AMENDED AND RESTATED FUND PARTICIPATION AND SHAREHOLDER SERVICES AGREEMENT
AMENDED
AND RESTATED FUND PARTICIPATION AND SHAREHOLDER SERVICES
AGREEMENT
THIS
AMENDED AND RESTATED FUND
PARTICIPATION AND SHAREHOLDER SERVICES AGREEMENT is made and entered
into as of [September 15], 20[04] by and between NATIONWIDE
FINANCIAL SERVICES, INC., on behalf of its subsidiary life insurance companies
who may offer the Funds (as defined below), including but not limited to those
listed on EXHIBIT A hereto (collectively, the “Company”), and
AMERICAN CENTURY INVESTMENT SERVICES, INC. (“Distributor”).
WHEREAS,
the Company
offers to the public certain group and individual variable annuity and variable
life insurance contracts (the “Contracts”); and
WHEREAS,
the Company
wishes to make available as investment options under the Contracts certain
classes of the funds made available by Distributor for use in variable annuity
and variable life insurance contracts (the “Funds”), each of which is a series
of mutual fund shares registered under the Investment Company Act of 1940,
as
amended (the “1940 Act”) and issued by American Century Variable Portfolios,
Inc. or American Century Variable Portfolios II, Inc. (collectively, the
“Issuer”); and
WHEREAS,
on the terms
and conditions hereinafter set forth, Distributor desires to make shares of
the
Funds available as investment options under the Contracts and to retain the
Company to perform certain administrative services on behalf of the Funds,
and
the Company is willing and able to furnish such services.
NOW,
THEREFORE, the
Company and Distributor agree as follows:
1. Transactions
in the Funds. Subject to the terms and conditions of
this Agreement, Distributor will cause the Issuer to make shares of the Funds
available to be purchased, exchanged, or redeemed, by or on behalf of the
Accounts (defined in Section 7(a) below) through a single
account per Fund at the net asset value applicable to each order. The
Funds’ shares shall be purchased and redeemed on a net basis in such quantity
and at such time as determined by the Company to satisfy the requirements of
the
Contracts for which the Funds serve as underlying investment media. Dividends
and capital gains distributions will be automatically reinvested in full and
fractional shares of the Funds.
2. Administrative
Services. The Company agrees to provide all
administrative services for the Contract owners, including but not limited
to
those services specified in EXHIBIT B (the “Administrative
Services”). Neither Distributor nor the Issuer shall be required to
provide Administrative Services for the benefit of Contract
owners. The Company agrees that it will maintain and preserve all
records as required by law to be maintained and preserved in connection with
providing the Administrative Services, and will otherwise comply with all laws,
rules and regulations applicable to the marketing of the Contracts and the
provision of the Administrative
Services. Upon
request, the Company will provide Distributor or its representatives reasonable
information regarding the quality of the Administrative Services being provided
and its compliance with the terms of this Agreement.
3. Timing
of Transactions. (a) Distributor hereby appoints the
Company as agent for the Funds for the limited purpose of accepting purchase
and
redemption orders for Fund shares from the contract/policy owners, as
applicable. On each day the New York Stock Exchange (the “Exchange”)
is open for business (each, a “Business Day”), the Company may receive
instructions from the contract/policy owners for the purchase or redemption
of
shares of the Funds (“Orders”). The Company or its designee shall use this data
to calculate unit values. Said unit values shall be used to process
that same Business Day’s variable account unit value. The variable
account processing will be done the same evening, and orders for purchases
or
redemptions shall be placed by 9:30 a.m. Eastern time the morning of the
following Business Day in accordance with the terms of Section 4
below. Payment for purchases shall be wired to a custodial account
designated by the Fund or the Distributor and payment for redemptions shall
be
wired in Federal Funds to an account designated by NFS in order to coincide
with
the order for Fund shares. The Distributor will execute the orders at
the net asset value as determined as of the Close of Trading on the prior
Business Day. Dividends and capital gain distributions shall be
reinvested in additional shares at the ex-date net asset
value. Notwithstanding the above, the Distributor shall not be held
responsible for providing the Company or its designee with net asset value,
dividend and capital gain information when the New York Stock Exchange is
closed, when an emergency exists making the valuation of net assets not
reasonably practicable, or during any period when the Securities and Exchange
Commission (“SEC”) has by order permitted the suspension of pricing shares for
the protection of shareholders.
(b) Notwithstanding
Section 3(a) above, if the Securities and Exchange Commission adopts a rule,
or
Congress adopts a law, that changes the requirements for intermediaries with
regard to accepting Orders on behalf of the Funds, the timing of transmitting
Orders to the Funds, or otherwise affects the way Orders are accepted,
transmitted and priced, Section 3(a) shall be deemed to be automatically amended
to comply with such new rule or law.
4. Processing
of Transactions.
