FUND AGREEMENT
This Agreement dated as of the 13th day of March, 2003 is made by and among
Nationwide Financial Services, Inc. ("NFS") (including any affiliates and/or
subsidiaries listed on Exhibit A), the STI Classic Variable Trust (each a "Fund"
and collectively the "Funds"), a Massachusetts business trust, and Trusco
Capital Management, Inc., ("Trusco") as Investment Adviser to the Funds.
WHEREAS, NFS or a subsidiary or affiliate thereof (collectively referred to as
"NFS Affiliate/Subsidiary") provides administrative and/or recordkeeping
services to variable contracts, which may include, but are not limited to,
variable annuity contracts, variable life insurance policies and various
retirements plans which meet the definition of retirement plans under Sections
401, 403 and 457 of the Internal Revenue Code (the "Code") (collectively,
"Contracts"); and
WHEREAS NFS, the Funds and Trusco mutually desire the inclusion of the Funds as
investment options in the Contracts, which may be issued through separate
accounts ("Variable Accounts") registered under the Investment Company Act of
1940; and
WHEREAS, the Contracts allow for the allocation of net amounts received by NFS
to sub-accounts or to the Fund for investment in shares of the Funds; and
WHEREAS, selection of a particular investment option is made by the contract
owner or by participants in various types of retirement plans and such contract
owners and/or participants may reallocate their investments among the investment
options in accordance with the terms of the Contracts; and
NOW THEREFORE, NFS,Trusco and the Funds, in consideration of the promises and
undertakings described herein, agree that the Funds will be made available as
investment options in Contracts offered by NFS subject to the following:
REPRESENTATIONS AND UNDERTAKINGS
REPRESENTATIONS BY NFS
NFS or an NFS Affiliate/Subsidiary agrees to perform certain administrative
services ("Services") as listed on Exhibit C.
NFS represents that the NFS Affiliates/Subsidiaries, including the Contracts and
Variable Accounts, have been established and are in good standing under the
state law in which they were organized. The Contracts and Variable Accounts are
registered under the Securities Act of 1933 (the "1933 Act") and the Investment
Company Act of 1940 (the "1940 Act"), unless otherwise exempt there from
pursuant to Section 3(a)(2) of the 1933 Act or Section 3(c)(11) of the 1940 Act.
NFS and its agents shall make no representations concerning the Funds, Trusco,
any of their affiliates or Fund shares except those contained in the Funds' then
current prospectuses, Statements of Additional Information or other documents
produced by the Funds (or an entity on its behalf) which contain information
about the Funds. NFS agrees to allow a reasonable period of time for the Funds
to review any advertising and sales literature drafted by NFS (or agents on its
behalf) with respect to the Funds, prior to use and prior to submitting such
material to any regulator.
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NFS acknowledges that the identity of the Funds' (and its affiliates' and/or
subsidiaries') customers and all information maintained about those customers
constitute the valuable property of the Funds or its affiliates. This provision
shall survive termination of this Agreement.
NFS acknowledges that the services provided for under this Agreement by the
Funds and Trusco are not exclusive and that the same skill will be used in
performing services for other companies in similar contexts.
NFS represents that the Contracts marketed as annuity contracts and/or life
insurance policies are currently treated as annuity contracts and/or life
insurance policies under the appropriate provisions of the Code and applicable
insurance law, and that it shall make every effort to maintain such treatment.
NFS will promptly notify the Funds 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.
NFS represents that where applicable, the Variable Accounts are "segregated
asset accounts" and that interests in such Variable Accounts 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, and
that it shall make every effort to continue to meet such definitional
requirements. NFS shall promptly notify the Funds 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.
NFS represents that it maintains and knows of no reason why it cannot or will
not during the term hereof, maintain adequate offices, personnel and computer
and other equipment to perform the services contemplated by this Agreement.
NFS intends to adopt anti-money laundering procedures as soon as practicable
after final regulations applicable to NFS are issued by the United States
Department of Treasury in accordance with the requirements of the U.S. Patriot
Act. The parties to this agreement shall acknowledge the adoption of these
procedures upon implementation by amendment to this Agreement.
NFS represents that to the extent Fund shares are purchased by plan participants
through a defined contribution plan, the arrangements provided for in this
Agreement may be disclosed to the defined contribution plan sponsors through
their representatives.
NFS represents that it will not be a "fiduciary" with respect to the provision
of the services contemplated herein to any Plan(s) as such term is defined in
Section 3(21) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and Section 4975 of the Code.
NFS represents that the receipt of the fees and the provision of the services
contemplated herein to any Plan(s) will not constitute a non-exempt "prohibited
transaction" as such term is defined in Section 406 of ERISA and Section 4975 of
the Code.
At all times NFS shall comply with all laws, rules and regulations applicable to
it by virtue of entering into this Agreement.
