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Exhibit 99(h)(5)
FUND PARTICIPATION AGREEMENT
This Fund Participation Agreement ("Agreement"), dated as of the __ day of
______, 1998 is made by and between Nationwide Life Insurance Company and/or
Nationwide Life and Annuity Insurance Company (separately or collectively
"Nationwide") on behalf of the Nationwide separate accounts identified on
Exhibit A which is attached hereto and may be amended from time to time
("Variable Accounts"), and Key Asset Management Inc. and BISYS Fund Services,
Inc., which serve respectively as adviser and distributor to the mutual funds
(the "Funds") listed on Exhibit A. The Funds, Key Asset Management Inc. and
BISYS Fund Services, Inc. are collectively referred to throughout this Agreement
as "Key."
WHEREAS, the Contracts allow for the allocation of net amounts received by
Nationwide to separate sub-accounts of the Variable Accounts for investment in
shares of the Funds and other similar funds; and
WHEREAS, selection of a particular sub-account (corresponding to a particular
Fund) is made by the contract owner; or, in the case of certain group Contracts,
by participants in various types of retirement plans which have purchased such
group Contracts, and such Contract owners and/or participants may reallocate
their investment options among the sub-accounts of the Variable Accounts in
accordance with the terms of the Variable Accounts in accordance with the terms
of the Contracts; and
WHEREAS, Nationwide and Key mutually desire the inclusion of the Funds as
underlying investment media for variable life insurance policies and/or variable
annuity contracts (collectively, the "Contracts") issued by Nationwide;
NOW THEREFORE, Nationwide and Key, in consideration of the promises and
undertakings described herein, agree as follows:
1. Nationwide represents and warrants that the Variable Accounts have been
established and are in good standing under Ohio Law; and the Variable
Accounts have been registered as unit investment trusts under the
Investment Company Act of 1940 (the "1940 Act") or are exempt from
registration pursuant to section 3(c)(11) of the 1940 Act;
2. Each party recognizes that the services provided for under this Agreement
are not exclusive and that the same skill will be used in performing
services in similar contexts. Nationwide will use its best efforts to give
equal emphasis and promotion to shares of the Funds as is given to other
underlying investments of the Variable Accounts.
3. Subject to the terms and conditions of this Agreement, Nationwide shall be
appointed to, and agrees, to act as a limited agent of Key, for the sole
purpose of receiving instructions for the purchase and redemption of Fund
shares (from Contract owners or participants making investment allocation
decisions under the Contracts) prior to the close of regular trading each
Business Day. "Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and on which the Funds calculate their net
asset value as set forth in the Funds' most recent Prospectuses and
Statements of Additional Information. Except as particularly stated in this
paragraph, Nationwide shall have no authority to act on behalf of Key or to
incur any cost or liability on its behalf.
Key will use its reasonable best efforts to provide closing net asset
value, change in net asset value, dividend or daily accrual rate
information and capital gain information by 6:00 p.m. Eastern Time each
Business Day to Nationwide. Nationwide shall use this data to calculate
unit xxxxx. Unit values shall be used to process that same Business Day's
Variable Account transactions. Orders for purchases or redemptions shall be
placed with Key or its specified
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agent no later than 10:00 a.m. of the following Business Day. Orders for
shares of Funds shall be accepted and executed at the time they are
received by Key and at the net asset value price determined as of the close
of trading on the previous Business Day. Key will not accept any order made
on a conditional basis or subject to any delay or contingency. Nationwide
shall only place purchase orders for shares of Funds on behalf of its
customers whose addresses recorded on Nationwide's books are in a state or
other jurisdiction in which the Funds are registered or qualified for sale,
or are exempt from registration or qualification as confirmed in writing by
Key.
