Exhibit 27(h)(11)
PARTICIPATION AGREEMENT
BY AND AMONG
SENTINEL VARIABLE PRODUCTS TRUST
AND
NATIONAL LIFE INSURANCE COMPANY
AND
EQUITY SERVICES, INC.
THIS AGREEMENT, made and entered into this 27th day of
July, 2000, by and among NATIONAL LIFE INSURANCE COMPANY,
a Vermont insurance company (hereinafter the "Company"), on its own behalf and
on behalf of NATIONAL VARIABLE LIFE INSURANCE ACCOUNT, NATIONAL VARIABLE ANNUITY
ACCOUNT II, and various separate accounts now existing or to be created in the
future to fund certain private placement variable life insurance or annuity
products (hereinafter, the "Accounts"), each a segregated asset account of the
Company, the SENTINEL VARIABLE PRODUCTS TRUST, an open-end diversified
management investment company organized as a business trust under the laws of
the State of Delaware (hereinafter the "Trust") and EQUITY SERVICES, INC., a
Vermont corporation (hereinafter the "Underwriter").
WHEREAS, the Trust engages in business as an open-end
diversified, management investment company and is
available to act as the investment vehicle for separate accounts established for
variable life insurance contracts and variable annuity contracts to be offered
by the Company; and
WHEREAS, beneficial interests in the Trust are divided into
several series of shares, each representing the interest in a particular managed
portfolio of securities and other assets (the "Funds"); and
WHEREAS, the Trust is registered as an open-end management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Company has offered and sold, and will offer
and sell certain variable life insurance contracts and variable annuity
contracts (the "Contracts") pursuant to registration statements under the 1933
Act, or in transactions exempt from registration under the 1933 Act; and
WHEREAS, each of the Accounts is a duly organized, validly
existing segregated asset account, established by resolution of the Board of
Directors of the Company under the insurance laws of Vermont, to set aside and
invest assets attributable to the Contracts; and
WHEREAS, the Company has registered each of
the Accounts as a unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker-dealer
with the SEC under the Securities Exchange Act of 1934, as amended (hereinafter
the "1934 Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance
laws and regulations, the Company intends to purchase shares in the Funds on
behalf of the Accounts to fund the Contracts and the Underwriter is authorized
to sell such shares to the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises,
the Company, the Trust and the Underwriter agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. The Underwriter agrees to sell to the Company those
shares of the Trust which the Company orders on behalf of the Accounts,
executing such orders on a daily basis at the net asset value next computed
after receipt and acceptance by the Trust or its agent of the order for the
shares of the Trust.
1.2. The Trust agrees to make its shares available
indefinitely for purchase at the applicable net asset value per share by the
Company and the Accounts on those days on which the Trust calculates its net
asset value pursuant to rules of the SEC; provided, however, that the Board of
Trustees of the Trust (hereinafter the "Trustees") may refuse to sell shares of
any Fund to any person, or suspend or terminate the offering of shares of any
Fund if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Trustees, acting in good faith
and in light of their fiduciary duties under federal and any applicable state
laws, necessary in the best interests of the shareholders of any Fund.
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1.3. The Trust and the Underwriter agree that shares of the
Trust will be sold only to the Company and the Accounts. No shares of any Fund
will be sold to the general public.
1.4. The Trust agrees to redeem for cash, upon the
Company's request, any full or fractional shares of the Trust held by the
Company, executing such requests on a daily basis at the net asset value next
computed after receipt and acceptance by the Trust or its agent of the request
for redemption.
1.5. The Company agrees to purchase and redeem the shares
of each Fund offered by the then current prospectus of the Trust in accordance
with the provisions of such prospectus. Net amounts available under the
Contracts may be invested in the Trust, in shares of investment companies other
than the Trust, or in the Company's general account.
1.6. The Company shall pay for Trust shares on the same day
that it places an order to purchase Trust shares. Payment shall be in federal
funds transmitted by wire.
1.7. Issuance and transfer of the Trust's shares will be by
book entry only. Stock certificates will not be issued to the Company or the
Accounts. Shares ordered from the Trust will be recorded in an appropriate title
for the applicable Account or the appropriate subaccount of such Account.
1.8. The Trust shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Company of any income
dividends or capital gain distributions payable on the Trust's shares. The
Company hereby elects to receive all such dividends and distributions as are
payable on the Fund shares in additional shares of that Fund. The Company
reserves the right to revoke this election and to receive all such dividends and
distributions in cash. The Trust shall notify the Company of the number of
shares so issued as payment of such dividends and distributions.