NFS represents that it is free to enter into this Agreement and that by doing so
it will not breach or otherwise impair any other agreement or understanding with
any other person, corporation or other entity. NFS further represents, warrants
and covenants that:
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(a) it has full power and authority under applicable law, and has
taken all action necessary, to enter into and perform this
Agreement;
(b) this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its
terms;
(c) the arrangements and fees provided for in this Agreement may
be disclosed to the Contracts;
(d) if services required to be performed by NFS as set forth in
this Agreement are required to be performed by a registered
broker dealer, they will be performed by a registered broker
dealer affiliate of NFS;
(e) it will maintain comprehensive general liability coverage and
will carry a fidelity bond covering it and each of its
employees and authorized agents with limits of not less than
those considered commercially reasonable and appropriate under
current industry practices, each issued by a qualified
insurance carrier with a Best's rating of at least "A"; and
(f) its internal control structure over the processing and
transmission of instructions for Fund transactions is suitably
designed to prevent or detect on a timely basis instructions
received after close of trading from being aggregated with
instructions received before close of trading, and to minimize
errors that could result in late transmission of instructions
to the Funds.
NFS agrees not to redeem Funds shares attributable to the Contracts except (i)
as necessary to implement Contract owner initiated or approved transactions, or
(ii) as required by state and/or federal laws or regulations or judicial or
other legal precedent of general application or (iii) as permitted by an order
of the SEC. Upon request, NFS will promptly furnish to the Funds the opinion of
counsel for NFS to the effect that any redemption pursuant to clause (ii) above
is a legally required redemption.
REPRESENTATIONS BY THE FUNDS
Each Fund party represents that it is free to enter into this Agreement and that
by doing so it will not breach or otherwise impair any other agreement or
understanding with any other person, corporation or other entity. Each Fund
party further represents, warrants and covenants that:
(a) it has full power and authority under applicable law, and has
taken all action necessary, to enter into and perform this
Agreement, and at all times it shall comply with all laws,
rules and regulations applicable to it by virtue of entering
into this Agreement;
(b) this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its
terms;
(c) all of its directors, officers, employees, investment
advisers, and other individuals or entities dealing with the
money and/or securities of the Fund are and shall continue to
be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less
than the minimum coverage as required currently by Rule 17g-1
of the 1940 Act or related provisions as may be promulgated
from time to time. The aforesaid bond shall include coverage
for larceny and embezzlement and shall be issued by a
reputable bonding company.
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The Funds acknowledge that they receive substantial savings as a result of NFS
performing those Services listed on Exhibit C on behalf of the Funds.
The Funds and their agents shall make no representations about NFS except those
contained in publicly available documents or other documents produced by NFS (or
an entity on its behalf).
The Funds agree to allow a reasonable period of time for NFS to review any
advertising and sales literature drafted by the Funds (or agents on their
behalf) with respect to NFS prior to use and prior to submitting such material
to any regulator.
The Funds acknowledge that the identity of NFS (and its affiliates' and/or
subsidiaries') customers and that all information maintained about those
customers constitute the valuable property of NFS. This provision shall survive
termination of this Agreement.
The Funds acknowledge that the services provided for under this Agreement by NFS
or an NFS Affiliate/Subsidiary are not exclusive and that the same skill will be
used in performing services for other companies in similar contexts.
The Funds represent that the Funds are currently qualified as regulated
investment companies under Subchapter M of the Code, and that the Funds shall
make every effort to maintain such qualification. The Funds shall promptly
notify NFS 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.
The Funds represent that any insurance Funds utilized in the Contracts 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, if required, and
that such 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.
The Funds will notify NFS 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.
REPRESENTATIONS BY TRUSCO
Trusco represents that it is free to enter into this Agreement and that by doing
so it will not breach or otherwise impair any other agreement or understanding
with any other person, corporation or other entity. Trusco further represents,
warrants and covenants that:
(a) it has full power and authority under applicable law, and has
taken all action necessary, to enter into and perform this
Agreement; and
(b) this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its
terms; and
(c) it is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and will remain
duly registered under all applicable federal and state
securities laws and that it will perform its obligations for
the Fund in accordance with any applicable state and federal
securities laws.
Trusco and its agents shall make no representations about NFS except those
contained in publicly available documents or other documents produced by NFS (or
an entity on its behalf).
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Trusco agrees to allow a reasonable period of time for NFS to review any
advertising and sales literature drafted by Trusco (or agents on its behalf)
with respect to NFS prior to use and prior to submitting such material to any
regulator.
Trusco acknowledges that the identity of NFS (and its affiliates' and/or
subsidiaries') customers and that all information maintained about those
customers constitute the valuable property of NFS. This provision shall survive
termination of this Agreement.
Trusco acknowledges that the services provided for under this Agreement by NFS
or an NFS Affiliate/Subsidiary are not exclusive and that the same skill will be
used in performing services for other companies in similar contexts.
Each party shall notify the others promptly in the event that it becomes unable
for any reason to perform the services contemplated by, or any other of its
obligations under, this Agreement.
