October 1, 2000
Xx. Xxxxxx X. Xxxx
Senior Vice President
New York Life Insurance and Annuity Corporation
00 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Mr. Xxxx:
This letter sets forth the agreement between New York Life Insurance and
Annuity Corporation (the "Company"), and Janus Capital Corporation, (the
"Adviser") concerning certain administrative services. It amends and supercedes
the letter agreement dated June 19, 1996.
1. Administrative Services and Expenses. Administrative services for the
separate accounts of the Company (the "Accounts") which invest in one or
more portfolios (collectively, the "Portfolios") of Xxxxx Xxxxx Series
(the "Trust") pursuant to the Participation Agreement between the Company
and the Trust dated June 20, 1996 (the "Participation Agreement"), and for
purchasers of variable annuity or life insurance contracts (the
"Contracts") issued through the Accounts are the responsibility of the
Company. Administrative services for the Portfolios, in which the Accounts
invest, and for purchasers of shares of the Portfolios, are the
responsibility of the Trust. These administrative services the Company
intends to provide to the Trust and its Portfolios are set forth in
Schedule A attached to this letter agreement, which may be amended from
time to time.
2. Service Fee. In consideration of the anticipated administrative expense
savings resulting to the Trust from the Company's services, the Adviser
agrees to pay the Company a fee ("Service Fee"), computed daily and paid
monthly, equal to applied to the average daily net asset value of
the shares of the Portfolios held in the Accounts, commencing with the
month in which the average aggregate net asset value of investments by the
Accounts reaches $50 million, increasing to on average daily net
assets over $1.25 billion. The Service Fee will be correspondingly
suspended if the average aggregate net asset value of such investments
drops below $50 million in any month.
The Adviser will increase this Service Fee to a rate identical to the rate
of any higher Service Fee paid to any insurance company at the level of
assets attained by such insurance company at the time said rate went into
effect (1) whose separate accounts invest in the Portfolios, (2) who offer
variable annuity or life insurance contracts materially comparable to the
Contracts and (3) who have agreed to provide services that are similar to
the services listed on Schedule A to the Trust.
As soon as practicable after the end of each month, the Company will send
the Adviser, at the address and in the manner set forth in the
Participation Agreement, a statement of the average daily net asset value
for the preceding month of shares of the Portfolios as to which the fee
stated in this Paragraph 2 is calculated, together with a statement of the
amount of such fee. In the calculation of such fee, the Company records
will govern unless an error can be shown in the calculation or the number
of shares or net asset value used in such calculation.
The Adviser will pay the Company such fee within thirty (30) days after
Adviser's receipt of such statement. 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 net asset value of the
shares of the Portfolios will be based on the net asset values reported by
such Portfolios to the Company. In the event there is an error in the net
asset value for shares of a Portfolio on any day, the Adviser will use its
best efforts to correct the net asset value as soon as practicable and to
report the corrected net asset value to the Company as soon as it is
available. The fee stated in 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 Adviser's payments to the Company relate to administrative
services for the Portfolios. Such payments do not constitute payment in any
manner for administrative services provided by the Company to the Accounts
or to the Contracts, for investment advisory services or for costs of
distribution of Contracts or of shares of the Portfolios, and that these
payments are not otherwise related to investment advisory or distribution
services or expenses.
4. Representations and Warranties.
a. The Adviser represents and warrants that in the event the Trustees of
the Trust approve the payment of all or any portion of the Service Fee
by the Trust, the Trust will calculate in the same manner the Service
Fee to all insurance companies that have entered into Service Fee
arrangements with the Adviser and/or the Trust (the "Participating
Insurance Companies").
b. The Company represents and warrants that: (1) it and its employees and
agents meet the requirements of applicable law, including but not
limited to federal and state securities law and state insurance law,
for the performance of services contemplated herein; and (2) it will
not purchase shares of the Portfolios with Account assets derived from
tax-qualified retirement plans except indirectly,
through Contracts purchased in connection with such plans and that the
Service Fee does not include any payment to the Company that is
prohibited under the Employee Retirement Income Securities Act of 1974
("ERISA") with respect to any assets of a Contract owner invested in a
Contract using the Portfolios as investment vehicles.