Payment for net purchases shall be wired to a custodial account designated
by Key and payment for net redemptions will be wired to an account
designated by Nationwide. Dividends and capital gain distributions shall be
reinvested in additional Fund shares at net asset value. Notwithstanding
the above, Key shall not be held responsible for providing Nationwide with
ex-date net asset value, change in net asset value, dividend or capital
gain information when the New York Stock Exchange is closed, when an
emergency exists making the valuation of net asset not reasonably
practicable, or during any period when the Securities and Exchange
Commission ("SEC") has by order permitted the suspension of pricing shares
for the protection of shareholders.
4. All expenses incident to the performance by Key under this Agreement shall
be paid by Key. Key shall promptly provide Nationwide, or cause Nationwide
to be provided with, a reasonable quantity of the Funds' Prospectuses,
Statements of Additional Information and any supplements.
5. Nationwide and its agents shall make no representations concerning the
Funds or Fund shares except those contained in the Funds' then current
Prospectuses, Statements of Additional Information or other documents
produced by Key (or an entity on its behalf) which contain information
about the Funds. Nationwide agrees to allow a reasonable period of time for
Key to review any advertising and sales literature drafted by Nationwide
(or agents on its behalf) with respect to the Funds prior to submitting
such material to any regulator.
6. Key or an entity on its behalf and Nationwide hereby agree and represent
that each of their information technology systems will be Year 2000
Compliant in accordance with the Year 2000 Compliance requirements of the
SEC and the National Association of Securities Dealers ("NASD"). Each party
shall notify the other if there is a change in the status of their
informational technology systems or upon having a reasonable basis for
believing that their informational technology systems will not be Year 2000
Compliant.
"Year 2000 Compliant" or "Year 2000 Compliance" shall mean that the systems
or software in question shall be able to accurately process date or
date-related data, without creating any logical or mathematical
inconsistencies, from, into and between the twentieth and twenty-first
centuries, when used in accordance with the specifications set forth for
such systems or software; provided, however, that neither party shall be
responsible for any failure of its systems or software to be Year 2000
Compliant which is caused by or related to the interaction or interface of
such systems or software with the systems or software of a third party
which are not Year 2000 Compliant.
7. Key represents that the Funds are currently qualified as regulated
investment companies under Subchapter M of the Internal Revenue Code of
1986 (the "Code"), as amended, and that the Funds shall make every effort
to maintain such qualification. Key shall promptly notify Nationwide upon
having a reasonable basis for believing that the Funds have ceased to so
qualify, or that they may not qualify as such in the future.
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Key represents that the Funds currently comply with the diversification
requirements pursuant to Section 817(h) of the Code and Section 1.817-5(b)
of the Federal Tax Regulations and that the Funds will make every effort to
maintain the Funds' compliance with such diversification requirements,
unless the Funds are otherwise exempt from section 817(h) and/or except as
otherwise disclosed in each Fund's prospectus. Key will notify Nationwide
promptly upon having a reasonable basis for believing that the Funds have
ceased to so qualify, or that the Funds might not so qualify in the future.
Unless otherwise exempt, Key shall provide to Nationwide a statement
indicating compliance with Section 817(h) and a schedule of investment
holdings, to be received by Nationwide no later than twenty-five (25) days
following the end of each calendar quarter.
Nationwide represents that the Contracts are currently treated as annuity
contracts or life insurance policies, whichever is appropriate under
applicable provisions of the Code, and that it shall make every effort to
maintain such treatment. Nationwide will promptly notify Key upon having a
reasonable basis for believing that the Contracts have ceased to be treated
as annuity contracts or life insurance policies, or that the Contracts may
not be so treated in the future.
Unless a Fund is exempt from the requirements of section 817(h), Nationwide
represents that each Variable Account is a "segregated asset account" and
that interests in each Variable Account are offered exclusively through the
purchase of a "variable contract", within the meaning of such terms
pursuant to section 1.817-5(f)(2) of the Federal Tax Regulations, that is
shall make every effort to continue to meet such definitional requirements,
and that it shall notify Key immediately upon having a reasonable basis for
believing that such requirements have ceased to be met or that they may not
be met in the future.