CONFIDENTIALITY
PRIVACY AND CONFIDENTIALITY OF INFORMATION
(a) Definitions. For purposes of this Section, the following definitions
apply:
1. "Customer" means an individual who seeks to obtain or obtains
a Nationwide product.
2. "Customer Information" means non-public personally
identifiable information as defined in the Xxxxx-Xxxxx-Xxxxxx
Act and the rules and regulations promulgated there under
("GLBA").
3. "Confidential Information" means any data or information
regarding proprietary or confidential information concerning
each of the parties. Confidential Information does not include
information that (a) was in the public domain prior to the
date of this Agreement or subsequently came into the public
domain through no fault of the Receiving Party or by violation
of this Agreement; (b) was lawfully received by the Receiving
Party from a third party free of any obligation of confidence
of such third party; (c) was already in the possession of the
Receiving Party prior to receipt thereof directly or
indirectly from the Disclosing Party (as hereinafter defined);
(d) is required to be disclosed pursuant to applicable laws,
regulatory or legal process, subpoena or court order; or, (e)
is subsequently and independently developed by employees,
consultants or agents of the Receiving Party without reference
to or use of the Confidential Information disclosed under this
Agreement.
(b) Each of the parties agree that they will maintain the confidentiality of
Confidential and Customer Information received from each other using
reasonable care, which shall not be less than the degree of care used for
its own Confidential and Customer Information.
(c) Each of the parties agree to comply with all laws, rules, regulations and
ordinances relating to privacy, confidentiality, security, data security
and the handling of Customer Information, which may from time to time be
established.
(d) Each of the parties agree not to disclose or use any Customer Information
in performance under this Agreement other than (i) in performance of its
obligations under this Agreement; (ii) as authorized by the Customer;
(iii) for purposes of self-evaluation; or (iv) as permitted by Law.
(e) Each of the parties warrants to the other that it shall not disclose to
any person any Confidential Information, which it may acquire in the
performance of this Agreement; nor shall it use such
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Confidential Information for any purposes other than to fulfill its
contractual obligations under this Agreement.
(f) Each party shall provide information and data back-up procedures and
information security so as to reasonably ensure that the other parties'
Confidential and Customer Information is not lost or modified.
1. Each party warrants that it will reasonably monitor, evaluate and
adjust its information security systems and procedures in response
to internal and external threats to information security, relevant
changes in technology, and changes in the sensitivity of
Confidential and Customer Information. Each party shall promptly
notify the other parties of: (i) any material unauthorized
possession, use, or knowledge, or attempt thereof, of the
data-processing files, transmission messages or other Confidential
and Customer Information by any person or entity that may become
known; (ii) the effect of such; and (iii) the corrective action
taken in response thereto.
2. During the term of this Agreement, and for one (1) year
following termination:
a. Each party will have the right to conduct a remote or on-site
audit of any of the other parties ("audited party") at the
initiating party's discretion and expense, to review the
information and data security systems and processes of other
party, at any time during regular business hours, upon no
less than five (5) business days prior notice. Such audit and
review may be performed by the initiating party, its agent,
or an independent third party bound by a Nondisclosure
Agreement no less restrictive than contained herein, and may
include reasonable testing of the systems and procedures. Any
such security tests will be scheduled by mutual agreement of
the parties. The audited party agrees to promptly grant
reasonable access to logs, policies, records, or other
materials reasonably required for the initiating party to
perform the audit, but this access will be limited to the
audited party's facilities. The initiating party will
reasonably determine the extent and methodology of the
testing subject to the approval of audited party, such
approval not to be unreasonably withheld. Further, the
audited party may make available to the initiating party the
results of any third party's or its own testing, monitoring
and auditing of such systems and procedures; provided,
however, that the audited party will not be required to make
available any such results which would breach confidentiality
obligations between the audited party and any third parties.
b. Should such an audit, test or review reveal that the audited
party's security procedures or its contemplated services do
not protect Confidential and Customer Information, and the
audited party agrees with said audit, test or review
conclusions, then the audited party will take reasonable
steps to complete and install modifications, the cost,
expense, and allocation of which will be agreed upon by the
parties, to its security systems or implement recommended
changes to its operating systems to meet the security
requirements of the initiating party, its regulators, and the
provisions of applicable law.
(g) This section shall survive and continue in full force and effect
notwithstanding the expiration or termination of the Agreement.
TRADING
Subject to the terms and conditions of this Agreement, NFS shall be appointed
to, and agrees to act, as a limited agent of the Funds for the sole purpose of
receiving instructions from authorized parties as defined by the Contracts for
the purchase and redemption of Fund shares prior to the close of regular trading
each
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Business Day. A "Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and on which the Fund calculates its net asset
value as set forth in the Fund's most recent prospectus and Statement of
Additional Information. Except as particularly stated in this paragraph, NFS
shall have no authority to act on behalf of the Funds or to incur any cost or
liability on its behalf.
