EXHIBIT (i) (21)
BUSINESS AGREEMENT
THIS AGREEMENT is entered into as of the 14th day of August, 2006 (the
"Effective Date") by and among NEW YORK LIFE INSURANCE AND ANNUITY CORPORATE
("NYLIAC"), a life insurance company organized under the laws of the State of
Delaware (on behalf of itself and certain of its separate accounts); AMERICAN
FUNDS DISTRIBUTORS, INC. ("AFD"), a corporation organized under the laws of the
State of California; and CAPITAL RESEARCH AND MANAGEMENT COMPANY ("CRMC"), a
corporation organized under the laws of the State of Delaware.
WITNESSETH:
WHEREAS, NYLIAC proposes to issue, now and in the future, certain
multi-manager variable life insurance and variable annuity contracts that
provide certain funds ("Funds") of the American Funds Insurance Series (the
"Series") as investment options (the "Contracts");
WHEREAS, NYLIAC has established pursuant to the insurance law of the State
of Delaware one or more separate accounts (each, an "Account") with respect to
the Contracts and has or will register each Account with the United States
Securities and Exchange Commission (the "Commission") as a unit investment trust
under the Securities Act of 1933 (the "1933 Act") and the Investment Company Act
of 1940 (the "1940 Act") (unless the Account is exempt from such registration);
WHEREAS, the Contracts, which are or will be registered (unless exempt
from such registration) by NYLIAC with the Commission for offer and sale, will
be in compliance with all applicable laws prior to being offered for sale;
WHEREAS, the Distributor, a broker-dealer registered under the Securities
Exchange Act of 1934 (the "1934 Act") and a member of the National Association
of Securities Dealers, Inc. (the "NASD"), will serve as principal underwriter of
the Contracts and will arrange for the distribution of the Contracts;
WHEREAS, AFD, a broker-dealer registered under the 1934 Act, a member of
the NASD, and the principal underwriter of the shares of the Series, will
provide certain marketing assistance in connection with the Contracts;
WHEREAS, the Series is divided into various Funds, each Fund being subject
to certain fundamental investment policies, which may not be changed without a
majority vote of the shareholders of such Fund;
WHEREAS, the Series has received a "Mixed and Shared Funding Order" from
the Commission granting relief from certain provisions of the 1940 Act and the
rules thereunder to the extent necessary to permit shares of the Series to be
sold to variable annuity and life insurance separate accounts of unaffiliated
insurance companies;
WHEREAS, Class 2 shares of certain Funds in the Series will be available
as an underlying investment to the Contracts pursuant to the terms of a Fund
Participation Agreement among the Series, CRMC and NYLIAC to be executed in the
form attached hereto as Exhibit A (the "Fund Participation Agreement"); and
WHEREAS, CRMC, by virtue of an Investment Advisory and Service Agreement
between CRMC and the Series, will serve as investment adviser to the Series, as
the term "investment adviser" is defined in the 1940 Act.
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants and conditions set forth herein, and for other good and valuable
consideration, NYLIAC, (on behalf of itself and each Account), AFD and CRMC
hereby agree as follows:
DUTIES OF NYLIAC
1. CRMC will make available for use in the Contracts certain Funds that it
has in the Series, as described in the Fund Participation Agreement.
2. NYLIAC will administer the Contracts and the Accounts, including all
Contract owner service and communication activities, such as: filing any reports
or other filings required by any law or regulation; establishing each Account;
creating the Contracts, confirmation and other administrative forms or
documents; and obtaining all required regulatory approvals to permit the sale
and maintenance of the Contracts.
3. NYLIAC will not distribute any prospectus, sales literature,
advertising material or any other printed matter or material relating to the
Contracts or the Series, if, to its knowledge, any of the foregoing contains any
material misstatements.
4. NYLIAC will provide to AFD and/or CRMC, upon AFD's and/or CRMC's
request, at least one complete copy of all registration statements,
prospectuses, statements of additional information, reports, solicitations for
voting instructions, sales literature and other promotional materials,
applications for exemptions or requests for no-action letters that may have a
material impact on the operation of the Series, and all amendments to any of the
above, that relate to the Contracts. NYLIAC will advise AFD and CRMC immediately
of:
(a) the issuance by the Commission of any stop order suspending
the effectiveness of the registration statement of the
Contracts or the initiation of any proceedings for that
purpose;
(b) the institution of any regulatory proceeding, investigation or
hearing involving the offer or sale of the Contracts of which
it becomes aware; or
(c) the occurrence of any material event that, if known, makes
untrue any statement made in the registration statement of the
Contracts or the Series
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or which requires the making of a change therein in order to
make any statement made therein not misleading.
5. Other than the 12b-1 fees provided for in the Fund Participation
Agreement and as provided below, NYLIAC will bear its respective expenses under
this Agreement, including:
(a) the cost of providing service to Contract owners;
(b) the expenses and fees of registering or qualifying the
Contracts and the Account under federal or state laws;
(c) any expenses incurred by NYLIAC employees in assisting AFD
and/or CRMC in performing AFD's and/or CRMC's duties
hereunder;
(d) the marketing expense allowance payable to AFD in
consideration for AFD's marketing assistance, as provided for
under this Agreement (including, without limitation, the
provisions of Paragraphs 19 and 20 hereof), which shall be
0.xx%, multiplied by the amount of new and subsequent purchase
payments made under the Contracts and allocated to the Series,
paid monthly in arrears;
provided, however, that, pursuant to Section 10 of the Fund Participation
Agreement, the Series shall bear the expenses for the cost of registration of
its shares, preparation of prospectuses and statements of additional information
to be sent to existing Contract owners (upon request in the case of the
statement of additional information), proxy statements and related materials and
annual and semi-annual shareholder reports, the printing and distribution of
such items to each Contract owner who has allocated net amounts to any
Subaccount, the preparation of all statements and notices required from it by
any federal or state law, and taxes on the issue or transfer of the Series'
shares subject to the Fund Participation Agreement.
