FUND PARTICIPATION AGREEMENT
THIS
AGREEMENT made as of the 31st day of December, 2002, by and between Lord Xxxxxx
Series Fund, Inc. (“Fund”), a Maryland Corporation, on its behalf and on behalf
of each separate investment series thereof, whether existing as of the date
above or established subsequent thereto, (each a “Portfolio” and collectively,
the “Portfolios”), Lord Xxxxxx Distributor LLC, a New York limited liability
Company (the "Distributor"), and Nationwide Life Insurance
Company(“NLIC”) and Nationwide Life and Annuity Insurance Company,
(“NLAIC” and collectively referred to xxxxx with NLIC as the
“Company”),each a life insurance company organized under the laws of the State
of Ohio.
WHEREAS,
Fund is registered with the Securities and Exchange Commission
(“SEC”) under the Investment Company Act of 1940, as amended (the “ ‘40 Act”),
as an open-end, diversified management investment company; and
WHEREAS,
Fund is organized as a series fund comprised of separate investment series,
namely the Portfolios; and
WHEREAS,
Fund was organized to act as the funding vehicle for certain variable life
insurance and/or variable annuity contracts (“Variable Contracts”) offered by
life insurance companies through separate accounts of such life insurance
companies and also offers its shares to certain qualified pension and retirement
plans; and
WHEREAS,
Fund has filed an application with the SEC requesting an order granting relief
from various provisions of the ‘40 Act and the rules thereunder to the extent
necessary to permit Fund shares to be sold to and held by variable annuity
and
variable life insurance separate accounts of both affiliated and unaffiliated
participating insurance companies accounts ("Participating Companies") and
qualified pension and retirement plans outside the separate account context
(including, without limitation, those trusts, plans, accounts contracts or
annuities described in Sections 401(a), 403(a), 403(b), 408(a), 408(b), 414(d),
457(b), 408(k), 501(c)(18) of the Internal Revenue Code of 1986, as amended
(the
“Code”) and any other trust, plan, account, contract or annuity trust that is
determined to be within the scope of Treasury Regulation
§1.817.5(f)(3)(iii)("Plans"); and
WHEREAS,
the Company has established or will establish one or more separate accounts
(“Separate Accounts”) to offer Variable Contracts and is desirous of having Fund
as one of the underlying funding vehicles for such Variable Contracts;
and
WHEREAS,
Distributor is registered with the SEC as a broker-dealer under the Securities
Exchange Act of 1934, as amended and acts as Fund’s principal underwriter;
and
WHEREAS,
to the extent permitted by applicable insurance laws and regulations, the
Company intends to purchase shares of Fund to fund the aforementioned Variable
Contracts and Fund is authorized to sell such shares to the Company at net
asset
value;
NOW,
THEREFORE, in consideration of their mutual promises, the Company, Fund, and
Distributor agree as follows:
Article
I. SALE OF FUND SHARES
1.1 Fund
agrees to make Variable Contract Class shares (“Shares”) of the Fund available
to the Separate Accounts of the Company for investment of purchase payments
of
Variable Contracts allocated to the designated Separate Accounts as provided
in
Fund's then current prospectus and statement of additional
information. Company agrees to purchase and redeem the Shares of the
Portfolios offered by the then current prospectus and statement of additional
information of the Fund in accordance with the provisions of such prospectus
and
statement of additional information. Company shall not permit any
person other than a Variable Contract owner to give instructions to Company
which would require Company to redeem or exchange Shares of the
Fund.
1.2 Fund
agrees to sell to the Company those Shares of the selected Portfolios of Fund
which the Company orders, executing such orders on a daily basis at the net
asset value next computed after receipt by Fund or its designee of the order
for
the Shares of Fund. For purposes of this Section 1.2, the Company
shall be the designee of Fund for receipt of such orders from the designated
Separate Account and receipt by such designee shall constitute receipt by Fund;
provided that the Company receives the order by 4:00 p.m. Eastern time and
Fund
receives notice from the Company by telephone, facsimile (orally confirmed)
or
by such other means as Fund and the Company may mutually agree of such order
by
9:00 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 Fund calculates its net asset value pursuant to the rules of the
SEC.
1.3 Fund
agrees to redeem on the Company's request, any full or fractional Shares of
Fund
held by the Company, executing such requests on a daily basis at the net asset
value next computed after receipt by Fund or its designee of the request for
redemption, in accordance with the provisions of this agreement and Fund's
then
current registration statement. For purposes of this Section 1.3, the
Company shall be the designee of Fund for receipt of requests for redemption
from the designated Separate Account and receipt by such designee shall
constitute receipt by Fund; provided that the Company receives the request
for
redemption by 4:00 p.m. Eastern time and Fund receives notice from the Company
by telephone, facsimile (orally confirmed) or by such other means as Fund and
the Company may mutually agree of such request for redemption by 9:00 a.m.