Until such time as the Funds and NFS are able to utilize the National Securities
Clearing Corporation ("NSCC") Defined Contribution Clearing and Settlement
("DCC&S") Fund/SERV system; the Funds will use their best efforts to provide to
NFS, or its designated agent, closing net asset value, change in net asset
value, dividend or daily accrual rate information and capital gain information
by 7:00 p.m. Eastern Time each Business Day. NFS or its agent shall use this
data to calculate unit values. Unit values shall be used to process the same
Business Day's contract transactions. Orders derived from, and in amounts equal
to, instructions received by NFS prior to the Close of Trading on the New York
Stock Exchange on any Business Day ("Day 1") shall be transmitted without
modification (except for netting or aggregating such orders) to the Funds by
9:00 A.M. Eastern Time on the next Business Day. Such trades will be effected at
the net assets value of each Fund's shares calculated as of the Close of Trading
on Day 1. The Funds will not accept any order made on a conditional basis or
subject to any delay or contingency. NFS shall only place purchase orders for
shares of Funds on behalf of its customers whose addresses recorded on NFS'
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 the Funds.
Until such time as the Funds and NFS are able to utilize the DCC&S Fund/SERV
system, each party shall, as soon as practicable after its receipt of an
instruction or confirmation, verify its receipt of such instruction or
confirmation, and in the absence of such verification, such a party to whom an
instruction or confirmation is sent shall not be liable for any failure to act
in accordance with such instruction or confirmation, and the sending party may
not claim that such an instruction or confirmation was received by the other.
Each party shall notify the other of any errors, omissions or interruptions in,
or delay or unavailability as promptly as possible.
a) For those purchase orders not transmitted via the DCC&S Fund/SERV
system, NFS shall initiate payment to the Funds or its designated agent
in federal funds no later than 1:00 P.M. on the Business Day following
the day on which the instructions are treated as having been received
by the Funds pursuant to this Agreement.
b) For those redemption orders not transmitted via the DCC&S Fund/SERV
system, the Funds or its designated agent shall initiate payment in
federal funds no later than 1:00 P.M. on the Business Day following the
day on which the instructions are treated as having been received by
the Funds pursuant to this Agreement.
At such time as the Funds and NFS are able to transmit information via the
NSCC's DCC&S Fund/SERV System:
a) Orders derived from, and in amounts equal to, instructions received by
NFS prior to the Close of Trading on Day 1 shall be transmitted without
modification (except for netting and aggregation of such orders) via
the NSCC's DCC&S Fund/SERV system to the Funds no later than 5:00 A.M.
Eastern Time on the Next Business Day. Such trades will be effected at
the net asset value of each Fund's shares calculated as of the Close of
Trading on Day 1.
b) The Funds and NFS shall mutually agree there may be instances when
orders shall be transmitted to the Funds via facsimile no later than
9:00 A.M. rather than through the DCC&S Fund/SERV system. In such
instances, such orders shall be transmitted to the Funds via facsimile
no later than 9:00 A.M. Eastern Time on the next Business Day.
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c) With respect to purchase and redemption orders received by the Funds on
any Business Day for any Fund, within the time limits set forth in this
Agreement, settlement shall occur consistent with the requirements of
DCC&S Fund/SERV system.
At such time as the Funds and NFS are able to transmit information via the DCC&S
Fund/SERV system; the Funds or its designated agent shall send to NFS, via the
DCC&S Fund/SERV system, verification of net purchase or redemption orders or
notification of the rejection of such orders ("Confirmations ") on each Business
Day for which NFS has transmitted such orders. Such confirmations shall include
the total number of shares of each Fund held by NFS following such net purchase
or redemption. The Funds or its designated agent, shall submit in a timely
manner, such confirmations to the DCC&S Fund/SERV system in order for NFS to
receive such confirmations no later than 11:00 A.M. Eastern Time the next
Business Day. The Funds or its designated agent will transmit to NFS via DCC&S
NETWORKING system those Networking activity files reflecting account activity.
In addition, within five (5) business days after the end of each month, the
Funds or its affiliate will send NFS a statement of account which shall confirm
all transactions made during that particular month in the account.
DOCUMENTS AND OTHER MATERIALS
DOCUMENTS PROVIDED BY NFS
NFS agrees to provide the Funds upon written request, any reports indicating the
number of shareholders that hold interests in the Funds and such other
information (including books and records) that the Funds may reasonably request
or as may be necessary or advisable to enable it to comply with any law,
regulation or order.
MAINTENANCE OF RECORDS
NFS shall maintain and preserve all records as required by law to be maintained
and preserved in connection with providing the services contemplated by this
agreement and in making Fund shares available to the Contracts. Upon the request
of the Funds, NFS shall provide copies of all records relating to transactions
between the Contracts and the Funds to enable the Funds or their representatives
to comply with any request of a governmental body or self-regulatory
organization. NFS agrees that it will permit the Funds or their representatives
to have reasonable access to NFS's personnel and records in order to facilitate
the monitoring of the quality of the services to by provided under this
Agreement. NFS shall maintain or provide for redundant facilities and shall
maintain or provide for back-up files of its records maintained hereunder and
shall store such back-up files in a secure off-premises location, so that in the
event of a power failure or other interruption of whatever cause at the location
of its records, such records are maintained intact and transactions can be
processed at another location.
