PARTICIPATION AGREEMENT
THIS
AGREEMENT, made and entered into as of the [6th] day of
[January, 2003] ("Agreement"), by and among AIM Variable Insurance
Funds,
a Delaware trust ("AVIF"); A I M Advisors, Inc. (“AIM”),
investment advisor to AVIF; A I M Distributors, Inc.
(“AIM Distributors”), principal underwriter to AVIF; Nationwide Life
Insurance Company and Nationwide Life and Annuity Insurance Company
(collectively, “Nationwide”), each, an Ohio life insurance company, on behalf of
themselves and each of their respective separate accounts listed in Schedule
A
hereto, as the parties hereto may amend from time to time (each, an "Account,"
and collectively, the "Accounts"); and Nationwide Investment Services
Corporation (“NISC”), an affiliate of Nationwide and the principal underwriter
of the Contracts (collectively, the “Parties”).
WITNESSETH
THAT:
WHEREAS,
AVIF is registered with the Securities and Exchange Commission ("SEC") as an
open-end management investment company under the Investment Company Act of
1940,
as amended (the "1940 Act"); and
WHEREAS,
AVIF currently consists of eighteen separate portfolios (“Portfolios”), shares
(‘Shares”) of each of which are registered under the Securities Act of 1933, as
amended (the "1933 Act") and are currently sold to one or more separate accounts
of life insurance companies to fund benefits under variable annuity contracts
and variable life insurance contracts; and
WHEREAS,
each
Portfolio is divided into one or more classes of Shares (each a “Series” and
collectively, the Series”); and
WHEREAS,
AVIF will make each Series of Shares of each Portfolio listed on Schedule A
hereto as the Parties hereto may amend from time to time (each a "Fund";
reference herein to "AVIF" includes reference to each Fund, to the extent the
context requires) available for purchase by the Accounts; and
WHEREAS,
Nationwide will be the issuer of certain variable annuity contracts and variable
life insurance contracts ("Contracts") as set forth on Schedule A hereto, as
the
Parties hereto may amend from time to time, which Contracts (hereinafter
collectively, the "Contracts"), if required by applicable law, will be
registered under the 1933 Act; and
WHEREAS,
Nationwide will fund the Contracts through the Accounts, each of which may
be
divided into two or more subaccounts ("Subaccounts"; reference herein to an
"Account" includes reference to each Subaccount thereof to the extent the
context requires); and
WHEREAS,
Nationwide will serve as the depositor of the Accounts, each of which is
registered as a unit investment trust company under the 1940 Act (or exempt
therefrom), and the security interests deemed to be issued by the Accounts
under
the Contracts will be registered as securities under the 1933 Act (or exempt
therefrom); and
WHEREAS,
each Account is a duly organized, validly existing
separate account, established by resolution or under authority
of the Board of Directors of Nationwide, on the date shown for such Account
on
Schedule A hereto, to set aside and invest assets attributable to the Contracts;
and
WHEREAS,
AIM is duly registered as an investment adviser under the Investment Advisers
Act of 1940, as amended; and
WHEREAS,
AIM Distributors is registered as a broker-dealer under the Securities and
Exchange Act of 1934, as amended (the “1934 Act”), is a member in good standing
of the National Association of Securities Dealers, Inc. (“NASD”) and serves as
principal underwriter of the shares of AVIF; and
WHEREAS,
NISC is registered as a broker-dealer under the 1934 Act, is a member in good
standing of the NASD and serves as principal underwriter of the Contracts;
and
WHEREAS,
to the extent permitted by applicable insurance laws and regulations, Nationwide
intends to purchase Shares in one or more of the Funds on behalf of the Accounts
to fund the Contracts;
WHEREAS,
the parties entered into a similar participation agreement dated November 4,
1997 and the parties agree to supersede and replace the November 4, 1997
agreement; and
NOW,
THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
Section
1. Available Funds
1.1 Availability.
AVIF
will
make Shares of each Fund available to Nationwide for purchase and redemption
at
net asset value and with no sales charges, subject to the terms and conditions
of this Agreement. The Board of Trustees of AVIF 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 if, 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, such action is deemed in the best interests of the shareholders
of
such Fund.
1.2 Addition,
Deletion or Modification of Funds.
The
Parties hereto may agree, from time to time, to add other Funds to provide
additional funding media for the Contracts, or to delete, combine, or modify
existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund, AVIF, or its Shares herein
shall
include a reference to any such additional Fund. Schedule A, as
amended from time to time, is incorporated herein by reference and is a part
hereof.
1.3 No
Sales to the General Public.
AVIF
represents and warrants that no Shares of any Fund have been or will be sold
to
the general public.
Section
2. Processing Transactions
2.1 Timely
Pricing and Orders.
The
Parties agree to communicate, process and settle purchase and redemption
transactions for Shares (collectively, “Share transactions”) via the Fund/SERV
and Networking systems of the National Securities Clearing Corporation
(hereinafter, “NSCC”). Nationwide and AIM Distributors each represents and
warrants that it: (a) has entered into an agreement with NSCC, (b)
has met and will continue to meet all of the requirements to participate in
Fund/SERV and Networking, and (c) intends to remain at all times in compliance
with the then current rules and procedures of NSCC, all to the extent necessary
or appropriate to facilitate such communications, processing, and settlement
of
Share transactions. AIM Distributors agrees to provide Nationwide with
account positions and activity data relating to Share transactions via
Networking. Nationwide shall pay for Shares by the scheduled close of
federal funds transmissions on the same Business Day on which it places an
order
to purchase Shares in accordance with this section. Payment shall be
in federal funds transmitted by wire from the Settling Bank (on behalf of
Nationwide) to the NSCC.
For
purposes of this Agreement, “Fund/SERV” shall mean NSCC’s system for automated,
centralized processing of mutual fund purchase and redemption orders,
settlement, and account registration; “Networking” shall mean
NSCC’s (Level Zero) system that allows mutual funds and life insurance companies
to exchange account level information electronically; and “Settling Bank” shall
mean the entity appointed by AVIF to perform such settlement services on behalf
of AVIF, which agrees to abide by NSCC’s then current rules and procedures
insofar as they relate to same day funds settlement. In all cases,
processing and settlement of Share transactions shall be done in a manner
consistent with applicable law. Such Party shall provide prompt
notice to the other Parties of any inability to utilize Fund/SERV or
Networking.
(a) AVIF
or its designated agent will use its best efforts to provide NSCC (or , in
the
event NSCC is unavailable, Nationwide) with the net asset value per Share for
each Fund by 5:30 p.m. Central Time on each Business Day. As used
herein, "Business Day" shall mean any day on which (i) the New York Stock
Exchange is open for regular trading, (ii) AVIF calculates the Fund's
net asset value, and (iii) Nationwide is open for business.
The
provisions of paragraphs (b) and (c) of this Section 2.1 shall apply only in
the
event that any Party is prohibited or unable to communicate, process or settle
Share transactions via Fund/SERV or Networking.
(b) Nationwide
will use the data provided by AVIF each Business Day to calculate Account unit
values and to process transactions that receive that same Business Day's Account
unit values. Nationwide will perform such Account processing the same
Business Day, and will place corresponding orders to purchase or redeem Shares
with AVIF by 9:00 a.m. Central Time the following Business Day;
provided, however, that AVIF shall provide additional time to
Nationwide in the event that AVIF is unable to meet the 5:30 p.m. time stated
in
paragraph (a) immediately above. Such additional time shall be equal
to the additional time that AVIF takes to make the net asset values available
to
Nationwide.
(c) With
respect to payment of the purchase price by Nationwide and of redemption
proceeds by AVIF, Nationwide and AVIF shall net purchase and
redemption orders with respect to each Fund and Account and shall
transmit one net payment per Fund per Account, in accordance with Section 2.2,
below.
(d) If
AVIF provides materially incorrect Share net asset value information (as
determined under SEC guidelines), Nationwide shall be entitled to an adjustment
to the number of Shares purchased or redeemed to reflect the correct net asset
value per Share. Any material error in the calculation or reporting
of net asset value per Share, dividend or capital gain information shall be
reported promptly upon discovery to Nationwide.
2.2 Timely
Payments.
Nationwide
will wire payment for net purchases to a custodial account designated by AVIF
by
1:00 p.m. Central Time on the same day as the order for Shares is placed, to
the
extent practicable. AVIF will wire payment for net redemptions to an
account designated by Nationwide by 1:00 p.m. Central Time on the same day
as
the Order is placed, to the extent practicable, but in any event within five
(5)
calendar days after the date the order is placed in order to enable Nationwide
to pay redemption proceeds within the time specified in Section 22(e) of the
1940 Act or such shorter period of time as may be required by law.
2.3 Applicable
Price.