1.9. The Trust shall make the net asset value per share for
each Fund available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated.
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ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts
are or will be registered under the 1933 Act, or will be sold in transactions
exempt from registration under the 1933 Act, and that the Contracts will be
issued and sold in compliance with all applicable federal and state laws. The
Company further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally and
validly established each of the Accounts as a segregated asset account under
Section 3855 of the Vermont Insurance Law and has registered each Account that
is required to be so registered as a unit investment trust in accordance with
the provisions of the 1940 Act to serve as segregated investment accounts for
the Contracts, and that it will maintain such registration for so long as any
Contracts utilizing such Account are outstanding. The Company shall amend the
registration statements under the 1933 Act for the Contracts and the
registration statements under the 1940 Act for the Accounts from time to time as
required in order to effect the continuous offering of the Contracts or as may
otherwise be required by applicable law. The Company shall register and qualify
the Contracts for sale in accordance with the securities laws of the various
states only if and to the extent deemed necessary by the Company.
2.2. The Company represents that it believes, in good
faith, that the Contracts are currently and at the time of issuance will be
treated as life insurance policies or annuity contracts under applicable
provisions of the Internal Revenue Code of 1986, and that it will make every
effort to maintain such treatment and that it will notify the Trust and the
Underwriter immediately upon having a reasonable basis for believing that any of
the Contracts have ceased to be so treated or that they might not be so treated
in the future.
2.3. The Trust represents and warrants that Trust shares
sold pursuant to this Agreement shall be registered under the 1933 Act and duly
authorized for issuance in accordance with applicable law and that the Trust is
and shall remain registered under the 1940 Act for as long as the Trust shares
are sold. The Trust shall amend the registration statement for its shares under
the 1933 Act and the 1940 Act from time to time as required in order to effect
the continuous offering of its shares. The Trust shall register and qualify the
shares for sale in accordance with the laws of the various states only if and to
the extent deemed advisable by the Trust or the Underwriter.
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2.4. The Trust represents that it believes, in good faith,
that it is currently qualified as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code of 1986, and that it will make every
effort to maintain such qualification (under Subchapter M or any successor or
similar provision) and that it will notify the Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify or that it might
not so qualify in the future.
2.5. The Trust represents that its investment objectives,
policies and restrictions comply with the Vermont Insurance Law as it applies to
the Trust. To the extent feasible and consistent with market conditions, the
Trust will adjust its investments to comply with requirements of the Company's
domiciliary state upon written notice from the Company of such requirements and
proposed adjustments, it being agreed and understood that in any such case the
Trust shall be allowed a reasonable period of time under the circumstances after
receipt of such notice to make any such adjustment.
2.6. The Trust currently does not intend to make any
payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940
Act or otherwise, although it may make such payments in the future. To the
extent that it decides to finance distribution expenses pursuant to Rule 12b-1,
the Trust undertakes to have a board of trustees, a majority of whom are not
interested persons of the Trust, formulate and approve any plan under Rule 12b-1
to finance distribution expenses.
2.7. The Underwriter represents and warrants that it is a
member in good standing of the NASD and is registered as a broker-dealer with
the SEC. The Underwriter further represents that it will sell and distribute the
Trust shares in accordance with the 1933 Act, the 1934 Act, and the 1940 Act.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Underwriter shall provide the Company, at the
Company's expense, with as many copies of the Trust's current prospectus as the
Company may reasonably request for use with prospective Contract owners and
applicants. The Underwriter shall print and distribute, at the Trust's expense,
as many copies as necessary for distribution to existing Contract owners or
participants. If requested by the Company in lieu thereof, the Trust shall
provide such documentation and other assistance as is reasonably necessary in
order for the Company to have the new prospectus for the Contracts and the
Trust's new prospectus printed together in one document, in such case the Trust
shall bear its share of expenses as described above.
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3.2. The Trust's prospectus shall state that the Statement
of Additional Information for the Trust is available from the Underwriter (or,
in the Trust's discretion, the Prospectus shall state that such Statement is
available from the Trust), and the Underwriter (or the Trust) shall provide such
Statement, at its expense, to the Company and to any owner of or participant
under a Contract who requests such Statement or, at the Company's expense, to
any prospective Contract owner and applicant who requests such statement.
3.3. The Trust, at its expense, shall provide the Company
with copies of its proxy material, reports to shareholders and other
communications to shareholders in such quantity as the Company shall reasonably
require and shall bear the costs of distributing them to existing Contract
owners or participants.