DOCUMENTS PROVIDED BY THE FUNDS
Within ten (10) Business Days after the end of each calendar month, the Funds
shall provide NFS, or its designee, a monthly statement of account, which shall
confirm all transactions made during that particular month.
The Funds shall promptly provide NFS, or cause NFS to be provided with, a
reasonable quantity of the Funds' prospectuses, Statements of Additional
Information and any supplements thereto.
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NOTICE
Each notice required by this Agreement shall be given in writing to:
Nationwide Financial Services, Inc. Trusco Capital Management, Inc
One Nationwide Plaza 1-09-V3 00 Xxxx Xxxxx, Xxxxx 0000
Xxxxxxxx, Xxxx 00000 Xxxxxxx, XX 00000
Attention: Securities Officer Attention: Xxxx X. Xxxxxxxxx, III
FAX NUMBER: 000-000-0000 FAX NUMBER: 000-000-0000
STI Classic Variable Trust
Attn: Xxxxxxx X. Xxxxx, Vice President SEI Investments Company
One Freedom Valley Drive Attn: General Counsel
Xxxx, XX 00000 One Freedom Valley Drive
FAX NUMBER: 000-000-0000 Xxxx, XX 00000
FAX NUMBER: 000-000-0000
Any party may change its address by notifying the other party(ies) in writing.
VOTING
For Variable Accounts that are registered under the 1940 Act and 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, NFS shall
distribute all proxy material furnished by the Funds (provided that such
material is received by NFS or its designated agent 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 interests in such Fund shares. NFS 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 the contract owners, provided that
such proportional voting is not prohibited by a contract owner's plan or trust
document, if applicable. NFS and its agents will in no way recommend an action
in connection with or oppose or interfere with the solicitation of proxies in
the Fund shares.
EXPENSES
All expenses incident to the performance by NFS under this Agreement shall be
paid by NFS. Likewise, all expenses incident to the performance by the Funds
under this Agreement shall be paid by the Funds.
NFS shall not bear any of the expenses for the cost of registration of the
Funds' shares, preparation of the Funds' prospectuses, proxy materials, and
reports and the preparation of other related statements and notices required by
law except as otherwise mutually agreed upon by the parties to the Agreement.
Should a Fund no longer be available in an NFS contract, the Funds shall be
responsible for any and all expenses incurred as a result of removing such Fund
as an available investment option under the Contract.
Should NFS desire to no longer have a Fund available in an NFS contract, NFS
shall be responsible for any and all expenses incurred as a result of removing
such Fund as an available investment option under the Contract.
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Should removal of a fund as an available investment option be mutually desired
by the parties, the parties agree to equally share any expenses incurred as a
result of removing such Fund as an available investment option.
Both NFS and the Funds agree to provide reasonable advance notice of the
election to remove a fund as an available investment option in order to permit
the parties to file documentation as may be required under applicable law.
CONFLICTS
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 Directors of the Funds, or a majority of the Funds' disinterested Directors,
that a material conflict exists caused by NFS, NFS shall at its own expense,
take whatever steps are necessary to remedy or eliminate such material conflict.
INDEMNIFICATION
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, with counsel reasonably satisfactory to the indemnified party, and
the indemnified party shall cooperate fully with the indemnifying party, at the
indemnifying party's expense, in 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 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.
INDEMNIFICATION BY NFS
NFS agrees to indemnify and hold harmless the Funds and Trusco and each of their
directors, officers, employees, agents and each person, if any, who controls the
Funds or Trusco within the meaning of the 1933 Act (collectively, "Affiliated
Party") against any losses, claims, damages or liabilities ("Losses") to which
the Funds or Trusco 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:
(1) Conduct, statements or representations (other than statements or
representations contained in the Prospectus, Informational Brochures and
sales literature and advertisements of the Funds approved by the Funds'
distributor) of NFS or its agents, with respect to the sale and
distribution of Contracts for which Fund shares are an investment option;
(2) The failure of NFS or an NFS Affiliate/Subsidiary to provide the services
and furnish the materials under the terms of this Agreement;
(3) A breach of a material term of this Agreement or of any of the
representations contained herein; or
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(4) Any failure to register the Contracts or a Variable Account that do not meet
any exemptions under federal or state securities laws, state insurance laws
or failure to otherwise comply with applicable laws, rules, regulations or
orders;
(5) Any untrue statement of any material fact contained in information furnished
by NFS; or
(6) The omission to state in the Registration Statements, Prospectuses,
Informational Brochures or other similar material of the Contracts, a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
Provided however, that NFS shall not be liable in any such case to the extent
that 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 NFS by or on behalf of the
Funds or Trusco specifically for use therein. NFS shall not be liable for any
special, consequential or incidental damages.
This indemnity agreement shall be in addition to any liability that NFS may
otherwise have.