(a) Share
purchase payments and redemption orders that result from purchase payments,
premium payments, surrenders and other transactions under Contracts
(collectively, “Contract transactions”) and that Nationwide receives prior to
the close of regular trading on the New York Stock Exchange on a Business Day
will be executed at the net asset values of the appropriate Funds next computed
after receipt by AVIF or its designated agent of the orders. For
purposes of this Section 2.3(a), Nationwide shall be the designated agent of
AVIF for receipt of orders relating to Contract transactions on each Business
Day and receipt by such designated agent shall constitute receipt by AVIF;
provided that AVIF receives notice of such orders by 9:00 a.m. Central Time
on
the next following Business Day or such later time as computed in accordance
with Section 2.1(b) hereof.
(b) All
other Share purchases and redemptions by Nationwide will be effected at the
net
asset values of the appropriate Funds next computed after receipt by AVIF or
its
designated agent of the order therefore, and such orders will be
irrevocable.
2.4 Dividends
and Distributions.
AVIF
will
furnish notice by wire or telephone (followed by written confirmation) on or
prior to the payment date to Nationwide of any income dividends or capital
gain
distributions payable on the Shares of any Fund. Nationwide hereby
elects to reinvest all dividends and capital gains distributions in additional
Shares of the corresponding Fund at the ex-dividend date net asset values until
Nationwide otherwise notifies AVIF in writing, it being agreed by the Parties
that the ex-dividend date and the payment date with respect to any dividend
or
distribution will be the same Business Day. Nationwide reserves the
right to revoke this election and to receive all such income dividends and
capital gain distributions in cash.
2.5 Book
Entry.
Issuance
and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to Nationwide. Shares ordered from
AVIF will be recorded in an appropriate title for Nationwide, on behalf of
its
Account.
Section
3. Costs and Expenses
3.1 General.
Except
as
otherwise specifically provided herein, each Party will bear all expenses
incident to its performance under this Agreement.
3.2 Registration.
(a) AVIF
will bear the cost of its registering as a management investment company under
the 1940 Act and registering its Shares under the 1933 Act, and keeping such
registrations current
and effective; including, without limitation,
the preparation of and filing with the SEC
of Forms N-SAR and Rule 24f-2 Notices with respect to AVIF
and its Shares and payment of all applicable registration or filing fees with
respect to any of the foregoing.
(b) Nationwide
will bear the cost of registering, to the extent required, each Account as
a
unit investment trust under the 1940 Act and registering units of interest
under
the Contracts under the 1933 Act and keeping such registrations current and
effective; including, without limitation, the preparation and filing with the
SEC of Forms N-SAR and Rule 24f-2 Notices with respect to each Account and
its
units of interest and payment of all applicable registration or filing fees
with
respect to any of the foregoing.
3.3 Other
(Non-Sales-Related).
(a) AVIF
will bear, or arrange for others to bear, the costs of preparing, filing with
the SEC and setting for printing AVIF's prospectus, statement of additional
information and any amendments or supplements thereto (collectively, the "AVIF
Prospectus"), periodic reports to shareholders, AVIF proxy material and other
shareholder communications.
(b) Nationwide
will bear the costs of preparing, filing with the SEC and setting for printing
each Account's prospectus, statement of additional information and any
amendments or supplements thereto (collectively, the "Account Prospectus"),
any
periodic reports to Contract owners, annuitants, insureds or participants (as
appropriate) under the Contracts (collectively, "Participants"), voting
instruction solicitation material, and other Participant
communications.
(c) Nationwide
will print in quantity and deliver to existing Participants the documents
described in Section 3.3(b) above and the prospectus provided by AVIF
in camera ready or computer diskette form. AVIF will print the
AVIF statement of additional information, proxy materials relating to AVIF
and
periodic reports of AVIF.
3.4 Other
(Sales-Related).
Nationwide
will bear the expenses of distribution. These expenses would include
by way of illustration, but are not limited to, the costs of distributing to
Participants the following documents, whether they relate to the Account or
AVIF: prospectuses, statements of additional information, proxy materials and
periodic reports. These costs would also include the costs of
preparing, printing, and distributing sales literature and advertising for
the
Accounts relating to the Funds, as well as filing such materials with, and
obtaining approval from, the SEC, the NASD, any state insurance regulatory
authority, and any other appropriate regulatory authority, to the extent
required.
3.5 Parties
To Cooperate.
Each
Party agrees to cooperate with the others, as applicable, in arranging to print,
mail and/or deliver, in a timely manner, combined or coordinated prospectuses
or
other materials of AVIF and the Accounts.
Section
4. Legal Compliance
4.1 Tax
Laws.
(a) AVIF
represents and warrants that each Fund is currently qualified as a regulated
investment company ("RIC") under Subchapter M of the Internal Revenue Code
of
1986, as amended (the "Code"), and represents that it will use its best efforts
to qualify and to maintain qualification of each Fund as a RIC. AVIF
will notify Nationwide immediately upon having a reasonable basis for believing
that a Fund has ceased to so qualify or that it might not so qualify in the
future.
(b) AVIF
represents that it will use its best efforts to comply and to maintain each
Fund's compliance with the diversification requirements set forth in Section
817(h) of the Code and Section 1.817-5(b) of the regulations under the
Code. AVIF will notify Nationwide immediately upon having a
reasonable basis for believing that a Fund has ceased to so comply or that
a
Fund might not so comply in the future. In the event of a breach of
this Section 4.1(b) by AVIF, it will take all reasonable steps to adequately
diversify the Fund so as to achieve compliance within the grace period afforded
by Section 1.817-5 of the regulations under the Code.
To
assist
Nationwide in monitoring compliance with Section 817(h) of the Code, AVIF agrees
to use its best efforts to have the transfer agent of AVIF send Nationwide
a
monthly statement of account confirming all transactions made during the month
in each Account within five (5) business days after the end of such
month. In addition, AIM agrees to provide Nationwide a certificate or
statement indicating compliance with Code Section 817(h), such certificate
or
statement to be sent no later than thirty (30) days following the end of the
calendar quarter.
(c) Nationwide
agrees that if the Internal Revenue Service ("IRS") asserts in writing in
connection with any governmental audit or review of Nationwide or, to
Nationwide’s knowledge, of any Participant, that any Fund has failed to comply
with the diversification requirements of Section 817(h) of the Code or
Nationwide otherwise becomes aware of any facts that could give rise to any
claim against AVIF or its affiliates as a result of such a failure or alleged
failure:
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(i)
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Nationwide
shall promptly notify AVIF of such assertion or potential claim (subject
to the Confidentiality provisions of Section 18 as to any
Participant);
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(ii)
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Nationwide
shall consult with AVIF as to how to minimize any liability that
may arise
as a result of such failure or alleged
failure;
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(iii)
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Nationwide
shall use its best efforts to minimize any liability of AVIF or its
affiliates resulting from such failure, including, without limitation,
demonstrating, pursuant to Treasury Regulations Section 1.817-5(a)(2),
to
the Commissioner of the IRS that such failure was
inadvertent;
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(iv)
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Nationwide
shall permit AVIF, its affiliates and their legal and accounting
advisors
to participate in any conferences, settlement discussions or other
administrative or judicial proceeding or contests (including judicial
appeals thereof) with the IRS, any Participant or any other claimant
regarding any claims that could give rise to liability to AVIF or
its
affiliates as a result of such a failure or alleged failure;
provided, however, that Nationwide will retain control of the
conduct of such conferences discussions, proceedings, contests or
appeals;
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(v)
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any
written materials to be submitted by Nationwide to the IRS, any
Participant or any other claimant in connection with any of the foregoing
proceedings or contests (including, without limitation, any such
materials
to be submitted to the IRS pursuant to Treasury Regulations Section
1.817-5(a)(2)), (a) shall be provided by Nationwide to AVIF
(together with any supporting information or analysis); subject to
the
confidentiality provisions of Section 18, at least ten (10) business
days
or such shorter period to which the Parties hereto agree prior to
the day
on which such proposed materials are to be submitted, and (b) shall
not be
submitted by Nationwide to any such person without the express written
consent of AVIF which shall not be unreasonably
withheld;
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(vi)
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Nationwide
shall provide AVIF or its affiliates and their accounting and legal
advisors with such cooperation as AVIF shall reasonably request
(including, without limitation, by permitting AVIF and its accounting
and
legal advisors to review the relevant books and records of Nationwide)
in
order to facilitate review by AVIF or its advisors of any written
submissions provided to it pursuant to the preceding clause or its
assessment of the validity or amount of any claim against its arising
from
such a failure or alleged failure;
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(vii)
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Nationwide
shall not with respect to any claim of the IRS or any Participant
that
would give rise to a claim against AVIF or its affiliates (a) compromise
or settle any claim, (b) accept any adjustment on audit, or (c) forego
any
allowable administrative or judicial appeals, without the express
written
consent of AVIF or its affiliates, which shall not be unreasonably
withheld, provided that Nationwide shall not be required, after
exhausting all administrative penalties, to appeal any adverse judicial
decision unless AVIF or its affiliates shall have provided an opinion
of
independent counsel to the effect that a reasonable basis exists
for
taking such appeal; and provided further that the costs of any
such appeal shall be borne equally by the Parties hereto;
and
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(viii)
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AVIF
and its affiliates shall have no liability as a result of such failure
or
alleged failure if Nationwide fails to comply with any of the foregoing
clauses (i) through (vii), and such failure could be shown to have
materially contributed to the
liability.