Eastern time on the next following Business Day.
1.4 Fund
shall furnish, on or before the ex-dividend date, notice to the Company of
any
income dividends or capital gain distributions payable on the Shares of any
Portfolios of Fund. The Company hereby elects to receive all such income
dividends and capital gain distributions as are payable on a Portfolio’s Shares
in additional Shares of the Portfolio. Fund shall notify the Company or its
designee of the number of Shares so issued as payment of such dividends and
distributions.
1.5 Fund
shall make the net asset value per share for the selected Portfolios available
to the Company on a daily basis, via a mutually agreeable form, as soon as
reasonably practicable after the net asset value per share is calculated but
shall use its best efforts to make such net asset value available by 6:30 p.m.
Eastern time.
1.6 At
the end of each Business Day, the Company shall use the information described
in
Section 1.5 to calculate Separate Account unit values for the
day. Using these unit values, the Company shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. Eastern time) to determine the net dollar amount
of Fund Shares which shall be purchased or redeemed at that day's closing net
asset value per share. The net purchase or redemption orders so
determined shall be transmitted to Fund by the Company by 9:00 a.m. Eastern
time
on the Business Day next following the Company's receipt of such requests and
premiums in accordance with the terms of Sections 1.2 and 1.3
hereof.
1.7 If
the Company's order requests the purchase of Fund Shares, the Company shall
pay
for such purchase by wiring federal funds to Fund or its designated custodial
account on the day the order is transmitted by the Company. If the
Company's order requests a net redemption resulting in a payment of redemption
proceeds to the Company, Fund shall use its best efforts to wire the redemption
proceeds to the Company by the next Business Day, unless doing so would require
Fund to dispose of Portfolio securities or otherwise incur additional
costs. In any event, proceeds shall be wired to the Company within
three Business Days or such longer period permitted by the '40 Act or the rules,
orders or regulations thereunder and Fund shall notify the person designated
in
writing by the Company as the recipient for such notice of such delay by 3:00
p.m. Eastern time the same Business Day that the Company transmits the
redemption order to Fund.
1.8 Fund
agrees that all Shares of the Portfolios of Fund will be sold only
to Participating Insurance Companies which have agreed to participate
in Fund to fund their Separate Accounts and/or to Plans, all in accordance
with
the requirements of Section 817(h) of the Code and Treasury Regulation
1.817-5. Shares of the Portfolios of Fund will not be sold directly
to the general public.
1.9 Fund
may refuse to sell Shares of any Portfolios to any person, or suspend or
terminate the offering of the Shares of any Portfolios if such action is
required by law or by regulatory authorities having jurisdiction or is, in
the
sole discretion of the Board of Directors/Trustees of the Fund (the "Board"),
deemed necessary, desirable or appropriate. Without limiting
the foregoing, it has been determined that there is a significant risk that
the
Fund and its shareholders may be adversely affected by short-term or excessive
trading activity, particularly activity used to try and take advantage of
short-term swings in the market. According, the Fund reserves right
to reject any purchase order, includes those purchase orders with respect to
shareholders or accounts whose trading has been or may be disruptive to the
Fund
or that may otherwise adversely affect the Fund. The Company agrees
to cooperate with the Fund with respect to the Fund’s policies and restrictions
on short-term or excessive trading activity.
1.10 Issuance
and transfer of Portfolio Shares will be by book entry only. Stock certificates
will not be issued to the Company or the Separate Accounts. Shares ordered
from
Portfolios will be recorded in appropriate book entry titles for the Separate
Accounts.
Article
II. FEES AND EXPENSES
2.1 Except
as otherwise provided under this Agreement, the Fund and Distributor shall
pay
no fee or other compensation to Company under this Agreement, and Company shall
pay no fee or other compensation to the Fund or Distributor, except as made
a
part of this Agreement as it may be amended from time to time with the mutual
consent of the parties hereto. All expenses incident to performance
by each party of its respective duties under this Agreement shall be paid by
that party, unless otherwise specified in this Agreement
Article
III. REPRESENTATIONS AND WARRANTIES
3.1 The
Company represents and warrants that it is an insurance company duly organized
and in good standing under the laws of Ohio and that it has legally and validly
established each Separate Account as a segregated asset account under such
laws.
3.2 The
Company represents and warrants that it has registered or, prior to any issuance
or sale of the Variable Contracts, will register each Separate Account as a
unit
investment trust (“UIT”) in accordance with the provisions of the ‘40 Act and
cause each Separate Account to remain so registered to serve as a segregated
asset account for the Variable Contracts, unless an exemption from registration
is available.
