PARTICIPATION AGREEMENT Between Nationwide Life Insurance Company and BB&T Asset Management, Inc. and BB&T Variable Insurance Funds
Between
Nationwide
Life Insurance Company
and
BB&T
Asset Management, Inc.
and
BB&T
Variable Insurance Funds
THIS
AGREEMENT, dated as of the __________________ by and
between Nationwide Life Insurance Company (the "Company"), an Ohio life
insurance company, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto, as may be amended
from
time to time (each account hereinafter referred to as the "Account"), BB&T
Asset Management, Inc. (“the Adviser”) and BB&T Variable Insurance
Funds (the “Trust”).
WHEREAS,
the Trust engages in business as an open-end management investment company
and
is available to act as the investment vehicle for separate accounts established
for variable life insurance and variable annuity contracts (the "Variable
Insurance Products") to be offered by insurance companies ("Participating
Insurance Companies");
WHEREAS,
the shares of beneficial interest of the Trust are divided into several series
of shares, each designated a "Portfolio" and representing the interest in
a
particular managed portfolio of securities and other assets;
WHEREAS,
the Trust is registered as an open-end management investment company under
the
Investment Company Act of 1940, as amended (the “1940 Act”) and shares of the
Portfolio are registered under the Securities Act of 1933, as amended (the
“1933
Act”);
WHEREAS,
Variable Insurance Funds, the predecessor trust to the Trust (the "Predecessor
Trust"), obtained an order (Variable Insurance Funds, et al.,
Investment Company Act Rel. No. 23594 (Dec. 10, 1998)) from the
Securities
and Exchange Commission (“SEC”) granting Participating Insurance Companies and
their separate accounts exemptions from the provisions of Sections 9(a),
13(a)
and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder,
to the extent necessary to permit shares of the Predecessor Trust to be sold
to
and held by variable annuity and variable life insurance separate accounts
of
both affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans, among others (the “Exemptive Order”), the terms of
which qualify, in their entirety, the terms of this Agreement;
WHEREAS,
the Company has issued or will issue certain variable life insurance and/or
variable annuity contracts supported wholly or partially by the Account (the
"Contracts");
WHEREAS,
the Account is duly established and maintained as a segregated asset account
by
the Company to set aside and invest assets attributable to the aforesaid
Contracts; and
WHEREAS,
to the extent permitted by applicable insurance laws and regulations, the
Company intends to purchase shares in the Portfolios listed in Schedule A
hereto, as it may be amended from time to time by mutual written agreement
(the
"Designated Portfolios"), on behalf of the Account to fund the aforesaid
Contracts;
WHEREAS,
the Adviser serves as investment adviser to the Designated Portfolios;
and
WHEREAS,
Participating Insurance Companies, including the Company, are authorized
to
sell such shares to the Accounts at net asset value;
and
WHEREAS,
the Company, the Adviser, the Trust and BISYS Fund Services, Limited Partnership
previously entered into a participation agreement dated October 6, 2003 (the
"Prior Agreement"); and
WHEREAS,
the Prior Agreement was terminated on
[ ];
NOW,
THEREFORE, in consideration of their mutual promises, the Company, the Trust
and
the Adviser agree as follows:
ARTICLE I. Sale
of Trust Shares
1.1 The
Trust agrees to make available to the Company for purchase on behalf of the
Account, shares of the Designated Portfolios, such purchases to be effected
at
net asset value in accordance with Section 1.3 of this
Agreement. Notwithstanding the foregoing, (i) Portfolios (other than
those listed on Schedule A) in existence now or that may be established in
the
future will be made available to the Company only as the Trust may so provide,
and (ii) the Board of Trustees of the Trust (the "Board") may suspend or
terminate the offering of shares of any Designated Portfolio or class thereof,
if such action is required by law or by regulatory authorities having
jurisdiction or if, in the sole discretion of the Board acting in good faith
and
in light of its fiduciary duties under federal and any applicable state laws,
suspension or termination is necessary in the best interests of the shareholders
of such Designated Portfolio.
1.2 The
Trust shall accept for redemption, at the Company's request, any full or
fractional Designated Portfolio shares held by the Company on behalf of the
Account, such redemptions to be effected at net asset value in accordance
with
Section 1.3 of this Agreement. Notwithstanding the foregoing, (i) the
Company shall not redeem Trust shares attributable to Contract owners except
in
the circumstances permitted in Section 1.3 of this Agreement, and (ii) the
Trust
may, in the best interests of shareholders of a Designated Portfolio, delay
redemption of such shares of any Designated Portfolio to the extent permitted
by
the 1940 Act and any rules, regulations or orders thereunder.
1.3 Purchase
and Redemption Procedures
(a)
The purchase, redemption and settlement of shares will normally follow the
Fund/SERV – Defined Contribution Clearance and Settlement Service ("DCCS")
Processing Procedures and Manual Processing Procedures defined in Exhibit
B and
summarized in this Section 1.3. For purposes of Sections 1.1 and 1.2,
the Company shall be an agent of the Trust for the limited purpose of receiving
and accepting purchase and redemption requests on behalf of the Account for
shares of those Designated Portfolios made available hereunder, based on
allocations of amounts to the Account or subaccounts thereof under the Contracts
and other transactions relating to the Contracts or the
Account. Receipt and acceptance of any such request (or relevant
transactional information therefor) on any day the New York Stock Exchange,
Inc.
is open for trading and on which a Designated Portfolio calculates its net
asset
value (a "Business Day") pursuant to the rules of the SEC by the Company
as such
limited agent of the Trust prior to the time that the Trust ordinarily
calculates its net asset value as described from time to time in each Designated
Portfolio’s prospectus shall constitute receipt and acceptance by the Designated
Portfolio on that same Business Day, provided that the Trust or its agent
receives notice of such request by 9:00 a.m. Eastern Time on the next following
Business Day.
(b) The
Company agrees that only those purchase orders, requests for redemption,
exchange orders and instructions that are received on a Business Day prior
to
the time the net asset value of each Designated Portfolio is calculated
according to the terms of each Designated Portfolio's prospectus (the "Close
of
Trading") will be included in the transactions transmitted to the Funds by
9:00
a.m. Eastern time on the next following Business Day, as defined in Section
1.3. In addition, the Company acknowledges and agrees that it has
procedures in place to segregate and prevent the aggregation of purchase
orders,
requests for redemption, exchange orders and instructions received by the
Close
of Trading from those received after the Close of Trading, and that a written
record of each purchase order, request for redemption, exchange order and
instruction, appropriately time stamped upon receipt, will be maintained
and
available to the Trust if requested.