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Should
AVIF or any of its affiliates refuse to give its written consent to any
compromise or settlement of any claim or liability hereunder, Nationwide may,
in
its discretion, authorize AVIF or its affiliates to act in the name of
Nationwide in, and to control the conduct of, such conferences, discussions,
proceedings, contests or appeals and all administrative or judicial appeals
thereof, and in that event AVIF or its affiliates shall bear the fees and
expenses associated with the conduct of the proceedings that it is so authorized
to control; provided, that in no event shall Nationwide have any
liability resulting from AVIF's refusal to accept the proposed settlement or
compromise with respect to any failure caused by AVIF. As used in
this Agreement, the term "affiliates" shall have the same meaning as "affiliated
person" as defined in Section 2(a)(3) of the 1940 Act.
(d) Nationwide
represents and warrants that the Contracts currently are and will be treated
as
annuity contracts or life insurance contracts under applicable provisions of
the
Code and that it will use its best efforts to maintain such treatment;
Nationwide will notify AVIF 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.
(e) Nationwide
represents and warrants that each Account is a "separate account" and that
interests in each Account are offered exclusively through the purchase of or
transfer into a "variable contract," within the meaning of such terms under
Section 817 of the Code and the regulations thereunder. Nationwide
will use its best efforts to continue to meet such definitional requirements,
and it will notify AVIF immediately upon having a reasonable basis for believing
that such requirements have ceased to be met or that they might not be met
in
the future.
4.2 Insurance
and Certain Other Laws.
(a) AVIF
will use its best efforts to comply with any applicable state insurance laws
or
regulations, to the extent specifically requested in writing by Nationwide,
including, the furnishing of information not otherwise available to Nationwide
which is required by state insurance law to enable Nationwide to obtain the
authority needed to issue the Contracts in any applicable state.
(b) Nationwide
represents and warrants that (i) it is an insurance company duly organized,
validly existing and in good standing under the laws of the State of Ohio and
has full corporate power, authority and legal right to execute, deliver and
perform its duties and comply with its obligations under this Agreement, (ii)
it
has legally and validly established and maintains each Account as a separate
account under Section 3907.15 of the Ohio Insurance Law and the regulations
thereunder, and (iii) the Contracts comply in all material respects with all
other applicable federal and state laws and regulations.
(c) AVIF
represents and warrants that it is a trust duly organized, validly existing,
and
in good standing under the laws of the State of Delaware and has full power,
authority, and legal right to execute, deliver, and perform its duties and
comply with its obligations under this Agreement.
4.3 Securities
Laws.
(a) Nationwide
represents and warrants that (i) interests in each Account pursuant to the
Contracts will be registered under the 1933 Act to the extent required by the
1933 Act, (ii) the Contracts will be duly authorized for issuance and sold
in
compliance with all applicable federal and state laws, including, without
limitation, the 1933 Act, the 1934 Act, the 1940 Act and Ohio law, (iii) each
Account is and will remain registered under the 1940 Act, to the extent required
by the 1940 Act, (iv) each Account does and will comply in all material respects
with the requirements of the 1940 Act and the rules thereunder, to the extent
required, (v) each Account's 1933 Act registration statement relating to
the Contracts, together with any amendments thereto, will at all times comply
in
all material respects with the requirements of the 1933 Act and the rules
thereunder, (vi) Nationwide will amend the registration statement for its
Contracts under the 1933 Act and for its Accounts under the 1940 Act from time
to time as required in order to effect the continuous offering of its Contracts
or as may otherwise be required by applicable law, and (vii) each Account
Prospectus will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder.
(b) AVIF
represents and warrants that (i) Shares sold pursuant to this Agreement will
be
registered under the 1933 Act to the extent required by the 1933 Act and duly
authorized for issuance and sold in compliance with Maryland law, (ii) AVIF
is
and will remain registered under the 1940 Act to the extent required by the
1940
Act, (iii) AVIF will amend the registration statement for its Shares under
the
1933 Act and itself under the 1940 Act from time to time as required in order
to
effect the continuous offering of its Shares, (iv) AVIF does and will comply
in
all material respects with the requirements of the 1940 Act and the rules
thereunder, (v) AVIF's 1933 Act registration statement, together with any
amendments thereto, will at all times comply in all material respects with
the
requirements of the 1933 Act and rules thereunder, and (vi) AVIF’s Prospectus
will at all times comply in all material respects with the requirements of
the
1933 Act and the rules thereunder.
(c) AVIF
will at its expense register and qualify its Shares for sale in accordance
with
the laws of any state or other jurisdiction if and to the extent reasonably
deemed advisable by AVIF.
(d) AVIF
represents and warrants that all of its trustees, officers, employees,
investment advisers, and other individuals/entities having access to the funds
and/or securities of the Fund are and 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 minimal coverage as required currently by Rule 17g-(1)
of the 1940 Act or related provisions as may be promulgated from time to
time. The aforesaid bond includes coverage for larceny and
embezzlement and is issued by a reputable bonding company.
4.4 Notice
of Certain Proceedings and Other Circumstances.
(a) AVIF
will immediately notify Nationwide of (i) the issuance by any court or
regulatory body of any stop order, cease and desist order, or other similar
order with respect to AVIF's registration statement under the 1933 Act or AVIF
Prospectus, (ii) any request by the SEC for any amendment to such registration
statement or AVIF Prospectus that may affect the offering of Shares of
AVIF, (iii) the initiation of any proceedings for that purpose or for
any other purpose relating to the registration or offering of AVIF's Shares,
or
(iv) any other action or circumstances that may prevent the lawful offer or
sale
of Shares of any Fund in any state or jurisdiction, including, without
limitation, any circumstances in which (a) such Shares are not registered and,
in all material respects, issued and sold in accordance with applicable state
and federal law, or (b) such law precludes the use of such Shares as an
underlying investment medium of the Contracts issued or to be issued by
Nationwide. AVIF will make every reasonable effort to prevent the
issuance, with respect to any Fund, of any such stop order, cease and desist
order or similar order and, if any such order is issued, to obtain the lifting
thereof at the earliest possible time.
(b) Nationwide
will immediately notify AVIF of (i) the issuance by any court or regulatory
body
of any stop order, cease and desist order, or other similar order with respect
to each Account's registration statement under the 1933 Act relating to the
Contracts or each Account Prospectus, (ii) any request by the SEC for any
amendment to such registration statement or Account Prospectus that may affect
the offering of Shares of AVIF, (iii) the initiation of any proceedings for that
purpose or for any other purpose relating to the registration or offering of
each Account's interests pursuant to the Contracts, or (iv) any other action
or
circumstances that may prevent the lawful offer or sale of said interests in
any
state or jurisdiction, including, without limitation, any circumstances in
which
said interests are not registered and, in all material respects, issued and
sold
in accordance with applicable state and federal law. Nationwide will
make every reasonable effort to prevent the issuance of any such stop order,
cease and desist order or similar order and, if any such order is issued, to
obtain the lifting thereof at the earliest possible time.
4.5 Nationwide
To Provide Documents; Information About AVIF.
(a) Nationwide
will provide to AVIF or its designated agent at least one (1) complete copy
of
all SEC registration statements, Account Prospectuses, reports, any preliminary
and final voting instruction solicitation material, and all amendments to any
of
the above, that relate to each Account or the Contracts, contemporaneously
with
the filing of such document with the SEC or other regulatory
authorities. In addition, Nationwide will provide AVIF with notice of
any application for exemption or request for no-action letters, and notice
of
all amendments to any of the above, that relate to an Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities, and will provide AVIF one (1) complete copy of the
same
upon request.