3.3 The
Company represents and warrants that the income, gains and losses, whether
or
not realized, from assets allocated to each Separate Account are, in accordance
with the applicable Variable Contracts, to be credited to or charged against
such Separate Account without regard to other income, gains or losses from
assets allocated to any other accounts of the Company. The Company
represents and warrants that the assets of the Separate Account are and will
be
kept separate from the General Account of the Company and any other separate
accounts the Company may have, and will not be charged with liabilities from
any
business that the Company may conduct or the liabilities of any companies
affiliated with the Company.
3.4 The
Company represents and warrants that the Variable Contracts will be registered
under the Securities Act of 1933 (the “’33 Act”) unless an exemption from
registration is available prior to any issuance or sale of the Variable
Contracts and that the Variable Contracts will be issued and sold in compliance
in all material respects with all applicable federal and state laws and further
that the sale of the Variable Contracts shall comply in all material respects
with state insurance law suitability requirements. Company agrees to notify
each
Fund promptly of any investment restrictions imposed by state insurance law
and
applicable to the Fund.
3.5 The
Company represents and warrants that the Variable Contracts are currently and
at
the time of issuance will be treated as life insurance, endowment or annuity
contracts under applicable provisions of the Code, that it will maintain such
treatment and that it will notify Fund immediately upon having a reasonable
basis for believing that the Variable Contracts have ceased to be so treated
or
that they might not be so treated in the future.
3.6 Fund
represents and warrants that the Portfolio Shares offered and sold pursuant
to
this Agreement will be registered under the ‘33 Act and sold in accordance with
all applicable federal and state laws, and Fund shall be registered under the
‘40 Act prior to and at the time of any issuance or sale of such
Shares. Fund, subject to Section 1.9 above, shall amend its
registration statement under the ‘33 Act and the ‘40 Act from time to time as
required in order to effect the continuous offering of its
Shares. Fund shall register and qualify its Shares for sale in
accordance with the laws of the various states only if and to the extent deemed
advisable by Fund.
3.7 Fund
represents and warrants that each Portfolio will comply with the diversification
requirements set forth in Section 817(h) of the Code, and the rules and
regulations thereunder, including without limitation Treasury Regulation
1.817-5, and will notify the Company immediately upon having a reasonable basis
for believing any Portfolio has ceased to comply or might not so comply and
will
immediately take all reasonable steps to adequately diversify the Portfolio
to
achieve compliance.
3.8 Fund
represents and warrants that each Portfolio invested in by the Separate Account
intends to elect to be treated as a “regulated investment company” under
Subchapter M of the Code, and to qualify for such treatment for each taxable
year and will notify the Company immediately upon having a reasonable basis
for
believing it has ceased to so qualify or might not so qualify in the
future.
3.9 Distributor
represents and warrants that it is and will be a member in good standing of
the
National Association of Securities Dealers, Inc. ("NASD") and is and will be
registered as a broker-dealer with the SEC. Distributor further
represents that it will sell and distribute Portfolio Shares in accordance
with
all applicable state and federal laws and regulations, including without
limitation the '33 Act, the '34 Act and the '40 Act.
3.10 Distributor
represents and warrants that it will remain duly registered and licensed in
all
material respects under all applicable federal and state securities laws and
shall perform its obligations hereunder in compliance in all material respects
with any applicable state and federal laws.
3.11 Fund
represents and warrants that all its directors, trustees, officers, employees,
and other individuals/entities who deal with the money and/or securities of
the
Fund are and shall 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
that required by Rule 17g-1 under the ’40 Act. The aforesaid bond
shall include coverage for larceny and embezzlement and shall be issued by
a
reputable bonding company. The Fund shall make all reasonable efforts
to see that this bond or another bond containing these same provisions is always
in effect, and each agrees to notify the Company in the event such coverage
no
longer applies.
3.12 Company
represents and warrants that all of its employees and agents who deal with
the
money and/or securities of each Fund are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage in an amount not less
than that required to be maintained by entities subject to the requirements
of
Rule 17g-1 of the ’40 Act. The aforesaid bond shall include coverage
for larceny and embezzlement and shall be issued by a reputable bonding company.
Company shall make all reasonable efforts to see that this bond or another
bond
containing these same provisions is always in effect, and each agrees to notify
the Fund in the event such coverage no longer applies.
Article
IV. PROSPECTUS AND PROXY STATEMENTS
4.1 Fund
shall prepare and be responsible for filing with the SEC and any state
regulators requiring such filing all shareholder reports, notices, proxy
materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of
Fund.
