FUND PARTICIPATION AGREEMENT
----------------------------
Nationwide Life Insurance Company ("Nationwide"), and Xxx Xxx Investment Trust
("Trust") and the Trust's investment adviser, Xxx Xxx Associates Corporation
("Adviser") hereby agree that shares of the Gold and Natural Resources Fund and
Global Bond Fund ("Portfolios") shall be made available to serve as an
underlying investment medium for Individual Deferred Variable Annuity Contracts
("Contracts") to be offered by Nationwide subject to the following provisions:
1. Nationwide represents that it has established the Nationwide Variable
Account-II (the "Variable Account"), a separate account under Ohio law, and
has registered it as a unit investment trust under the Investment Company
Act of 1940 ("1940 Act") to serve as an investment vehicle for the
Contracts. The Contracts provide for the allocation of net amounts received
by Nationwide to separate series of the Variable Account for investment in
the shares of specified investment companies selected among those companies
available through the Variable Account to act as underlying investment
media. Selection of a particular investment company is made by the Contract
owner who may change such selection from time to time in accordance with
the terms of the applicable Contract.
2. Nationwide agrees to make every reasonable effort to market its Contracts.
It will use its best efforts to give equal emphasis and promotion to shares
of the Trust as is given to other underlying investments of the Variable
Account. In marketing its Contracts, Nationwide will comply with all
applicable state or Federal laws.
3. The Trust or the Adviser will provide closing net asset value, dividend and
capital gain information at the close of trading each business day to
Nationwide. Nationwide will use this data to calculate unit values, which
will in turn be used to process that same business day's Variable Account
unit value. The Variable Account processing will be done the same evening,
and orders will be placed the morning of the following business day. Orders
will be sent directly to the Trust or its specified agent, and payment for
purchases will be wired to a custodial account designated by the Trust or
the Adviser, so as to coincide with the order for Trust shares. The Trust
will execute the orders at the net asset value as determined as of the
close of trading on the prior day. Dividends and capital gains
distributions shall be reinvested in additional shares at the ex-date net
asset value.
4. All expenses incident to the performance by the Trust under this Agreement
shall be paid by the Trust. The Trust shall pay the cost of registration of
Trust shares with the Securities and Exchange Commission ("SEC"). The
Trust shall distribute, to the Variable Account, their proxy material,
periodic Trust reports to shareholders and other material the Trusts may
require to be sent to Contract owners. The Trust shall pay the cost of
qualifying Trust shares in states where required. The Trust will provide
Nationwide with a reasonable quantity of the Trust's Prospectus and the
reports to be used in contemplation of this Agreement. The Trust will
provide Nationwide a copy of the Statement of Additional Information
suitable for duplication.
5. Nationwide and its agents shall make no representations concerning the
Trust or Trust shares except those contained in the then current
prospectuses of the Trust and in current printed sales literature of the
Trust.
6. Administrative services to Contract owners shall be the responsibility of
Nationwide, and shall not be the responsibility of the Trust or the
Adviser. The Trust and Adviser recognize that Nationwide will be the sole
shareholder of Trust shares issued pursuant to the Contracts. Such
arrangement will result in multiple share orders. Trust and Adviser
recognize that they will derive a savings of administrative expense such as
significant reductions in postage expense, qualified plan administrative
services and shareholder communication, by virtue of having a sole
shareholder rather than multiple shareholders. In consideration of the
administrative savings resulting from such arrangement, Adviser agrees to
pay to Nationwide $.50 per month per individual contract owner who has
allocated purchase payments to the Trust. Said reimbursement reflects the
difference between expense to the Trust or Adviser of maintaining the
accounts of individual shareholders and the expense of maintaining the
account of Nationwide as sole shareholder, and no portion thereof
constitutes distribution expense.
7. The Trust shall comply with Sections 817(h) and 851 of the Internal Revenue
Code of 1986, if applicable, and the regulations thereunder, and the
applicable provisions of the 1940 Act relating to the diversification
requirements for variable annuity, endowment, and life insurance contracts.
The Trust shall provide Nationwide each quarter with a letter from the
appropriate Trust officer certifying the Trust's compliance with the
diversification requirements and qualification as a regulated investment
company.
8. Nationwide agrees to inform the Board of Trustees of the Trust of the
existence of or any potential for any material irreconcilable conflict of
interest between the interests of the Contract owners of the Variable
Account investing in the Trust and/or any other separate account of any
other insurance company investing in the Trust.
