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EXHIBIT NO. 3
UNDERWRITING OR DISTRIBUTION CONTRACT
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MARKETING COORDINATION AND
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement entered into this____day of __________, 1993, between Financial
Horizons Life Insurance Company ("Financial Horizons"), and Nationwide
Financial Services, Inc. ("NFS").
Financial Horizons proposes to develop, issue and administer, and NFS proposes
to provide the exclusive national distribution services for certain annuity
products (the "Products"). The Products to be sold hereunder are the Individual
Flexible Purchase Payment Deferred Variable Annuity Contract (Financial Horizons
Annuity) and such other products as may hereafter be agreed upon by the parties.
The parties hereby agree as follows:
A. ADMINISTRATION OF PRODUCTS
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1. Appointment of Product Administration
-------------------------------------
Financial Horizons is hereby appointed Product Administrator for the
Products.
2. Duties of Financial Horizons
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Financial Horizons will perform in a proper and timely manner, those
functions enumerated in the column marked "Financial Horizons" in the
"Analysis of Administrative Functions," attached hereto as EXHIBIT A,
and incorporated herein by reference.
3. Duties of NFS
-------------
NFS will perform in a proper and timely manner, those functions
enumerated in the column marked "NFS" in the "Analysis of
Administrative Functions," attached hereto as EXHIBIT A, and
incorporated herein by reference.
B. MARKETING COORDINATION AND SALES ADMINISTRATION
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1. Distribution of Products
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The Products will be distributed through registered representatives of
NASD broker-dealer firms, appointed by Financial Horizons, who shall
be duly qualified and licensed as agents (the "Agents"), in accordance
with applicable state insurance authority.
2. NFS shall be the exclusive National Distributor of the Products.
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3. Appointment and Termination of Agents
-------------------------------------
Appointment and termination of Agents shall be processed and executed
by Financial Horizons. NFS reserves the right to require Financial
Horizons to consult with it regarding licensing decisions.
4. Advertising
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NFS shall not print, publish or distribute any advertisement, circular
or document relating to the Products or relating to Financial Horizons
unless such advertisement, circular or document has been approved in
writing by Financial Horizons. Such approval shall not be unreasonably
withheld, and shall be given promptly, normally within three (3)
business days. Neither Financial Horizons nor any of its affiliates
shall print, publish or distribute any advertisement, circular or
document relating to the Products or relating to NFS unless such
advertisement, circular or document has been approved in writing by
NFS. Such approval shall not be unreasonably withheld, and shall be
given promptly, normally within three (3) business days. However,
nothing herein shall prohibit any person from advertising the Products
on a generic basis.
5. Marketing Conduct
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The parties will jointly develop standards, practices and procedures
respecting the marketing of the Products. Such standards, practices
and procedures are intended to help Financial Horizons meet its
obligations as an issuer under the securities laws, to assure
compliance with state insurance laws, and to help NFS meet its
obligations under the securities laws as National Distributor. These
standards, practices and procedures are subject to continuing review
and neither Financial Horizons nor NFS will object unreasonably to
changes to such standards, practices and procedures recommended by
the other to comply with the intent of this provision.
6. Sales Material and Other Documents
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a. Sales Material
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1) Financial Horizons shall develop and prepare all promotional
material to be used in the distribution of the Products, in
consultation with NFS.
2) Financial Horizons is responsible for the printing and the
expense of providing such promotional material.
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3) Financial Horizons is responsible for approval of such
promotional material by state insurance regulators, where
required.
4) NFS and Financial Horizons agree to abide by the Advertising
and Sales Promotion Material Guidelines, attached hereto as
EXHIBIT B, and incorporated herein by reference.
b. Prospectuses
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1) Financial Horizons is responsible for the preparation and
regulatory clearance of any required registration statements
and prospectuses for the Products. NFS is responsible for
the preparation and regulatory clearance of any underlying
mutual fund registration statements and prospectuses.
2) Financial Horizons is responsible for the printing of such
Product prospectuses in quantities as the parties agree are
necessary to assure sufficient supplies.
3) Financial Horizons will bear the cost of providing the
required supply of mutual fund prospectuses.