4.2 At
least annually, Fund or its designee shall provide the Company, free of charge,
with as many copies of the current prospectus for the Shares of the Portfolios
as the Company may reasonably request for distribution to existing Variable
Contract owners whose Variable Contracts are funded by such
Shares. Fund or its designee shall provide the Company, at the
Company's expense, with as many more copies of the current prospectus for the
Shares as the Company may reasonably request for distribution to prospective
purchasers of Variable Contracts. If requested by the Company in lieu
thereof, Fund or its designee shall provide such documentation in a mutually
agreeable form and such other assistance as is reasonably necessary in order
for
the parties hereto once a year (or more frequently if the prospectus for the
Shares is supplemented or amended) to have the prospectus for the Variable
Contracts and the prospectus for the Fund Shares and any other fund shares
offered as investments for the Variable Contracts printed together in one
document, provided however that Company shall ensure that, except as expressly
authorized in writing by Fund, no alterations, edits or changes whatsoever
are
made to prospectuses or other Fund documentation after such documentation has
been furnished to Company or its designee, and Company shall assume liability
for any and all alterations, errors or other changes that occur to such
prospectuses or other Fund documentation after it has been furnished to Company
or its designee.
4.3 The
Fund shall provide the Company with copies of the Fund’s proxy statements, Fund
reports to shareholders, and other Fund communications to shareholders in such
quantity as the Company shall reasonably require for distributing to Variable
Contract owners.
4.4 Fund
will provide the Company with at least one complete copy of all prospectuses,
statements of additional information, annual and semi-annual reports, proxy
statements, and all amendments or supplements to any of the above that relate
to
the Portfolios promptly after the filing of each such document with the SEC
or
other regulatory authority. The Company will provide Fund with at
least one complete copy of all prospectuses, statements of additional
information, annual and semi-annual reports, proxy statements, and all
amendments or supplements to any of the above that relate to a Separate
Account promptly after the filing of each such document with the SEC or other
regulatory authority.
Article
V. SALES MATERIALS
5.1 The
Company will furnish, or will cause to be furnished, to Fund or
Distributor, each piece of sales literature or other promotional material in
which Fund, Distributor or any affiliate thereof is named, at least fifteen
(15)
Business Days prior to its intended use. No such material shall be
used unless the Fund or Distributor approves such material. Such
approval shall be presumed given if notice to the contrary is not received
by
Company within fifteen Business Days after receipt by the Fund or Distributor
of
such material.
5.2 Fund
or Distributor will furnish, or will cause to be furnished, to the Company,
each
piece of sales literature or other promotional material in which the Company
or
its Separate Accounts are named, at least fifteen (15) Business Days prior
to
its intended use. No such material shall be used unless the Company
approves such material. Such approval shall be presumed given if
notice to the contrary is not received by Fund or within fifteen Business Days
after receipt by the Company of such material.
5.3 Except
with the permission of the Company, neither the Fund nor Distributor shall
give
any information or make any representations on behalf of the Company or
concerning the Company, the Separate Accounts, or the Variable Contracts other
than the information or representations contained in the registration statement
or prospectus for such Variable Contracts, as such registration statement and
prospectus may be amended or supplemented from time to time, or in reports
of
the Separate Accounts for distribution to owners of such Variable Contracts,
or
in sales literature or other promotional material approved by the Company or
its
designee. Neither the Fund nor Distributor shall give such
information or make such representations or statements in a context that causes
the information, representations or statements to be false or
misleading.
5.4 Except
with the permission of the Fund or Distributor, neither the Company nor its
affiliates or agents shall give any information or make any representations
or
statements on behalf of the Fund, Distributor or any affiliate thereof or
concerning the Fund, Distributor or any affiliate thereof, other than the
information or representations contained in the registration statements or
prospectuses for the Fund, as such registration statements and prospectuses
may
be amended or supplemented from time to time, or in reports to shareholders
or
proxy statements for the Fund, or in sales literature or other promotional
material approved by the Fund or Distributor or designee
thereof. Neither Company nor its affiliates or agents shall give such
information or make such representations or statements in a context that causes
the information, representations or statements to be false or
misleading.
5.5 For
purposes of this Agreement, the phrase "sales literature or other promotional
material" or words of similar import include, without limitation, 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 (such as any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, or 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 ‘40 Act or the ‘33 Act.
Article
VI. POTENTIAL CONFLICTS
6.1 The
parties acknowledge that Fund filed has received an exemptive order from the
SEC
granting relief from various provisions of the ’40 Act and the rules thereunder
to the extent necessary to permit Fund Shares to be sold to and held by variable
annuity and variable life insurance separate accounts of Participating Companies
and Plans. The terms of such exemptive order (the "Mixed and Shared Funding
Exemptive Order"), require Fund and each Participating Company and Plan to
comply with conditions and undertakings substantially as provided in this
Article.