8. Within five (5) Business Days after the end of each calendar month, Key
shall provide Nationwide a monthly statement of account, which shall
confirm all transactions made during that particular month in the Variable
Accounts.
9. Each party agrees to inform the other of the existence of, or any potential
for, any material conflicts of interest between the parties and any
possible implications of the same.
It is agreed that if it is determined by a majority of the members of the
Boards of Trustees of the Funds, or a majority of the Funds' disinterested
Trustees, that a material conflict exists caused by Nationwide, Nationwide
shall, at its own expense, take whatever steps are necessary to remedy or
eliminate such material conflict.
It is agreed that if it is determined by Nationwide that a material
conflict exists caused by Key, Key shall, at its own expense, take whatever
steps are necessary to remedy or eliminate such material conflict.
10. This Agreement shall terminate as to the sale and issuance of new Contracts:
(a) at the option of Nationwide or Key upon at least 60 days advance
written notice to the other;
(b) at any time, upon Key's election, if the Funds determine that
liquidation of the Funds is in the best interest of the Funds and their
beneficial owners. Reasonable advance notice of election to liquidate
shall be furnished by Key to permit the substitution of fund shares
with the shares of another investment company pursuant to SEC
regulation;
(c) if the Contracts are not treated as annuity contracts or life insurance
policies by the applicable regulators or under applicable rules or
regulations;
(d) if the Variable Accounts are not deemed "segregated asset accounts" by
the applicable regulators or under applicable rules or regulations;
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(e) at the option of Nationwide, if Fund shares are not available for any
reason to meet the requirements of Contracts are determined by
Nationwide. Reasonable advance notice of election to terminate (and
time to cure) shall be furnished by Nationwide;
(f) at the option of Nationwide or Key, upon institution of relevant formal
proceedings against the broker-dealer(s) marketing the Contracts, the
Variable Accounts, Nationwide or the Funds by the NASD, IRS, the
Department of Labor, the SEC, state insurance departments or any other
regulatory body;
(g) upon a decision by Nationwide, in accordance with regulations of the
SEC, to substitute such Fund shares with the shares of another
investment company for Contracts for which the Fund shares have been
selected to serve as the underlying investment medium. Nationwide shall
give at least 60 days written notice to the Funds and Key of any
proposal to substitute Fund shares;
(h) upon assignment of this Agreement unless such assignment is made with
the written consent of each other party; and
(i) in the event Fund shares are not registered, issued or sold pursuant to
Federal law, or such law precludes the use of Duns shares as an
underlying investment medium of contracts issued or to be issued by
Nationwide. Prompt written notice shall be given by either party to the
other in the event the conditions of this provision occur.
11. Each notice required by this Agreement shall be given orally and confirmed
in writing to:
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
Xxx Xxxxxxxxxx Xxxxx 0-00-X0
Xxxxxxxx, Xxxx 00000
Attention: Senior Vice President - Lire Company Operations
Key Asset Management inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: General Counsel
BISYS Fund Services, Inc.
----------------------------------
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Attention: Compliance Manager - Securities
With a copy to:
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
Xxx Xxxxxxxxxx Xxxxx 0-00-X0
Xxxxxxxx, Xxxx 00000
Attention: Compliance Manager - Securities
Any party may change its address by notifying the other party(ies) in
writing.
12. So long as and to the extent that the SEC continues to interpret the 1940
Act to require pass-through voting privileges for variable contract owners,
Nationwide shall distribute all proxy material furnished by Key (Provided
that such material is received by Nationwide at least 10 business days
prior to the date scheduled for mailing to Contract owners) and shall vote
Fund shares in accordance with instructions received from the Contract
owners who have such interests in such Fund shares. Nationwide shall vote
the Fund shares for which no instructions
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have been received in the same proportion as Fund shares for which said
instructions have been received from Contract owners, provided that such
proportional voting is not prohibited by the Contract owner's related plan
or trust document. Nationwide and its agents will in no way recommend
action in connection with or oppose or interfere with the solicitation of
proxies for the Fund shares held for the benefit of such Contract owners.
