Amended and Restated Participation Agreement as of May 1, 2003 Franklin Templeton Variable Insurance Products Trust Franklin/Templeton Distributors, Inc. Nationwide Life Insurance Company Nationwide Life and Annuity Insurance Company Nationwide...
Amended
and Restated Participation Agreement
as
of May
1, 2003
Franklin
Xxxxxxxxx Variable Insurance Products Trust
Franklin/Xxxxxxxxx
Distributors, Inc.
Nationwide
Life Insurance Company
Nationwide
Life and Annuity Insurance Company
Nationwide
Investment Services Corporation
Nationwide
Life Insurance Company of America
Nationwide
Life and Annuity Company of America
1717
Capital Management Company
CONTENTS
Section Subject
Matter
1. Parties
and Purpose
2. Representations
and Warranties
3. Purchase
and Redemption of Trust Portfolio Shares
4. Fees,
Expenses, Prospectuses, Proxy Materials and Reports
5. Voting
6. Sales
Material, Information and Trademarks
7. Indemnification
8. Notices
9. Termination
10. Miscellaneous
Schedules
to this Agreement
A. The
Company
B. Accounts
of the Company
C. Available
Portfolios and Classes of Shares of the Trust; Investment Advisers
D. Contracts
of the Company
E. [this
schedule is not used]
F. Rule
12b-1 Plans of the Trust
G. Addresses
for Notices
H. Shared
Funding Order
1. Parties
and Purpose
THIS
AMENDED AND RESTATED PARTICIPATION AGREEMENT (the "Agreement") supercedes and
replaces the Participation Agreement, dated as of May 1, 2000, together with
all
subsequent amendments ("Prior Agreement"), by and between certain portfolios
and
classes of Franklin Xxxxxxxxx Variable Insurance Products Trust specified in
Schedule C of the Prior Agreement, Franklin/Xxxxxxxxx Distributors, Inc. and
the
insurance companies identified in Schedule A of the Prior Agreement on their
own
behalf and behalf of each segregated asset account listed in Schedule B of
the
Prior Agreement. This Agreement is entered by and between certain
portfolios and classes thereof, specified below and in Schedule C, of
Franklin Xxxxxxxxx Variable Insurance Products Trust, an open-end management
investment company organized as a business trust under Massachusetts law (the
“Trust”), Franklin/Xxxxxxxxx Distributors, Inc., a California corporation which
is the principal underwriter for the Trust (the “Underwriter,” and together with
the Trust, “we” or “us”) and the insurance company identified on Schedule A
(“you”) and your distributor, on your own behalf and on behalf of each separate
account maintained by you that is listed on Schedule B, as that schedule
may be amended from time to time (“Account” or “Accounts”).
The
purpose of this Agreement is to entitle you, on behalf of the Accounts, to
purchase the shares, and classes of shares, of portfolios of the Trust
(“Portfolios”) that are identified on Schedule C, consistent with the terms
of the prospectuses of the Portfolios, solely for the purpose of funding
benefits of your variable life insurance policies or variable annuity contracts
(“Contracts”) that are identified on Schedule D. This Agreement
does not authorize any other purchases or redemptions of shares of the
Trust.
2. Representations
and Warranties
2.1 Representations
and Warranties by You
You
represent and warrant that:
2.1.1 You
are an insurance company duly organized and in good standing under the laws
of
your state of incorporation.
2.1.2 All
of your directors, officers, employees, and other individuals or entities
dealing with the money and/or securities of the Trust are and shall be at all
times covered by a blanket fidelity bond or similar coverage for the benefit
of
the Trust, in an amount not less than $5 million. Such bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company. You agree to make all reasonable efforts to see that
this bond or another bond containing such provisions is always in effect, and
you agree to notify us in the event that such coverage no longer
applies.
2.1.3 Each
Account is a duly organized, validly existing separate account under applicable
insurance law and interests in each Account are offered exclusively through
the
purchase of or transfer into a "variable contract" within the meaning of such
terms under Section 817 of the Internal Revenue Code of 1986, as amended
(“Code”) and the regulations thereunder. You will use your best
efforts to continue to meet such definitional requirements, and will notify
us
immediately upon having a reasonable basis for believing that such requirements
have ceased to be met or that they might not be met in the future.
2.1.4 Each
Account either: (i) has been registered or, prior to any issuance or sale of
the
Contracts, will be registered as a unit investment trust under the Investment
Company Act of 1940 (“1940 Act”); or (ii) has not been so registered in
proper reliance upon an exemption from registration under Section 3(c) of
the 1940 Act; if the Account is exempt from registration as an investment
company under Section 3(c) of the 1940 Act, you will use your best
efforts to maintain such exemption and will notify us immediately upon having
a
reasonable basis for believing that such exemption no longer applies or might
not apply in the future.
2.1.5 The
Contracts or interests in the Accounts: (i) are or, prior to any issuance or
sale will be, registered as securities under the Securities Act of 1933, as
amended (the “1933 Act”); or (ii) are not registered because they are
properly exempt from registration under Section 3(a)(2) of the
1933 Act or will be offered exclusively in transactions that are properly
exempt from registration under Section 4(2) or Regulation D of the
1933 Act, in which case you will make every effort to maintain such
exemption and will notify us immediately upon having a reasonable basis for
believing that such exemption no longer applies or might not apply in the
future.
2.1.6 The
Contracts: (i) will be sold by broker-dealers, or their registered
representatives, who are registered with the Securities and Exchange Commission
(“SEC”) under the Securities and Exchange Act of 1934, as amended (the
“1934 Act”) and who are members in good standing of the National Association of
Securities Dealers, Inc. (the “NASD”); (ii) will be issued in
compliance in all material respects with all applicable federal and state
laws. You agree that in your agreements with broker-dealers who sell
the Contracts, you require that the broker-dealers, in recommending to a
Contract owner the purchase, sale or exchange of any subaccount units under
the
Contracts, shall have reasonable grounds for believing that the recommendation
is suitable for such Contract owner.
2.1.7 The
Contracts currently are and will be treated as annuity contracts or life
insurance contracts under applicable provisions of the Code and you will use
your best efforts to maintain such treatment; you will notify us immediately
upon having a reasonable basis for believing that any of the Contracts have
ceased to be so treated or that they might not be so treated in the
future.
2.1.8 The
fees and charges deducted under each Contract, in the aggregate, are reasonable
in relation to the services rendered, the expenses expected to be incurred,
and
the risks assumed by you.
2.1.9 You
will use shares of the Trust only for the purpose of funding benefits of the
Contracts through the Accounts.
2.1.10 Contracts
will not be sold outside of the United States.
2.1.11 With
respect to any Accounts which are exempt from registration under the 1940 Act
in
reliance on 3(c)(1) or Section 3(c)(7) thereof:
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2.1.11.1
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the
principal underwriter for each such Account and any subaccounts thereof
is
a registered broker-dealer with the SEC under the 1934 Act;
and
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2.1.11.2
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the
shares of the Portfolios of the Trust are and will continue to be
the only
investment securities held by the corresponding
subaccounts.
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2.1.12 As
covered financial institutions we, only with respect to Portfolio shareholders,
and you each undertake and agree to comply, and to take full responsibility
in
complying with any and all applicable laws, regulations, protocols and other
requirements relating to money laundering including, without limitation, the
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001 (Title III of the USA PATRIOT Act).
2.2 Representations
and Warranties by the Trust
The
Trust
represents and warrants that:
2.2.1 It
is duly organized and in good standing under the laws of the State of
Massachusetts.
2.2.2 All
of its directors, officers, employees and others dealing with the money and/or
securities of a Portfolio are and shall be at all times covered by a blanket
fidelity bond or similar coverage for the benefit of the Trust in an amount
not
less than the minimum coverage required by Rule 17g-1 or other regulations
under
the 1940 Act. Such bond shall include coverage for larceny and
embezzlement and be issued by a reputable bonding company.
2.2.3 It
is registered as an open-end management investment company under the
0000 Xxx.
2.2.4 Each
class of shares of the Portfolios of the Trust is registered under the
0000 Xxx.
2.2.5 It
will amend its registration statement under the 1933 Act and the
1940 Act from time to time as required in order to effect the continuous
offering of its shares.
2.2.6 It
will comply, in all material respects, with the 1933 and 1940 Acts and
the rules and regulations thereunder.
2.2.7 It
is currently qualified as a “regulated investment company” under Subchapter M of
the Code, it will make every effort to maintain such qualification, and will
notify you immediately upon having a reasonable basis for believing that it
has
ceased to so qualify or that it might not so qualify in the future.
2.2.8 The
Trust will use its best efforts to comply with the diversification requirements
for variable annuity, endowment or life insurance contracts set forth in
Section 817(h) of the Code, and the rules and regulations thereunder,
including without limitation Treasury Regulation 1.817-5. Upon having
a reasonable basis for believing any Portfolio has ceased to comply and will
not
be able to comply within the grace period afforded by Regulation 1.817-5, the
Trust will notify you immediately and will take all reasonable steps to
adequately diversify the Portfolio to achieve compliance.
2.2.9 It
currently intends for one or more classes of shares (each, a “Class”) to make
payments to finance its distribution expenses, including service fees, pursuant
to a plan (“Plan”) adopted under rule 12b-1 under the 1940 Act (“Rule
12b-1”), although it may determine to discontinue such practice in the
future. To the extent that any Class of the Trust finances its
distribution expenses pursuant to a Plan adopted under rule 12b-1, the Trust
undertakes to comply with any then current SEC interpretations concerning
rule 12b-1 or any successor provisions.
2.3 Representations
and Warranties by the Underwriter
The
Underwriter represents and warrants that:
2.3.1 It
is registered as a broker dealer with the SEC under the 1934 Act, and is a
member in good standing of the NASD.
2.3.2 Each
investment adviser listed on Schedule C (each, an “Adviser”) is duly
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended, and any applicable state securities law.
2.4 Warranty
and Agreement by Both You and Us
We
received an order from the SEC dated November 16, 1993 (file no. 812-8546),
which was amended by a notice and an order we received on September 17, 1999
and
October 13, 1999, respectively (file no. 812-11698) (collectively, the
“Shared Funding Order,” attached to this Agreement as
Schedule H). The Shared Funding Order grants exemptions from
certain provisions of the 1940 Act and the regulations thereunder to the
extent necessary to permit shares of the Trust to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies and qualified pension
and
retirement plans outside the separate account context. You and we
both warrant and agree that both you and we will comply with the “Applicants’
Conditions” prescribed in the Shared Funding Order as though such conditions
were set forth verbatim in this Agreement, including, without limitation, the
provisions regarding potential conflicts of interest between the separate
accounts which invest in the Trust and regarding contract owner voting
privileges. In order for the Trust’s Board of Trustees to perform its
duty to monitor for conflicts of interest, you agree to inform us of the
occurrence of any of the events specified in condition 2 of the Shared
Funding Order to the extent that such event may or does result in a material
conflict of interest as defined in that order.
3. Purchase
and Redemption of Trust Portfolio Shares
3.1 Availability
of Trust Portfolio Shares
3.1.1 We
will make shares of the Portfolios available to the Accounts for the benefit
of
the Contracts. The shares will be available for purchase at the net
asset value per share next computed after we (or our agent, or you as our
designee) receive a purchase order, as established in accordance
with
the provisions of the then current prospectus of the
Trust. All
orders are
subject to acceptance by us and by the Portfolio or its transfer agent, and
become effective only upon confirmation by us. Notwithstanding
the foregoing, the Trust’s Board of Trustees (“Trustees”) may refuse to sell
shares of any Portfolio to any person, or may suspend or terminate the offering
of shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or if, in the sole discretion of the Trustees,
they deem such action to be in the best interests of the shareholders of such
Portfolio.
3.1.2 Without
limiting the other provisions of this Section 3.1, among other delegations
by
the Trustees, the Trustees have determined that there is a significant risk
that
the Trust and its shareholders may be adversely affected by investors with
short
term trading activity and/or whose purchase and redemption activity follows
a
market timing pattern as defined in the prospectus for the Trust, and have
authorized the Trust, the Underwriter and the Trust’s transfer agent to adopt
procedures and take other action (including, without limitation, rejecting
specific purchase orders in whole or in part) as they deem necessary to reduce,
discourage, restrict or eliminate such trading and/or market timing
activity. You agree that your purchases and redemptions of Portfolio
shares are subject to, and that you will assist us in implementing, the Market
Timing Trading Policy and Additional Policies (as described in the Trust’s
prospectus) and the Trust’s restrictions on excessive and/or short term trading
activity and/or purchase and redemption activity that follows a market timing
pattern. We further agree that our Market Timing Trading Policy, as
disclosed in the Portfolio’s prospectuses, will apply to all shareholders of the
Portfolios, unless otherwise disclosed in the Portfolios’
prospectuses.
We
acknowledge that the rejection of purchase orders imposes significant risk
to
you and acknowledge that you have adopted market-timing policies (as described
in the variable product prospectuses) and we will only need to reject such
purchase orders if your market timing policies failed to stop the market timing
activity.
3.1.3 We
agree that shares of the Trust will be sold only to life insurance companies
which have entered into fund participation agreements with the Trust
(“Participating Insurance Companies”) and their separate accounts or to
qualified pension and retirement plans in accordance with the terms of the
Shared Funding Order. No shares of any Portfolio will be sold to the
general public.
3.2 Manual
or Automated Portfolio Share Transactions
3.2.1 Section
3.3 of this Agreement shall govern and Section 3.4 shall not be operative,
unless we receive from you at the address provided in the next sentence, written
notice that you wish to communicate, process and settle purchase and redemptions
for shares (collectively, “share transactions”) via the Fund/SERV and Networking
systems of the National Securities Clearing Corporation (“NSCC”). The
address for you to send such written notice shall be: Retirement
Services, Franklin Xxxxxxxxx Investments, 000 Xxxx Xxxxx, 0xx Xxxxx,
Xxx Xxxxx,
Xxxxxxxxxx 00000-0000. After giving ten (10) days’ advance written
notice at the address provided in the previous sentence of your desire to use
NSCC processing, Section 3.4 of this Agreement shall govern and Section 3.3
shall not be operative.
3.2.2 At
any time when, pursuant to the preceding paragraph, Section 3.4 of this
Agreement governs, any party to this Agreement may send written notice to the
other parties that it chooses to end the use of the NSCC Fund/SERV and
Networking systems and return to manual handling of share
transactions. Such written notice shall be
sent: (i) if from you to us, to the address provided in the
preceding paragraph; (ii) if from us to you, to your address in
Schedule G of this Agreement. After giving ten (10) days’
advance written notice at the address as provided in the previous sentence,
Section 3.3 of this Agreement shall govern and Section 3.4 shall not be
operative.
3.3 Manual
Purchase and Redemption
3.3.1 You
are hereby appointed as our designee for the sole purpose of receiving from
Contract owners purchase and exchange orders and requests for redemption
resulting from investment in and payments under the Contracts that pertain
to
subaccounts that invest in Portfolios (“Instructions”). “Business Day”
shall mean any day on which the New York Stock Exchange is open for trading
and
on which the Trust calculates its net asset value pursuant to the rules of
the
SEC and its current prospectus. “Close of Trading” shall mean the close of
trading on the New York Stock Exchange, generally 4:00 p.m. Eastern Time.
You represent and warrant that all Instructions transmitted to us for processing
on or as of a given Business Day (“Day 1”) shall have been received in
proper form and time stamped by you prior to the Close of Trading on
Day 1. Such Instructions shall receive the share price next
calculated following the Close of Trading on Day 1, provided that we
receive such Instructions from you before 9 a.m. Eastern Time on the next
Business Day (“Day 2”). You represent and warrant that
Instructions received in proper form and time stamped by you after the Close
of
Trading on Day 1 shall be treated by you and transmitted to us as if received
on
Day 2. Such Instructions shall receive the share price next
calculated following the Close of Trading on Day 2. You
represent and warrant that you have, maintain and periodically test, procedures
and systems in place reasonably designed to prevent Instructions received after
the Close of Trading on Day 1 from being executed with Instructions
received before the Close of Trading on Day 1. All Instructions
we receive from you after 9 a.m. Eastern Time on Day 2 shall be processed
by us on the following Business Day and shall receive the share price next
calculated following the Close of Trading on Day 2.
3.3.2 We
shall calculate the net asset value per share of each Portfolio on each Business
Day, and shall communicate these net asset values to you or your designated
agent on a daily basis as soon as reasonably practical after the calculation
is
completed (normally by 6:30 p.m. Eastern Time).
3.3.3 You
shall submit payment for the purchase of shares of a Portfolio on behalf of
an
Account in federal funds transmitted by wire to the Trust or to its designated
custodian, which must receive such wires no later than the close of the Reserve
Bank, which is 6:00 p.m. Eastern Time, on the Business Day following the
Business Day as of which such purchases orders are made.