6.2 The
Fund’s Board will monitor the Fund for the existence of any material
irreconcilable conflict between and among the interests of the Variable Contract
owners of all Participating Companies and of Plan Participants and Plans
investing in the Fund, and determine what action, if any, should be taken in
response to such conflicts. An irreconcilable material conflict may
arise for a variety of reasons, which may include: (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 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 Fund are being managed;
(e) a difference in voting instructions given by variable annuity and variable
life insurance contract owners; (f) a decision by a Participating Insurance
Company to disregard the voting instructions of Variable Contract owners and
(g)
if applicable, a decision by a Plan to disregard the voting instructions of
plan
participants.
6.3 The
Company will report any potential or existing conflicts to the
Board. The Company will be obligated to for assist the Board in
carrying out its duties and 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. The responsibility
includes, but is not limited to, an obligation by the Company to inform the
Board whenever it has determined to disregard Variable Contract owner voting
instructions.
6.4 If
a majority of the Board, or a majority of its disinterested Board members,
determines that a material irreconcilable conflict exists with regard to
contract owner investments in the Fund, the Board shall give prompt notice
of
the conflict and the implications thereof to all Participating Companies and
Plans. If the Board determines that Company is a relevant
Participating Company or Plan with respect to said conflict, Company shall
at
its sole cost and expense, and to the extent reasonably practicable (as
determined by a majority of the disinterested Board members), take such action
as is necessary to remedy or eliminate the irreconcilable material
conflict. Such necessary action may include but shall not be limited
to: (a) withdrawing the assets allocable to some or all of the Separate Accounts
from Fund or any Portfolio thereof and reinvesting those assets in a different
investment medium, which may include another Portfolio of Fund, or another
investment company; (b) submitting the question as to whether such segregation
should be implemented to a vote of all affected Variable Contract owners and
as
appropriate, segregating the assets of any appropriate group (i.e variable
annuity or variable life insurance contract owners of one or more Participating
Insurance Companies) that votes in favor of such segregation, or offering to
the
affected Variable Contract owners the option of making such a change; and (c)
establishing a new registered management investment company (or series thereof)
or managed separate account. If a material irreconcilable conflict
arises because of the Company’s decision to disregard Variable Contract owner
voting instructions, and that decision represents a minority position or would
preclude a majority vote, the Company may be required, at the election of Fund
to withdraw the Separate Account’s investment in Fund, and no charge or penalty
will be imposed as a result of such withdrawal. The responsibility to
take such remedial action shall be carried out with a view only to the interests
of the Variable Contract owners.
For
the
purposes of this Article, a majority of the disinterested members of the Board
shall determine whether or not any proposed action adequately remedies any
irreconcilable material conflict but in no event will Fund or its investment
adviser (or any other investment adviser of Fund) be required to establish
a new
funding medium for any Variable Contract. Further, the Company shall
not be required by this Article to establish a new funding medium for any
Variable Contracts if any offer to do so has been declined by a vote of a
majority of Variable Contract owners materially and adversely affected by the
irreconcilable material conflict.
6.5 The
Board’s determination of the existence of an irreconcilable material conflict
and its implications shall be made known promptly and in writing to the
Company.
6.6 No
less than annually, the Company shall submit to the Board such reports,
materials or data as the Board may reasonably request so that the Board may
fully carry out its obligations. Such reports, materials, and data
shall be submitted more frequently if deemed appropriate by the
Board.
6.7 If
and to the extent that the SEC promulgates new rules or regulations with respect
to mixed or shared funding 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 such rules and regulations, as
adopted, to the extent such rules are applicable; and (b) this Article VI shall
be deemed to incorporate such new terms and conditions, and any term or
condition of this Article VI that is inconsistent therewith, shall be deemed
to
be succeeded thereby.
68. The
Company acknowledges it has been advised by Fund that it may be appropriate
for
Company to disclose the potential risks of mixed and shared funding in
prospectuses or other applicable disclosure documents.
Article
VII. VOTING
7.1 The
Company will provide pass-through voting privileges to all Variable Contract
owners so long as the SEC continues to interpret the ‘40 Act as requiring
pass-through voting privileges for Variable Contract
owners. Accordingly, the Company, where applicable, will vote Shares
of the Portfolio held in its Separate Accounts in a manner consistent with
voting instructions timely received from its Variable Contract
owners. The Company will be responsible for assuring that each of its
Separate Accounts that participates in Fund calculates voting privileges in
a
manner consistent with other Participating Insurance Companies. The
Company will vote Shares for which it has not received timely voting
instructions, as well as Shares it owns, in the same proportion as its votes
those Shares for which it has received voting instructions. Company and its
agents shall not oppose or interfere with the solicitation of proxies for Fund
Shares held for such Variable Contract owners.
