Fund Participation Agreement
This
Fund
Participation Agreement (“Agreement”), dated as of the 30th day of October, 1998
is made by and among Nationwide Life Insurance Company and/or Nationwide
Life
and Annuity Insurance Company (separately or collectively “Nationwide”) and the
Nationwide separate accounts identified on Exhibit A which is attached hereto
and may be amended from time to time, and Lazard Fréres & Co. LLC, which
serves as distributor for the mutual funds listed on Exhibit A (the “Funds”).
The Funds and Lazard Fréres & Co. LLC are collectively referred to
throughout this Agreement as Lazard.
Nationwide
and Lazard 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 Lazard, in consideration of the promises and undertakings described herein,
agree as follows:
1.
Nationwide represents and warrants that
(a)
the
Variable Accounts (defined as separate investment accounts of Nationwide
into
which purchase payments are allocated) have been established and are in good
standing under Ohio Law;
(b)
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;
(c)
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
(d)
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 investments options among the sub-accounts of the Variable Accounts
in
accordance with terms of the Contracts.
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
Funds as is given to other underlying investments of the Variable Accounts.
In
marketing its Contracts, Nationwide shall comply with all applicable state
and/or federal laws.
3.
Lazard
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 Standard Time each Business Day to Nationwide.
“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 values as set
forth
in the Funds’ most recent prospectuses and Statements of Additional Information.
Subject to the terms and conditions of this Agreement, Nationwide shall be
appointed to, and agrees, to act as a limited agent of Lazard, for the sole
purpose of receiving instructions for the purchase and redemption of the
Funds’
shares (from Contract owners or participants making investment allocation
decisions under the Contracts) prior to the close of regular trading each
Business Day. Except as particularly stated in the preceding sentence,
Nationwide shall have no authority to act on behalf of Lazard or to incur
any
cost or liability on its behalf. Nationwide shall use this data provided
each
Business Day to calculate unit values. Unit values shall be used to process
that
same Business Day’s Variable Account transactions. The Variable Account
processing will be done the same evening, and orders for purchases or
redemptions shall be communicated to the Funds’ agent designated by Lazard by
9:00 a.m. the morning of the following Business Day. Orders will be sent
directly to Lazard or its specified agent. Orders for shares of the Funds
shall
be accepted at the time they are received by Lazard and at the net asset
value
price previously determined. Nationwide shall only place purchase orders
for
shares of the 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 exempt from registration and qualification
as confirmed in writing by Lazard.
Payment
for net purchases shall be wired to a custodial account designated by Lazard
by
2:00 p.m.
and
payment for net redemptions will be wired to an account designated by
Nationwide. Lazard will execute the orders at the net asset value as determined
as of the close of trading on the prior Business Day.
Nationwide
shall remit the purchase price of each purchase order in accordance with
written
procedures as provided to Nationwide. Dividends and capital gain distributions
shall be reinvested in additional Funds’ shares at net asset value.
Notwithstanding the above, Lazard 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 assets 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.
Nationwide
agrees to provide Lazard, upon request, written reports indicating the number
of
shareholders that hold interests in the Funds and such other information
(including books and records) that Lazard may reasonably request or as may
be
necessary or advisable to enable it to comply with any law, regulation or
order.
4.
All
expenses incident to the performance by Lazard under this Agreement shall
be
paid by Lazard. Lazard shall 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
Funds’ shares except those contained in the then current Prospectuses of the
Funds and in current printed sales literature of the Funds that have been
approved in writing by Lazard.
6.
Lazard
represents that it believes, in good faith, 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. Lazard shall notify Nationwide
immediately 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.
Nationwide
represents that it believes, in good faith, 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 and that it will notify Lazard
immediately upon having a reasonable basis for believing that the Contracts
have
ceased to be so treated, or that the Contracts may not be so treated in the
future.
7.
Within
five (5) Business Days after the end of each calendar month, Lazard, shall
provide Nationwide a monthly statement of account, which shall confirm all
transactions made during that particular month in the Variable
Accounts.
8.
Nationwide agrees to inform Lazard of the existence of or any potential for
any
material conflict of interest between the interests of the Contract owners
of
the Variable Accounts investing in the Funds and/or any other separate account
of any other insurance company investing in the Funds. A material irreconcilable
conflict may arise for a variety of reasons, including but not limited
to:
(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, 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 the Funds are being managed; or
(e)
a
difference in voting instructions given by Contract owners or by contract
owners
of different life insurance companies currently utilizing the
Funds.
It
is
agreed that if it is determined by a majority of the members of the Boards
of
Directors of the Funds, or a majority of its disinterested Directors, that
a
material conflict exists affecting Nationwide, Nationwide shall, at its own
expense, take whatever steps necessary to remedy or eliminate such
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 Funds and
(i)
reinvesting such assets in a different investment medium, including other
funds;
or
(ii)
submitting the question of whether such segregation should be subjected to
a
vote of all affected Contract owners, which may result in segregating the
assets
of any particular group (i.e., annuity Contract owners, variable 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; or
(b)
establishing a new registered management investment company or managed separate
account.
Lazard
agrees to inform Nationwide of the existence of or any potential for any
material conflict of interest and any possible implications of the same.
