SERVICE AGREEMENT
AGREEMENT dated as of June 1, 1997, between ▇▇▇▇ ▇▇▇▇▇ Management, Inc.
("▇▇▇▇▇"), a New York Corporation with its principal offices at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, as Investment Adviser for The ▇▇▇▇▇ American Fund (the
"Fund"), and National Life Insurance Company ("National Life"), a Vermont
corporation having its principal office and place of business at One National
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
In consideration of the promises and mutual covenants set forth in this
Agreement, the Parties agree as follows:
1. Services Provided
_________________
National Life agrees to provide services to the Fund including the
following:
a) responding to inquiries from National Life Contract owners using one or
more Portfolios of the Fund as an investment vehicle regarding the
services performed by National Life as they relate to the Fund;
b) providing information to ▇▇▇▇▇ and to Contract owners with respect to
shares attributable to Contract owner accounts;
c) printing and mailing of shareholder communications from the Fund (such
as proxies, shareholder reports, annual and semi-annual financial
statements and dividend, distribution and tax notices) as may be
required;
d) communication directly with Contract owners concerning the Fund's
operations;
e) providing such other similar services as ▇▇▇▇▇ may reasonably request
pursuant to the extent permitted or required under applicable statutes,
rules and regulations.
2. Expense Allocation
__________________
Subject to Paragraph 3 hereof, National Life or its affiliates shall
initially bear the costs of the following:
a) printing and distributing the Fund's prospectus, statement of additional
information and any amendments or supplements thereto, periodic reports
to shareholders, Fund proxy material and other shareholder
communications (collectively, the "Fund Materials") to be distributed to
prospective Contract owners;
b) printing and distributing all sales literature or promotional material
developed by National Life or its affiliates and relating to the
contracts;
c) servicing Contract owners who have allocated Contract value to a
Portfolio, which servicing shall include, but is not limited to, the
items listed in Paragraph 1 of this Agreement.
3. Payment of Expenses
___________________
a) ▇▇▇▇▇ will pay National Life a quarterly fee equal to a percentage of
the average daily net assets of the Portfolio attributable to Contracts,
at the annual rate set fourth in the following schedule ("Portfolio
Servicing Fee"), in connection with the expenses incurred by National
Life under Paragraph 2 hereof: .10% of all assets in Portfolio of the
Fund.
b) From time to time, the Parties hereto shall review the Portfolio
Servicing Fee to determine whether it reasonably approximates the
incurred and anticipated costs, over time of National Life in connection
with its duties hereunder. The Parties agree to negotiate in good faith
any change to the Portfolio Servicing Fee proposed by a Party in good
faith.
4. Term of Agreement
_________________
Either Party may terminate this Agreement, without penalty, on 60 days'
written notice to the other Party. Unless so terminated, this Agreement
shall continue in effect for so long as ▇▇▇▇▇ or its successor(s) in
interest, or any affiliate thereof, continues to perform in a similar
capacity for the Fund, and for so long as any Contract value or any monies
attributable to National Life is allocated to a Portfolio.
5. Indemnification
_______________
a) National Life agrees to indemnify and hold harmless ▇▇▇▇▇ and its
officers, directors and affiliates from any and all loss, liability and
expense resulting from the gross negligence or willful wrongful act of
National Life under this Agreement, except to the extent such loss,
liability or expense is the result of the willful misfeasance, bad faith
or gross negligence of ▇▇▇▇▇ in the performance of its duties, or by
reason of the reckless disregard of its obligations and duties under
this Agreement.
b) ▇▇▇▇▇ agrees to indemnify and hold harmless National Life and its
officers, directors and affiliates from any and all loss, liability and
expense resulting from the gross negligence or willful wrongful act of
▇▇▇▇▇ under this Agreement, except to the extent such loss, liability or
expense is the result of the willful misfeasance, bad faith or gross
negligence of National Life in the performance of its duties, or by
reason of the reckless disregard of its obligations and duties under
this Agreement.
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6. Notice
______
Notices and communications required or permitted hereby will be given to
the following persons at the following addresses and facsimile numbers, or
such other persons, addresses or facsimile numbers as the Party receiving
such notices or communications may subsequently direct in writing:
▇▇▇▇ ▇▇▇▇▇ Management, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
National Life Insurance Company
One National Life Drive
Montpelier, VT. 05604
Attn: D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
7. Applicable Law
______________
Except insofar as the Investment Company Act of 1940 or other federal laws
and regulations may be controlling, this Agreement will be construed and
the provisions hereof interpreted under and in accordance with New York
law, without regard for that state's principles of conflict of laws.
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8. Severability
____________
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will
not be affected thereby.
9. Rights Cumulative
_________________
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, that the Parties are entitled to under
federal and state laws.
10. Assignment
__________
Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written consent of the other
party thereto.
11. Amendment
_________
This Agreement may be amended or modified in whole or in part only by a
written agreement executed by both parties.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized officers signing below.
▇▇▇▇ ▇▇▇▇▇ MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
________________________________________
Title: Executive Vice President
________________________________________
NATIONAL LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
________________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
________________________________________
Title: Senior Vice President
________________________________________
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Schedule A
National Variable Life Insurance Account
National Variable Annuity Account II
/s/ D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
4/25/97
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