3.3.4 We
will redeem any full or fractional shares of any Portfolio, when requested
by
you on behalf of an Account, at the net asset value next computed after receipt
by us (or our agent or you as our designee) of the request for redemption,
as
established in accordance with the provisions of the then current prospectus
of
the Trust. We shall make payment for such shares in the manner we
establish from time to time, but in no event shall payment be delayed for a
greater period than is permitted by the 0000 Xxx.
3.3.5 Issuance
and transfer of the Portfolio shares will be by book entry
only. Stock certificates will not be issued to you or the
Accounts. Portfolio shares purchased from the Trust will be recorded
in the appropriate title for each Account or the appropriate subaccount of
each
Account.
3.3.6 We
shall furnish, on or before the ex-dividend date, notice to you of any income
dividends or capital gain distributions payable on the shares of any
Portfolio. You hereby elect to receive all such income dividends and
capital gain distributions as are payable on shares of a Portfolio in additional
shares of that Portfolio, and you reserve the right to change this election
in
the future. We will notify you of the number of shares so issued as
payment of such dividends and distributions.
3.3.7 Each
party to this Agreement agrees that, in the event of a material error resulting
from incorrect information or confirmations, the parties will seek to comply
in
all material respects with the provisions of applicable federal securities
laws.
3.4 Automated
Purchase and Redemption
3.4.1 “Fund/SERV”
shall mean NSCC's Mutual Fund Settlement, Entry and Registration Verification
System, a system for automated, centralized processing of mutual fund purchase
and redemption orders, settlement, and account registration; “Networking” shall
mean NSCC's system that allows mutual funds and life insurance companies to
exchange account level information electronically; and “Settling Bank” shall
mean the entity appointed by the Trust or you, as applicable, to perform such
settlement services on behalf of the Trust and you, as applicable, which entity
agrees to abide by NSCC's then current rules and procedures insofar as they
relate to same day funds settlement. In all cases, processing and
settlement of share transactions shall be done in a manner consistent with
applicable law.
3.4.2 You
are hereby appointed as our designee for the sole purpose of receiving from
Contract owners purchase and exchange orders and requests for redemption
resulting from investment in and payments under the Contracts that pertain
to
subaccounts that invest in Portfolios ("Instructions"). "Business
Day" shall mean any day on which the New York Stock Exchange is open for trading
and on which the Trust calculates its net asset value pursuant to the rules
of
the SEC and its current prospectus. "Close of Trading" shall mean the
close of trading on the New York Stock Exchange, generally 4:00 p.m. Eastern
Time. Upon receipt of Instructions, and upon your determination that
there are good funds with respect to Instructions involving the purchase of
shares, you will calculate the net purchase or redemption order for each
Portfolio.
3.4.3 On
each Business Day, you shall aggregate all purchase and redemption orders for
shares of a Portfolio that you received prior to the Close of Trading. You
represent and warrant that all orders for net purchases or net redemptions
derived from Instructions received by you and transmitted to Fund/SERV for
processing on or as of a given Business Day (“Day 1”) shall have been received
in proper form and time stamped by you prior to the Close of Trading on Day
1. Such orders shall receive the share price next calculated
following the Close of Trading on Day 1, provided that we receive Instructions
from Fund/SERV by 6:30 a.m. Eastern Time on the next Business Day (“Day
2”). You represent and warrant that orders received in good order and
time stamped by you after the Close of Trading on Day 1 shall be treated by
you
and transmitted to Fund/SERV as if received on Day 2. Such
orders shall receive the share price next calculated following the Close of
Trading on Day 2. All Instructions we receive from Fund/SERV after
6:30 a.m. Eastern Time on Day 2 shall be processed by us on the following
Business Day and shall receive the share price next calculated following the
close of trading on Day 2. You represent and warrant that you
have, maintain and periodically test, procedures and systems in place
reasonably designed to prevent orders received after the Close of Trading on
Day
1 from being executed with orders received before the Close of Trading on Day
1,
and periodically monitor the systems to determine their
effectiveness. Subject to your compliance with the foregoing, you
will be considered the designee of the Underwriter and the Portfolios, and
the
Business Day on which Instructions are received by you in proper form prior
to
the Close of Trading will be the date as of which shares of the Portfolios
are
deemed purchased, exchanged or redeemed pursuant to such
Instructions. Dividends and capital gain distributions will be
automatically reinvested at net asset value in accordance with the Portfolio's
then current prospectus.
3.4.4 We
shall calculate the net asset value per share of each Portfolio on each Business
Day, and shall furnish to you through NSCC's Networking or Mutual Fund Profile
System: (i) the most current net asset value information for each Portfolio;
and
(ii) in the case of fixed income funds that declare daily dividends, the daily
accrual or the interest rate factor. All such information shall be
furnished to you by 6:30 p.m. Eastern Time on each Business Day or at such
other
time as that information becomes available.
3.4.5 You
will wire payment for net purchase orders by the Trust's NSCC Firm Number,
in
immediately available funds, to an NSCC settling bank account designated by
you
in accordance with NSCC rules and procedures on the same Business Day such
purchase orders are communicated to NSCC. For purchases of shares of
daily dividend accrual funds, those shares will not begin to accrue dividends
until the day the payment for those shares is received.
3.4.6 We
will redeem any full or fractional shares of any Portfolio, when requested
by
you on behalf of an Account, at the net asset value next computed after receipt
by us (or our agent or you as our designee) of the request for redemption,
as
established in accordance with the provisions of the then current prospectus
of
the Trust. NSCC will wire payment for net redemption orders by the
Trust, in immediately available funds, to an NSCC settling bank account
designated by you in accordance with NSCC rules and procedures on the Business
Day such redemption orders are communicated to NSCC, except as provided in
the
Trust's prospectus and statement of additional information.
3.4.7 Issuance
and transfer of the Portfolio shares will be by book entry
only. Stock certificates will not be issued to you or the
Accounts. Portfolio shares purchased from the Trust will be recorded
in the appropriate title for each Account or the appropriate subaccount of
each
Account.
3.4.8 We
shall furnish through NSCC's Networking or Mutual Fund Profile System on or
before the ex-dividend date, notice to you of any income dividends or capital
gain distributions payable on the shares of any Portfolio. You hereby
elect to receive all such income dividends and capital gain distributions as
are
payable on shares of a Portfolio in additional shares of that Portfolio, and
you
reserve the right to change this election in the future. We will
notify you of the number of shares so issued as payment of such dividends and
distributions.
3.4.9 All
orders are subject to acceptance by Underwriter and become effective only upon
confirmation by Underwriter. Underwriter reserves the right:
(i) not to accept any specific order or part of any order for the purchase
or exchange of shares through Fund/SERV; and (ii) to require any redemption
order or any part of any redemption order to be settled outside of Fund/SERV,
in
which case the order or portion thereof shall not be “confirmed” by Underwriter,
but rather shall be accepted for redemption in accordance with
Section 3.4.11 below.
3.4.10 All
trades placed through Fund/SERV and confirmed by Underwriter via Fund/SERV
shall
settle in accordance with Underwriter's profile within Fund/SERV applicable
to
you. Underwriter agrees to provide you with account positions and
activity data relating to share transactions via Networking.
3.4.11 If
on any specific day you or Underwriter are unable to meet the NSCC deadline
for
the transmission of purchase or redemption orders for that day, a party may
at
its option transmit such orders and make such payments for purchases and
redemptions directly to you or us, as applicable, as is otherwise provided
in
the Agreement; provided, however, that we must receive written notification
from
you by 9:00 a.m. Eastern Time on any day that you wish to transmit such orders
and/or make such payments directly to us.
3.4.12 n
the event that you or we are unable to or prohibited from electronically
communicating, processing or settling share transactions via Fund/SERV, you
or
we shall notify the other, including providing the notification provided above
in Section 3.4.11. After all parties have been notified, you and
we shall submit orders using manual transmissions as are otherwise provided
in
the Agreement.
3.4.13 These
procedures are subject to any additional terms in each Portfolio's prospectus
and the requirements of applicable law. The Trust’s Board of Trustees
may refuse to sell shares of any Portfolio to any person, or may suspend or
terminate the offering of shares of any Portfolio if such action is required
by
law or by regulatory authorities having jurisdiction, or if in the sole
discretion of the Trustees, the deem such action to be in the best interests
of
the shareholders of such Portfolio.
3.4.14 Each
party to the Agreement agrees that, in the event of a material error resulting
from incorrect information or confirmations, the parties will seek to comply
in
all material respects with the provisions of applicable federal securities
laws.
3.4.15 You
and Underwriter represent and warrant that each: (a) has entered into
an agreement with NSCC; (b) has met and will continue to meet all of the
requirements to participate in Fund/SERV and Networking; (c) intends to remain
at all times in compliance with the then current rules and procedures of NSCC,
all to the extent necessary or appropriate to facilitate such communications,
processing, and settlement of share transactions; and (d) will notify the other
parties to this Agreement if there is a change in or a pending failure with
respect to its agreement with NSCC.
4. Fees,
Expenses, Prospectuses, Proxy Materials and Reports
4.1 We
shall pay no fee or other compensation to you under this Agreement except as
provided on Schedule F, if attached.
4.2 We
shall prepare and be responsible for filing with the SEC, and any state
regulators requiring such filing, all shareholder reports, notices, proxy
materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of the
Trust. We shall bear the costs of preparation and filing of the
documents listed in the preceding sentence, registration and qualification
of
the Trust’s shares of the Portfolios.
4.3 We
shall use reasonable efforts to provide you, on a timely basis, with such
information about the Trust, the Portfolios and each Adviser, in such form
as
you may reasonably require, as you shall reasonably request in connection with
the preparation of disclosure documents and annual and semi-annual reports
pertaining to the Contracts.
4.4 At
your option, we shall provide you, at our expense, with either: (i) for
each Contract owner who is invested through the Account in a subaccount
corresponding to a Portfolio (“designated subaccount”), one copy of each of the
following documents on each occasion that such document is required by law
or
regulation to be delivered to such Contract owner who is invested in a
designated subaccount: the Trust’s current prospectus, annual report,
semi-annual report and other shareholder communications, including any
amendments or supplements to any of the foregoing, pertaining specifically
to
the Portfolios (“Designated Portfolio Documents”); or (ii) a camera ready copy
of such Designated Portfolio Documents in a form suitable for printing and
from
which information relating to series of the Trust other than the Portfolios
has
been deleted to the extent practicable. In connection with
clause (ii) of this paragraph, we will pay for proportional printing costs
for such Designated Portfolio Documents in order to provide one copy for each
Contract owner who is invested in a designated subaccount on each occasion
that
such document is required by law or regulation to be delivered to such Contract
owner, and provided the appropriate documentation is provided and approved
by
us. We shall provide you with a copy of the Trust’s current statement of
additional information, including any amendments or supplements, in a form
suitable for you to duplicate. The expenses of furnishing, including
mailing, to Contract owners the documents referred to in this paragraph shall
be
borne by you. For each of the documents provided to you in accordance
with clause (i) of this paragraph 4.4, we shall provide you, upon your
request and at your expense, additional copies. In no event shall we be
responsible for the costs of printing or delivery of Designated Portfolio
Documents to potential or new Contract owners or the delivery of Designated
Portfolio Documents to existing contract owners.
4.5 We
shall provide you, at our expense, with copies of any Trust-sponsored proxy
materials in such quantity as you shall reasonably require for distribution
to
Contract owners who are invested in a designated subaccount. You
shall bear the costs of distributing proxy materials (or similar materials
such
as voting solicitation instructions) to Contract owners.
4.6 You
assume sole responsibility for ensuring that the Trust’s prospectuses,
shareholder reports and communications, and proxy materials are delivered to
Contract owners in accordance with applicable federal and state securities
laws.
5. Voting
5.1 All
Participating Insurance Companies shall have the obligations and
responsibilities regarding pass-through voting and conflicts of interest
corresponding to those contained in the Shared Funding Order.
5.2
If and to the extent required by law, you shall: (i) solicit voting
instructions from Contract owners; (ii) vote the Trust shares in accordance
with the instructions received from Contract owners; and (iii) vote Trust
shares for which no instructions have been received in the same proportion
as
Trust shares of such Portfolio for which instructions have been received; 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. You reserve the right to vote Trust shares held in any
Account in your own right, to the extent permitted by law.
5.3 So
long as, and to the extent that, the SEC interprets the 1940 Act to require
pass-through voting privileges for Contract owners, you shall provide
pass-through voting privileges to Contract owners whose Contract values are
invested, through the Accounts, in shares of one or more Portfolios of the
Trust. We shall require all Participating Insurance Companies to
calculate voting privileges in the same manner and you shall be responsible
for
assuring that the Accounts calculate voting privileges in the manner established
by us. With respect to each Account, you will vote shares of each
Portfolio of the Trust held by an Account and for which no timely voting
instructions from Contract owners are received in the same proportion as those
shares held by that Account for which voting instructions are
received. You and your agents will in no way recommend or oppose or
interfere with the solicitation of proxies for Portfolio shares held to fund
the
Contracts without our prior written consent, which consent may be withheld
in
our sole discretion.
6. Sales
Material, Information and Trademarks
6.1 For
purposes of this Section 6, “Sales literature or other Promotional
material” includes, but is not limited to, portions of the following that use
any logo or other trademark related to the Trust, or Underwriter or its
affiliates, or refer to the Trust: advertisements (such as material
published or designed for use in a newspaper, magazine or other periodical,
radio, television, telephone or tape recording, videotape display, signs or
billboards, motion pictures, electronic communication or other public media),
sales literature (i.e., any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, reprints or
excerpts or any other advertisement, sales literature or published article
or
electronic communication), educational or training materials or other
communications distributed or made generally available to some or all agents
or
employees in any media, and disclosure documents, shareholder reports and proxy
materials.
6.2 Upon
our reasonable request, you shall furnish, or cause to be furnished to us or
our
designee, at least one complete copy of each registration statement, prospectus,
statement of additional information, the portions of a private placement
memorandum that contain information regarding the Portfolio, Underwriter or
Adviser, or other disclosure documents or similar information, as applicable
(collectively “Disclosure Documents”), as well as any report, solicitation for
voting instructions, Sales literature or other Promotional materials, and all
amendments to any of the above that relate to the Contracts or the Accounts
prior to its first use. You shall furnish, or shall cause to be
furnished, to us or our designee each piece of Sales literature or other
Promotional material in which the Trust or an Adviser is named, at least fifteen
(15) Business Days prior to its proposed use. No such material shall
be used unless we or our designee approve such material and its proposed use,
such approval shall not be unreasonably withheld.
6.3 You
and your agents shall not give any information or make any representations
or
statements on behalf of the Trust or concerning the Trust, the Underwriter
or an
Adviser, other than information or representations contained in and accurately
derived from the registration statement or prospectus for the Trust shares
(as
such registration statement and prospectus may be amended or supplemented from
time to time), annual and semi-annual reports of the Trust, Trust-sponsored
proxy statements, or in Sales literature or other Promotional material approved
by the Trust or its designee, except as required by legal process or regulatory
authorities or with the written permission of the Trust or its
designee. If requested, you shall send us a complete copy of each
Disclosure Document and item of Sales literature or other Promotional materials
in its final form within twenty (20) days of its first use.
6.4 We
shall not give any information or make any representations or statements on
behalf of you or concerning you, the Accounts or the Contracts other than
information or representations, including naming you as a Trust shareholder,
contained in and accurately derived from Disclosure Documents for the Contracts
(as such Disclosure Documents may be amended or supplemented from time to time),
or in materials approved by you for distribution, including Sales literature
or
other Promotional materials, except as required by legal process or regulatory
authorities or with your written permission.
6.5
Except as provided in Section 6.2, you shall not use any designation
comprised in whole or part of the names or marks “Franklin” or “Xxxxxxxxx” or
any logo or other trademark relating to the Trust or the Underwriter without
prior written consent, and upon termination of this Agreement for any reason,
you shall cease all use of any such name or xxxx as soon as reasonably
practicable.
6.6 You
shall furnish to us ten (10) Business Days prior to its first submission to
the
SEC or its staff, any request or filing for no-action assurance or exemptive
relief naming, pertaining to, or affecting, the Trust, the Underwriter or any
of
the Portfolios.