4) Financial Horizons is responsible for supplying Agents with
sufficient quantities of Product prospectuses.
c. Contracts, Applications and Related Forms
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1) Financial Horizons, in consultation with NFS, is responsible
for the design and printing of adequate supplies of Product
applications, contracts, related forms, and such service
forms as the parties agree are necessary.
2) Financial Horizons is responsible for supplying adequate
quantities of all such forms to the Agents.
7. Appointment of Agents
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a. NFS will assist Financial Horizons in facilitating the
appointment of Agents by Financial Horizons.
b. Financial Horizons will forward all appointment forms and
applications to the appropriate states and maintain all contacts
with the states.
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c. Financial Horizons will maintain appointment files on Agents, and
NFS will have access to such files as needed.
8. Licensing and Appointment Guide
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Financial Horizons shall provide to NFS a Licensing and Appointment
Guide (as well periodic updates thereto), setting forth the
requirements for licensing and appointment, in such quantities as
NFS may reasonably require.
9. Other
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a. Product Training
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Financial Horizons is responsible for any Product training for
the Agents.
b. Field Sales Material
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1) Financial Horizons, in consultation with NFS, is responsible
for the development, printing and distribution of non-public
field sales material to be used by Agents.
2) NFS shall have the right to review all field sales materials
and to require any modification mandated by regulatory
requirements.
c. Productions Reports
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Financial Horizons will deliver to NFS the items listed in
Production Reports to be provided, attached hereto as EXHIBIT C,
and incorporated herein by reference.
d. Customer Service
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Each party will notify the other of all material pertinent
inquiries and complaints it receives, from whatever source and to
whomever directed, and will consult with the other in responding
to such inquiries and complaints.
10. Auditing
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NFS will maintain all records relating to the mutual funds or other
investment options in accordance with generally accepted accounting
procedures. Any such records shall be made available to Financial
Horizons or its accountants or auditors upon reasonable written
request. Financial Horizons will provide NFS with any records, reports
or other materials relative to the
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distribution of the Products as may reasonably be required by NFS or
as may be required by any governmental agency having jurisdiction.
C. GENERAL PROVISIONS
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1. Waiver
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The forbearance or neglect of either party to insist upon strict
compliance by the other with any of the provisions of this Agreement,
whether continuing or not, or to declare a forfeiture of termination
against the other, shall not be construed as a waiver of any rights
or privileges of the forbearing party in the event of a further
default or failure of performance.
2. Limitations
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Neither party shall have authority on behalf of the other to: make,
alter or discharge any contractual terms of the Products; waive any
forfeiture; extend the time of making any contributions to the
products; guarantee dividends; alter the forms which either may
prescribe; nor substitute other forms in place of those prescribed by
the other.
3. Binding Effect
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This Agreement shall be binding on and shall insure to the benefit of
the parties to it and their respective successors and assigns,
provided that neither party shall assign or sub-contract this
Agreement or any rights or obligations hereunder without prior written
consent of the other.
4. Indemnification
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Each party ("Indemnifying Party") hereby agrees to release, indemnify
and hold harmless the other party, its officers, directors, employers,
agents, servants, predecessors or successors from any claims or
liability arising out of the acts or omissions of the Indemnifying
Party not authorized by this Agreement, including the violation of any
federal or state law or regulation.
5. Notices
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All notices, requests, demands and other communication under this
Agreement shall be in writing and shall be deemed to have been given
on the date of service if served personally on the party to whom
notice is to be given, or on the date of mailing if sent postage
prepaid by First Class Mail, Registered or Certified mail, by
overnight mail, properly addressed as follows:
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TO FINANCIAL HORIZONS:
Financial Horizons Life Insurance Company
Xxxxxxx X. Xxxxx, Vice President
Sales - Financial Services
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
TO NFS:
Nationwide Financial Services, Inc.
Xxxxxx X. Xxxxxxx, President
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
6. Governing Law
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This Agreement shall be construed in accordance with and governed by
the laws of the State of Ohio.
