EXHIBIT 10.3
AMENDED AND RESTATED COST SHARING AGREEMENT
This Amended Cost Sharing Agreement (the "Agreement") effective July 1,
2002, by and between Nationwide Mutual Insurance Company, Nationwide Mutual Fire
Insurance Company, Nationwide Life Insurance Company, Nationwide Life and
Annuity Insurance Company, Nationwide Insurance Company of America, Nationwide
Insurance Company of Florida, Nationwide Affinity Insurance Company of America,
Nationwide Assurance Company, AMCO Insurance Company, Depositors Insurance
Company, Allied Property and Casualty Insurance Company, Farmland Mutual
Insurance Company, Scottsdale Insurance Company, Scottsdale Surplus Lines
Insurance Company, Western Heritage Insurance Company, Nationwide General
Insurance Company, Nationwide Property and Casualty Insurance Company,
Nationwide Agribusiness Insurance Company, Colonial County Mutual Insurance
Company, National Casualty Company, CalFarm Insurance Company, Nationwide
Lloyds, Nationwide Financial Services, Inc., Nationwide Corporation, Nationwide
Investment Services Corporation, Nationwide Realty Investors, Ltd., Nationwide
Financial Services (Bermuda), Ltd., Gates ▇▇▇▇▇▇▇▇ & Company, Nationwide Health
Plans, Inc., Nationwide Global Holdings, Inc., Gartmore Global Investments, Inc.
(fka Villanova Capital, Inc.), Gartmore ▇▇▇▇▇▇ Financial Services, Inc. (fka
▇▇▇▇▇▇ Financial Services, Inc.), Nationwide Retirement Plan Services, Inc. (fka
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Associates, Inc.), Nationwide Retirement Solutions, Inc., The
401(k) Companies, Inc., Nationwide Securities, Inc. (fka Nationwide Advisory
Services, Inc.), Nationwide Financial Institution Distributors Agency, Inc.,
Nationwide Advantage Mortgage Company (fka Nationwide Home Mortgage Company),
Allied Group, Inc., Retention Alternatives, Ltd., Scottsdale Indemnity Company,
Nationwide Indemnity Company, Nationwide Services Company, LLC, Nationwide Cash
Management Company, Insurance Intermediaries, Inc., National Deferred
Compensation, Inc., Nationwide Foundation, and any United States domiciled
subsidiaries of each aforestated company (collectively, the "Parties").
WHEREAS, the Parties desire to terminate and replace in its entirety the
Cost Sharing Agreement, dated January 1, 2000, with this Agreement, effective
July 1, 2002; and
WHEREAS, the Parties desire to have each other perform certain operational
services and certain administrative services, on behalf of one another; and
WHEREAS, the providing of these certain operational services and certain
administrative services shall of necessity involve a Party rendering such
services to another Party (the "Providing Party"); and
WHEREAS, the receiving of these certain operational services and certain
administrative services shall of necessity involve a Party receiving such
services from the Providing Party (the "Receiving Party"); and
WHEREAS, the Parties desire to properly distribute and allocate expenses to
each Receiving Party.
Now theretofore, in consideration of the premises and of the mutual
agreements and covenants herein contained, the Parties do hereby agree as
follows:
1. Services Provided to the Receiving Party by the Providing Party.
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a. Operational Services. Unless addressed by a separate
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agreement, the Providing Party's employees may perform some
or all of the following operational services on behalf of
the Receiving Party:
i. Field acquisition services (including, but not
limited to advertising, solicitation and
underwriting);
ii. Policy processing and administration services;
iii. Claims adjustment, claims administration and other
loss adjustment services (however, any compensation
for claims adjustment services shall not be based on
the amount of adjustments, that is not based upon
reduction or denial results);
iv. Data processing services; v. Accounting services;
vi. Actuarial services; vii. Investment services;
and
viii. Other necessary operational services or functions.
As to the services mentioned in Section 1(a)(i) above, (i) all
advertising shall first be approved by the specific underwriting
insurance company; (ii) all underwriting performed hereunder shall
be in conformity with the underwriting guidelines provided by the
underwriting insurance company; and (iii) the underwriting insurance
company shall make the final determination as to whether to accept
or reject the proposed request for insurance.
b. Administrative Services. Unless addressed by a separate
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agreement, the Providing Party's employees may perform some
or all of the following administrative services on behalf of
the Receiving Party:
i. Payroll Administration;
ii. Benefits administration;
iii. Investment management administration (however, in
the performance of such services, and the investment
services stated in Section 1(a)(vii) above, the
deposit and maintenance of all individual insurance
company's funds and assets shall be in accounts in
the insurance company's own name);
iv. Legal administration;
v. Human Resource administration;
vi. Communications administration;
vii. Financial administration (including, but not limited
to, treasury services, financial reporting,
management reporting, financial planning, budgeting,
tax planning, consulting and reporting); and
viii. Other necessary administrative services.
