November 1, 2004
Columbia Funds Distributor, Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Re: Administrative Services Letter of Agreement
Ladies and Gentlemen:
This letter of agreement ("LOA") sets forth the agreement among New York Life
Insurance and Annuity Corporation (the "Company") and Columbia Funds
Distributor, Inc. (the "Distributor") concerning certain administrative services
to be provided by the Company in connection with shares issued by the Liberty
Variable Investment Trust (the "Trust"), on behalf of its series portfolio
listed on Exhibit B (the "Fund"). Any terms not otherwise defined herein will
have the meaning set forth in the Participation Agreement (defined below).
1. Administrative Services and Expenses. The Company has entered into a
Participation Agreement dated November 1, 2004, with the Distributor and
the Trust, as may be amended from time to time (the "Participation
Agreement") pursuant to which the Company purchases shares of the Fund for
the separate accounts identified in the Participation Agreement (the
"Accounts"). Administrative services for the Accounts which invest in the
Fund and for purchasers of the variable annuity and/or variable life
insurance contracts (the "Contracts") issued through the Accounts, are the
responsibility of the Company. Administrative services for the Trust, in
which the Accounts invest, and for purchasers of shares of the Fund, are
the responsibility of the Distributor, and/or its affiliated transfer
agent.
The Distributor recognizes the Company as the shareholder of shares of the
Fund purchased under the Participation Agreement on behalf of the Accounts.
The Distributor further recognizes that it, and/or its affiliated transfer
agency, will derive a substantial savings in administrative expenses by
virtue of having the Company as a single shareholder of record of shares of
the Fund rather than multiple shareholders having record ownership of such
shares. The administrative services for which the Distributor will derive
such savings are set forth in Exhibit A to this LOA, attached hereto and
incorporated by reference.
2. Administrative Expense Payments. In consideration of the anticipated
administrative expense savings resulting to the Distributor from the
Company's services set forth in Exhibit A, the Distributor agrees to pay
the Company, from its own resources and not from the Trust, a fee in the
amount as set forth in Exhibit B, attached hereto and incorporated by
reference. The fee shall be computed daily and paid monthly in arrears.
Columbia Funds Distributor, Inc.
November 1, 2004
Page 2
Distributor will calculate the monthly fee payment contemplated by this
Paragraph 2 at the end of each month and will pay the Company within 30
days thereafter. Payment will be accompanied by a statement showing the
calculation of the amount payable by the Distributor and such other
supporting data as the Company may reasonably request.
If there is a discrepancy with the Company's records in the calculation of
such fee, the Company's records will govern unless an error can be shown in
the number of shares used in such calculation.
Such payment will be by wire transfer unless the amount thereof is less
than $500. Wire transfers will be sent to the account and in the manner
specified by the Company. Such wire transfer will be separate from wire
transfers of redemption proceeds and distributions. Amounts less than $500
may be paid by check or by another method acceptable to the parties.
For purposes of this Paragraph 2, the average daily value of the shares of
the Fund will be based on the net asset values reported by the Trust to the
Company.
In the event there is an error in the net asset value of shares of a Fund
on any day, the Trust will use its best efforts to correct the net asset
value as soon as possible. The error will be corrected in accordance with
the error correction policy as disclosed in the Participation Agreement.
The fee payment contemplated by this Paragraph 2 will be based on the
corrected net asset value.
3. Nature of Payments. The parties to this letter agreement recognize and
agree that the Distributor's payments to the Company relate to
administrative services only and do not constitute payment in any manner
for investment advisory services or for costs of distribution of Contracts
or of shares of the Fund, and that these payments are not otherwise related
to investment advisory or distribution services or expenses. Distributor
also recognizes and agrees that this LOA does not provide any guaranty,
expressed or implied, regarding minimum Fund share sales (via Contracts)
through the Company or its affiliates. The amount of administrative expense
payments made by the Distributor to the Company pursuant to Paragraph 2 of
this LOA will not be deemed to be conclusive with respect to actual
administrative expenses or savings of the Distributor.
From time to time, the parties will review the administrative expense
payments to determine whether they exceed or are reasonably expected to
exceed the incurred and anticipated costs, over time, of the Company. The
appropriate parties agree to negotiate in good faith a reduction to the
administrative expense payments as necessary to eliminate any such excess.
4. Term. This letter agreement will remain in full force and effect for so
long as assets of the Trust are attributable to amounts invested by the
Company under the
Columbia Funds Distributor, Inc.