3.4. If and to the extent required by law the Company
shall:
(i) solicit voting instructions from
Contract owners or participants;
(ii) vote the Trust shares held in the
Accounts in accordance with
instructions received from Contract
owners or participants; and
(iii) vote Trust shares held in the Accounts
for which no timely instructions have
been received, and any Trust shares
held in the Company's general account,
in the same proportion as Trust shares
of such Fund for which instructions
have been received;
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require passthrough voting privileges for variable policy owners. The Company
reserves the right to vote Trust shares held in any segregated asset account or
in its general account in its own right, to the extent permitted by law.
3.5. The Trust will comply with all provisions of the 1940
Act requiring voting by shareholders, and in particular the Trust will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Trust is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further,
the Trust will act in accordance with the SEC interpretation of the requirements
of Section 16(a) with respect to periodic elections of trustees and with
whatever rules the Commission may promulgate with respect thereto.
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ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be
furnished, to the Trust or the Underwriter, each piece of sales literature or
other promotional material in which the Trust or the Underwriter is named, at
least five business days prior to its use. No such material shall be used if the
Trust or the Underwriter objects to such use within five business days after
receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Trust shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Trust,
or in sales literature or other promotional material approved by the Trust or by
the Underwriter, except with the permission of the Trust or the Underwriter. The
Trust and the Underwriter agree to respond to any request for approval on a
prompt and timely basis.
4.3. The Trust or the Underwriter shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company or its separate
account(s) is named, at least five business days prior to its use. No such
material shall be used if the Company objects to such use within five business
days after receipt of such material.
4.4. The Trust and the Underwriter shall not give any
information or make any representations on behalf of the Company or concerning
the Company, the Accounts, or the Contracts other than the information or
representations contained in a registration statement, prospectus or private
placement memorandum for the Contracts, as such registration statement,
prospectus or private placement memorandum may be amended or supplemented from
time to time, or in published reports for the Accounts which are in the public
domain or approved by the Company for distribution to Contract owners or
participants, or in sales literature or other promotional material approved by
the Company, except with the permission of the Company. The Company agrees to
respond to any request for approval on a prompt and timely basis.
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4.5. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
sales literature (I.E., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under NASD rules, the 1940 Act or the 1933 Act.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust and Underwriter shall pay no fee or other
compensation to the Company under this Agreement, except that if the Trust or
any Fund adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then, subject to obtaining any required exemptive orders
or other regulatory approvals, the Underwriter may make payments to the Company
or to the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Trust of
this Agreement shall be paid by the Trust to the extent permitted by law. The
Trust shall bear the expenses for the cost of registration and qualification of
the Trust's shares under federal law, and, if applicable, under any state
securities law, preparation and filing of the Trust's prospectus and
registration statement, proxy materials and reports, setting in type, printing
and distributing the prospectuses, the proxy materials and reports to existing
shareholders and Contract owners, the preparation of all statements and notices
required by any federal or state law, all taxes on the issuance or transfer of
the Trust's shares, and any expenses permitted to be paid or assumed by the
Trust pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act.
ARTICLE VI. DIVERSIFICATION
6.1. The Trust will comply with Section 817(h) of the
Internal Revenue Code of 1986, and all regulations issued thereunder, relating
to the diversification requirements for variable annuity, endowment, and life
insurance policies.
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ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board of Trustees of the Trust (the "Board") will
monitor the Trust for the existence of any material irreconcilable conflict
between the interests of the Contract owners of all Accounts investing in the
Trust. 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
interpretative 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 any Fund are
being managed; (e) a difference in voting instructions given by variable annuity
contract and variable life insurance Contract owners; or (f) a decision by the
Company to disregard the voting instructions of Contract owners. The Board shall
promptly inform the Company if it determines that an irreconcilable material
conflict exists and the implications thereof. A majority of the Board shall
consist of persons who are not "interested" persons of the Trust.
7.2. The Company will report any potential or existing
conflicts of which it is aware to the Board. The Company agrees to provide the
Board with all information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever Contract owner voting instructions are
disregarded. The Board shall record in its minutes or other appropriate records,
all reports received by it and all action with regard to a conflict.