6. NYLIAC or its agents will receive and process applications and purchase
payments in accordance with the terms of the Contracts and the current
prospectus. All applications for Contracts are subject to acceptance or
rejection by NYLIAC in its sole discretion.
7. NYLIAC shall amend its registration statement for its Contracts under
the 1933 Act and the 1940 Act from time to time as required by law, and, should
it ever be required, under the state securities laws, in order to effect the
continuous offering of its Contracts; and NYLIAC shall file for approval of the
Contracts under state insurance laws, when necessary, and to maintain
registration of the Accounts (unless the Accounts are exempt from such
registration) under the 1940 Act.
8. NYLIAC may invoke its then existing limits on transfers as stated in
the Contracts or in a Contract's prospectus. NYLIAC reserves the right to
refuse, to impose limitations on, or to limit any transaction request if the
request would tend to disrupt Contract administration or is
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not in the best interest of the Contract holders or an Account or Subaccount.
9. NYLIAC acknowledges that the distribution of Contracts pursuant to this
Agreement will take place through an affiliated broker dealer or through selling
agreements with certain non-affiliated broker-dealers (collectively, "Members")
for distribution of the Contracts through the Members' registered
representatives. NYLIAC agrees to provide to AFD and CRMC on a monthly basis in
writing information, on a Fund basis, regarding the volume of sales of the
Contracts and the name of each registered representative of the Members selling
the Contracts.
Any selling agreement between NYLIAC's distributor, NYLIFE Distributors
LLC ("NYLIFE Distributors"), and a Member described in this Section 9 will
provide that:
(a) each Member will distribute the Contracts only in those
jurisdictions in which the Contracts are registered or
qualified for sale and only through duly licensed registered
representatives of the Members who are properly insurance
licensed with NYLIAC to sell the Contracts in the applicable
jurisdiction(s);
(b) all applications and initial and subsequent payments under the
Contracts collected by the Member will be remitted promptly by
the Member to NYLIAC at such address as it may from time to
time designate; and
(c) each Member will comply with all applicable federal and state
laws, rules and regulations.
10. NYLIAC represents that any exchanges or replacements of existing
variable insurance policies and contracts with the Contracts will be effected in
compliance with all applicable federal and state securities rules and
regulations.
11. NYLIAC will promptly provide Members with current prospectuses, and
any supplements thereto, for the Contracts and for the Series. NYLIAC will use
reasonable efforts to ensure that its registered representatives deliver only
the currently effective prospectuses of the Contracts and the Series to existing
clients.
12. NYLIAC will use reasonable efforts to provide information and
marketing assistance to its registered representatives and to Members, including
preparing and providing such registered representatives with advertising
materials and sales literature, and other promotional or marketing materials.
NYLIAC will coordinate wholesaling and marketing services with respect to the
Contracts.
13. NYLIAC will use reasonable efforts to ensure that any sales literature
and advertising materials it disseminates with respect to the Contracts conforms
with the requirements of all pertinent federal and state laws and rules and
regulations thereunder. AFD shall have the right to approve all sales material
that mentions AFD's name and/or the Series (the
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"AFD Material") prior to its use. NYLIAC shall send all AFD Material to AFD's
Marketing Coordinator at the AFD address listed in Section 46 of this Agreement
or such other person as AFD may direct NYLIAC in writing (any such person shall
be referred to as the "AFD Reviewer"). The AFD Material will be deemed approved
unless the AFD Reviewer notifies the NYLIAC Reviewer (as herein defined) of any
required changes within five business days of his/her receipt of the AFD
Material. No review of sales material produced by NYLIAC shall be necessary if
all references contained in such materials regarding AFD and/or the Series are
identical to those references that appear in the Series' current prospectus or
statement of additional information.
NYLIAC shall have the right to approve all sales material that mentions
NYLIAC's and/or NYLIFE Distributors' name (the "NYLIAC Material") prior to its
use. AFD and/or CRMC shall send all NYLIAC Material to NYLIAC's Marketing
Representative (the "NYLIAC Marketing Representative) at the NYLIAC address
listed in Section 46 of this Agreement or such other person as NYLIAC may direct
AFD and/or CRMC in writing. NYLIAC Material will be deemed approved unless the
reviewer for NYLIAC notifies the AFD and/or CRMC of any required changes within
five business days of his/her receipt of NYLIAC Material. No review of sales
material produced by the AFD and/or the Series shall be necessary if all
references contained in such materials regarding NYLIAC and/or the NYLIFE
Distributors are identical to those references that appear in NYLIAC's current
Contract prospectus(es) or statement(s) of additional information.
14. NYLIAC will be responsible for filing sales literature and advertising
materials, where necessary, with appropriate regulatory authorities, including
the NASD, used in connection with its marketing efforts for the Contracts.
15. NYLIAC's distributor will not distribute any prospectus, sales
literature, advertising material or any other printed matter or material
relating to the Contracts or the Series, if, to its knowledge, any of the
foregoing contains any material misstatements.