6.7 [This
section is not used]
6.8 Each
of your and your distributor’s registered representatives, agents, independent
contractors and employees, as applicable, will have access to our websites
at
xxxxxxxxxxxxxxxxx.xxx, and such other URLs through which we may permit you
to
conduct business concerning the Portfolios from time to time (referred to
collectively as the “Site”) as provided herein, (i) upon registration by such
individual on a Site, (ii) if you cause a Site Access Request Form (an “Access
Form”) to be signed by your authorized supervisory personnel and submitted to
us, as a Schedule to, and legally a part of, this Agreement, or (iii) if you
provide such individual with the necessary access codes or other information
necessary to access the Site through any generic or firm-wide authorization
we
may grant you from time to time. Upon receipt by us of a completed
registration submitted by an individual through the Site or a signed Access
Form
referencing such individual, we shall be entitled to rely upon the
representations contained therein as if you had made them directly hereunder
and
we will issue a user identification, express number and/or password
(collectively, “Access Code”). Any person to whom we issue an Access
Code or to whom you provide the necessary Access Codes or other information
necessary to access the Site through any generic or firm-wide authorization
we
may grant you from time to time shall be an “Authorized User.”
We
shall
be entitled to assume that such person validly represents you and that all
instructions received from such person are authorized, in which case such person
will have access to the Site, including all services and information to which
you are authorized to access on the Site. All inquiries and actions
initiated by you (including your Authorized Users) are your responsibility,
are
at your risk and are subject to our review and approval (which could cause
a
delay in processing). You agree that we do not have a duty to
question information or instructions you (including Authorized Users) give
to us
under this Agreement, and that we are entitled to treat as authorized, and
act
upon, any such instructions and information you submit to us. You
agree to take all reasonable measures to prevent any individual other than
an
Authorized User from obtaining access to the Site. You agree to
inform us if you wish to restrict or revoke the access of any individual Access
Code. If you become aware of any loss or theft or unauthorized
use of any Access Code, you agree to contact us immediately. You also agree
to
monitor your (including Authorized Users’) use of the Site to ensure the terms
of this Agreement are followed. You also agree that you will comply
with all policies and agreements concerning Site usage, including without
limitation the Terms of Use Agreement(s) posted on the Site (“Site Terms”), as
may be revised and reposted on the Site from time to time, and those Site Terms
(as in effect from time to time) are a part of this Agreement. Your duties
under
this section are considered “services” required under the terms of this
Agreement. You acknowledge that the Site is transmitted over the
Internet on a reasonable efforts basis and we do not warrant or guarantee their
accuracy, timeliness, completeness, reliability or
non-infringement. Moreover, you acknowledge that the Site is provided
for informational purposes only, and are not intended to comply with any
requirements established by any regulatory or governmental agency.
7. Indemnification
7.1 Indemnification
By You
7.1.1 You
agree to indemnify and hold harmless the Underwriter, the Trust and each of
its
Trustees, officers, and each person, if any, who controls the Trust within
the
meaning of Section 15 of the 1933 Act (collectively, the “Indemnified
Parties” and individually the “Indemnified Party” for purposes of this
Section 7) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with your written consent, which consent
shall not be unreasonably withheld) or expenses (including the reasonable costs
of investigating or defending any alleged loss, claim, damage, liability or
expense and reasonable legal counsel fees incurred in connection therewith)
(collectively, “Losses”), to which the Indemnified Parties may become subject
under any statute or regulation, or at common law or otherwise, insofar as
such
Losses are related to the sale or acquisition of shares of the Trust or the
Contracts and
7.1.1.1 arise
out of or are based upon any untrue statements or alleged untrue statements
of
any material fact contained in a Disclosure Document for the Contracts or in
the
Contracts themselves or in sales literature generated or approved by you on
behalf of the Contracts or Accounts (or any amendment or supplement to any
of
the foregoing) (collectively, “Company Documents” for the purposes of this
Section 7), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this
indemnity shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance upon and
was
accurately derived from written information furnished to you by or on behalf
of
the Trust for use in Company Documents or otherwise for use in connection with
the sale of the Contracts or Trust shares; or
7.1.1.2 arise
out of or result from statements or representations (other than statements
or
representations contained in and accurately derived from Trust Documents as
defined below in Section 7.2) or wrongful conduct of you or persons under
your control, with respect to the sale or acquisition of the Contracts or Trust
shares; or
7.1.1.3 arise
out of or result from any untrue statement or alleged untrue statement of a
material fact contained in Trust Documents as defined below in Section 7.2
or the omission or alleged omission to state therein a material fact required
to
be stated therein or necessary to make the statements therein not misleading
if
such statement or omission was made in reliance upon and accurately derived
from
written information furnished to the Trust by or on behalf of you;
or
7.1.1.4 arise
out of or result from any failure by you to provide the services or furnish
the
materials required under the terms of this Agreement;
7.1.1.5 arise
out of or result from any material breach of any representation and/or warranty
made by you in this Agreement or arise out of or result from any other material
breach of this Agreement by you; or
7.1.1.6 arise
out of or result from a Contract failing to be considered a life
insurance policy or an annuity Contract, whichever is appropriate,
under applicable provisions of the Code thereby depriving the Trust of its
compliance with Section 817(h) of the Code.
7.1.2 You
shall not be liable under this indemnification provision with respect to any
Losses to which an Indemnified Party would otherwise be subject by reason of
such Indemnified Party’s willful misfeasance, bad faith, or gross negligence in
the performance of such Indemnified Party’s duties or by reason of such
Indemnified Party’s reckless disregard of obligations and duties under this
Agreement or to the Trust or Underwriter, whichever is
applicable. You shall also not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified you in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or
after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify you of any such claim shall not relieve
you from any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Parties, you shall be entitled to participate, at your own expense, in the
defense of such action. Unless the Indemnified Party releases you
from any further obligations under this Section 7.1, you also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from you to such party of your
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and you will not
be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
7.1.3 The
Indemnified Parties will promptly notify you of the commencement of any
litigation or proceedings against them in connection with the issuance or sale
of the Trust shares or the Contracts or the operation of the Trust.
7.2 Indemnification
By The Underwriter
7.2.1 The
Underwriter agrees to indemnify and hold harmless you, and each of your
directors and officers and each person, if any, who controls you within the
meaning of Section 15 of the 1933 Act (collectively, the “Indemnified
Parties” and individually an “Indemnified Party” for purposes of this
Section 7.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Underwriter, which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, “Losses”) to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such Losses are related to the sale or acquisition of the shares
of
the Trust or the Contracts and:
7.2.1.1 arise
out of or are based upon any untrue statements or alleged untrue statements
of
any material fact contained in the Registration Statement, prospectus or sales
literature of the Trust (or any amendment or supplement to any of the foregoing)
(collectively, the “Trust Documents”) or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be
stated therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission of such alleged statement or omission was
made in reliance upon and in conformity with information furnished to us by
or
on behalf of you for use in the Registration Statement or prospectus for the
Trust or in sales literature (or any amendment or supplement) or otherwise
for
use in connection with the sale of the Contracts or Trust shares;
or
7.2.1.2 arise
out of or as a result of statements or representations (other than statements
or
representations contained in the Disclosure Documents or sales literature for
the Contracts not supplied by the Underwriter or persons under its control)
or
wrongful conduct of the Trust, Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of the Contracts or Trust
shares; or
7.2.1.3 arise
out of any untrue statement or alleged untrue statement of a material fact
contained in a Disclosure Document or sales literature covering the Contracts,
or any amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished to you
by
or on behalf of the Trust; or
7.2.1.4 arise
as a result of any failure by us to provide the services and furnish the
materials under the terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with the qualification
representation specified above in Section 2.2.7 and the diversification
requirements specified above in Section 2.2.8); or
7.2.1.5 arise
out of or result from any material breach of any representation and/or warranty
made by the Underwriter in this Agreement or arise out of or result from any
other material breach of this Agreement by the Underwriter; as limited by and
in
accordance with the provisions of Sections 7.2.2 and 7.2.3 hereof.
7.2.2 The
Underwriter shall not be liable under this indemnification provision with
respect to any Losses to which an Indemnified Party would otherwise be subject
by reason of such Indemnified Party’s willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party’s duties or by reason of
such Indemnified Party’s reckless disregard of obligations and duties under this
Agreement or to you or the Accounts, whichever is applicable.
7.2.3 The
Underwriter shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified the Underwriter in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the Underwriter of any such claim shall not
relieve the Underwriter from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against
the Indemnified Parties, the Underwriter will be entitled to participate, at
its
own expense, in the defense thereof. Unless the Indemnified Party
releases the Underwriter from any further obligations under this
Section 7.2, the Underwriter also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the
action. After notice from the Underwriter to such party of the
Underwriter’s election to assume the defense thereof, the Indemnified Party
shall bear the expenses of any additional counsel retained by it, and the
Underwriter will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
7.2.4 You
agree promptly to notify the Underwriter of the commencement of any litigation
or proceedings against you or the Indemnified Parties in connection with the
issuance or sale of the Contracts or the operation of each Account.
7.3 Indemnification
By The Trust
7.3.1 The
Trust agrees to indemnify and hold harmless you, and each of your directors
and
officers and each person, if any, who controls you within the meaning of
Section 15 of the 1933 Act (collectively, the “Indemnified Parties”
for purposes of this Section 7.3) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Trust, which consent shall not be unreasonably withheld) or
litigation (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements result from the gross negligence, bad faith or willful
misconduct of the Board or any member thereof, are related to the operations
of
the Trust, and arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement or arise
out
of or result from any other material breach of this Agreement by the Trust;
as
limited by and in accordance with the provisions of Sections 7.3.2 and
7.3.3 hereof. It is understood and expressly stipulated that neither
the holders of shares of the Trust nor any Trustee, officer, agent or employee
of the Trust shall be personally liable hereunder, nor shall any resort be
had
to other private property for the satisfaction of any claim or obligation
hereunder, but the Trust only shall be liable.
7.3.2 The
Trust shall not be liable under this indemnification provision with respect
to
any losses, claims, damages, liabilities or litigation incurred or assessed
against any Indemnified Party as such may arise from such Indemnified Party’s
willful misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party’s duties or by reason of such Indemnified Party’s reckless
disregard of obligations and duties under this Agreement or to you, the Trust,
the Underwriter or each Account, whichever is applicable.
7.3.3 The
Trust shall not be liable under this indemnification provision with respect
to
any claim made against an Indemnified Party unless such Indemnified Party shall
have notified the Trust in writing within a reasonable time after the summons
or
other first legal process giving information of the nature of the claims shall
have been served upon such Indemnified Party (or after such Indemnified Party
shall have received notice of such service on any designated agent), but failure
to notify the Trust of any such claim shall not relieve the Trust from any
liability which it may have to the Indemnified Party against whom such action
is
brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Parties, the Trust will be entitled to participate, at its own expense, in
the
defense thereof. Unless the Indemnified Party releases the Trust from
any further obligations under this Section 7.3, the Trust also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Trust to such party of the
Trust’s election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the Trust
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
7.3.4 You
agree promptly to notify the Trust of the commencement of any litigation or
proceedings against you or the Indemnified Parties in connection with this
Agreement, the issuance or sale of the Contracts, with respect to the operation
of the Account, or the sale or acquisition of shares of the Trust.
8. Notices
Any
notice, except for those provided in Sections 3.2.1 and 3.2.2 of the Agreement,
shall be sufficiently given when sent by registered or certified mail, or by
nationally recognized overnight courier services, to the other party at the
address of such party set forth in Schedule G below or at such other
address as such party may from time to time specify in writing to the other
party.
9. Termination
9.1 This
Agreement may be terminated by any party in its entirety or with respect to
one,
some or all Portfolios for any reason by ninety (90) days advance written notice
delivered to the other parties. This Agreement shall terminate
immediately in the event of its assignment by any party without the prior
written approval of the other parties, or as otherwise required by
law.
9.2 This
Agreement may be terminated immediately by us upon written notice to you
if:
9.2.1 (i) you
breach any of the representations and warranties made in this Agreement; or
(ii) you inform us that any of such representations and warranties may no
longer be true or might not be true in the future; or (iii) any of such
representations and warranties were not true on the effective date of this
Agreement, are at any time no longer true, or have not been true during any
time since the effective date of this Agreement; or
9.2.2 either
one or both of the Trust or the Underwriter respectively, shall determine,
in
their sole judgment exercised in good faith, that you have suffered a material
adverse change in your business, operations, financial condition or prospects
since the date of this Agreement or are the subject of material adverse
publicity.
This
Agreement may be terminated immediately by you upon written notice to us
if:
9.2.3 (i)
we breach any of the representations and warranties made in this Agreement;
or
(ii) we inform you that any of such representations and warranties may no longer
be true or might not be true in the future; or (iii) any of such representations
and warranties were not true on the effective date of this Agreement, are at
any
time no longer true, or have not been true during any time since the effective
date of this Agreement; or
9.2.4 You
determine, in your sole judgment exercised in good faith, that we have suffered
a material adverse change in our business, operations, financial condition
or
prospects since the date of this Agreement or are subject of material adverse
publicity.
9.3 If
this Agreement is terminated with respect to any Portfolio(s) for any reason
except as required by the Shared Funding Order, we shall, at your option and
pursuant to the terms and conditions of this Agreement, continue to make
available additional shares of any Portfolio for any or all Contracts or
Accounts existing on the effective date of termination of this Agreement,
provided that such further sale is not prohibited by law, regulation,
applicable regulatory body, or action by the Trust’s Board of
Trustees. Further, if the Trust’s Board of Trustees: (1) in the
exercise of its fiduciary duties, determines that such termination is a
necessary and appropriate remedy for a material breach of this Agreement that
has or could have a material adverse impact on a Portfolio, including a
violation of laws; or (2) determines such termination is appropriate upon
liquidation of a Portfolio, the Trust may redeemin accordance with its
prospectus, the Portfolio shares held by the Accounts on the effective date
of
termination of this Agreement, which shall be done in consultation with you
to
provide an orderly transfer; provided further that any such liquidation
of a Portfolio will not occur prior to up to six (6) months following written
notice to you, and during this time, the Trust will cooperate reasonably in
effecting a transfer of assets to another underlying fund pursuant to either
an
exchange offer, SEC substitution order, SEC no-action letter, or other legal
and
appropriate means. If this Agreement is terminated as required by the
Shared Funding Order, its provisions shall govern.
9.4 The
provisions of Sections 2 (Representations and Warranties) and 7
(Indemnification) shall survive the termination of this
Agreement. All other applicable provisions of this Agreement shall
survive the termination of this Agreement, as long as shares of the Trust are
held on behalf of Contract owners in accordance with Section 9.3, except
that we shall have no further obligation to sell Trust shares with respect
to
Contracts issued after termination.
9.5 You
shall not redeem Trust shares attributable to the Contracts except:
(i) as necessary to implement Contract owner initiated or approved
transactions; (ii) as required by state and/or federal laws or regulations
or judicial or other legal precedent of general application (hereinafter
referred to as a “Legally Required Redemption”); or (iii) as permitted by an
order of the SEC pursuant to Section 26(b) of the
1940 Act. Upon request, you shall promptly furnish to us the
opinion of your counsel (which counsel shall be reasonably satisfactory to
us)
to the effect that any redemption pursuant to clause (ii) above is a
Legally Required Redemption. Furthermore, you shall not prevent
Contract owners from allocating payments to any Portfolio that has been
available under a Contract without first giving us ninety (90) days advance
written notice of your intention to do so.
10. Miscellaneous
10.1 The
captions in this Agreement are included for convenience of reference only and
in
no way define or delineate any of the provisions of this Agreement or otherwise
affect their construction or effect.
10.2 This
Agreement may be executed simultaneously in two or more counterparts, all of
which taken together shall constitute one and the same instrument.
10.3 If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement shall
not
be affected thereby.
10.4 This
Agreement shall be construed and its provisions interpreted under and in
accordance with the laws of the State of California. It shall also be
subject to the provisions of the federal securities laws and the rules and
regulations thereunder, to any orders of the SEC on behalf of the Trust granting
it exemptive relief, and to the conditions of such orders. We shall
promptly forward copies of any such orders to you.
10.5 The
parties to this Agreement acknowledge and agree that all liabilities of the
Trust arising, directly or indirectly, under this Agreement, of any and every
nature whatsoever, shall be satisfied solely out of the assets of the Trust
and
that no Trustee, officer, agent or holder of shares of beneficial interest
of
the Trust shall be personally liable for any such liabilities.
10.6 The
parties to this Agreement agree that the assets and liabilities of each
Portfolio of the Trust are separate and distinct from the assets and liabilities
of each other Portfolio. No Portfolio shall be liable or shall be
charged for any debt, obligation or liability of any other
Portfolio.
10.7 Each
party to this Agreement shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the
NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated
hereby.
10.8 Each
party shall treat as confidential all information of the other party which
the
parties agree in writing is confidential (“Confidential
Information”). Except as permitted by this Agreement or as required
by appropriate governmental authority (including, without limitation, the SEC,
the NASD, or state securities and insurance regulators) the receiving party
shall not disclose or use Confidential Information of the other party before
it
enters the public domain, without the express written consent of the party
providing the Confidential Information.
