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Exhibit 3
MARKETING COORDINATION AND
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement entered into this ____ day of May, 1997, between Nationwide Life
Insurance Company, Nationwide Life and Annuity Insurance Company (collectively
"Nationwide"), and Nationwide Advisory Services, Inc. ("NAS") and restates and
confirms all earlier agreements between the parties concerning marketing
coordination and administrative services.
Nationwide proposes to develop, issue and administer, and NAS proposes to
provide the exclusive national distribution services for variable annuity
contracts and variable life insurance policies (the "Products").
The parties hereby agree as follows:
A. ADMINISTRATION OF PRODUCTS
1. Appointment of Product Administration
Nationwide is hereby appointed Product Administrator for the Products.
2. Duties of Nationwide
Nationwide shall perform in a proper and timely manner, those
functions enumerated in the column marked "Nationwide" in the
"Analysis of Administrative Functions," attached hereto as EXHIBIT A,
and incorporated herein by reference.
3. Duties of NAS
NAS shall perform in a proper and timely manner, those functions
enumerated in the column marked "NAS" in the "Analysis of
Administrative Functions," attached hereto as EXHIBIT A, and
incorporated herein by reference.
B. MARKETING COORDINATION AND SALES ADMINISTRATION
1. Distribution of Products
The Products will be distributed through registered representatives of
NASD broker-dealer firms, appointed by Nationwide, who shall be duly
qualified and licensed as agents (the "Agents"), in accordance with
applicable state insurance authority.
2. NAS shall be the exclusive National Distributor of the Products.
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3. Appointment and Termination of Agents
Appointment and termination of Agents shall be processed and executed
by Nationwide. NAS reserves the right to require Nationwide to consult
with it regarding licensing decisions.
4. Advertising
NAS shall not print, publish or distribute any advertisement, circular
or document relating to the Products or relating to Nationwide unless
such advertisement, circular or document has been approved in writing
by Nationwide. Such approval shall not be unreasonably withheld, and
shall be given promptly, normally within three (3) business days.
Neither Nationwide nor any of its affiliates shall print, publish or
distribute any advertisement, circular or document relating to the
Products or relating to NAS unless such advertisement, circular or
document has been approved in writing by NAS. Such approval shall not
be unreasonably withheld, and shall be given promptly, normally within
three (3) business days. However, nothing herein shall prohibit any
person from advertising the Products on a generic basis.
5. Marketing Conduct
The parties will jointly develop standards, practices and procedures
respecting the marketing of the Products. Such standards, practices
and procedures are intended to help Nationwide meet its obligations as
an issuer under the securities laws, to assure compliance with state
insurance laws, and to help NAS meet its obligations under the
securities laws as National Distributor. These standards, practices
and procedures are subject to continuing review and neither Nationwide
nor NAS shall object unreasonably to changes to such standards,
practices and procedures recommended by the other to comply with the
intent of this provision.
6. Sales Material and Other Documents
a. Sales Material
1) Nationwide shall develop and prepare all promotional
material to be used in the distribution of the Products, in
consultation with NAS.
2) Nationwide is responsible for the printing and the expense
of providing such promotional material.
3) Nationwide is responsible for approval of such promotional
material by state insurance regulators, where required.
4) NAS and Nationwide agree to abide by the Advertising and
Sales Promotion Material Guidelines, attached hereto as
EXHIBIT B, and incorporated herein by reference.
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b. Prospectuses
1) Nationwide is responsible for the preparation and regulatory
clearance of any required registration statements and
prospectuses for the Products. NAS is responsible for the
preparation and regulatory clearance of any underlying
mutual fund registration statements and prospectuses.
2) Nationwide is responsible for the printing of Product
prospectuses in such quantities as the parties agree are
necessary to assure sufficient supplies.
3) Nationwide will bear the cost of providing the required
supply of mutual fund prospectuses.