16. Subject to Section 5 herein, NYLIAC will bear all its expenses of
providing services under this Agreement, including the costs attributable to
wholesaling efforts, advertising, and producing and distributing sales
literature and prospectuses used by its registered representatives and the
Members with prospective Contract owners, provided that, pursuant to Section 10
of the Fund Participation Agreement, the Series shall bear the expenses for the
cost of registration of its shares, preparation of its prospectuses and
statements of additional information to be sent to existing Contract owners
(upon request in the case of the statement of additional information), proxy
statements and related materials and annual and semi-annual shareholder reports,
the printing and distribution of such items to each Contract owner who has
allocated net amounts to any Subaccount, the preparation of all statements and
notices required from it by any federal or state law, and taxes on the issue or
transfer of the Series' shares subject to the Fund Participation Agreement.
17. NYLIAC will provide to AFD and/or CRMC, upon AFD's and/or CRMC's
request, at least one complete copy of all registration statements,
prospectuses, statements of
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additional information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions or
requests for no-action letters, and all amendments to any of the above, that
relate to the Contracts and materially impact the Series. NYLIAC will advise AFD
and CRMC upon becoming aware of:
(a) the institution of any regulatory proceeding, investigation or
hearing involving the offer or sale of the Contracts of which
they become aware and which materially impact the Series; or
(b) the occurrence of any material event, if known, which makes
untrue any statement made in the registration statement of the
Contracts or the Series or which requires the making of a
change therein in order to make any statement made therein not
misleading.
DUTIES OF AFD
18. AFD will bear its expenses of providing services under this Agreement.
AFD will conduct training of NYLIAC's wholesalers regarding CRMC's approach to
investment management and specific Subaccount positioning and sales. Training
will include initial hire training, periodic training in conjunction with sales
meetings, and refresher training. From time to time, AFD will provide, at its
expense, speakers and panelists at due diligence meetings regarding the
Contracts.
19. AFD will furnish to NYLIAC such information with respect to the Series
in such form as NYLIAC may reasonably request. AFD will advise NYLIAC upon
becoming aware of:
(a) the issuance by the Commission of any stop order suspending
the effectiveness of the registration statement of the Series
or the initiation of any proceedings for that purpose;
(b) the institution of any proceeding, investigation or hearing
involving the offer or sale of the Series of which it becomes
aware; or
(c) the occurrence of any material event, if known, which makes
untrue any statement made in the registration statement of the
Series or which requires the making of a change therein in
order to make any statement made therein not misleading.
DUTIES OF CRMC
20. CRMC agrees to allow NYLIAC to include in the Contracts certain Funds
described in the Fund Participation Agreement. CRMC will cause the Series: (a)
to make available for use in the Contracts the Funds in the Series, as described
in the Fund Participation Agreement and (b) to adequately diversify the Funds of
the Series, pursuant to the requirements of Section 817(h) of the Internal
Revenue Code of 1986 and Treasury Regulation Section 1.817-5, and
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any Treasury interpretations thereof, as amended, and the regulations thereunder
relating to the diversification requirements for variable annuity, endowment,
and variable life insurance contracts. In the event that any Fund ceases to
comply with Treasury Regulation Section 1.817-5, CRMC will make all reasonable
efforts to achieve compliance with such section. If CRMC determines that
compliance within the grace period will not be possible, CRMC will promptly
notify NYLIAC in writing;
21. [Reserved]
22. CRMC will furnish to NYLIAC such information with respect to the
Series in such form as NYLIAC may reasonably request. CRMC will advise NYLIAC
upon becoming aware of:
(a) the issuance by the Commission of any stop order suspending
the effectiveness of the registration statement of the Series
or the initiation of any proceedings for that purpose;
(b) the institution of any proceeding, investigation or hearing
involving the offer or sale of the Series of which it becomes
aware; or
(c) the occurrence of any material event, if known, which makes
untrue any statement made in the registration statement of the
Series or which requires the making of a change therein in
order to make any statement made therein not misleading.
23. CRMC will bear its expenses of providing services under this
Agreement.
24. The Series will pay NYLIAC a Rule 12b-1 service fee to be accrued
daily and paid monthly at an annual rate of 0.25% of the average daily net
assets of the Class 2 assets of each Fund attributable to the Contracts for
personal services and account maintenance services for Contract owners with
investments in Subaccounts corresponding to the Class 2 shares of each Fund so
long as the Series' 12b-1 plan is effective with respect to the Class 2 shares
of a Fund. Such payments shall be calculated by the Series and be paid by the
Series to NYLIAC as soon as practicable after the end of each month and in any
event within thirty days.
JOINT DUTIES
25. All the parties to this Agreement will cooperate in the development of
advertising, sales literature and all other sales materials to be used with
respect to the Funds.
26. The parties shall coordinate with each other in the filing with the
Commission of amendments to the registration statements for the Contracts (if
required by law) and for the Series, respectively.
27. Each of the parties hereto agrees: (a) to comply with all laws
applicable to it in
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the sale of Contracts and (b) to refrain from participating, cooperating, or
assisting in any way with its or any third party's (i) development of marketing
programs or other activities (written or oral) which directly encourage
exchanges from the Contracts or (ii) creation of broker and/or client marketing
tools which provide direct comparisons between the Contracts and any other
investment products directly targeting the holders of the Contracts to exchange
or transfer assets from the Contracts, unless such marketing programs or other
activities or broker or client tools relate to variable insurance products
issued by NYLIAC or an affiliate; or if agreed to by the parties.
