portfolio in additional shares of that
Portfolio, and you reserve the right to change this election in the
future. We will notify you of the number of shares so issued as payment
of such dividends and distributions.
3.3.7 Each party to this Agreement agrees that, in the
event of a material error resulting from incorrect information or
confirmations, the parties will seek to comply in all material respects
with the provisions of applicable federal securities laws.
3.4 Automated Purchase and Redemption
3.4.1 "Fund/SERV" shall mean NSCC's Mutual Fund
Settlement, Entry and Registration Verification System, a system for
automated, centralized processing of mutual fund purchase and redemption
orders, settlement, and account registration; "Networking" shall mean
NSCC's system that allows mutual funds and life insurance companies to
exchange account level information electronically; and "Settling Bank"
shall mean the entity appointed by the Trust or you, as applicable, to
perform such settlement services on behalf of the Trust and you, as
applicable, which entity agrees to abide by NSCC's then current rules
and
procedures insofar as they relate to same day funds settlement. In all
cases, processing and settlement of share transactions shall be done in
a manner consistent with applicable law.
3.4.2 You are hereby appointed as our designee for the
sole purpose of receiving from Contract owners purchase and exchange
orders and requests for redemption resulting from investment in and
payments under the Contracts that pertain to subaccounts that invest in
Portfolios ("Instructions"). "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading and on which the Trust
calculates its net asset value pursuant to the rules of the SEC and its
current prospectus. "Close of Trading" shall mean the close of trading
on the New York Stock Exchange, generally 4:00 p.m. Eastern Time. Upon
receipt of Instructions, and upon your determination that there are good
funds with respect to Instructions involving the purchase of shares, you
will calculate the net purchase or redemption order for each Portfolio.
3.4.3 On each Business Day, you shall aggregate all
purchase and redemption orders for shares of a Portfolio that you
received prior to the Close of Trading. You represent and warrant that
all orders for net purchases or net redemptions derived from
Instructions received by you and transmitted to Fund/SERV for processing
on or as of a given Business Day ("Day 1") shall have been received in
proper form and time stamped by you prior to the Close of Trading on Day
1. Such orders shall receive the share price next calculated following
the Close of Trading on Day 1, provided that we receive Instructions
from Fund/SERV by 6:30 a.m. Eastern Time on the next Business Day ("Day
2"). You represent and warrant that orders received in good order and
time stamped by you after the Close of Trading on Day 1 shall be treated
by you and transmitted to Fund/SERV as if received on Day 2. Such orders
shall receive the share price next calculated following the Close of
Trading on Day 2. All Instructions we receive from Fund/SERV after 6:30
a.m. Eastern Time on Day 2 shall be processed by us on the following
Business Day and shall receive the share price next calculated following
the close of trading on Day 2. You represent and warrant that you have,
maintain and periodically test, procedures and systems in place
reasonably designed to prevent orders received after the Close of
Trading on Day 1 from being executed with orders received before the
Close of Trading on Day 1, and periodically monitor the systems to
determine their effectiveness. Subject to your compliance with the
foregoing, you will be considered the designee of the Underwriter and
the Portfolios, and the Business Day on which Instructions are received
by you in proper form prior to the Close of Trading will be the date as
of which shares of the Portfolios are deemed purchased, exchanged or
redeemed pursuant to such Instructions. Dividends and capital gain
distributions will be automatically reinvested at net asset value in
accordance with the Portfolio's then current prospectus.
3.4.4 We shall calculate the net asset value per share
of each Portfolio on each Business Day, and shall furnish to you through
NSCC's Networking or Mutual Fund Profile System: (i) the most current
net asset value
information for each Portfolio; and (ii) in the case of fixed income
funds that declare daily dividends, the daily accrual or the interest
rate factor. All such information shall be furnished to you by 6:30 p.m.
Eastern Time on each Business Day or at such other time as that
information becomes available.
3.4.5 You will wire payment for net purchase orders
by the Trust's NSCC Firm Number, in immediately available funds, to an
NSCC settling bank account designated by you in accordance with NSCC
rules and procedures on the same Business Day such purchase orders are
communicated to NSCC. For purchases of shares of daily dividend accrual
funds, those shares will not begin to accrue dividends until the day
the payment for those shares is received.
