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EXHIBIT NO. 3
UNDERWRITING OR DISTRIBUTION OF CONTRACTS BETWEEN THE REGISTRANT AND
PRINCIPAL UNDERWRITER
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MARKETING COORDINATION AND
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement entered into this ________ day of May, 1997, between Nationwide
Life Insurance Company, Nationwide Life and Annuity Insurance Company
(collectively "Nationwide"), and Nationwide Advisory Services, Inc. ("NAS") and
restates and confirms all earlier agreements between the parties concerning
marketing coordination and administrative services.
Nationwide proposes to develop, issue and administer, and NAS proposes to
provide the exclusive national distribution services for variable annuity
contracts and variable life insurance policies (the "Products").
The parties hereby agree as follows:
A. ADMINISTRATION OF PRODUCTS
1. APPOINTMENT OF PRODUCT ADMINISTRATION
Nationwide is hereby appointed Product Administrator for the Products.
2. DUTIES OF NATIONWIDE
Nationwide shall perform in a proper and timely manner, those functions
enumerated in the column marked "Nationwide" in the "Analysis of
Administrative Functions," attached hereto as EXHIBIT A, and
incorporated herein by reference.
3. DUTIES OF NAS
NAS shall perform in a proper and timely manner, those functions
enumerated in the column marked "NAS" in the Analysis of Administrative
Functions," attached hereto as EXHIBIT A, and incorporated herein by
reference.
B. MARKETING COORDINATION AND SALES ADMINISTRATION
1. DISTRIBUTION OF PRODUCTS
The Products will be distributed through registered representatives of
NASD broker-dealer firms, appointed by Nationwide, who shall be duly
qualified and licensed as agents (the "Agents"), in accordance with
applicable state insurance authority.
2. NAS 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
Nationwide. NAS reserves the right to require Nationwide to consult with
it regarding licensing decisions.
4. ADVERTISING
NAS shall not print, publish or distribute any advertisement, circular
or document relating to the Products or relating to Nationwide unless
such advertisement, circular or document has been approved in writing by
Nationwide. Such approval shall not be unreasonably withheld, and shall
be given promptly, normally within three (3) business days. Neither
Nationwide nor any of its affiliates shall print, publish or distribute
any advertisement, circular or document relating to the Products or
relating to NAS unless such advertisement, circular or document has been
approved in writing by NAS. 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
The parties will jointly develop standards, practices and procedures
respecting the marketing of the Products. Such standards, practices and
procedures are intended to help Nationwide meet its obligations as an
issuer under the securities laws, to assure compliance with state
insurance laws, and to help NAS meet its obligations under the
securities laws of National Distributor. These standards, practices and
procedures are subject to continuing review and neither Nationwide nor
NAS shall 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
a. SALES MATERIAL
1) Nationwide shall develop and prepare all promotional material to
be used in the distribution of the Products, in consultation
with NAS.
2) Nationwide is responsible for the printing and the expense of
providing such promotional material.
3) Nationwide is responsible for approval of such promotional
material by state insurance regulators, where required.
4) NAS and Nationwide agree to abide by the Advertising and Sales
Promotion Material Guidelines, attached hereto as EXHIBIT B, and
incorporated herein by reference.
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b. PROSPECTUSES
1) Nationwide is responsible for the preparation and regulatory
clearance of any required registration statements and
prospectuses for the Products. NAS is responsible for the
preparation and regulatory clearance of any underlying mutual
fund registration statements and prospectuses.
2) Nationwide is responsible for the printing of Product
prospectuses in such quantities as the parties agree are
necessary to assure sufficient supplies.
3) Nationwide will bear the cost of providing the required supply
of mutual fund prospectuses.
4) Nationwide is responsible for supplying Agents with sufficient
quantities of Product prospectuses.
c. CONTRACTS, APPLICATIONS AND RELATED FORMS
1) Nationwide, in consultation with NAS, 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) Nationwide is responsible for supplying adequate quantities of
all such forms to the Agents.
7. APPOINTMENT OF AGENTS
a. NAS shall assist Nationwide in facilitating the appointment of
Agents by Nationwide.
b. Nationwide shall forward all appointment forms and applications to
the appropriate states and maintain all contacts with the states.
c. Nationwide shall maintain appointment files on Agents, and NAS shall
have access to such files as needed.