10.9 The
rights, remedies and obligations contained in this Agreement are cumulative
and
are in addition to any and all rights, remedies and obligations, at law or
in
equity, which the parties to this Agreement are entitled to under state and
federal laws.
10.10 The
parties to this Agreement acknowledge and agree that this Agreement shall not
be
exclusive in any respect.
10.11 Neither
this Agreement nor any rights or obligations created by it may be assigned
by
any party without the prior written approval of the other parties.
10.12 No
provisions of this Agreement may be amended or modified in any manner except
by
a written agreement properly authorized and executed by both
parties. Notwithstanding the foregoing, the Site Terms may be
separately amended as provided therein and, as so amended and in effect from
time to time, shall be a part of this Agreement.
10.13 Each
party to the Agreement agrees to limit the disclosure of nonpublic personal
information of Contract owners and customers consistent with its policies on
privacy with respect to such information and Regulation S-P of the
SEC. Each party hereby agrees that it will comply with all applicable
requirements under the regulations implementing Title V of the
Xxxxx-Xxxxx-Xxxxxx Act and any other applicable federal and state consumer
privacy acts, rules and regulations. Each party further represents
that it has in place, and agrees that it will maintain, information security
policies and procedures for protecting nonpublic personal customer information
adequate to conform to applicable legal requirements.
IN
WITNESS WHEREOF,
each of the parties have caused their duly authorized officers to execute this
Agreement.
|
The
Company:
|
|
|
Nationwide
Life Insurance Company
By:
Name:
[Xxxxx X. Xxxxxxxx]
Title:
[V.P. Associate General Counsel]
|
Nationwide
Life and Annuity Insurance Company
By:
Name:
[Xxxxx X. Xxxxxxxx]
Title:
[V.P. Associate General Counsel]
|
|
Nationwide
Life Insurance Company of America
By:
Name:
[Xxxxx X. Xxxxxxxx]
Title:
[V.P. - Associate General Counsel]
|
Nationwide
Life and Annuity Company of America
By:
Name:
[Xxxxx X. Xxxxxxxx]
Title:
[V.P. - Associate General Counsel]
|
|
Distributors
for the Company:
|
|
|
Nationwide
Investment Services Corporation
By:
Name:
[Xxxxx X. Xxxxxxxx]
Title:
[V.P. - Associate General Counsel]
|
1717
Capital Management Company
By:
Name:
[Xxxxx X. Xxxxxxxx]
Title:
[V.P. - Associate General Counsel]
|
|
The
Trust: (Only on behalf of each Portfolio listed on Schedule C
hereof)
|
The
Underwriter:
|
|
Franklin
Xxxxxxxxx Variable Insurance Products Trust
By:
Name: Xxxxx
X. Xxxxxxxx
Title: Assistant
Vice President
|
Franklin/Xxxxxxxxx
Distributors, Inc.
By:
Name: Xxxxx
X. Xxx
Title: Senior
Vice President
|
Schedule A
The
Company and its Distributors
THE
COMPANY
Nationwide
Life and Annuity Insurance Company
Xxx
Xxxxxxxxxx Xxxxx
Xxxxxxxx,
Xxxx 00000
An
insurance company organized under Ohio law.
Nationwide
Life Insurance Company
Xxx
Xxxxxxxxxx Xxxxx
Xxxxxxxx,
Xxxx 00000
An
insurance company organized under Ohio law.
Nationwide
Life Insurance Company of America
Xxx
Xxxxxxxxxx Xxxxx
Xxxxxxxx,
Xxxx 00000
An
insurance company organized under Pennsylvania law.
Nationwide
Life and Annuity Company of America
Xxx
Xxxxxxxxxx Xxxxx
Xxxxxxxx,
Xxxx 00000
An
insurance company organized under Delaware law.
THE
DISTRIBUTORS
Nationwide
Investment Services Corporation
Xxx
Xxxxxxxxxx Xxxxx
Xxxxxxxx,
Xxxx 00000
A
corporation organized under Oklahoma law.
1717
Capital Management Company
Christiana
Executive Campus
P.
O. Xxx
00000
Xxxxxxxxxx,
Xxxxxxxx 00000
A
corporation organized under Pennsylvania law.
Schedule B
Accounts
of the Company
|
1.
|
Name:
|
Nationwide
Multi-Flex Variable Account
|
|
Date
Established:
|
October
7, 1981
|
|
|
SEC
Registration Number:
|
811-3338
|
|
|
2.
|
Name:
|
Nationwide
Variable Account-II
|
|
Date
Established:
|
October
7, 1981
|
|
|
SEC
Registration Number:
|
811-3330
|
|
|
3.
|
Name:
|
Nationwide
Variable Account-7
|
|
Date
Established:
|
July
22, 1994
|
|
|
SEC
Registration Number:
|
811-8666
|
|
|
4.
|
Name:
|
Nationwide
Variable Account-9
|
|
Date
Established:
|
May
22, 1997
|
|
|
SEC
Registration Number:
|
811-08241
|
|
|
5.
|
Name:
|
Nationwide
Variable Account-13
|
|
Date
Established:
|
July
10, 2001
|
|
|
SEC
Registration Number:
|
811-21139
|
|
|
6.
|
Name:
|
Nationwide
Variable Account-14
|
|
Date
Established:
|
August
8, 2002
|
|
|
SEC
Registration Number:
|
811-5311
|
|
|
7.
|
Name:
|
Nationwide
VLI Separate Account-2
|
|
Date
Established:
|
May
7, 1987
|
|
|
SEC
Registration Number:
|
811-8301
|
|
|
8.
|
Name:
|
Nationwide
VLI Separate Account-4
|
|
Date
Established:
|
May
21, 1998
|
|
|
SEC
Registration Number:
|
811-8301
|
|
|
9.
|
Name:
|
Nationwide
VL Separate Account-C
|
|
Date
Established:
|
July
22, 1997
|
|
|
SEC
Registration Number:
|
811-8351
|
|
|
10.
|
Name:
|
Nationwide
VL Separate Account-D
|
|
Date
Established:
|
May
21, 1998
|
|
|
SEC
Registration Number:
|
811-08891
|
|
|
11.
|
Name:
|
Nationwide
Private Placement Variable Account
|
|
Date
Established:
|
May
1, 1998
|
|
|
SEC
Registration Number:
|
Not
registered
|
|
|
12.
|
Name:
|
Nationwide
Provident VLI Separate Account A
|
|
Date
Established:
|
June
30, 1994
|
|
|
SEC
Registration Number:
|
811-8722
|
|
|
13.
|
Name:
|
Nationwide
Provident VLI Separate Account 1
|
|
Date
Established:
|
May
1, 2000
|
|
|
SEC
Registration Number:
|
811-4460
|
Schedule C
Available
Portfolios and Classes of Shares of the Trust; Investment
Advisers
|
Franklin
Xxxxxxxxx Variable Insurance Products Trust
Portfolio
|
Investment
Adviser
|
|
Franklin
Rising Dividends Securities Fund –
Classes 1 &2
|
Franklin
Advisory Services, LLC
|
|
Franklin
Small Cap Value Securities Fund – Classes 1 & 2
|
Franklin
Advisory Services, LLC
|
|
Franklin
U.S. Government Fund – Class 2
|
Franklin
Advisers, Inc.
|
|
Templeton
Developing Markets Securities Fund – Class 2
|
Xxxxxxxxx
Asset Management Ltd.
|
|
Templeton
Foreign Securities Fund – Classes 1 & 2
|
Xxxxxxxxx
Investment Counsel, LLC
|
|
Templeton
Growth Securities Fund – Class 2
|
Xxxxxxxxx
Global Advisors Limited
|
Schedule
D
Contracts
of the Company
|
#
|
Insurance
Company
|
Product
Name
Registered
Y/N
1933
Act #
|
Separate
Account Name &
1940
Act #
|
Share
Class and Portfolios
|
|
|
1.
|
Nationwide
Life Insurance Company
|
NEA
Valuebuilder
Y
2-75174
|
Nationwide
Multi-Flex Variable Annuity
811-3338
|
Class
1 Shares:
Xxxxxxxxx
Foreign Securities Fund
|
|
|
2.
|
Nationwide
Life Insurance Company
|
BOA
Future II
Y
33-103093
|
Nationwide
Variable Account-II
811-3330
|
Class
2 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
3.
|
Nationwide
Life Insurance Company
|
BOA
All American Gold
Y
33-103094
|
Nationwide
Variable Account-II
811-3330
|
Class
2 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
4.
|
Nationwide
Life Insurance Company
|
BOA
Achiever
Y
33-103095
|
Nationwide
Variable Account-II
811-3330
|
Class
2 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
5.
|
Nationwide
Life Insurance Company
|
BOA
Future Venue
Y
333-104513
|
Nationwide
Variable Account-II
811-3330
|
Class
2 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
6.
|
Nationwide
Life Insurance Company
|
BOA
Exclusive Venue
Y
333-104511
|
Nationwide
Variable Account-II
811-3330
|
Class
2 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
7.
|
Nationwide
Life Insurance Company
|
BOA
Elite Venue
Y
333-104512
|
Nationwide
Variable Account-II
811-3330
|
Class
2 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
8.
|
Nationwide
Life Insurance Company
|
BOA
Choice Venue II
Y
333-104510
|
Nationwide
Variable Account-II
811-3330
|
Class
2 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
9.
|
Nationwide
Life Insurance Company
|
Schwab
VA
Y
333-105992
|
Nationwide
Variable Account-II
811-3330
|
Class
2 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
10.
|
Nationwide
Life Insurance Company
|
All
American Annuity
Y
33-89560
|
Nationwide
Variable Account-7
811-8666
|
Class
1 Shares:
Franklin
Rising Dividends Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
11.
|
Nationwide
Life Insurance Company
|
BOA
Future
Y
333-28995
|
Nationwide
Variable Account-9
811-08241
|
Class
1 Shares:
Xxxxxxxxx
Foreign Securities Fund
|
|
|
12.
|
Nationwide
Life Insurance Company
|
BOA
V
Y
333-56073
|
Nationwide
Variable Account-9
811-08241
|
Class
1 Shares:
Xxxxxxxxx
Foreign Securities Fund
|
|
|
13.
|
Nationwide
Life Insurance Company
|
BOA
America's Income Annuity
333-79327
|
Nationwide
Variable Account-9
811-08241
|
Class
2 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
14.
|
Nationwide
Life Insurance Company
|
BOA
Advisor
Y
333-91890
|
Nationwide
Variable Account-13
811-21139
|
Class
2 Shares:
Franklin
Small Cap Value Securities Fund
Franklin
U.S. Government Fund
Xxxxxxxxx
Developing Markets Securities Fund
Xxxxxxxxx
Foreign Securities Fund
Templeton
Growth Securities Fund
|
|
|
15.
|
Nationwide
Life Insurance Company
|
BOA
TruAccord Annuity
Y
333-104339
|
Nationwide
Variable Account-14
811-21205
|
Class
2 Shares:
Xxxxxxxxx
Foreign Securities Fund
|
|
|
16.
|
Nationwide
Life Insurance Company
|
BOA
MSPVL
Y
33-62795
|
Nationwide
VLI Separate Account-2
811-5311
|
Class
1 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
17.
|
Nationwide
Life Insurance Company
|
BOA
FPVUL
Y
33-42180
|
Nationwide
VLI Separate Account-2
811-5311
|
Class
1 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
18.
|
Nationwide
Life Insurance Company
|
BOA
The Next Generation
Y
33-31725
|
Nationwide
VLI Separate Account-4
811-8301
|
Class
1 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
19.
|
Nationwide
Life Insurance Company
|
BOA
COLI Future
Y
33-43671
|
Nationwide
VLI Separate Account-4
811-8301
|
Class
2 Shares:
Xxxxxxxxx
Foreign Securities Fund
|
|
|
20.
|
Nationwide
Life Insurance Company
|
BOA
Last Survivor Future
Y
33-52617
|
Nationwide
VLI Separate Account-4
811-8301
|
Class
1 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
21.
|
Nationwide
Life Insurance Company
|
BOA
Last Survivor III
Y
333-94037
|
Nationwide
VLI Separate Account-4
811-8301
|
Class
1 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
22.
|
Nationwide
Life Insurance Company
|
BOA
MSPVL Future
Y
333-52615
|
Nationwide
VLI Separate Account-4
811-8301
|
Class
1 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
23.
|
Nationwide
Life Insurance Company
|
BOA
Protection FPVUL
Y
333-69160
|
Nationwide
VLI Separate Account-4
811-8301
|
Class
1 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
24.
|
Nationwide
Life Insurance Company
|
Protection
Last Survivor
Y
333-83010
|
Nationwide
VLI Separate Account-4
811-8301
|
Class
1 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
25.
|
Nationwide
Life and Annuity Insurance Company
|
COLI
Future
Y
333-43639
|
Nationwide
VL Separate Account-C
811-8351
|
Class
2 Shares:
Xxxxxxxxx
Foreign Securities Fund
|
|
|
26.
|
Nationwide
Life and Annuity Insurance Company
|
Private
Client CVUL
Y
333-59517
|
Nationwide
VL Separate Account-D
811-08891
|
Class
2 Shares:
Xxxxxxxxx
Foreign Securities Fund
|
|
|
27.
|
Nationwide
Life Insurance Company
|
Private
Placement Variable Universal Life
N
N/A
|
Private
Placement Variable Account
N/A
|
Class
2 Shares:
Xxxxxxxxx
Foreign Securities Fund
|
|
|
28.
|
Nationwide
Life and Annuity Company of America
|
Options
Premier
Y
333-67775
|
Nationwide
Provident VLI Separate Account A
811-8722
|
Class
1 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
29.
|
Nationwide
Life and Annuity Company of America
|
Survivor
Options Premier
Y
333-82611
|
Nationwide
Provident VLI Separate Account A
811-8722
|
Class
1 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
30.
|
Nationwide
Life Insurance Company of America
|
Options
Premier
Y
333-71763
|
Nationwide
Provident VLI Separate Account 1
811-4460
|
Class
1 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
31.
|
Nationwide
Life Insurance Company of America
|
Options
Plus
Y
33-421333
|
Nationwide
Provident VLI Separate Account 1
811-4460
|
Class
1 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
32.
|
Nationwide
Life Insurance Company of America
|
Survivor
Options Elite
Y
333-82613
|
Nationwide
Provident VLI Separate Account 1
811-4460
|
Class
1 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
|
33.
|
Nationwide
Life Insurance Company of America
|
Survivor
Options Premier
Y
333-84475
|
Nationwide
Provident VLI Separate Account 1
811-4460
|
Class
1 Shares:
Franklin
Rising Dividends Securities Fund
Franklin
Small Cap Value Securities Fund
Xxxxxxxxx
Foreign Securities Fund
|
|
1.
Schedule E
This
schedule is not used
Schedule F
Rule
12b-1 Plans
Compensation
Schedule
Each
Portfolio named below shall pay the following amounts pursuant to the terms
and
conditions referenced below under its Class 2 Rule 12b-1 Distribution Plan,
stated as a percentage per year of Class 2’s average daily net assets
represented by shares of Class 2.
Portfolio
Name Maximum
Annual Payment Rate
|
Franklin
Rising Dividends Securities Fund
|
____%
|
|
Franklin
Small Cap Value Securities Fund
|
____%
|
|
Franklin
U.S. Government Fund
|
____%
|
|
Xxxxxxxxx
Developing Markets Securities Fund
|
____%
|
|
Xxxxxxxxx
Foreign Securities Fund
|
____%
|
|
Templeton
Growth Securities Fund
|
____%
|
Agreement
Provisions
If
the
Company, on behalf of any Account, purchases Trust Portfolio shares (“Eligible
Shares”) which are subject to a Rule 12b-1 plan adopted under the 1940 Act
(the “Plan”), the Company may participate in the Plan.