(c) The
Company shall pay for shares of each Designated Portfolio on the same day
that
it notifies the Trust or its agent of a purchase request for such
shares. Payment for Designated Portfolio shares shall be made in
federal funds transmitted to the Trust or other designated person by wire
to be
received on the day the Trust is notified of the purchase request for Designated
Portfolio shares (which request may be net of redemptions of
shares). If federal funds are not received on time, such funds will
be invested, and Designated Portfolio shares purchased thereby will be issued,
as soon as practicable and the Company shall promptly, upon the Trust's request,
reimburse the Trust for any reasonable charges, costs, fees, interest or
other
expenses incurred by the Trust in connection with any advances to, or
borrowing or overdrafts by, the Trust, or any similar expenses incurred by
the
Trust, as a result of portfolio transactions effected by the Trust based
upon
such purchase request. Upon receipt of federal funds so wired, such
funds shall cease to be the responsibility of the Company and shall become
the
responsibility of the Trust.
(d) Payment
for Designated Portfolio shares redeemed by the Account or the Company shall
be
made in federal funds transmitted by wire to the Company or any other designated
person on the next Business Day after the Trust or its agent is properly
notified of the redemption order of such shares (which order shall be net
of any
purchase orders), except that the Trust may redeem Designated Portfolio shares
in assets other than cash and delay payment of redemption proceeds to the
extent
permitted under Section 22(e) of the 1940 Act and any rules thereunder, and
in
accordance with the procedures and policies of the Trust as described in
the
then current prospectus and/or statement of additional information
(“SAI”). The Trust shall not bear any responsibility whatsoever for
the proper disbursement or crediting of redemption proceeds by the Company,
the
Company alone shall be responsible for such action.
(e) The
Company shall not redeem Trust shares attributable to the Contracts except
(i)
as necessary to implement Contract owner initiated or approved transactions,
(ii) as required by state and/or federal laws or regulations or judicial
or
other legal precedent of general application (hereinafter referred to as
a
"Legally Required Redemption"), (iii) upon 45 days prior written notice to
the
Trust and Adviser, as permitted by an order of the SEC pursuant to Section
26(b)
of the 1940 Act, but only if a substitution of other securities for the shares
of the Designated Portfolios is consistent with the terms of the Contracts,
or
(iv) as permitted under the terms of the Contract. Upon request, the
Company will promptly furnish to the Trust reasonable assurance that any
redemption pursuant to clause (ii) above is a Legally Required
Redemption. Furthermore, except in cases where permitted under the
terms of the Contracts, the Company shall not prevent Contract owners from
allocating payments to a Designated Portfolio that was otherwise available
under
the Contracts without first giving the Trust 45 days notice of its intention
to
do so.
1.4 The
Trust shall make the net asset value per share for each Designated Portfolio
available to the Company by 6:30 p.m. Eastern Time each Business Day, and
in any
event, as soon as reasonably practicable after the net asset value per share
for
such Designated Portfolio is calculated, and the Trust shall calculate such
net
asset value in accordance with the Trust's prospectus. Neither the
Trust, any Designated Portfolio, the Adviser, nor any of their affiliates
shall
be liable for any information provided to the Company pursuant to this Agreement
which information is based on incorrect information supplied by the Company
or
any other Participating Insurance Company to the Trust or the
Adviser.
1.5 The
Trust or its agent shall furnish notice (by wire or telephone followed by
written confirmation) to the Company as soon as reasonably practicable of
any
income dividends or capital gain distributions payable on any Designated
Portfolio shares. The Company, on its behalf and on behalf of the
Account, hereby elects to receive all such dividends and distributions as
are
payable on any Designated Portfolio shares in the form of additional shares
of
that Designated Portfolio. The Company reserves the right, on its
behalf and on behalf of the Account, to revoke this election and to receive
all
such dividends and capital gain distributions in cash. The Trust or
its agent shall notify the Company promptly of the number of Designated
Portfolio shares so issued as payment of such dividends and
distributions.
1.6 Issuance
and transfer of Trust shares shall be by book entry only. Share
certificates will not be issued to the Company or the
Account. Purchase and redemption orders for Trust shares shall be
recorded in an appropriate ledger for the Account or the appropriate subaccount
of the Account.
1.7 (a) The
parties hereto acknowledge that the arrangement contemplated by this Agreement
is not exclusive; the Trust's shares may be sold to other insurance
companies and the cash value of the Contracts may be invested in
other investment companies, provided, however, that until this Agreement
is
terminated pursuant to Article X, the Company shall promote the Designated
Portfolios on the same basis as other funding vehicles available under the
Contracts.
(b) The
Company shall not, without prior notice to the Trust (unless otherwise required
by applicable law), take any action to operate the Account as a management
investment company under the 1940 Act.
(c) The
Company shall not, without prior notice to the Adviser and the Trust (unless
otherwise required by applicable law), induce Contract owners to change or
modify the Trust or change the Trust's investment adviser.
(d) The
Company shall not, without prior notice to the Trust, induce Contract owners
to
vote on any matter submitted for consideration by the shareholders of the
Trust
in a manner other than as recommended by the Board.
ARTICLE
II. Representations
and Warranties
1. This
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2.1 The
Trust represents and warrants that (i) the Trust is lawfully organized and
validly existing under the laws of the Commonwealth of Massachusetts, (ii)
the
Trust is and shall remain registered under the 1940 Act, (iii) the Trust
does
and shall comply in all material respects with the 1940 Act, (iv) Designated
Portfolio shares sold pursuant to this Agreement are registered under the
1933
Act (to the extent required by that Act) and are duly authorized for issuance,
(v) the Trust shall amend the registration statement for the shares of the
Designated Portfolios under the 1933 Act and the 1940 Act from time to time
as
required in order to effect the continuous offering of such shares, and (vi)
the
Board has elected for each Designated Portfolio to be taxed as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986,
as
amended (the “Code”). The Trust makes no representations or
warranties as to whether any aspect of the Designated Portfolios’ operations,
including, but not limited to, investment policies, fees and expenses, complies
with the insurance laws and other applicable laws of the various
states.
2.2 The
Trust further represents and warrants that shares of the Designated Portfolios
(i) shall be offered and sold in compliance with applicable state and federal
securities laws, (ii) are offered and sold only to Participating Insurance
Companies and their separate accounts and to persons or plans that communicate
to the Trust that they qualify to purchase shares of the Designated Portfolios
under Section 817(h) of the Code and the regulations thereunder without
impairing the ability of the Account to consider the portfolio investments
of
the Designated Portfolios as constituting investments of the Account for
the
purpose of satisfying the diversification requirements of Section 817(h)
(“Qualified Persons”), and (iii) are registered and qualified for sale in
accordance with the laws of the various states to the extent required by
applicable law.
