EXHIBIT (h)(8)
PARTICIPATION AGREEMENT
BY AND AMONG
MARKET STREET FUND
AND
NATIONWIDE LIFE AND ANNUITY COMPANY OF AMERICA
(FORMERLY, "PROVIDENTMUTUAL LIFE AND ANNUITY COMPANY OF AMERICA")
AND
1717 CAPITAL MANAGEMENT COMPANY
THIS AGREEMENT, made as of the close of business on _______________,
2002, by and among NATIONWIDE LIFE AND ANNUITY COMPANY OF AMERICA (formerly,
"Providentmutual Life and Annuity Company of America"), a Delaware stock
insurance company (hereinafter, the "Company"), on its own behalf and on behalf
of each separate account of the Company named in Exhibit A to this Agreement, as
may be amended from time to time (each, an "Account" and collectively, the
"Accounts"), the MARKET STREET FUND, an open-end diversified management
investment company organized as a business trust under the laws of the State of
Delaware (hereinafter, the "Fund") and 1717 CAPITAL MANAGEMENT COMPANY, a
Pennsylvania corporation (hereinafter, "1717" or the "Underwriter").
WHEREAS, the Fund engages in business as an open-end diversified,
management investment company, and the Fund's shares of beneficial interests
("shares") are divided into several distinct series of shares, each representing
an interest in a particular managed portfolio of securities and other assets
named in Exhibit B to this Agreement, as may be amended from time to time (each,
a "Portfolio"), of which certain Portfolios (the "Dedicated Portfolios") are
available to act as an investment vehicle for separate accounts established for
variable life insurance policies and variable annuity contracts offered by
insurance companies that have entered into participation agreements
substantially identical to this Agreement (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission (the "SEC"), dated October 3, 1985 (File No. 812-6143),
granting Participating Insurance Companies and variable annuity and variable
life insurance separate accounts exemptions from the provisions of Sections
9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended
(hereinafter, the "1940 Act"), and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit the Fund's shares to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter, the
"Mixed and Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act, and its shares are registered under the Securities
Act of 1933, as amended (hereinafter, the "1933 Act"); and
WHEREAS, the Company has registered or will register certain
variable life insurance policies and variable annuity contracts named in Exhibit
A to this Agreement, as it may be amended from time to time (collectively, the
"Policies") under the 1933 Act, unless exempt therefrom; and
WHEREAS, the Accounts are duly organized, validly existing
segregated asset accounts, established by resolution of the Company's Board of
Directors under Pennsylvania insurance law, to set aside and invest assets
attributable to the Policies; and
WHEREAS, the Company has registered each Account as a unit
investment trust under the 1940 Act, unless exempt therefrom; and
WHEREAS, the Underwriter is registered as a broker-dealer with the
SEC under the Securities Exchange Act of 1934, as amended (hereinafter, the
"1934 Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter, the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, Providentmutual Life and Annuity Company of America previously had
purchased shares in certain of the Portfolios that are dedicated to support
separate accounts established for variable life insurance policies and variable
annuity contracts offered by insurance companies (the aforementioned "Dedicated
Portfolios") on behalf of the Accounts to fund the Policies, which shares of the
Dedicated Portfolios the Underwriter was authorized to sell to unit investment
trusts such as the Accounts at net asset value, pursuant to an agreement by and
among Providentmutual Life and Annuity Company of America, the Fund, and the
Distributor, dated January 26, 2001 (hereinafter, the "Previous Agreement"); and
WHEREAS, prior to ______________, 2002, Providentmutual Life and
Annuity Company of America was a wholly-owned subsidiary of Provident Mutual
Life Insurance Company, a Pennsylvania mutual life insurance company; and
WHEREAS, the change in control over Provident Mutual Life Insurance
Company, as of ________, 2002, as a result of the ___________, 2002 "sponsored
demutualization" and acquisition of Provident Mutual Life Insurance Company by
Nationwide Financial Services, Inc., pursuant to which acquisition Provident
Mutual Life Insurance Company was renamed "Nationwide Life Insurance Company of
America," also resulted in the automatic and immediate change in control over
Providentmutual Life and Annuity Company of America (which thereafter was
renamed "Nationwide Life and Annuity Company of America"), and, accordingly,
also resulted in the "assignment" (as that term is defined at Section 2(a)(4) of
the 0000 Xxx) of the Previous Agreement, pursuant to which assignment the
Previous Agreement automatically and immediately terminated; and
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WHEREAS, to the extent permitted by applicable insurance laws and
regulations, Nationwide Life and Annuity Company of America (formerly,
"Providentmutual Life and Annuity Company of America") (hereinafter, the
aforementioned "Company") intends to continue to purchase shares in certain of
the Dedicated Portfolios that are dedicated to support separate accounts
established for variable life insurance policies and variable annuity contracts
offered by insurance companies and named in Exhibit B to this Agreement, as this
Exhibit B may be amended from time to time, on behalf of the Accounts to fund
the Policies, and the Underwriter is and remains authorized to sell shares of
the Dedicated Portfolios to unit investment trusts such as the Accounts at net
asset value.