(b) Nationwide
will provide to AVIF or its designated agent at least one (1) complete copy
of
each piece of sales literature or other promotional material in which AVIF
or
any of its affiliates is named, at least five (5) Business Days prior to its
use
or such shorter period as the Parties hereto may, from time to time, agree
upon. No such material shall be used if AVIF or its designated agent
objects to such use within five (5) Business Days after receipt of such material
or such shorter period as the Parties hereto may, from time to time, agree
upon. AVIF hereby designates A I M as the entity to receive such
sales literature, until such time as AVIF appoints another designated agent
by
giving notice to Nationwide in the manner required by Section 9
hereof.
(c) Neither
Nationwide nor any of its affiliates, will give any information or make any
representations or statements on behalf of or concerning AVIF or its affiliates
in connection with the sale of the Contracts other than (i) the information
or
representations contained in the registration statement, including the AVIF
Prospectus contained therein, relating to Shares, as such registration statement
and AVIF Prospectus may be amended from time to time; or (ii) in reports or
proxy materials for AVIF; or (iii) in published reports for AVIF that are in
the
public domain and approved by AVIF for distribution; or (iv) in sales literature
or other promotional material approved by AVIF, except with the express written
permission of AVIF.
(d) Nationwide
shall adopt and implement procedures reasonably designed to ensure that
information concerning AVIF and its affiliates that is intended for use only
by
brokers or agents selling the Contracts (i.e., information that is not
intended for distribution to Participants) ("broker only materials") is so
used,
and neither AVIF nor any of its affiliates shall be liable for any losses,
damages or expenses relating to the improper use of such broker only
materials.
(e) 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, (e.g., on-line networks such as the Internet or other
electronic messages), 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 the NASD rules, the 1933 Act or the 0000
Xxx.
4.6 AVIF
To Provide Documents; Information About Nationwide.
(a) AVIF
will provide to Nationwide at least one (1) complete copy of all SEC
registration statements, AVIF Prospectuses, reports, any preliminary and final
proxy material, and all amendments to any of the above, that relate to AVIF
or
the Shares of a Fund, contemporaneously with the filing of such document with
the SEC or other regulatory authorities. In addition, AVIF will
provide Nationwide with notice of any application for exemption or request
for
no-action letters, and notice of all amendments to any of the above, that relate
to AVIF or the Shares of a Fund, contemporaneously with the filing of such
document with the SEC or other regulatory authorities, and will provide
Nationwide one (1) complete copy of the same upon request.
(b) AVIF
will provide to Nationwide camera ready, pdf, or computer diskette copies of
all
AVIF prospectuses and printed copies, in an amount specified by Nationwide,
of
AVIF statements of additional information, proxy materials, periodic reports
to
shareholders and other materials required by law to be sent to Participants
who
have allocated any Contract value to a Fund. AVIF will provide such
copies to Nationwide in a timely manner so as to enable Nationwide, as the
case
may be, to print and distribute such materials within the time required by
law
to be furnished to Participants.
(c) AVIF
will provide to Nationwide or its designated agent at least one (1) complete
copy of each piece of sales literature or other promotional material in which
Nationwide, or any of its respective affiliates is named, or that refers to
the
Contracts, at least five (5) Business Days prior to its use or such shorter
period as the Parties hereto may, from time to time, agree upon. No
such material shall be used if Nationwide or its designated agent objects to
such use within five (5) Business Days after receipt of such material or such
shorter period as the Parties hereto may, from time to time, agree
upon. Nationwide shall receive all such sales literature until such
time as it appoints a designated agent by giving notice to AVIF in the manner
required by Section 9 hereof.
(d) Neither
AVIF nor any of its affiliates will give any information or make any
representations or statements on behalf of or concerning Nationwide, each
Account, or the Contracts other than (i) the information or representations
contained in the registration statement, including each Account Prospectus
contained therein, relating to the Contracts, as such registration statement
and
Account Prospectus may be amended from time to time; or (ii) in published
reports for the Account or the Contracts that are in the public domain and
approved by Nationwide for distribution; or (iii) in sales literature or other
promotional material approved by Nationwide or its affiliates, except with
the
express written permission of Nationwide.
(e) AVIF
shall cause its principal underwriter to adopt and implement procedures
reasonably designed to ensure that information concerning Nationwide, and its
respective affiliates that is intended for use only by brokers or agents selling
the Contracts (i.e., information that is not intended for distribution
to Participants) ("broker only materials") is so used, and neither Nationwide,
nor any of its respective affiliates shall be liable for any losses, damages
or
expenses relating to the improper use of such broker only
materials.
Section
5. Mixed and Shared Funding
5.1 General.
The
SEC
has granted an order to AVIF exempting it from certain provisions of the 1940
Act and rules thereunder so that AVIF may be available for investment by certain
other entities, including, without limitation, separate accounts funding
variable annuity contracts or variable life insurance contracts, separate
accounts of insurance companies unaffiliated with Nationwide, and trustees
of
qualified pension and retirement plans (collectively, "Mixed and Shared
Funding"). The Parties recognize that the SEC has imposed terms and
conditions for such orders that are substantially identical to many of the
provisions of this Section 5. AVIF hereby notifies Nationwide that it
may be appropriate to include in the prospectus pursuant to which a Contract
is
offered disclosure regarding the potential risks of Mixed and Shared
Funding.
5.2 Disinterested
Trustees.
AVIF
agrees that its Board of Trustees shall at all times consist of trustees a
majority of whom (the "Disinterested Trustees") are not interested persons
of
AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the Rules
thereunder and as modified by any applicable orders of the SEC, except that
if
this condition is not met by reason of the death, disqualification, or bona
fide
resignation of any trustee, then the operation of this condition shall be
suspended (a) for a period of forty-five (45) days if the vacancy or vacancies
may be filled by the Board; (b) for a period of sixty (60) days if a vote of
shareholders is required to fill the vacancy or vacancies; or (c) for such
longer period as the SEC may prescribe by order upon application.
5.3 Monitoring
for Material Irreconcilable Conflicts.
AVIF
agrees that its Board of Trustees will monitor for the existence of any material
irreconcilable conflict between the interests of the Participants in all
separate accounts of life insurance companies utilizing AVIF ("Participating
Insurance Companies"), including each Account, and participants in all qualified
retirement and pension plans investing in AVIF ("Participating
Plans"). Nationwide agrees to inform the Board of Trustees of AVIF of
the existence of or any potential for any such material irreconcilable conflict
of which it is aware. The concept of a "material irreconcilable
conflict" is not defined by the 1940 Act or the rules thereunder, but the
Parties recognize that such a conflict may arise for a variety of reasons,
including, without limitation:
(a) an
action by any state insurance or other 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 Participants or by Participants of different
Participating Insurance Companies;
(f) a
decision by
a Participating Insurance Company to disregard the voting
instructions of Participants; or
(g) a
decision by a Participating Plan to disregard the voting instructions of Plan
participants.
Consistent
with the SEC's requirements in connection with exemptive orders of the type
referred to in Section 5.1 hereof, Nationwide will assist the Board of Trustees
in carrying out its responsibilities by providing the Board of Trustees with
all
information reasonably necessary for the Board of Trustees to consider any
issue
raised, including information as to a decision by Nationwide to disregard voting
instructions of Participants.
5.4 Conflict
Remedies.
(a) It
is agreed that if it is determined by a majority of the members of the Board
of
Trustees or a majority of the Disinterested Trustees that a material
irreconcilable conflict exists, Nationwide will, if it is a Participating
Insurance Company for which a material irreconcilable conflict is relevant,
at
its own 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 material irreconcilable conflict, which steps may
include, but are not limited to:
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(i)
|
withdrawing
the assets allocable to some or all of the Accounts from AVIF or
any Fund
and reinvesting such assets in a different investment medium, including
another Fund of AVIF, or submitting the question whether such segregation
should be implemented to a vote of all affected Participants and,
as
appropriate, segregating the assets of any particular group
(e.g., annuity Participants, life insurance Participants or
all
Participants) that votes in favor of such segregation, or offering
to the
affected Participants the option of making such a change;
and
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(ii)
|
establishing
a new registered investment company of the type defined as a "management
company" in Section 4(3) of the 1940 Act or a new separate account
that is
operated as a management company.
|
(b) If
the material irreconcilable conflict arises because of Nationwide's decision
to
disregard Participant voting instructions and that decision represents a
minority position or would preclude a majority vote, Nationwide may be required,
at AVIF's election, to withdraw each Account's investment in AVIF or any
Fund. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal must take place within six (6) months
after AVIF gives notice to Nationwide that this provision is being implemented,
and until such withdrawal AVIF shall continue to accept and implement orders
by
Nationwide for the purchase and redemption of Shares of AVIF.