7.3. If it is determined by a majority of the Board, or a
majority of its disinterested Trustees, that an irreconcilable material conflict
exists, the Company shall, at its expense and to the extent reasonably
practicable (as determined by a majority of the disinterested Trustees), take
whatever steps are necessary to remedy or eliminate the irreconcilable material
conflict, up to and including withdrawing the assets allocable to some or all of
the Accounts from the Trust or any Fund and reinvesting such assets in a
different investment medium, including (but not limited to) another Fund of the
Trust, or submitting the question whether such segregation should be implemented
to a vote of all affected Contract owners and, as appropriate, segregating the
assets of any appropriate group (I.E., variable annuity contract owners or
variable life insurance contract owners) that votes in favor of such
segregation, or offering to the affected Contract owners the option of making
such a change.
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7.4. If the Company's disregard of voting instructions
could conflict with the majority of Contract owner voting instructions, and the
Company's judgment represents a minority position or would preclude a majority
vote, the Company is permitted to withdraw each affected Account's investment in
the Trust. The Underwriter and Trust shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the Trust
until the Company notifies the Underwriter and the Trust that it is withdrawing
the Account's investment in the Trust pursuant to this Section 7.4.
7.5. If a particular state insurance regulator's decision
applicable to the Company conflicts with the majority of other state insurance
regulators, then the Company is permitted to withdraw each affected Account's
investment in the Trust. The Underwriter and Trust shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Trust for such Account until the Company notifies the Underwriter and the
Trust that it is withdrawing an affected Account's investment in the Trust
pursuant to this Section 7.5.
7.6. For purposes of Section 7.3 of this Agreement, the
Board shall determine whether any proposed action adequately remedies any
irreconcilable material conflict, but in no event will the Trust be required to
establish a new funding medium for the Contracts.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY
8.1(a). The Company agrees to indemnify and hold harmless
the Trust, the Underwriter, and each of the Trust's
or the Underwriter's current and former directors, officers, employees or agents
and each person, if any, who controls, or has controlled, or is or was
associated with the Trust or the Underwriter within the meaning of such terms
under the federal securities laws (collectively, the "indemnified parties" for
purposes of this Section 8.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company) or litigation (including legal and other expenses), to which the
indemnified parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of the Trust's shares and:
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(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact
contained in the registration statement or prospectus
or private placement memorandum for the Contracts or
contained in the Contracts or sales literature for 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
in light of the circumstances in which they were made;
provided that this agreement to indemnify 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 information
furnished to the Company by or on behalf of the Trust
for use in the registration statement or prospectus or
private placement memorandum for the Contracts or in
the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the
sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of statements or
representations by or on behalf of the Company (other
than statements or representations contained in a
Contract or Trust registration statement, private
placement memorandum or the Contract or Trust
prospectus or sales literature for the Contracts or the
Trust not supplied by the Company or persons under its
control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or
distribution of the Contracts or Trust 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
of the Trust 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 in light of the circumstances in which they
were made, if such a statement or omission was made in
reliance upon and in conformity with information
furnished to the Trust by or on behalf of the Company;
or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials or to
make any payments under the terms of this Agreement; or
(v) arise out of any material breach by the Company of this
Agreement;
except to the extent provided in Sections 8.1(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Company may
otherwise have.
8.1(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an indemnified party would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence in the
performance of his or her duties or by reason of his or her reckless disregard
of obligations or duties under this Agreement or to the Trust.
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8.1(c). The indemnified parties will promptly notify the
Company of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Trust shares or the Contracts or the
operation of the Trust.
8.2. INDEMNIFICATION BY THE UNDERWRITER
8.2(a). The Underwriter agrees to indemnify and hold
harmless the Company and each of its current and former
directors, officers, employees or agents and each person, if any, who controls
or has controlled or is or was associated with the Company within the meaning of
such terms under the federal securities laws (collectively, the "indemnified
parties" for purposes of this Section 8.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Underwriter) or litigation (including legal and other expenses)
to which the indemnified parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of the Trust's shares and:
(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 the Trust (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 in light of the circumstances in which they
were made; provided that this agreement to indemnify
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 information furnished to the Underwriter or Trust
by or on behalf of the Company for use in the
registration statement or prospectus for the Trust or
in sales literature for the Trust (or any amendment or
supplement thereto) or otherwise for use in connection
with the sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Contracts or in the
Contract or Trust registration statement, the Contract
or Trust prospectus, private placement memoranda for
the Contracts or sales literature for the Contracts or
the Trust not supplied by the Underwriter or persons
under its control) or wrongful conduct of the
Underwriter or persons under its control, with respect
to the sale or distribution of the Contracts or Trust
shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, private placement
memorandum 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 statement or statements therein
not misleading in light of the circumstances in which
they were made, if such statement or omission was made
in reliance upon and in conformity with information
furnished to the Company by or on behalf of the
Underwriter; or
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(iv) arise out of any material breach by the Underwriter of
this Agreement;
except to the extent provided in Sections 8.2(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Underwriter may
otherwise have.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses,
claims, damages, liabilities or litigation to which an indemnified party would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his or her duties or by reason of his or her
reckless disregard of obligations and duties under this Agreement or to the
Company or the Accounts.