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund, and the Underwriter hereby agree as follows:
ARTICLE I. Sale of Dedicated Portfolio Shares
1.1. The Underwriter agrees to sell to the Company those shares of
the Fund's Dedicated Portfolios that the Company orders on behalf of the
Accounts, executing such orders on a daily basis at the net asset value next
computed after receipt and acceptance by the Fund, or its designee, of the order
for these shares. For purposes of this Section 1.1, the Company shall be the
designee of the Fund for receipt of such orders from each Account and receipt by
such designee shall constitute receipt by the Fund; provided that the Fund
receives notice of such order by 10:00 a.m. Eastern Time on the next following
Business Day. "Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and on which the relevant Fund calculates its net
asset value.
1.2. The Fund agrees to make its Dedicated Portfolio shares
available indefinitely for purchase at the applicable net asset value per share
by Participating Insurance Companies and their separate accounts on those days
on which the Fund calculates the Portfolios' net asset values pursuant to SEC
rules; provided, however, that the Fund's Board of Trustees (the "Board") may
refuse to sell shares of any Portfolio to any person, or suspend or terminate
the offering of shares of any Portfolio if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole discretion of the
Board, acting in good faith and in light of its fiduciary duties under federal
and any applicable state laws, necessary in the best interests of the
shareholders of any Portfolio.
1.3. The Fund and the Underwriter agree that Dedicated Portfolio
shares will be sold only to Participating Insurance Companies and their separate
accounts. No shares of any Dedicated Portfolio will be sold to the general
public.
1.4. The Fund and the Underwriter will not sell Dedicated Portfolio
shares to any insurance company or separate account unless an agreement
containing provisions substantially the same as Articles I, III, V, and VII of
this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, upon the Company's request,
any full or fractional shares of a Dedicated Portfolio held by the Company,
executing such requests on a
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daily basis at the net asset value next computed after receipt and acceptance by
the Fund, or its designee, of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Separate Account and receipt by such designee
shall constitute receipt by the Fund; provided the Fund receives notice of
request for redemption by 10:00 a.m. Eastern Time on the next following Business
Day.
1.6. The Company agrees to purchase and redeem the shares of each
Dedicated Portfolio offered by the Fund's then current prospectus in accordance
with the provisions of such prospectus. The Company agrees that all net amounts
available under the Policies shall be invested in the Fund, or in the Company's
general account; provided that these amounts may also be invested in an
investment company other than the Fund if: (a) the other investment company, or
series thereof, has investment objectives or policies that are substantially
different from the investment objectives and policies of all the Fund's
Portfolios; (b) the Company gives the Fund and the Underwriter forty-five (45)
days written notice of the Company's intention to make that other investment
company available as a funding vehicle for the Policies; (c) that other
investment company was available as a funding vehicle for the Policies prior to
the date of this Agreement and the Company has informed the Fund and Underwriter
of that arrangement in writing prior to their signing this Agreement; or (d) the
Fund or Underwriter consents in writing prior to the use of that other
investment company.
1.7. The Company shall pay for Fund shares on the same day that the
Company places an order to purchase Fund shares. The Fund shall pay redemption
proceeds in accordance with the terms of the then-current prospectus for the
Fund. Payment shall be in federal funds transmitted by wire.
1.8. Issuance and transfer of the Funds' shares will be by book
entry only. Share certificates will not be issued to the Company or any of the
Accounts. Shares ordered from the Fund will be recorded in an appropriate title
for the applicable Account or the appropriate subaccount of the applicable
Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income dividends or
capital-gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such dividends and distributions as are payable on the
Dedicated Portfolio shares in additional shares of that Dedicated Portfolio;
provided, that the Company reserves the right to revoke this election and to
receive all such dividends and distributions in cash. The Fund shall notify the
Company of the number of each Dedicated Portfolio's shares so issued as payment
of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each
Dedicated Portfolio available to the Company on a daily basis as soon as
reasonably practical after the net asset value per share is calculated.