INDEMNIFICATION BY THE FUNDS
The Funds agree to indemnify and hold harmless NFS and/or NFS
Affiliate/Subsidiary and each of its directors, officers, employees, agents and
each person, if any, who controls NFS or NFS Affiliate/Subsidiary within the
meaning of the 1933 Act (collectively, "NFS Affiliated Party") against any
Losses to which NFS, NFS Affiliate/Subsidiary or any such NFS 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:
(1) The Funds's failure to keep applicable Funds qualified as regulated
investment companies as required by the 1940 Act and applicable regulations
thereunder, and if applicable, fully diversified as is required by the Code
and applicable regulations thereunder;
(2) The failure of the Funds to provide the services and furnish the materials
under the terms of this Agreement;
(3) A breach of a material term of this Agreement or of any of the
representations contained herein;
(4) A failure to register the Funds under federal or state securities laws or
to otherwise comply with such laws, rules, regulations or orders;
(5) Any untrue statement of any material fact contained in information
furnished by the Funds, including but not limited to, the Registration
Statements, Prospectuses, or sales literature of the Funds; or
(6) The omission to state in the Registration Statements, Prospectuses,
Informational Brochures or other similar material of the Funds, a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
Provided however, that the Funds shall not be liable in any such case to the
extent that 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 the Funds by or on
behalf of NFS specifically for use therein. The Funds shall not be liable for
any special, consequential or incidental damages.
This indemnity agreement shall be in addition to any liability which the Funds
may otherwise have.
INDEMNIFICATION BY TRUSCO
Trusco agrees to indemnify and hold harmless NFS and/or NFS Affiliate/Subsidiary
and each of its directors, officers, employees, agents and each person, if any,
who controls NFS, NFS
11
Affiliate/Subsidiary within the meaning of the 1933 Act against any Losses to
which NFS, NFS Affiliate/Subsidiary or any such NFS 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:
(1) The failure of Trusco to provide the services and furnish the materials
provided for under the terms of this Agreement;
(2) A breach by Trusco of a material term of this Agreement or of any of the
representations contained herein;
(3) A failure by Trusco to register as a registered investment adviser under
federal or state securities laws or to otherwise comply with such laws,
rules, regulations or orders; or
(4) Any untrue statement of any material fact contained in information
furnished by Trusco.
Provided however, that Trusco shall not be liable in any such case to the extent
that such statement, or such alleged statement, was made in reliance upon and in
conformity with written information furnished to Trusco by or on behalf of NFS
specifically for use therein.
Trusco shall not be liable for any special, consequential or incidental damages.
This indemnity agreement shall be in addition to any liability which Trusco may
otherwise have.
SERVICE FEES
In consideration for the Services provided by NFS pursuant to this Agreement,
Trusco will pay, or cause one of its affiliates to pay, and NFS or an NFS
Affiliate/Subsidiary that is registered as a broker/dealer, will calculate and
be entitled to receive from Trusco a fee ("Service Fee"). Such fee will be
calculated by NFS at an annualized rate equal to the rates shown on Exhibit D of
the average daily net assets of each Fund for which NFS performed administrative
services during the period in which they were earned.
The Service Fees will be paid to NFS, or its designee, by electronic funds
transfer as soon as practicable, but no later than 30 days after the end of the
period in which they were earned. If the Fund assets administered by NFS are
less than $1 billion as of December 31 of the prior calendar year, the Service
Fees will be paid on a quarterly basis. Once assets are greater than $1 billion,
the Service Fees will be paid on a monthly basis. The Service Fee payment will
be accompanied or preceded by a statement showing the calculation of the amounts
being paid by Trusco for the relevant period and such other supporting data as
may be reasonably requested by NFS.
The Service Fee shall be paid by Trusco or one of its affiliates from general
operating funds.
The Service Fee shall be calculated as an annualized percentage of the average
aggregate amount invested in the Funds for the applicable period. The average
aggregate amount shall be computed by totaling the aggregate investment on each
business day during the period and dividing by the total number of Business Days
during the period.
The parties agree that a Service Fee will be paid to NFS or its designee
according to this Agreement with respect to each Fund as long as shares of such
Fund are held by an NFS Affiliate/Subsidiary on behalf of the beneficial owners
of contracts issued by an NFS Affiliate/Subsidiary. This provision will survive
the termination of this Agreement.
12
NFS and the Funds and Trusco agree that the Service Fees described in this
Agreement are for administrative and distribution services of the Funds only,
and do not constitute payment in any manner for investment advisory services for
the Fund or for costs of administrative and distribution services on behalf of
the Contracts.
Upon providing reasonable advance notice to NFS, Trusco or the Funds may review
NFS's books and records during normal business hours for the purpose of
verifying the accuracy of the amounts paid or payable by Trusco under this
Agreement.
COMPLIANCE WITH AGREEMENT
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 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.
