ADMINISTRATIVE SERVICES AGREEMENT
_________________________________
NATIONAL LIFE INSURANCE COMPANY ("INSURER") and A I M ADVISORS, INC.
("AIM") (collectively, the "Parties") mutually agree to the arrangements set
forth in this Administrative Services Agreement (the "Agreement") dated as of
April 30, 2004.
WHEREAS, AIM is the investment adviser to AIM Variable Insurance Funds (the
"Fund"); and
WHEREAS, AIM has entered into an amended Master Administrative Services
Agreement, dated July l, 2003, as amended, with the Fund ("Master Agreement")
pursuant to which it has agreed to provide, or arrange to provide, certain
administrative services, including such services as may be requested by the
Fund's Board of Directors from time to time; and
WHEREAS, INSURER issues variable life insurance policies and/or variable
annuity contracts (collectively, the "Contracts"); and
WHEREAS, INSURER has entered into a participation agreement, dated April
30, 2004 ("Participation Agreement") with the Fund, pursuant to which the Fund
has agreed to make shares of certain of its portfolios ("Portfolios") available
for purchase by one or more of INSURER's separate accounts or divisions thereof
(each, a "Separate Account"), in connection with the allocation by Contract
owners of purchase payments to corresponding investment options offered under
the Contracts; and
WHEREAS, INSURER and AIM expect that the Fund, and its Portfolios, can
derive substantial savings in administrative expenses by virtue of having one or
more Separate Accounts of INSURER each as a single shareholder of record
of Portfolio shares, rather than having numerous public shareholders of such
shares; and
WHEREAS, INSURER and AIM expect that the Fund, and its Portfolios, can
derive such substantial savings because INSURER performs the administrative
services listed on Schedule A hereto for the Fund in connection with the
Contracts issued by INSURER; and
WHEREAS, INSURER has no contractual or other legal obligation to perform
such administrative services, other than pursuant to this Agreement and the
Participation Agreement; and
WHEREAS, INSURER desires to be compensated for providing such
administrative services; and
WHEREAS, AIM desires that the Fund benefit from the lower administrative
expenses resulting from the administrative services performed by INSURER; and
1
WHEREAS, AIM desires to retain the administrative services of INSURER and
to compensate INSURER for providing such administrative services;
NOW, THEREFORE, the Parties agree as follows:
Section 1. Administrative Services; Payments Therefor.
__________________________________________
(a) INSURER shall provide the administrative services set out in Schedule A
hereto and made a part hereof, as the same may be amended from time to time. For
such services, AIM agrees to pay to INSURER a quarterly fee ("Quarterly Fee")
equal to a percentage of the average daily net assets of the Fund attributable
to the Contracts issued by INSURER (INSURER Fund Assets) at the following annual
rates:
Annual Rate
___________
0.25%
(b) AIM shall calculate the Quarterly Fee at the end of each calendar
quarter and will make such payment to INSURER, without demand or notice by
INSURER, within 30 days thereafter, in a manner mutually agreed upon by the
Parties from time to time.
(c) From time to time, the Parties shall review the Quarterly Fee to
determine whether it exceeds or is reasonably expected to exceed the incurred
and anticipated costs, over time, of INSURER. The Parties agree to negotiate in
good faith a reduction to the Quarterly Fee as necessary to eliminate any such
excess or as necessary to reflect a reduction in the fee paid by the Fund to AIM
pursuant to the Master Agreement.
Section 2. Nature of Payments.
___________________
The Parties to this Agreement recognize and agree that AIM's payments
hereunder are for administrative services only and do not constitute payment in
any manner for investment advisory services or for costs of distribution
of Contracts or of Portfolio shares, and are not otherwise related to investment
advisory or distribution services or expenses. INSURER represents and warrants
that the fees to be paid by AIM for services to be rendered by INSURER pursuant
to the terms of this Agreement are to compensate the INSURER for providing
administrative services to the Fund, and are not designed to reimburse or
compensate INSURER for providing administrative services with respect to the
Contracts or any Separate Account.
2
Section 3. Term and Termination.
____________________
Any 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 AIM 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 INSURER provides the services contemplated hereunder with respect to
Contracts under which values or monies are allocated to a Portfolio.
Section 4. Amendment.
_________
This Agreement may be amended upon mutual agreement of the Parties in
writing.
Section 5. Notices.
_______
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered
Life Insurance Company
National Life Insurance Company
Xxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
A I M Advisors, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esquire
Section 6. Miscellaneous.
_____________
(a) Successors and Assigns. This Agreement shall be binding upon the
Parties and their transferees, successors and assigns. The benefits of and the
right to enforce this Agreement shall accrue to the Parties and their
transferees, successors and assigns.
(b) Assignment. Neither this Agreement nor any of the rights, obligations
or liabilities of any Party hereto shall be assigned without the written consent
of the other Party.
(c) Intended Beneficiaries. Nothing in this Agreement shall be construed to
give any person or entity other than the Parties, as well as the Fund, any legal
or equitable claim, right or remedy. Rather, this Agreement is intended to be
for the sole and exclusive benefit of the Parties, as well as the Fund.
3
(d) 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.
(e) Applicable Law. This Agreement shall be interpreted, construed, and
enforced in accordance with the laws of the State of Delaware without reference
to the conflict of law principles thereof.
(f) Severability. If any portion of this Agreement shall be found to be
invalid or unenforceable by a court or tribunal or regulatory agency of
competent jurisdiction, the remainder shall not be affected thereby, but shall
have the same force and effect as if the invalid or unenforceable portion had
not been inserted.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
of first above written.