7. Arbitration
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The parties agree that misunderstandings or disputes arising from this
Agreement shall decided by arbitration, conducted upon request of
either party before three arbitrators (unless the parties agree on a
single arbitrator) designated by the American Arbitration Association,
and in accordance with the rules of such Association. The expenses of
the arbitration proceedings conducted hereunder shall be borne equally
by both parties.
8. Confidentiality
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Any information, documents and materials, whether printed or oral,
furnished by either party or its agents or employees to the other
shall be held in confidence. No such information shall be given to any
third party, other than to such sub-contractors of NFS as may be
permitted herein, or under requirements of a lawful authority, without
the express written consent of the other party.
D. TERM OF AGREEMENT
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This Agreement, including the Exhibits attached hereto, shall remain in
full force and effect until terminated, and may be amended only by mutual
agreement of the parties in writing. Any decision by either party to
cease issuance or distribution of any specific Product shall not effect a
termination of the Agreement unless such termination is mutually agreed
upon, or unless notice is given pursuant to Section E.2. hereof.
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E. TERMINATION
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1. Either party may terminate this Agreement for cause at any time, upon
written notice to the other, if the other knowingly and willfully: (a)
fails to comply with the laws or regulations or any state or
governmental agency or body having jurisdiction over the sale of
insurance of securities; (b) misappropriates any money or property
belonging to the other; (c) subjects the other to any actual or
potential liability due to misfeasance, malfeasance, or nonfeasance;
(d) commits any fraud upon the other; (e) has an assignment for the
benefit of creditors; (f) incurs bankruptcy; or (g) commits a
material breach of this Agreement.
2. Either party may terminate this Agreement, without regard to cause,
upon six months prior written notice to the other.
3. In the event of termination of this Agreement, the following
conditions shall apply:
a) The parties irrevocably acknowledge the continuing right to use
any Product trademark that might then be associated with any
Products, but only with respect to all business in force at the
time of termination.
b) NFS will continue to sell to Financial Horizons at net asset
value, shares of all mutual funds which serve as underlying
investments for Products actually issued by Financial Horizons
pursuant to this Agreement, until such time as mutually agreed
upon by the parties. NFS may discontinue the sale at net asset
value of such shares in connection with the issuance by Financial
Horizons of new contracts after termination.
c) In the event this Agreement is terminated the parties will use
their best efforts to preserve in force the business issued
pursuant to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date first above written.
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
By Xxxxxxx X. Xxxxx
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Title Senior Vice President
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NATIONWIDE FINANCIAL SERVICES, INC.
By Xxxxxx X. Xxxxxxx
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Title President
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EXHIBIT A
ANALYSIS OF ADMINISTRATIVE FUNCTIONS
A. PRODUCT UNDERWRITING/ISSUE
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FINANCIAL HORIZONS NFS
- Establishes - Consults with regard
underwriting criteria to new business
for application procedures and
processing and processing.
rejections.
- Reviews the completed
application. Applies
underwriting/issue
criteria to application.
- Notifies Agent and/or
customer of any error
or missing data
necessary to underwrite
application and establish
records for owner of
Product ("Contract Owner").
- Prepares policy data page
for approved business and
mails with policy to Contract
Owner.
- Establishes and maintains
all records required for
each Contract Owner, as
applicable.
- Prepares and mails
confirmation and other
statements to Contract
Owners and Agents, as
required.
- Prints, provides all
forms ancillary to issue
of contract/policy forms
for Products.
- Maintains supply of
approved specimen policy
forms and all ancillary
forms, distributes
same to Agents.
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B. BILLING AND COLLECTION
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FINANCIAL HORIZONS
- Receives premium/purchase
payments and reconciles
amount received with
remittance media.
- Updates Contract Owner
records to reflect
receipt of premium/
purchase payment and
performs accounting/
investment allocation of
each payment received.
- Deposits all cash received
under the Products in
accordance with the terms
of the Products.
C. BANKING
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FINANCIAL HORIZONS
- Balances, edits,
endorses and prepares daily
deposit.
- Places deposits in
depository account.
- Transfers funds from
depository account to NFS
within 24 hours following
underwriting approval, in
accordance with investment
allocation.
- Prepares daily cash
journal summary reports
and maintains same for
review by NFS.