TERMINATION
This Agreement shall terminate as to the availability of shares of the Funds for
new Contracts:
(1) at the option of NFS or the Funds upon at least 90 days advance written
notice to the other;
(2) at any time upon the Funds' election, if the Funds determine that
liquidation of the Funds is in the best interest of the Funds or their
beneficial owners. Reasonable advance notice of election to liquidate
shall be provided to NFS in order to permit the substitution of Fund
shares, if necessary, with shares of another investment company
pursuant to the 1940 Act and other applicable securities regulations;
(3) if the applicable annuity contracts and life insurance policies are not
treated as annuity contracts or life insurance policies by the
applicable regulators or under applicable rules and regulations;
(4) if the Variable Accounts are not deemed "segregated asset accounts" by
the applicable regulators or under applicable rules and regulations;
(5) at the option of NFS, if Fund shares are not available for any reason
to meet the requirements of Contracts as determined by NFS. Reasonable
advance notice of election to terminate (and time to cure) shall be
furnished by NFS;
(6) at the option of NFS, if NFS shall determine, it its sole judgment
reasonably exercised in good faith, that the Fund(s) or Trusco has
suffered a material adverse change in its business or financial
condition or is the subject of material adverse publicity, NFS shall
notify the Fund(s) and Trusco in writing of such determination and its
intent to terminate this Agreement, and after considering the actions
taken by the Fund or Trusco and any other changes in circumstances
since the giving of such notice, such determination of NFS shall
continue to apply on the sixtieth (60th) day following the giving of
such notice, which sixtieth day shall be the effective date of
termination;
(7) at the option of the Funds or Trusco, if the Funds or Trusco shall
determine, it its sole judgment reasonably exercised in good faith,
that NFS has suffered a material adverse change in its business or
financial condition or is the subject of material adverse publicity,
Funds or Trusco shall notify NFS in writing of such determination and
its intent to terminate this Agreement, and after considering the
actions taken by NFS and any other changes in circumstances since the
giving of such notice, such determination of the Fund(s) and the Funds
or Trusco shall continue to apply on the sixtieth (60th) day following
the giving of such notice, which sixtieth day shall be the effective
date of termination;
13
(8) at the option of NFS or the Funds or Trusco, upon institution of
relevant formal proceedings against the broker-dealer(s) marketing the
Contracts, the Variable Accounts, NFS, an NFS Affiliate/Subsidiary or
the Funds by the NASD, the IRS, the Department of Labor, the SEC, state
insurance departments or any other regulatory body;
(9) upon a decision by NFS, in accordance with the 1940 Act and applicable
regulations, 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. NFS shall give
at least 60 days written notice to the Funds of any proposal to
substitute Fund shares;
(10) upon assignment of this Agreement unless such assignment is made with
the written consent of each party;
(11) in the event Fund shares are not registered, issued or sold pursuant to
federal law and state securities laws, or such laws preclude the use of
Fund shares as an underlying investment medium of Contracts issued or
to be issued by an NFS Affiliate/Subsidiary. Prompt written notice
shall be given by either party to the other in the event the conditions
of this provision occur; and
(12) by Trusco if it no longer acts as investment adviser to the Funds.
JURISDICTION
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.
LIMITATION OF LIABILITY
A copy of the Funds' Declaration of Trust is on file with the Secretary of State
of the Commonwealth of Massachusetts and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Funds as trustees and
not individually, and that all obligations of this instrument are not binding
upon any of the trustees, officers or shareholders of any of the Funds, or the
Trust individually, but binding only upon the assets and the property of the
Funds, or the Trust.
PARTNERSHIPS/JOINT VENTURES
Nothing in this Agreement shall be deemed to create a partnership or joint
venture by and among the parties hereto.
AMENDMENTS TO THIS AGREEMENT
This Agreement supersedes any and all prior Agreements made by and between the
parties. This Agreement may not be amended or modified except by a written
amendment, which includes any amendments to the Exhibits, executed by all
parties to the Agreement.
SURVIVAL
The representations, indemnification, service fees and confidentiality
obligations under this Agreement shall survive its termination.
SECTION HEADINGS
The section headings in this Agreement are for reference and convenience only
and will not be construed to limit or otherwise affect the meaning of this
Agreement.
14
EXECUTION
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 a legal,
valid and binding obligation, and is enforceable 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 damages,
loss of data, delay or any other loss whatsoever caused by events beyond its
control.
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 FINANCIAL SERVICES, INC.
/S/ XXXXXXX X. XXXXXX
-------------------------------------------------
By: Xxxxxxx X. Xxxxxx
Title: Vice President
Investment Management Relationships
STI CLASSIC VARIABLE TRUST
/S/ XXXXXXX X. XXXXX
-------------------------------------------------
By: Xxxxxxx X. Xxxxx
Title: Vice President
TRUSCO CAPITAL MANAGEMENT, INC.
/S/ XXXXXXX XXXXXXXXX
-------------------------------------------------
By: Xxxxxxx Xxxxxxxxx
Title: Managing Director
15
EXHIBIT A
This Exhibit corresponds to the Fund Agreement dated March 13, 2003.