8. LICENSING AND APPOINTMENT GUIDE
Nationwide shall provide to NAS a Licensing and Appointment Guide (as
well as periodic updates thereto), setting forth the requirements for
licensing and appointment, in such quantities as NAS may reasonably
require.
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9. OTHER
a. PRODUCT TRAINING
Nationwide is responsible for any Product training for the Agents.
b. FIELD SALES MATERIAL
1) Nationwide, in consultation with NAS, is responsible for the
development, printing and distribution of non-public field sales
material to be used by Agents.
2) NAS shall have the right to review all field sales materials and
to require any modification mandated by regulatory requirements.
c. PRODUCTION REPORTS
Nationwide shall deliver to NAS the items listed in Production
Reports to be Provided, attached hereto as EXHIBIT C, and
incorporated herein by reference.
d. CUSTOMER SERVICE
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
NAS shall 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 Nationwide or
its accountants or auditors upon reasonable written request. Nationwide
shall provide NAS with any records, reports or other materials relative
to the distribution of the Products as may reasonably be required by NAS
or as may be required by any governmental agency having jurisdiction.
C. GENERAL PROVISIONS
1. WAIVER
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.
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2. LIMITATIONS
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
This Agreement shall be binding on and shall inure 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
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
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:
TO NATIONWIDE:
Nationwide Life Insurance Company
Xxxxxxx X Xxxxx, Senior Vice President-Sales-Financial Services
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
TO NAS:
Nationwide Advisory Services, Inc.
Xxxxxx X. Xxxx, Vice President-Compliance
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
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6. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by the
laws of the State of Ohio.
7. ARBITRATION
The parties agree that misunderstandings or disputes arising from this
Agreement shall be 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
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 NAS 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
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.
E. TERMINATION
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 of any state or
governmental agency or body having jurisdiction over the sale of
insurance or 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:
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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) NAS shall continue to sell to Nationwide at net asset value, shares
of all mutual funds which serve as underlying investments for
Products actually issued by Nationwide pursuant to this Agreement,
until such time as mutually agreed upon by the parties. NAS may
discontinue the sale at net asset value of such shares in connection
with the issuance by Nationwide of new products 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date first above written.
NATIONWIDE LIFE INSURANCE
COMPANY
By: Xxxxxxx X. Xxxxx
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Title: Senior Vice President
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NATIONWIDE LIFE AND ANNUITY
INSURANCE COMPANY
By: Xxxxxxx X. Xxxxx
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Title: Senior Vice President
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NATIONWIDE ADVISORY SERVICES,
INC.
By: Xxxxxx X. Xxxx
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Title: Vice President
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EXHIBIT A
ANALYSIS OF ADMINISTRATIVE FUNCTIONS
A. PRODUCT UNDERWRITING/ISSUE
NATIONWIDE
- Establishes underwriting criteria for application processing and 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.
NAS
- Consults with regard to new business procedures and processing.
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B. BILLING AND COLLECTION
NATIONWIDE
- 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
NATIONWIDE
- Balances, edits, endorses and prepares daily deposit.
- Places deposits in depository account.
- Transfers funds from depository account to NAS within 24 hours following
underwriting approval, in accordance with investment allocation.
- Prepares daily cash journal summary reports and maintains same for review by
NAS.
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D. PRICING/VALUATION/ACCOUNTING
NATIONWIDE
- Determines the "Net Amount Available for Investment" in Fund Shares and
places Fund Share purchase or redemption orders with the Fund, by facsimile
each day by 10:00 a.m. E.T. If for any reason Nationwide is unable to process
such orders, it will provide NAS with estimates.
- Maintains and makes available, as reasonably requested, records used in
determining "Net Amount Available for Investment."
- Collects information needed in determining Variable Account unit values from
the Funds including daily net asset value, capital gains or dividend
distributions, and the number of Fund Shares acquired or sold during the
immediately preceding valuation period.
- Performs daily unit valuation calculation.
NAS
- Issues Fund Shares to Nationwide at net asset Value.
- Confirms Nationwide's Fund purchases and redemptions.
- Transmit by facsimile Fund Share prices to Nationwide by 6:00 p.m. EST each
day.
- Maintains records of all Fund Shares owned by Nationwide, including the date
purchased and sold, cost, and other information maintained by NAS in its
ordinary course of business.