Article
VIII. INDEMNIFICATION
8.1 Indemnification
by the Company.
(a) Subject
to Section 8.3 below, the Company agrees to indemnify and hold harmless Fund
and
Distributor, and each of their trustees, directors, members, principals,
officers, partners, employees and agents and each person, if any, who
controls Fund or Distributor within the meaning of Section 15 of the
‘33 Act (collectively, the “Indemnified Parties” for purposes of this Article)
against any and all losses, claims, damages, liabilities (including amounts
paid
in settlement with the written consent of the Company, which consent shall
not
be unreasonably withheld) 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 Fund’s Shares or the Variable Contracts and:
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(i)
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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 Variable Contracts or contained in the Variable
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
the
Company by or on behalf of an Indemnified Party for use in the
registration statement or prospectus for the Variable Contracts or
in the
Variable Contracts or sales literature (or any amendment or supplement)
or
otherwise for use in connection with the sale of the Variable Contracts
or
Fund Shares; or
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(ii)
|
arise
out of or as a result of statements or representations (other than
statements or representations contained in the registration
statement, prospectus or sales literature of 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 Variable Contracts or Fund Shares;
or
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(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
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
if such
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished to Fund
by or on behalf of the Company; or
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(iv)
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arise
as a result of any failure by the Company to provide the services
and
furnish the materials under the terms of this Agreement;
or
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(v)
|
arises
out of information or instructions from the Company or its agents
concerning the purchase, redemption, transfer or other transaction
in Fund
Shares; or
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(vi)
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arise
out of or result from any material breach of any representation and/or
warranty made by the Company in this Agreement or arise out of or
result
from any other material breach of this Agreement by the
Company.
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(b) The
Company shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation incurred
or
assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations or duties under this Agreement.
(c) The
Company shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified the Company 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 such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the Company of any such claim shall not relieve
the Company from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against
an Indemnified Party, the Company shall be entitled to participate at its own
expense in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in
the
action. After notice from the Company to such party of the Company'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 Company
will
not be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
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8.2
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Indemnification
by Fund and Distributor.
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(a) Subject
to Section 8.3 below, the Fund and Distributor agree to indemnify and hold
harmless the Company and each of its directors, officers, employees, and agents
and each person, if any, who controls the Company within the meaning of Section
15 of the ‘33 Act (collectively, the “Indemnified Parties” for the purposes of
this Article) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of Fund and
Distributor which consent shall not be unreasonably withheld) or litigation
(including legal and other expenses) to which the Indemnified Parties 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 Fund's Shares
or the Variable Contracts and:
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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 the registration statement
or
prospectus of 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, 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 Fund or Distributor by or on behalf of the Company for
use in the registration statement or prospectus for Fund (or any
amendment
or supplement) or otherwise for use in connection with the sale of
the
Variable Contracts or Fund Shares;
or
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(ii)
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arise
out of or as a result of statements or representations (other
than statements or representations contained in the registration
statement, prospectus or sales literature for the Variable Contracts
not supplied by Fund or Distributor or persons under its control)
or
wrongful conduct of Fund or Distributor or persons under its control, with
respect to the sale or distribution of the Variable Contracts or
Fund
Shares; or
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(iii)
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arise
out of any untrue statement or alleged untrue statement of a material
fact
contained in a registration statement or prospectus covering the
Variable
Contracts, 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
if such
statement or omission or such alleged statement or omission was made
in
reliance upon and in conformity with information furnished to the
Company
for inclusion therein by or on behalf of Fund or Distributor;
or
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(iv)
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arise
as a result of a failure by Fund or Distributor to provide the services
and furnish the materials under the terms of this Agreement;
or
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(v)
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arise
out of or result from any material breach of any representation and/or
warranty made by Fund or Distributor in this Agreement or arise out
of or
result from any other material breach of this Agreement by Fund or
Distributor.
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(b) Fund
or Distributor 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 such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.
(c) Fund
or Distributor, as the case may be, shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified Fund or
Distributor, as the case may be, 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 such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify Fund or Distributor of any such claim shall not
relieve Fund or Distributor from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision. In case any such action is brought
against the Indemnified Parties, Fund or Distributor shall be entitled to
participate at its own expense in the defense thereof. Fund or Distributor
also
shall be entitled to assume the defense thereof, with counsel satisfactory
to
the party named in the action. After notice from Fund or Distributor
to such party of Fund’s or Distributor’s election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and Fund or Distributor will not be liable to such party under
this Agreement for any legal or other expenses subsequently incurred by such
party independently in connection with the defense thereof other than reasonable
costs of investigation.