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D. PRICING/VALUATION/ACCOUNTING
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FINANCIAL HORIZONS NFS
- Determines the "Net Amount - Issues Fund Shares to
Available for Investment" in Financial Horizons at
Fund Shares and places Fund net asset Value.
Share purchase or redemption
orders with the Fund, by - Confirms Financial
facsimile each day by 10:00 Horizons' Fund purchases
a.m. E.T. If for any reason and redemptions.
Financial Horizons is unable
to process such orders, it - Transmit by facsimile
will provide NFS with Fund Share prices to
estimates. Financial Horizons by
6:00 p.m. EST each day.
- Maintains and makes
available, as reasonably - Maintains records of all
requested, records used in Fund Shares owned by
determining "Net Amount Financial Horizons,
Available for Investment." including the date
purchased and sold,
- Collects information needed cost, and other
in determining Variable information maintained
Account unit values from the by NFS in its ordinary
Funds including daily net course of business.
asset value, capital gains
or dividend distributions, - Cooperates in annual
and the number of Fund audit of separate
Shares acquired or sold account financials
during the immediately conducted for purposes
preceding valuation period. of financial statement
certification and
- Performs daily unit publication.
valuation calculation.
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E. CONTRACT OWNER SERVICE/
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RECORD MAINTENANCE
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FINANCIAL HORIZONS NFS
- Receives and processes all - Accommodates customer
Contract Owner service service function by
requests, including but providing any supporting
not limited to information or
informational requests, documentation which may
beneficiary changes, and be in the control of
transfers of Contract NFS.
Value among eligible
investment options.
- Maintains daily records of
all changes made to
Contract Owner accounts.
- Researches and responds - Researches and responds
to all Contract Owner/Agent to Financial Horizon's
inquiries. inquiries regarding fund
performance.
- Keeps all required
Contract Owner records.
- Maintains adequate number
of toll free lines to
service Contract
Owner/Agent inquiries.
F. DISBURSEMENTS
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(SURRENDERS, DEATH
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CLAIMS, LOANS)
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FINANCIAL HORIZONS NFS
- Receives and processes
surrenders, loans, and
death claims in accordance
with established
guidelines.
- Prepares checks for
surrenders, loans, and
death claims, and forwards
to Contract Owner or
Beneficiary. Prepares and
mails confirmation
statement of disbursement
to Contract
Owner/Beneficiary with
copy to Agent.
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G. COMMISSIONS
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FINANCIAL HORIZONS NFS
- Ascertains, on receipt of
applications, whether
writing Agent is
appropriately licensed.
- Pays commissions and other
fees in accordance with
agreements relating to
same.
H. PROXY PROCESSING
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FINANCIAL HORIZONS NFS
- Receives record date - Provides proxy,
information from Funds solicitation materials,
Receives proxy and record date
solicitation materials information.
from Funds.
- Prepares Voting
Instruction cards and
mails solicitation, if
necessary.
- Tabulates and votes all
Fund Shares in accordance
with SEC requirements.
I. PERIODIC REPORTS TO CONTRACT OWNERS
-----------------------------------
FINANCIAL HORIZONS NFS
- Prepares and mails
quarterly and annual
Statements of Account to
Contract Owners.
- Prepares and mails all - Prepares and mails to
semi-annual and annual Financial Horizons all
reports of Variable required semi-annual and
Account(s) to Contract annual financial reports
Owners. to shareholder of the
Funds.
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J. REGULATORY/STATEMENT REPORTS
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FINANCIAL HORIZONS NFS
- Prepares and files
Separate Account Annual
Statements.
- Prepares and mails the
appropriate, required IRS
reports at the Contract
Owner level. Files same
with required regulatory
agencies.
- Prepares and files form - Prepares and files form
N-SAR for the Separate N-SAR for the Funds.
Account.
K. PREMIUM TAXES
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-
FINANCIAL HORIZONS NFS
- Collects, pays and
accounts for premium taxes
as appropriate.
- Prepares and maintains all
premium tax records by
state.
- Maintains liabilities in
General Account ledger for
accrual of premium tax
collected.
- Integrates all company
premium taxes due and
performs related
accounting.