(c) If
a material irreconcilable conflict arises because a particular state insurance
regulator's decision applicable to Nationwide conflicts with the majority of
other state regulators, then Nationwide will withdraw each Account's investment
in AVIF within six (6) months after AVIF's Board of Trustees informs Nationwide
that it has determined that such decision has created a material irreconcilable
conflict, and until such withdrawal AVIF shall continue to accept and implement
orders by Nationwide for the purchase and redemption of Shares of
AVIF. No charge or penalty will be imposed as a result of such
withdrawal.
(d) Nationwide
agrees that any remedial action taken by it in resolving any material
irreconcilable conflict will be carried out at its expense and with a view
only
to the interests of Participants.
(e) For
purposes hereof, a majority of the Disinterested Trustees will determine whether
or not any proposed action adequately remedies any material irreconcilable
conflict. In no event, however, will AVIF or any of its affiliates be
required to establish a new funding medium for any
Contracts. Nationwide will not be required by the terms hereof to
establish a new funding medium for any Contracts if an offer to do so has been
declined by vote of a majority of Participants materially adversely affected
by
the material irreconcilable conflict.
5.5 Notice
to Nationwide .
AVIF
will
promptly make known in writing to Nationwide the Board of Trustees'
determination of the existence of a material irreconcilable conflict, a
description of the facts that give rise to such conflict and the implications
of
such conflict.
5.6 Information
Requested by Board of Trustees.
Nationwide
and AVIF (or its investment adviser) will at least annually submit to the Board
of Trustees of AVIF such reports, materials or data as the Board of Trustees
may
reasonably request so that the Board of Trustees may fully carry out the
obligations imposed upon it by the provisions hereof or the exemptive order
granted by the SEC to permit Mixed and Shared Funding, and said reports,
materials and data will be submitted at any reasonable time deemed appropriate
by the Board of Trustees. All reports received by the Board of
Trustees of potential or existing conflicts, and all Board of Trustees actions
with regard to determining the existence of a conflict, notifying Participating
Insurance Companies and Participating Plans of a conflict, and determining
whether any proposed action adequately remedies a conflict, will be properly
recorded in the minutes of the Board of Trustees or other appropriate records,
and such minutes or other records will be made available to the SEC upon
request.
5.7 Compliance
with SEC Rules.
If,
at
any time during which AVIF is serving as an investment medium for variable
life
insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable, 6e-2 are amended
or Rule 6e-3 is adopted to provide exemptive relief with respect to Mixed and
Shared Funding, AVIF agrees that it will comply with the terms and conditions
thereof and that the terms of this Section 5 shall be deemed modified if and
only to the extent required in order also to comply with the terms and
conditions of such exemptive relief that is afforded by any of said rules that
are applicable.
5.8 Other
Requirements.
AVIF
will
require that each Participating Insurance Company and Participating Plan enter
into an agreement with AVIF that contains in substance the same provisions
as
are set forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b), 4.5(a), 5, and 10
of
this Agreement.
Section
6. Termination
6.1 Events
of Termination.
Subject
to Section 6.4 below, this Agreement will terminate as to a Fund:
(a) at
the option of any party, with or without cause with respect to the Fund, upon
six (6) months advance written notice to the other parties, or, if later, upon
receipt of any required exemptive relief from the SEC, unless otherwise agreed
to in writing by the parties; or
(b) at
the option of AVIF upon institution of formal proceedings against Nationwide
or
its affiliates by the NASD, the SEC, any state insurance regulator or any other
regulatory body regarding Nationwide's obligations under this Agreement or
related to the sale of the Contracts, the operation of each Account, or the
purchase of Shares, if, in each case, AVIF reasonably determines that such
proceedings, or the facts on which such proceedings would be based, have a
material likelihood of imposing material adverse consequences on the Fund with
respect to which the Agreement is to be terminated; or
(c) at
the option of Nationwide upon institution of formal proceedings against AVIF,
its principal underwriter, or its investment adviser by the NASD, the SEC,
or
any state insurance regulator or any other regulatory body regarding AVIF's
obligations under this Agreement or related to the operation or management
of
AVIF or the purchase of AVIF Shares, if, in each case, Nationwide reasonably
determines that such proceedings, or the facts on which such proceedings would
be based, have a material likelihood of imposing material adverse consequences
on Nationwide, or the Subaccount corresponding to the Fund with respect to
which
the Agreement is to be terminated; or
(d) at
the option of any Party in the event that (i) the Fund's Shares are not
registered and, in all material respects, issued and sold in accordance with
any
applicable federal or state law, or (ii) such law precludes the use of such
Shares as an underlying investment medium of the Contracts issued or to be
issued by Nationwide; or
(e) upon
termination of the corresponding Subaccount's investment in the Fund pursuant
to
Section 5 hereof; or
(f) at
the option of Nationwide if the Fund ceases to qualify as a RIC under Subchapter
M of the Code or under successor or similar provisions, or if Nationwide
reasonably believes that the Fund may fail to so qualify; or
(g) at
the option of Nationwide if the Fund fails to comply with Section 817(h) of
the
Code or with successor or similar provisions, or if Nationwide reasonably
believes that the Fund may fail to so comply; or
(h) at
the option of AVIF if the Contracts issued by Nationwide cease to qualify as
annuity contracts or life insurance contracts under the Code (other than by
reason of the Fund's noncompliance with Section 817(h) or Subchapter M of the
Code) or if interests in an Account under the Contracts are not registered,
where required, and, in all material respects, are not issued or sold in
accordance with any applicable federal or state law; or
(i) upon
another Party's material breach of any provision of this Agreement.
6.2 Notice
Requirement for Termination.
No
termination of this Agreement will be effective unless and until the Party
terminating this Agreement gives prior written notice to the other Party to
this
Agreement of its intent to terminate, and such notice shall set forth the basis
for such termination. Furthermore:
(a) in
the event that any termination is based upon the provisions of Sections 6.1(a)
or 6.1(e) hereof, such prior written notice shall be given at least six (6)
months in advance of the effective date of termination unless a shorter time
is
agreed to by the Parties hereto;
(b) in
the event that any termination is based upon the provisions of Sections 6.1(b)
or 6.1(c) hereof, such prior written notice shall be given at least ninety
(90)
days in advance of the effective date of termination unless a shorter time
is
agreed to by the Parties hereto; and
(c) in
the event that any termination is based upon the provisions of Sections 6.1(d),
6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior written notice shall be
given as soon as possible within twenty-four (24) hours after the terminating
Party learns of the event causing termination to be required.
6.3 Funds
To Remain Available.
Notwithstanding
any termination of this Agreement, AVIF will, at the option of Nationwide,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as “Existing
Contracts”). Specifically, without limitation, the owners of the
Existing Contracts will be permitted to reallocate investments in the Fund
(as
in effect on such date), redeem investments in the Fund and/or invest in the
Fund upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 6.3 will not apply to
any terminations under Section 5 and the effect of such terminations will be
governed by Section 5 of this Agreement.
6.4 Survival
of Warranties and Indemnifications.
All
warranties and indemnifications will survive the termination of this
Agreement.
6.5 Continuance
of Agreement for Certain Purposes.
If
any
Party terminates this Agreement with respect to any Fund pursuant to Sections
6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, this Agreement
shall nevertheless continue in effect as to any Shares of that Fund that are
outstanding as of the date of such termination (the "Initial Termination
Date"). This continuation shall extend to the earlier of the date as
of which an Account owns no Shares of the affected Fund or a date (the "Final
Termination Date") six (6) months following the Initial Termination Date, except
that Nationwide may, by written notice shorten said six (6) month period in
the
case of a termination pursuant to Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or
6.1(i).
Section
7. Parties To Cooperate Respecting
Termination
The
Parties hereto agree to cooperate and give reasonable assistance to one another
in taking all necessary and appropriate steps for the purpose of ensuring that
an Account owns no Shares of a Fund after the Final Termination Date with
respect thereto, or, in the case of a termination pursuant to
Section 6.1(a), the termination date specified in the notice of
termination. Such steps may include combining the affected Account
with another Account, substituting other mutual fund shares for those of the
affected Fund, or otherwise terminating participation by the Contracts in such
Fund.