(a) If
transactions in Fund shares are to be settled through the National Securities
Clearing Corporation’s (“NSCC”) Mutual Fund Settlement, Entry, and Registration
Verification (Fund/SERV) system, the following provisions shall
apply:
(1) Each
party to this Agreement represents that it or one of its affiliates has entered
into the Standard Networking Agreement with the NSCC and it desires to
participate in the programs offered by the NSCC Fund/SERV system which provide
(i) an automated process whereby shareholder purchases and redemptions,
exchanges and transactions of mutual fund shares are executed through the
Fund/SERV system, and (ii) a centralized and standardized communication system
for the exchange of customer-level information and account activity through
the
Fund/SERV Networking system (“Networking”).
(2) For
each Fund/SERV transaction, including transactions establishing accounts with
the Distributor or its affiliate, the Company shall provide the Funds and the
Distributor or its affiliate with all information necessary or appropriate
to
establish and maintain each Fund/SERV transaction (and any subsequent changes
to
such information), which the Company hereby certifies is and shall remain true
and correct. The Company shall maintain documents required by the
Funds to effect Fund/SERV transactions. Each instruction shall be
deemed to be accompanied by a representation by the Company that it has received
proper authorization from each person whose purchase, redemption, account
transfer or exchange transaction is effected as a result of such
instruction.
(3) At
all times each party shall maintain insurance coverage that is reasonable and
customary in light of all its responsibilities hereunder and under applicable
law. Such coverage shall insure for losses resulting from the
criminal acts, errors or omissions of each party’s employees and
agents.
(4) The
parties agree to participate in Networking with each other under the terms
of
the Standard Networking Agreement, except that (i) Section 12 of Article IV
relating to governing law is hereby amended by deleting the second sentence
of
such section, and (ii) Section 13 of Article IV relating to arbitration of
disputes is hereby deleted and shall be of no force and effect among the
parties.
(5) The
Company represents and warrants that all instructions, questions and other
correspondence concerning the accounts for which trades are made in accordance
with this Section 4(a) shall come from the Company, and that
individual account holders shall contact the Company, rather than contact
Distributor or the Funds directly, with instructions, questions and requests
concerning the Funds. The Company further represents and warrants
that it, rather than Distributor or the Funds, has reporting responsibility
to
its clients for confirmations of transactions and monthly, quarterly and
year-end statements.
(b) If
transactions in Fund shares are to be settled directly with the Funds’ transfer
agent (i.e., manual trading), procedures relating to the processing and
settlement of Orders shall be subject to such instructions as Distributor may
forward to the Company from time to time. Payment for net purchase
transactions shall be made by wire transfer or through a clearinghouse agency
approved by us to the applicable Fund custodial account designated by
Distributor on the Business Day next following the Trade Date (T +
1). Such wire transfers shall be initiated by the Company’s bank
prior to 4:00 p.m. Eastern time and received by the Funds prior to 6:00 p.m.
Eastern time on the Business Day next following the Trade Date. If
payment for a purchase Order is not timely received, the Fund may cancel the
Order or, at Distributor’s option, resell the shares to the applicable Fund at
the then prevailing net asset value, and the Company shall be responsible for
all costs to Distributor, the Funds or any affiliate of the Funds resulting
from
such resale. The Company shall be responsible for any loss, expense,
liability or damage, including loss of profit suffered by Distributor and/or
the
respective Funds resulting from delay or failure to make timely payment for
such
shares or cancellation of any trade, or for any Orders that are processed on
an
“as of” basis as an accommodation to the Company. The Company shall
not be entitled to any gains generated thereby. Payment for net
redemption orders shall occur by the Distributor using its best efforts to
cause
the remittance of the requisite funds to cover such net redemption order by
Federal Funds Wire on T+1, provided that the Fund reserves the right to (i)
delay settlement of redemptions for up to seven (7) Business Days after
receiving a net redemption order in accordance with Section 22 of the 1940
Act
and Rule 22c-1 thereunder, or (ii) suspend redemptions pursuant to the 1940
Act
or as otherwise required by law. Settlements shall be in U.S.
dollars.
(c) The
Company agrees not to withhold placing Orders received from any customers for
the purchase or sale of shares so as to profit itself as a result of such
withholding. The Company shall not purchase shares through
Distributor except for the purpose of covering purchase Orders received by
the
Company, or for the Company’s bona fide investment. The Company
agrees to purchase shares only from the Funds.
5. Prospectus
and Proxy Materials. Distributor shall provide the
Company with reasonable quantities of the Issuer’s prospectuses, statements of
additional information, proxy materials, periodic fund reports to shareholders
and other materials that are required by law to be sent to the Issuers’
shareholders, each in the amounts and at the times requested by the
Company. At the Company’s option, instead of providing printed
prospectuses, statements of additional information and periodic fund reports,
Distributor will provide electronic files (in .pdf format) of such documents
to
the Company or its designee, to be printed together with the other funds offered
under any Contract. In that situation, the Company will inform
Distributor of the number of such documents that are printed, and Distributor
will reimburse the Company in the amount saved by Distributor by not printing
that number of documents. The cost of any distribution of
prospectuses, proxy materials, periodic fund reports and other materials of
the
Issuers to the contract/policy owners shall be paid by the Company, and shall
not be the responsibility of Distributor or the Issuers.
6. Compensation
and Expenses.