8.3 Indemnification
for Errors. In the event of any error or delay with respect to
information regarding the purchase, redemption, transfer or registration of
Shares of the Fund, the parties agree that each is obligated to make the
Separate Accounts and/or the Fund, respectively, whole for any error or delay
that it causes, subject in the case of pricing errors to the related Portfolio’s
policies on materiality of pricing errors. In addition, each party
agrees that neither will receive compensation from the other for the costs
of
any reprocessing necessary as a result of an error or
delay. Each party agrees to provide the other with prompt
notice of any errors or delays of the type referred to in this
Section.
Article
IX. TERM; TERMINATION
9.1 This
Agreement shall be effective as of the date hereof and shall continue in force
until terminated in accordance with the provisions herein.
9.2 This
Agreement shall terminate in accordance with the following
provisions:
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(a)
|
At
the option of the Company or Fund at any time from the date hereof
upon
ninety (90) days notice, unless a shorter time is agreed to by the
parties;
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(b)
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At
the option of the Company, if Fund Shares are not reasonably available
to
meet the requirements of the Variable Contracts as determined by
the
Company. Prompt notice of election to terminate shall be
furnished by the Company, said termination to be effective ten days
after
receipt of notice unless Fund makes available a sufficient
number of Shares to reasonably meet the requirements of the Variable
Contracts within said ten-day
period;
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(c)
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(c) At
the option of the Company, upon the institution of formal proceedings
against Fund by the SEC, the National Association of Securities Dealers,
Inc., or any other regulatory body, the expected or anticipated
ruling, judgment or outcome of which would, in the Company's reasonable
judgment, materially impair Fund's ability to meet and perform Fund's
obligations and duties hereunder. Prompt notice of
election to terminate shall be furnished by the Company with said
termination to be effective upon receipt of
notice;
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(d)
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(d) At
the option of Fund, upon the institution of formal proceedings against
the
Company by the SEC, the NASD, or any other regulatory body, the expected
or anticipated ruling, judgment or outcome of which would,
in Fund's reasonable judgment, materially impair the Company's
ability to meet and perform its obligations and duties
hereunder. Prompt notice of election to terminate shall be
furnished by Fund with said termination to be effective upon receipt
of
notice;
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(e)
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(e) In
the event Fund’s Shares are not registered, issued or sold in
accordance with applicable state or federal law, or such law
precludes the use of such Shares as the underlying investment medium
of
Variable Contracts issued or to be issued by the
Company. Termination shall be effective upon such occurrence
without notice;
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(f)
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(f) At
the option of Fund if the Variable Contracts cease to qualify as
annuity
contracts or life insurance contracts, as applicable, under the Code,
or
if Fund reasonably believes that the Variable Contracts may fail
to so
qualify. Termination shall be effective upon receipt of notice
by the Company;
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(g)
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(g) At
the option of the Company, upon Fund's breach of any material provision
of
this Agreement, which breach has not been cured to the satisfaction
of the Company within ten days after written notice of such breach
is
delivered to Fund;
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(h)
|
(h) At
the option of Fund, upon the Company's breach of any material provision
of
this Agreement, which breach has not been cured to the satisfaction
of Fund within ten days after written notice of such breach is delivered
to the Company;
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(i)
|
(i) At
the option of Fund, if the Variable Contracts are not registered,
issued
or sold in accordance with applicable federal and/or state law.
Termination shall be effective immediately upon such occurrence without
notice;
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(j)
|
In
the event this Agreement is assigned without the prior written consent
of the Company, Fund, and Distributor, termination
shall be effective immediately upon such occurrence without
notice.
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9.3 Notwithstanding
any termination of this Agreement pursuant to Section 9.2 hereof, Fund at the
option of the Company will continue to make available additional Fund Shares,
as
provided below, pursuant to the terms and conditions of this Agreement, for
all
Variable 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 or the Company, whichever shall have legal authority to
do
so, shall be permitted to reallocate investments in Fund, redeem investments
in
Fund and/or invest in Fund upon the payment of additional premiums under the
Existing Contracts.
Article
X. NOTICES
Any
notice hereunder shall be given by registered or certified mail return receipt
requested 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
Funds:
Lord
Xxxxxx Family of Funds
00
Xxxxxx
Xxxxxx
Xxxxxx
Xxxx, XX 00000
Attention: General
Counsel
With
a copy to:
Lord,
Xxxxxx & Co.