Section
8. Assignment
This
Agreement may not be assigned by any Party, except with the written consent
of
each other Party.
Section
9. Notices
Notices
and communications required or permitted by Section 9 hereof will be given
by
means mutually acceptable to the Parties concerned. Each other notice
or communication required or permitted by this Agreement 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:
AIM
Variable Insurance Funds
A
I M Distributors, Inc.
A
I M Advisors, Inc.
00
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
Facsimile: (000)
000-0000
Attn:
Xxxxx X. Xxxxxx, Esq. – Assistant General Counsel
Nationwide
Life Insurance Company
Nationwide
Life and Annuity Insurance Company
Xxx
Xxxxxxxxxx Xxxxx, 0-00-X0
Xxxxxxxx,
Xxxx 00000
Facsimile:
(000) 000-0000
Attn:
Securities Officer
Nationwide
Investment Services Corporation
Xxx
Xxxxxxxxxx Xxxxx, 0-00-00
Xxxxxxxx,
Xxxx 00000
Facsimile:
(000) 000-0000
Attn:
Compliance Officer
Section
10. Voting Procedures
Subject
to the cost allocation procedures set forth in Section 3 hereof, Nationwide
will
distribute all proxy material furnished by AVIF to Participants to whom
pass-through voting privileges are required to be extended and will solicit
voting instructions from Participants. Nationwide will vote Shares in accordance
with timely instructions received from Participants. Nationwide will
vote Shares that are (a) not attributable to Participants to whom
pass-through voting privileges are extended, or (b) attributable to
Participants, but for which no timely instructions have been received, in the
same proportion as Shares for which said instructions have been received from
Participants, so long as and to the extent that the SEC continues to interpret
the 1940 Act to require pass through voting privileges for
Participants. Neither Nationwide nor any of its affiliates
will in any way recommend action in connection with or oppose or interfere
with
the solicitation of proxies for the Shares held for such
Participants. Nationwide reserves the right to vote shares held in
any Account in its own right, to the extent permitted by
law. Nationwide shall be responsible for assuring that each of its
Accounts holding Shares calculates voting privileges in a manner consistent
with
that of other Participating Insurance Companies or in the manner required by
the
Mixed and Shared Funding exemptive order obtained by AVIF. AVIF will
notify Nationwide of any changes of interpretations or amendments to Mixed
and
Shared Funding exemptive order it has obtained. AVIF will comply with
all provisions of the 1940 Act requiring voting by shareholders, and in
particular, AVIF either will provide for annual meetings (except insofar as
the
SEC may interpret Section 16 of the 1940 Act not to require such meetings)
or
will comply with Section 16(c) of the 1940 Act (although AVIF 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, AVIF will act in
accordance with the SEC’s interpretation of the requirements of Section 16(a)
with respect to periodic elections of directors and with whatever rules the
SEC
may promulgate with respect thereto.
Section
11. Foreign Tax Credits
AVIF
agrees to consult in advance with Nationwide concerning any decision to elect
or
not to elect pursuant to Section 853 of the Code to pass through the benefit
of
any foreign tax credits to its shareholders.
Section
12. Indemnification
12.1 Of
AVIF by Nationwide and NISC.
(a) Except
to the extent provided in Sections 12.1(b) and 12.1(c), below, Nationwide and
NISC agree to indemnify and hold harmless AVIF, its affiliates, and each person,
if any, who controls AVIF or its affiliates within the meaning of Section 15
of
the 1933 Act and each of their respective trustees and officers, (collectively,
the "Indemnified Parties" for purposes of this Section 12.1) against any and
all
losses, claims, damages, liabilities (including amounts paid in settlement
with
the written consent of Nationwide and NISC) or actions in respect thereof
(including, to the extent reasonable, legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise; provided, the Account owns Shares of the Fund
and insofar as such losses, claims, damages, liabilities or
actions:
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(i)
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arise
out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any Account's 1933 Act registration
statement, any Account Prospectus, the Contracts, or sales literature
or
advertising 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;
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 Nationwide or NISC by or on behalf of AVIF
for
use in any Account's 1933 Act registration statement, any Account
Prospectus, the Contracts, or sales literature or advertising or
otherwise
for use in connection with the sale of Contracts or Shares (or any
amendment or supplement to any of the foregoing);
or
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(ii)
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arise
out of or as a result of any other statements or representations
(other
than statements or representations contained in AVIF's 1933 Act
registration statement, AVIF Prospectus, sales literature or advertising
of AVIF, or any amendment or supplement to any of the foregoing,
not
supplied for use therein by or on behalf of Nationwide, NISC or their
respective affiliates and on which such persons have reasonably relied)
or
the negligent, illegal or fraudulent conduct of Nationwide, NISC
or their
respective affiliates or persons under their control (including,
without
limitation, their employees and "Associated Persons," as that term
is
defined in paragraph (m) of Article I of the NASD's By-Laws), in
connection with the sale or distribution of the Contracts or Shares;
or
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(iii)
|
arise
out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in AVIF's 1933 Act registration statement,
AVIF Prospectus, sales literature or advertising of AVIF, or any
amendment
or supplement to any of the foregoing, 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 and in conformity
with
information furnished to AVIF or its affiliates by or on behalf
of Nationwide, NISC or their respective affiliates for use in AVIF's
1933
Act registration statement, AVIF Prospectus, sales literature or
advertising of AVIF, or any amendment or supplement to any of the
foregoing; or
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(iv)
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arise
as a result of any failure by Nationwide or NISC to perform the
obligations, provide the services and furnish the materials required
of
them under the terms of this Agreement, or any material breach of
any
representation and/or warranty made by Nationwide or NISC in this
Agreement or arise out of or result from any other material breach
of this
Agreement by Nationwide or NISC; or
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(v)
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arise
as a result of failure by the Contracts issued by Nationwide to qualify
as
annuity contracts or life insurance contracts under the Code, otherwise
than by reason of any Fund's failure to comply with Subchapter M
or
Section 817(h) of the Code.
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(b) Neither
Nationwide nor NISC shall be liable under this Section 12.1 with respect to
any
losses, claims, damages, liabilities or actions to which an Indemnified Party
would otherwise be subject by reason of willful misfeasance, bad faith, or
gross
negligence in the performance by that Indemnified Party of its duties or by
reason of that Indemnified Party's reckless disregard of obligations or duties
(i) under this Agreement, or (ii) to AVIF.
(c) Neither
Nationwide nor NISC shall be liable under this Section 12.1 with respect to
any
action against an Indemnified Party unless AVIF shall have notified Nationwide
and NISC in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the action 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
Nationwide and NISC of any such action shall not relieve Nationwide and NISC
from any liability which they may have to the Indemnified Party against whom
such action is brought otherwise than on account of this Section
12.1. Except as otherwise provided herein, in case any such action is
brought against an Indemnified Party, Nationwide and NISC shall be entitled
to
participate, at their own expense, in the defense of such action and also shall
be entitled to assume the defense thereof, with counsel approved by the
Indemnified Party named in the action, which approval shall not be unreasonably
withheld. After notice from Nationwide or NISC to such Indemnified
Party of Nationwide’s or NISC’s election to assume the defense thereof, the
Indemnified Party will cooperate fully with Nationwide and NISC and shall bear
the fees and expenses of any additional counsel retained by it, and neither
Nationwide nor NISC will be liable to such Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof, other
than reasonable costs of investigation.
12.2 Of
Nationwide and NISC by AVIF.