28. For purposes of this Agreement, the terms, "sales literature",
"advertising" or "other promotional material" includes, but is not limited to:
advertisements (such as material published, or designed for use in, newspapers,
magazines, other periodicals, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, electronic
publications, websites, or other public media) (i.e., any written communication
distributed or generally made available to customers or the public including
electronic and website materials, brochures, circulars, research reports, market
letters, e-mail messages, form letters, newsletters, seminar texts, reprints or
excerpts of any other advertisement, sales literature, or published article);
educational or training materials or other communications distributed or made
generally available to some or all agents or employees; registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials, and any other material constituting sales literature or
advertising under NASD rules, the 1933 Act or the 1940 Act, including electronic
and website materials.
REPRESENTATIONS AND WARRANTIES
29. NYLIAC represents and warrants to AFD and CRMC that:
(a) each of the recitals applicable to it and/or each Account is
true and correct;
(b) a registration statement under the 1933 Act and under the 1940
Act (if required by law) with respect to the Contracts and
each Account has been or will be filed with the Commission (a
copy of which will be delivered to AFD, upon request, when
effective), and copies of any and all amendments thereto will
be forwarded to AFD, upon request, at the time that they are
filed with the Commission (if required by law);
(c) each such registration statement (if required by law) and any
further amendments or supplements thereto will, when they
become effective, conform in all material respects to the
requirements of the 1933 Act and the 1940 Act, and the rules
and regulations of the Commission thereunder, and will not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall
not apply to any statement or omission
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made in reliance upon and in conformity with the information
furnished in writing to NYLIAC by AFD or CRMC expressly for
use therein;
(d) NYLIAC is validly existing as a life insurance company under
the laws of the State of Delaware, with power (corporate or
other) to own its properties and conduct its business, as
described in the prospectus for the Contracts, and has been
duly qualified for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business to the
extent such qualification is required;
(e) the Contracts to be issued through the Account have been duly
and validly authorized and, when issued and delivered against
payment therefor as provided in the prospectus (if a
prospectus is required by law) and in the Contracts, will be
duly and validly issued, and will conform to the description
of the Contracts contained in the prospectuses (if a
prospectus is required by law);
(f) the performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach
or violation of any of the terms or provisions of, or
constitute a default under, any statute, any indenture,
mortgage, deed of trust, note agreement or other agreement or
instrument to which NYLIAC is a party or by which NYLIAC is
bound, NYLIAC's charter as a life insurance company or By-Laws
or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over NYLIAC or any of their
properties; and no consent, approval, authorization or order
of any court or governmental agency or body which has not been
obtained by the Effective Date of this Agreement is required
for the consummation by NYLIAC of the transactions
contemplated by this Agreement, except for the Commission's
approval of the registration statement referred to in Section
26(b) hereof;
(g) there are no material legal or governmental proceedings
pending to which NYLIAC or the Account is a party or of which
any property of NYLIAC or the Account is subject, other than
as set forth in the prospectus relating to the Contracts, and
other than litigation incidental to the kind of business
conducted by NYLIAC which, if determined adversely to NYLIAC,
would not individually or in the aggregate have a material
adverse effect on the financial position, surplus or
operations of NYLIAC;
(h) any information furnished in writing by NYLIAC to AFD or CRMC
for use in the registration statement or annual report of the
Series will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, nor result in the Series' registration statement's
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failing to materially conform in all respects to the
requirements of the 1933 Act and 1940 Act and the rules and
regulations thereunder; and
(i) NYLIAC will materially comply with all applicable requirements
of state insurance laws and regulations in connection with the
Contracts.
30. NYLIAC, on behalf of its distributor, NYLIFE Distributors LLC,
represents and warrants to AFD and CRMC that:
(a) each of the recitals applicable to it is true and correct;
(b) NYLIFE Distributors LLC, an affiliate of NYLIAC, is validly
existing as a Limited Liability Company under the laws of the
State of Delaware, and it is a broker-dealer duly registered
with the Commission pursuant to the 1934 Act and is a member
in good standing of the NASD, with power (corporate or other)
to own its properties and conduct its business, and has been
duly qualified for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business to the
extent such qualification is required;
(c) there are no material legal or governmental proceedings
pending to which NYLIFE Distributors is a party or of which
any property of NYLIFE Distributors is subject, other than as
set forth in the prospectus relating to the Contracts, and
other than litigation incidental to the kind of business
conducted by NYLIFE Distributors which, if determined
adversely to NYLIFE Distributors, would not individually or in
the aggregate have a material adverse effect on the financial
position, surplus or operations of NYLIFE Distributors;
(d) any information furnished in writing by NYLIAC to AFD or CRMC
for use in the registration statement or annual report of the
Series will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, nor result in the registration statement's failing
to conform materially in all respects to the requirements of
the 1933 Act and 1940 Act and the rules and regulations
thereunder;
(e) NYLIFE Distributors will comply with all applicable
requirements of federal and state insurance laws and
regulations in connection with the sale of the Contracts; and
(f) NYLIFE Distributors will not pay commissions to persons who,
to the best of NYLIFE Distributors' knowledge, are not
appropriately licensed in a manner as to comply with
applicable state insurance laws and regulations.