4) Nationwide is responsible for supplying Agents with
sufficient quantities of Product prospectuses.
c. Contracts, Applications and Related Forms
1) Nationwide, in consultation with NAS, is responsible for the
design and printing of adequate supplies of Product
applications, contracts, related forms, and such service
forms as the parties agree are necessary.
2) Nationwide is responsible for supplying adequate quantities
of all such forms to the Agents.
7. Appointment of Agents
a. NAS shall assist Nationwide in facilitating the appointment of
Agents by Nationwide.
b. Nationwide shall forward all appointment forms and applications
to the appropriate states and maintain all contacts with the
states.
c. Nationwide shall maintain appointment files on Agents, and NAS
shall have access to such files as needed.
8. Licensing and Appointment Guide
Nationwide shall provide to NAS a Licensing and Appointment Guide (as
well periodic updates thereto), setting forth the requirements for
licensing and appointment, in such quantities as NAS may reasonably
require.
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9. Other
a. Product Training
Nationwide is responsible for any Product training for the
Agents.
b. Field Sales Material
1) Nationwide, in consultation with NAS, is responsible for the
development, printing and distribution of non-public field
sales material to be used by Agents.
2) NAS shall have the right to review all field sales materials
and to require any modification mandated by regulatory
requirements.
c. Production Reports
Nationwide shall deliver to NAS the items listed in Production
Reports to be Provided, attached hereto as EXHIBIT C, and
incorporated herein by reference.
d. Customer Service
Each party will notify the other of all material pertinent
inquiries and complaints it receives, from whatever source and to
whomever directed, and will consult with the other in responding
to such inquiries and complaints.
10. Auditing
NAS shall maintain all records relating to the mutual funds or other
investment options in accordance with generally accepted accounting
procedures. Any such records shall be made available to Nationwide or
its accountants or auditors upon reasonable written request.
Nationwide shall provide NAS with any records, reports or other
materials relative to the distribution of the Products as may
reasonably be required by NAS or as may be required by any
governmental agency having jurisdiction.
C. GENERAL PROVISIONS
1. Waiver
The forbearance or neglect of either party to insist upon strict
compliance by the other with any of the provisions of this Agreement,
whether continuing or not, or to declare a forfeiture of termination
against the other, shall not be construed as a waiver of any rights or
privileges of the forbearing party in the event of a further default
or failure of performance.
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2. Limitations
Neither party shall have authority on behalf of the other to: make,
alter or discharge any contractual terms of the Products; waive any
forfeiture; extend the time of making any contributions to the
products; guarantee dividends; alter the forms which either may
prescribe; nor substitute other forms in place of those prescribed by
the other.
3. Binding Effect
This Agreement shall be binding on and shall inure to the benefit of
the parties to it and their respective successors and assigns,
provided that neither party shall assign or sub-contract this
Agreement or any rights or obligations hereunder without prior written
consent of the other.
4. Indemnification
Each party ("Indemnifying Party") hereby agrees to release, indemnify
and hold harmless the other party, its officers, directors, employers,
agents, servants, predecessors or successors from any claims or
liability arising out of the acts or omissions of the Indemnifying
Party not authorized by this Agreement, including the violation of any
federal or state law or regulation.
5. Notices
All notices, requests, demands and other communication under this
Agreement shall be in writing and shall be deemed to have been given
on the date of service if served personally on the party to whom
notice is to be given, or on the date of mailing if sent postage
prepaid by First Class Mail, Registered or Certified mail, by
overnight mail, properly addressed as follows:
TO NATIONWIDE:
Nationwide Life Insurance Company
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, SeniorVice President-Sales-Financial Services
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
TO NAS:
Nationwide Advisory Services, Inc.
▇▇▇▇▇▇ ▇. ▇▇▇▇, Vice President-Compliance
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
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6. Governing Law
This Agreement shall be construed in accordance with and governed by
the laws of the State of Ohio.
7. Arbitration
The parties agree that misunderstandings or disputes arising from this
Agreement shall be decided by arbitration, conducted upon request of
either party before three arbitrators (unless the parties agree on a
single arbitrator) designated by the American Arbitration Association,
and in accordance with the rules of such Association. The expenses of
the arbitration proceedings conducted hereunder shall be borne equally
by both parties.