REGISTERED BROKER DEALERS
Nationwide Investment Services Corporation
AFFILIATES AND SUBSIDIARIES
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
Nationwide Life Insurance Company of America
Nationwide Life and Annuity Company of America
VARIABLE ACCOUNTS
Nationwide Variable Account
Nationwide Variable Account-II
Nationwide Variable Account-3
Nationwide Variable Account-4
Nationwide Variable Account-5
Nationwide Variable Account-6
Nationwide Variable Account -7
Nationwide Variable Account-8
Nationwide Variable Account-9
Nationwide Variable Account-10
Nationwide Variable Account-11
Nationwide Variable Account -12
Nationwide Variable Account-13
Multi-Flex Variable Account
Nationwide VA Separate Account-A
Nationwide VA Separate Account-B
Nationwide VA Separate Account-C
Nationwide VA Separate Account-D
Nationwide VLI Separate Account
Nationwide VLI Separate Account-2
Nationwide VLI Separate Account-3
Nationwide VLI Separate Account-4
Nationwide VLI Separate Account-5
Nationwide VLI Separate Account-6
Nationwide VL Separate Account
Nationwide VL Separate Account-A
Nationwide VL Separate Account-B
Nationwide VL Separate Account-C
Nationwide VL Separate Account-D
Nationwide Provident VA Separate Account-1
Nationwide Provident VA Separate Account-A
Nationwide Provident VLI Separate Account-1
Nationwide Provident VLI Separate Account-A
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EXHIBIT B
This Exhibit corresponds to the Fund Agreement dated March 13, 2003.
FUNDS
STI CLASSIC VARIABLE TRUST CAPITAL APPRECIATION
STI CLASSIC VARIABLE TRUST GROWTH AND INCOME
STI CLASSIC VARIABLE TRUST INTERNATIONAL EQUITY
STI CLASSIC VARIABLE TRUST INTERNATIONAL GRADE BOND
STI CLASSIC VARIABLE TRUST MID-CAP EQUITY
STI CLASSIC VARIABLE TRUST SMALL CAP VALUE EQUITY
STI CLASSIC VARIABLE TRUST VALUE INCOME STOCK
17
EXHIBIT C
Services Provided by NFS
Pursuant to the Agreement, NFS shall perform all administrative and shareholder
services with respect to the Contracts and Plans, including but not limited to,
the following:
1. Maintaining separate records for each Contract owner and each Plan, which
shall reflect the Fund shares purchased and redeemed and Fund share
balances of such Contract owners and Plans. Nationwide will maintain
accounts with each Fund on behalf of Contract owners and Plans, and such
account shall be in the name of Nationwide (or its nominee) as the record
owner of shares owned by such Contract owners and Plans.
2. Disbursing or crediting to Contract owners and Plans all proceeds of
redemptions of shares of the Funds and all dividends and other
distributions not reinvested in shares of the Funds.
3. Preparing and transmitting to Contract owners and Plans, as required by
law, periodic statements showing the total number of shares owned as of the
statement closing date, purchases and redemptions of Fund shares during the
period covered by the statement and the dividends and other distributions
paid during the statement period (whether paid in cash or reinvested in
Fund shares), and such other information as may be required, from time to
time, by Contract owners and Plans.
4. Supporting and responding to service inquires from Contract owners and
Plans.
5. Maintaining and preserving all records required by law to be maintained and
preserved in connection with providing the Services for Contract owners and
Plans.
6. Generating written confirmations and quarterly statements to Contract
owners and Plan participants.
7. Distributing to Contract owners and Plans, to the extent required by
applicable law, Funds' prospectuses, proxy materials, periodic fund reports
to shareholders and other materials that the Funds are required by law or
otherwise to provide to their shareholders or prospective shareholders.
8. Transmitting purchase and redemption orders to the Funds on behalf of the
Contract owners and Plans. 9. Being responsible for any third party record
keepers used by NFS.
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EXHIBIT D
TO FUND AGREEMENT
This Exhibit corresponds with the Fund Agreement dated March 13, 2003.
------------------------------------------------------------------------------------- ----------------------------------------------
BASIS POINTS PER ANNUM
------------------------------------------------------------------------------------- ----------------------------------------------
o STI Classic Variable Capital Appreciation - Variable Trust (25 Bps) Funds available for NFS (including any
o STI Classic Variable Growth and Income - Variable Trust (25 Bps) affiliates and/or subsidiaries)
o STI Classic Variable International Equity - Variable Trust (25 Bps)
o STI Classic Variable International Grade Bond - Variable Trust (25 Bps)
o STI Classic Variable Mid-Cap Equity - Variable Trust (25 Bps)
o STI Classic Variable Small Cap Value Equity - Variable Trust (25 Bps)
o STI Classic Variable Value Income Stock - Variable Trust (25 Bps)
------------------------------------------------------------------------------------- ----------------------------------------------
------------------------------------------------------------------------------------- ----------------------------------------------
19