- Cooperates in annual audit of separate account financials conducted for
purposes of financial statement certification and publication.
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E. CONTRACT OWNER SERVICE RECORD MAINTENANCE
NATIONWIDE
- Receives and processes all Contract Owner service requests, including but not
limited to informational requests, beneficiary changes, and transfers of
Contract Value among eligible investment options.
- Maintains daily records of all changes made to Contract Owner accounts.
- Researches and responds to all Contract Owner/Agent inquiries.
- Keeps all required Contract Owner records.
- Maintains adequate number of toll free lines to service Contract Owner/Agent
inquiries.
NAS
- Accommodates customer service function by providing any supporting
information or documentation which may be in the control of NAS.
- Researches and responds to Nationwide's inquiries regarding fund performance.
F. DISBURSEMENTS (SURRENDERS, DEATH CLAIMS, LOANS)
NATIONWIDE
- 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.
NAS
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G. COMMISSIONS
NATIONWIDE
- Ascertains, on receipt of applications, whether writing Agent is
appropriately licensed.
- Pays commissions and other fees in accordance with agreements relating to
same.
NAS
H. PROXY PROCESSING
NATIONWIDE
- Receives record date information from Funds. Receives proxy solicitation
materials from Funds.
- Prepares Voting Instruction cards and mails solicitation, if necessary.
- Tabulates and votes all Fund Shares in accordance with SEC requirements.
NAS
- Provides proxy, solicitation materials, and record date information.
I. PERIODIC REPORTS TO CONTRACT OWNERS
NATIONWIDE
- Prepares and mails quarterly and annual Statements of Account to Contract
Owners.
- Prepares and mails all semi-annual and annual reports of Variable Account(s)
to Contract Owners.
NAS
- Prepares and mails to Nationwide all required semi-annual and annual
financial reports to shareholder of the Funds.
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J. REGULATORY STATEMENT REPORTS
NATIONWIDE
- 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 N-SAR for the Separate Account.
NAS
- Prepares and files form N-SAR for the Funds.
K. PREMIUM TAXES
NATIONWIDE
- 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.
NAS
L. FINANCIAL AND MANAGEMENT REPORTS
NATIONWIDE
- Provides periodic reports in accordance with the Schedule of Reports to be
prepared jointly by Nationwide and NAS. (See EXHIBIT C).
NAS
- Provides periodic reports in accordance with the Schedule of Reports to be
prepared jointly by Nationwide and NAS. (See EXHIBIT C).
M. AGENT LICENSE RECORDKEEPING
NATIONWIDE
- Receives, establishes, processes, and maintains Agent appointment records.
NAS
- Cooperates with Nationwide in 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, Nationwide and NAS require that ALL variable contract promotional
materials be REVIEWED and APPROVED by both Nationwide and NAS 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 NAS 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. Nationwide and NAS 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 NAS 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 promotional material. It will be used to aid in
necessary filings, and to maintain appropriate controls.
7. OS-FS and NAS will provide WRITTEN APPROVAL for all material to be used.
8. Nationwide and NAS will provide each other with a minimum of 50 copies of
all material in final print form to effect necessary state filings.
9. NAS will coordinate SEC/NASD filings of sales and promotional material.
10. All communication regarding promotional materials should be directed to
Marketing Director, Office of Sales-Financial Services, Nationwide Life
Insurance Company, Xxx Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxxx 00000 (phone
(000) 000-0000) or to President, Nationwide Advisory Services, Inc.,
Three Nationwide Plaza, Columbus, Ohio (phone (000) 000-0000).
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EXHIBIT C
PRODUCTION REPORTS TO BE PROVIDED
Nationwide agrees to provide the following reports to NAS:
1. Daily Receipt Report Indicates which Agents are generating sales.
2. Daily Approval Report Indicates the 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 by territory/dealer/branch,
Territory and Dealer including non-commissionable amounts and actual
commission payments, as well as chargebacks
(Internal use only).
6. Summary of Sales by Indicates sales by territory/dealer/branch,
Territory and Dealer including chargebacks.
7. Commission Report Indicates commissions paid and chargebacks,
matched to commission checks.
In addition, Nationwide shall provide reports detailing current appointments and
other information, as reasonably requested by NAS.