8. Confidentiality
Any information, documents and materials, whether printed or oral,
furnished by either party or its agents or employees to the other
shall be held in confidence. No such information shall be given to any
third party, other than to such sub-contractors of NAS as may be
permitted herein, or under requirements of a lawful authority, without
the express written consent of the other party.
D. TERM OF AGREEMENT
This Agreement, including the Exhibits attached hereto, shall remain in
full force and effect until terminated, and may be amended only by mutual
agreement of the parties in writing. Any decision by either party to cease
issuance or distribution of any specific Product shall not effect a
termination of the Agreement unless such termination is mutually agreed
upon, or unless notice is given pursuant to Section E.2. hereof.
E. TERMINATION
1. Either party may terminate this Agreement for cause at any time, upon
written notice to the other, if the other knowingly and willfully: (a)
fails to comply with the laws or regulations of any state or
governmental agency or body having jurisdiction over the sale of
insurance or securities; (b) misappropriates any money or property
belonging to the other; (c) subjects the other to any actual or
potential liability due to misfeasance, malfeasance, or nonfeasance;
(d) commits any fraud upon the other; (e) has an assignment for the
benefit of creditors; (f) incurs bankruptcy; or (g) commits a material
breach of this Agreement.
2. Either party may terminate this Agreement, without regard to cause,
upon six months prior written notice to the other.
3. In the event of termination of this Agreement, the following
conditions shall apply:
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a) The parties irrevocably acknowledge the continuing right to use
any Product trademark that might then be associated with any
Products, but only with respect to all business in force at the
time of termination.
b) NAS shall continue to sell to Nationwide at net asset value,
shares of all mutual funds which serve as underlying investments
for Products actually issued by Nationwide pursuant to this
Agreement, until such time as mutually agreed upon by the
parties. NAS may discontinue the sale at net asset value of such
shares in connection with the issuance by Nationwide of new
products after termination.
c) In the event this Agreement is terminated the parties will use
their best efforts to preserve in force the business issued
pursuant to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date first above written.
NATIONWIDE LIFE INSURANCE
COMPANY
By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Title Sr. Vice President
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NATIONWIDE LIFE AND ANNUITY
INSURANCE COMPANY
By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Title Sr. Vice President
----------------------------------
NATIONWIDE ADVISORY SERVICES,
INC.
By /s/▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Title Vice President
----------------------------------
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EXHIBIT A
ANALYSIS OF ADMINISTRATIVE FUNCTIONS
A. PRODUCT UNDERWRITING/ISSUE
NATIONWIDE NAS
- Establishes underwriting - Consults with regard to new
criteria for application business procedures and
processing and rejections. processing.
- Reviews the completed
application. Applies
underwriting/issue criteria to
application.
- Notifies Agent and/or customer
of any error or missing data
necessary to underwrite
application and establish
records for owner of Product
("Contract Owner").
- Prepares policy data page for
approved business and mails with
policy to Contract Owner.
- Establishes and maintains all
records required for each
Contract Owner, as applicable.
- Prepares and mails confirmation
and other statements to Contract
Owners and Agents, as required.
- Prints, provides all forms
ancillary to issue of
contract/policy forms for
Products.
- Maintains supply of approved
specimen policy forms and all
ancillary forms, distributes
same to Agents.
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B. BILLING AND COLLECTION
NATIONWIDE
- Receives premium/purchase
payments and reconciles amount
received with remittance media.
- Updates Contract Owner records
to reflect receipt of
premium/purchase payment and
performs accounting/ investment
allocation of each payment
received.
- Deposits all cash received under
the Products in accordance with
the terms of the Products.
C. BANKING
NATIONWIDE
- Balances, edits, endorses and
prepares daily deposit.
- Places deposits in depository
account.
- Transfers funds from depository
account to NAS within 24 hours
following underwriting approval,
in accordance with investment
allocation.
- Prepares daily cash journal
summary reports and maintains
same for review by NAS.