00
Xxxxxx
Xxxxxx
Xxxxxx
Xxxx, XX 00000
Attention: Xxxxx
X. Xxxxxx
If
to the
Distributor:
Lord
Xxxxxx Distributor LLC
00
Xxxxxx
Xxxxxx
Xxxxxx
Xxxx, XX 00000
Attention: General
Counsel
If
to the
Company:
Nationwide
Xxx
Xxxxxxxxxx Xxxxx,
0-00-X0
Xxxxxxxx,
Xxxx 00000
Attention:
Securities
Counsel
Notice
shall be deemed given on the date of receipt by the addressee as evidenced
by
the return receipt.
Article
XI. MISCELLANEOUS
11.1 Privacy. Each
party hereto acknowledges that, by reason of its performance under this
Agreement, it shall have access to, and shall receive from the other party
(and
its affiliates, partners and employees), the confidential information of the
other party (and its affiliates, partners and employees), including but not
limited to the “nonpublic personal information” of their consumers within the
meaning of SEC Regulation S-P (collectively, “Confidential
Information”). Each party shall hold all such Confidential
Information in the strictest confidence and shall use such Confidential
Information solely in connection with its performance under this Agreement
and
for the business purposes set forth in this Agreement. Under no
circumstances may a party cause any Confidential Information of the other party
to be disclosed to any third party or reused or redistributed without the other
party’s prior written consent.
11.2 Counterparts. This
Agreement may be executed simultaneously in two or more counterparts, each
of
which taken together shall constitute one and the same instrument.
11.3 Severability. 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.
11.4 Governing
Law. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New
York. It shall also be subject to the provisions of the federal
securities laws and the rules and regulations thereunder and to any orders
of
the SEC granting exemptive relief therefrom and the conditions of such
orders.
11.5 Liability. This
Agreement has been executed on behalf of the Fund by the undersigned officer
of
the Fund in his or her capacity as an officer of the Fund. The
obligations of this Agreement shall be binding upon the assets and property
of
the Fund and each respective Portfolio thereof only and shall not be binding
on
any Director/Trustee, officer or shareholder of the Fund individually. In
addition, notwithstanding any other provision of this Agreement, no Portfolio
shall be liable for any loss, expense, fee, charge or liability of any kind
relating to or arising from the actions or omissions of any other Portfolio
or
from the application of this Agreement to any other Portfolio. It is
also understood that each of the Portfolios shall be deemed to be entering
into
a separate Agreement with the Company so that it is as if each of the Portfolios
had signed a separate Agreement with the Company and that a single document
is
being signed simply to facilitate the execution and administration of the
Agreement.
11.6 Inquiries
and Investigations.
Each party 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 such authorities reasonable access
to its books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
11.7 Subcontractors,
Agents or Affiliates. The Company may hire or make arrangements
for subcontractors, agents or affiliates to perform the services set forth
in
this Agreement. Company shall provide the Fund with written notice of
the names of any subcontractors, agents or affiliates Company hires or arranges
to perform such services, and any specific operational requirements that arise
as a result of such arrangement. Company agrees that it is and will
be responsible for the acts and omissions of its subcontractors, affiliates,
and
agents and that the indemnification provided by Company in Section 8 of this
Agreement shall be deemed to cover the acts and omissions of such
subcontractors, affiliates, and agents to the same extent as if they were the
acts or omissions of Company.
11.8 Client
Lists. Company hereby consents to Distributor’s, Fund’s, or its
investment adviser’s use or reference to the Company’s name in connection with
any full, partial or representative list of clients.
11.9 Entire
Agreement. This Agreement constitutes the entire agreement and
understanding between the parties hereto and supersedes all prior agreement
and
understandings relating to the subject matter hereof.
11.10 Amendment,
Waiver and Other Matters.
Neither this Agreement, nor any provision hereof, may be amended, waived,
modified or terminated in any manner except by a written instrument properly
authorized and executed by all parties hereto. 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, which
the
parties hereto are entitled to under state and federal laws.
IN
WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Fund Participation Agreement as of the date and year first
above
written.
Lord
Xxxxxx Series Fund, Inc.
By:_____________________________
Name:
Xxxxxxxx X. Xxxxxx
Title:
Vice President & Assistant
Secretary
Lord
Xxxxxx Distributor LLC
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|
By:
Lord, Xxxxxx & Co., [LLC], Managing
Member
|
By:_____________________________
Name:
Xxxxxxxx X. Xxxxxx
Title:
Member & Deputy General Counsel
Nationwide
Life Insurance Company
By:______________________________
Name:
Xxxxxxx X. Xxxxxx, Xx.
Title:
Vice President – Investment
Management
Relations
Nationwide
Life and Annuity Insurance Company
By:______________________________
Name:
Xxxxxxx X. Xxxxxx, Xx.
Vice
President – Investment
Management
Relations
With
a copy To:
Securities
Counsel
Xxx
Xxxxxxxxxx Xxxxx, 0-00-X0
Xxxxxxxx, Xxxx 00000