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31. AFD and CRMC represent and warrant to NYLIAC that:
(a) each of the recitals applicable to it, them, and/or the Series
is true and correct;
(b) a registration statement under the 1933 Act (File No. 2-86838)
and under the 1940 Act (File No. 811-3857) with respect to the
Series has been filed with the Commission in the form
previously delivered to NYLIAC and copies of any and all
amendments thereto will be forwarded to NYLIAC at the time
that they are filed with the Commission;
(c) the registration statement for the Series and any further
amendments or supplements thereto will, when they become
effective, conform in all material respects to the
requirements of the 1933 Act and the 1940 Act, and the rules
and regulations of the Commission thereunder, and will not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall
not apply to any statement or omission made in reliance upon
and in conformity with the information furnished in writing to
AFD or CRMC by NYLIAC expressly for use therein;
(d) AFD is and shall remain validly existing as a corporation
under the laws of the State of California and it is a
broker-dealer duly registered with the Commission pursuant to
the 1934 Act and is a member in good standing of the NASD,
with power (corporate or other) to own its properties and
conduct its business, and has been duly qualified for the
transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases
properties, or conducts any business to the extent such
qualification is required;
(e) CRMC is and shall remain validly existing as a corporation
under the laws of the State of Delaware and it is an
investment adviser duly registered with the Commission
pursuant to the Investment Advisers Act of 1940, with power
(corporate or other) to own its properties and conduct its
business, and has been duly qualified for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or
conducts any business to the extent such qualification is
required;
(f) the shares to be issued by the Series have been duly and
validly authorized and, when issued and delivered against
payment therefor as provided in the Series prospectus, will be
duly and validly issued, and will conform to the description
of such shares contained in that prospectus;
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(g) the performance of duties under this Agreement by AFD and CRMC
will not result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any statute,
any indenture, mortgage, deed of trust, note agreement or
other agreement or instrument to which AFD or CRMC is a party
or by which AFD or CRMC is bound, the Articles of
Incorporation or By-Laws of AFD or CRMC, or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over AFD or CRMC or its property;
(h) there are no material legal or governmental proceedings
pending to which AFD or CRMC is a party or of which any
property of AFD or CRMC is subject, other than as set forth in
the prospectus relating to the Series, and other than
litigation incidental to the kind of business conducted by AFD
or CRMC which, if determined adversely to AFD or CRMC, would
not individually or in the aggregate have a material adverse
effect on the financial position, surplus or operations of AFD
or CRMC;
(i) CRMC and AFD will use reasonable efforts to ensure that no
offering, sale or other disposition of the Contracts will be
made until it has been notified by NYLIAC that the subject
registration statements (if required by law) have been
declared effective and that the Contracts have been released
for sale by NYLIAC, and that such offer, sale or other
disposition shall be limited to those jurisdictions that have
approved or otherwise permit the offer and sale of the
Contracts by NYLIAC;
(j) any information furnished in writing by AFD or CRMC to NYLIAC
for use in a registration statement (if required by law) of
the Contracts will not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, nor result in the registration statement's failing
to materially conform in all respects to the requirements of
the 1933 Act and the rules and regulations thereunder; and
(k) AFD will comply with all applicable requirements of state
broker-dealer regulations and the 1934 Act as each applies to
AFD and shall conduct its affairs in accordance with the rules
of the NASD.
(l) AFD will comply with all applicable requirements of federal
and state securities laws in connection with the sales of the
Funds to the Contracts.
(m) All of its respective directors, officers, employees,
investment advisers, and other individuals or entities dealing
with the money and/or securities of any Fund in which an
Account invests are, and shall continue to be at all times,
covered by one or more blanket fidelity bonds or similar
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coverage for the benefit of the Fund in an amount not less
than $5 million. The aforesaid bonds shall include coverage
for dishonest and fraudulent acts and shall be issued by a
reputable bonding company. CRMC and AFD each agree to make all
reasonable efforts to see that this bond or another bond
containing these provisions is always in effect with respect
to such entity, and agree to notify the Trust in the event
that such coverage no longer applies. With respect to losses
incurred by the Trust from dishonest or fraudulent acts of
CRMC or AFD employees (or other acts of CRMC or AFD employees
covered under the aforesaid bond(s)), CRMC and/or AFD agree to
pay to the Trust amounts in respect of such losses to the
extent that a) CRMC and/or AFD specifically seek and obtain
recovery for any such loss incurred by the Trust under the
aforesaid bond and b) such amounts are attributable to
activities described in this Agreement.
(n) The Series, each Fund, AFD, and CRMC each, to the extent
applicable, have in place a compliance program as required by
Rule 38a-1 under the 1940 Act that is reasonably designed to
prevent, detect, and correct violations of the Federal
Securities Laws as defined by the 1940 Act.
32. Each party to this Agreement represents and warrants that:
(a) It shall comply with anti-money laundering laws and
regulations applicable to it, including the relevant
provisions of the USA PATRIOT Act (Pub. L. No. 107-56 (2001)
and the regulations issued thereunder.
(b) It shall comply with privacy and notice provisions of 15
U.S.C. Sections 6801-6827 and any regulations promulgated
thereunder (including but not limited to 17 C.F.R. Part 248)
applicable to it as they may be amended from time to time.
(c) It has full power and authority to enter into and perform its
obligations under this Agreement; it has duly taken all
necessary steps to authorize the person signing this Agreement
on its behalf to do so and to authorize the performance of its
obligations under this Agreement and assuming the accuracy of
and compliance with this representation and warranty by all
other Parties, this Agreement will be valid, binding on, and
enforceable against such party in accordance with its terms,
subject only to such limitations as apply generally to the
rights of creditors, such as, but not limited to, bankruptcy
laws, laws governing the insolvency of insurance companies and
other entities, and principles of equity.