2. Management of Employees. The Providing Party's employees shall at
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all times operate under the management control of the executive
officers of Providing Party. The executive officers of the Providing
Party shall maintain the right to hire additional employees and to
otherwise commence any and all necessary and appropriate management
action with respect to the Providing Party's employees performing
services on behalf of the Receiving Party.
3. Costs Not Subject to Allocation. The Parties may determine that an
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expense item or group of expenses segregated into Receiving Party
disbursement codes are one hundred percent (100%) chargeable to that
specific Receiving Party and are therefore not subject to allocation
or cost sharing.
4. Allocation of Costs and Allocation Methods. Costs associated with
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the services provided by the Providing Party shall be allocated to
the Receiving Party based on standard allocation techniques and
procedures acceptable under general cost accounting techniques and
procedures that shall be in conformity with NAIC statutory
accounting principles. Expenses shall be apportioned in accordance
with Statement of Statutory Accounting Procedure No. 70, "Allocation
of Expenses." The books, accounts and records shall be so maintained
as to clearly and accurately disclose the nature and details of the
transactions including such accounting information as is necessary
to support the expenses apportioned to the respective parties. The
following methods or some combination thereof, shall be used as
appropriate to allocate expenses to the Receiving Party:
a. Special Cost Studies;
b. Individual Time Estimates;
c. Claims Counts;
d. Policies in Force;
e. Direct Written Premiums;
f. Pro rata share of the Receiving Party's employees, or their
salaries; and/or;
g. Any other method agreed to by the Parties that are in
conformity with NAIC statutory accounting principles.
5. Maintenance and Payment of Expenses.
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a. The Parties shall maintain expenses for such operation and
administrative services in sufficient detail so as to
facilitate proper allocation to the Receiving Party,
including the cost allocation methodology.
b. The Receiving Party shall remit payment for the operational
and administrative expenses to the Providing Party.
Estimated settlements shall be executed as appropriate to
maintain equity of cash flow in accordance with treasury
policy and cash management principles. In most instances the
actual settlement will occur quarterly taking into account
the estimated settlements. The payment of invoices is
expected within a reasonable and timely manner (i.e. 90
days) following receipt of the invoice by the Receiving
Party.
6. Chief Financial Officer.
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a. The Chief Financial Officer of Nationwide Mutual Insurance
Company (the "CFO") or the CFO's duly authorized
representative (the "Representative") shall be responsible
for allocation of expenses to the Receiving Parties. The CFO
or the Representative may seek input from other areas, but
shall make the ultimate decision regarding the allocation of
expenses.
b. It shall be the responsibility of the CFO or the
Representative to maintain fairness and equity of expense
allocations and to ensure that such allocations are in
conformity with customary insurance accounting practices
consistently applied and in accordance with NAIC guidelines.
7. Disputes Regarding Allocation. If a dispute arises between the
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Parties regarding the allocation of expenses and cannot be resolved
between the Parties and the CFO or the Representative, the executive
officers of the Parties may, at their option, negotiate a settlement
related thereto. The CFO or the Representative shall be responsible
for the operational aspects of any such settlement.
8. Future Corporate Structure Changes. Unless otherwise agreed to, the
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Parties shall cause any corporation that in the future becomes a
subsidiary or affiliate having the ultimate parent entity of
Nationwide Mutual Insurance Company and/or Nationwide Mutual Fire
Insurance Company, to become a party hereto as an additional "Party"
hereto. Conversely, the parties shall cause any corporation that in
the future ceases to be a subsidiary or affiliate not having the
ultimate parent entity of Nationwide Mutual Insurance Company and/or
Nationwide Mutual Fire Insurance Company, to no longer be a party
hereto.
9. Term. The term of this Agreement shall commence on July 1, 2002
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and shall remain in effect until terminated pursuant to Section
11 of the Agreement.
10. Amendments. This Agreement may be amended, modified, or
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supplemented at any time by mutual consent of all Parties; provided,
however, that any such amendment, modification or supplement must be
in writing, executed by all Parties, and approved by the appropriate
regulatory authorities. Notwithstanding the foregoing, and except as
otherwise agreed to by the Parties, an amendment,
modification or supplement to this Agreement with respect to
particular Parties affected by such amendment, modification or
supplement is effective as it relates to such particular Parties;
provided, however, that any such amendment, modification, or
supplement is in writing and executed by the Parties, and the
Agreement shall remain in full force and effect with respect to the
remaining Parties to the Agreement.