To
the
extent the Company or its affiliates, agents or designees (collectively “you”)
provide any activity or service which is primarily intended to assist in the
promotion, distribution or account servicing of Eligible Shares (“Rule 12b-1
Services”) or variable contracts offering Eligible Shares, the Underwriter, the
Trust or their affiliates (collectively, “we”) may pay you a Rule 12b-1
fee. “Rule 12b-1 Services” may include, but are not limited to,
printing of prospectuses and reports used for sales purposes, preparing and
distributing sales literature and related expenses, advertisements, education
of
dealers and their representatives, and similar distribution-related expenses,
furnishing personal services to owners of Contracts which may invest in Eligible
Shares (“Contract Owners”), education of Contract Owners, answering routine
inquiries regarding a Portfolio, coordinating responses to Contract Owner
inquiries regarding the Portfolios, maintaining such accounts or providing
such
other enhanced services as a Trust Portfolio or Contract may require, or
providing other services eligible for service fees as defined under NASD
rules. Your acceptance of such compensation is your acknowledgment
that eligible services have been rendered. All Rule 12b-1 fees, shall
be based on the value of Eligible Shares owned by the Company on behalf of
its
Accounts, and shall be calculated on the basis and at the rates set forth in
the
Compensation Schedule stated above. The aggregate annual fees paid
pursuant to each Plan shall not exceed the amounts stated as the “annual
maximums” in the Portfolio’s prospectus, unless an increase is approved by
shareholders as provided in the Plan. These maximums shall be a
specified percent of the value of a Portfolio’s net assets attributable to
Eligible Shares owned by the Company on behalf of its Accounts (determined
in
the same manner as the Portfolio uses to compute its net assets as set forth
in
its effective Prospectus). The Rule 12b-1 fee will be paid to you
within thirty (30) days after the end of the three-month periods ending in
January, April, July and October.
You
shall
furnish us with such information as shall reasonably be requested by the Trust’s
Boards of Trustees (“Trustees”) with respect to the Rule 12b-1 fees paid to you
pursuant to the Plans. We shall furnish to the Trustees, for their
review on a quarterly basis, a written report of the amounts expended under
the
Plans and the purposes for which such expenditures were made.
The
Plans
and provisions of any agreement relating to such Plans must be approved annually
by a vote of the Trustees, including the Trustees who are not interested persons
of the Trust and who have no financial interest in the Plans or any related
agreement (“Disinterested Trustees”). Each Plan may be terminated at
any time by the vote of a majority of the Disinterested Trustees, or by a vote
of a majority of the outstanding shares as provided in the Plan, on sixty (60)
days’ written notice, without payment of any penalty. The Plans may
also be terminated by any act that terminates the Underwriting Agreement between
the Underwriter and the Trust, and/or the management or administration agreement
between Franklin Advisers, Inc. and its affiliates and the
Trust. Continuation of the Plans is also conditioned on Disinterested
Trustees being ultimately responsible for selecting and nominating any new
Disinterested Trustees. Under Rule 12b-1, the Trustees have a duty to
request and evaluate, and persons who are party to any agreement related to
a
Plan have a duty to furnish, such information as may reasonably be necessary
to
an informed determination of whether the Plan or any agreement should be
implemented or continued. Under Rule 12b-1, the Trust is permitted to
implement or continue Plans or the provisions of any agreement relating to
such
Plans from year-to-year only if, based on certain legal considerations, the
Trustees are able to conclude that the Plans will benefit each affected Trust
Portfolio and class. Absent such yearly determination, the Plans must
be terminated as set forth above. In the event of the termination of
the Plans for any reason, the provisions of this Schedule F relating to the
Plans will also terminate.
Any
obligation assumed by the Trust pursuant to this Agreement shall be limited
in
all cases to the assets of the Trust and no person shall seek satisfaction
thereof from shareholders of the Trust. You agree to waive payment of
any amounts payable to you by Underwriter under a Plan until such time as the
Underwriter has received such fee from the Trust.
The
provisions of the Plans shall control over the provisions of the Participation
Agreement, including this Schedule F, in the event of any
inconsistency.
You
agree
to provide complete disclosure as required by all applicable statutes, rules
and
regulations of all rule 12b-1 fees received from Portfolios in the prospectus
of
the Contracts.
Schedule G
Addresses
for Notices
|
To
the Company:
|
Nationwide
Life Insurance Company
|
|
Nationwide
Life and Annuity Insurance Company
|
|
|
Nationwide
Life Insurance Company of America
|
|
|
Nationwide
Life and Annuity Company of America
|
|
|
Xxx
Xxxxxxxxxx Xxxxx, 00-00-00
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Xxxxxxxx,
XX 00000
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Attention: Vice
President - Investment and Advisory Services
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With
a copy to:
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Nationwide
Life Insurance Company
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Nationwide
Life and Annuity Insurance Company
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Nationwide
Life Insurance Company of America
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Nationwide
Life and Annuity Company of America
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Xxx
Xxxxxxxxxx Xxxxx, 00-00-X0
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Xxxxxxxx,
XX 00000
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Attention:
Associate General Counsel
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To
the Distributor:
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Nationwide
Investment Services Corporation
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Xxx
Xxxxxxxxxx Xxxxx, 0-00-00
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Xxxxxxxx,
Xxxx 00000
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Attention:
AVP- Compliance
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1717
Capital Management Company
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Christiana
Executive Campus
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X.X.
Xxx 00000
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Xxxxxxxxxx,
XX 00000
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Attention:
VP & Assistant Secretary
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To
the Trust:
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Franklin
Xxxxxxxxx Variable Insurance Products Trust
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Xxx
Xxxxxxxx Xxxxxxx, Xxxx. 000, 0xx
Xxxxx
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Xxx
Xxxxx, Xxxxxxxxxx 00000
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Attention: Xxxxx
X. Xxxxxxxx, Assistant Vice President
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With
a copy to:
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Xxxxxx
Xxxxxxx, General Counsel
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To
the Underwriter:
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Franklin/Xxxxxxxxx
Distributors, Inc.
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Xxx
Xxxxxxxx Xxxxxxx, Xxxx. 000, 0xx
Xxxxx
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Xxx
Xxxxx, Xxxxxxxxxx 00000
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Attention: Xxxxx
X. Xxx, Senior Vice President
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With
a copy to:
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Xxxxxx
Xxxxxxx, General Counsel
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Schedule
H
Shared
Funding Order
Templeton
Variable Products Series Fund, et al.
File
No.
812-11698
SECURITIES
AND EXCHANGE COMMISSION
Release
No. IC-24018
1999
SEC
LEXIS 1887
September
17, 1999
ACTION: Notice
of application for an amended order of exemption pursuant to Section 6(c) of
the
Investment Company Act of 1940 (the "1940 Act") from the provisions of Sections
9(a), 13(a), 15(a) and 15(b) of the 1940 Act and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder.
TEXT:
Summary of Application: Templeton Variable Products Series Fund (the "Templeton
Trust"), Franklin Xxxxxxxxx Variable Insurance Products Trust (formerly Franklin
Valuemark Funds) (the "VIP Trust," and together with the Templeton Trust, the
"Funds"), Xxxxxxxxx Funds Annuity Company ("TFAC") or any successor to TFAC,
and
any future open-end investment company for which TFAC or any affiliate is the
administrator, sub-administrator, investment manager, adviser, principal
underwriter, or sponsor ("Future Funds") seek an amended order of the Commission
to (1) add as parties to that order the VIP Trust and any Future Funds and
(2)
permit shares of the Funds and Future Funds to be issued to and held by
qualified pension and retirement plans outside the separate account
context.
Applicants:
Templeton Variable Products Series Fund, Franklin Xxxxxxxxx Variable Insurance
Products Trust, Xxxxxxxxx Funds Annuity Company or any successor to TFAC, and
any future open-end investment company for which TFAC or any affiliate is the
administrator, sub-administrator, investment manager, adviser, principal
underwriter, or sponsor (collectively, the "Applicants").
Filing
Date: The application was filed on July 14, 1999, and amended and restated
on
September 17, 1999.
Hearing
or Notification of Hearing: An order granting the application will be issued
unless the Commission orders a hearing. Interested persons may request a hearing
by writing to the Secretary of the Commission and serving Applicants with a
copy
of the request, personally or by mail. Hearing requests should be received
by
the Commission by 5:30 p.m., on October 12, 1999, and should be accompanied
by
proof of service on the Applicants in the form of an affidavit or, for lawyers,
a certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues contested. Persons
who wish to be notified of a hearing may request notification by writing to
the
Secretary of the Commission.
Addresses:
Secretary, Securities and Exchange Commission, 000 Xxxxx Xxxxxx, XX, Xxxxxxxxxx,
X.X. 00000-0000.
Applicants:
Templeton Variable Products Series Fund and Franklin Xxxxxxxxx Variable
Insurance Products Trust, 000 Xxxxxxxx Xxxxxx Xxxxxxxxx, Xxx Xxxxx,
Xxxxxxxxxx 00000, Attn: Xxxxx X. Xxxxxxxx, Esq.
For
Further Information Contact: Xxxxx X. XxXxxxx, Senior Counsel, or Xxxxx X.
Xxxxx, Branch Chief, Office of Insurance Products, Division of Investment
Management, at (000) 000-0000.
Supplementary
Information: The following is a summary of the application. The complete
application is available for a fee from the SEC's Public Reference Branch,
000
Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000-0000 (tel. (000)
000-0000).
Applicants'
Representations:
VIP
Trust
consists of twenty-five separate series. Each Fund's Declaration of Trust
permits the Trustees to create additional series of shares at any time. The
Funds currently serve as the underlying investment medium for variable annuity
contracts and variable life insurance policies issued by various insurance
companies. The Funds have entered into investment management agreements with
certain investment managers ("Investment Managers") directly or indirectly
owned
by Franklin Resources, Inc. ("Resources"), a publicly owned company engaged
in
the financial services industry through its subsidiaries.
2.
TFAC
is an indirect, wholly owned subsidiary of Resources. TFAC is the sole insurance
company in the Franklin Xxxxxxxxx organization, and specializes in the writing
of variable annuity contracts. The Templeton Trust has entered into a Fund
Administration Agreement with Franklin Xxxxxxxxx Services, Inc. ("FT Services"),
which replaced TFAC in 1998 as administrator, and FT Services subcontracts
certain services to TFAC. FT Services also serves as administrator to all series
of the VIP Trust. TFAC and FT Services provide certain administrative facilities
and services for the VIP and Templeton Trusts.
3.
On
November 16, 1993, the Commission issued an order granting exemptive relief
to
permit shares of the Xxxxxxxxx Trust to be sold to and held by variable annuity
and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (Investment Company Act Release No. 19879,
File No. 812-8546) (the "Original Order"). Applicants incorporate by reference
into the application the Application for the Original Order and each amendment
thereto, the Notice of Application for the Original Order, and the Original
Order, to the extent necessary, to supplement the representations made in the
application in support of the requested relief. Applicants represent that all
of
the facts asserted in the Application for the Original Order and any amendments
thereto remain true and accurate in all material respects to the extent that
such facts are relevant to any relief on which Applicants continue to rely.
The
Original Order allows the Templeton Trust to offer its shares to insurance
companies as the investment vehicle for their separate accounts supporting
variable annuity contracts and variable life insurance contracts (collectively,
the "Variable Contracts"). Applicants state that the Original Order does not
(i)
include the VIP Trust or Future Funds as parties, nor (ii) expressly address
the
sale of shares of the Funds or any Future Funds to qualified pension and
retirement plans outside the separate account context including, without
limitation, those trusts, plans, accounts, contracts or annuities described
in
Sections 401(a), 403(a), 403(b), 408(b), 408(k), 414(d), 457(b), 501(c)(18)
of
the Internal Revenue Code of 1986, as amended (the "Code"), and any other trust,
plan, contract, account or annuity that is determined to be within the scope
of
Treasury Regulation 1.817.5(f)(3)(iii) ("Qualified Plans").
4.
Separate accounts owning shares of the Funds and their insurance company
depositors are referred to in the application as "Participating Separate
Accounts" and "Participating Insurance Companies," respectively. The use of
a
common management investment company as the underlying investment medium for
both variable annuity and variable life insurance separate accounts of a single
insurance company (or of two or more affiliated insurance companies) is referred
to as "mixed funding." The use of a common management investment company as
the
underlying investment medium for variable annuity and/or variable life insurance
separate accounts of unaffiliated insurance companies is referred to as "shared
funding."
Applicants'
Legal Analysis:
1.
Applicants request that the Commission issue an amended order pursuant to
Section 6(c) of the 1940 Act, adding the VIP Trust and Future Funds to the
Original Order and exempting scheduled premium variable life insurance separate
accounts and flexible premium variable life insurance separate accounts of
Participating Insurance Companies (and, to the extent necessary, any principal
underwriter and depositor of such an account) and the Applicants from Sections
9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) (and any comparable rule) thereunder, respectively, to the extent
necessary to permit shares of the Funds and any Future Funds to be sold to
and
held by Qualified Plans. Applicants submit that the exemptions requested are
appropriate in the public interest, consistent with the protection of investors,
and consistent with the purposes fairly intended by the policy and provisions
of
the 1940 Act.
2.
The
Original Order does not include the VIP Trust or Future Funds as parties nor
expressly address the sale of shares of the Funds or any Future Funds to
Qualified Plans. Applicants propose that the VIP Trust and Future Funds be
added
as parties to the Original Order and the Funds and any Future Funds be permitted
to offer and sell their shares to Qualified Plans.
3.
Section 6(c) of the 1940 Act provides, in part, that the Commission, by order
upon application, may conditionally or unconditionally exempt any person,
security or transaction, or any class or classes of persons, securities or
transactions from any provisions of the 1940 Act or the rules or regulations
thereunder, if and to the extent that such exemption is necessary or appropriate
in the public interest and consistent with the protection of investors and
the
purposes fairly intended by the policy and provisions of the 1940
Act.
4.
In
connection with the funding of scheduled premium variable life insurance
contracts issued through a separate account registered under the 1940 Act as
a
unit investment trust ("UIT"), Rule 6e-2(b)(15) provides partial exemptions
from
various provisions of the 1940 Act, including the following: (1) Section 9(a),
which makes it unlawful for certain individuals to act in the capacity of
employee, officer, or director for a UIT, by limiting the application of the
eligibility restrictions in Section 9(a) to affiliated persons directly
participating in the management of a registered management investment company;
and (2) Sections 13(a), 15(a) and 15(b) of the 1940 Act to the extent that
those
sections might be deemed to require "pass-through" voting with respect to an
underlying fund's shares, by allowing an insurance company to disregard the
voting instructions of contractowners in certain circumstances.
5.
These
exemptions are available, however, only where the management investment company
underlying the separate account (the "underlying fund") offers its shares
"exclusively to variable life insurance separate accounts of the life insurer,
or of any affiliated life insurance company." Therefore, Rule 6e-2 does not
permit either mixed funding or shared funding because the relief granted by
Rule
6e-2(b)(15) is not available with respect to a scheduled premium variable life
insurance separate account that owns shares of an underlying fund that also
offers its shares to a variable annuity or a flexible premium variable life
insurance separate account of the same company or of any affiliated life
insurance company. Rule 6e-2(b)(15) also does not permit the sale of shares
of
the underlying fund to Qualified Plans.
6.
In
connection with flexible premium variable life insurance contracts issued
through a separate account registered under the 1940 Act as a UIT, Rule
6e-3(T)(b)(15) also provides partial exemptions from Sections 9(a), 13(a),
15(a)
and 15(b) of the 1940 Act. These exemptions, however, are available only where
the separate account's underlying fund offers its shares "exclusively to
separate accounts of the life insurer, or of any affiliated life insurance
company, offering either scheduled contracts or flexible contracts, or both;
or
which also offer their shares to variable annuity separate accounts of the
life
insurer or of an affiliated life insurance company." Therefore, Rule 6e-3(T)
permits mixed funding but does not permit shared funding and also does not
permit the sale of shares of the underlying fund to Qualified Plans. As noted
above, the Original Order granted the Templeton Trust exemptive relief to permit
mixed and shared funding, but did not expressly address the sale of its shares
to Qualified Plans.
7.
Applicants note that if the Funds were to sell their shares only to Qualified
Plans, exemptive relief under Rule 6e-2 and Rule 6e-3(T) would not be necessary.
Applicants state that the relief provided for under Rule 6e-2(b)(15) and Rule
6e-3(T)(b)(15) does not relate to qualified pension and retirement plans or
to a
registered investment company's ability to sell its shares to such
plans.
8.
Applicants state that changes in the federal tax law have created the
opportunity for each of the Funds to increase its asset base through the sale
of
its shares to Qualified Plans. Applicants state that Section 817(h) of the
Internal Revenue Code of 1986, as amended (the "Code"), imposes certain
diversification standards on the assets underlying Variable Contracts. Treasury
Regulations generally require that, to meet the diversification requirements,
all of the beneficial interests in the underlying investment company must be
held by the segregated asset accounts of one or more life insurance companies.
Notwithstanding this, Applicants note that the Treasury Regulations also contain
an exception to this requirement that permits trustees of a Qualified Plan
to
hold shares of an investment company, the shares of which are also held by
insurance company segregated asset accounts, without adversely affecting the
status of the investment company as an adequately diversified underlying
investment of Variable Contracts issued through such segregated asset accounts
(Treas. Reg. 1.817-5(f)(3)(iii)).
9.