3.4.6 We will redeem any full or fractional shares of
any Portfolio, when requested by you on behalf of an Account, at the net
asset value next computed after receipt by us (or our agent or you as
our designee) of the request for redemption, as established in
accordance with the provisions of the then current prospectus of the
Trust. NSCC will wire payment for net redemption orders by the Trust, in
immediately available funds, to an NSCC settling bank account designated
by you in accordance with NSCC rules and procedures on the Business Day
such redemption orders are communicated to NSCC, except as provided in
the Trust's prospectus and statement of additional information.
3.4.7 Issuance and transfer of the Portfolio shares will
be by book entry only. Stock certificates will not be issued to you or
the Accounts. Portfolio shares purchased from the Trust will be recorded
in the appropriate title for each Account or the appropriate subaccount
of each Account.
3.4.8 We shall furnish through NSCC's Networking or
Mutual Fund Profile System on or before the ex-dividend date, notice to
you of any income dividends or capital gain distributions payable on the
shares of any Portfolio. You hereby elect to receive all such income
dividends and capital gain distributions as are payable on shares of a
Portfolio in additional shares of that Portfolio, and you reserve the
right to change this election in the future. We will notify you of the
number of shares so issued as payment of such dividends and
distributions.
3.4.9 All orders are subject to acceptance by
Underwriter and become effective only upon confirmation by Underwriter.
Underwriter reserves the right: (i) not to accept any specific order or
part of any order for the purchase or exchange of shares through
Fund/SERV; and (ii) to require any redemption order or any part of any
redemption order to be settled outside of Fund/SERV, in which case the
order or portion thereof shall not be "confirmed" by Underwriter, but
rather shall be accepted for redemption in accordance with Section
3.4.11 below.
3.4.10 All trades placed through Fund/SERV and confirmed
by Underwriter via Fund/SERV shall settle in accordance with
Underwriter's profile within Fund/SERV applicable to you. Underwriter
agrees to provide you with account positions and activity data relating
to share transactions via Networking.
3.4.11 If on any specific day you or Underwriter are
unable to meet the NSCC deadline for the transmission of purchase or
redemption orders for that day, a party may at its option transmit such
orders and make such payments for purchases and redemptions directly to
you or us, as applicable, as is otherwise provided in the Agreement;
provided, however, that we must receive written notification from you by
9:00 a.m. Eastern Time on any day that you wish to transmit such orders
and/or make such payments directly to us.
3.4.12 In the event that you or we are unable to or
prohibited from electronically communicating, processing or settling
share transactions via Fund/SERV, you or we shall notify the other,
including providing the notification provided above in Section 3.4.11.
After all parties have been notified, you and we shall submit orders
using manual transmissions as are otherwise provided in the Agreement.
3.4.13 These procedures are subject to any additional
terms in each Portfolio's prospectus and the requirements of applicable
law. The Trust reserves the right, at its discretion and without notice,
to suspend the sale of shares or withdraw the sale of shares of any
Portfolio.
3.4.14 Each party to the Agreement agrees that, in the
event of a material error resulting from incorrect information or
confirmations, the parties will seek to comply in all material respects
with the provisions of applicable federal securities laws.
3.4.15 You and Underwriter represent and warrant that
each: (a) has entered into an agreement with NSCC; (b) has met and will
continue to meet all of the requirements to participate in Fund/SERV and
Networking; (c) intends to remain at all times in compliance with the
then current rules and procedures of NSCC, all to the extent necessary
or appropriate to facilitate such communications, processing, and
settlement of share transactions; and (d) will notify the other parties
to this Agreement if there is a change in or a pending failure with
respect to its agreement with NSCC."
4. A new Section 6.7 is hereby added to the Agreement as follows:
"6.7 You agree that any posting of Portfolio prospectuses on
your website will result in the Portfolio prospectuses: (i) appearing
identical to the hard copy printed version; (ii) being clearly
associated with the particular Contracts in which they are available and
posted in close proximity to the applicable Contract prospectuses; (iii)
having no less prominence than prospectuses of any other underlying
funds available under the Contracts; and (iv) being used in an
authorized manner. Notwithstanding the above, you understand and agree
that you are responsible for ensuring that participation in the
Portfolios, and any website posting, or other use, of the Portfolio
prospectuses is in compliance with this Agreement and applicable state
and federal securities and insurance laws and regulations, including as
they relate to paper or electronic use of fund prospectuses. The format
of such presentation, the script and layout for any website that
mentions the Trust, the Underwriter, an Adviser or the Portfolios shall
be routed to us as sales literature or other promotional materials,
pursuant to Section 6 of this Agreement.