8.2(c). The Company agrees promptly to notify the
Underwriter of the commencement of any litigation or
proceedings against it or any of its officers or directors in connection with
the issuance or sale of the Contracts or the operation of the Accounts.
8.3. INDEMNIFICATION BY THE TRUST
8.3(a). The Trust agrees to indemnify and hold harmless the
Company and each of its current and former directors, officers, employees or
agents and each person, if any, who controls or has controlled or is or was
associated with the Company within the meaning of such terms under the federal
securities laws (collectively, the "indemnified parties" for the purpose of this
Section 8.3) against any and all losses, claims, damages or liabilities
(including amounts paid in settlement with the written consent of the Trust) or
litigation (including legal and other expenses) to which they or any of them may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Trust's shares and:
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(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 for the
Trust or sales literature of the Trust (or any
amendment or supplement thereto), 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 in light of the circumstances in which they
were made; provided that this agreement to indemnify
shall not apply if such statement or omission or
alleged statement or alleged omission was made in
reliance upon and in conformity with information
furnished to the Trust by or on behalf of the Company
for use in the registration statement or prospectus for
the Trust or sales literature for the Trust (or any
amendment or supplement thereto) or otherwise for use
in connection with the sale or distribution of the
Contracts or Trust shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Contracts, a private
placement memorandum for the Contracts, or a Contract
or Trust registration statement or a Contract or Trust
prospectus or sales literature for a Contract or the
Trust not supplied by the Trust or persons under its
control) or wrongful conduct of the Trust or the
Trust's investment adviser or persons under their
control, with respect to the sale or distribution of
the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the
registration statement or prospectus or private
placement memorandum or sales literature covering the
Contracts (or any amendment 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
in light of the circumstances in which they were made,
if such statement or omission was made in reliance upon
and in conformity with information furnished by or on
behalf of the Trust to the Company; or
(iv) arise as a result of any failure by the Trust to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise, to
comply with the diversification requirements specified
in Article VI of this Agreement); or
(v) arise out of any material breach by the Trust of this
Agreement;
except to the extent provided in Section 8.3(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Trust may
otherwise have.
8.3(b). The Trust shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an indemnified party would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence in the
performance of his or her duties or by reason of his or her reckless disregard
of obligations or duties under this Agreement or to the Company or the Accounts.
8.3(c). The indemnified parties will promptly notify the
Trust of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Trust Shares or the Contracts or the
operation of the Trust.
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8.4. INDEMNIFICATION PROCEDURE
Any person obligated to provide indemnification under this
Article VIII ("indemnifying party" for the purpose of this Section 8.4) shall
not be liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification under this
Article VIII ("indemnified party" for the purpose of this Section 8.4) unless
such indemnified party shall have notified the indemnifying party 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 party shall have received notice of such
service on any designated agent), but failure to notify the indemnifying party
of any such claim shall not relieve the indemnifying party from any liability
which it may have to the indemnified party against whom such action is brought
under the indemnification provision of this Article VIII, except to the extent
that the failure to notify results in the failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a result of
failure to give such notice. In case any such action is brought against the
indemnified party, the indemnifying party will be entitled to participate, at
its own expense, in the defense thereof. The indemnifying party also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the indemnifying party to the indemnified
party of the indemnifying party's election to assume the defense thereof, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by it, and the indemnifying party will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation, unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written consent
but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment.
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A successor by law of the parties to this Agreement shall
be entitled to the benefits of the indemnification contained in this Article
VIII. The indemnification provisions contained in this Article VIII shall
survive any termination of this Agreement.
ARTICLE IX. APPLICABLE LAW.
9.1. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the State of
Vermont.