(a) The
Accounts shall be the sole shareholder of Fund shares purchased for the Contract
owners pursuant to this Agreement (the “Record Owner”). The Record
Owner shall properly complete any applications or other forms required by
Distributor or the Issuer from time to time.
(b) All
expenses incident to the performance by the Funds under this Agreement shall
be
paid by the Funds or the Distributor. The Distributor shall pay the
costs of registering the Fund shares with the SEC and of qualifying Fund shares
in states where required.
(c) Distributor
acknowledges that it will derive a substantial savings in administrative
expenses, such as a reduction in expenses related to postage, shareholder
communications and recordkeeping, by virtue of having a single shareholder
account per Fund for the Accounts rather than having each Contract owner as
a
shareholder. In consideration of the Administrative Services and
performance of all other obligations under this Agreement by the Company,
Distributor will pay the Company a fee (the “Administrative Services Fee”) as
set forth in EXHIBIT C per annum of the average aggregate
amount invested by the Company in the Funds offered under this
Agreement. Distributor agrees that the Administrative Services Fee
will be paid to NFS according to this Agreement with respect to each Fund for
a
period of two years after the termination of this Agreement.
(d) Distributor
agrees to pay an Annual Maintenance Fee of $_____ per Fund offered in the BOA
Advisory Services Wrap product and a one-time set-up fee of $_____ per Fund
offered in the BOA Advisory Services Wrap product. The latter fee
will be paid only upon the addition of a Fund to the BOA Advisory Services
Wrap
product, and both fees shall be paid upon invoice by the Company.
(e) Certain
classes of certain of the Funds have adopted distribution plans pursuant to
which Distributor, on behalf of each such Fund, will pay a service fee to
dealers in accordance with the provisions of such Funds’ distribution
plans. The service fee is paid as additional consideration for all
personal services, account maintenance services and/or Distribution Services
provided by the general distributor (which is a registered broker dealer) of
the
Contracts and/or its affiliates to shareholders of the applicable
Fund. The provisions and terms of these Funds’ distribution plans are
described in their respective prospectuses, and the Company hereby agrees that
Distributor has made no representations with respect to the distribution plans
of such Funds in addition to, or conflicting with, the description set forth
in
their respective prospectuses. The fee for each class of Shares of
the Funds will be set by Distributor based on the relevant distribution
plans. Any such fee shall be paid only to the general distributor
pursuant to Distributor’s records, whether that broker is the Company or another
entity.
(f) For
the purposes of computing the payments to the Company contemplated by this
Section 6, the average aggregate amount invested by the Company
on behalf of the Accounts in the Funds over a one month period shall be computed
by totaling the Company’s aggregate investment (share net asset value multiplied
by total number of shares of the Funds held by the Company) on each day during
the month and dividing by the total number of days during such
month.
(g) Distributor
will calculate the amount of the payment to be made pursuant to this
Section 6 at the end of each calendar quarter and will make
such payment to the Company within 30 days thereafter. The check for
such payment will be accompanied by a statement showing the calculation of
the
amounts being paid by Distributor for the relevant months and such other
supporting data as may be reasonably requested by the Company and shall be
mailed to:
Nationwide
Investment Services
Corporation
▇.▇.
▇▇▇ ▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇
▇▇▇▇▇▇▇
Phone
No.: ▇▇▇-▇▇▇-▇▇▇▇
Fax
No.: ▇▇▇-▇▇▇-▇▇▇▇
(h) Other
than the fees specifically set forth in this Section 6,
Distributor will not be responsible for paying any other fees to the Company,
including but not limited to asset-based fees or fees for system set up or
maintenance.
7. Representations.
(a) The
Company represents and warrants that (i) this Agreement has been duly authorized
by all necessary corporate action and, when executed and delivered, shall
constitute the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms; (ii) it has established the separate accounts
which offer the Funds as investment options, each of which is a duly authorized
and established separate account under applicable state Insurance law (the
“Accounts”), and has registered each Account as a unit investment trust under
the 1940 Act to serve as an investment vehicle for the Contracts; (iii) each
Contract provides for the allocation of net amounts received by the Company
to
an Account for investment in the shares of one or more specified investment
companies selected among those companies available through the Account to act
as
underlying investment media; (iv) selection of a particular investment company
is made by the Contract owner under a particular Contract, who may change such
selection from time to time in accordance with the terms of the applicable
Contract; and (v) the activities of the Company contemplated by this Agreement
comply in all material respects with all provisions of federal and state
securities laws applicable to such activities.
(b) Distributor
represents that (i) this Agreement has been duly authorized by all necessary
corporate action and, when executed and delivered, shall constitute the legal,
valid and binding obligation of Distributor, enforceable in accordance with
its
terms; (ii) it is registered as a broker-dealer under the Securities and
Exchange Act of 1934, as amended (the "1934 Act") and will remain duly
registered under all applicable federal and state securities laws, and is a
member in good standing of the National Association of Securities Dealers,
Inc.
