SUPPLEMENT FOR DISTRIBUTION SERVICES
This Agreement is between National Life Insurance Company ("Company") and X.
Xxxx Price Investment Services, Inc., (the "Distributor"), is intended to
supplement the Administrative Services Agreement dated May 1, 2004 by, between
and among the Company and X. Xxxx Price Associates, Inc. ("Price Associates").
All terms herein, unless otherwise defined, shall have the same meaning as used
in the Administrative Services Agreement.
Whereas, certain portfolios of the X. Xxxx Price Equity Series, Inc. (the
"Equity Fund") are authorized to issue a class of shares ("VIP II Class" or
"Class") with respect to which the Equity Fund has adopted a plan ("12b-1
Plan") for purposes of paying for distribution services under Rule 12b-1 of the
Investment Company Act of 1940 with respect to VIP II Class shares;
Whereas, the Company intends to issue Contracts that will be funded by an
investment in the VIP II Class shares; and
Whereas, the Company is interested in performing distribution services for the
Distributor with respect to VIP II Class shares in exchange for the receipt of
fees pursuant to the 12b-1 Plan.
In consideration of the foregoing and the mutual covenants set forth below the
Company and the Distributor agree as follows:
1. Distributor. The Distributor is a broker-dealer registered under the
Securities Exchange Act of 1934 and with the National Association of Securities
Dealers, Inc. and serves as the principal underwriter of the Equity Fund. The
Distributor is affiliated with the Price Associates.
2. Services.
(a) Distribution Services. The Company has agreed to assist Distributor, as it
may request from time to time, with the provision of distribution services to
the Equity Fund, as they may relate to the investment in the VIP II Class by the
Separate Accounts. It is anticipated that such services shall include any
activities primarily intended to result in the sale of shares of the VIP II
Class, including (but not limited to): (i) distribution of Fund reports,
prospectuses, and SAIs for the Class to other than existing holders of
Contracts; (ii) the preparation and distribution of sales literature and
advertising material for the Class; (iii) continuing education and training of
insurance agents and other representatives of the Company with respect to the
Class and the Fund's portfolios offering the Class and serving as funding
vehicles for the Contracts; (iv) the provision of distribution support services
by insurance agents and other representatives of the Company who will provide
personal service and attention to the foregoing; and (v) other distribution
services in respect of the Class as mutually agreed upon from time to time.
(b) Other Services. The Company agrees to monitor its Contractholders' accounts
for excessive trading or market timing activity (as defined in the Fund's
prospectus) and agrees to work with the Distributor to deter or block any future
such activity.
3. Payment for Distribution Services. In consideration of the distribution
services to be provided by the Company and its agents, the Distributor, in
accordance with the 12b-1 Plan, shall pay to the Company a fee with respect to
the Class of each portfolio of Equity Fund equal to 25 basis points (0.25%) per
annum of the average aggregate net asset value of the shares of each Class held
by the Separate Accounts under the Participation Agreement. For purposes of
computing the payment to the Company contemplated under this Paragraph 3, the
average aggregate net asset value of shares of each Class held by the Separate
Accounts over a monthly period shall be computed by totaling each Separate
Account's aggregate investment (share net asset value multiplied by total number
of shares held by the Separate Account) on each business day during the calendar
month, and dividing by the total number of business days during each month. The
Payments contemplated by this Paragraph 3 shall be calculated by the Equity Fund
at the end of each calendar month and will be paid to each Company within 30
calendar days thereafter.
4. Term. The term of this Agreement shall run concurrently with the term of the
Administrative Services Agreement.
5. Relationship to Other Agreements. This Agreement is intended to supplement
the Administrative Services Agreement and not intended to conflict with or
supersede the provisions of the Administrative Services Agreement or the
Participation Agreement ("Prior Agreements"). All representations and warranties
made by the parties in the Prior Agreements are incorporated into this Agreement
and shall be deemed to have been made in connection with this Agreement.
X. XXXX PRICE INVESTMENT SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxx
__________________________
Name: Xxxxxxx X. Xxxxxx
__________________________
Title: Vice President
__________________________
NATIONAL LIFE INSURANCE COMPANY
By: /s/ Xxxxxxxxx XxxXxxxx
__________________________
Name: Xxxxxxxxx X. XxxXxxxx
__________________________
Title: Vice President
__________________________
May 1, 2004
National Life Insurance Company
Ladies and Gentlemen:
This letter sets forth the agreement ("Agreement") between National Life
Insurance Company ("you" or the "Company") and the undersigned ("we" or "Price
Associates") concerning certain administration services to be provided by you,
with respect to the X. Xxxx Price Equity Series, Inc. (the "Fund").
1. The Fund. The Fund is a Maryland Corporation registered with the
Securities and Exchange Commission (the "SEC") under the Investment Company Act
of 1940 (the "Act") as an open-end diversified management investment company.
The Fund serves as a funding vehicle for variable annuity contracts and variable
life insurance contracts and, as such, sells its shares to insurance companies
and their separate accounts. With respect to various provisions of the Act, the
SEC requires that owners of variable annuity contracts and variable life
insurance contracts be provided with materials and rights afforded to
shareholders of a publicly-available SEC-registered mutual fund.