INDEMNIFICATION
33. AFD and/or CRMC agree to indemnify NYLIAC (or any affiliate, control
person, shareholder, director, officer, employee or agent of NYLIAC) from, and
hold them harmless
13
against, any and all losses, claims, damages, liabilities incurred (including
amounts paid in settlement with the written consent of AFD and/or CRMC) or
litigation (including reasonable legal fees and costs relating to the
investigation and/or defense of any action) arising out of any act or omission
of AFD and/or CRMC (or those of its affiliates) relating to:
(a) rendering services under, or breaching, this Agreement;
(b) the failure by the Series or CRMC to adequately diversify the
various Funds of the Series, pursuant to the requirements of
Section 817(h) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder relating to the
diversification requirements for variable annuity, endowment
and life insurance contracts;
(c) the failure by the Series or CRMC to supply NYLIAC with
information sufficient to adequately calculate its
accumulation and/or annuity unit values as required by law and
the registration statement (if required by law) for the
Account;
(d) unlawful conduct, bad faith, willful misfeasance, or
negligence on the part of AFD and/or CRMC; or
(e) the failure by the Series and CRMC to invest the assets of
each Fund in accordance with the Fund's investment objective,
policies and restrictions;
provided, however, that indemnification will not be provided hereunder for any
such liability that results from NYLIAC's willful misfeasance, bad faith, or
gross negligence in the performance of its duties or by reason of NYLIAC's
failure to fulfill its duties and obligations arising under this Agreement.
34. NYLIAC agrees to indemnify AFD and/or CRMC (or any affiliate, control
person, shareholder, director, officer, employee or agent of AFD and/or CRMC)
from, and hold them harmless against, any and all losses, claims, damages,
liabilities incurred (including amounts paid in settlement with the written
consent of NYLIAC) or litigation (including reasonable legal fees, costs
relating to the defense of any action and amounts paid in settlement with the
written consent of NYLIAC, which consent shall not be unreasonably withheld and)
arising out of any act or omission of NYLIAC (or those of its affiliates)
relating to:
(a) rendering services under, or breaching, this Agreement; or
(b) unlawful conduct, bad faith, willful misfeasance, or
negligence on the part of NYLIAC;
provided, however, that indemnification will not be provided hereunder for any
such liability that results from AFD's and/or CRMC's willful misfeasance, bad
faith, or gross negligence in the
14
performance of its duties or by reason of AFD's and/or CRMC's failure to fulfill
their respective duties and obligations arising under this Agreement.
35. Any party seeking indemnification (the "Potential Indemnitee") will
promptly notify any party from whom they intend to seek indemnification (each a
"Potential Indemnitor") of all demands made and/or actions commenced against the
Potential Indemnitee which may require a Potential Indemnitor to provide such
indemnification. At its option and expense, a Potential Indemnitor may retain
counsel and control any litigation for which it may be responsible to indemnify
a Potential Indemnitee under this Agreement.
36. With respect to any claim, the parties each shall give the other party
reasonable access during normal business hours to its books, records and
employees and those books, records and employees within its control pertaining
to such claim and shall otherwise cooperate with one another in the defense of
any claim. Regardless of which party defends a particular claim, the defending
party shall give the other parties written notice of any significant development
in the case as soon as practicable, and such other party, at all times, shall
have the right to intervene in the defense of the case.
37. If a party is defending a claim and indemnifying the other party
hereto, and: (a) a settlement proposal is made by the claimant or (b) the
defending party desires to present a settlement proposal to the claimant that is
accepted by the claimant (subject to acceptance by the indemnified party), then
the defending party promptly shall provide written notice to the other party
hereto of such settlement proposal together with its counsel's recommendation.
If the defending party desires to enter into the settlement and the indemnified
party fails to consent within thirty (30) business days (unless such period is
extended, in writing, by mutual agreement of the parties hereto), then the other
party, commencing from the earlier of the date the indemnified party declined to
accept the settlement or the expiration of the thirty (30) day period, shall
defend the claim (at the defending party's expense) and shall relieve the
defending party of any obligation hereunder to indemnify it and further
indemnify the defending party for all costs associated with the claim which are
in excess of the proposed settlement amount. The defending party, however ,
shall remain obligated hereunder to indemnify and hold harmless the indemnified
party for any Losses up to and including the amount of the proposed settlement.
Regardless of which party is defending the claim, if a settlement requires
an admission of liability by the non-defending party or would require the
non-defending party to either take action (other than purely ministerial action)
or refrain from taking action (due to an injunction or otherwise) (a "Specific
Performance Settlement"), the defending party may agree to such settlement only
after obtaining the express, written consent of the non-defending party. If a
non-defending party fails to consent to a Specific Performance Settlement, the
consequences described in the last sentence of the first paragraph of this
Section 37 shall not apply.
38. The parties shall use good faith efforts to resolve any dispute
concerning this indemnification obligation. Should those efforts fail to resolve
the dispute, the ultimate resolution shall be determined in a de novo
proceeding, separate and apart from the underlying matter complained of, before
a court of competent jurisdiction. Either party may initiate such
15
proceedings with a court of competent jurisdiction at any time following the
termination of the efforts by such parties to resolve the dispute (termination
of such efforts shall be deemed to have occurred thirty days from the
commencement of the same unless such time period is extended by the written
agreement of the parties). The prevailing party in such a proceeding shall be
entitled to recover reasonable attorneys' fees, costs and expenses.
39. A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Indemnification
section. The provisions of this Indemnification section shall survive
termination of this Agreement.
40. If a party notifies the other parties in writing of reasonable
concerns or issues it may have from time to time concerning market-timing,
excessive trading, or other potentially detrimental trading activities that
affect or may affect an Account or a Fund, each other party shall work
cooperatively to reach a mutually satisfactory solution or action plan to
address such notifying party's concerns or issues.