2.3 Subject
to Company’s representations and warranties in Sections 2.5 and 2.6, the Adviser
represents and warrants that it shall invest the assets of each Designated
Portfolio in such a manner as to ensure that the Contracts will be treated
as
annuity or life insurance contracts, whichever is appropriate, under the
Code
and the regulations issued thereunder (or any successor
provisions). Without limiting the scope of the foregoing, the Adviser
represents and warrants that each Designated Portfolio has complied and it
will
use its best efforts to ensure that each Designated Portfolio continues to
comply with Section 817(h) of the Code and Treasury Regulation §1.817-5, and any
Treasury interpretations thereof, relating to the diversification requirements
for variable annuity, endowment, or life insurance contracts, and any amendments
or other modifications or successor provisions to such Section or
Regulation. The Adviser will take all reasonable steps (a) to notify
the Company immediately upon having a reasonable basis for believing that
a
breach of this Section 2.3 has occurred, and (b) in the event of such a breach,
to adequately diversify the Designated Portfolio so as to achieve compliance
within the grace period afforded by Treasury Regulation §1.817-5.
2.4 The
Adviser represents and warrants that each Designated Portfolio is or will
be
qualified as a Regulated Investment Company under Subchapter M of the Code,
that
the Adviser will make every effort to maintain such qualification (under
Subchapter M or any successor or similar provisions) and that the Adviser
will
notify the Company immediately upon having a reasonable basis for believing
that
a Designated Portfolio has ceased to so qualify or that it might not so qualify
in the future.
2.5 The
Company represents and warrants that the Contracts (a) are, or prior to issuance
will be, registered under the 1933 Act, or (b) are not registered because
they
are properly exempt from registration under the 1933 Act or will be offered
exclusively in transactions that are properly exempt from registration under
the
1933 Act. The Company further represents and warrants that the
Contracts will be issued and sold in compliance in all material respects
with
all applicable federal securities and state securities and insurance
laws. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law,
that
it has legally and validly established the Account prior to any issuance
or sale
thereof as a segregated asset account under Ohio insurance laws, and that
it (a)
has registered or, prior to any issuance or sale of the Contracts, will register
the Account as a unit investment trust in accordance with the provisions
of the
1940 Act to serve as a segregated investment account for the Contracts, or
alternatively (b) has not registered the Account in proper reliance upon
an
exclusion from registration under the 1940 Act. The Company also
represents and warrants that it and the Account are Qualified
Persons. The Company shall register and qualify the Contracts or
interests therein as securities in accordance with the laws of the various
states only if and to the extent required by applicable law.
2.6 The
Company represents and warrants that it shall comply with any applicable
privacy
and notice provisions of 15 U.S.C. §§ 6801-6827 and any applicable regulations
promulgated thereunder (including but not limited to 17 C.F.R. Part 248)
as they
may be amended.
2.7 The
Company represents and warrants that it shall comply with the USA Patriot
Act as
applicable and effective. The Company agrees to provide the Trust or
its designee with all necessary information for it to fulfill its obligations,
if any, under the USA Patriot Act.
2.8 The
Adviser represents and warrants that it shall comply with the USA Patriot
Act as
applicable and effective. The Adviser agrees to provide the Company
or its designee with all necessary information for it to fulfill its
obligations, if any, under the USA Patriot Act.
2.9 The
Company represents and warrants that the Contracts are currently, and at
the
time of issuance shall be, treated as life insurance or annuity contracts,
under
applicable provisions of the Code, and that it will make every effort to
maintain such treatment, and that it will notify the Trust and the Adviser
immediately upon having a reasonable basis for believing the Contracts have
ceased to be so treated or that they might not be so treated in the
future. In addition, Company represents and warrants that each of its
Accounts is a "segregated asset account" and that interests in the Accounts
are
offered exclusively through the purchase of or transfer into a "variable
contract" within the meaning of such terms under Section 817 of the Code
and the
regulations thereunder. Company will use every effort to continue to
meet such definitional requirements, and it will notify the Trust and the
Adviser immediately upon having a reasonable basis for believing that such
requirements have ceased to be met or that they might not be met in the
future.
2.10 The
Adviser represents and warrants that it is registered as an investment adviser
with the SEC.
2.11. The
Trust represents and warrants that all of its trustees, officers, employees,
and
other individuals or entities dealing with the money and/or securities of
the
Trust are and shall continue to be at all times covered by a blanket fidelity
bond or similar coverage for the benefit of the Trust in an amount not less
than
the minimum coverage as required currently by Rule 17g-1 of the 1940 Act
or
related provisions as may be promulgated from time to time. The
aforesaid bond shall include coverage for larceny and embezzlement and shall
be
issued by a reputable bonding company.
2.12. The
Company represents and warrants that all of its directors, officers, employees,
and other individuals/entities employed or controlled by the Company dealing
with the money and/or securities of the Account are covered by a blanket
fidelity bond or similar coverage for the benefit of the Account, in an amount
not less than $__. The aforesaid bond includes coverage for larceny
and embezzlement and is issued by a reputable bonding company. The
Company agrees to hold for the benefit of the Trust and to pay to the Trust
any
amounts lost from larceny, embezzlement or other events covered by the aforesaid
bond to the extent such amounts properly belong to the Trust pursuant to
the
terms of this Agreement. The Company agrees to make all reasonable
efforts to see that this bond or another bond containing these provisions
is
always in effect, and agrees to notify the Trust and the Adviser in the event
that such coverage no longer applies.
2.12 The
Company acknowledges that the Funds are not intended to serve as vehicles
for
frequent transfers among the Funds in response to short-term market fluctuations
(“market timing”). The Company represents that the
Variable Insurance Products are intended for long-term investors. The
Company has adopted policies and procedures designed to detect and deter
short-term trading and/or disruptive trading practices, including, but not
limited to, automated monitoring of contract owner trading activity and imposing
trade restrictions. These policies are disclosed in the Variable Insurance
Products’ prospectuses.
The
Trust
has adopted policies and procedures designed to prevent disruptive trading
practices. Such policies are disclosed in the Portfolio’s
prospectuses and shall be uniformly and consistently applied to all
shareholders, unless otherwise disclosed in the Portfolio’s
prospectuses.
ARTICLE
III. Voting
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3.1 The
Company shall:
solicit
voting instructions from Contract owners;
vote
Trust shares in accordance with instructions received from Contract owners;
and
vote
Trust shares for which no instructions have been received in the same proportion
as Trust shares of such portfolio for which instructions have been
received,
so
long
as and to the extent that the SEC continues to interpret the 1940 Act to
require
pass-through voting privileges for variable contract owners or to the extent
otherwise required by law. The Company will vote Trust shares held in
any segregated asset account in the same proportion as Trust shares of such
Designated Portfolio for which voting instructions have been received from
Contract owners, to the extent permitted by law.