L. FINANCIAL AND MANAGEMENT REPORTS
-----------------------------------
FINANCIAL HORIZONS NFS
- Provides periodic reports - Provides periodic
in accordance with the reports in accordance
Schedule of Reports to be with the Schedule of
prepared jointly by Reports to be prepared
Financial Horizons and jointly by Financial
NFS. (See EXHIBIT C) Horizons and NFS. (See
EXHIBIT C)
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M. AGENT LICENSE RECORDKEEPING
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FINANCIAL HORIZONS NFS
- Receives, establishes, - Cooperates with
processes, and maintains Financial Horizons in
Agent appointment records. the Agent appointment
process with the broker-
dealer firms.
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EXHIBIT B
ADVERTISING AND SALES PROMOTION MATERIAL GUIDELINES
FOR APPROVAL BY THE OFFICE OF SALES-FINANCIAL SERVICES
In order to assure compliance with state and federal regulatory requirements
and to maintain control over the distribution of promotional materials dealing
with the Products, Financial Horizons and NFS require that ALL variable
contract promotional materials be REVIEWED and APPROVED by both Financial
Horizons and NFS PRIOR to their use. These guidelines are intended to provide
appropriate regulatory and distribution controls.
1. Sufficient lead time must be allowed in the submission of all
promotional material. The Office of Sales-Financial Services
("OS-FS") and NFS shall approve in writing all promotional material.
Such approval shall not be unreasonably withheld, and shall be given
promptly, normally within three (3) days.
2. All promotional material will be submitted in "draft" form to
permit any changes or corrections to be made prior to the printing.
3. Financial Horizons and NFS will provide each other with details
as to each and every use of all promotional material submitted.
Approval for one use will not constitute approval for any other use.
Different standards of review may apply when the same advertising
material is intended for different uses. The following information
will be provided for each item of promotional material:
a. In what jurisdiction(s) the material will be used.
b. Whether distribution will be used (e.g., brochure, mailing, 482
ads, etc.).
c. How the material will be used (e.g., brochure, mailing, 482 ads,
etc.).
d. The projected date of initial use and, if a special promotion,
the projected date of last use.
4. Each party will advise the other of the date it discontinues the use of
any material.
5. Any changes to previously approved promotional material must be
resubmitted, following these procedures. When approved material is to
be put to a different use, request for approval of the material for
the new use must be submitted.
6. OS-FS and NFS will assign a form number to each item of advertising
and sales promotional material. This number will appear on each piece
of advertising and sales
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promotional material. It will be used to aid in necessary filings,
and to maintain appropriate controls.
7. OS-FS and NFS will provide WRITTEN APPROVAL for all material to be
used.
8. Financial Horizons and NFS will provide each other with a minimum of 50
copies of all material in final print form to effect necessary state
filings.
9. NFS will coordinate SEC/NASD filings of sales and promotional material.
10. All telephone communication and written correspondence regarding
promotional materials should be directed to Marketing Director,
Office of Sales-Financial Services, Financial Horizons Life Insurance
Company, Xxx Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxxx 00000 (phone (614)
000-0000) or to President, Nationwide Financial Services, Inc., Xxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxxx (phone (000) 000-0000).
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EXHIBIT C
PRODUCTION REPORTS TO BE PROVIDED
Financial Horizons agrees to provide the following reports to NFS:
1. Daily Receipt Report: Indicates which Agents are
generating sales.
2. Daily Approval Report: Indicates which applications have
been approved.
3. Daily Activity Summary: Indicates top firms' sales and
liquidation by month, year-to-date
as well as total assets by firm.
4. Dealer Activity Indicates top firms' sales and
Summary by Territory: liquidation by month, year-to-date.
5. Summary of Sales by Indicates sales
Territory and Dealer: by territory/dealer/branch,
including non-commissionable
amounts and actual commission
payments, as well as chargebacks.
(Internal use only)
6. Summary of Sales by Indicates sales by territory/
Territory and Dealer: dealer/branch, including
chargebacks.
7. Commission Report: Indicates commissions paid and
chargebacks, matched to commission
checks.
In addition, Financial Horizons will provide reports detailing current
appointments and other information, as reasonably requested by NFS.
