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EXHIBIT (b)(8)(d)
PARTICIPATION AGREEMENT
THIS AGREEMENT, is made as of May 7, 1997, by and among National Life
Insurance Company ("Company"), on its own behalf and on behalf of National
Variable Annuity Account II, a segregated asset account of the Company
("Account"), Strong Variable Insurance Funds, Inc. (the "Insurance Funds") and
Strong Special Fund II, Inc. ("Special Fund"), Strong Capital Management, Inc.
(the "Adviser"), the investment adviser and transfer agent for the Insurance
Funds and the Special Fund, and Strong Funds Distributors, Inc.
("Distributors"), the distributor for the Insurance Funds and the Special Fund
(each, a "Party" and collectively, the "Parties").
WHEREAS, beneficial interests in the Strong Variable Insurance Funds,
Inc. are divided into several series of shares, each representing the interest
in a particular managed portfolio of securities and other assets (the
"Portfolios");
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Strong Special Fund
II, Inc. and the Portfolios named in Exhibit A, hereto (said series of the
Insurance Funds, the "Designated Portfolios"; reference herein to a "Fund" or
"Funds" shall be deemed to refer to each Designated Portfolio and to the
Special Fund to the extent the context requries), as such Exhibit may be
amended from time to time, on behalf of the Account to fund the variable
annuity contracts that use the Designated Portfolios as an underlying
investment medium (the "Contracts");
WHEREAS, the Company, Adviser and Distributors desire to facilitate
the purchase and redemption of shares of the Special Fund and the Designated
Portfolios by the Company for the Account through one account in the Special
Fund and in each Designated Portfolio (each an "Omnibus Account") to be
maintained of record by the Company, subject to the terms and conditions of
this Agreement; and
WHEREAS, the Company desires to provide administrative services and
functions (the "Services") for purchasers of Contracts ("Owners") who are
beneficial owners of shares of the Special Fund or Designated Portfolios on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the Company, Fund, Adviser and Distributors agree as follows:
1. Performance of Services. Company agrees to perform the administrative
functions and services specified in Exhibit B attached hereto with respect to
the shares of the Designated Portfolios beneficially owned by the Owners and
included in the Account.
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2. The Omnibus Accounts.
2.1 Each Omnibus Account will be opened based upon the information
contained in Exhibit C hereto. In connection with each Omnibus Account, Company
represents and warrants that it is authorized to act on behalf of each Owner
effecting transactions in the Omnibus Account and that the information
specified on Exhibit C hereto is correct.
2.2 The Fund shall designate each Omnibus Account with an account number.
Account numbers will be the means of identification when the parties are
transacting in the Omnibus Accounts. The assets in the Accounts are segregated
from the Company's own assets. The Adviser agrees to cause the Omnibus
Accounts to be kept open on the Designated Portfolio's or Special Fund's books,
as applicable, regardless of a lack of activity or small position size except
to the extent the Company takes specific action to close an Omnibus Account or
to the extent the Fund's prospectus reserves the right to close accounts which
are inactive or of a small position size. In the latter two cases, the Adviser
will give prior notice to the Company before closing an Omnibus Account.
2.3 The Company agrees to provide Adviser such information as Adviser or
Distributors may reasonably request concerning Owners as may be necessary or
advisable to enable Company and Distributors to comply with applicable laws,
including state "Blue Sky" laws relating to the sales of Fund shares to the
Accounts.
3. Fund Shares Transactions.
3.1 In General. Designated Portfolio and Fund shares shall be sold on
behalf of the Fund by Distributors and purchased by Company for the Account
and, indirectly for the appropriate subaccount thereof at the net asset value
next computed after receipt by Distributors of each order of the Company or its
designee, in accordance with the provisions of this Agreement, the then current
prospectuses of the Designated Portfolio, and the Contracts. Company may
purchase Designated Portfolio and Fund shares for its own account subject to
(a) receipt of prior written approval by Distributors; and (b) such purchases
being in accordance with the then current prospectuses of the Portfolio and the
Contracts. The Board of Directors of each Fund ("Directors") may refuse to sell
shares of Fund to any person, or suspend or terminate the offering of shares of
the Fund if such action is required by law or by regulatory authorities having
jurisdiction. Company agrees to purchase and redeem the shares of the Fund in
accordance with the provisions of this Agreement, of the Contracts and of the
then current prospectuses for the Contracts and Designated Portfolio. Except as
necessary to implement transactions initiated by Owners, or as otherwise
permitted by state and/or federal laws or regulations, Company shall not redeem
Fund shares attributable to the Contracts.
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3.2 Purchase and Redemption Orders. On each day that the Funds are open
for business (a "Business Day"), the Company shall aggregate and calculate the
net purchase or redemption order it receives for the Account from the Owners
for shares of the Fund that it received prior to the close of trading on the
New York Stock Exchange (the "NYSE") (i.e. 3:00 p.m., Central time, unless the
NYSE closes at an earlier time in which case such earlier time shall apply) and
communicate to Distributors, by telephone or facsimile (or by such other means
as the parties hereto may agree to in writing), the net aggregate purchase or
redemption order (if any) for the Omnibus Account for such Business Day (such
Business Day is sometimes referred to herein as the "Trade Date"). The Company
will communicate such orders to Distributors prior to 8:00 a.m., Central time,
on the next Business Day following the Trade Date. All trades communicated to
Distributors by the foregoing deadline shall be treated by Distributors as if
they were received by Distributors prior to the close of trading on the Trade
Date.
3.3 Settlement of Transactions.
(a) Purchases. Company will wire, or arrange for the wire of, the
purchase price of each purchase order to the custodian for the Fund in
accordance with written instructions provided by Distributors to the
Company so that either (1) such funds are received by the custodian for
the Fund prior to 12:00 (noon), Central time, on the next Business Day
following the Trade Date, or (2) Distributors is provided with a Federal
Funds wire system reference number prior to such 12:00 noon deadline
evidencing the entry of the wire transfer of the purchase price to the
applicable custodian into the Federal Funds wire system prior to such
time. Company agrees that if it fails to provide funds to the Fund's
custodian by the close of business on the next Business Day following the
Trade Date, then, at the option of Distributors, (i) the transaction may
be canceled, or (ii) the transaction may be processed at the
next-determined net asset value for the applicable Fund after purchase
order funds are received. In such event, the Company shall indemnify and
hold harmless Distributors, Adviser and/or the Fund from any liabilities,
costs and damages either may suffer as a result of such failure.
(b) Redemptions. The Adviser will use its best efforts to cause to
be transmitted to such custodial account as Company shall direct in
writing, the proceeds of all redemption orders placed by Company by 8:00
a.m., Central time, on the Business Day immediately following the Trade
Date, by wire transfer on that Business Day. Should Company need to extend
the settlement on a trade, it will contact Adviser to discuss the
extension. For purposes of determining the length of settlement, Adviser
agrees to treat the Account no less favorably than other shareholders of
the Designated Portfolio. Each wire transfer of redemption proceeds shall
indicate, on the Federal Funds wire system, the amount thereof
attributable to each Portfolio; provided, however, that if the number of
entries would be too great to be transmitted through the Federal Funds
wire system, the Adviser shall, on the day the wire is sent, fax such
entries to Company or if
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possible, send via direct or indirect systems access until otherwise
directed by the Company in writing.
(c) Authorized Persons. The following persons are each duly
authorized to act on behalf of the Company under this Agreement. The
Funds, Adviser and Distributors are entitled to conclusively rely on
verbal or written instructions that Adviser or Distributors reasonably
believes were originated by any one of said persons. The Company shall
inform Adviser and Distributors of additions to or subtractions from this
list of authorized persons pursuant to Section 13, hereof:
Xxxxxxxx Xxxxx
Xxxxx Xxxxxxxxx
Xxxxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxxxx Xxxxx
3.4 Book Entry Only. Issuance and transfer of Fund shares will be by
book entry only. Stock certificates will not be issued to the Company or the
Account. Shares of the Fund ordered from Distributors will be recorded in the
appropriate book entry title for the Account.
3.5 Distribution Information. The Adviser or Distributors shall provide
the Company with all distribution announcement information as soon as it is
announced by the Fund. The distribution information shall set forth, as
applicable, ex-dates, record date, payable date, distribution rate per share,
record date share balances, cash and reinvested payment amounts and all other
information reasonably requested by the Company. Where possible, the Adviser or
Distributors shall provide the Company with direct or indirect systems access
to the Adviser's systems for obtaining such distribution information.
3.6 Reinvestment. All dividends and capital gains distributions will be
automatically reinvested on the payable date in additional shares of the
Designated Portfolio or Special Fund, as applicable, at net asset value in
accordance with each Designated Portfolio's or the Special Fund's then current
prospectus.
3.7 Pricing Information. Distributors shall use its best efforts to
furnish to the Company prior to 6:00 p.m., Central time, on each Business Day
the Designated Portfolios' and Special Fund's closing net asset value for that
day, and for those Funds for which such information is calculated, the daily
accrual for interest rate factor (mil rate). Such information shall be
communicated via fax, or indirect or direct systems access acceptable to the
Company.
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3.8 Price Errors.
(a) In the event adjustments are required to correct any
error in the computation of the net asset value of Fund shares, Fund or
Adviser shall promptly notify Company after discovering the need for those
adjustments which result in a reimbursement to an Account in accordance
with such Fund's or Designated Portfolio's then current policies on
reimbursement. Notification may be made orally or via direct or indirect
systems access. Any such notification shall be promptly followed by a
letter written on Fund or Adviser letterhead and must state for each day
for which an error occurred the incorrect price, the correct price, and,
to the extent communicated to the Fund's shareholder, the reason for the
price change. Fund and Adviser agree that Company may send this writing,
or derivation thereof (so long as such derivation is approved in advance
by Fund or Adviser, which approval shall not be unreasonably withheld) to
Owners that are affected by the price change.
(b) If the Account received amounts in excess of the amounts
to which it otherwise would have been entitled prior to an adjustment for
an error, Company, when requested by Fund or Adviser, will use its best
efforts to collect such excess amounts from the accounts of the Owners. In
no event, however, shall Company be liable to Fund or Adviser for any such
amounts.
(c) If an adjustment is to be made in accordance with
subsection (a) above to correct an error which has caused the Account to
receive an amount less than that to which it is entitled, Fund and/or
Adviser shall make all necessary adjustments (within the parameters
specified in subsection (a)) to the number of shares owned in the Account
and distribute to the Company the amount of such underpayment for credit
to the accounts of the Owners.
3.9 Agency. Distributors hereby appoints the Company as its agent for
the limited purpose of accepting purchase and redemption instructions from the
Owners for the purchase and redemption of shares of the Fund by the Company on
behalf of Account.
3.10 Quarterly Reports. Adviser agrees to provide Company a statement of
Special Fund and Designated Portfolio assets as soon as practicable and in any
event within 30 days after the end of each calendar quarter, and a statement
certifying the compliance by the Special Fund and the Designated Portfolios
during that fiscal quarter with the diversification requirements and
qualification as a regulated investment company. In the event of a breach of
Section 6.4(a), Adviser will take all reasonable steps (a) to notify Company of
such breach and (b) to adequately diversify the Portfolio so as to achieve
compliance within the grace period afforded by Treasury Regulation 1.817-5.
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4. Proxy Solicitations and Voting. The Company shall, at its expense,
distribute or arrange for the distribution of all proxy materials furnished by
the Fund to the Account and shall: (i) solicit voting instructions from Owners;
(ii) vote the Fund shares in accordance with instructions received from Owners;
and (iii) vote the Fund shares for which no instructions have been received, as
well as shares attributable to it, in the same proportion as Fund shares for
which instructions have been received from Owners, so long as and to the extent
that the Securities and Exchange Commission (the "SEC") continues to interpret
the Investment Company Act of 1940, as amended (the "1940 Act"), to require
pass-through voting privileges for various contract owners. The Company and its
agents will not recommend action in connection with, or oppose or interfere
with, the solicitation of proxies for the Fund shares held for Owners.
5. Customer Communications.
5.1 Prospectuses. The Adviser or Distributors, at its expense,
will provide the Company with as many copies of the current prospectus for the
Special Fund and Designated Portfolios as the Company may reasonably request
for distribution, at the Company's expense, to existing or prospective Owners.
5.2 Shareholder Materials. The Adviser and Distributors shall, as
applicable, provide in bulk to the Company or its authorized representative, at
a single address and at no expense to the Company, the following shareholder
communications materials prepared for circulation to Owners in quantities
requested by the Company which are sufficient to allow mailing thereof by the
Company and, to the extent required by applicable law, to all Owners: proxy or
information statements, annual reports, semi-annual reports, and all initial
and updated prospectuses, supplements and amendments thereof Neither the Funds,
the Adviser nor Distributors shall be responsible for the cost of distributing
such materials to Owners.
6. Representations and Warranties.
6.1 The Company represents and warrants that:
(a) It is an insurance company duly organized and in good standing
under the laws of the State of Vermont and that it has legally and validly
established the Account prior to any issuance or sale thereof as a
segregated asset account and that the Company has and will maintain the
capacity to issue all Contracts that may be sold; and that it is and will
remain duly registered, licensed, qualified and in good standing to sell
the Contracts in all the jurisdictions in which such Contracts are to be
offered or sold;
(b) It is and will remain duly registered and licensed in all
material respects under all applicable federal and state securities and
insurance laws and shall perform its obligations hereunder in compliance
in all material respects with any applicable state and federal laws;
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(c) The Contracts are and will be registered under the Securities
Act of 1933, as amended (the "1933 Act"), and are and will be registered
and qualified for sale in the states where so required; and the Account is
and will be registered as a unit investment trust in accordance with the
1940 Act and shall be a segregated investment account for the Contracts;
(d) The Contracts are currently treated as annuity contracts, under
applicable provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), and the Company will maintain such treatment and will notify
Adviser, Distributors and Fund promptly upon having a reasonable basis for
believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future;
(e) It is registered as a transfer agent pursuant to Section 17A of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), or is
not required to be registered as such;
(f) The arrangements provided for in this Agreement will be
disclosed to the Owners; and
(g) It is registered as a broker-dealer under the 1934 Act and any
applicable state securities laws, including as a result of entering into
and performing the Services set forth in this Agreement, or is not
required to be registered as such.
6.2 The Funds each represent and warrant that Fund shares sold
pursuant to this Agreement are and will be registered under the 1933 Act
and the Fund is and will be registered as a registered investment company
under the Investment Company Act of 1940, in each case, except to the
extent the Company is so notified in writing;
6.3 Distributors represents and warrants that:
(a) It is and will be a member in good standing of the NASD and is and
will be registered as a broker-dealer with the SEC; and
(b) It will sell and distribute Fund shares in accordance with all
applicable state and federal laws and regulations.
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6.4 Adviser represents and warrants that:
(a) It will cause each Fund to invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable annuity
contracts under the Code and the regulations issued thereunder, and that each
Fund will comply with Section 817(h) of the Code as amended from time to time
and with all applicable regulations promulgated thereunder;
(b) It is and will remain duly registered and licensed in all material
respects under all applicable federal and state securities and insurance laws
and shall perform its obligations hereunder in compliance in all material
respects with any applicable state and federal laws; and
6.5 Each of the parties hereto represents and warrants to the others that:
(a) It has full power and authority under applicable law, and has taken
all action necessary, to enter into and perform this Agreement and the person
executing this Agreement on its behalf is duly authorized and empowered to
execute and deliver this Agreement;
(b) This Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms and it shall comply in all
material respects with all laws, rules and regulations applicable to it by
virtue of entering into this Agreement;
(c) No consent or authorization of, filing with, or other act by or in
respect of any governmental authority, is required in connection with the
execution, delivery, performance, validity or enforceability of this Agreement;
(d) The execution, performance and delivery of this Agreement will not
result in it violating any applicable law or breaching or otherwise impairing
any of its contractual obligations;
(e) Each Party hereto is entitled to rely on any written records or
instructions provided to it by another Party; and
(f) Its directors, officers, employees, and investment advisers, and
other individuals/entities dealing with the money and/or securities of a Fund
are and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
amount required by the applicable rules of the National Association of
Securities Dealers, Inc. ("NASD") and the federal
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securities laws, which bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
7. Sales Material and Information
7.1 NASD Filings. The Company shall promptly inform Distributors as to
the status of all sales literature filings pertaining to the Special Fund or
Designated Portfolios and shall promptly notify Distributors of all approvals
or disapprovals of sales literature filings with the NASD. For purposes of this
Section 7, the phrase "sales literature or other promotional material" shall be
construed in accordance with all applicable securities laws and regulations.
7.2 Company Representations. The Company shall not make any material
representations concerning the Adviser, the Distributors, or a Fund other than
the information or representations contained in: (a) a registration statement
of the Fund or prospectus of a Designated Portfolio or Special Fund, as amended
or supplemented from time to time; (b) published reports or statements of the
Funds which are in the public domain or are approved by Distributors and/or the
Funds; or (c) sales literature or other promotional material of the Funds.
7.3 Adviser, Distributors and Fund Representations. Neither Adviser,
Distributors nor a Fund shall make any material representations concerning the
Company other than the information or representations contained in: (a) a
registration statement or prospectus for the Contracts, as amended or
supplemented from time to time; (b) published reports or statements of the
Contracts or the Account which are in the public domain or are approved by the
Company; or (c) sales literature or other promotional material of the Company.
7.4 Trademarks, etc. Except to the extent required by applicable law, no
Party shall use any other Party's names, logos, trademarks or service marks,
whether registered or unregistered, without the prior consent of such Party.
7.5 Information From Distributors and Adviser. Upon request, Distributors
and/or Adviser will provide to Company at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, solicitations for voting instructions, applications
for exemptions, requests for no action letters, and all amendments to any of
the above, that relate to the Designated Portfolios or the Special Fund, in
final form as filed with the SEC, NASD and other regulatory authorities.
7.6 Information From Company. Company will provide to Distributors 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, requests for no action letters and all amendments to any of the
above, that relate to a Fund and the Contracts, in final form as filed with the
SEC, NASD and other regulatory authorities.
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7.7 Review of Marketing Materials. If so requested by Company, the
Adviser or Distributors will use its best efforts to review sales literature
and other marketing materials prepared by Company which relate to the Funds,
the Adviser or Distributors for factual accuracy as to such entities, provided
that the Adviser or Distributors is provided at least five (5) Business Days to
review such materials. Neither the Adviser nor Distributors will review such
materials for compliance with applicable laws. Company shall provide the
Adviser with copies of all sales literature and other marketing materials which
refer to the Funds, the Company or Distributors within five (5) Business Days
after their first use, regardless of whether the Adviser or Distributors has
previously reviewed such materials. If so requested by the Adviser or
Distributors, Company shall cease to use any sales literature or marketing
materials which refer to the Funds, the Adviser or Distributors that the
Adviser or Distributors determines to be inaccurate, misleading or otherwise
unacceptable.
8. Fees and Expenses.
8.1 Fund Registration Expenses. Fund or Distributors shall bear the cost
of registration and qualification of Fund shares; preparation and filing of
Fund prospectuses and registration statements, proxy materials and reports;
preparation of all other statements and notices relating to Fund or
Distributors required by any federal or state law; payment of all applicable
fees, including, without limitation, all fees due under Rule 24f-2 of the 1940
Act, relating to Fund; and all taxes on the issuance or transfer of Fund's
shares on the Fund's records.
8.2 Contract Registration Expenses. The Company shall bear the expenses
for the costs of preparation and filing of the Company's prospectus and
registration statement with respect to the Contracts; preparation of all other
statements and notices relating to the Account or the Contracts required by any
federal or state law; expenses for the solicitation and sale of the Contracts
including all costs of printing and distributing all copies of advertisements,
prospectuses, Statements of Additional Information, proxy materials, and
reports to Owners or potential purchasers of the Contracts as required by
applicable state and federal law; payment of all applicable fees relating to
the Contracts; all costs of drafting, filing and obtaining approvals of the
Contracts in the various states under applicable insurance laws; filing of
annual reports on form N-SAR, and all other costs associated with ongoing
compliance with all such laws and its obligations hereunder.
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9. Indemnification.
9.1 Indemnification By Company.
(a) Company agrees to indemnify and hold harmless the Funds, Adviser
and Distributors and each of their directors, officers, employees and
agents, and each person, if any, who controls any of them within the
meaning of Section 15 of the 1933 Act (each, an "Indemnified Party" and
collectively, the "Indemnified Parties" for purposes of this Section 9.1)
from and against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of
Company), and expenses (including reasonable legal fees and expenses), to
which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise (collectively, hereinafter
"Losses"), insofar as such Losses:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement, prospectus or sales literature for the
Contracts or contained in the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this paragraph
9.1(a) shall not apply as to any Indemnified Party if such statement
or omission or such alleged statement or omission was made in
reliance upon and in conformity with written information furnished to
Company by or on behalf of a Fund, Distributors or Adviser for use in
the registration statement or prospectus for the Contracts or in the
Contracts (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of, or as a result of, statements or
representations or wrongful conduct of Company or its agents, with
respect to the sale or distribution of the Contracts or Fund shares;
or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, or sales literature covering a Fund or any amendment
thereof or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, if such a
statement or omission was made in reliance upon written information
furnished to a Fund, Adviser or Distributors by or on behalf of
Company; or
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(iv) arise out of, or as a result of, any failure by Company or
persons under its control to provide the Services and furnish the
materials contemplated under the terms of this Agreement; or
(v) arise out of, or result from, any material breach of any
representation and/or warranty made by Company or persons under its
control in this Agreement or arise out of or result from any other
material breach of this Agreement by Company or persons under its
control; as limited by and in accordance with the provisions of
Sections 9.1(b) and 9.1(c) hereof; or
(vi) arise out of, or as a result of, adherence by Adviser or
Distributors to instructions that it reasonably believes were
originated by persons specified in Section 3.2(c), hereof.
This indemnification provision is in addition to any liability which
the Company may otherwise have.
(b) Company shall not be liable under this indemnification provision
with respect to any Losses to which an Indemnified Party would otherwise
be subject by reason of such Indemnified Party's willful misfeasance, bad
faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations or duties under this Agreement.
(c) Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify
Company of any such claim shall not relieve Company from any liability
which it may have to the Indemnified Party otherwise than on account of
this indemnification provision. In case any such action is brought against
any Indemnified Party, and it notified the indemnifying Party of the
commencement thereof, the indemnifying Party will be entitled to
participate therein and, to the extent that it may wish, assume the
defense thereof, with counsel satisfactory to such Indemnified Party.
After notice from the indemnifying Party of its intention to assume the
defense of an action, the Indemnified Party shall bear the expenses of any
additional counsel obtained by it, and the indemnifying Party shall not be
liable to such Indemnified Party under this Section for any legal or other
expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof other than reasonable costs of investigation. The
Indemnified Party may not settle any action without the written consent of
the indemnifying Party. The indemnifying Party may not settle any action
without the written consent of the Indemnified Party unless
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such settlement completely and finally releases the Indemnified Party from
any and all liability. In either event, consent shall not be unreasonably
withheld.
(d) The Indemnified Parties will promptly notify Company of the
commencement of any litigation or proceedings against them in connection
with the issuance or sale of Fund shares or the Contracts or the operation
of Fund.
9.2 Indemnification by Adviser and Distributors.
(a) Adviser and Distributors agrees to indemnify and hold harmless
Company and each of its directors, officers, employees and agents and each
person, if any, who controls Company within the meaning of Section 15 of
the 1933 Act (each, and "Indemnified Party" and collectively, the
"Indemnified Parties" for purposes of this Section 9.2) against any and
all Losses to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such Losses:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of a Fund
(or any amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided
that this Section 9.2(a) shall not apply as to any Indemnified Party
if such statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with written information
furnished to a Fund, Adviser or Distributors by or on behalf of
Company for use in the registration statement or prospectus for a
Fund or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or
Fund shares; or
(ii) arise out of, or as a result of, statements or
representations or wrongful conduct of Adviser or Distributors or
persons under its control, with respect to the sale or distribution
of Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading,
if such statement or omission was made in reliance upon written
information furnished to Company by or on behalf of Adviser or
Distributors; or
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(iv) arise out of, or as a result of, any failure by Adviser or
Distributors or persons under its control to provide the services and
furnish the materials contemplated under the terms of this Agreement;
or
(v) arise out of or result from any material breach of any
representation and/or warranty made by Adviser or Distributors or
persons under its control in this Agreement or arise out of or result
from any other material breach of this Agreement by Adviser or
Distributors or persons under its control; as limited by and in
accordance with the provisions of Sections 9.2(b) and 9.2(c) hereof.
This indemnification provision is in addition to any liability which
Adviser and Distributors may otherwise have.
(b) Distributors shall not be liable under this indemnification
provision with respect to any Losses to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to
Company.
(c) Adviser and Distributors shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified
Adviser and Distributors in writing within a reasonable time after the
summons or other first legal process giving information of the nature of
the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify Adviser and Distributors of any
such claim shall not relieve Adviser and Distributors from any liability
which it may have to the Indemnified Party otherwise than on account of
this indemnification provision. In case any such action is brought against
any Indemnified Party, and it notified the indemnifying Party of the
commencement thereof, the indemnifying Party will be entitled to
participate therein and, to the extent that it may wish, assume the
defense thereof, with counsel satisfactory to such Indemnified Party.
After notice from the indemnifying Party of its intention to assume the
defense of an action, the Indemnified Party shall bear the expenses of any
additional counsel obtained by it, and the indemnifying Party shall not
be liable to such Indemnified Party under this Section for any legal or
other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation. The Indemnified Party may not settle any action without the
written consent of the indemnifying Party. The indemnifying Party may not
settle any action without the written consent of the Indemnified Party
unless such settlement completely and finally releases the Indemnified
Party from any and all liability. In either event, consent shall not be
unreasonably withheld.
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(d) The Indemnified Parties will promptly notify Adviser and
Distributors of the commencement of any litigation or proceedings against
them in connection with the issuance or sale of the Contracts or the
operation of the Account.
10. Potential Conflicts.
10.1 Monitoring by Directors for Conflicts of Interest. The Directors of
each Fund will monitor the Fund for any potential or existing material
irreconcilable conflict of interest between the interests of the contract
owners of all separate accounts investing in the Fund, including such conflict
of interest with any other separate account of any other insurance company
investing in the Fund. An irreconcilable material conflict may arise for a
variety of reasons, including: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretive letter, or any similar action by insurance, tax or
securities regulatory authorities; (c) an administrative or judicial decision
in any relevant proceeding; (d) the manner in which the investments of the Fund
are being managed; (e) a difference in voting instructions given by variable
annuity contract owners and variable life insurance contract owners or by
contract owners of different life insurance companies utilizing the Fund; or
(f) a decision by Company to disregard the voting instructions of Owners. The
Directors shall promptly inform the Company, in writing, if they determine that
an irreconcilable material conflict exists and the implications thereof.
10.2 Monitoring by the Company for Conflicts of Interest. The Company will
promptly notify the Directors, in writing, of any potential or existing
material irreconcilable conflicts of interest, as described in Section 10.1
above, of which it is aware. The Company will assist the Directors in carrying
out their responsibilities under any applicable provisions of the federal
securities laws and/or any exemptive orders granted by the SEC ("Exemptive
Order"), by providing the Directors, in a timely manner, with all information
reasonably necessary for the Directors to consider any issues raised. This
includes, but is not limited to, an obligation by the Company to inform the
Directors whenever Owner voting instructions are disregarded.
10.3 Remedies. If it is determined by a majority of the Directors, or a
majority of disinterested Directors, that a material irreconcilable conflict
exists, as described in Section 10.1 above, the Company shall, at its own
expense take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including, but not limited to: (a),
withdrawing the assets allocable to some or all of the separate accounts from
the applicable Fund and reinvesting such assets in a different investment
medium, including (but not limited to) another fund managed by the Adviser, or
submitting the question whether such segregation should be implemented to a
vote of all affected Owners and, as appropriate, segregating the assets of any
particular group that votes in favor of such segregation, or offering to the
affected
15
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owners the option of making such a change; and (b), establishing a new
registered management investment company or managed separate account.
10.4 Causes of Conflicts of Interest.
(a) State Insurance Regulators. If a material irreconcilable
conflict arises because a particular state insurance regulator's
decision applicable to the Company conflicts with the majority of
other state regulators, then the Company will withdraw the affected
Account's investment in the applicable Fund and terminate this
Agreement with respect to such Account within the period of time
permitted by such decision, but in no event later than six months
after the Directors inform the Company in writing that it has
determined that such decision has created an irreconcilable material
conflict; provided, however, that such withdrawal and termination
shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the
disinterested Directors. Until the end of the foregoing period, the
Distributors and Fund shall continue to accept and implement orders
by the Company for the purchase (and redemption) of shares of the
Fund to the extent such actions do not violate applicable law.
(b) Disregard of Owner Voting. If a material irreconcilable
conflict arises because of Company's decision to disregard Owner
voting instructions and that decision represents a minority position
or would preclude a majority vote, Company may be required, at the
applicable Fund's election, to withdraw the Account's investment in
said Fund. No charge or penalty will be imposed against the Account
as a result of such withdrawal.
10.5 Limitations on Consequences. For purposes of Sections 10.3
through 10.5 of this Agreement, a majority of the disinterested Directors
shall determine whether any proposed action adequately remedies any
irreconcilable material conflict. In no event will a Fund, the Adviser or
the Distributors be required to establish a new funding medium for any of
the Contracts. The Company shall not be required by Section 10.3 to
establish a new funding medium for the Contracts if an offer to do so has
been declined by vote of a majority of Owners affected by the
irreconcilable material conflict. In the event that the Directors
determine that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Company will withdraw the
Account's investment in the applicable Fund and terminate this Agreement
as quickly as may be required to comply with applicable law, but in no
event later than six (6) months after the Directors inform the Company in
writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any
such material irreconcilable conflict.
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10.6 Changes in Laws. If and to the extent that Rule 6e-2 and Rule
6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief
from any provision of the Act or the rules promulgated thereunder with
respect to mixed or shared funding (as defined in the Fund's Exemptive
Order) on terms and conditions materially different from those contained
in the Fund's Exemptive Order, then (a) the Fund and/or the Company, as
appropriate, shall take such steps as may be necessary to comply with
Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 10.1, 10.2, 10.3 and
10.4 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
11. Maintenance of Records.
(a) Recordkeeping and other administrative services to Owners
shall be the responsibility of the Company and shall not be the
responsibility of the Fund, Adviser or Distributors. Neither the
Funds, the Adviser nor Distributors shall maintain separate accounts
or records for Owners. Company shall maintain and preserve all
records as required by law to be maintained and preserved in
connection with providing the Services and in making shares of the
Funds available to the Account.
(b) Upon the request of the Adviser or Distributors, the
Company shall provide copies of all the historical records relating
to transactions between the Funds and the Account, written
communications regarding the Funds to or from the Account and other
materials, in each case (1) as are maintained by the Company in the
ordinary course of its business and in compliance with applicable
law, and (2) as may reasonably be requested to enable the Adviser and
Distributors, or its representatives, including without limitation
its auditors or legal counsel, to (A) monitor and review the
Services, (B) comply with any request of a governmental body or
self-regulatory organization or the Owners, (C) verify compliance by
the Company with the terms of this Agreement, (D) make required
regulatory reports, or (E) perform general customer supervision. The
Company agrees that it will permit the Adviser and Distributors or
such representatives of either to have reasonable access to its
personnel and records in order to facilitate the monitoring of the
quality of the Services.
(c) Upon the request of the Company, the Adviser and
Distributors shall provide copies of all the historical records
relating to transactions between the Funds and the Account, written
communications regarding the Funds to or from the Account and other
materials, in each case (1) as are maintained by the Adviser and
Distributors, as the case may be, in the ordinary course of its
business and in compliance with applicable law, and (2) as may
reasonably be requested to enable the Company, or its
representatives, including without limitation its auditors or legal
counsel, to (A) comply with any request of a governmental body or
self-regulatory organization or the Owners, (B) verify
17
18
compliance by the Adviser and Distributors with the terms of this
Agreement, (C) make required regulatory reports, or (D) perform
general customer supervision.
(d) The Parties agree to cooperate in good faith in providing
records to one another pursuant to this Section II-1.
12. Term and Termination.
12.1 Term and Termination Without Cause. The initial term of this
Agreement shall be for a period of one year from the date hereof. Unless
terminated as to any Fund upon not less than thirty (30) days prior written
notice to the other Parties, this Agreement shall thereafter automatically
renew for the remaining Funds from year to year, subject to termination at the
next applicable renewal date upon not less than 30 days prior written notice.
Any Party may terminate this Agreement as to any Fund following the initial
term upon six (6) months advance written notice to the other Parties.
12.2 Termination by Fund, Distributors or Adviser for Cause. Adviser,
Fund or Distributors may terminate this Agreement by written notice to the
Company, if any of them shall determine, in its sole judgment exercised in good
faith, that (a) the Company 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; or (b) any of the
Contracts are not registered, issued or sold in accordance with applicable
state and/or federal law or such law precludes the use of Fund shares as the
underlying investment media of the Contracts issued or to be issued by the
Company.
12.3 Termination by Company for Cause. Company may terminate this
Agreement by written notice to the Funds and the Distributors in the event that
(a) any of the Fund's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts issued or to be
issued by the Company; (b) the Funds cease to qualify as a Regulated Investment
Companies under Subchapter M of the Code or under any successor or similar
provision, or if the Company reasonably believes that the Funds may fail to so
qualify; or (c) a Fund fails to meet the diversification requirements specified
in Section 6.4(a).
12.4 Termination by any Party. This Agreement may be terminated as to
any Fund by any Party at any time (A) by giving 30 days' written notice to the
other Parties in the event of a material breach of this Agreement by the other
Party or Parties that is not cured during such 30-day period, and (B) (i) upon
institution of formal proceedings relating to the legality of the terms and
conditions of this Agreement against the Account, Company, Funds, Adviser or
Distributors by the NASD, the SEC or any other regulatory body provided that
the terminating Party has a reasonable belief that the institution of formal
proceedings is not without foundation and will have a material adverse impact
on the terminating Party, (ii) by the non-assigning Party upon the
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19
assignment of this Agreement in contravention of the terms hereof, or (iii) as
is required by law, order or instruction by a court of competent jurisdiction
or a regulatory body or self-regulatory organization with jurisdiction over the
terminating Party.
12.5 Limit on Termination. Notwithstanding the termination of this
Agreement with respect to any or all Funds, for so long as any Contracts remain
outstanding and invested in a Designated Portfolio or in the Special Fund each
Party hereto shall continue to perform such of its duties hereunder as are
necessary to ensure the continued tax deferred status thereof and the payment
of benefits thereunder, except to the extent proscribed by law, the SEC or
other regulatory body. Notwithstanding the foregoing, nothing in this Section
12.5 obligates a Fund to continue in existance. In the event that any Fund
elects to terminate its operations, the Company shall, as soon as practicable,
obtain an exemptive order or order of substition from the SEC to remove all
Owners from the applicable Fund.
13. Notices.
All notices hereunder shall be given in writing (and shall be deemed to
have been duly given upon receipt) by delivery in person, by facsimile, by
registered or certified mail or by overnight delivery (postage prepaid, return
receipt requested) to the respective Parties as follows:
If to Insurance Fund:
Strong Variable Insurance Funds, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Special Fund:
Strong Special Fund II, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
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If to Adviser:
Strong Capital Management, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Distributors:
Strong Funds Distributors, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Company:
National Life Insurance Company
National Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
14. Miscellaneous.
14.1. Captions. The captions in this Agreement are included for
convenience of reference only and in no way affect the construction or effect
of any provisions hereof.
14.2. Enforceability. If any portion of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of the Agreement shall not be affected thereby.
14.3. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which taken together shall constitute one and the
same instrument.
14.4. Remedies not Exclusive. The rights, remedies and obligations
contained in this Agreement are cumulative and are in addition to any and all
rights, remedies and obligations, at law or in equity, which the Parties hereto
are entitled to under state and federal laws.
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21
14.5. Confidentiality. Subject to the requirements of legal process and
regulatory authority, the Fund and Distributors shall treat as confidential the
names and addresses of the owners of the Contracts and all information
reasonably identified as confidential in writing by the Company hereto and,
except as permitted by this Agreement, shall not disclose, disseminate or
utilize such names and addresses and other confidential information without the
express written consent of the Company until such time as it may come into the
public domain.
14.6. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of Wisconsin applicable to
agreements fully executed and to be performed therein; exclusive of conflicts
of laws.
14.7. Survivability. Sections 6, 7.2, 7.3, 7.4, 9, 11 and 12.5 hereof
shall survive termination of this Agreement. In addition, all provisions of
this Agreement shall survive termination of this Agreement in the event that
any Contracts are invested in Special Fund or a Designated Portfolio at the
time the termination becomes effective and shall survive for so long as such
Contracts remain so invested.
14.8. Amendment and Waiver. No modification of any provision of this
Agreement will be binding unless in writing and executed by the Party to be
bound thereby. No waiver of any provision of this Agreement will be binding
unless in writing and executed by the Party granting such waiver.
Notwithstanding anything in this Agreement to the contrary, the Company may
unilaterally amend Exhibit A hereto to add additional series of Insurance Funds
("New Funds") as Funds by sending to the Company a written notice of the New
Funds Any valid waiver of a provision set forth herein shall not constitute a
waiver of any other provision of this Agreement. In addition, any such waiver
shall constitute a present waiver of such provision and shall not constitute a
permanent future waiver of such provision.
14.9. Assignment. This Agreement shall be binding upon and shall inure
to the benefit of the Parties and their respective successors and assigns;
provided, however, that neither this Agreement nor any rights, privileges,
duties or obligations of the Parties may be assigned by any Party without the
written consent of the other Parties or as expressly contemplated by this
Agreement.
14.10. Entire Agreement. This Agreement contains the full and complete
understanding between the Parties with respect to the transactions covered and
contemplated hereunder, and supersedes all prior agreements and understandings
between the Parties relating to the subject matter hereof, whether oral or
written, express or implied.
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14.11. Relationship of Parties, No Joint Venture, Etc. Except for
the limited purpose provided in Section 3.8, it is understood and agreed that
the Company shall be acting as an independent contractor and not as an employee
or agent of the Adviser, Distributors or the Funds, and none of the Parties
shall hold itself out as an agent of any other Party with the authority to bind
such Party. Neither the execution nor performance of this Agreement shall be
deemed to create a partnership or joint venture by and among any of the
Company, Fund, Adviser, or Distributors.
14.12. Expenses. All expenses incident to the performance by each Party
of its respective duties under this Agreement shall be paid by that Party.
14.13. Time of Essence. Time shall be of the essence in this Agreement.
14.14. Non-Exclusivity. Each of the Parties acknowledges and agrees that
this Agreement and the arrangements described herein are intended to be
non-exclusive and that each of the Parties is free to enter into similar
agreements and arrangements with other entities.
14.15. Operations of Fund. In no way shall the provisions of this
Agreement limit the authority of the Funds, the Company or Distributors to take
such action as it may deem appropriate or advisable in connection with all
matters relating to the operation of such Fund and the sale of its shares. In
no way shall the provisions of this Agreement limit the authority of the
Company to take such action as it may deem appropriate or advisable in
connection with all matters relating to the provision of Services or the shares
of funds other than the Funds offered to the Account.
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IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement
to be duly executed as of the date first above written.
NATIONAL LIFE INSURANCE COMPANY].
/s/ XXXXX X. XXXXX
----------------------------------------------
Xxxxx X. Xxxxx,/Vice President
Senior
STRONG CAPITAL MANAGEMENT, INC.
/s/ XXXXXXXX XXXX WALLASH
----------------------------------------------
Xxxxxxxx Xxxx Xxxxxxx
President of Strong Advisory Services, a
division of Strong Capital Management, Inc.
STRONG FUNDS DISTRIBUTORS, INC.
/s/ XXXXXXX X. XXXXXXXXXXX
----------------------------------------------
Xxxxxxx X. Xxxxxxxxxxx, Vice President
STRONG VARIABLE INSURANCE FUNDS,
INC.
/s/ XXXXXXX X. XXXXXXXXXXX
----------------------------------------------
Xxxxxxx X. Xxxxxxxxxxx, Vice President
STRONG SPECIAL FUND II, INC.
/s/ XXXXXXX X. XXXXXXXXXXX
----------------------------------------------
Xxxxxxx X. Xxxxxxxxxxx, Vice President
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EXHIBIT A
The following is a list of all series of the Insurance Fund which are to be
made available for investment by the Contracts pursuant to this Agreement:
Strong Growth Fund II
24
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EXHIBIT B
THE SERVICES
Company shall perform the following services. Such services shall be the
responsibility of the Company and shall not be the responsibility of the Funds,
Adviser or Distributors.
1. Maintain separate records for each Account, which records shall
reflect Fund shares ("Shares") purchased and redeemed, including the date and
price for all transactions, Share balances, and the name and address of each
Owner, including zip codes and tax identification numbers.
2. Credit contributions to individual Owner accounts and invest such
contributions in shares of the Special Fund or Designated Portfolios to the
extent so designated by the Owner.
3. Disburse or credit to the Owners, and maintain records of, all
proceeds of redemptions of Special Fund or Designated Portfolio shares and all
other distributions not reinvested in shares.
4. Prepare and transmit to the Owners, periodic account statements
showing, among other things, the total number of Special Fund or Designated
Portfolio shares owned as of the statement closing date, purchases and
redemptions of shares during the period covered by the statement, the net asset
value of the Special Fund and Designated Portfolios as of a recent date, and
the dividends and other distributions paid during the statement period (whether
paid in cash or reinvested in shares).
5. Transmit to the Owners, as required by applicable law,
prospectuses, proxy materials, shareholder reports, and other information
provided by the Adviser, Distributors or Funds and required to be sent to
shareholders under the Federal securities laws.
6. Transmit to Distributors purchase orders and redemption requests
placed by the Account and arrange for the transmission of funds to and from the
Funds.
7. Transmit to Distributors such periodic reports as Distributors
shall reasonably conclude is necessary to enable the Funds to comply with
applicable Federal securities and state Blue Sky requirements.
8. Transmit to the each Account confirmations of purchase orders and
redemption requests placed by each Account.
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9. Maintain all account balance information for the Account and daily
and monthly purchase summaries expressed in shares and dollar amounts.
10. Prepare, transmit and file any Federal, state and local government
reports and returns as required by law with respect to each account maintained
on behalf of the Account.
11. Respond to Owners' inquiries regarding, among other things, share
prices, account balances, dividend options, dividend amounts, and dividend
payment dates.
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EXHIBIT C
ACCOUNT INFORMATION
1. Entity in whose name each Account will be opened:
Mailing address:
National Variable Annuity Account II
-------------------------------------
One National Life Drive
-------------------------------------
Montpelier, Vermont 05604
-------------------------------------
-------------------------------------
2. Employer ID number (For internal usage only):
00-0000000
-------------------------------------
3. Authorized contact persons: The following persons are authorized on behalf
of the Company to effect transactions in each Account:
Name: Xxxxxxxx Xxxxx Name: Xxxxx Xxxxxxxxx
------------------------ ----------------------
Phone: (000) 000-0000 Phone: (000) 000-0000
------------------------ ----------------------
4. Will the Accounts have telephone exchange? x Yes No
------- ------
(This option lets Company redeem shares by telephone and apply the proceeds
for purchase in another identically registered Strong Funds account.)
5. Will the Accounts have telephone redemption? x Yes No
------- ------
(This option lets Company sell shares by telephone. The proceeds will be
wired to the bank account specified below.)
6. All dividends and capital gains will be reinvested automatically.
7. Instructions for all outgoing wire transfers:
Chase Manhattan Bank
-------------------------------------
One Chase Manhattan Plaza
-------------------------------------
New York City, New York
-------------------------------------
ABA Routing #000-000-000
-------------------------------------
For Credit to: National Life
-------------------------------------
Insurance Company, Chase Account
-------------------------------------
#000-0-000000
-------------------------------------
Ref:
-------------------------------------
8. If this Account Information Form contains changed information, the
undersigned authorized officer has executed this amended Account Information
Form as of the date set forth below and acknowledges the agreements and
representations set forth in the Participation Agreement between the Company,
the Funds, Adviser and Distributors:
/s/ XXXXX X. XXXXX May 9, 1997
-------------------------------------- --------------------
(Signature of Authorized Officer) (Date)
Xxxxx X. Xxxxx, Senior Vice President
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9. Company represents under penalty of perjury that:
(i) The employer ID number on this form is correct; and
(ii) Company is not subject to backup withholding because (a) Company is
exempt from backup withholding, (b) Company has not been notified by the IRS
that it is subject to backup withholding as a result of failure to report all
interest or dividends, or (c) the IRS has notified the Company that it is no
longer subject to backup withholding. (Cross out (ii) if Company has been
notified by the IRS that it is subject to backup withholding because of
underreporting interest or dividends on its tax return.)
Please Note: Distributors employs reasonable procedures to confirm that
instructions communicated by telephone are genuine and may not be liable for
losses due to unauthorized or fraudulent instructions. Please see the
prospectus for the Special Fund or applicable Designated Portfolio for more
information on the telephone exchange and redemption privileges.
For Strong Internal Use: This Account Information Form may be a copy. The
original Account Information Form is attached to the Participation Agreement
with the Adviser and retained in the legal department.
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Re: Fee Letter Relating to the National Life Insurance Company
Participation Agreement.
Dear Sir or Madame:
Pursuant to the Participation Agreement by and among Strong Capital
Management, Inc. ("Strong"), National Life Insurance Company (the "Company"),
Strong Variable Insurance Funds, Inc., Strong Special Fund II, Inc. and Strong
Funds Distributors, Inc. ("Distributors") dated May 7, 1997 (the "Participation
Agreement"), the Company will provide certain administrative services on behalf
of the registered investment companies or series thereof specified in Exhibit A
(each a "Fund" and collectively the "Funds").
In recognition of the reduction in administrative expenses that derives
from the performance of said administrative services, Strong agrees to pay the
Company the fee specified below for each Fund specified in Exhibit A hereto.
(a) For average aggregate amounts (as calculated in paragraph
(b), below) invested through variable insurance products issued by the
Company with the Funds, the monthly fee shall equal the percentage
(calculated in paragraph (b), below) of of the applicable annual fee for
each Fund specified in Exhibit A.
(b) For purposes of computing the fee contemplated in paragraph
(a) above, Strong shall calculate and pay to the Company an amount with
respect to each Fund equal to the product of: (a) the product of (i) the
number of calendar days in the applicable month divided by the number of
calendar days in that year (365 or 366 as applicable) and (ii) the
applicable percentage specified in Exhibit A, hereto, multiplied by (b)
the average daily market value of the investments held in such Fund
pursuant to the Participation Agreement computed by totaling the
aggregate investment (share net asset value multiplied by the total
number of shares held) on each day during the calendar month and dividing
by the total number of days during such month.
(c) Strong shall calculate the amount of the payment to be made
pursuant to this Letter Agreement at the end of each calendar month and
will make such payment to the Company within 30 days after receiving the
report referenced in paragraph (e), below. Fees will be paid, at Strong's
election, by wire transfer or by check. All payments hereunder shall be
considered final unless disputed by the Company in writing within 60 days
of receipt.
(d) The parties agree that the fees contemplated herein are
solely for shareholder servicing and other administrative services
provided by the Company and do not constitute payment in any manner for
investment advisory, distribution, trustee, or custodial services.
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(e) The Company agrees to provide Strong by the 15th day of each
month with a report which indicates the number of Owners that hold
through a Contract interests in each Account as of the last day of the
prior month.
(f) If requested in writing by Strong, and at Strong's expense,
the Company shall provide to Strong, by February 14th of each year, a
"Special Report" from a nationally recognized accounting firm reasonably
acceptable to Strong which substantiates for each month of the prior
calendar year: (a) the number of Owners that hold, through an Account,
interests in each Account maintained by the Company on the last day of
each month which held shares for which the fee provided for in this
Letter Agreement was received by the Company, (b) that any fees billed to
Strong for such month were accurately determined in accordance with this
Letter Agreement, and (c) such other information in connection with this
Agreement and the Participation Agreement as may be reasonably requested
by Strong.
(g) The parties hereto agree that Strong may unilaterally amend
Schedule A hereto to add additional investment companies or series
thereof ("New Funds") as Funds subject to the provisions of this Letter
Agreement by sending to the Company a written notice of the New Funds and
indicating therein the fees to be paid to the Company with respect to the
administrative services provided pursuant to the Participation Agreement
in connection with such New Funds.
(h) This Letter Agreement shall terminate upon termination of the
Participation Agreement. Accordingly, all payments pursuant to this
Letter Agreement shall cease upon termination of the Participation
Agreement.
(i) Capitalized terms not otherwise defined herein shall have the
meaning assigned to them in the Participation Agreement.
If you are in agreement with the foregoing, please sign and date
below where indicated and return one copy of this signed letter agreement to
me.
Very truly yours,
/s/ XXXXXXXX XXXX XXXXXXX
Xxxxxxxx Xxxx Xxxxxxx
President of Strong Advisory Services, a
division of Strong Capital Management, Inc.
Accepted and agreed to this 9th day of
May, 1997 by
National Life Insurance Companv
/s/ XXXXX X. XXXXX
------------------------------------------
Xxxxx X. Xxxxx, President
Senior
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EXHIBIT A
The Funds subject to this Agreement and applicable annual fees are as follows:
Fund Annual Fee
Strong Special Fund II, Inc. .20%
Strong Variable Insurance Funds, Inc.
Strong Growth Fund II .20%
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