9.2. This Agreement shall be subject to the provisions of
the 1933, 1934 and 1940 Acts, and the rules and regulations and rulings
thereunder, and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party upon ninety days advance
written notice to the other parties; or
(b) at the option of the Company if shares of all Funds are
not reasonably available to meet the requirements of the Contracts as determined
by the Company. Prompt notice of the election to terminate for such cause shall
be furnished by the Company; or
(c) at the option of the Trust upon institution of formal
proceedings against the Company by the NASD, the SEC, the Vermont Insurance
Commissioner or any other regulatory body regarding the Company's duties under
this Agreement or related to the sale of the Contracts, the operation of the
Accounts, or the purchase of the Trust shares; or
(d) at the option of the Company upon institution of formal
proceedings against the Trust by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body; or
(e) at the option of the Company or the Trust upon receipt
of any necessary regulatory approvals and/or the vote of the Contract owners
having an interest in the Accounts (or any subaccount) to substitute the shares
of another investment company for the corresponding Fund shares of the Trust in
accordance with the terms of the Contracts for which those Fund shares had been
selected to serve as the underlying investment media. The Company will give 30
days prior written notice to the Trust of the date of any proposed vote or other
action taken to replace the Trust's shares; or
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(f) at the option of the Company or the Trust upon a
determination by a majority of the Trustees of the Trust, or a majority of its
disinterested Trustees, that an irreconcilable material conflict exists among
the interests of the Contract owners of the various variable insurance products
of all Accounts; or
(g) at the option of the Company if the Company has
withdrawn an Account's investment in the Trust because the Company's disregard
of voting instructions could conflict with the majority of Contract owner voting
instructions and if the Company's judgment represents a minority position or
would preclude a majority vote; or
(h) at the option of the Company if the Company has
withdrawn an Account's investment in the Trust because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state insurance regulators;
(i) at the option of the Company if the Trust ceases to
qualify as a Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1986, or under any successor or similar provision, or if the
Company reasonably believes that the Trust may fail to so qualify; or
(j) at the option of the Company if the Trust fails to meet
the diversification requirements specified in Article VI hereof; or
(k) at the option of any party to this Agreement, upon
another party's material breach of any provision of this Agreement.
10.2. It is understood and agreed that the right to
terminate this Agreement pursuant to Section 10.1(a) may be exercised for any
reason or for no reason.
10.3. Except as necessary to implement Contract owner
initiated transactions, or as required by state insurance laws or regulations,
the Company shall not redeem Trust shares attributable to the Contracts (as
opposed to Trust shares attributable to the Company's assets held in the
Accounts), and the Company shall not prevent Contract owners from allocating
payments to a Fund that was otherwise available under the Contracts, until 60
days after the Company shall have notified the Trust or Underwriter of its
intention to do so.
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ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by
registered or certified mail to the other party at the
address of such party set forth below or at such other address as such party may
from time to time specify in writing to the other party.
IF TO THE TRUST:
Xxxxxx X. Xxx
President
Sentinel Variable Products Trust
National Life Drive
Montpelier, VT 05604
IF TO THE COMPANY:
D. Xxxxxxx Xxxxxx, Esq.
Senior Counsel
National Life Insurance Company
Xxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
IF TO THE UNDERWRITER:
Xxxxxxx X. Xxxxxxx
President
Equity Services, Inc.
National Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
ARTICLE XII. MISCELLANEOUS
12.1. All persons dealing with the Trust must look solely
to the property of the Trust for the enforcement of any claims against the Trust
as neither the Trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Trust.
12.2. Subject to law and regulatory authority, each party
hereto shall treat as confidential all information reasonably identified as such
in writing by any other party hereto (including without limitation the names and
addresses of the owners of the Contracts) and, except as contemplated by this
Agreement, shall not disclose, disseminate or utilize such confidential
information until such time as it may come into the public domain without the
express prior written consent of the affected party.
12.3. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two
or more counterparts, each of which taken together shall constitute one and the
same instrument.
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12.5. If any provision 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.
12.6. This Agreement shall not be assigned by any party
hereto without the prior written consent of all the parties.
12.7. Each party hereto shall cooperate with each other
party and all appropriate governmental authorities (including without limitation
the SEC, the NASD and state insurance regulators) and shall permit such
authorities reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
12.8. Each party represents that the execution and delivery
of this Agreement and the consummation of the transactions contemplated herein
have been duly authorized by all necessary corporate action, as applicable, by
such party and when so executed and delivered this Agreement will be the valid
and binding obligation of such party enforceable in accordance with its terms.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
COMPANY:
NATIONAL LIFE INSURANCE COMPANY
By: /s/_________________________
Xxxxxx von Gal, Vice President
Date:July 27, 2000
TRUST:
SENTINEL VARIABLE PRODUCTS TRUST
By: /s/___________________________
Xxxxxx X. Xxx, President
Date: July 27, 2000
UNDERWRITER:
EQUITY SERVICES, INC.
By: _/s/___________________________
Xxxxxx X. Rob, CEO
Date: July 27, 2000
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