RULE 12B-1 FEE
41. If the Series 12b-1 plan is no longer effective or is no longer
applicable to the Funds in the Contracts (the "12b-1 Termination"), AFD, CRMC
and the Series shall discuss with NYLIAC, in good faith, alternate fee
arrangements and/or a reallocation of marketing expenses. If no new agreement is
reached within thirty days after the 12b-1 Termination (or at such later date
mutually acceptable to all of the parties), NYLIAC, at its option, may elect to
terminate this Agreement, and/or may elect to obtain an order of exemption
pursuant to Section 26(b) of the 1940 Act ("Substitution Order") for the Fund(s)
or a vote of Contract owners authorizing redemption and substitution of Fund
shares. The Series, AFD and CRMC shall cooperate with NYLIAC in obtaining and
implementing any such Substitution Order.
TERMINATION
42. This Agreement shall continue in full force and effect until
terminated in accordance with the provisions herein. This Agreement
shall terminate in its entirety or with respect to a particular
Fund, as specified below, without penalty upon the first to occur
of:
(a) Termination by mutual agreement at any time;
(b) Termination by any party, for any reason, at any time upon
ninety (90) days advance written notice to the other parties,
unless a shorter time is agreed to by all the Parties;
(c) Termination at NYLIAC's option, pursuant to Section 41 hereof;
(d) Termination at NYLIAC's option by written notice to AFD and/or
CRMC if NYLIAC shall determine in its sole judgment exercised
in
16
good faith, that either AFD or CRMC has suffered a material
adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or is
the subject of material adverse publicity;
(e) Termination at AFD or CRMC's option by written notice to
NYLIAC if AFD or CRMC shall determine in its sole judgment
exercised in good faith, that NYLIAC has suffered a material
adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or is
the subject of material adverse publicity;
(f) Termination by NYIAC by written notice to the Series, AFD, and
CRMC with respect to any Fund in the event any of the shares
of the Fund are not registered, issued or sold in accordance
with applicable federal and/or state law, or such law
precludes the use of such shares as the underlying investment
medium of the Contracts issued or to be issued by NYLIAC;
(g) Termination by NYLIAC upon written notice to the Series and
CRMC with respect to any Fund in the event that such Fund
ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar
provision;
(h) Termination by NYLIAC upon written notice to the Series and
AFD with respect to any Fund in the event that such Fund fails
to meet the diversification requirements specified in Sections
20 and 32 of this Agreement;
(i) Termination by any party in the event that the Series' Board
of Trustees determines that a material irreconcilable conflict
exists as provided in the Fund Participation Agreement; or
(j) Termination in the event AFD ceases to serve as distributor of
a Fund provided the Series, on behalf of the Fund, shall
promptly notify the other parties of such an event;
(k) Termination as to a Fund, upon termination of the investment
advisory agreement between the Fund and CRMC or its successors
unless each other party to this Agreement specifically
approves the selection of a new Fund investment adviser. The
terminating party shall give notice of such termination to all
other parties, and the termination shall be effective as of
the date specified in the notice, which shall be not more than
thirty (30) days after such notice has been received by all
such parties. The Series, on behalf of such Fund,
17
shall promptly furnish notice of termination of CRMC to each
other party to this agreement;
(l) Termination by NYLIAC, upon any substitution of the shares of
another investment company or series thereof for shares of the
Fund in accordance with the terms of the Contracts, provided
that NYLIAC has given at least forty-five (45) days prior
written notice to the Fund and CRMC of the date of
substitution;
(m) Termination by any party, upon another party's breach of any
material provision of this Agreement. The terminating party
shall delivery notice of such breach to all other parties to
this Agreement. The termination shall be effective thirty (30)
days after the notice has been received by all such parties,
but only if the breaching party shall not have cured the
breach, in all materials respects, by the end of the thirty
(30) day period; or
(n) As to a Fund, at the option of any party to this Agreement,
upon the institution of formal proceedings against any other
party to this Agreement by the SEC, NASD or other regulatory
body, the expected or anticipated ruling, judgment or outcome
of which would, in the terminating party's reasonable
judgment, materially impair that other party's ability to meet
and perform its obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by the
terminating party to all other parties, with said termination
to be effective upon receipt of notice by all such parties.
43. Notwithstanding any termination of this Agreement pursuant to Section
42, the Series, AFD, and CRMC shall, at the option of NYLIAC, continue to make
available additional shares of the Fund pursuant to the terms and conditions of
this Agreement, for all Contracts in effect on the effective date of termination
of this Agreement (the "Existing Contracts") unless such further sale of any
Fund's shares is proscribed by law, regulation or applicable regulatory body, or
unless the Series requests that NYLIAC seek an order pursuant to Section 26(c)
of the 1940 Act to permit the substitution of other securities for the shares of
the Fund. The Series shall bear the cost of any such substitution in the above
described event. Specifically, without limitation, the owners of the Existing
Contracts or NYLIAC, whichever shall have legal authority to do so, will be
permitted to direct allocation and reallocation of investments in the Series,
redeem investments in the Fund and invest in the Fund through additional
purchase payments. If such Fund shares continue to be made available after such
termination, the provision of this Agreement shall remain in effect.
44. If this Agreement terminates, the parties shall cooperate after
termination to effect an orderly windup of the business.
18
MISCELLANEOUS
45. Subject to the requirements of legal process and regulatory authority,
each party will treat as confidential the names and addresses of the owners of
the Contracts and all information reasonably identified as confidential in
writing by any other parties and, except as permitted by this Agreement or as
required by any governmental agency, regulator or other authority, shall not
without the express written consent of the affected party disclose, disseminate
or utilize such names and addresses and other confidential information until
such time as it may come into the public domain.