In addition, you agree to be solely responsible for maintaining
and updating the Portfolio prospectuses' PDF files (including prospectus
supplements) and removing and/or replacing promptly any outdated
prospectuses, as necessary, ensuring that any accompanying instructions
by us, for using or stopping use are followed. You agree to designate
and make available to us a person to act as a single point of
communication contact for these purposes. We are not responsible for any
additional costs or additional liabilities that may be incurred as a
result of your election to place the Portfolio prospectuses on your
website. We reserve the right to revoke this authorization, at any time
and for any reason, although we may instead make our authorization
subject to new procedures."
5. A new Section 6.8 is hereby added to the Agreement as follows:
"6.8 Each of your and your distributor's registered
representatives, agents, independent contractors and employees, as
applicable, will have access to our websites at xxxxxxxxxxxxxxxxx.xxx,
and such other URLs through which we may permit you to conduct business
concerning the Portfolios from time to time (referred to collectively as
the "Site") as provided herein: (i) upon registration by such individual
on a Site; (ii) if you cause a Site Access Request Form (an "Access
Form") to be signed by your authorized supervisory personnel and
submitted to us, as a Schedule to, and legally a part of, this
Agreement; or (iii) if you provide such individual with the necessary
access codes or other information necessary to access the Site through
any generic or firm-wide authorization we may grant you from time to
time. Upon receipt by us of a completed registration submitted by an
individual through the Site or a signed Access Form referencing such
individual, we shall be entitled to rely upon the representations
contained therein as if you had made them directly hereunder and we will
issue a user identification, express number and/or password
(collectively, "Access Code"). Any person to whom we issue an Access
Code or to whom you provide the necessary Access Codes or other
information necessary to access the Site through any generic or
firm-wide authorization we may grant you from time to time shall be an
"Authorized User."
We shall be entitled to assume that such person validly
represents you and that all instructions received from such person are
authorized, in which case such person will have access to the Site,
including all services and information to which you are authorized to
access on the Site. All inquiries and actions initiated
by you (including your Authorized Users) are your responsibility, are at
your risk and are subject to our review and approval (which could cause
a delay in processing). You agree that we do not have a duty to question
information or instructions you (including Authorized Users) give to us
under this Agreement, and that we are entitled to treat as authorized,
and act upon, any such instructions and information you submit to us.
You agree to take all reasonable measures to prevent any individual
other than an Authorized User from obtaining access to the Site. You
agree to inform us if you wish to restrict or revoke the access of any
individual Access Code. If you become aware of any loss or theft or
unauthorized use of any Access Code, you agree to contact us
immediately. You also agree to monitor your (including Authorized
Users') use of the Site to ensure the terms of this Agreement are
followed. You also agree that you will comply with all policies and
agreements concerning Site usage, including without limitation the Terms
of Use Agreement(s) posted on the Site ("Site Terms"), as may be revised
and reposted on the Site from time to time, and those Site Terms (as in
effect from time to time) are a part of this Agreement. Your duties
under this section are considered "services" required under the terms of
this Agreement. You acknowledge that the Site is transmitted over the
Internet on a reasonable efforts basis and we do not warrant or
guarantee their accuracy, timeliness, completeness, reliability or
non-infringement. Moreover, you acknowledge that the Site is provided
for informational purposes only, and is not intended to comply with any
requirements established by any regulatory or governmental agency."
6. A new paragraph is added at the end of Section 10.8 of the Agreement as
follows:
"Each party to this Agreement agrees to limit the disclosure of
nonpublic personal information of Contract owners consistent with its
policies on privacy with respect to such information and Regulation S-P
of the SEC. Each party hereby agrees that it will comply with all
applicable requirements under the regulations implementing Title V of
the Xxxxx-Xxxxx-Xxxxxx Act and any other applicable federal and state
consumer privacy acts, rules and regulations. Each party further
represents that it has in place, and agrees that it will maintain,
information security policies and procedures for protecting nonpublic
personal customer information adequate to conform to applicable legal
requirements."
IN WITNESS WHEREOF, each of the parties has caused its duly authorized officers
to execute this Amendment.
The Trust: Franklin Xxxxxxxxx Variable Insurance
Products Trust
Only on behalf of
each Portfolio listed
on Schedule C of
the Agreement. By:
---------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President
The Underwriter: Franklin/Xxxxxxxxx Distributors, Inc.
By:
---------------------------------
Name: Xxxxx X. Xxx
Title: Senior Vice President
The Company: American International Life Assurance
Company of New York
By:
---------------------------------
Name:
Title:
[Corporate Seal] Attest:
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Name:
Title:
