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EXHIBIT NO. 3
UNDERWRITING OR DISTRIBUTION OF CONTRACTS BETWEEN THE REGISTRANT AND
PRINCIPAL UNDERWRITER
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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
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1. Appointment of Product Administration
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Nationwide is hereby appointed Product Administrator for the Products.
2. Duties of Nationwide
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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
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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
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1. Distribution of Products
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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
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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
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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
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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
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a. Sales Material
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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
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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
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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
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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
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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
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a. Product Training
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Nationwide is responsible for any Product training for the
Agents.
b. Field Sales Material
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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
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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
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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
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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
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1. Waiver
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The forbearance or neglect or 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
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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
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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
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Each party ("Indemnifying Party") hereby agrees to release, indemnify
and hold harmless the other party, its offices, 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
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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
Xxxxxxx X. Xxxxx, Senior Vice President-Sales-Financial Services
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
TO NAS:
Nationwide Advisory Services, Inc.
Xxxxxx X. Xxxx, Vice President-Compliance
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
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6. Governing Law
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This Agreement shall be construed in accordance with and governed by
the laws of the State of Ohio.
7. Arbitration
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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
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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
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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
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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 written above.
NATIONWIDE LIFE INSURANCE COMPANY
By /s/ XXXXXXX X. XXXXX
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Title Senior Vice President
NATIONWIDE LIFE AND ANNUITY
INSURANCE COMPANY
By /s/ XXXXXXX X. XXXXX
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Title Senior Vice President
NATIONWIDE ADVISORY SERVICES, INC.
By /s/ XXXXXX X. XXXX
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Title Vice President
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EXHIBIT A
ANALYSIS OF ADMINISTRATIVE FUNCTIONS
A. PRODUCT UNDERWRITING/ISSUE
NATIONWIDE NAS
- Establishes underwriting criteria for - Consults with regard to new business
application processing and rejections. procedures and 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 form 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 Available for - Issues Fund Shares to Nationwide at
Investment" in Fund Shares and places Fund net asset Value.
Share purchase or redemption orders with
the Fund, by facsimile each day by 10:00 - Confirms Nationwide's Fund
a.m. E.T. If for any reason Nationwide is purchases and redemptions.
unable to process such orders, it will
provide NAS with estimates. - Transmit by facsimile Fund Share
prices to Nationwide by 6:00 p.m.
- Maintains and makes available, as reasonably EST each day.
requested, records used in determining "Net
Amount Available for Investment." - Maintains records of all Fund Shares
owned by Nationwide, including the
- Collects information needed in determining date purchased and sold, cost, and
Variable Account unit values from the Funds other information maintained by NAS
including daily net asset value, capital in its ordinary course of business.
gains or dividend distributions, and the
number of Fund Shares acquired or sold during - Cooperates in annual audit of
the immediately preceding valuation period. separate account financials conducted
for purposes of financial statement
- Performs daily unit valuation calculation. certification and publication.
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E. CONTRACT OWNER SERVICE/
RECORD MAINTENANCE
NATIONWIDE NAS
- Receives and processes all Contract - Accommodates customer service function
Owner service requests, including but not by providing any supporting information
limited to informational requests, or documentation which may be in the
beneficiary changes, and transfers of control of NAS.
Contract Value among eligible
investment options.
- Maintains daily records of all changes
made to Contract Owner accounts.
- Researches and responds to all Contract - Researches and responds to Nationwide's
Owner/Agent inquiries. 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 from - Provides proxy, solicitation materials, and
Funds Receives proxy solicitation record date information.
materials from 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 semi-annual and - Prepares and mails to Nationwide all
annual reports of Variable Account(s) to required semi-annual and annual financial
Contract Owners. reports to 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 for the - Prepares and files form N-SAR for the
Separate Account. 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 accordance - Provides periodic reports in accordance
with the Schedule of Reports to be with the Schedule of Reports to be
prepared jointly by Nationwide and NAS. prepared jointly by Nationwide and NAS.
(See EXHIBIT C) (See EXHIBIT C)
M. AGENT LICENSE RECORDKEEPING
NATIONWIDE NAS
- Receives, establishes, processes, and - Cooperates with Nationwide in the Agent
maintains Agent appointment records. appointment process 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, Xxx Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxxx 00000 (phone
(000)000-0000) or to President, Nationwide Advisory Services, Inc. Three
Nationwide Plaza, Columbus, Ohio (phone (000)000-0000).
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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 liquidation by
Summary by Territory: 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.