c. The Company represents, warrants and agrees that: (1) the payment of the
Service Fee by the Adviser is designed to reimburse the Company for
providing administrative services to the Trust that the Trust would
customarily provide and does not represent reimbursement to the Company
for providing administrative services to the Contract or Account as
described in Section 26 of the Investment Company Act of 1940 (the "1940
Act") and the rules and regulations thereunder; (2) no portion of the
Service Fee will be rebated by the Company to any Contract owner; and
(3) the Company will disclose to each Contract owner the existence of
the Service Fee received by the Company pursuant to this letter
agreement in a form consistent with the requirements of applicable law
and will disclose the amount of the Service Fee, if any, that is paid by
the Trust as required by applicable law.
5. Indemnification
a. The Company agrees to indemnify and hold harmless the Adviser and its
directors, officers, and employees from any and all loss, liability and
expense resulting from any negligence or willful wrongful act of the
Company in performing its services under this letter agreement, from the
inaccuracy or breach of any representation made in this letter
agreement, or from a breach of a material provision of this letter
agreement, except to the extent such loss, liability or expense is the
result of the Adviser's misfeasance, bad faith or negligence in the
performance of its duties.
b. The Adviser agrees to indemnify and hold harmless the Company and its
directors, officers, agents and employees from any and all loss,
liability and expense resulting from any negligence or willful wrongful
act of the Adviser in performing its services under this letter
agreement, from the inaccuracy or breach of any representation made in
this letter agreement, or from a breach of a material provision of this
letter agreement, except to the extent such loss, liability or expense
is the result of the Company's misfeasance, bad faith or negligence in
the performance of its duties.
6. Term. This letter agreement will remain in full force and effect for so
long as assets of the Portfolios are attributable to amounts invested by the
Company, unless terminated in accordance with Paragraph 7 of this letter
agreement.
7. Termination.
a. Either party may terminate this letter agreement, without penalty, on
sixty (60) days' written notice to the other party.
b. This letter agreement will terminate at the option of either party in
the event of the termination of the Participation Agreement.
c. This letter agreement will terminate immediately upon the
determination of either party, with the advice of counsel, that the
payment of the Service Fee is in conflict with applicable law.
d. In the event of termination of this letter agreement pursuant to
paragraphs a or b herein, the Adviser will continue to pay the
Service Fee for one year from the effective date of termination,
provided the Company continues to provide the administrative services
set forth in Schedule A.
8. Amendment. This letter agreement may be amended only upon mutual agreement
of the parties hereto in writing.
9. Confidentiality. The terms of this letter agreement will be treated as
confidential and will not be disclosed to the public or any outside party
except with each party's prior written consent, as required by law or
judicial process or as provided in paragraph 4c herein.
10. Assignment. This letter agreement may not be assigned (as that term is
defined in the 1940 Act) by either party without the prior written approval
of the other party, which approval will not be unreasonably withheld,
except that the Adviser may assign its obligations under this letter
agreement, including the payment of all or any portion of the Service Fee,
to the Trust upon sixty (60) days' written notice to the Company.
11. Governing Law. This letter agreement will be construed and the provisions
hereof interpreted under and in accordance with the laws of the State of
Colorado.
12. 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.
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,
JANUS CAPITAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President of Institutional Services
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
By: /s/ Xxxxxx X. Xxxx
---------------------------------------------
Name: Xxxxxx X. Xxxx
Title: Senior Vice President
Attachment: Schedule A
SCHEDULE A
Pursuant to the letter agreement to which this Schedule is attached, the
Company will perform administrative services including, but not limited to, the
following:
1. Print and mail to Contract owners copies of the Portfolios'
prospectuses, proxy materials, periodic fund reports to shareholders and other
materials that the Trust is required by law or otherwise to provide to its
shareholders.
2. Provide Contract owner services including, but not limited to,
trained representatives to respond to inquiries related to the Portfolios (not
including information about performance or related to sales) and communicating
with Contract owners about Portfolio (and subaccount) performance.
3. Provide other administrative support for the Trust as mutually agreed
to by the Company and the Adviser and relieve the Trust of other usual or
incidental administrative services provided to individual Contract owners.