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ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Policies are or
will be registered under the 1933 Act, unless exempt therefrom, and that the
Policies will be issued and sold in compliance with all applicable federal and
state laws. The Company further represents and warrants that the Company is an
insurance company duly organized and in good standing under applicable law and
that the Company has legally and validly established the Accounts as segregated
asset accounts under Section 00-00-000 of the Pennsylvania Insurance Code and
has registered each of the Accounts as a unit investment trust in accordance
with the provisions of the 1940 Act, unless exempt therefrom, to serve as
segregated investment accounts for the Policies, and that the Company will
maintain such registrations for so long as any Policies are outstanding. The
Company shall amend any registration statement under the 1933 Act for the
Policies and any registration statement under the 1940 Act for the Accounts from
time to time as required in order to effect the continuous offering of the
Policies or as may otherwise be required by applicable law. The Company shall
register and qualify the Policies for sale in accordance with the securities
laws of the various states only if and to the extent deemed necessary by the
Company.
2.2. Subject to Article VI hereof, the Company represents that the
Company believes, in good faith, that the Policies are currently and, at the
time of issuance, will be treated as life insurance contracts or annuity
contracts under applicable provisions of the Internal Revenue Code of 1986, that
the Company will make every effort to maintain such treatment and that the
Company will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Policies have ceased to be so treated or
that the Policies might not be so treated in the future.
2.3. The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act and duly authorized for
issuance in accordance with applicable law and that the Fund is and shall remain
registered under the 1940 Act for as long as the Fund shares are sold. The Fund
shall amend the registration statement for Fund shares under the 1933 Act and
the 1940 Act from time to time as required in order to effect the continuous
offering of its shares. The Fund shall register and qualify the shares for sale
in accordance with the laws of the various states only if and to the extent
deemed advisable by the Fund or the Underwriter.
2.4. The Fund represents that the Fund believes, in good faith, that
the Fund is currently qualified as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, that the Fund will make every
effort to maintain such qualification (under Subchapter M or any successor or
similar provision), and that the Fund will notify the Company immediately upon
having a reasonable basis for believing that the Fund has ceased to so qualify
or that it might not so qualify in the future.
2.5. The Fund represents that the Fund's investment objectives,
policies, and restrictions comply with the Pennsylvania Insurance Code as this
Code applies to the Fund. To the extent feasible and consistent with market
conditions, the Fund will adjust the Fund's investments to comply with
requirements of the Company's domiciliary state upon written notice
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from the Company of such requirements and proposed adjustments, provided that in
this case the Fund shall be allowed a reasonable period of time under the
circumstances after receipt of such notice to make any such adjustment.
2.6. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although the Fund may make such payments in the future. To the extent
that the Fund decides to finance distribution expenses pursuant to Rule 12b-1,
the Fund shall formulate and approve any plan pursuant to the requirements of
Rule 12b-1 to finance distribution expenses and shall notify the Company
immediately.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that the Underwriter will sell and distribute the
Fund shares in accordance with the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.8 The Fund represents and warrants that it and all of its
trustees, officers, employees and other individuals/entities having access to
the moneys 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.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company, at the Company's
expense, with as many copies of the Fund's current prospectus as the Company may
reasonably request for use with prospective Policy owners and applicants. The
Underwriter shall print and distribute, at the Fund's expense, as many copies as
necessary for distribution to existing Policy owners or participants. If
requested by the Company in lieu thereof, the Fund shall provide this
documentation and other assistance as is reasonably necessary in order for the
Company to have the new prospectus for the Policies and the Fund's new
prospectus for the Dedicated Portfolios printed together in one document, in
such case the Fund shall bear its proportional share of expenses as described
above.
3.2. The Fund's prospectus shall state that the Fund's Statement of
Additional Information is available from the Underwriter (or, in the Fund's
discretion, the prospectus shall state that this Statement is available from the
Fund), and the Underwriter (or the Fund) shall provide this Statement, at the
Underwriter's expense, to the Company and to any owner of or participant under a
Policy who requests this Statement or, at the Company's expense, to any
prospective Policy owner and applicant who requests this Statement.
3.3. The Fund, at its expense, shall provide the Company with copies
of the Fund's proxy material, reports to shareholders, and other communications
to shareholders in
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such quantity as the Company shall reasonably require and shall bear the costs
of distributing these materials, reports, and communications to existing Policy
owners or participants.