13.
(a) Nationwide agrees to reimburse and/or indemnify and hold harmless Key
and each of its directors, officers, employees, agents and each person,
if any, who controls Key within the meaning of the Securities Act of
1933 (the "1933 Act") (collectively, "Affiliated Party") against any
losses, claims, damages or liabilities ("Losses") to which Key or any
such Affiliated Party may become subject, under the 1933 Act or
otherwise, insofar as such Losses (or actions in respect thereof) arise
out of or are based upon, but not limited to:
(i) any untrue statement or alleged untrue statement of any
material fact contained in information furnished by
Nationwide;
(ii) the omission or the alleged omission to state in the
Registration Statements or Prospectuses of the Variable
Accounts a material fact required to be stated therein or
necessary to make the statements therein not misleading;
conduct, statements ore presentations of Nationwide or its
agents, with respect to the sale and distribution of Contracts
for which Fund shares are an underlying investment;
(iv) the failure of Nationwide to provide the services and furnish
the materials under the terms of this Agreement;
(v) a breach of this Agreement or of any of the representations
contained herein; or
(vi) any failure to register the Contracts or the Variable Accounts
under federal or state securities laws, state insurance laws
or to otherwise comply with such laws, rules, regulations or
orders.
Provided however, that Nationwide shall not be liable in any such case to the
extent any such statement, omission or representation or such alleged
statement, alleged omission or alleged representation was made in
reliance upon and in conformity with written information furnished to
Nationwide by or on behalf of Key specifically for use therein.
Nationwide shall reimburse any legal or other expenses reasonably incurred by
Key or any Affiliated Party in connection with investigating or
defending any such Losses, provided, however, that Nationwide shall
have prior approval of the use of said counsel or the expenditure of
said fees.
This indemnity agreement shall be in addition to any liability which Nationwide
may otherwise have.
(b) Key agrees to indemnify and hold harmless Nationwide and each of its
directors, officers, employees, agents and each person, (collectively
"Nationwide Affiliated Party"), who controls Nationwide within the
meaning of the 1933 Act against any Losses to which Nationwide or any
such Nationwide Affiliated Party may become subject, under the 1933 Act
or otherwise, insofar as such Losses (or actions in respect thereof)
arise out of or are based upon; but not limited to:
(i) any untrue statement or alleged untrue statement of any
material fact contained in any information furnished by Key,
including but not limited to, the Registration Statements,
Prospectuses or sales literature of the Funds;
(ii) the omission or the alleged omission to state in the
Registration Statements or Prospectuses of the Funds a
material fact required to be stated therein or necessary to
make the statements therein not misleading;
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(iii) Key's failure to keep the funds fully diversified and
qualified as regulated investment companies as required by the
applicable provisions of the Code, the 1940 Act, and the
applicable regulations promulgated thereunder;
(iv) the failure of Key to provide the services and furnish the
materials under the terms of this Agreement;
(v) a breach of this Agreement or of any of the representations
contained herein; or
(vi) any failure to register the Funds under federal or state
securities laws or to otherwise comply with such laws, rules,
regulations or orders.
Provided however, that Key shall 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 act or omission of Nationwide or untrue statement or
omission or alleged omission made in conformity with written
information furnished to Key by Nationwide specifically for use
therein.
Key shall reimburse any reasonable legal or other expenses reasonably
incurred by Nationwide or any Nationwide Affiliated Party in connection
with investigating or defending any such Losses, provided, however,
that Key shall have prior approval of the use of said counsel or the
expenditure of said fees.
This indemnity agreement will be in addition to any liability which Key
may otherwise have.
(c) Each party shall promptly notify the other party(ies) in writing of any
situation which presents or appears to involve a claim which may be the
subject of indemnification under this Agreement and the indemnifying
party shall have the option to defend against any such claim. In the
event the indemnifying party so elects, it shall notify the indemnified
party and shall assume the defense of such claim, and the indemnified
party shall cooperate fully with the indemnifying party, at the
indemnifying party's expense, in the defense of such claim.