Any material irreconcilable conflict may arise for a variety of reasons,
including:
(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, 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 Contract owners and variable
life insurance contract owners or by contract owners of different life
insurance companies utilizing the Trust; or
(f) a decision by Nationwide to disregard the voting instructions of contract
owners.
Nationwide will be responsible for assisting the Board of Trustees of the Trust
in carrying out its responsibilities by providing the Board with all information
reasonably necessary for the Board to consider any issue raised, including
information as to a decision by Nationwide to disregard voting instructions of
Contract owners.
It is agreed that if it is determined by a majority of the members of the Board
of Trustees of the Trust or a majority of its disinterested Trustees that a
material irreconcilable conflict exists affecting Nationwide, Nationwide shall,
at its own expense, take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps may include, but are not limited
to,
(a) withdrawing the assets allocable to some or all of the separate accounts
from the Trust or any Portfolio and reinvesting such assets in a different
investment medium, including another Portfolio of the Trust or submitting
the questions of whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets
of any particular group (i.e., annuity Contract owners, life insurance
Contract owners or qualified Contract owners) that votes in favor of such
segregation, or offering to the affected Contract owners the option of
making such a change;
(b) establishing a new registered management investment company or managed
separate account.
If a material irreconcilable conflict arises because of Nationwide's
decision to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote,
Nationwide may be required, at the Trust's election, to withdraw the
Variable Account's investment in the Trust. No charge or penalty will be
imposed against the Variable Account as a result of such withdrawal.
Nationwide agrees that any remedial action taken by it in resolving any
material conflicts of interest will be carried out with a view only to the
interests of Contract owners.
For purposes hereof, a majority of the disinterested members of the Board
of Trustees of the Trust shall determine whether any proposed action
adequately remedies any material irreconcilable conflict. In no event will
the Trust be required to establish a new funding medium for any Contracts.
Nationwide shall 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 affected Contract owners.
The Trust will undertake to promptly make known to Nationwide the Board of
Trustees' determination of the existence of a material irreconcilable
conflict and its implications.
9. This Agreement shall terminate as to the sale and issuance of new
Contracts:
(a) at the option of Nationwide, the Adviser or the Trust upon six months'
advance written notice to the other;
(b) at the option of Nationwide if Trust shares are not available for any
reason to meet the requirements of Contracts as determined by
Nationwide. Reasonable advance notice of election to terminate shall
be furnished by Nationwide;
(c) at the option of Nationwide, the Adviser or the Trust, upon
institution of formal proceedings against the Broker-Dealer or Broker-
Dealers marketing the Contracts, the Variable Account, Nationwide or
the Trust by the National Association of Securities Dealers ("NASD"),
the SEC or any other regulatory body;
(d) upon a decision by Nationwide, in accordance with regulations of the
SEC, to substitute such Trust shares with the shares of another
investment company for Contracts for which the Trust shares have been
selected to serve as the underlying investment medium. Nationwide will
give 60 days' written notice to the Trust and the Adviser of any
proposed vote to replace Trust shares;
(e) upon assignment of this Agreement unless made with the written consent
of each other party;
(f) in the event Trust shares are not registered, issued or sold in
conformance with Federal law or such law precludes the use of Trust
shares as an underlying investment medium of Contracts issued or to be
issued by Nationwide. Prompt notice shall be given by either party to
the other in the event the conditions of this provision occur.
10. Termination as the result of any cause listed in the preceding paragraph
shall not affect the Trust's obligation to furnish Trust shares for
Contracts then in force for which the shares of the Trust serve or may
serve as an underlying medium, unless such further sale of Trust shares is
proscribed by law or the SEC or other regulatory body.
11. Each notice required by this Agreement shall be given by wire and confirmed
in writing to:
Nationwide Life Insurance Company
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
Van Eck Investment Trust
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn:
Xxx Xxx Associates Corporation
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn:
12. Advertising and sales literature with respect to the Trust prepared by
Nationwide or its agents for use in marketing its Contracts will be
submitted to the Trust for review before such material is submitted to the
SEC or NASD for review.
13. Nationwide will distribute all proxy material furnished by the Trust and
will vote Trust shares in accordance with instructions received from the
Contract owners of such Trust shares. Nationwide shall vote the Trust
shares for which no instructions have been received in the same proportion
as Trust shares for which said instructions have been received from
Contract owners. Nationwide and its agents will in no way recommend action
in connection with or oppose or interfere with the solicitation of proxies
for the Trust shares held for such Contract owners.