3.4. If and to the extent required by law, the Company shall:
(i) solicit voting instructions from Policy owners or
participants;
(ii) vote the Fund shares held in the Accounts in accordance with
instructions received from Policy owners or participants; and
(iii) vote Fund shares held in the Accounts for which no timely
instructions have been received, and any Fund shares held in
the Company's general account, in the same proportion as Fund
shares for which instructions have been received;
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require passthrough voting privileges for variable policy owners. The Company
reserves the right to vote Fund shares held in any segregated asset account or
in the Company's general account in its own right, to the extent permitted by
law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with other Participating Insurance Companies
and as required by the Mixed and Shared Funding Exemptive Order.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will call a meeting
of shareholders at the written request of 25% of the outstanding shares of a
Portfolio or Portfolios and will comply with Section 16(a) of the 1940 Act and,
if and when applicable, Section 16(b). Further, the Fund will act in accordance
with the SEC interpretation of the requirements of Section 16 (a) with respect
to periodic elections of trustees and with whatever rules the SEC may promulgate
with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to
the Fund or the Underwriter, each piece of sales literature or other promotional
material in which the Fund or the Underwriter is named, at least ten (10)
business days prior to the literature's or material's use. No such material
shall be used if the Fund or the Underwriter objects to such use within ten (10)
business days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Policies other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales
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literature or other promotional material approved by the Fund or by the
Underwriter, except with the permission of the Fund or the Underwriter. The Fund
and the Underwriter agree to respond to any request for approval on a prompt and
timely basis. The parties agree that this Section 4.2 is not intended to
designate or otherwise imply that the Company is an underwriter or distributor
of the Fund's shares.
4.3. The Fund or the Underwriter shall furnish, or shall cause to be
furnished, to the Company or the Company's designee, each piece of sales
literature or other promotional material in which the Company, the Company's
separate account(s) or the Policies are named, at least ten (10) business days
prior to the literature's or material's use. No such material shall be used if
the Company objects to such use within ten (10) business days after receipt of
such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company, the
Accounts, or the Policies other than the information or representations
contained in a registration statement or prospectus for the Policies, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for the Accounts which are in the public domain
or approved by the Company for distribution to Policy owners or participants, or
in sales literature or other promotional material approved by the Company,
except with the permission of the Company. The Company agrees to respond to any
request for approval on a prompt and timely basis.
4.5. For purposes of this Article IV, the phrase "sales literature
or other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under NASD rules, the 1940 Act or the 1933 Act.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other compensation
to the Company under this Agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act to
finance distribution expenses, then, subject to obtaining any required exemptive
orders or other regulatory approvals, the Underwriter may make payments to the
Company or to the underwriter for the Policies if and in amounts agreed to by
the Underwriter in writing.
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5.2. All expenses incident to performance by the Fund of this
Agreement shall be paid by the Fund to the extent permitted by law. The Fund
shall bear the expenses for the cost of registration and qualification of the
Fund's shares under federal law, and, if applicable, under any state securities
law, preparation and filing of the Fund's prospectus and registration statement,
proxy materials and reports, setting in type, printing and distributing the
prospectuses, the proxy materials and reports to existing shareholders and
Policy owners, the preparation of all statements and notices required by any
federal or state law, all taxes on the issuance or transfer of the Fund's
shares, and any expenses permitted to be paid or assumed by the Fund pursuant to
a plan, if any, under Rule 12b-1 under the 1940 Act.
ARTICLE VI. Diversification
6.1. The Fund, on behalf of each Dedicated Portfolio, shall at all
times be responsible to invest money from an Account in such a manner as to
ensure that the Policies will be treated as variable contracts under the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
issued thereunder; provided that, the Fund's investment responsibility shall be
limited to compliance with Subchapter M (Code Section 851 et seq.) as that
section relates to regulated investment companies and Code Section 817 (h) and
the related U.S. Treasury Regulation Section 1.817-5 issued thereunder, relating
to the diversification requirements for variable annuity, endowment, and life
insurance contracts.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund and Portfolios for the
existence of any material irreconcilable conflict between the interests of the
policy owners of all separate accounts investing in the Fund and Portfolios. An
irreconcilable material conflict may arise for a variety of reasons, including:
(a) an action by any state insurance regulatory authority;
(b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any
similar action by insurance, tax, or securities regulatory
authorities;
(c) an administrative or judicial decision in any relevant
proceeding;
(d) the manner in which the investments of any Portfolio are being
managed;
(e) a difference in voting instructions given by Participating
Insurance Companies or by variable annuity contract and
variable life insurance policy owners; or
(f) a decision by an insurer to disregard the voting instructions
of policy owners.