Notwithstanding the foregoing, the indemnified party shall be entitled
to participate in the defense of such claim at its own expense through
counsel of its own choosing. Neither party shall admit to wrong-doing
nor make any compromise in any action or proceeding which may result in
a finding of wrongdoing by the other party without the other party's
prior written consent. Any notice given by the indemnifying party to an
indemnified party or participation in or control of the litigation of
any such claim by the indemnifying party shall in no event be deemed to
be an admission by the indemnifying party of culpability, and the
indemnifying party shall be free to contest liability among the parties
with respect to the claim.
14. The forbearance or neglect of any party to insist upon strict compliance by
another party with any of the provisions of this Agreement, whether
continuing or not, or to declare a forfeiture of termination against the
other parties, shall not be construed as a waiver of any of the rights or
privileges of any party hereunder. No waiver of any right or privilege of
any party arising from any default or failure of performance by any party
shall affect the rights or privileges of the other parties in the event of
a further default or failure of performance.
15. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of Ohio, without respect to its
choice of law provisions and in accordance with the 1940 Act. In the case
of any conflict, the 1940 Act shall control.
16. Each party hereby represents and warrants to the other that the persons
executing this Agreement on its behalf are duly authorized and empowered to
execute and deliver the Agreement and that the Agreement constitutes its
legal, valid and binding obligation, enforceable against it in accordance
with its terms. Except as particularly set forth herein, neither party
assumes any responsibility hereunder, and will not be liable to the other
for any
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damage, loss of data, delay or any other loss whatsoever caused by events
beyond its reasonable control.
17. Nationwide acknowledges that the identity of Key's (and its affiliates'
and/or subsidiaries') customers and all information maintained about those
customers constitute the valuable property of Key. Nationwide agrees that,
should it come into contact or possession of any such information
(including, but not limited to, lists or compilations of the identity of
such customers), Nationwide shall hold such information or property in
confidence and shall not use, disclose or distribute any such information
or property except with Key's prior written consent or as required by law
or judicial process.
Key acknowledges that the identity of Nationwide's (and its affiliates'
and/or subsidiaries') customers and all information maintained about those
customers constitute the valuable property of Nationwide. Key agrees that,
should it come into contact or possession of any such information
(including, but not limited to, lists or compilations of the identity of
such customers), Key shall hold such information or property in confidence
and shall not use, disclose or distribute any such information or property
except with Nationwide's prior written consent or as required by law or
judicial process.
This section shall survive the expiration or termination of this Agreement.
18. Nothing in this Agreement shall be deemed to create a partnership or joint
venture by and among the parties hereto.
19. This Agreement supersedes any and all prior Fund Participation Agreements
made by and between the parties.
20. Except to amend Exhibit A, or as otherwise provided in this Agreement, this
Agreement may not be amended or modified except by a written amendment
executed by each of the parties.
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21. This Agreement may be executed by facsimile signature and it may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
NATIONWIDE LIFE INSURANCE
COMPANY AND NATIONWIDE LIFE
AND ANNUITY INSURANCE
COMPANY
_____________________________________
________________
By: Xxxxxx X. Xxxx
Title: Vice President
Office of Product and Market
Compliance
KEY ASSET MANAGEMENT INC.
_____________________
By:
Title:
BISYS FUND SERVICES, INC.
By:
Title:
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EXHIBIT A
this Exhibit corresponds to the Fund Participation Agreement dated ________ 1998.
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VARIABLE ACCOUNTS OF NATIONWIDE CORRESPONDING NATIONWIDE CORRESPONDING FUNDS
CONTRACTS
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Nationwide Variable Account Modified Single Deferred The Victory Variable Insurance Funds
Premium Variable Annuity - Investment Quality Bond Fund - Class B
Contracts (the Best of - Diversified Stock Fund - Class B
America(R) - America's Choice) - Small Company Value Fund - Class B
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