("NASD") and serves as distributor of the Funds and that it will perform its
obligations for the Fund in accordance with any applicable state and federal
securities laws; (iii) the prospectus of each Fund complies in all material
respects with federal and state securities laws; (iv) shares of the Issuer
are
registered and authorized for sale in accordance with all federal and state
securities laws; (v) the investments of the Funds will at all times be
adequately diversified within the meaning of Section 817(h) of the Internal
Revenue Service Code of 1986, as amended (the “Code”), and the regulations
thereunder, and it will make every effort to maintain each Fund’s compliance
with such diversification requirements and will notify the Company immediately
upon having a reasonable basis for believing that any Fund has ceased to so
qualify, or that any Fund might not so qualify in the future, and that at all
times while this Agreement is in effect, all beneficial interests in each of
the
Funds will be owned by one or more insurance companies’ segregated asset
accounts or by any other party permitted under Section 1.817-5(f)(3) of the
Regulations promulgated under the Code; and (vi) each Fund is qualified as
a
Regulated Investment Company under Subchapter M of the Code, and shall make
every effort to maintain such qualification of each Fund and shall notify the
Company immediately upon having a reasonable basis for believing that any Fund
has ceased to so qualify, or that any Fund might not so qualify in the
future.
8. Additional
Covenants and Agreements.
(a) Each
party shall comply with all provisions of federal and state laws applicable
to
its respective activities under this Agreement. All obligations of
each party under this Agreement are subject to compliance with applicable
federal and state laws.
(b) Each
party shall promptly notify the other party in the event that it is, for any
reason, unable to perform any of its obligations under this
Agreement.
(c) The
Company covenants and agrees that all Orders accepted and transmitted by it
hereunder with respect to each Account on any Business Day will be based upon
instructions that it received from the Contract owners, in proper form prior
to
the Close of Trading of the Exchange on that Business Day. The
Company shall time stamp all Orders or otherwise maintain records that will
enable the Company to demonstrate compliance with Section 8(c)
hereof.
(d) The
Company covenants and agrees that all Orders transmitted to the Issuer, whether
by telephone, telecopy, or other electronic transmission acceptable to
Distributor, shall be sent by or under the authority and direction of a person
designated by the Company as being duly authorized to act on behalf of the
owner
of the Accounts. Distributor shall be entitled to rely on the
existence of such authority and to assume that any person transmitting Orders
for the purchase, redemption or transfer of Fund shares on behalf of the Company
is “an appropriate person” as used in Sections 8-107 and 8-401 of the Uniform
Commercial Code with respect to the transmission of instructions regarding
Fund
shares on behalf of the owner of such Fund shares. The Company shall
maintain the confidentiality of all passwords and security procedures issued,
installed or otherwise put in place with respect to the use of Remote Computer
Terminals and assumes full responsibility for the security
therefor. The Company further agrees to be responsible for the
accuracy, propriety and consequences of all data transmitted to Distributor
by
the Company by telephone, telecopy or other electronic transmission acceptable
to Distributor.
(e) The
Company shall not impose any fee, condition, or requirement for the use of
the
Funds as investment options for the Contracts that operates to the specific
prejudice of the Funds vis-a-vis the other investment media made
available for the Contracts by the Company.
(f) The
Company shall not, without the written consent of Distributor, make
representations concerning the Issuer or the shares of the Funds except those
contained in the then-current prospectus and in current printed sales literature
approved by Distributor or the Issuer.
(g) Distributor
shall not, without the written consent of Company, make representations
concerning the Company or the Contracts except those contained in then current
prospectus and in current printed sales literature approved by the
Company.
(h) Advertising
and sales literature with respect to the Issuer or the Funds prepared by the
Company or its agents, if any, for use in marketing shares of the Funds as
underlying investment media to contract owners shall be submitted to Distributor
for review and approval before such material is used.
(i) Advertising
and sales literature with respect to the Company or Contracts prepared by the
Distributor or its agents, if any, shall be submitted to the Company for review
and approval before such material is used.
(j) Within
five (5) Business Days after the end of each calendar month, Distributor shall
provide the Company a monthly statement of account, which shall confirm all
transactions made during that particular month in the Accounts.
(k) Distributor
shall provide the Company with the investment advisory and other expenses of
each Fund incurred during that Fund’s most recently completed fiscal year within
90 days of the Fund’s fiscal year end, to permit the Company to fulfill its
prospectus disclosure obligations pursuant to the SEC’s variable annuity fee
table regulations and variable life insurance requirements.
9. Use
of Names. Except as otherwise expressly
provided for in this Agreement, neither Distributor nor any of its affiliates
nor the Funds shall use any trademark, trade name, service ▇▇▇▇ or logo of
the
Company, or any variation of any such trademark, trade name, service ▇▇▇▇ or
logo, without the Company’s prior written consent, the granting of which shall
be at the Company’s sole option. Except as otherwise expressly
provided for in this Agreement, the Company shall not use any trademark, trade
name, service ▇▇▇▇ or logo of the Issuer, Distributor or any variation of any
such trademarks, trade names, service marks, or logos, without the prior written
consent of either the Issuer or Distributor, as appropriate, the granting of
which shall be at the sole option of Distributor and/or the Issuer.