(a) Except
to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e), below, AVIF
agrees to indemnify and hold harmless Nationwide, NISC, their respective
affiliates, and each person, if any, who controls Nationwide, NISC or their
respective affiliates within the meaning of Section 15 of the 1933 Act and
each
of their respective directors and officers, (collectively, the "Indemnified
Parties" for purposes of this Section 12.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of AVIF ) or actions in respect thereof (including, to the extent
reasonable, legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law, or otherwise;
provided, the Account owns Shares of the Fund and insofar as
such losses, claims, damages, liabilities or actions:
|
|
(i)
|
arise
out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in AVIF's 1933 Act registration statement,
AVIF Prospectus or sales literature or advertising of AVIF (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 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 AVIF or its
affiliates by or on behalf of Nationwide, NISC or their respective
affiliates for use in AVIF's 1933 Act registration statement, AVIF
Prospectus, or in sales literature or advertising or otherwise for
use in
connection with the sale of Contracts or Shares (or any amendment
or
supplement to any of the foregoing);
or
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|
|
(ii)
|
arise
out of or as a result of any other statements or representations
(other
than statements or representations contained in any Account's 1933
Act
registration statement, any Account Prospectus, sales literature
or
advertising for the Contracts, or any amendment or supplement to
any of
the foregoing, not supplied for use therein by or on behalf of AVIF
or its
affiliates and on which such persons have reasonably relied) or the
negligent, illegal or fraudulent conduct of AVIF or
its affiliates or persons under its control (including, without
limitation, their employees and "Associated Persons" as that Term
is
defined in Section (m) of Article 1 of the NASD By-Laws), in connection
with the sale or distribution of AVIF Shares;
or
|
|
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(iii)
|
arise
out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any Account's 1933 Act registration
statement, any Account Prospectus, sales literature or advertising
covering the Contracts, or any amendment or supplement to any of
the
foregoing, 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 and in conformity with information furnished to Nationwide,
NISC or
their respective affiliates by or on behalf of AVIF for use in any
Account's 1933 Act registration statement, any Account Prospectus,
sales literature or advertising covering the Contracts, or any amendment
or supplement to any of the foregoing;
or
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|
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(iv)
|
arise
as a result of any failure by AVIF to perform the obligations, provide
the
services and furnish the materials required of it under the terms
of this
Agreement, or any material breach of any representation and/or warranty
made by AVIF in this Agreement or arise out of or result from any
other
material breach of this Agreement by
AVIF.
|
(b) Except
to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e) hereof, AVIF
agrees to indemnify and hold harmless the Indemnified Parties from and against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement thereof with, the written consent of AVIF) or actions in respect
thereof (including, to the extent reasonable, legal and other expenses) to
which
the Indemnified Parties may become subject directly or indirectly under any
statute, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or actions directly or indirectly result from or arise out
of the failure of any Fund to operate as a regulated investment
company in compliance with (i) Subchapter M of the Code and regulations
thereunder, or (ii) Section 817(h) of the Code and regulations thereunder,
including, without limitation, any income taxes and related penalties,
rescission charges, liability under state law to Participants asserting
liability against Nationwide pursuant to the Contracts, the costs of any ruling
and closing agreement or other settlement with the IRS, and the cost of any
substitution by Nationwide of Shares of another investment company or portfolio
for those of any adversely affected Fund as a funding medium for each Account
that Nationwide reasonably deems necessary or appropriate as a result of the
noncompliance.
(c) AVIF
shall not be liable under this Section 12.2 with respect to any losses, claims,
damages, liabilities or actions to which an Indemnified Party would otherwise
be
subject by reason of willful misfeasance, bad faith, or gross negligence in
the
performance by that Indemnified Party of its duties or by reason of such
Indemnified Party's reckless disregard of its obligations and duties (i) under
this Agreement, or (ii) to Nationwide, NISC, each Account or
Participants.
(d) AVIF
shall not be liable under this Section 12.2 with respect to any action against
an Indemnified Party unless the Indemnified Party shall have notified AVIF
in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the action 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 AVIF of any such
action shall not relieve AVIF from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this Section 12.2. Except as otherwise provided herein, in case
any such action is brought against an Indemnified Party, AVIF will be entitled
to participate, at its own expense, in the defense of such action and also
shall
be entitled to assume the defense thereof (which shall include, without
limitation, the conduct of any ruling request and closing agreement or other
settlement proceeding with the IRS), with counsel approved by the Indemnified
Party named in the action, which approval shall not be unreasonably
withheld. After notice from AVIF to such Indemnified Party of AVIF's
election to assume the defense thereof, the Indemnified Party will cooperate
fully with AVIF and shall bear the fees and expenses of any additional counsel
retained by it, and AVIF will not be liable to such Indemnified Party under
this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof, other
than reasonable costs of investigation.
(e) In
no event shall AVIF be liable under the indemnification provisions contained
in
this Agreement to any individual or entity, including, without limitation,
Nationwide, NISC or any other Participating Insurance Company or any
Participant, with respect to any losses, claims, damages, liabilities or
expenses that arise out of or result from (i) a breach of any representation,
warranty, and/or covenant made by Nationwide or NISC hereunder or by any
Participating Insurance Company under an agreement containing substantially
similar representations, warranties and covenants; (ii) the failure by
Nationwide or any Participating Insurance Company to maintain its separate
account (which invests in any Fund) as a legally and validly established
separate account under applicable state law and as a duly registered unit
investment trust under the provisions of the 1940 Act (unless exempt therefrom);
or (iii) the failure by Nationwide or any Participating Insurance Company
to maintain its variable annuity or life insurance contracts (with respect
to
which any Fund serves as an underlying funding vehicle) as annuity contracts
or
life insurance contracts under applicable provisions of the Code.
12.3 Effect
of Notice.
Any
notice given by the indemnifying Party to an Indemnified Party referred to
in
Sections 12.1(c) or 12.2(d) above of participation in or control of any
action by the indemnifying Party will in no event be deemed to be an admission
by the indemnifying Party of liability, culpability or responsibility, and
the
indemnifying Party will remain free to contest liability with respect to the
claim among the Parties or otherwise.
12.4 Successors.
A
successor by law of any Party shall be entitled to the benefits of the
indemnification contained in this Section 12.
Section
13. Applicable Law
This
Agreement will be construed and the provisions hereof interpreted under and
in
accordance with Delaware law, without regard for that state's principles of
conflict of laws.
Section
14. Execution in Counterparts
This
Agreement may be executed simultaneously in two or more counterparts, each
of
which taken together will constitute one and the same instrument.
Section
15. 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.
Section
16. 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.
Section
17. Headings
The
Table
of Contents and headings used in this Agreement are for purposes of reference
only and shall not limit or define the meaning of the provisions of this
Agreement.
Section
18. Confidentiality
AVIF
acknowledges that the identities of the customers of Nationwide or any of its
affiliates (collectively, the “Nationwide Protected Parties” for purposes of
this Section 18), information maintained regarding those customers, and all
computer programs and procedures or other information developed by the
Nationwide Protected Parties or any of their employees or agents in connection
with Nationwide’s performance of its duties under this Agreement are the
valuable property of the Nationwide Protected Parties. AVIF agrees
that if it comes into possession of any list or compilation of the identities
of
or other information about the Nationwide Protected Parties’ customers, or any
other information or property of the Nationwide Protected Parties, other than
such information as may be independently developed or compiled by AVIF from
information supplied to it by the Nationwide Protected Parties’ customers who
also maintain accounts directly with AVIF, AVIF will hold such information
or
property in confidence and refrain from using, disclosing or distributing any
of
such information or other property except: (a) with Nationwide’s prior
written consent; or (b) as required by law or judicial
process. Nationwide acknowledges that the identities of the customers
of AVIF or any of its affiliates (collectively the “AVIF Protected Parties” for
purposes of this Section 18), information maintained regarding those customers,
and all computer programs and procedures or other information developed by
the
AVIF Protected Parties or any of their employees or agents in connection with
AVIF’s performance of its duties under this Agreement are the valuable property
of the AVIF Protected Parties. Nationwide agrees that if it comes
into possession of any list or compilation of the identities of or other
information about the AVIF Protected Parties’ customers or any other information
or property of the AVIF Protected Parties, other than such information as may
be
independently developed or compiled by Nationwide from information supplied
to
it by the AVIF Protected Parties’ customers who also maintain accounts directly
with Nationwide, Nationwide will hold such information or property in confidence
and refrain from using, disclosing or distributing any of such information
or
other property except: (a) with AVIF’s prior written consent; or (b) as required
by law or judicial process. Each party acknowledges that any breach
of the agreements in this Section 18 would result in immediate and irreparable
harm to the other parties for which there would be no adequate remedy at law
and
agree that in the event of such a breach, the other parties will be entitled
to
equitable relief by way of temporary and permanent injunctions, as well as
such
other relief as any court of competent jurisdiction deems
appropriate.
Section
19. Trademarks and Fund Names
(a) A
I M Management Group Inc. (“AIM Management” or “licensor”), an affiliate of
AVIF, owns all right, title and interest in and to the name, trademark and
service xxxx AIM Management and such other tradenames, trademarks and
service marks as may be set forth on Schedule B, as amended from time to time
by
written notice from AIM Management to Nationwide (the “AIM licensed marks” or
the “licensor’s licensed marks”) and is authorized to use and to license other
persons to use such marks. Nationwide and its affiliates are hereby
granted a non-exclusive license to use the AIM Management licensed marks in
connection with Nationwide’s performance of the services contemplated under this
Agreement, subject to the terms and conditions set forth in this Section
19.