Applicants state that the promulgation of Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
under the 1940 Act preceded the issuance of these Treasury Regulations. Thus,
Applicants assert that the sale of shares of the same investment company to
both
separate accounts and Qualified Plans was not contemplated at the time of the
adoption of Rules 6e-2(b)(15) and 6e-3(T)(b)(15).
10.
Section 9(a) provides that it is unlawful for any company to serve as investment
adviser or principal underwriter of any registered open-end investment company
if an affiliated person of that company is subject to a disqualification
enumerated in Section 9(a)(1) or (2). Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
provide exemptions from Section 9(a) under certain circumstances, subject to
the
limitations on mixed and shared funding. These exemptions limit the application
of the eligibility restrictions to affiliated individuals or companies that
directly participate in the management of the underlying portfolio investment
company.
11.
Applicants state that the relief granted in Rule 6e-2(b)(15) and 6e-3(T)(b)(15)
from the requirements of Section 9 limits, in effect, the amount of monitoring
of an insurer's personnel that would otherwise be necessary to ensure compliance
with Section 9 to that which is appropriate in light of the policy and purposes
of Section 9. Applicants submit that those Rules recognize that it is not
necessary for the protection of investors or the purposes fairly intended by
the
policy and provisions of the 1940 Act to apply the provisions of Section 9(a)
to
the many individuals involved in an insurance company complex, most of whom
typically will have no involvement in matters pertaining to investment companies
funding the separate accounts.
12.
Applicants to the Original Order previously requested and received relief from
Section 9(a) and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) to the extent necessary
to
permit mixed and shared funding. Applicants maintain that the relief previously
granted from Section 9(a) will in no way be affected by the proposed sale of
shares of the Funds to Qualified Plans. Those individuals who participate in
the
management or administration of the Funds will remain the same regardless of
which Qualified Plans use such Funds. Applicants maintain that more broadly
applying the requirements of Section 9(a) because of investment by Qualified
Plans would not serve any regulatory purpose. Moreover, Qualified Plans, unlike
separate accounts, are not themselves investment companies and therefore are
not
subject to Section 9 of the 1940 Act.
13.
Applicants state that Rules 6e-2(b)(15)(iii) and 6e-3(T)(b)(15)(iii) provide
exemptions from the pass-through voting requirement with respect to several
significant matters, assuming the limitations on mixed and shared funding are
observed. Rules 6e-2(b)(15)(iii)(A) and 6e-3(T)(b)(15)(iii)(A) provide that
the
insurance company may disregard the voting instructions of its contractowners
with respect to the investments of an underlying fund or any contract between
a
fund and its investment adviser, when required to do so by an insurance
regulatory authority (subject to the provisions of paragraphs (b)(5)(i) and
(b)(7)(ii)(A) of the Rules). Rules 6e-2(b)(15)(iii)(B) and
6e-3(T)(b)(15)(iii)(A)(2) provide that the insurance company may disregard
contractowners' voting instructions if the contractowners initiate any change
in
such company's investment policies, principal underwriter, or any investment
adviser (provided that disregarding such voting instructions is reasonable
and
subject to the other provisions of paragraphs (b)(5)(ii) and (b)(7)(ii)(B)
and
(C) of the Rules).
14.
Applicants assert that Qualified Plans, which are not registered as investment
companies under the 1940 Act, have no requirement to pass-through the voting
rights to plan participants. Applicants state that applicable law expressly
reserves voting rights to certain specified persons. Under Section 403(a) of
the
Employment Retirement Income Security Act ("ERISA"), shares of a fund sold
to a
Qualified Plan must be held by the trustees of the Qualified Plan. Section
403(a) also provides that the trustee(s) must have exclusive authority and
discretion to manage and control the Qualified Plan with two exceptions: (1)
when the Qualified Plan expressly provides that the trustee(s) are subject
to
the direction of a named fiduciary who is not a trustee, in which case the
trustees are subject to proper directions made in accordance with the terms
of
the Qualified Plan and not contrary to ERISA; and (2) when the authority to
manage, acquire or dispose of assets of the Qualified Plan is delegated to
one
or more investment managers pursuant to Section 402(c)(3) of ERISA. Unless
one
of the two above exceptions stated in Section 403(a) applies, Qualified Plan
trustees have the exclusive authority and responsibility for voting proxies.
Where a named fiduciary to a Qualified Plan appoints an investment manager,
the
investment manager has the responsibility to vote the shares held unless the
right to vote such shares is reserved to the trustees or the named fiduciary.
Where a Qualified Plan does not provide participants with the right to give
voting instructions, Applicants do not see any potential for material
irreconcilable conflicts of interest between or among variable contract holders
and Qualified Plan investors with respect to voting of the respective Fund's
shares. Accordingly, Applicants state that, unlike the case with insurance
company separate accounts, the issue of the resolution of material
irreconcilable conflicts with respect to voting is not present with respect
to
such Qualified Plans since the Qualified Plans are not entitled to pass-through
voting privileges.
15.
Even
if a Qualified Plan were to hold a controlling interest in one of the Funds,
Applicants believe that such control would not disadvantage other investors
in
such Fund to any greater extent than is the case when any institutional
shareholder holds a majority of the voting securities of any open-end management
investment company. In this regard, Applicants submit that investment in a
Fund
by a Qualified Plan will not create any of the voting complications occasioned
by mixed funding or shared funding. Unlike mixed or shared funding, Qualified
Plan investor voting rights cannot be frustrated by veto rights of insurers
or
state regulators.
16.
Applicants state that some of the Qualified Plans, however, may provide for
the
trustee(s), an investment adviser (or advisers), or another named fiduciary
to
exercise voting rights in accordance with instructions from participants. Where
a Qualified Plan provides participants with the right to give voting
instructions, Applicants see no reason to believe that participants in Qualified
Plans generally or those in a particular Qualified Plan, either as a single
group or in combination with participants in other Qualified Plans, would vote
in a manner that would disadvantage Variable Contract holders. In sum,
Applicants maintain that the purchase of shares of the Funds by Qualified Plans
that provide voting rights does not present any complications not otherwise
occasioned by mixed or shared funding.
17.
Applicants do not believe that the sale of the shares of the Funds to Qualified
Plans will increase the potential for material irreconcilable conflicts of
interest between or among different types of investors. In particular,
Applicants see very little potential for such conflicts beyond that which would
otherwise exist between variable annuity and variable life insurance
contractowners.
18.
As
noted above, Section 817(h) of the Code imposes certain diversification
standards on the underlying assets of variable contracts held in an underlying
mutual fund. The Code provides that a variable contract shall not be treated
as
an annuity contract or life insurance, as applicable, for any period (and any
subsequent period) for which the investments are not, in accordance with
regulations prescribed by the Treasury Department, adequately
diversified.
19.
Treasury Department Regulations issued under Section 817(h) provide that, in
order to meet the statutory diversification requirements, all of the beneficial
interests in the investment company must be held by the segregated asset
accounts of one or more insurance companies. However, the Regulations
contain certain exceptions to this requirement, one of which allows shares
in an
underlying mutual fund to be held by the trustees of a qualified pension or
retirement plan without adversely affecting the ability of shares in the
underlying fund also to be held by separate accounts of insurance companies
in
connection with their variable contracts (Treas. Reg. 1.817-5(f)(3)(iii)).
Thus,
Applicants believe that the Treasury Regulations specifically permit "qualified
pension or retirement plans" and separate accounts to invest in the same
underlying fund. For this reason, Applicants have concluded that neither the
Code nor the Treasury Regulations or revenue rulings thereunder presents any
inherent conflict of interest.
20.
Applicants note that while there are differences in the manner in which
distributions from Variable Contracts and Qualified Plans are taxed, these
differences will have no impact on the Funds. When distributions are to be
made,
and a Separate Account or Qualified Plan is unable to net purchase payments
to
make the distributions, the Separate Account and Qualified Plan will redeem
shares of the Funds at their respective net asset value in conformity
with Rule 22c-1 under the 1940 Act (without the imposition of any sales charge)
to provide proceeds to meet distribution needs. A Qualified Plan will make
distributions in accordance with the terms of the Qualified Plan.
21.
Applicants maintain that it is possible to provide an equitable means of giving
voting rights to Participating Separate Account contractowners and to Qualified
Plans. In connection with any meeting of shareholders, the Funds will inform
each shareholder, including each Participating Insurance Company and Qualified
Plan, of information necessary for the meeting, including their respective
share
of ownership in the relevant Fund. Each Participating Insurance Company will
then solicit voting instructions in accordance with Rules 6e-2 and 6e-3(T),
as
applicable, and its participation agreement with the relevant Fund. Shares
held
by Qualified Plans will be voted in accordance with applicable law. The voting
rights provided to Qualified Plans with respect to shares of the Funds would
be
no different from the voting rights that are provided to Qualified Plans with
respect to shares of funds sold to the general public.
22.
Applicants have concluded that even if there should arise issues with respect
to
a state insurance commissioner's veto powers over investment objectives where
the interests of contractowners and the interests of Qualified Plans are in
conflict, the issues can be almost immediately resolved since the trustees
of
(or participants in) the Qualified Plans can, on their own, redeem the shares
out of the Funds. Applicants note that state insurance commissioners have been
given the veto power in recognition of the fact that insurance companies usually
cannot simply redeem their separate accounts out of one fund and invest in
another. Generally, time-consuming, complex transactions must be undertaken
to
accomplish such redemptions and transfers. Conversely, the trustees of Qualified
Plans or the participants in participant-directed Qualified Plans can make
the
decision quickly and redeem their interest in the Funds and reinvest in another
funding vehicle without the same regulatory impediments faced by separate
accounts or, as is the case with most Qualified Plans, even hold cash pending
suitable investment.
23.
Applicants also state that they do not see any greater potential for material
irreconcilable conflicts arising between the interests of participants under
Qualified Plans and contractowners of Participating Separate Accounts from
possible future changes in the federal tax laws than that which already exist
between variable annuity contractowners and variable life insurance
contractowners.
24.
Applicants state that the sale of shares of the Funds to Qualified Plans in
addition to separate accounts of Participating Insurance Companies will result
in an increased amount of assets available for investment by the Funds. This
may
benefit variable contractowners by promoting economies of scale, by permitting
increased safety of investments through greater diversification, and by making
the addition of new portfolios more feasible.
25.
Applicants assert that, regardless of the type of shareholders in each Fund,
each Fund's Investment Manager is or would be contractually and otherwise
obligated to manage the Fund solely and exclusively in accordance with that
Fund's investment objectives, policies and restrictions as well as any
guidelines established by the Board of Trustees of such Fund (the "Board").
The
Investment Manager works with a pool of money and (except in a few instances
where this may be required in order to comply with state insurance laws) does
not take into account the identity of the shareholders. Thus, each Fund will
be
managed in the same manner as any other mutual fund. Applicants therefore see
no
significant legal impediment to permitting the sale of shares of the Funds
to
Qualified Plans.
26.
Applicants state that the Commission has permitted the amendment of a
substantially similar original order for the purpose of adding a party to the
original order and has permitted open-end management investment companies to
offer their shares directly to Qualified Plan in addition to separate accounts
of affiliated or unaffiliated insurance companies which issue either or both
variable annuity contracts or variable life insurance contracts. Applicants
state that the amended order sought in the application is identical to precedent
with respect to the conditions Applicants propose should be imposed on Qualified
Plans in connection with investment in the Funds.
Applicants'
Conditions:
If
the
requested amended order is granted, Applicants consent to the following
conditions:
1.
A
majority of the Board of each Fund shall consist of persons who are not
"interested persons" thereof, as defined by Section 2(a)(19) of the 1940 Act,
and the rules thereunder and as modified by any applicable orders of the
Commission, except that if this condition is not met by reason of the death,
disqualification or bona fide resignation of any Board Member or Members, then
the operation of this condition shall be suspended: (a) for a period of 45
days
if the vacancy or vacancies may be filled by the remaining Board Members; (b)
for a period of 60 days if a vote of shareholders is required to fill the
vacancy or vacancies; or (c) for such longer period as the Commission may
prescribe by order upon application.
2.
The
Board will monitor their respective Fund for the existence of any material
irreconcilable conflict among the interests of the Variable Contract owners
of
all Separate Accounts investing in the Funds and of the Qualified Plan
participants investing in the Funds. The Board will determine what action,
if
any, shall be taken in response to such conflicts. A material irreconcilable
conflict may arise for a variety of reasons, including: (a) an action by any
state insurance regulatory authority; (b) a change in applicable federal or
state insurance, tax or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretive letter, or any similar action
by insurance, tax or securities regulatory authorities; (c) an administrative
or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of the Funds are being managed; (e) a difference in voting
instructions given by variable annuity contract owners, variable life insurance
contract owners, and trustees of Qualified Plans; (f) a decision by an insurer
to disregard the voting instructions of Variable Contract owners; or (g) if
applicable, a decision by a Qualified Plan to disregard the voting instructions
of Qualified Plan participants.
3.
Participating Insurance Companies, the Investment Managers, and any Qualified
Plan that executes a fund participation agreement upon becoming an owner of
10
percent or more of the assets of an Fund (a "Participating Qualified Plan"),
will report any potential or existing conflicts of which it becomes aware to
the
Board of any relevant Fund. Participating Insurance Companies, the Investment
Managers and the Participating Qualified Plans will be responsible for assisting
the Board in carrying out its responsibilities under these conditions by
providing the Board with all information reasonably necessary for the Board
to
consider any issues raised. This responsibility includes, but is not limited
to,
an obligation by each Participating Insurance Company to inform the Board
whenever voting instructions of Contract owners are disregarded and, if
pass-through voting is applicable, an obligation by each Participating Qualified
Plan to inform the Board whenever it has determined to disregard Qualified
Plan
participant voting instructions. The responsibility to report such information
and conflicts, and to assist the Board, will be contractual obligations of
all
Participating Insurance Companies investing in the Funds under their agreements
governing participation in the Funds, and such agreements shall provide that
these responsibilities will be carried out with a view only to the interests
of
the Variable Contract owners. The responsibility to report such information
and
conflicts, and to assist the Board, will be contractual obligations of all
Participating Qualified Plans under their agreements governing participation
in
the Funds, and such agreements will provide that their responsibilities will
be
carried out with a view only to the interests of Qualified Plan
participants.
4.
If it
is determined by a majority of the Board of a Fund, or by a majority of the
disinterested Board Members, that a material irreconcilable conflict exists,
the
relevant Participating Insurance Companies and Participating Qualified Plans
will, at their own expense and to the extent reasonably practicable as
determined by a majority of the disinterested Board Members, take whatever
steps
are necessary to remedy or eliminate the material irreconcilable conflict,
which
steps could include: (a) in the case of Participating Insurance Companies,
withdrawing the assets allocable to some or all of the Separate Account s from
the Fund or any portfolio thereof and reinvesting such assets in a different
investment medium, including another portfolio of an Fund or another Fund,
or
submitting the question as to whether such segregation should be implemented
to
a vote of all affected Variable Contract owners and, as appropriate, segregating
the assets of any appropriate group (i.e., variable annuity contract owners
or
variable life insurance contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
Variable Contract owners the option of making such a change; (b) in the case
of
Participating Qualified Plans, withdrawing the assets allocable to some or
all
of the Qualified Plans from the Fund and reinvesting such assets in a different
investment medium; and (c) establishing a new registered management investment
company or managed Separate Account. If a material irreconcilable conflict
arises because of a decision by a Participating Insurance Company to disregard
Variable Contract owner voting instructions, and that decision represents a
minority position or would preclude a majority vote, then the insurer may be
required, at the Fund's election, to withdraw the insurer's Separate Account
investment in such Fund, and no charge or penalty will be imposed as a result
of
such withdrawal. If a material irreconcilable conflict arises because of a
Participating Qualified Plan's decision to disregard Qualified Plan participant
voting instructions, if applicable, and that decision represents minority
position or would preclude a majority vote, the Participating Qualified Plan
may
be required, at the Fund's election, to withdraw its investment in such Fund,
and no charge or penalty will be imposed as a result of such withdrawal. The
responsibility to take remedial action in the event of a determination by a
Board of a material irreconcilable conflict and to bear the cost of such
remedial action will be a contractual obligation of all Participating Insurance
Companies and Participating Qualified Plans under their agreements governing
participation in the Funds, and these responsibilities will be carried out
with
a view only to the interest of Variable Contract owners and Qualified Plan
participants.
5.