10. Proxy
Voting.
(a) The
Company shall provide pass-through voting privileges to all Contract owners
so
long as the SEC continues to interpret the 1940 Act as requiring such
privileges. It shall be the responsibility of the Company to assure
that it and the separate accounts of the other Participating Companies (as
defined in Section 12(a) below) participating in any Fund
calculate voting privileges in a consistent manner.
(b)
The Company will distribute to
Contract owners all proxy material furnished by Distributor (provided that
such
material is received by the Company or its designated agent at least 10 Business
Days prior to the date scheduled for mailing, or as soon as practicable if
less
than 10 Business Days) and will vote shares in accordance with instructions
received from such Contract owners. The Company shall vote Fund
shares for which no voting instructions are received in the same proportion
as
shares for which such instructions have been received. The Company
and its agents shall not oppose or interfere with the solicitation of proxies
for Fund shares held for such Contract owners.
11. Indemnity.
(a) Distributor
agrees to indemnify and hold harmless the Company and its officers, directors,
employees, agents, affiliates, subsidiaries and each person, if any, who
controls the Company within the meaning of the Securities Act of 1933
(collectively, the “Indemnified Parties” for purposes of this Section
11(a)) against any losses, claims, expenses, damages or liabilities
(including amounts paid in settlement thereof) or litigation expenses (including
reasonable legal and other expenses) (collectively, “Losses”), to which the
Indemnified Parties may become subject, insofar as such Losses result from
a
breach by Distributor of a material provision of this
Agreement. Distributor will reimburse any legal or other expenses
reasonably incurred by the Indemnified Parties in connection with investigating
or defending any such Losses. Distributor shall not be liable for
indemnification hereunder if such Losses are attributable to the negligence
or
misconduct of the Company in performing its obligations under this
Agreement.
(b) The
Company agrees to indemnify and hold harmless Distributor and the Issuer, and
their respective officers, directors, employees, agents, affiliates,
subsidiaries and each person, if any, who controls Issuer or
Distributor within the meaning of the Securities Act of 1933 (collectively,
the
“Indemnified Parties” for purposes of this Section 11(b))
against any Losses to which the Indemnified Parties may become subject, insofar
as such Losses result from a breach by the Company of a material provision
of
this Agreement or the use by any person of the Remote Computer
Terminals. The Company will reimburse any reasonable legal or other
expenses reasonably incurred by the Indemnified Parties in connection with
investigating or defending any such Losses. The Company shall not be liable
for
indemnification hereunder if such Losses are attributable to the negligence
or
misconduct of Distributor or the Issuer in performing their obligations under
this Agreement.
(c) Promptly
after receipt by an indemnified party hereunder of notice of the commencement
of
action, such indemnified party will, if a claim in respect thereof is to be
made
against the indemnifying party hereunder, notify the indemnifying party of
the
commencement thereof; but the omission so to notify the indemnifying party
will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 11. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be
entitled to participate therein and, to the extent that it may wish to, assume
the defense thereof, with counsel satisfactory to such
indemnified
party,
and after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 11 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
(d) If
the indemnifying party assumes the defense of any such action, the indemnifying
party shall not, without the prior written consent of the indemnified parties
in
such action, settle or compromise the liability of the indemnified parties
in
such action, or permit a default or consent to the entry of any judgment in
respect thereof, unless in connection with such settlement, compromise or
consent, each indemnified party receives from such claimant an unconditional
release from all liability in respect of such claim.
12. Potential
Conflicts
(a) The
Company has received a copy of an application for exemptive relief, as amended,
filed by the Issuer on December 21, 1987, with the SEC and the order issued
by
the SEC in response thereto (the “Shared Funding Exemptive
Order”). The Company has reviewed the conditions to the requested
relief set forth in such application for exemptive relief. As set
forth in such application, the Board of Directors of the Issuer (the “Board”)
will monitor the Issuer for the existence of any material irreconcilable
conflict between the interests of the contract owners of all separate accounts
(“Participating Companies”) investing in funds of the Issuer. An
irreconcilable material conflict may arise for a variety of reasons, including:
(i) an action by any state insurance regulatory authority; (ii) a change in
applicable federal or state insurance, tax, or securities laws or regulations,
or a public ruling, private letter ruling, no-action or interpretative letter,
or any similar actions by insurance, tax or securities regulatory authorities;
(iii) an administrative or judicial decision in any relevant proceeding; (iv)
the manner in which the investments of any portfolio are being managed; (v)
a
difference in voting instructions given by variable annuity contract owners
and
variable life insurance contract owners; or (vi) a decision by an insurer to
disregard the voting instructions of contract owners. The Board shall
promptly inform the Company if it determines that an irreconcilable material
conflict exists and the implications thereof.