2. The Company. The Company is a Vermont insurance company. The Company
issues variable annuity and/or variable life insurance contracts (the
"Contracts") supported by the National Variable Life Insurance Account and the
National Variable Annuity Account II (the "Separate Account") which is
registered with the SEC as a unit investment trust. The Company has entered into
a participation agreement (the "Participation Agreement") with the Fund pursuant
to which the Company purchases shares of the Fund for the Separate Account
supporting the Company's Contracts.
3. Price Associates. Price Associates serves as the Fund's investment
adviser. Price Associates supervises and assists in the overall management of
the Fund's affairs under an Investment Management Agreement with the Fund,
subject to the overall authority of the Fund's Board of Directors in accordance
with Maryland law. Under the Investment Management Agreement, Price Associates
is compensated by the Fund for providing investment advisory and certain
administrative services (either directly or through its affiliates).
National Life Insurance Company
May 1, 2004
Page 2
4. Administrative Services. You have agreed to assist us and/or our
affiliates, as we may request from time to time, with the provision of
administrative services to the Fund, as they may relate to the investment in the
Fund by the Separate Account. It is anticipated that such services may include
(but shall not be limited to): the mailing of Fund reports, notices, proxies and
proxy statements and other informational materials to holders of the Contracts
supported by the Separate Account; the transmission of purchase and redemption
requests to the Fund's transfer agent; the maintenance of separate records for
each holder of the Contracts reflecting shares purchased and redeemed and share
balances; the preparation of various reports for submission to the Fund
Directors; the provision of advice and recommendations concerning the operation
of the series of the Fund as funding vehicles for the Contracts; the provision
of shareholder support services with respect to the Portfolios serving as
funding vehicles for the Company's Contracts; telephonic support for holders of
Contracts with respect to inquiries about the Fund; and the provision of other
administrative services as shall be mutually agreed upon from time to time. The
Company agrees to monitor its contractholders' accounts for excessive trading or
market timing activity (as defined in the Fund's prospectus) and agrees to work
with the Price Associates to deter or block any future such activity.
5. Payment for Administrative Services. In consideration of the
administrative services to be provided by the Company, we shall make payments to
the Company on a monthly basis ("Payments"), from our assets, including our bona
fide profits as an investment adviser to the Fund, an amount equal to 15 basis
points (0.15%) per annum for average aggregate net asset value of shares of the
Fund held by the Separate Accounts under the Participation Agreement provided,
however, that such Payments shall only be payable for each calendar month during
which the aggregate dollar value of shares of the Funds purchased pursuant to
the Participation Agreement by the Company in the aggregate exceeds $25,000,000
at all times during that month. Further, this amount shall be increased to 25
basis points (0.25%) per annum of the average aggregate net asset value of
shares of the Fund held by the Separate Accounts under the Participation
Agreement, provided, however, that such increased Payments shall only be payable
with respect to the Fund for each calendar month during which the aggregate
dollar value of shares exceeds $250,000,000 at all times during that month.
Subject to the terms of Paragraph 6 hereof, TRPI shall be responsible for
payments due pursuant to this Paragraph 5 with respect to the purchase of shares
of a Fund managed by TRPI. For purposes of computing the Payments to the Company
contemplated under this Paragraph 5, the average aggregate net asset value of
shares of the Funds held by the Separate Accounts over a monthly period shall be
computed by totaling each Separate Account's aggregate investment (share net
asset value multiplied by total number of shares held by the Separate Account)
on each business day during the calendar month, and dividing by the total number
of business days during the month. The Payments contemplated by this Paragraph 5
shall be calculated by TRPI at the end of each calendar month and will be paid
to each Company within 30 calendar days thereafter.
National Life Insurance Company
May 1, 2004
Page 3
6. Nature of Payments. The parties to this Agreement recognize and agree
that Price Associates' Payments to the Company under this Agreement represent
compensation for administrative services only and do not constitute payment in
any manner for investment advisory services or for costs of distribution of the
Contracts or of Fund shares; and further, that these payments are not otherwise
related to investment advisory or distribution services or expenses, or
administrative services which Price Associates is required to provide to owners
of the Contracts pursuant to the terms thereof. You represent that you may
legally receive the payments contemplated by this Agreement.
7. Term. This Agreement shall remain in full force and effect for an
initial term of one year, and shall automatically renew for successive one-year
periods unless either party notifies the other upon 60-days written notice of
its intent not to continue this agreement. This Agreement and all obligations
hereunder shall terminate automatically upon the redemption of the Company's and
the Separate Account's investment in the Fund, or upon termination of the
Participation Agreement.
8. Amendment. This Agreement may be amended only upon mutual agreement of
the parties hereto in writing.
9. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which shall together constitute one
and the same instrument.
If this Agreement is consistent with your understanding of the matters we
discussed concerning your administration services, kindly sign below and return
a signed copy to us.
Very truly yours,
X. XXXX PRICE ASSOCIATES, INC.
By: /s/ Xxxxxxx Xxxxxx
_____________________________
Name: Xxxxxxx X. Xxxxxx
_____________________________
Title: Vice President
_____________________________
Acknowledged and Agreed to:
NATIONAL LIFE INSURANCE COMPANY
By: /s/ Xxxxxxxxx XxxXxxxx
________________________________
Name: Xxxxxxxxx X. XxxXxxxx
________________________________
Title: Vice President
________________________________