11. Entire Agreement. This Agreement and any and all addenda, schedules
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or exhibits attached hereto constitutes the entire agreement between
the Parties with respect to the subject matter hereof and supercedes
all previous proposals, negotiations, representations, commitments,
writings and all other communications between the Parties, both oral
and written. In the event of any conflict between this Agreement and
any other prior agreements or understandings, the terms of this
Agreement shall control.
12. Non-Assignability. The rights, obligations, duties, and authority
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under this Agreement are not assignable by the Parties.
13. Termination.
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a. This Agreement may be terminated by the mutual agreement of
all Parties.
b. The participation of a Party in this Agreement may be
terminated by any such Party upon ninety (90) days written
notice by the terminating Party to the other Parties.
14. Governing Law. This Agreement shall be governed by and construed
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and enforced in accordance with the laws of the State of Ohio,
excluding the choice of law rules thereof.
15. Records. All records of a specific insurance company's business are
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owned by, and are the property of, the specific insurance company.
As a general matter, each individual insurance company and all
appropriate regulatory authorities shall have access to all records
relating to the business within a reasonable time, such timeframe to
depend upon the nature and complexity of the request and the
physical location of such records at the time of the request.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
on the day and year first above set forth.
NATIONWIDE MUTUAL INSURANCE COMPANY
NATIONWIDE MUTUAL FIRE INSURANCE COMPANY
NATIONWIDE LIFE INSURANCE COMPANY
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
NATIONWIDE INSURANCE COMPANY OF AMERICA
NATIONWIDE INSURANCE COMPANY OF FLORIDA
NATIONWIDE ASSURANCE COMPANY
AMCO INSURANCE COMPANY
DEPOSITORS INSURANCE COMPANY
ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY
FARMLAND MUTUAL INSURANCE COMPANY
SCOTTSDALE INSURANCE COMPANY
SCOTTSDALE SURPLUS LINES INSURANCE COMPANY
WESTERN HERITAGE INSURANCE COMPANY
NATIONWIDE GENERAL INSURANCE COMPANY
NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY
NATIONWIDE AGRIBUSINESS INSURANCE COMPANY
COLONIAL COUNTY MUTUAL INSURANCE COMPANY
NATIONAL CASUALTY COMPANY
CALFARM INSURANCE COMPANY
NATIONWIDE FINANCIAL SERVICES, INC.
NATIONWIDE CORPORATION
NATIONWIDE INVESTMENT SERVICES CORPORATION
NATIONWIDE REALTY INVESTORS, LTD
NATIONWIDE GLOBAL HOLDINGS, INC.
GARTMORE GLOBAL INVESTMENTS, INC.
NATIONWIDE RETIREMENT SOLUTIONS, INC.
NATIONWIDE SECURITIES, INC.
NATIONWIDE FINANCIAL INSTITUTION DISTRIBUTORS AGENCY, INC.
NATIONWIDE ADVANTAGE MORTGAGE COMPANY
ALLIED GROUP, INC.
SCOTTSDALE INDEMNITY COMPANY
NATIONWIDE INDEMNITY COMPANY
NATIONWIDE SERVICES COMPANY, LLC
NATIONWIDE CASH MANAGEMENT COMPANY
NATIONAL DEFERRED COMPENSATION, INC.
NATIONWIDE FOUNDATION
RETENTION ALTERNATIVES, LTD.
By: -------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President-Chief Financial Officer
NATIONWIDE AFFINITY INSURANCE COMPANY OF AMERICA
By: -------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
Title: President and Chief Operating Officer
NATIONWIDE LLOYDS
By: Lone Star General Agency, Inc., its Attorney-in-Fact
By: -------------------------------------
Print Name: -------------------------------------
Its -------------------------------------
NATIONWIDE RETIREMENT PLAN SERVICES, INC.
By: -------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board and Vice President
NATIONWIDE FINANCIAL SERVICES (BERMUDA), INC.
By: -------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President-Finance and Treasurer
GATES ▇▇▇▇▇▇▇▇ & COMPANY
By: -------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief Operating Officer
NATIONWIDE HEALTH PLANS, INC.
By: -------------------------------------
Name: ▇▇▇▇▇▇ San ▇▇▇▇▇▇▇
Title: President and Chief Operating Officer
GARTMORE ▇▇▇▇▇▇ FINANCIAL SERVICES, INC.
By: -------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
THE 401(k) COMPANIES, INC.
By: -------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: President, Chief Executive Officer and Chief Financial Officer
INSURANCE INTERMEDIARIES, INC.
By: -------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