(b) The
Company will report any potential or existing conflicts of which it is aware
to
the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order by providing the
Board
with all information reasonably necessary for the Board to consider any issues
raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
(c) If
a majority of the Board, or a majority of its disinterested Board members,
determines that a material irreconcilable conflict exists with regard to
contract owner investments in a Fund, the Board shall give prompt notice to
all
Participating Companies. If the Board determines that the Company is
responsible for causing or creating said conflict, the Company shall at its
sole
cost and expense, and to the extent reasonably practicable (as determined by
a
majority of the disinterested Board members), take such action as is necessary
to remedy or eliminate the irreconcilable material conflict. Such
necessary action may include but shall not be limited to:
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(i)
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withdrawing
the assets allocable to the Accounts from the Fund and reinvesting
such
assets in a different investment medium or submitting the question
of
whether such segregation should be implemented to a vote of all affected
contract owners and as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance
contract
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owners,
or variable contract owners of one or more Participating Companies) that votes
in favor of such segregation, or offering to the affected contract owners the
option of making such a change; and/or
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(ii)
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establishing
a new registered management investment company or managed separate
account.
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(d) If
a material irreconcilable conflict arises as a result of a decision by the
Company to disregard its contract owner voting instructions and said decision
represents a minority position or would preclude a majority vote by all of
its
contract owners having an interest in the Issuer, the Company at its sole cost,
may be required, at the Board’s election, to withdraw an Account’s investment in
the Issuer and terminate this Agreement; provided, however, that such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
(e) For
the purpose of this Section 12, a majority of the disinterested
Board members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no event will the Issuer
be required to establish a new funding medium for any Contract. The
Company shall not be required by this Section 12 to establish a
new funding medium for any Contract if an offer to do so has been declined
by
vote of a majority of the Contract owners materially adversely affected by
the
irreconcilable material conflict.
13. Termination;
Withdrawal of Offering. This Agreement may be
terminated by either party upon 180 days’ prior written notice to the other
party; by the Company, if the Company decides to substitute such Fund shares
with the shares of another investment company for Contracts for which the Fund
shares have been selected to serve as the underlying investment medium; or
on 60
days’ written notice pursuant to a vote of a majority of the outstanding
securities of the Funds. Notwithstanding the above, the Issuer
reserves the right, without prior notice, to suspend sales of shares of any
Fund, in whole or in part, or to make a limited offering of shares of any of
the
Funds in the event that (A) any regulatory body commences formal proceedings
against the Company, Distributor, affiliates of Distributor, or the Issuer,
which proceedings Distributor reasonably believes may have a material adverse
impact on the ability of Distributor, the Issuer or the Company to perform
its
obligations under this Agreement or (B) in the judgment of Distributor or the
Company, declining to accept any additional instructions for the purchase or
sale of shares of any such Fund is warranted by market, economic or political
conditions. Notwithstanding the foregoing, this Agreement may be
terminated immediately (i) by any party as a result of any other breach of
this
Agreement by another party, which breach is not cured within 30 days after
receipt of
notice
from the other party, (ii) by any party upon a determination that continuing
to
perform under this Agreement would, in the reasonable opinion of the terminating
party’s counsel, violate any applicable federal or state law, rule, regulation
or judicial order; (iii) by a vote of a majority of the independent directors,
or (iv) upon assignment by either party. Termination of this
Agreement shall not affect the obligations of the parties to make payments
under
Section 4 for Orders received by the Company prior to such
termination and shall not affect the Issuer’s obligation to maintain the shares
of the Funds as set forth by this Agreement.
14. Redemption
Fee Funds.
(a) Distributor
has Fund share classes with redemption fees (“Redemption Fee Funds”) and
Distributor is requiring the Company to add the Redemption Fee Funds to those
Contracts which use those Funds as underlying investment options in the
Company’s Contracts. The Company has implemented administrative
systems at considerable cost which permit the Company to assess redemption
fees
against the Contracts on behalf of the Funds. Distributor agrees that
the imposition of redemption fees on exchanges and redemptions will help
eliminate the harmful effects of disruptive trading that may arise within the
Accounts.
(b) The
Company shall be responsible for: 1) monitoring Contract sub-accounts
that hold Redemption Fee Funds for transactions not meeting the holding period
applicable to those Funds and; 2) assessing redemption fees on behalf of the
Redemption Fee Funds in conjunction with those transactions specifically subject
to such fees, subject to any reasonable exceptions as set forth in the Company's
Contract prospectuses, which include the Redemption Fee Funds as underlying
investment options. The Company shall maintain records supporting its
calculations of redemption fees payable to each Fund and shall provide the
Distributor with access, to or copies of, such records upon the reasonable
request of the Distributor. The Company 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 Distributor.
Nothing
herein shall be construed to require actions on the part of the Company that
would, in the best judgment of the Company, constitute the violation or breach
of any duty the Company owes to purchasers of variable insurance product
contracts established prior to the creation of the Redemption Fee
Funds.
(c) Distributor
acknowledges that, with the addition of the Redemption Fee Funds to certain
of
its Contracts, the Company may be subjected to potentially unfavorable
comparisons with other insurance carriers offering the Funds through variable
insurance products. Moreover, Distributor acknowledges that the
ameliorative benefits that may be realized by the Funds in connection with
the
Company’s incorporation of the Redemption Fee Funds into its Contracts may
benefit other insurance company contract and policy owners.