3.2 Participating
Insurance Companies shall be responsible for assuring that each of their
separate accounts participating in a Designated Portfolio calculates voting
privileges as required by the Mixed and Shared Funding Exemptive Order
(See Section 7.1) and consistent with any reasonable standards that
the
Trust may adopt and provide in writing.
ARTICLE
IV. Prospectuses
and Proxy Statements
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4.1 The
Trust or its agent shall provide the Company with as many copies of the Trust's
current prospectus (describing only the Designated Portfolios listed on Schedule
A), any supplements thereto or, to the extent permitted and requested by
Company, the Trust’s profiles as the Company may reasonably
request. If requested by the Company in lieu thereof, the Trust or
its agent shall provide such documentation (including a “camera ready” final
copy of such documentation on diskette) and other assistance as is reasonably
necessary in order for the Company once each year (or more frequently if
the
prospectus for the Trust is amended) to have the prospectus for the Contracts
and the Trust's prospectus or profile printed together in one or more
documents. The Trust agrees to cooperate with Company to provide the
documents on a timely basis to meet Company’s reasonable deadline requirements
for production.
4.2 The
Trust or its agent shall provide the Company with information regarding the
Designated Portfolios’ expenses, which information may include a table of fees
and related narrative disclosure for use in any prospectus or other descriptive
document relating to a Contract. The Company shall provide prior
written notice of any proposed modification of such information, which notice
will describe in detail the manner in which the Company proposes to modify
the
information, agrees to provide the Trust or its agent with an opportunity
to
review such proposed modification prior to its use by the Company, and agrees
not to use the proposed modification without the consent of the Trust or
its
agent.
4.3 The
Trust or its agent shall provide the Company with copies of the Designated
Portfolios’ proxy material, reports to shareholders (describing only the
Designated Portfolios listed on Schedule A), and other communications to
shareholders (each, a “Shareholder Communication”) in such quantity as the
Company shall reasonably require for distributing to Contract
owners. If requested by the Company in lieu thereof, the Trust or its
agent shall provide Shareholder Communications in “camera ready” format on
diskette. The Trust agrees to cooperate with Company to provide such
Shareholder Communications on a timely basis to meet Company’s reasonable
deadline requirements for production and delivery.
ARTICLE
V. Sales
Material and Information
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5.1 The
Company shall furnish, or shall cause to be furnished, to the Trust or its
designee and Adviser each piece of sales literature or other promotional
material that the Company develops and in which the Trust (or a Designated
Portfolio thereof) or the Adviser is named. No such material shall be
used until approved by the Trust or its designee or the
Adviser, and the Trust and the Adviser will use their best efforts to review
such sales literature or promotional material within ten Business Days after
receipt of such material. The Trust and the
Adviser reserve the right to reasonably object to the continued use of any
such
sales literature or other promotional material in which the Trust (or a
Designated Portfolio thereof) or the Adviser is named, and no such material
shall be used if the Trust or its designee or the Adviser so
objects.
5.2 The
Company shall not give any information or make any representations or statements
on behalf of the Trust or concerning the Trust or the Adviser in connection
with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus or SAI for the Trust
shares, as such registration statement and prospectus or SAI may be amended
or
supplemented from time to time, or in reports or proxy statements for the
Trust,
or in sales literature or other promotional material approved by the Adviser,
except with the permission of the Trust or its designee.
5.3 The
Trust shall furnish, or cause to be furnished, to the
Company, each piece of sales literature or other promotional material that
it
develops and in which the Company, and/or its Account, is named. No
such material shall be used until approved by the Company, and the Company
will
use its best efforts to review such sales literature or promotional material
within ten Business Days after receipt of such material. The Company
reserves the right to reasonably object to the continued use of any such
sales
literature or other promotional material in which the Company and/or its
Account
is named, and no such material shall be used if the Company so
objects.
5.4 The Trust
shall not give any information or make any representations on behalf of the
Company or concerning the Company, the Account, or the Contracts other than
the
information or representations contained in a registration statement, prospectus
(which shall include an offering memorandum, if any, if the Contracts issued
by
the Company or interests therein are not registered under the 1933 Act),
or SAI
for the Contracts, as such registration statement, prospectus, or SAI may
be
amended or supplemented from time to time, or in published reports for the
Account which are in the public domain or approved by the Company for
distribution to Contract owners, or in sales literature or other promotional
material approved by the Company or its designee, except with the permission
of
the Company.
5.5 The
Trust shall provide, or cause to be provided, to the
Company upon request, at least one complete copy of all registration statements,
prospectuses, SAIs, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Designated
Portfolios or their shares, after the filing of such document(s) with
the SEC or other regulatory authorities.
5.6 The
Company will provide to the Trust upon request, at least one complete copy
of
all registration statements, prospectuses (which shall include an offering
memorandum, if any, if the Contracts issued by the Company or interests therein
are not registered under the 1933 Act), SAIs, reports, solicitations for
voting
instructions, sales literature and other promotional materials, applications
for
exemptions, requests for no-action letters, and all amendments to any of
the
above, that relate to the Contracts or the Account, after the filing
of such document(s) with the SEC or other regulatory authorities. The
Company shall provide to the Adviser and the Trust any complaints received
from
the Contract owners pertaining to the Trust or a Designated
Portfolio.
5.7 For
purposes of this Article V, the phrase "sales literature and other promotional
materials" includes, but is not limited to, any of the following that refer
to
the Trust, any Designated Portfolio or any affiliate of the
Trust: advertisements (such as material published, or designed for
use in, a newspaper, magazine, or other periodical, radio, television, telephone
or tape recording, videotape display, signs or billboards, motion pictures,
or
other public media), sales literature (i.e., any written communication
distributed or made generally available to customers or the public, including
brochures, circulars, reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, and shareholder
reports, proxy materials, and any other Shareholder Communications distributed
or made generally available with regard to the Trust.
ARTICLE
VI. Fees
and Expenses
6.1 Except
as otherwise provided herein, no party to this Agreement shall pay any fee
or
other compensation to any other party to this Agreement. Except as
otherwise provided herein, all expenses incident to performance by a party
under
this Agreement shall be paid by such party.
6.2 The
Trust or its agent will pay the expenses associated with the
following: setting the prospectus and profiles in type; printing
copies of the prospectus and profiles to be delivered to existing Contract
owners investing in the Designated Portfolios; providing a reasonable number
of
copies of the SAI to the Company for itself and for any current owner of
a
Contract who requests such SAI; setting in type and printing the proxy materials
and reports to shareholders (including the costs of printing a prospectus
that
constitutes an annual report); and the preparation of all statements and
notices
required by any federal or state law.
6.3 The
Company shall bear the expenses of printing copies of the current prospectus
and
profiles for the Contracts; printing copies of the Trust's prospectus and
profiles that are used in connection with offering the Contracts; distributing
the Trust's prospectus to owners of Contracts issued by the Company; and
of
distributing the Trust's proxy materials and reports to such Contract
owners. If the prospectus for the Contracts and the Trust’s
prospectus are printed together in one or more documents, printing costs
shall
be allocated to reflect the Trust’s share, pursuant to Section 6.2, of the total
costs for printing the Trust’s prospectus(es) to be delivered to existing
Contract owners investing in the Designated Portfolio(s), determined according
to the number of pages of the Trust's respective portions of the
documents.
ARTICLE
VII. Potential
Conflicts
7.1 The
parties to this Agreement agree that the conditions or undertakings required
by
the Exemptive Order that may be imposed on the Company, the Trust and/or
the
Adviser by virtue of such order by the SEC: (i) shall apply only upon the
sale
of shares of the Designated Portfolios to variable life insurance separate
accounts (and then only to the extent required under the 1940 Act); (ii)
will be
incorporated herein by reference; and (iii) such parties agree to comply
with
such conditions and undertakings to the extent applicable to each such party
notwithstanding any provision of this Agreement to the contrary.
7.2 If
and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3
is
adopted, to provide exemptive relief from any provision of the 1940 Act or
the
rules promulgated thereunder with respect to mixed or shared funding (as
defined
in the Exemptive Order) on terms and conditions materially different from
those
contained in the Exemptive Order, then (a) the parties to this Agreement
shall
take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as
amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and
(b) Sections 3.1 and 3.2 of this Agreement shall continue in effect only
to the
extent that terms and conditions substantially identical to such Sections
are
contained in such Rule(s) as so amended or adopted.
ARTICLE
VIII. Indemnification
8.1 Indemnification
By the Company
(a) The
Company agrees to indemnify and hold harmless each of the Trust and the
Adviser and each of their trustees/directors and officers, and each person,
if
any, who controls the Trust or the Adviser within the meaning of Section
15 of
the 1933 Act or who is under common control with the Trust or the Adviser
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts
paid
in settlement with the written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties may become subject
under any statute or regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements:
(i)
arise
out of or are based upon any untrue statement or alleged untruestatements
of any
material fact contained in the registration statement,prospectus (which shall
include a written description of a Contract that isnot registered under the
1933
Act), or SAI for the Contracts or contained in the Contracts or sales literature
for the Contracts (or any amendment or supplement to any of the foregoing),
or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the
statements therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or omission
or
such alleged statement or omission was made in reliance upon and in conformity
with information furnished to the Company by or on behalf of the Trust for
use
in the registration statement, prospectus or SAI for the Contracts or in
the
Contracts or sales literature (or any amendment or supplement) or otherwise
for
use in connection with the sale of the Contracts or Trust shares;
or
(ii)
arise out of or as a result of statements or representations (other
thanstatements or representations contained in the registration
statement,prospectus, SAI, or sales literature of the Trust not supplied
by
theCompany or persons under its control) or wrongful conduct of the Company
or
its agents or persons under the Company's authorization or control, with
respect
to the sale or distribution of the Contracts or Trust shares; or
(iii)
arise out of any untrue statement or alleged untrue statement of a materialfact
contained in a registration statement, prospectus, SAI, or salesliterature
of
the Trust or any amendment thereof or supplement thereto orthe omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading if such a statement
or omission was made in reliance upon information furnished to the Trust
by or
on behalf of the Company; or
(iv)
arise as a result of any material failure by the Company to provide theservices
and furnish the materials required to be provided by the Companyunder the
terms
of this Agreement (including a material failure, whetherunintentional or
in good
faith or otherwise, to comply with the qualification requirements specified
in
Section 2.8 of this Agreement); or
(v)
arise
out of or result from any material breach of any representation and/orwarranty
made by the Company in this Agreement or arise out of or resultfrom any other
material breach of this Agreement by the Company;
as
limited by and in accordance with the provisions of Sections 8.1(b) and 8.1(c)
hereof.
(b) The
Company shall not be liable under this indemnification provision with respect
to
any losses, claims, damages, liabilities or litigation to which an Indemnified
Party would otherwise be subject by reason of such Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of its obligations or duties under this Agreement.
(c) The
Company shall not be liable under this indemnification provision with respect
to
any claim made against an Indemnified Party unless such Indemnified Party
shall
have notified the Company in writing within a reasonable time after the summons
or other first legal process giving information of the nature of the claim
shall
have been served upon such Indemnified Party (or after such Indemnified Party
shall have received notice of such service on any designated agent), but
failure
to notify the Company of any such claim shall not relieve the Company from
any
liability which it may have to the Indemnified Party against whom such action
is
brought otherwise than on account of this indemnification
provision. In case any such action is brought against an Indemnified
Party, the Company shall be entitled to participate, at its own expense,
in the
defense of such action. The Company also shall be entitled to assume
the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's
election to assume the defense thereof, the Indemnified Party shall bear
the
fees and expenses of any additional counsel retained by it, and the Company
will
not be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the
defense
thereof other than reasonable costs of investigation.
(d) The
Indemnified Parties will promptly notify the Company of the commencement
of any
litigation or proceedings against them in connection with the issuance or
sale
of the Trust shares or the Contracts or the operation of the Trust.
8.2 Indemnification
by the Adviser
(a) The
Adviser agrees to indemnify and hold harmless the Company and each of its
directors and officers and each person, if any, who controls the Company
within
the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.3) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Adviser) or litigation (including legal and other expenses)
to
which the Indemnified Parties may become subject under any statute or
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or
settlements:
(i)
arise
out of or are based upon any untrue statement or alleged untrue statement
of any
material fact contained in the registration statement or prospectus or SAI
or
sales literature of the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Adviser or Trust
by or
on behalf of the Company for use in the registration statement, prospectus
or
SAI for the Trust or in sales literature (or any amendment or supplement)
or
otherwise for use in connection with the sale of the Contracts or Trust shares;
or
(ii)
arise out of or as a result of statements or representations (other
thanstatements or representations contained in the registration
statement,prospectus, SAI or sales literature for the Contracts not supplied
by
theTrust or the Adviser) or wrongful conduct of the Trust or Adviser with
respect to the sale or distribution of the Contracts or Trust shares;
or
(iii)
arise out of any untrue statement or alleged untrue statement of a materialfact
contained in a registration statement, prospectus, SAI or salesliterature
covering the Contracts, or any amendment thereof or supplementthereto, or
the
omission or alleged omission to state therein a material fact required to
be
stated therein or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance upon information
furnished to the Company by or on behalf of the Trust or the Adviser;
or
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(iv)
arise as a result of any material failure by the Adviser to provide
the
services and furnish the materials required to be provided by the
Adviser
under the terms of this Agreement (including a material failure,
whether
unintentional or in good faith or otherwise, to comply with the
diversification and other qualification requirements specified
in Sections
2.3 and 2.4 of this Agreement); or
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(v)
arise out of or result from any material breach of any representation
and/or warranty made by the Adviser in this Agreement or arise
out of or
result from any other material breach of this Agreement by the
Adviser;
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as
limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c)
hereof.
(b) The
Adviser shall not be liable under this indemnification provision with respect
to
any losses, claims, damages, liabilities or litigation to which an Indemnified
Party would otherwise be subject by reason of such Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance or such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the Company
or
the Account, whichever is applicable.
(c) The
Adviser shall not be liable under this indemnification provision with respect
to
any claim made against an Indemnified Party unless such Indemnified Party
shall
have notified the Adviser in writing within a reasonable time after the summons
or other first legal process giving information of the nature of the claim
shall
have been served upon such Indemnified Party (or after such Indemnified Party
shall have received notice of such service on any designated agent), but
failure
to notify the Adviser of any such claim shall not relieve the Adviser from
any
liability which it may have to the Indemnified Party against whom such action
is
brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Party, the Adviser will be entitled to participate, at its own expense, in
the
defense thereof. The Adviser also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Adviser to such party of the Adviser's
election to assume the defense thereof, the Indemnified Party shall bear
the
fees and expenses of any additional counsel retained by it, and the Adviser
will
not be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the
defense
thereof other than reasonable costs of investigation.
(d) The
Company agrees promptly to notify the Adviser of the commencement of any
litigation or proceedings against it or any of its officers or directors
in
connection with the issuance or sale of the Contracts or the operation of
the
Account.
8.3 Indemnification
By the Trust
(a) The
Trust agrees to indemnify and hold harmless the Company and each of its
directors and officers and each person, if any, who controls the Company
within
the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.3) against any and all losses, claims,
expenses, damages, liabilities (including amounts paid in settlement with
the
written consent of the Trust) or litigation (including legal and other expenses)
to which the Indemnified Parties may be required to pay or may become subject
under any statute or regulation, at common law or otherwise, insofar as such
losses, claims, expenses, damages, liabilities or expenses (or actions in
respect thereof) or settlements:
(i)
arise
as a result of any material failure by the Trust to provide the servicesand
furnish the materials required to be provided by the Trust under theterms
of
this Agreement; or
(ii)
arise out of or result from any material breach of any representation
and/orwarranty made by the Trust in this Agreement or arise out of or result
fromany other material breach of this Agreement by the Trust;
(b) as
limited by and in accordance with the provisions of Sections 8.3 (b) and
8.3(c)
hereof. The parties acknowledge that the Trust’s indemnification
obligations under this Section 8.3 are subject to applicable law. The
Company agrees that, in the event an obligation to indemnify exists pursuant
to
Section 8.3 as well as Section 8.2, it will seek satisfaction under the
indemnification provisions of Section 8.2 before seeking indemnification
under
this Section 8.3.
(c) The
Trust
shall not be liable under this indemnification provision with respect to
any
losses, claims, damages, liabilities or litigation to which an Indemnified
Party
would otherwise be subject by reason of such Indemnified Party’s willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party’s duties or by reason of such Indemnified Party’s reckless
disregard of obligations and duties under this Agreement or to the Company
or
the Account, whichever is applicable.
(d)
The Trust shall not be liable under this indemnification provision with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified the Trust in writing within a reasonable time after the
summons or other first legal process giving information of the nature of
the
claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the Trust of any such claim shall not relieve
the
Trust from any liability which it may have to the Indemnified Party against
whom
such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Parties, the Trust or its agent will be entitled to participate, at its own
expense, in the defense thereof. The Trust or its agent also shall be
entitled to assume the defense thereof, with counsel satisfactory to the
party
named in the action. After notice from the Trust to such party of the
Trust's (or its agent’s) election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained
by it,
and the Trust or its agent will not be liable to such party under this Agreement
for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs
of investigation.
(e) The
Company agrees promptly to notify the Trust of the commencement of any
litigation or proceeding against it or any of its respective officers or
directors in connection with the Agreement, the issuance or sale of the
Contracts, the operation of the Account, or the sale or acquisition of shares
of
the Trust.
ARTICLE
IX. Applicable
Law
9.1 This
Agreement shall be construed and the provisions hereof interpreted under
and in
accordance with the laws of the State of Ohio.
9.2 This
Agreement shall be subject to the provisions of the 1933, 1934 and 1940 Acts,
and the rules and regulations and rulings thereunder, including such exemptions
from those statutes, rules and regulations as the SEC may grant (including,
but
not limited to, the Exemptive Order and any future exemptive orders)
and the terms hereof shall be interpreted and construed
in accordance
therewith. If, in the future, the Exemptive Order should no longer be
necessary under applicable law, then Article VII shall no longer
apply.
ARTICLE
X. Termination
10.1 This
Agreement shall continue in full force and effect until the first to occur
of:
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(a)
|
termination
by any party, for any reason with respect to some or all Designated
Portfolios, by three (3) months advance written notice delivered
to the
other parties; or
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(b)
|
termination
by the Company by written notice to the Adviser and the Trust based
upon
the Company's determination that shares of the Trust are not reasonably
available to meet the requirements of the Contracts;
or
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(c)
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termination
by the Company by written notice to the Adviser and the Trust in
the event
any of the Designated Portfolio's shares are not registered, issued
or
sold in accordance with applicable state and/or federal law or
such law
precludes the use of such shares as the underlying investment media
of the
Contracts issued or to be issued by the Company;
or
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(d)
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termination
by the Adviser or the Trust in the event that formal administrative
proceedings are instituted against the Company by the NASD, the
SEC, an
insurance commissioner or like official of any state or any other
regulatory body regarding the Company's duties under this Agreement
or
related to the sale of the Contracts, the operation of any Account,
or the
purchase of the Designated Portfolios’ shares; provided, however, that the
Adviser or the Trust determines in its sole judgment exercised
in good
faith, that any such administrative proceedings will have a material
adverse effect upon the ability of the Company to perform its obligations
under this Agreement; or
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(e)
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termination
by the Company in the event that formal administrative proceedings
are
instituted against the Trust or the Adviser by the SEC or any state
securities or insurance department or any other regulatory body;
provided,
however, that the Company determines in its sole judgment exercised
in
good faith, that any such administrative proceedings will have
a material
adverse effect upon the ability of, the Adviser or the Trust to
perform
its obligations under this Agreement;
or
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(f)
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termination
by the Company by written notice to the Adviser and the Trust with
respect
to any Designated Portfolio in the event that such Designated Portfolio
ceases to qualify as a Regulated Investment Company under Subchapter
M or
fails to comply with the Section 817(h) diversification requirements
specified in Section 2.3 hereof, or if the Company reasonably believes
that such Designated Portfolio may fail to so qualify or comply;
or
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(g)
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termination
by the Adviser or the Trust by written notice to the Company in
the event
that the Contracts fail to meet the qualifications specified in
Section
2.8 hereof; or
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(h)
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termination
by the Adviser or the Trust by written notice to the Company, if
the
Adviser or the Trust, shall determine, in its sole judgment exercised
in
good faith, that the Company has suffered a material adverse change
in its
business, operations, financial condition, or prospects since the
date of
this Agreement or is the subject of material adverse publicity;
or
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(i)
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termination
by the Company by written notice to the Adviser and the Trust,
if the
Company shall determine, in its sole judgment exercised in good
faith,
that the Adviser or the Trust has suffered a material adverse change
in
its business, operations, financial condition or prospects since
the date
of this Agreement or is the subject of material adverse publicity;
or
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(j)
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termination
by the Company upon any substitution of the shares of another investment
company or series thereof for shares of a Designated Portfolio
of the
Trust in accordance with the terms of the Contracts, provided that
the
Company has given at least 45 days prior written notice to the
Adviser and
the Trust of the date of substitution;
or
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(k)
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termination
by any party in the event that the Board determines that a material
irreconcilable conflict exists as provided in Article
VII.
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10.2 Notwithstanding
any termination of this Agreement, the Trust shall, at the option of the
Company, continue to make available additional shares of the Trust pursuant
to
the terms and conditions of this Agreement and any related agreements, for
all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"), unless the Adviser requests
that the Company seek an order pursuant to Section 26(c) of the 1940 Act
to
permit the substitution of other securities for the shares of the Designated
Portfolios. The Adviser agrees to split the cost of seeking such an order,
and
the Company agrees that it shall reasonably cooperate with the Adviser and
seek
such an order upon request. Specifically, the owners of the Existing
Contracts may be permitted to reallocate investments in the Trust, redeem
investments in the Trust and/or invest in the Trust upon the making of
additional purchase payments under the Existing Contracts (subject to any
such
election by the Adviser). The parties agree that this Section 10.2
shall not apply to any terminations under Article VII and the effect of such
Article VII terminations shall be governed by Article VII of this
Agreement. The parties further agree that this Section 10.2 shall not
apply to any terminations under Section 10.1(g) of this Agreement.
10.3 Notwithstanding
any termination of this Agreement, each party's obligation under Article
VIII to
indemnify the other parties shall survive.
ARTICLE
XI. Notices
11.1 Any
notice shall be sufficiently given when sent by registered or certified mail
to
the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
party.
If
to the
Company: Nationwide
Life Insurance Company
Xxx
Xxxxxxxxxx Xxxxx, 0-00-X0
Xxxxxxxx,
Xxxx 00000
Attn: Managing
Counsel- Officer
With
a
copy
to: Nationwide
Life Insurance Company
Xxx
Xxxxxxxxxx Xxxxx, 0-00-00
Xxxxxxxx,
Xxxx 00000
Attn: Vice
President – Investment and Advisory Services
If
to
Adviser: BB&T
Asset Management, Inc.
000
Xxxxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx,
XX 00000
Attn:
Mr. Trip Xxxxxxx
If
to the
Trust: BB&T
Variable Insurance Funds
0000
Xxxxxxx Xxxx
Xxxxxxxx,
Xxxx 00000
Attn:
Client Services
ARTICLE
XII. Miscellaneous
12.1 Subject
to the requirements of legal process and regulatory authority, each party
hereto
shall treat as confidential the names and addresses of the owners of the
Contracts and all information reasonably identified as confidential in writing
by any other party hereto and, except as permitted by this Agreement, shall
not
disclose, disseminate or utilize such names and addresses and other confidential
information without the express written consent of the affected party until
such
time as such information has come into the public domain.
12.2 The
captions in this Agreement are included for convenience of reference only
and in
no way define or delineate any of the provisions hereof or otherwise affect
their construction or effect.
12.3 This
Agreement may be executed simultaneously in two or more counterparts, each
of
which taken together shall constitute one and the same instrument.
12.4 If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement shall
not
be affected thereby.
12.5 Each
party hereto shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the NASD,
and
state insurance regulators) and shall permit such authorities reasonable
access
to its books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated
hereby. Notwithstanding the generality of the foregoing, each party
hereto further agrees to furnish the Ohio Insurance Commissioner with any
information or reports in connection with services provided under this Agreement
which such Commissioner may request in order to ascertain whether the variable
insurance operations of the Company are being conducted in a manner consistent
with the Ohio insurance laws and regulations and any other applicable law
or
regulations.
12.6 The
rights, remedies and obligations contained in this Agreement are cumulative
and
are in addition to any and all rights, remedies, and obligations, at law
or in
equity, which the parties hereto are entitled to under state and federal
laws.
12.7 This
Agreement or any of the rights and obligations hereunder may not be assigned
by
any party without the prior written consent of all parties hereto.
12.8 All
persons dealing with the Trust must look solely to the property of the
respective Designated Portfolios listed on Schedule A hereto as though each
such
Designated Portfolio had separately contracted with such party for the
enforcement of any claims against the Trust. The parties agree that
neither the Board, officers, agents or shareholders of the Trust assume any
personal liability or responsibility for obligations entered into by or on
behalf of the Trust. It is expressly agreed that the obligations of
the Trust hereunder shall not be binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Trust personally, but shall
bind
only the trust property of the Trust. The execution and delivery of
this Agreement have been authorized by the Trustees, and this Agreement has
been
signed and delivered by an authorized officer of the Trust, acting as such,
and
neither such authorization by the Trustees nor such execution and delivery
by
such officer shall be deemed to have been made by any of them individually
or to
impose any liability on any of them personally, but bind only the trust property
of the Trust as provided in the Trust’s Declaration of Trust. The
provisions of this section 12.8 shall survive termination of the
Agreement.
IN
WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be
executed in its name and on its behalf by its duly authorized representative
as
of the date specified below.