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The Board shall promptly inform the Company if the Board determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company has reviewed a copy of the Mixed and Shared Funding
Exemptive Order, and in particular, has reviewed the conditions to the requested
relief set forth therein. As set forth in the Mixed and Shared Funding Exemptive
Order, the Company will report any potential or existing conflicts of which the
Company is aware to the Board. The Company agrees to assist the Board in
carrying out the Fund's responsibilities under the Mixed and Shared Funding
Exemptive Order, by providing the Board with all information reasonably
necessary for the Board to consider any issues raised. This includes, but is not
limited to, an obligation by the Company to inform the Board whenever policy
owner voting instructions are disregarded. The Board shall record in the minutes
or other appropriate records of the Fund, all reports received by the Board and
all action with regard to a conflict.
7.3. If it is determined by a majority of the members of the Board
or a majority of its disinterested Trustees that an irreconcilable material
conflict exists, the Company and other Participating Insurance Companies shall,
at their expense and to the extent reasonably practicable (as determined by a
majority of the disinterested Trustees), take whatever steps are necessary to
remedy or eliminate the irreconcilable material conflict, up to and including:
(a) withdrawing the assets allocable to some or all of the
separate accounts from the Fund or any Portfolio and
reinvesting these assets in a different investment medium,
including (but not limited to) another Portfolio of the Fund,
or submitting the question whether such segregation should be
implemented to a vote of all affected policy owners and, as
appropriate, segregating the assets of any appropriate group
(i.e., variable annuity policy owners or variable life
insurance policy owners, of one or more Participating
Insurance Companies) that votes in favor of such segregation,
or offering to the affected policy owners the option of making
such a change; and
(b) establishing a new registered management investment company or
managed separate account.
7.4. If the Company's disregard of voting instructions could
conflict with the majority of Policy owner voting instructions, and the
Company's judgment represents a minority position or would preclude a majority
vote, the Company is permitted to withdraw each affected Portfolio's investment
in the Fund. The Underwriter and Fund shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the Fund
until the Company notifies the Underwriter and the Fund that the Company is
withdrawing each affected Account's investment in the Fund pursuant to this
Section 7.4.
7.5. If a particular state insurance regulator's decision applicable
to the Company conflicts with the majority of other state insurance regulators,
then the Company is
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permitted to withdraw each affected Account's investment in the Fund. The
Underwriter and Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund until the
Company notifies the Underwriter and the Fund that the Company is withdrawing
each affected Account's investment in the Fund pursuant to this Section 7.5.
7.6. For purposes of Section 7.3 of this Agreement, the Board shall
determine whether any proposed action adequately remedies any irreconcilable
material conflict, but in no event will the Fund be required to establish a new
funding medium for the Policies. The Company shall not be required by Section
7.3 to establish a new funding medium for the Policies if an offer to do so has
been declined by vote of a majority of Policy owners materially adversely
affected by the irreconcilable material conflict.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) under the
1940 Act are amended, or Rule 6e-3 under the 1940 Act is adopted, to provide
exemptive relief from any provision of the 1940 Act or the rules promulgated
thereunder with respect to mixed or shared funding (as defined in the Mixed and
Shared Funding Exemptive Order) on terms and conditions materially different
from those contained in the Mixed and Shared Funding Exemptive Order, then:
(a) the Fund and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 6e-3(T), as amended, and Rule
6e-3, as adopted, to the extent that these rules are
applicable; and
(b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this
Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to these
Sections of the Agreement are contained in such Rule(s) as
so amended or adopted.
ARTICLE VIII. Indemnification
8 1. Indemnification by the Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund,
the Underwriter, and each of the Fund's or the Underwriter's trustees,
directors, officers, employees, or agents and each person, if any, who controls
or is associated with the Fund or the Underwriter within the meaning of such
terms under the federal securities laws (collectively, the "indemnified parties"
for purposes of this Section 8.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company), or litigation (including legal and other expenses), to which the
indemnified parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities, or
expenses (or actions in respect thereof), or settlements are related to the sale
or acquisition of the Fund's shares and:
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(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the registration statement or prospectus for the Policies or
contained in the Policies or sales literature for the Policies
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were
made; provided that this agreement to indemnify shall not
apply as to any indemnified party if this statement or
omission or this alleged statement or omission was made in
reliance upon and in conformity with information furnished to
the Company by or on behalf of the Fund for use in the
registration statement or prospectus for the Policies or in
the Policies or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale
of the Policies or Fund shares: or
(ii) arise out of or as a result of statements or representations
by or on behalf of the Company (other than statements or
representations contained in the Policy or Fund registration
statement, the Policy or Fund prospectus or sales literature
for the Policies or the Fund not supplied by the Company or
persons under its control) or wrongful conduct of the Company
or persons under its control, with respect to the sale or
distribution of the Policies or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, or sales literature of the Fund or any amendment
thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were
made, if such a statement or omission was made in reliance
upon and in conformity with information furnished to the Fund
by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials or to make any payments
under the terms of this Agreement; or
(v) arise out of any material breach by the Company of this
Agreement;
12
except to the extent provided in Sections 8.1(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Company may
otherwise have.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities, or
litigation to which an indemnified party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence of the party seeking
indemnification in the performance of his or her duties or by reason of his or
her reckless disregard of obligations or duties under this Agreement or to the
Fund.