In
light
of the foregoing, the Distributor agrees -- to the extent the negative effects
of disruptive trading practices may be engendered through identified abusive
trading activity within other insurance carriers’ separate account products --
that Distributor will request that such other
companies take
any and all actions (not excluding the possible incorporation of the Redemption
Fee Funds) necessary to minimize the potentially harmful consequences to the
Funds of disruptive trading practices. Distributor agrees to use its
best efforts to encourage, promote, and, if necessary, compel other insurance
companies to employ such measures, irrespective of the size of such companies’
separate account investments in the Funds. Distributor shall not unreasonably
withhold from the Company information relative to what, if any, measures have
been taken by other such insurance carriers.
15. Non-Exclusivity.
Both parties acknowledge and agree that this Agreement and the arrangement
described herein are intended to be non-exclusive and that each party is free
to
enter into similar agreements and arrangements with other entities.
16. Survival. The
provisions of Section 6 (Compensation), Section
7 (Representations), Section 9 (Use of Names) and
Section 11 (Indemnity)
of this Agreement shall survive
termination of this Agreement.
17. Privacy
Procedures. Each of the parties to this Agreement
affirms that it has procedures in place reasonably designed to protect the
privacy of non-public customer information and it will maintain such information
that it may acquire pursuant to this Agreement in confidence and in accord
with
all applicable privacy laws. Each of the parties agrees not to use,
or permit the use of, any such customer information for any purpose except
to
carry out the terms of this Agreement and/or pursuant to any exceptions set
forth in such privacy laws. This provision shall survive the
termination of this Agreement.
18. Amendment. Neither
this Agreement, nor any provision hereof, may be amended, waived, discharged
or
terminated orally, but only by an instrument in writing signed by all of the
parties hereto.
19. Notices. All
notices and other communications hereunder shall be given or made in writing
and
shall be delivered personally, or sent by telex, telecopier, express delivery
or
registered or certified mail, postage prepaid, return receipt requested, to
the
party or parties to whom they are
directed
at the following addresses, or at such other addresses as may be designated
by
notice from such party to all other parties.
To
the Company:
Nationwide
Financial Services,
Inc.
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇-▇▇-▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
Attn:
Vice President – Investment and
Advisory Services
(▇▇▇)
▇▇▇-▇▇▇▇ (office
number)
(▇▇▇)
▇▇▇-▇▇▇▇ (telecopy
number)
With
a copy to:
NFS
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇-▇▇-▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
Attn:
Associate General Counsel –
Securities
(▇▇▇)
▇▇▇-▇▇▇▇ (office
number)
(▇▇▇)
▇▇▇-▇▇▇▇ (telecopy
number)
To
the Issuer or
Distributor:
American
Century Investment Services,
Inc.
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention: ▇▇▇▇▇
▇. ▇▇▇▇,
Esq.
(▇▇▇)
▇▇▇-▇▇▇▇ (office
number)
(▇▇▇)
▇▇▇-▇▇▇▇ (telecopy
number)
Any
notice, demand or other communication given in a manner prescribed in this
Section 19 shall be deemed to have been delivered on
receipt.
20. Successors
and Assigns. This Agreement may not be
assigned. This Agreement shall be binding upon and inure to the
benefit of both parties hereto and their respective permitted successors and
assigns.
21. Counterparts. This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one agreement, and any party hereto may execute this
Agreement by signing any such counterpart.
22. Severability. In
case any one or more of the provisions contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any
way
be affected or impaired thereby.
23. Compliance. The
forbearance or neglect of any party to insist upon strict compliance by any
other party with any of the provisions of this Agreement, whether continuing
or
not, or to declare a forfeiture of termination against the other parties, shall
not be construed as a waiver of any of the rights or privileges of any party
hereunder. No waiver of any right or privilege of any party arising
from any default or failure of performance by any party shall affect the rights
or privileges of the other parties in the event of a further default or failure
of performance.
24. Governing
Law. This Agreement shall be construed and the
provisions hereof interpreted under and in accordance with the laws of
Ohio. This Agreement shall be subject to the provisions of the
federal securities statutes, rules and regulations, including such exemptions
from those statutes, rules and regulations as the SEC may grant and the terms
hereof shall be interpreted and construed in accordance therewith.
25. Entire
Agreement. This Agreement, including the attachments
hereto, constitutes the entire agreement between the parties with respect to
the
matters dealt with herein, and supersedes all previous agreements, written
or
oral, with respect to such matters, including but not limited to:
|
·
|
that
certain Amended and Restated Fund Participation Agreement between
the
parties dated as of April 1, 2001,
|
|
·
|
that
certain Letter Agreement between the parties dated January 25,
2000,
|
|
·
|
that
certain Shareholder Services Agreement among Nationwide Life Insurance
Company of America, Nationwide Life and Annuity Company of America,
and
Distributor dated as of May 1,
2002,
|
|
·
|
that
certain Fund/SERV and Networking Agreement between Nationwide Life
and
Annuity Company of America, f/k/a Providentmutual Life and Annuity
Insurance Company of America, and American Century Services Corporation
dated as of May 1, 2002,
|
|
·
|
that
certain Fund/SERV and Networking Agreement between Nationwide Life
Insurance Company, f/k/a Provident Mutual Life Insurance Company,
and
American Century Services Corporation dated as of March 15, 2001,
and
|
|
·
|
that
certain Fund/Serv Agreement between Nationwide Investment Services
Corporation and American Century Services Corporation dated December
11,
1998.
|
If
the foregoing correctly sets forth
our understanding, please indicate your agreement to and acceptance thereof
by
signing below, whereupon this Agreement shall become a binding agreement between
us as of the latest date indicated.