For
purposes of Condition 4, a majority of the disinterested Board Members of the
applicable Board will determine whether or not any proposed action adequately
remedies any material irreconcilable conflict, but in no event will the relevant
Fund or the Investment Managers be required to establish a new funding medium
for any Contract. No Participating Insurance Company shall be required by
Condition 4 to establish a new funding medium for any Variable Contract if
any
offer to do so has been declined by vote of a majority of the Variable Contract
owners materially and adversely affected by the material irreconcilable
conflict. Further, no Participating Qualified Plan shall be required by
Condition 4 to establish a new funding medium for any Participating Qualified
Plan if (a) a majority of Qualified Plan participants materially and adversely
affected by the irreconcilable material conflict vote to decline such offer,
or
(b) pursuant to governing Qualified Plan documents and applicable law, the
Participating Qualified Plan makes such decision without a Qualified Plan
participant vote.
6.
The
determination of the Board of the existence of a material irreconcilable
conflict and its implications will be made known in writing promptly to all
Participating Insurance Companies and Participating Qualified
Plans.
7.
Participating Insurance Companies will provide pass-through voting privileges
to
Variable Contract owners who invest in registered Separate Accounts so long
as
and to the extent that the Commission continues to interpret the 1940 Act as
requiring pass-through voting privileges for Variable Contract owners. As to
Variable Contracts issued by unregistered Separate Accounts, pass-through voting
privileges will be extended to participants to the extent granted by issuing
insurance companies. Each Participating Insurance Company will also vote shares
of the Funds held in its Separate Accounts for which no voting instructions
from
Contract owners are timely received, as well as shares of the Funds which the
Participating Insurance Company itself owns, in the same proportion as those
shares of the Funds for which voting instructions from contract owners are
timely received. Participating Insurance Companies will be responsible for
assuring that each of their registered Separate Accounts participating in the
Funds calculates voting privileges in a manner consistent with other
Participating Insurance Companies. The obligation to calculate voting privileges
in a manner consistent with all other registered Separate Accounts investing
in
the Funds will be a contractual obligation of all Participating Insurance
Companies under their agreements governing their participation in the Funds.
Each Participating Qualified Plan will vote as required by applicable law and
governing Qualified Plan documents.
8.
All
reports of potential or existing conflicts received by the Board of a Fund
and
all action by such Board with regard to determining the existence of a conflict,
notifying Participating Insurance Companies and Participating Qualified Plans
of
a conflict, and determining whether any proposed action adequately remedies
a
conflict, will be properly recorded in the minutes of the meetings of such
Board
or other appropriate records, and such minutes or other records shall be made
available to the Commission upon request.
9.
Each
Fund will notify all Participating Insurance Companies that separate disclosure
in their respective Separate Account prospectuses may be appropriate to advise
accounts regarding the potential risks of mixed and shared funding. Each Fund
shall disclose in its prospectus that (a) the Fund is intended to be a funding
vehicle for variable annuity and variable life insurance contracts offered
by
various insurance companies and for qualified pension and retirement plans;
(b)
due to differences of tax treatment and other considerations, the interests
of
various Contract owners participating in the Fund and/or the interests of
Qualified Plans investing in the Fund may at some time be in conflict; and
(c)
the Board of such Fund will monitor events in order to identify the existence
of
any material irreconcilable conflicts and to determine what action, if any,
should be taken in response to any such conflict.
10.
Each
Fund will comply with all provisions of the 1940 Act requiring voting by
shareholders (which, for these purposes, will be the persons having a voting
interest in the shares of the Funds), and, in particular, the Funds will either
provide for annual shareholder meetings (except insofar as the Commission may
interpret Section 16 of the 1940 Act not to require such meetings) or comply
with Section 16(c) of the 1940 Act, although the Funds are not the type of
trust
described in Section 16(c) of the 1940 Act, as well as with Section 16(a) of
the
1940 Act and, if and when applicable, Section 16(b) of the 1940 Act. Further,
each Fund will act in accordance with the Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of Board
Members and with whatever rules the Commission may promulgate with respect
thereto.
11.
If
and to the extent Rules 6e-2 or 6e-3(T) under the 1940 Act is amended, or
proposed Rule 6e-3 under the 1940 Act is adopted, to provide exemptive relief
from any provision of the 1940 Act or the rules promulgated thereunder, with
respect to mixed or shared funding on terms and conditions materially different
from any exemptions granted in the order requested in the application, then
the
Funds and/or Participating Insurance Companies and Participating Qualified
Plans, as appropriate, shall take such steps as may be necessary to comply
with
such Rules 6e-2 and 6e-3(T), as amended, or proposed Rule 6e-3, as adopted,
to
the extent that such Rules are applicable.
12.
The
Participating Insurance Companies and Participating Qualified Plans and/or
the
Investment Managers, at least annually, will submit to the Board such reports,
materials or data as the Board may reasonably request so that the Board may
fully carry out obligations imposed upon it by the conditions contained in
the
application. Such reports, materials and data will be submitted more frequently
if deemed appropriate by the Board. The obligations of the Participating
Insurance Companies and Participating Qualified Plans to provide these reports,
materials and data to the Board, when the Board so reasonably requests, shall
be
a contractual obligation of all Participating Insurance Companies and
Participating Qualified Plans under their agreements governing participation
in
the Funds.
13. If
a Qualified Plan should ever become a holder of ten percent or more of the
assets of a Fund, such Qualified Plan will execute a participation agreement
with the Fund that includes the conditions set forth herein to the extent
applicable. A Qualified Plan will execute an application containing an
acknowledgment of this condition upon such Qualified Plan's initial purchase
of
the shares of any Fund.
Conclusion:
Applicants
assert that, for the reasons summarized above, the requested exemptions are
appropriate in the public interest and consistent with the protection of
investors and the purposes fairly intended by the policy and provisions of
the
1940 Act.
For
the
Commission, by the Division of Investment Management, pursuant to delegated
authority.
Templeton
Variable Products Series Fund, et al.
File
No.
812-11698
SECURITIES
AND EXCHANGE COMMISSION
Release
No. IC-24079
1999
SEC
LEXIS 2177
October
13, 1999
A
notice
of the filing of the application was issued on September 17, 1999 (Rel. No.
IC-24018). The notice gave interested persons an opportunity to request a
hearing and stated that an order granting the application would be issued unless
a hearing should be ordered. No request for a hearing has been filed, and the
Commission has not ordered a hearing.
The
matter has been considered, and it is found that granting the requested
exemptions is appropriate in the public interest and consistent with the
protection of investors and the purposes intended by the policy and provisions
of the 1940 Act.
Accordingly,
IT
IS
ORDERED, pursuant to Section 6(c) of the 1940 Act, that the requested exemptions
from Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, be, and hereby are, granted,
effective forthwith.
For
the
Commission, by the Division of Investment Management, pursuant to delegated
authority.
Participation
Agreement Addendum
as
of May
1, 2004
by
and
among
Franklin
Xxxxxxxxx Variable Insurance Products Trust
Franklin/Xxxxxxxxx
Distributors, Inc.
Nationwide
Life Insurance Company
Nationwide
Life and Annuity Insurance Company
Nationwide
Investment Services Corporation
Nationwide
Life Insurance Company of America
Nationwide
Life and Annuity Company of America
1717
Capital Management Company
Franklin
Xxxxxxxxx Variable Insurance Products Trust (the “Trust”), Franklin/Xxxxxxxxx
Distributors, Inc. (together with the Trust, “we” or “us”) and Nationwide Life
Insurance Company, Nationwide Life and Annuity Insurance Company, Nationwide
Investment Services Corporation, Nationwide Life Insurance Company of America,
Nationwide Life and Annuity Company of America, and 1717 Capital Management
Company (altogether, “you”), on your behalf and on behalf of certain Accounts,
have previously entered into a Participation Agreement dated May 1, 2003
(the “Agreement”). The parties now desire to supplement the Agreement
in this Addendum (the “Addendum”). Except as modified hereby, all
other terms and conditions of the Agreement shall remain in full force and
effect. Unless otherwise indicated, the terms defined in the
Agreement shall have the same meaning as in this Addendum. Schedules
to this Addendum supplement the Schedules in the Agreement that share the same
identifying letter.
WHEREAS,
certain short-term trading practices may have a harmful or deleterious effect
on, the series of the Trust listed on Schedule C of this Addendum (the “Funds”),
which serve as investment options through certain Accounts under the Contracts;
and
WHEREAS,
you acknowledge that such short-term trading practices may have a harmful or
deleterious impact on the Funds; and
WHEREAS,
the Trust has introduced a share class of the Funds with short-term redemption
fees (“Class 3 shares”); and
WHEREAS,
you have implemented administrative systems that will permit you to, on behalf
of the Funds, assess and collect short-term redemption fees against owners
of
variable insurance contracts that offer Class 3 shares of the Funds as
investment options of certain Accounts (“Class 3 Contracts”);
and
WHEREAS,
you and we agree that the imposition of short-term redemption fees on certain
redemptions of Class 3 shares of the Funds may help offset costs of the
Funds associated with short-term trading redemptions.
NOW,
THEREFORE, in consideration of our mutual promises, you and we agree as
follows:
1. Acceptance
of Orders and Trust Policies. All orders submitted by you
with respect to each Fund shall be subject to the terms of the then current
prospectus of each Fund. You represent that Contracts are intended
for long-term investors. You have adopted policies and procedures
designed to detect and deter short-term trading and/or disruptive trading
practices, including, but not limited to, monitoring of contract owner trading
activity and imposing trading restrictions. These policies are
disclosed in the Contract prospectuses.
2. Your
Systems and Records. You represent and warrant that
you have, maintain and periodically test, systems, processes and procedures
to
modify and track the holding period of interests of Class 3 Contract owners
in Accounts corresponding to Class 3 shares of the Funds for sixty (60)
days, and fulfill relevant regulatory obligations. You shall be
responsible for monitoring the holding period of interests of Class 3
Contract owners and for tracking such holding periods for purposes of assessing
redemption fees in conjunction with those transactions subject to such fees,
subject to any reasonable exceptions as set forth in products prospectuses
for
the Class 3 Contracts. You shall maintain records supporting
your calculation of redemption fees payable to each Fund and shall provide
the
Trust and/or its designated agents with access to, or copies of, such records
upon their reasonable request. You shall calculate the amount of
redemption fees payable to each Fund on a daily basis and such amount shall
be
netted against the redemption proceeds payable by the Trust on behalf of the
Funds for Class 3 shares of the Funds.
3. Actions
by Nationwide. Nothing in this Agreement shall be construed
to require actions on your part that would, in your best judgment, constitute
the violation or breach of any duty you owe to purchasers of variable insurance
contracts established prior to the creation of the Class 3
shares.
4. Acknowledgement
by the Trust. The Trust acknowledges that, with the addition
of Class 3 shares to the Funds and your offering of Class 3 shares of
the Funds as investment options under Class 3 Contracts, you may be
subjected to unfavorable comparisons with other insurance carriers that offer
the Funds, but not Class 3 shares of the Funds, as investment options under
their variable insurance products. Moreover, the Trust acknowledges
that the ameliorative benefits that may be realized by the Funds in connection
with your offering Class 3 shares of the Funds as investment options under
the Class 3 Contracts may benefit other Fund investors and other insurance
company contract and policy owners. Notwithstanding the foregoing
sentences of this paragraph 4, you acknowledge that the Trust cannot and
will not compel insurance carriers offering the Funds as investment options
to
offer Class 3 shares of the Funds as investment options under their
variable insurance contracts.
5. Termination. In
addition to the provisions of Section 9 of the Agreement, which shall remain
in
full force and effect, if the Trust’s Board of Trustees, in the exercise of its
fiduciary duties, determines to terminate this Addendum with respect to any
Fund or to eliminate the Class 3 shares of any or all of the Funds, then
the Trust may redeem, in accordance with its prospectus, the Class 3 shares
of
the affected Fund(s) held by the Accounts on the effective date of such
termination or such elimination, which shall be done in consultation with you
to
provide an orderly transfer; provided further that any such liquidation
of a Fund will not occur prior to up to six (6) months following written notice
to you, and during this time, the Trust will cooperate reasonably in effecting
a
transfer of assets to another investment vehicle pursuant to an exchange offer,
SEC substitution order, SEC no-action letter, or other legal and appropriate
means.
IN
WITNESS WHEREOF, you and we have caused our duly authorized officers to execute
this Addendum.
The
Company:
Nationwide
Life Insurance Company, and
Nationwide
Life and Annuity Insurance Company
By:
Name:
[Xxxxxxx X. Xxxxxx]
Title:
[Vice President]
Nationwide
Life Insurance Company of America, and
Nationwide
Life and Annuity Company of America
By:
Name:
[Xxxxxxx X. Xxxxxx]
Title:
[Vice President]
Distributor
for the Company
1717
Capital Management Company
By:
Name:
[Xxxx Xxxxxx]
Title:
[Assistant Treasurer]
Nationwide
Investment Services Corporation
By:
Name:
[Xxxxx X. Xxxxxx]
Title:
[Vice President]
The
Trust:
Franklin
Xxxxxxxxx Variable Insurance Products Trust
Only
on behalf of each Fund.
By:
Name: Xxxxx
X. Xxxxxxxx
Title: Vice
President
The
Underwriter:
Franklin/Xxxxxxxxx
Distributors, Inc.
By:
Name: Xxxxxx
Xxxxxx
Title: Senior
Vice President
Schedule C
Available
Portfolios and Classes of Shares of the Trust; Investment
Advisers
|
Franklin
Xxxxxxxxx Variable Insurance Products Trust
|
Investment
Adviser
|
|
Templeton
Developing Markets Securities Fund – Class 3
|
Xxxxxxxxx
Asset Management Ltd.
|
|
Templeton
Foreign Securities Fund – Class 3
|
Xxxxxxxxx
Investment Counsel, LLC
|
|
Templeton
Global Income Securities Fund – Class 3
|
Franklin
Advisers Inc.
|
Amendment
#1 to
Amended
and Restated Participation Agreement
As
of May
1, 2006
by
and
among
Franklin
Xxxxxxxxx Variable Insurance Products Trust
Franklin/Xxxxxxxxx
Distributors, Inc.
Nationwide
Life Insurance Company
Nationwide
Life and Annuity Insurance Company
Nationwide
Investment Services Corporation
Nationwide
Life Insurance Company of America
Nationwide
Life and Annuity Company of America
1717
Capital Management Company
Franklin
Xxxxxxxxx Variable Insurance Products Trust (the “Trust”), Franklin/Xxxxxxxxx
Distributors, Inc. (the “Underwriter,” and together with the Trust, “we” or
“us”), Nationwide Life Insurance Company, Nationwide Life and Annuity Insurance
Company, Nationwide Life Insuance Company of America, Nationwide Life and
Annuity Company of America (together “you”), Nationwide Investment Services
Corporation and 1717 Capital Management Company, your distributors, on your
behalf and on behalf of certain Accounts, have previously entered into an
Amended and Restated Participation Agreement dated May 1, 2003 (the
“Agreement”). The parties now desire to amend the Agreement in this
amendment (the “Amendment”).
Except
as
modified hereby, all other terms and conditions of the Agreement shall remain
in
full force and effect. Unless otherwise indicated, the terms defined
in the Agreement shall have the same meaning in this Amendment.
A
M E N D M E N T
For
good
and valuable consideration, the receipt of which is hereby acknowledged,
the
parties agree to amend the Agreement as follows:
|
1.
|
Section
2.3.2 is amended and restated in its entirety as
follows:
|
“2.3.2 Each
investment adviser (each, an “Adviser”) of a Portfolio, as indicated in the
current prospectus of the Portfolio, is duly registered as an investment
adviser
under the Investment Advisers Act of 1940, as amended or exempt from such
registration.”
2. Schedules
B, C, D, F and G of the Agreement are deleted and replaced in their entirety
with the Schedules B, C, D, F and G attached hereto, respectively.
3. All
other terms and provisions of the Agreement not amended herein shall remain
in
full force and effect.
IN
WITNESS WHEREOF, each of the parties has caused its duly authorized officers
to
execute this Amendment effective as of May 1, 2006.
|
The
Company:
|
|
|
NATIONWIDE
LIFE INSURANCE COMPANY
By:
Name:
[Xxxx Xxxxxx]
Title:
[Officer]
|
NATIONWIDE
LIFE AND ANNUITY INSURANCE COMPANY
By:
Name:
[Xxxx Xxxxxx]
Title:
[Officer]
|
|
NATIONWIDE
LIFE INSURANCE COMPANY OF AMERICA
By:
Name:
[Xxxx Xxxxxx]
Title:
[Officer]
|
NATIONWIDE
LIFE AND ANNUITY COMPANY OF AMERICA
By:
Name:
[Xxxx Xxxxxx]
Title:
[Officer]
|
|
Distributors
for the Company:
|
|
|
NATIONWIDE
INVESTMENT SERVICES CORPORATION
By:
Name:
[Xxxxx X. Xxxxxx]
Title:
[Officer]
|
1717
CAPITAL MANAGEMENT COMPANY
By:
Name:
[Xxxx Xxxxxx]
Title:
[Officer]
|
|
The
Trust: (Only on behalf of each Portfolio listed on Schedule C
hereof)
|
The
Underwriter:
|
|
FRANKLIN
XXXXXXXXX VARIABLE INSURANCE PRODUCTS TRUST
By:
Name: Xxxxx
X. Xxxxxxxx
Title: Vice
President
|
FRANKLIN/XXXXXXXXX
DISTRIBUTORS, INC.