46. This Agreement shall be governed by the laws of the State of New York.
47. This Agreement, its terms and definitions, shall be subject to the
provisions of the 1933 Act, the 1934 Act, and the 1940 Act, and the rules and
regulations and rulings thereunder, including such exemptions from those
statutes, rules and regulations as the SEC may grant.
48. This Agreement (along with the Fund Participation Agreement)
constitutes the entire agreement among the parties pertaining to the Contracts,
and supersedes any and all prior agreements, understandings, documents,
projections, financial data, statements, representations and warranties, oral or
written, express or implied, between the parties hereto and their respective
affiliates, representatives and agents in respect of the subject matter hereof.
If there should be any conflict between the terms of this Agreement and those of
the Fund Participation Agreement, the terms of the Fund Participation Agreement
shall govern.
49. This Agreement may be amended from time to time only by agreement in
writing of the parties.
50. No waiver of any provision nor consent to any exceptions to the terms
of this Agreement shall be effective unless that waiver or consent is executed
in writing by the parties and then only for the specific purpose, extent and
instance so provided.
51. This Agreement and the parties' rights, duties and obligations under
this Agreement are not transferable or assignable by any of them without the
express, prior written consent of the other party hereto. Any attempt by a party
to transfer or assign this Agreement or any of its rights, duties or obligations
under this Agreement without such consent is void; provided, however, that a
merger of, reinsurance arrangement by, or change of control of a party shall not
be deemed to be an assignment for purposes of this Agreement.
52. This Agreement shall inure to the benefit of and be binding upon
NYLIAC, AFD, and CRMC, and their respective successors and permitted assigns.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person or corporation, other than the parties hereto and
their respective successors and permitted assigns, any legal or equitable right,
remedy or claim in respect of this Agreement or any provision herein contained.
53. This Agreement and any amendment to it may be executed in one or more
counterparts. All of those counterparts shall constitute one and the same
agreement. Neither this
19
Agreement nor any amendment shall become effective until all counterparts have
been fully executed and delivered.
54. All notices, requests, demands and/or other communications permitted
or required hereunder shall be in writing and shall be sent by nationally
recognized overnight courier, and/or by certified mail, return receipt
requested, addressed to each party to the individuals and at the address shown
in the notice provisions of the Fund Participation Agreement, or at such other
address as a party has directed in writing.
IF TO NYLIAC:
New York Life Insurance and Annuity Corporation
Attention: Xxxxxx X. Xxxxxx, Senior Vice President
00 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
WITH A COPY TO:
New York Life Insurance and Annuity Corporation
Office of the General Counsel
Attention: Variable Products Attorney
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
IF TO AFD:
American Funds Distributors, Inc.
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, President
Facsimile No.: (000) 000-0000
WITH A COPY TO:
American Funds Distributors, Inc.
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Senior Vice President and Senior
Counsel, Fund Business Management Group
Facsimile No.: (000) 000-0000
20
IF TO CRMC:
Capital Research and Management Company
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Senior Vice President and Legal Counsel,
Fund Business Management Group, and Secretary
Facsimile No.: (000) 000-0000
WITH A COPY TO:
Capital Research and Management Company
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Vice President and Senior Counsel, Fund
Business Management Group
Facsimile No.: (000) 000-0000
A notice shall be presumed to have been received: (a) on the day after it
was sent if sent by overnight courier, so long as a receipt evidencing that it
was sent, in fact, by overnight courier is obtained or (b) on the day that the
recipient signs the receipt if sent by certified mail.
55. The provisions of this Agreement are severable. Should any provision
hereof be held unlawful or invalid by any competent authority, the remainder of
the Agreement shall remain in full force and effect.
56. Acknowledgements:
(a) NYLIAC acknowledges that the identity of the Series', AFD's,
and CRMC's (and their affiliates' and/or subsidiaries')
customers and all information maintained about those customers
constitute the valuable property of the Series, AFD, and CRMC,
respectively. NYLIAC agrees that, should it come into contact
or possession of any such information (including, but not
limited to, lists or compilations of the identity of such
customers), NYLIAC shall hold such information or property in
confidence and shall not use, disclose or distribute any such
information or property except with prior written consent of
the Series, AFD, and/or CRMC or as required by law or judicial
process or to perform its obligations under this Agreement.
(b) The Series, AFD, and CRMC acknowledge that the identity of
NYLIAC's (and its affiliates' and/or subsidiaries') customers
and all information maintained about those customers
constitute the valuable property of NYLIAC. The Series, AFD,
and CRMC agree that, should they come into contact or
possession of any such information (including, but not limited
21
to, lists or compilations of the identity of such customers),
they shall hold such information or property in confidence and
shall not use, disclose or distribute any such information or
property except with NYLIAC's prior written consent or as
required by law or judicial process or to perform its
obligations under this Agreement.
57. The provisions contained in Sections 2, 4, 5 (except for 5(d)), 6-8,
17, 19-24, 26-27, 33-40 and 43-57 shall survive the termination of this
Agreement for so long as any of the Series shares remain as investment options
in any of the Contracts.
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested as of the date first above written.
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION (ON BEHALF OF
ITSELF AND EACH ACCOUNT)
Attest:
___________________________ By: _____________________________
Its: Senior Vice President
AMERICAN FUNDS DISTRIBUTORS, INC.
Attest:
___________________________ By: _____________________________
Its: Secretary
CAPITAL RESEARCH AND MANAGEMENT
COMPANY
Attest:
___________________________ By: _____________________________
Its: Vice President and Secretary
23