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D. PRICING/VALUATION/ACCOUNTING
NATIONWIDE NAS
- Determines the "Net Amount - Issues Fund Shares to Nationwide
Available for Investment" in at net asset Value.
Fund Shares and places Fund
Share purchase or redemption - Confirms Nationwide's Fund
orders with the Fund, by purchases and redemptions.
facsimile each day by 10:00 a.m.
E.T. If for any reason - Transmit by facsimile Fund Share
Nationwide is unable to process prices to Nationwide by 6:00
such orders, it will provide NAS p.m. EST each day.
with estimates.
- Maintains records of all Fund
- Maintains and makes available, Shares owned by Nationwide,
as reasonably requested, records including the date purchased and
used in determining "Net Amount sold, cost, and other
Available for Investment." information maintained by NAS in
its ordinary course of business.
- Collects information needed in
determining Variable Account - Cooperates in annual audit of
unit values from the Funds separate account financials
including daily net asset value, conducted for purposes of
capital gains or dividend financial statement
distributions, and the number of certification and publication.
Fund Shares acquired or sold
during the immediately preceding
valuation period.
- Performs daily unit valuation
calculation.
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E. CONTRACT OWNER SERVICE/
RECORD MAINTENANCE
NATIONWIDE NAS
- Receives and processes all - Accommodates customer service
Contract Owner service requests, function by providing any
including but not limited to supporting information or
informational requests, documentation which may be in
beneficiary changes, and the control of NAS.
transfers of Contract Value
among eligible investment
options.
- Maintains daily records of all
changes made to Contract Owner
accounts.
- Researches and responds to all - Researches and responds to
Contract Owner/Agent inquiries. Nationwide's inquiries regarding
fund performance.
- Keeps all required Contract
Owner records.
- Maintains adequate number of
toll free lines to service
Contract Owner/Agent inquiries.
F. DISBURSEMENTS (SURRENDERS,
DEATH CLAIMS, LOANS)
NATIONWIDE NAS
- Receives and processes
surrenders, loans, and death
claims in accordance with
established guidelines.
- Prepares checks for surrenders,
loans, and death claims, and
forwards to Contract Owner or
Beneficiary. Prepares and mails
confirmation statement of
disbursement to Contract Owner/
Beneficiary with copy to Agent.
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G. COMMISSIONS
NATIONWIDE NAS
- Ascertains, on receipt of
applications, whether writing
Agent is appropriately licensed.
- Pays commissions and other fees
in accordance with agreements
relating to same.
H. PROXY PROCESSING
NATIONWIDE NAS
- Receives record date information - Provides proxy, solicitation
from Funds Receives proxy materials, and record date
solicitation materials from information.
Funds.
- Prepares Voting Instruction
cards and mails solicitation, if
necessary.
- Tabulates and votes all Fund
Shares in accordance with SEC
requirements.
I. PERIODIC REPORTS TO CONTRACT OWNERS
NATIONWIDE NAS
- Prepares and mails quarterly and
annual Statements of Account to
Contract Owners.
- Prepares and mails all - Prepares and mails to Nationwide
semi-annual and annual reports all required semi-annual and
of Variable Account(s) to annual financial reports to
Contract Owners. shareholder of the Funds.
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J. REGULATORY/STATEMENT REPORTS
NATIONWIDE NAS
- Prepares and files Separate
Account Annual Statements.
- Prepares and mails the
appropriate, required IRS
reports at the Contract Owner
level. Files same with required
regulatory agencies.
- Prepares and files form N-SAR - Prepares and files form N-SAR
for the Separate Account. for the Funds.
K. PREMIUM TAXES
NATIONWIDE NAS
- Collects, pays and accounts for
premium taxes as appropriate.
- Prepares and maintains all
premium tax records by state.
- Maintains liabilities in General
Account ledger for accrual of
premium tax collected.
- Integrates all company premium
taxes due and performs related
accounting.