8.1(c). The indemnified parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund shares or the Policies or the operation of
the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors, officers, employees, or agents and each
person, if any, who controls or is associated with the Company within the
meaning of such terms under the federal securities laws (collectively, the
"indemnified parties" for purposes of this Section 8.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Underwriter), or litigation (including legal and
other expenses) to which the indemnified parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities, or expenses (or actions in respect thereof), or
settlements are related to the sale or acquisition of the Fund's shares and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the registration statement or prospectus or sales
literature of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading
in light of the circumstances in which they were made;
provided that this agreement to indemnify shall not
apply as to any indemnified party if this statement or
omission or this alleged statement or omission was made
in reliance upon and in conformity with information
furnished to the Underwriter or Fund by or on behalf of
the Company for use in the registration statement or
prospectus for the Fund or in sales literature for the
Fund (or any amendment or supplement thereto) or
otherwise for use in connection with the sale of the
Policies or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the
13
Policies or in the Policy or Fund registration
statement, the Policy or Fund prospectus or sales
literature for the Policies or the Fund not supplied by
the Underwriter or persons under its control) or
wrongful conduct of the Underwriter or persons under its
control, with respect to the sale or distribution of the
Policies or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, or sales literature covering the
Policies (or any amendment thereof or supplement
thereto), or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statement or statements therein
not misleading in light of the circumstances in which
they were made, if such statement or omission was made
in reliance upon and in conformity with information
furnished to the Company by or on behalf of the
Underwriter; or
(iv) arise out of any material breach by the Underwriter or
the Fund of this Agreement; or
(v) arise as a result of any failure by the Underwriter to
provide the services and furnish the materials under the
terms of this Agreement (including a failure), whether
unintentional or is good faith or otherwise, by the Fund
to comply with the diversification requirements and
procedures related thereto specified in Article VI of
this Agreement;
except to the extent provided in Sections 8.2 (b) and 8.4 hereof. This
Indemnification shall be in addition to any liability which the Underwriter may
otherwise have.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities, or litigation to which an indemnified party would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence of the
party seeking indemnification in the performance of his or her duties or by
reason of his or her reckless disregard of obligations and duties under this
Agreement or to the Company or the Accounts.
8.2(c). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Policies or the
operation of the Accounts.
8.3. Indemnification by the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company
and each of the Company's directors, officers, employees, or agents and each
person, if any, who controls
14
or is associated with the Company within the meaning of such terms under the
federal securities laws (collectively, the "indemnified parties" for the purpose
of this Section 8.3) against any and all losses, claims, damages, or liabilities
(including amounts paid in settlement with the written consent of the Fund), or
litigation (including legal and other expenses) to which they or any of them may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares and:
(i) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms
of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply
with the diversification requirements specified in
Article VI of this Agreement); or
(ii) arise out of any material breach by the Fund of this
Agreement;
except to the extent provided in Section 8.3(b) and 8.4 hereof. This
indemnification shall be in addition to any liability which the Fund may
otherwise have.
8.3 (b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities, or
litigation to which an indemnified party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence of the party seeking
indemnification in the performance of his or her duties or by reason of his or
her reckless disregard of obligations or duties under this Agreement or to the
Company or the Accounts.
8.3(c). The indemnified parties will promptly notify the Fund of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Policies or the operation of the
Accounts.
8.4. Indemnification Procedure
Any person obligated to provide indemnification under this Article
VIII ("indemnifying party" for the purpose of this Section 8.4) shall not be
liable under the indemnification provisions of this Article VIII with respect to
any claim made against a party entitled to indemnification under this Article
VIII ("indemnified party" for the purpose of this Section 8.4) unless this
indemnified party shall have notified the indemnifying party in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon this
indemnified party (or after this party shall have received notice of this
service on any designated agent), but failure to notify the indemnifying party
of any such claim shall not relieve the indemnifying party from any liability
which it may have to the indemnified party against whom this action is brought
under the indemnification provision of this Article VIII, except to the extent
that the failure to notify results in the failure of actual notice to the
indemnifying party and this indemnifying party is damaged solely as a result of
failure to give this notice. In case any such action is brought against the
indemnified party, the indemnifying party will be entitled to participate, at
its own expense,
15
in the defense thereof. The indemnifying party also shall be entitled to assume
the defense thereof, with counsel satisfactory to the party named in the action.