14. (a) Nationwide agrees to indemnify and hold harmless the Trust and each of
its directors, officers, employees, agents and each person, if any,
who controls the Trust within the meaning of the Securities Act of
1933 (the "Act") against any losses, claims, damages or liabilities to
which the Trust or any such director, officer, employee, agent or
controlling person may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in information furnished by Nationwide for use in the
Registration Statement or prospectus of the Trust or in the Registration
Statement or prospectus for the Variable Account, 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, or arise out of or as a result of conduct,
statements or representations (other than statements or representations
contained in the prospectus and sales literature of the Trust) of Nationwide
or its agents, with respect to the sale and distribution of Contracts for
which Trust shares are an underlying investment; and Nationwide will
reimburse any legal or other expenses reasonably incurred by the Trust or
any such director, officer, employee, agent or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action. This indemnity agreement will be in addition to any
liability which Nationwide may otherwise have.
(b) The Trust agrees to indemnify and hold harmless Nationwide and each of its
directors, officers, employee, agents and each person, if any, who controls
Nationwide within the meaning of the Act against any losses, claims, damages
or liabilities to which Nationwide or any such director, officer, employee,
agent or controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) 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 Trust, 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, or arise out of or are based upon the
Trust's failure to keep each of the Trust options fully diversified and
qualified as a regulated investment company as required by the applicable
provisions of the Internal Revenue Code, the Investment Company Act of 1940,
and any other law or regulation, and the Trust will reimburse any legal or
other expenses reasonably incurred by Nationwide or any such director,
officer, employee, agent or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Trust will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or omission or alleged omission made
in such Registration
Statement or prospectus in conformity with written information furnished to
the Trust by Nationwide specifically for use therein. This indemnity
agreement will be in addition to any liability which the Trust may otherwise
have.
(c) The Adviser agrees to indemnify and hold harmless Nationwide and each of its
directors, officers, employee, agents and each person, if any, who controls
Nationwide within the meaning of the Act against any losses, claims, damages
or liabilities to which Nationwide or any such director, officer, employee,
agent or controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) 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 Trust, 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, or arise out of or are based upon the
Adviser's failure to keep each of the Trust and its Portfolios fully
diversified and qualified as a regulated investment company as required by
the applicable provisions of the Internal Revenue Code, the 1940 Act, and
any other law or regulation, and the Adviser will reimburse any legal or
other expenses reasonably incurred by Nationwide or any such director,
officer, employee, agent or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Adviser will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or omission or alleged omission made
in such Registration Statement or prospectus in conformity with written
information furnished to the Adviser by Nationwide specifically for use
therein. This indemnity agreement will be in addition to any liability which
the Trust may otherwise have.
(d) The Trust and the Adviser shall indemnify and hold Nationwide harmless
against any and all liability, loss, damages, costs or expenses which
Nationwide may incur, suffer or be required to pay due to the Trust's, or
Adviser's (or their designated agent's) (1) incorrect calculation of the
daily net asset value, dividend rate or capital gain distribution rate; (2)
incorrect reporting of the daily net asset value, dividend rate or capital
gain distribution rate; or (3) untimely reporting of the net asset value,
dividend rate or capital gain distribution rate. Any gain to Nationwide
attributable to the Trust's, or Adviser's (or their designated agent's)
incorrect calculation or
reporting of the daily net asset value shall be immediately returned
to the Trust.
(e) Promptly after receipt by an indemnified party under this paragraph of
notice of the commencement of action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying
party under this paragraph, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under this paragraph. In case any
such action is brought against any indemnified party, and it notified
the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that
it may wish, assume the defense thereof, with counsel satisfactory to
such indemnified party, after notice from the indemnifying party to
such indemnified party under this paragraph for any legal or other
expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation.
15. If, in the course of future marketing of the Contracts, Nationwide or its
agents shall request the continued assistance of the Trust's sales
personnel, compensation (which will be negotiated by the Trust and
Nationwide) shall be paid by Nationwide to the Trust.
NATIONWIDE LIFE INSURANCE COMPANY
__________________________ By ___________________________________
Date
XXX XXX INVESTMENT TRUST
__________________________ By ___________________________________
Date
XXX XXX ASSOCIATES CORPORATION
___________________________ By ___________________________________
Date