L. FINANCIAL AND MANAGEMENT REPORTS
NATIONWIDE NAS
- Provides periodic reports in - Provides periodic reports in
accordance with the Schedule of accordance with the Schedule of
Reports to be prepared jointly Reports to be prepared jointly
by Nationwide and NAS. (See by Nationwide and NAS. (See
EXHIBIT C) EXHIBIT C)
M. AGENT LICENSE RECORDKEEPING
NATIONWIDE NAS
- Receives, establishes, - Cooperates with Nationwide in
processes, and maintains Agent the Agent appointment process
appointment records. with the broker- dealer firms.
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EXHIBIT B
ADVERTISING AND SALES PROMOTION MATERIAL GUIDELINES
FOR APPROVAL BY THE OFFICE OF SALES-FINANCIAL SERVICES
In order to assure compliance with state and federal regulatory requirements and
to maintain control over the distribution of promotional materials dealing with
the Products, Nationwide and NAS require that all variable contract promotional
materials be reviewed and approved by both Nationwide and NAS prior to their
use. These guidelines are intended to provide appropriate regulatory and
distribution controls.
1. Sufficient lead time must be allowed in the submission of all promotional
material. The Office of Sales-Financial Services ("OS-FS") and NAS shall
approve in writing all promotional material. Such approval shall not be
unreasonably withheld, and shall be given promptly, normally within three
(3) days.
2. All promotional material will be submitted in "draft" form to permit any
changes or corrections to be made prior to the printing.
3. Nationwide and NAS will provide each other with details as to each and
every use of all promotional material submitted. Approval for one use will
not constitute approval for any other use. Different standards of review
may apply when the same advertising material is intended for different
uses. The following information will be provided for each item of
promotional material:
a. In what jurisdiction(s) the material will be used.
b. Whether distribution will be used (e.g., brochure, mailing, 482 ads,
etc.).
c. How the material will be used (e.g., brochure, mailing, 482 ads,
etc.).
d. The projected date of initial use and, if a special promotion, the
projected date of last use.
4. Each party will advise the other of the date it discontinues the use of any
material.
5. Any changes to previously approved promotional material must be
resubmitted, following these procedures. When approved material is to be
put to a different use, request for approval of the material for the new
use must be submitted.
6. OS-FS and NAS will assign a form number to each item of advertising and
sales promotional material. This number will appear on each piece of
advertising and sales promotional material. It will be used to aid in
necessary filings, and to maintain appropriate controls.
7. OS-FS and NAS will provide written approval for all material to be used.
8. Nationwide and NAS will provide each other with a minimum of 50 copies of
all material in final print form to effect necessary state filings.
9 NAS will coordinate SEC/NASD filings of sales and promotional material.
10. All communication regarding promotional materials should be directed to
Marketing Director, Office of Sales-Financial Services, Nationwide Life
Insurance Company, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ (phone
(▇▇▇)▇▇▇-▇▇▇▇) or to President, Nationwide Advisory Services, Inc. Three
Nationwide Plaza, Columbus, Ohio (phone (▇▇▇) ▇▇▇-▇▇▇▇).
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EXHIBIT C
PRODUCTION REPORTS TO BE PROVIDED
Nationwide agrees to provide the following reports to NAS:
1. Daily Receipt Report: Indicates which Agents are generating sales.
2. Daily Approval Report: Indicates which applications have been
approved.
3. Daily Activity Summary: Indicates top firms' sales and liquidation by
month, year-to-date as well as total assets
by firm.
4. Dealer Activity Indicates top firms' sales and
Summary by Territory: liquidation by month, year-to-date.
5. Summary of Sales by Indicates sales by territory/dealer/branch,
Territory and Dealer: including non-commissionable amounts and
actual commission payments, as well as
chargebacks. (Internal use only)
6. Summary of Sales by Indicates sales by territory/dealer/branch,
Territory and Dealer: including chargebacks.
7. Commission Report: Indicates commissions paid and chargebacks,
matched to commission checks.
In addition, Nationwide shall provide reports detailing current appointments and
other information, as reasonably requested by NAS.