After notice from the indemnifying party to the indemnified party of the
indemnifying party's election to assume the defense thereof, the indemnified
party shall bear the fees and expenses of any additional counsel retained by it,
and the indemnifying party will not be liable to this party under this Agreement
for any legal or other expenses subsequently incurred by this party
independently in connection with the defense thereof other than reasonable costs
of investigation, unless (a) the indemnifying party and the indemnified party
shall have mutually agreed to the retention of this counsel, or (b) the named
parties to any such proceeding (including any impleaded parties) include both
the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The indemnifying party shall not be liable for
any settlement of any proceeding effected without the indemnifying party's
written consent but if settled with this consent or if there be a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of this settlement or
judgment.
A successor by law of the parties to this Agreement shall be
entitled to the benefits of the indemnification contained in this Article VIII.
The indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
ARTICLE IX. Applicable Law.
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Pennsylvania.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934, and 1940 Acts, and the rules and regulations and rulings thereunder,
including any exemptions from those statutes, rules, and regulations as the SEC
may grant (including, but not limited to, the Mixed and Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party upon one-year advance written
notice to the other parties; or
(b) at the option of the Company if shares of all Dedicated
Portfolios are not reasonably available to meet the requirements of the Policies
as determined by the Company; prompt notice of the election to terminate for
such cause shall be furnished by the Company; or
(c) at the option of the Fund upon institution of formal
proceedings against the Company by the NASD, the SEC, the Insurance Commissioner
or any other regulatory body regarding the Company's duties under this Agreement
or related to the sale of
16
the Policies, the operation of the Accounts, or the purchase of the Fund shares
and which would have a material adverse effect on the Company's ability to
perform its obligations under this Agreement; or
(d) at the option of the Company upon institution of formal
proceedings against the Fund by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body; or
(e) at the option of the Company or the Fund upon receipt of
any necessary regulatory approvals and/or any necessary vote of the Policy
owners having an interest in an Account (or any subaccount) to substitute the
shares of another investment company for the corresponding Portfolio shares of
the Fund in accordance with the terms of the Policies for which those Portfolio
shares had been selected to serve as the underlying investment media. The
Company will give thirty (30) days prior written notice to the Fund of the date
of any proposed vote or other action taken to replace the Fund's shares; or
(f) at the option of the Company or the Fund upon a
determination by a majority of the Board members of the Fund that an
irreconcilable material conflict exists among the interests of (i) all policy
owners of variable insurance products of all separate accounts or (ii) the
interests of the Participating Insurance Companies investing in the Fund; or
(g) at the option of the Company, if the Company has withdrawn
an Account's investment in the Fund because the Company's disregard of voting
instructions could conflict with the majority of policy owner voting
instructions, and if the Company's judgment represents a minority position or
would preclude a majority vote; or
(h) at the option of the Company, if the Company has withdrawn
an Account's investment in the Fund because a particular state insurance
regulator's decision applicable to the Company conflicts with the majority of
other state insurance regulators;
(i) at the option of the Company, if the Fund ceases to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, or under any successor or similar provision, or if the
Company reasonably believes that the Fund may fail to so qualify; or
(j) at the option of the Company, if the Fund fails to meet
the diversification requirements specified in Article VI hereof or if the
Company reasonably believes that the Fund will fail to meet such requirements;
or
(k) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement.
17
10.2. Notice Requirement
(a) In the event that any termination of this Agreement is based
upon the provisions of Article VII, such prior written notice shall be given in
advance of the effective date of termination as required by such provisions.
(b) In the event that any termination of this Agreement is based
upon the provisions of Sections 10.l (b) - (d) or 10.1(g) - (k), prompt written
notice of the election to terminate this Agreement for cause shall be furnished
by the party terminating the Agreement to the non-terminating parties, with said
termination to be effective upon receipt of such notice by the non-terminating
parties.
10.3. It is understood and agreed that the right to terminate this
Agreement pursuant to Section 10.1(a) may be exercised for any reason or for no
reason.