By:
Name: Xxxxxx
X. Xxxx
Title: Senior
Vice President
|
Schedule
B
Accounts
of the Company
|
#
|
Name
of Account
|
SEC
Registration Yes/No
|
|
1.
|
Nationwide
Multi-Flex Variable Account
|
Yes
|
|
2.
|
Nationwide
Private Placement Variable Account
|
No
|
|
3.
|
Nationwide
Provident VLI Separate Account 1
|
Yes
|
|
4.
|
Nationwide
Provident VLI Separate Account A
|
Yes
|
|
5.
|
Nationwide
Variable Account
|
Yes
|
|
6.
|
Nationwide
Variable Account-II
|
Yes
|
|
7.
|
Nationwide
Variable Account-7
|
Yes
|
|
8.
|
Nationwide
Variable Account-9
|
Yes
|
|
9.
|
Nationwide
Variable Account-13
|
Yes
|
|
10.
|
Nationwide
Variable Account-14
|
Yes
|
|
11.
|
Nationwide
VL Separate Account-C
|
Yes
|
|
12.
|
Nationwide
VL Separate Account-D
|
Yes
|
|
13.
|
Yes
|
|
|
14.
|
Nationwide
VLI Separate Account-2
|
Yes
|
|
15.
|
Nationwide
VLI Separate Account-4
|
Yes
|
|
16.
|
Nationwide
VLI Separate Account-7
|
Yes
|
Schedule C
Available
Portfolios and Classes of Shares of the Trust
|
1.
|
Franklin
Income Securities Fund – Class 2
|
|
2.
|
Franklin
Rising Dividends Securities Fund –
Classes 1 &2
|
|
3.
|
Franklin
Small Cap Value Securities Fund – Classes 1 &
2
|
|
4.
|
Franklin
Small-Mid Cap Growth Securities Fund - Class
2
|
|
5.
|
Franklin
U.S. Government Fund – Class 2
|
|
6.
|
Mutual
Shares Securities Fund – Class 1
|
|
7.
|
Xxxxxxxxx
Developing Markets Securities Fund – Class
2
|
|
8.
|
Xxxxxxxxx
Foreign Securities Fund – Classes 1 &
2
|
|
9.
|
Xxxxxxxxx
Growth Securities Fund – Class 2
|
Schedule
D
Contracts
of the Company
|
1.
|
Soloist
|
|
2.
|
Successor
|
|
3.
|
NEA
Valuebuilder
|
|
4.
|
BOA
Future II
|
|
5.
|
BOA
All American Gold
|
|
6.
|
BOA
Achiever
|
|
7.
|
BOA
Future Venue
|
|
8.
|
BOA
Exclusive Venue
|
|
9.
|
BOA
Elite Venue
|
|
10.
|
BOA
Choice Venue II
|
|
11.
|
Schwab
VA
|
|
12.
|
All
American Annuity
|
|
13.
|
BOA
Future
|
|
14.
|
BOA
V
|
|
15.
|
BOA
America’s Income Annuity
|
|
16.
|
BOA
Advisor
|
|
17.
|
BOA
TruAccord Annuity
|
|
18.
|
BOA
MSPVL
|
|
19.
|
BOA
FPVUL
|
|
20.
|
BOA
The Next Generation FPVUL
|
|
21.
|
BOA
CVUL Future
|
|
22.
|
BOA
Last Survivor Future
|
|
23.
|
BOA
Last Survivor III
|
|
24.
|
BOA
MSPVL Future
|
|
25.
|
BOA
Protection FPVUL
|
|
26.
|
Protection
Last Survivor
|
|
27.
|
BOA
The Next Generation FPVUL II
|
|
28.
|
Nationwide
Options Select NY
|
|
29.
|
BOA
CVUL Future (NLAIC)
|
|
30.
|
Private
Client CVUL
|
|
31.
|
Nationwide
Options Select
|
|
32.
|
Private
Placement Variable Universal Life
|
|
33.
|
Options
Premier (333-67775)
|
|
34.
|
Survivor
Options Premier (333-82611)
|
|
35.
|
Options
Premier (333-71763)
|
|
36.
|
Options
Plus
|
|
37.
|
Survivor
Options Elite
|
|
38.
|
Survivor
Options Premier (333-84475)
|
|
39.
|
BOA
IV
|
|
40.
|
BOA
Vision
|
|
41.
|
NEBA
|
|
42.
|
Choice
|
|
43.
|
Exclusive
II
|
Schedule F
Rule
12b-1 Plans of the Trust
Compensation
Each
Class 2 Portfolio named on Schedule C of this Agreement is eligible to
receive a maximum annual payment rate of ____% stated as a percentage per
year
of that Portfolio’s Class 2 average daily net assets, pursuant to the terms and
conditions referenced below under its Class 2 Rule 12b-1 Distribution
Plan.
Agreement
Provisions
If
the
Company, on behalf of any Account, purchases Trust Portfolio shares (“Eligible
Shares”) that are subject to a Rule 12b-1 plan adopted under the 1940 Act
(the “Plan”), the Company may participate in the Plan.
To
the
extent the Company or its affiliates, agents or designees (collectively “you”)
provide any activity or service which is primarily intended to assist in
the
promotion, distribution or account servicing of Eligible Shares (“Rule 12b-1
Services”) or variable contracts offering Eligible Shares, the Underwriter, the
Trust or their affiliates (collectively, “we”) may pay you a Rule 12b-1
fee. “Rule 12b-1 Services” may include, but are not limited to,
printing of prospectuses and reports used for sales purposes, preparing and
distributing sales literature and related expenses, advertisements, education
of
dealers and their representatives, and similar distribution-related expenses,
furnishing personal services to owners of Contracts which may invest in Eligible
Shares (“Contract Owners”), education of Contract Owners, answering routine
inquiries regarding a Portfolio, coordinating responses to Contract Owner
inquiries regarding the Portfolios, maintaining such accounts or providing
such
other enhanced services as a Trust Portfolio or Contract may require, or
providing other services eligible for service fees as defined under NASD
rules.
Your
acceptance of such compensation is your acknowledgment that eligible services
have been rendered. All Rule 12b-1 fees, shall be based on the value
of Eligible Shares owned by the Company on behalf of its Accounts, and shall
be
calculated on the basis and at the rates set forth in the compensation provision
stated above. The aggregate annual fees paid pursuant to each Plan
shall not exceed the amounts stated as the “annual maximums” in the Portfolio’s
prospectus, unless an increase is approved by shareholders as provided in
the
Plan. These maximums shall be a specified percent of the value of a
Portfolio’s net assets attributable to Eligible Shares owned by the Company on
behalf of its Accounts (determined in the same manner as the Portfolio uses
to
compute its net assets as set forth in its effective Prospectus). The
Rule 12b-1 fee will be paid to you within thirty (30) days after the end
of the
three-month periods ending in January, April, July and October.
You
shall
furnish us with such information as shall reasonably be requested by the
Trust’s
Boards of Trustees (“Trustees”) with respect to the Rule 12b-1 fees paid to you
pursuant to the Plans. We shall furnish to the Trustees, for their
review on a quarterly basis, a written report of the amounts expended under
the
Plans and the purposes for which such expenditures were made.
The
Plans
and provisions of any agreement relating to such Plans must be approved annually
by a vote of the Trustees, including the Trustees who are not interested
persons
of the Trust and who have no financial interest in the Plans or any related
agreement (“Disinterested Trustees”). Each Plan may be terminated at
any time by the vote of a majority of the Disinterested Trustees, or by a
vote
of a majority of the outstanding shares as provided in the Plan, on sixty
(60)
days’ written notice, without payment of any penalty. The Plans may
also be terminated by any act that terminates the Underwriting Agreement
between
the Underwriter and the Trust, and/or the management or administration agreement
between Franklin Advisers, Inc. and its affiliates and the
Trust. Continuation of the Plans is also conditioned on Disinterested
Trustees being ultimately responsible for selecting and nominating any new
Disinterested Trustees. Under Rule 12b-1, the Trustees have a duty to
request and evaluate, and persons who are party to any agreement related
to a
Plan have a duty to furnish, such information as may reasonably be necessary
to
an informed determination of whether the Plan or any agreement should be
implemented or continued. Under Rule 12b-1, the Trust is permitted to
implement or continue Plans or the provisions of any agreement relating to
such
Plans from year-to-year only if, based on certain legal considerations, the
Trustees are able to conclude that the Plans will benefit each affected Trust
Portfolio and class. Absent such yearly determination, the Plans must
be terminated as set forth above. In the event of the termination of
the Plans for any reason, the provisions of this Schedule F relating to the
Plans will also terminate.
Any
obligation assumed by the Trust pursuant to this Agreement shall be limited
in
all cases to the assets of the Trust and no person shall seek satisfaction
thereof from shareholders of the Trust. You agree to waive payment of
any amounts payable to you by Underwriter under a Plan until such time as
the
Underwriter has received such fee from the Trust.
The
provisions of the Plans shall control over the provisions of the Participation
Agreement, including this Schedule F, in the event of any inconsistency.
You agree to provide complete disclosure as required by all applicable statutes,
rules and regulations of all rule 12b-1 fees received from us in the prospectus
of the Contracts.
Schedule G
Addresses
for Notices
|
To
the Company:
|
Nationwide
Life Insurance Company
|
|
Nationwide
Life and Annuity Insurance Company
|
|
|
Nationwide
Life Insurance Company of America
|
|
|
Nationwide
Life and Annuity Company of America
|
|
|
Xxx
Xxxxxxxxxx Xxxxx, 00-00-00
|
|
|
Xxxxxxxx,
XX 00000
|
|
|
Attention: Vice
President - Investment and Advisory Services
|
|
|
With
a copy to:
|
Nationwide
Life Insurance Company
|
|
Nationwide
Life and Annuity Insurance Company
|
|
|
Nationwide
Life Insurance Company of America
|
|
|
Nationwide
Life and Annuity Company of America
|
|
|
Xxx
Xxxxxxxxxx Xxxxx, 00-00-X0
|
|
|
Xxxxxxxx,
XX 00000
|
|
|
Attention:
Associate General Counsel
|
|
|
To
the Distributor:
|
Nationwide
Investment Services Corporation
|
|
Xxx
Xxxxxxxxxx Xxxxx, 0-00-00
|
|
|
Xxxxxxxx,
Xxxx 00000
|
|
|
Attention:
AVP- Compliance
|
|
|
1717
Capital Management Company
|
|
|
Christiana
Executive Campus
|
|
|
X.X.
Xxx 00000
|
|
|
Xxxxxxxxxx,
XX 00000
|
|
|
Attention:
VP & Assistant Secretary
|
|
|
To
the Trust:
|
Franklin
Xxxxxxxxx Variable Insurance Products Trust
|
|
Xxx
Xxxxxxxx Xxxxxxx, Xxxx. 000 0xx
Xxxxx
|
|
|
Xxx
Xxxxx, Xxxxxxxxxx 00000
|
|
|
Attention: Xxxxx
X. Xxxxxxxx, Vice President
|
|
|
To
the Underwriter:
|
Franklin/Xxxxxxxxx
Distributors, Inc.
|
|
000
Xxxxxxxx Xxxxxxx, 0xx
Xxxxx
|
|
|
Xx.
Xxxxxxxxxx, XX 00000
|
|
|
Attention: Xxxxx
Xxxxx, President
|
|
|
If
to the Trust or Underwriter
|
|
|
with
a copy to:
|
Franklin
Xxxxxxxxx Xxxxxxxxxxx
|
|
Xxx
Xxxxxxxx Xxxxxxx, Xxxx. 000 0xx
Xxxxx
|
|
|
Xxx
Xxxxx, Xxxxxxxxxx 00000
|
|
|
Attention: General
Counsel
|
Amendment
[#2] toParticipation Agreement
Franklin
Xxxxxxxxx Variable Insurance Products Trust
Franklin/Xxxxxxxxx
Distributors, Inc.
Nationwide
Life Insurance Company
Nationwide
Life and Annuity Insurance Company
Nationwide
Investment Services Corporation
Nationwide
Life Insurance Company of America
Nationwide
Life and Annuity Company of America
1717
Capital Management Company
Franklin
Xxxxxxxxx Variable Insurance Products Trust (the “Trust”), Franklin/Xxxxxxxxx
Distributors, Inc. (the “Underwriter,” and together with the Trust, “we” or
“us”), Nationwide Life Insurance Company, Nationwide Life and Annuity Insurance
Company, Nationwide Life Insuance Company of America, Nationwide Life and
Annuity Company of America (together the “Company”
or
“you”), Nationwide Investment Services Corporation and 1717 Capital Management
Company, your distributors, on your behalf and on behalf of certain Accounts,
have previously entered into a Participation Agreement dated May 1, 2003,
as
amended, (the “Agreement”). The parties now desire to amend the
Agreement by this amendment (the “Amendment”).
Except
as
modified hereby, all other terms and conditions of the Agreement shall remain
in
full force and effect. Unless otherwise indicated, the terms defined
in the Agreement shall have the same meaning in this Amendment.
A
M E N D M E N T
For
good
and valuable consideration, the receipt of which is hereby acknowledged,
the
parties agree to amend the Agreement as follows:
|
1.
|
Section
1 and Section 2.3.1 are hereby each amended to reflect that Franklin
Xxxxxxxxx Variable Insurance Products Trust (the “Trust”) is organized as
a statutory trust under the laws of the State of Delaware, effective
as of
May 1, 2007.
|
2. Section
3.1.3 is amended and restated in its entirety as follows:
“3.1.3 We
agree that shares of the Trust will be sold only to: (i) life
insurance companies which have entered into fund participation agreements
with
the Trust (“Participating Insurance Companies”) and their separate accounts or
to qualified pension and retirement plans in accordance with the Shared Funding
Order; and (II) investment companies in the form of funds of
funds. No shares of any Portfolio will be sold to the general
public.”
3. Section
5.2 is amended and restated in its entirety as follows:
“5.2 If
and to the extent required by law, you shall: (i) solicit voting instructions
from Contract owners; (ii) vote the Trust Shares in accordance with the
instructions received from Contract owners; and (iii) vote Trust shares owned
by
subaccounts for which no instructions have been received from Contract owners
in
the same proportion as Trust shares of such Portfolio for which instructions
have been received from Contract owners; so long as and to the extent that
the
SEC continues to interpret the 1940 Act to require pass-through voting
privileges for variable account contract owners. You reserve the
right to vote Trust shares held in any Account in your own right, to the
extent
permitted by law.”
|
4.
|
All
other terms and provisions of the Agreement not amended herein
shall
remain in full force and effect.
|
IN
WITNESS WHEREOF, each of the parties has caused its duly authorized officers
to
execute this Amendment effective as of June 5, 2007.
|
The
Trust:
Only
on behalf of each Portfolio listed on Schedule C of the
Agreement
|
FRANKLIN
XXXXXXXXX VARIABLE INSURANCE PRODUCTS TRUST
By:
Name: Xxxxx
X. Xxxxxxxx
Title: Vice
President
|
|
The
Underwriter:
|
FRANKLIN/XXXXXXXXX
DISTRIBUTORS, INC.
By:
Name: Xxxxxx
Xxxxxx
Title: Senior
Vice President
|
|
The
Company:
|
|
|
NATIONWIDE
LIFE INSURANCE COMPANY
By:
Name:
[Xxxxxxx X. Xxxxxx]
Title:
[Vice President]
|
NATIONWIDE
LIFE AND ANNUITY INSURANCE COMPANY
By:
Name:
[Xxxxxxx X. Xxxxxx]
Title:
[Vice President]
|
|
NATIONWIDE
LIFE INSURANCE COMPANY OF AMERICA
By:
Name:
[Xxxxx X. Xxxxxxx]
Title:
[Financial Operation Officer]
|
NATIONWIDE
LIFE AND ANNUITY COMPANY OF AMERICA
By:
Name:
[Xxxxx X. Xxxxxxx]
Title:
[Financial Operation Officer]
|
|
The
Distributors:
|
|
|
1717
CAPITAL MANAGEMENT COMPANY
By:
Name:
[Xxxxx X. Xxxxxxx]
Title:
[Financial Operation Officer]
|
NATIONWIDE
INVESTMENT SERVICES CORPORATION
By:
Name:
[Xxxxx X. Xxxxxx]
Title:
[Vice President]
|