November 1, 2004
Page 3
Participation Agreement, unless terminated in accordance with Paragraph 5
of this letter agreement.
5. Termination. Any party may terminate this letter agreement, without
penalty, on 60 days' written notice to the other party. Unless so
terminated, this letter agreement will continue in effect for so long as
the Distributor or its successors in interest, or any affiliate thereof,
continues to perform in a similar capacity for the Trust, and for so long
as the Company provides the services contemplated hereunder with respect to
the Contracts under which values or monies are allocated to the Trust.
6. Disclosure. The Company agrees to make, and keep current, such disclosures
in each Contract's prospectus with regard to Distributor's payment of the
financial support described herein to Company as may be required by
applicable federal and state laws, regulations and rules.
7. Arbitration. Any dispute by the parties regarding this LOA shall be
arbitrated in accordance with the rules and regulations of the National
Association of Securities Dealers.
8. Subcontractors. The Company may, with the consent of the Trust, contract
with or establish relationships with other parties to provide services or
other activities, if any, required of the Company by this LOA, provided
that the Company shall be fully responsible for the acts and omissions of
such other parties.
9. Indemnification. The parties to this LOA shall indemnify and hold harmless
each other to the same degree and under the same conditions as provided for
in the Participation Agreement to the extent those provisions apply to the
party.
10. Amendment/Prior Agreements. This LOA may be amended or assigned only upon
mutual agreement of the parties hereto in writing. This LOA supersedes all
prior arrangements or agreements between the parties concerning this
subject matter.
11. Counterparts. This letter agreement may be executed in counterparts, each
of which will be deemed an original but all of which will together
constitute one and the same instrument.
Columbia Funds Distributor, Inc.
November 1, 2004
Page 4
If this letter agreement is consistent with your understanding of the matters we
discussed concerning administrative expense payments, kindly sign below and
return a signed copy to us.
Very truly yours,
NEW YORK LIFE INSURANCE AND ANNUITY ATTEST:
CORPORATION
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxxxx
------------------------- --------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxx X. Xxxxxxxx
Title: Vice President Title: Assistant General Counsel
Acknowledged and Agreed:
COLUMBIA FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Operating Officer
Attachments: Exhibit A
Exhibit B
Columbia Funds Distributor, Inc.
November 1, 2004
Page 5
EXHIBIT A
SERVICES
Maintenance of Books and Records
o Record issuance of shares
o Record transfers (via net purchase orders)
o Reconciliation and balancing of the separate account at the Fund level in
the general ledger, at various banks and within systems interface
Communication with the Trust
o Purchase Orders
o Determination of net amount available for investment by the Fund o
Deposit of receipts at the Trust's custodian (generally by wire
transfer) o Notification of the custodian of the estimated amount
required to pay dividend or distribution
o Purchase shares of the Fund on behalf of each Account at the
applicable price computed in accordance with the Participation
Agreement.
o Redemption Orders
o Determination of net amount required for redemptions of Fund shares by
the Company, on behalf of each Account
o Notification of the custodian and Trust of cash required to meet
payments to the Company on behalf of each Account
o Redeem shares of the Fund on behalf of each Account at the applicable
price computed in accordance with the Participation Agreement.
Processing Distributions from the Trust
o Process ordinary dividends and capital gains received on behalf of each
Account
o Reinvest the Fund's distributions received on behalf of each Account
Reports
o Periodic information reporting to the Trust and its Board
Proxy Solicitations
o Assistance with proxy solicitations, specifically with respect to
soliciting voting instructions from Contract owners
Fund-Related Contractowner Services
o Provide general information to Contract owners with respect to Fund
inquiries (not including information about performance or related to sales)
o Communications to Contract owners regarding Fund performance
Other Administrative Support
o Providing other administrative support for the Fund as mutually agreed
between the Company and the Trust or the Distributor
Columbia Funds Distributor, Inc.
November 1, 2004
Page 6
o Relieving the Trust of other usual or incidental administrative services
provided to individual Contract owners
Columbia Funds Distributor, Inc.
November 1, 2004
Page 7
EXHIBIT B
FEE
For all Accounts investing in the Colonial Small Cap Value Fund, Variable Series
- Class B, the Distributor shall pay the Company a monthly fee at an annual rate
equal to:
o ________ basis points (.__%) of the average daily value of the shares
of the Fund held in the Accounts.