A
material irreconcilable conflict may arise for a variety of reasons, including
but not limited to:
(a)
an
action by any state regulatory authority;
(b)
a
change in applicable federal or state insurance, tax or securities laws or
regulations, 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; or
(d)
the
manner in which the investments of the Funds are being managed.
It
is
agreed that if it is determined by Nationwide that a material conflict exists
affecting Lazard, Lazard shall, at its own expense, take whatever steps are
necessary to remedy or eliminate such material conflict, including terminating
the Fund(s) or terminating Nationwide’s interest in the Fund(s).
9.
This
Agreement shall terminate as to the sale and issuance of new
Contracts:
(a)
at
the option of Nationwide or Lazard upon 60 days advance written notice to
the
other;
(b)
at
any time, upon Lazard’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
Lazard
to permit the substitution of Fund shares with the shares of another investment
company pursuant to SEC regulation or if the Contracts are not treated as
annuity contracts or life insurance policies by the applicable regulators
or
under applicable rules or regulations, or if the Variable Account is not
deemed
a “segregated asset account” by the applicable regulators or under applicable
rules or regulations;
(c)
at
the option of Nationwide if Fund shares are not available for any reason
to meet
the requirements of Contracts as determined by Nationwide. Reasonable advance
notice of election to terminate (and time to cure) shall be furnished by
Nationwide;
(d)
at
the option of Nationwide or Lazard, upon institution of formal proceedings
against the Broker-Dealer(s) marketing the Contracts, the Variable Account,
Nationwide or the Funds by the NASD, the Department of Labor, the SEC or
any
other regulatory body;
(e)
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 60 days written notice
to
the Funds and Lazard of any proposal to substitute Fund shares;
(f)
upon
assignment of this Agreement unless such assignment is made with the written
consent of each other party; and
(g)
in
the event Fund shares are not registered, issued or sold pursuant to Federal
law, or such law precludes the use of Fund 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.
10.
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:
Vice President - Investment Product Operations
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
To
Lazard:
Lazard
Fréres & Co. LLC
00
Xxxxxxxxxxx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxx Xxxx
11.
Advertising and sales literature with respect to the Funds prepared by
Nationwide or its agents for use in marketing its Contracts shall be submitted
to Lazard, for review before Nationwide submits such material to the SEC
or NASD
for review. Nationwide shall not, without the prior written consent of Lazard,
make public references to any Fund or to Lazard or advertise a Fund in any
manner whatsoever.
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 Lazard (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 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 Lazard
and
each of its directors, officers, employees, agents and each person, if any,
who
controls Lazard within the meaning of the Securities Act of 1933 (the “1933
Act”) against any losses, claims, damages or liabilities to which Lazard or any
such director, officer, employee, agent or controlling person may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (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;
(iii)
conduct, statements or representations 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 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 Lazard specifically
for
use therein.
Nationwide
shall reimburse any legal or other expenses reasonably incurred by Lazard
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 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)
Lazard agrees to indemnify and hold harmless Nationwide and each of its
directors, officers, employees, agents and each person, if any, who controls
Nationwide within the meaning of the 1933 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 1933
Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in
respect thereof) arise out of or are based upon:
(i)
any
untrue statement or alleged untrue statement of any material fact contained
in
any information furnished by Lazard, 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;
(iii)
Lazard’s failure to keep the Funds fully diversified, to the extent required,
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 Lazard 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 Lazard 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 Lazard by Nationwide
specifically for use therein.
Lazard
shall reimburse any reasonable 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 Lazard 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 Lazard may
otherwise have.
(c)
Each
party shall promptly notify the other in writing of any situation which presents
or appears to involve a claim which may be the subject of indemnification
hereunder 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 confess any claim 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 with respect to the claim among
the
parties.
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. This Agreement shall be subject to the provisions of the federal
securities statutes, rules and regulations, including such exemptions from
those
statutes, rules and regulations as the SEC may grant and the terms hereof
shall
be interpreted and construed in accordance therewith.
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 damage, loss of data,
delay or any other loss whatsoever caused by events beyond its reasonable
control.
17.
Nationwide acknowledges that the identity of Lazard’s (and its affiliates’
and/or subsidiaries’) customers and all information maintained about those
customers constitute the valuable property of Lazard. 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
Lazard’s prior written consent or as required by law or judicial
process.
Lazard
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. Lazard 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), Lazard
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.
With
respect to both parties, information in possession of the public shall not
be
considered confidential information.
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 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
LAZARD
FRÉRES & CO. LLC
By:
Title:
EXHIBIT
A
This
Exhibit corresponds with the Agreement dated October 30, 1998.
|
Variable
Accounts of Nationwide
|
Corresponding
Nationwide Contracts
|
Corresponding
Funds
|
|
Nationwide
Qualified Plans Variable Account (“QPVA”)
|
Qualified
Plans Variable Group Annuity Contract
|
The
Lazard Funds, Inc. - Lazard Small Cap Portfolio - Open
Shares
|
|
Deferred
Variable Annuity Contracts
|
The
Lazard Funds, Inc. - Lazard Small Cap Portfolio - Open
Shares
|