(b) The
grant of license to Nationwide and its affiliates ( the “licensee”) shall
terminate automatically upon termination of this Agreement. Upon
automatic termination, the licensee shall cease to use the licensor’s licensed
marks, except that Nationwide shall have the right to continue to service any
outstanding Contracts bearing any of the AIM licensed marks. Upon
AIM Management’s elective termination of this license, Nationwide and its
affiliates shall immediately cease to issue any new annuity or life insurance
contracts bearing any of the AIM licensed marks and shall likewise cease any
activity which suggests that it has any right under any of the AIM licensed
marks or that it has any association with AIM Management, except that Nationwide
shall have the right to continue to service outstanding Contracts bearing any
of
the AIM licensed marks.
(c) The
licensee shall obtain the prior written approval of the licensor for the public
release by such licensee of any materials bearing the licensor’s licensed
marks. The licensor’s approvals shall not be unreasonably
withheld.
(d) During
the term of this grant of license, a licensor may request that a licensee submit
samples of any materials bearing any of the licensor’s licensed marks which were
previously approved by the licensor but, due to changed circumstances, the
licensor may wish to reconsider. If, on reconsideration, or on
initial review, respectively, any such samples fail to meet with the written
approval of the licensor, then the licensee shall immediately cease distributing
such disapproved materials. The licensor’s approval shall not be unreasonably
withheld, and the licensor, when requesting reconsideration of a prior approval,
shall assume the reasonable expenses of withdrawing and replacing such
disapproved materials. The licensee shall obtain the prior written
approval of the licensor for the use of any new materials developed to replace
the disapproved materials, in the manner set forth above.
(e) The
licensee hereunder: (i) acknowledges and stipulates that, to the best of the
knowledge of the licensee, the licensor’s licensed marks are valid and
enforceable trademarks and/or service marks and that such licensee does not
own
the licensor’s licensed marks and claims no rights therein other than as a
licensee under this Agreement; (ii) agrees never to contend otherwise in legal
proceedings or in other circumstances; and (iii) acknowledges and agrees that
the use of the licensor’s licensed marks pursuant to this grant of license shall
inure to the benefit of the licensor.
Section
20. Parties to Cooperate
Each
party to this Agreement will cooperate with each other party and all appropriate
governmental authorities (including, without limitation, the SEC, the NASD
and
state insurance regulators) and will permit each other and such authorities
reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to
this Agreement or the transactions contemplated hereby.
IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
signing below.
|
AIM
VARIABLE INSURANCE FUNDS
|
|||
|
Attest:
|
By:
|
||
|
Name:
|
Xxxxx
X. Xxxxxx
|
Name:
|
[Xxxxxx
X. Xxxxxx]
|
|
Title:
|
Assistant
Secretary
|
Title:
|
[President]
|
|
A I M
ADVISORS, INC.
|
|||
|
Attest:
|
By:
|
||
|
Name:
|
Xxxxx
X. Xxxxxx
|
Name:
|
[Xxxx
Xxxxxxxxxx]
|
|
Title:
|
Assistant
Secretary
|
Title:
|
President
|
|
A I M
DISTRIBUTORS, INC.
|
|||
|
Attest:
|
By:
|
||
|
Name:
|
Xxxxx
X. Xxxxxx
|
Name:
|
Xxxxxxx
X. Xxxx
|
|
Title:
|
Assistant
Secretary
|
Title:
|
President
|
|
NATIONWIDE
LIFE INSURANCE COMPANY, on behalf of itself and its
separate accounts
|
|||
|
Attest:
|
By:
|
||
|
Name:
|
[Xxxx
X. Xxxxxxxxxx]
|
Name:
|
[Xxxxxxx
X. Xxxxxx]
|
|
Title:
|
[Variable
Products Counsel]
|
Title:
|
[Vice
President]
|
|
NATIONWIDE
LIFE AND ANNUITY INSURANCE COMPANY, on behalf of itself and its
separate accounts
|
|||
|
Attest:
|
By:
|
||
|
Name:
|
[Xxxx
X. Xxxxxxxxxx]
|
Name:
|
[Xxxxxxx
X. Xxxxxx]
|
|
Title:
|
[Variable
Products Counsel]
|
Title:
|
[Vice
President]
|
|
NATIONWIDE
INVESTMENT SERVICES CORPORATION
|
|||
|
Attest:
|
By:
|
||
|
Name:
|
[Xxxx
X. Xxxxxxxxxx]
|
Name:
|
[Xxxxxxx
X. Xxxxxx]
|
|
Title:
|
[Variable
Products Counsel]
|
Title:
|
[Vice
President]
|
SCHEDULE
A
FUNDS
AVAILABLE UNDER THE CONTRACTS
|
|
AIM
VARIABLE INSURANCE FUNDS
|
|
FUNDS
AVAILABLE UNDER
THE
POLICIES
|
SEPARATE
ACCOUNTS UTILIZING THE FUNDS
|
|
(Series
I shares)
AIM
V.I. Aggressive Growth Fund
AIM
V.I. Balanced Fund
AIM
V.I. Basic Value Fund
AIM
V.I. Blue Chip Fund
AIM
V.I. Capital Appreciation Fund
AIM
V.I. Capital Development Fund
AIM
V.I. Core Equity Fund
AIM
V.I. Dent Demographic Trends Fund
AIM
V.I. Diversified Income Fund
AIM
V.I. Global Utilities Fund
AIM
V.I. Government Securities Fund
AIM
V.I. Growth Fund
AIM
V.I. High Yield Fund
AIM
V.I. International Growth Fund
AIM
V.I. Mid Cap Core Equity Fund
AIM
V.I. New Technology Fund
AIM
V.I. Premier Equity Fund
|
Nationwide
Variable Account
Nationwide
Variable Account-II
Nationwide
Variable Account-3
Nationwide
Variable Account-4
Nationwide
Variable Account-5
Nationwide
Variable Account-6
Nationwide
Variable Account -7
Nationwide
Variable Account-8
Nationwide
Variable Account-9
Nationwide
Variable Account-10
Nationwide
Variable Account-11
Nationwide
Variable Account -12
Nationwide
Variable Account-13
Nationwide
Variable Account-14
Nationwide
Variable Account-15
Nationwide
Variable Account-16
Nationwide
Variable Account-17
Multi-Flex
Variable Account
Nationwide
VA Separate Account-A
Nationwide
VA Separate Account-B
Nationwide
VA Separate Account-C
Nationwide
VA Separate Account-D
Nationwide
VLI Separate Account
Nationwide
VLI Separate Account-2
Nationwide
VLI Separate Account-3
Nationwide
VLI Separate Account-4
Nationwide
VLI Separate Account-5
Nationwide
VLI Separate Account-6
Nationwide
VL Separate Account
Nationwide
VL Separate Account-A
Nationwide
VL Separate Account-B
Nationwide
VL Separate Account-C
Nationwide
VL Separate Account-D
Nationwide
Private Placement Variable Account
|
|
(Series
II shares)
AIM
V.I. Aggressive Growth Fund
AIM
V.I. Balanced Fund
AIM
V.I. Basic Value Fund
AIM
V.I. Blue Chip Fund
AIM
V.I. Capital Appreciation Fund
AIM
V.I. Capital Development Fund
AIM
V.I. Core Equity Fund
AIM
V.I. Dent Demographic Trends Fund
AIM
V.I. Diversified Income Fund
AIM
V.I. Global Utilities Fund
AIM
V.I. Government Securities Fund
AIM
V.I. Growth Fund
AIM
V.I. High Yield Fund
AIM
V.I. International Growth Fund
AIM
V.I. Mid Cap Core Equity Fund
AIM
V.I. New Technology Fund
AIM
V.I. Premier Equity Fund
|
SCHEDULE
B
AIM
VARIABLE INSURANCE FUNDS
|
(Series
I
shares)
(Series
II
shares)
AIM
V.I. Aggressive Growth Fund
AIM
V.I. Balanced Fund
AIM
V.I. Basic Value Fund
AIM
V.I. Blue Chip Fund
AIM
V.I. Capital Appreciation Fund
AIM
V.I. Capital Development Fund
AIM
V.I. Core Equity Fund
AIM
V.I. Dent Demographic Trends Fund
AIM
V.I. Diversified Income Fund
AIM
V.I. Global Utilities Fund
AIM
V.I. Government Securities Fund
AIM
V.I. Growth Fund
AIM
V.I. High Yield Fund
AIM
V.I. International Growth Fund
AIM
V.I. Mid Cap Core Equity Fund
AIM
V.I. New Technology Fund
AIM
V.I. Premier Equity Fund
|
AIM
and
Design