NATIONAL LIFE INSURANCE COMPANY
By: /s/ Xxxxxxxxx X. XxxXxxxx
________________________________________
Xxxxxxxxx X. XxxXxxxx
Title: Vice President - Product Development
________________________________________
A I M ADVISORS, INC.
By: /s/ Signature
________________________________________
Title: President
________________________________________
4
SCHEDULE A
__________
ADMINISTRATIVE SERVICES FOR
___________________________
AIM VARIABLE INSURANCE FUNDS
____________________________
INSURER shall provide certain administrative services respecting the
operations of the Fund, as set forth below. This Schedule, which may be amended
from time to time as mutually agreed upon by INSURER and AIM, constitutes an
integral part of the Agreement to which it is attached. Capitalized terms used
herein shall, unless otherwise noted, have the same meaning as the defined terms
in the Agreement to which this Schedule relates.
A. Records of Portfolio Share Transactions; Miscellaneous Records
______________________________________________________________
1. INSURER shall maintain master accounts with the Fund, on behalf of each
Portfolio, which accounts shall bear the name of INSURER as the record owner
of Portfolio shares on behalf of each Separate Account investing in the
Portfolio.
2. INSURER shall maintain a daily journal setting out the number of shares
of each Portfolio purchased, redeemed or exchanged by Contract owners each day,
as well as the net purchase or redemption orders for Portfolio shares submitted
each day, to assist AIM, the Fund and/or the Fund's transfer agent in tracking
and recording Portfolio share transactions, and to facilitate the computation of
each Portfolio's net asset value per share. INSURER shall promptly provide AIM,
the Fund, and the Fund's transfer agent with a copy of such journal entries or
information appearing thereon in such format as may be reasonably requested from
time to time. INSURER shall provide such other assistance to AIM, the Fund, and
the Fund's transfer agent as may be necessary to cause various Portfolio share
transactions effected by Contract owners to be properly reflected on the books
and records of the Fund.
3. In addition to the foregoing records, and without limitation, INSURER
shall maintain and preserve all records as required by law to be maintained and
preserved in connection with providing administrative services hereunder.
B. Order Placement and Payment
___________________________
1. INSURER shall determine the net amount to be transmitted to the Separate
Accounts as a result of redemptions of each Portfolio's shares based on Contract
owner redemption requests and shall disburse or credit to the Separate Accounts
all proceeds of redemptions of Portfolio shares. INSURER shall notify the Fund
of the cash required to meet redemption payments.
2. INSURER shall determine the net amount to be transmitted to the Fund as
a result of purchases of Portfolio shares based on Contract owner purchase
payments and transfers allocated to the Separate Accounts investing in each
Portfolio. INSURER shall transmit net purchase payments to the Fund's custodian.
5
c. Accounting Services
___________________
INSURER shall perform miscellaneous accounting services as may be
reasonably requested from time to time by AIM, which services shall relate to
the business contemplated by the Participation Agreement between INSURER and the
Fund, as amended from time to time. Such services shall include, without
limitation, periodic reconciliation and balancing of INSURER's books and records
with those of the Fund with respect to such matters as cash accounts, Portfolio
share purchase and redemption orders placed with the Fund, dividend and
distribution payments by the Fund, and such other accounting matters that may
arise from time to time in connection with the operations of the Fund as related
to the business contemplated by the Participation Agreement.
D. Reports
_______
INSURER acknowledges that AIM may, from time to time, be called upon by the
Fund's Board of Trustees ("Board"), to provide various types of information
pertaining to the operations of the Fund and related matters, and that AIM also
may, from time to time, decide to provide such information to the Board in its
own discretion. Accordingly, INSURER agrees to provide AIM with such assistance
as AIM may reasonably request so that AIM can report such information to the
Fund's Board in a timely manner. INSURER acknowledges that such information and
assistance shall be in addition to the information and assistance required
of INSURER pursuant to the Fund's mixed and shared funding SEC exemptive order,
described in the Participation Agreement.
INSURER further agrees to provide AIM with such assistance as AIM may
reasonably request with respect to the preparation and submission of reports and
other documents pertaining to the Fund to appropriate regulatory bodies and
third party reporting services.
E. Fund-related Contract Owner Services
____________________________________
INSURER agrees to print and distribute, in a timely manner, prospectuses,
statements of additional information, supplements thereto, periodic reports and
any other materials of the Fund required by law or otherwise to be given to its
shareholders, including, without limitation, Contract owners investing in
Portfolio shares, provided, that with respect to proxy materials, INSURER shall
bear the expenses associated with (i) text composition, printing, mailing,
distributing, and tabulating proxy materials, including voting instruction
solicitation materials, sent to policy owners with respect to proxy
solicitations related to the Account or related to matters requested by INSURER
and agreed to by the Fund, (ii) making typesetting and other customization
changes to Fund proxy materials, which changes are requested by INSURER and
agreed to by the Fund. FUND will be responsible for the cost of the mailing and
distribution of Fund proxy materials. INSURER further agrees to provide
telephonic support for Contract owners, including, without limitation, advice
with respect to inquiries about the Fund and each Portfolio thereof (not
including information about performance or related to sales), communicating with
Contract owners about Fund (and Separate Account) performance, and assisting
with proxy solicitations, specifically with respect to soliciting voting
instructions from Contract owners.
6
F. Miscellaneous Services
______________________
INSURER shall provide such other administrative support to the Fund as
mutually agreed between INSURER and AIM or the Fund from time to time. INSURER
shall, from time to time, relieve the Fund of other usual or incidental
administration services of the type ordinarily borne by mutual funds that offer
shares to individual members of the general public.
7