AMERICAN
CENTURY INVESTMENT
SERVICES,
INC.
By:
Name:
[▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇]
Title:
[Executive Vice
President]
Date:
[9/13/04]
We
agree
to and accept the terms of the foregoing Agreement.
NATIONWIDE
FINANCIAL SERVICES,
INC.
By:
Name:
[▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇]
Title:
[Vice
President]
Date:
[9-14-04]
EXHIBIT
A
SUBSIDIARY
LIFE INSURANCE
COMPANIES
Nationwide
Life Insurance Company
Nationwide
Life and Annuity Insurance Company
Nationwide
Life Insurance Company of America
Nationwide
Life and Annuity Company of America
EXHIBIT
B
ADMINISTRATIVE
SERVICES
Pursuant
to the Agreement to which this is attached, the Company shall perform all
administrative and shareholder services required or requested under the
Contracts with respect to the Contract owners, including, but not limited to,
the following:
1. Maintain
separate records for each Contract owner, which records shall reflect the shares
purchased and redeemed and share balances of such Contract
owners. The Company will maintain a single master account with each
Fund on behalf of the Contract owners and such account shall be in the name
of
the Company (or its nominee) as the record owner of shares owned by
the Contract owners.
2. Disburse
or credit to the Contract owners all proceeds of redemptions of shares of the
Funds and all dividends and other distributions not reinvested in shares of
the
Funds.
3. Prepare
and transmit to the Contract owners, as required by law or the Contracts,
periodic statements showing the total number of shares owned by the Contract
owners as of the statement closing date, purchases and redemptions of Fund
shares by the Contract owners during the period covered by the statement and
the
dividends and other distributions paid during the statement period (whether
paid
in cash or reinvested in Fund shares), and such other information as may be
required, from time to time, by the Contracts.
4. Transmit
purchase and redemption orders to the Funds on behalf of the Contract owners
in
accordance with the procedures set forth in Section 4 to the
Agreement.
5. Distribute
to the Contract owners copies of the Funds’ prospectus, proxy materials,
periodic fund reports to shareholders and other materials that the Funds are
required by law or otherwise to provide to their shareholders or prospective
shareholders.
6. Maintain
and preserve all records as required by law to be maintained and preserved
in
connection with providing the Administrative Services for the
Contracts.
Subject
to Review & Approval
EXHIBIT
C
FEES
Administrative
Services Fee
Class
I and Class III
No
Administrative Services Fee shall be paid on any Class I or Class III Funds
with
an expense ratio at or below __ basis points. An Administrative
Services Fee of __ basis points shall be paid on any Class I or Class III Funds
with an expense ratio between __ basis points and __ basis points. An
Administrative Services Fee of __ basis points shall be paid on any Class I
or
Class III Funds with an expense ratio between __ basis points and __ basis
points except assets in Best of America products, which shall receive __
basis points, and assets in VP Income & Growth, which shall receive __ basis
points. An Administrative Services Fee in accordance with the
schedule below shall be paid on any Class I or Class III Funds with an expense
ratio greater than or equal to __ basis points:
|
Product
|
Fee
|
|
All
Future assets except
|
|
|
assets
in VP Ultra
|
__
basis points
|
|
All
Non-Future*
assets
|
__
basis points
|
Class
II and Class IV
No
Administrative Services Fee shall be paid on any Class II or Class IV Funds
with
an expense ratio less than or equal to __ basis points. An
Administrative Services Fee of __ basis points shall be paid on any Class II
or
Class IV Funds with an expense ratio between __ basis points and __ basis
points. An Administrative Services Fee of __ basis points shall be
paid on any Class II or Class IV Funds with an expense ratio greater than or
equal to __ basis points.
Distribution
Fee
Class
I and Class III
In
consideration of the distribution services provided by the Company and its
affiliates, a distribution fee of __ basis points shall be paid on any assets
in
Class I or Class III of VP Ultra.
*
“Non-Future
assets”
means all assets in the following products, which were created prior to November
1, 1997:
The
Best
of America IV
The
Best
of America America’s Vision Activity
Nationwide
Enterprise Benefit Annuity
The
Best
of America America’s Exclusive Annuity
The
Best
of America Single Premium Variable Life
The
Best
of America Modified Single Premium Variable Life
The
Best
of America Flexible Premium Variable Universal Life
The
Best
of America Multiple Payment Variable Universal Life
The
Best
of America Last Survivor Flexible Premium Variable Universal
Life