10.4. Effect of Termination
(a) Notwithstanding any termination of this Agreement pursuant to
Section 10.1 of this Agreement and subject to Section 1.3 of this Agreement, the
Company may require the Fund and the Underwriter to continue to make available
additional shares of the Fund for so long after the termination of this
Agreement as the Company desires pursuant to the terms and conditions of this
Agreement as provided in paragraph (b) below, for all Policies in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Policies"). Specifically, without limitation, the owners of the
Existing Policies shall be permitted to reallocate investments in the Fund,
redeem investments in the Fund, and/or invest in the Fund upon the making of
additional purchase payments under the Existing Policies. The parties agree that
this Section 10.4 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
(b) If shares of the Fund continue to be made available after
termination of this Agreement pursuant to this Section 10.4, the provisions of
this Agreement shall remain in effect except for Section 10.l(a).
10.5. Except as necessary to implement Policy owner initiated
transactions, or as required by state or federal laws or regulations, the
Company shall not redeem Fund shares attributable to the Policies (as opposed to
Fund shares attributable to the Company's assets held in any of the Accounts),
and the Company shall not prevent Policy owners from allocating payments to a
Portfolio that was otherwise available under the Policies, until ninety (90)
days after the Company shall have notified the Fund or Underwriter of the
Company's intention to do so.
18
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
Market Street Fund
0000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000-0000
Attn: President
If to the Company:
Nationwide Life and Annuity Company
of America
0000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000-0000
Attn: President
If to the Underwriter:
1717 Capital Management Company
0000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000-0000
Attn: President
ARTICLE XII. Miscellaneous
12.1. All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2. Subject to law and regulatory authority, each party hereto
shall treat as confidential all information reasonably identified as such in
writing by any other party hereto (including without limitation the names and
addresses of the owners of the policies) and, except as contemplated by this
Agreement, shall not disclose, disseminate or utilize such confidential
information until such time as this information may come into the public domain
without the express prior written consent of the affected party.
12.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
19
12.4. This Agreement may be executed simultaneously in two (2) or
more counterparts, each of which taken together shall constitute one and the
same instrument.
12.5. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule, or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6. This Agreement shall not be assigned by any party hereto
without the prior written consent of all the parties.
12.7. Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the SEC,
the NASD, and state insurance regulators) and shall permit each other and these
authorities reasonable access to that party's books and records in connection
with any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
12.8. Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or trust action, as applicable, by
such party and when so executed and delivered this Agreement will be the valid
and binding obligation of such party enforceable in accordance with the
Agreement's terms.
20
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
Company:
ATTEST: NATIONWIDE LIFE AND ANNUITY
COMPANY OF AMERICA
By:__________________________ By: _______________________________
Name: Name:
Title: Title:
Date: _____________________________
Fund:
ATTEST: MARKET STREET FUND
By:__________________________ By: _______________________________
Name: Name:
Title: Title:
Date: _____________________________
Underwriter:
ATTEST: 1717 CAPITAL MANAGEMENT COMPANY
By:__________________________ By: _______________________________
Name: Name:
Title: Title:
Date: _____________________________
21
EXHIBIT A
ACCOUNTS AND POLICIES
SUBJECT TO THE PARTICIPATION AGREEMENT
NATIONWIDE PROVIDENT VLI SEPARATE ACCOUNT A:
- FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE-OPTIONS PREMIER
- FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE-OPTIONS VL
- FLEXIBLE PREMIUM ADJUSTABLE SURVIVORSHIP VARIABLE LIFE
INSURANCE-SURVIVOR OPTIONS PREMIER
- FLEXIBLE PREMIUM ADJUSTABLE SURVIVORSHIP VARIABLE LIFE
INSURANCE-SURVIVOR OPTIONS VL
- FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE-OPTIONS ELITE
NATIONWIDE PROVIDENT VA SEPARATE ACCOUNT A:
- INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
CONTRACT-MARKET STREET VIP/2
- FLEXIBLE PREMIUM VARIABLE ANNUITY CONTRACT-VIP EXTRA CREDIT VARIABLE
ANNUITY
- FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT-OPTIONS VIP
- INDIVIDUAL FLEXIBLE PREMIUM VARIABLE ANNUITY CONTRACT-VIP PREMIER
VARIABLE ANNUITY
EXHIBIT B
PORTFOLIOS SUBJECT TO THE PARTICIPATION AGREEMENT
- ALL PRO BROAD EQUITY PORTFOLIO
- ALL PRO LARGE CAP GROWTH PORTFOLIO
- ALL PRO LARGE CAP VALUE PORTFOLIO
- ALL PRO SMALL CAP GROWTH PORTFOLIO
- ALL PRO SMALL CAP VALUE PORTFOLIO
- EQUITY 500 INDEX PORTFOLIO
- INTERNATIONAL PORTFOLIO
- BALANCED PORTFOLIO
- MID CAP GROWTH PORTFOLIO
- BOND PORTFOLIO
- MONEY MARKET PORTFOLIO