Nationwide
Life Insurance
Company: By
its authorized officer
By:
Title:
Vice President – Investment and Advisory Services
Date:
BB&T
Asset
Management, By
its authorized officer
Inc.:
By:
Title:
Date:
BB&T
Variable Insurance
Funds: By
its authorized officer:
By:
Title:
Date:
Red
May
1,
2005
Schedule
A
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Accounts
|
Designated
Portfolio(s)
|
||
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Nationwide
Variable Account – 9
|
BB&T
Large Cap Value VIF
BB&T
Capital Manager Equity VIF
BB&T
Large Company Growth VIF
BB&T
Mid Cap Growth VIF
BB&T
Special Opportunities Equity VIF
BB&T
Total Return Bond VIF
|
||
|
Nationwide
Variable Account - II
|
BB&T
Large Cap Value VIF
BB&T
Capital Manager Equity VIF
BB&T
Large Company Growth VIF
BB&T
Mid Cap Growth VIF
BB&T
Special Opportunities Equity VIF
BB&T
Total Return Bond VIF
|
||
EXHIBIT
B
FUND/SERV
PROCESSING PROCEDURES
AND
MANUAL
PROCESSING PROCEDURES
The
purchase, redemption and settlement of shares of a Fund (“Shares”) will normally
follow the Fund/SERV-Defined Contribution Clearance and Settlement Service
(“DCCS”) Processing Procedures below and the rules and procedures of the SCC
Division of the National Securities Clearing Corporation (“NSCC”) shall govern
the purchase, redemption and settlement of Shares of the Funds through NSCC
by
Nationwide Life Insurance Company (“Nationwide”). In the event of
equipment failure or technical malfunctions or the parties’ inability to
otherwise perform transactions pursuant to the FUND/SERV Processing Procedures,
or the parties’ mutual consent to use manual processing, the Manual Processing
Procedures below will apply.
It
is
understood and agreed that, in the context of Section 22 of the Investment
Company Act of 1940 (the “1940 Act”) and the rules and public interpretations
thereunder by the staff of the Securities and Exchange Commission (SEC Staff),
receipt by Nationwide of any Instructions from the contract owner prior to
the
Close of Trade on any Business Day shall be deemed to be receipt by the Funds
of
such Instructions solely for pricing purposes and shall cause purchases and
sales to be deemed to occur at the Share Price for such Business Day, except
as
provided in 4(c) of the Manual Processing Procedures. Each
Instruction shall be deemed to be accompanied by a representation by Nationwide
that it has received proper authorization from each contract owner whose
purchase, redemption, account transfer or exchange transaction is effected
as a
result of such Instruction.
Fund/Serv
/ DCCS Processing Procedures
2. Fund/SERV-DCCS
Processing Procedures
1. On
each business day that the New York Stock Exchange (the “Exchange”) is open for
business on which the Funds determine their net asset values ("Business Day"),
the Trust or its designee shall accept, and effect changes
in its records upon receipt of purchase, redemption, exchanges, account
transfers and registration instructions from Nationwide electronically through
Fund/SERV ("Instructions”) without supporting documentation from the contract
owner. On each Business Day, the Trust or its
designee shall accept for processing any Instructions from
Nationwide and shall process such Instructions in a timely manner.
2. The
Trust shall perform, or shall cause to be performed, any
and all duties, functions, procedures and responsibilities assigned to it
under
this Agreement and as otherwise established by the NSCC. The Trust or
its designee shall conduct each of the foregoing activities in a competent
manner and in compliance with (a) all applicable laws, rules and regulations,
including NSCC Fund/SERV-DCCS rules and procedures relating to Fund/SERV;
(b)
the then-current Prospectus of a Fund; and (c) any provision relating to
Fund/SERV in any other agreement of the Trust that would affect its duties
and
obligations pursuant to this Agreement.
3. Confirmed
trades and any other information provided by the Trust or its
designee to Nationwide through Fund/SERV and pursuant to
this Agreement shall be accurate, complete, and in the format prescribed
by the
NSCC.
4. Trade
information provided by Nationwide to the Trust or its designee through
Fund/SERV and pursuant to this Agreement shall be accurate, complete and,
in the
format prescribed by the NSCC. All Instructions by Nationwide
regarding each Fund/SERV Account shall be true and correct and will have
been
duly authorized by the registered holder.
5. For
each Fund/SERV transaction, Nationwide shall provide the Funds and the Trust
or
its designee with all information necessary or appropriate
to establish and maintain each Fund/SERV transaction (and any subsequent
changes
to such information), which Nationwide hereby certifies is and shall remain
true
and correct. Nationwide shall maintain documents required by the
Funds to effect Fund/SERV transactions. Nationwide certifies that all
Instructions delivered to the Trust on any Business Day shall have been received
by Nationwide from the contract owner prior to the calculation of each Fund's
net asset value according to the Fund's prospectus (generally 4:00 p.m. Eastern
Time (“ET”)) (the "Close of Trading") on such Business Day and that any
Instructions received by it after the Close of Trading on any given Business
Day
will be transmitted to the Trust or its designee on the
next Business Day.
Manual
Processing Procedures
3. Manual
Processing Procedures
1. On
each Business Day, Nationwide may receive Instructions from the contract
owner
for the purchase or redemption of shares of the Funds based solely upon receipt
of such Instructions prior to the Close of Trading on that Business
Day. Instructions in good order received by Nationwide prior to the
Close of Trading on any given Business Day (the “Trade Date”) and transmitted to
the Trust by no later than 9:00 a.m. ET the Business Day following the Trade
Date (“Trade Date plus One” or “T+1”), will be executed at the NAV (“Share
Price”) of each applicable Fund, determined as of the Close of Trading on the
Trade Date.
2. By
no later than 6:30 p.m. ET on each Trade Date (“Price Communication Time”), the
Trust will use its best efforts to communicate to Nationwide via electronic
transmission acceptable to both parties, the Share Price of each applicable
Fund, as well as dividend and capital gain information and, in
the case of funds that credit a daily dividend, the daily accrual or interest
rate factor, determined at the Close of Trading on that Trade Date.
3. As
noted in Paragraph 1 above, by 9:00 a.m. ET on T+1 (“Instruction Cutoff Time”)
and after Nationwide has processed all approved transactions, Nationwide
will
transmit to the Trust or its designee via facsimile,
telefax or electronic transmission or system-to-system, or by a method
acceptable to Nationwide and the Trust, a report (the “Instruction Report”)
detailing the Instructions that were received by Nationwide prior to the
Funds’
daily determination of Share Price for each Fund (i.e., the Close of Trading)
on
Trade Date.
(a) It
is understood by the parties that all Instructions from the contract owner
shall
be received and processed by Nationwide in accordance with its standard
transaction processing procedures. Nationwide or its designees shall
maintain records sufficient to identify the date and time of receipt of all
contract owner transactions involving the Funds and shall make or cause to
be
made such records available upon reasonable request for examination by the
Funds
or its designated representative or, by appropriate governmental
authorities. Under no circumstances shall Nationwide change, alter or
modify any Instructions received by it in good order.
(b) Following
the completion of the transmission of any Instructions by Nationwide to the
Trust by the Instruction Cutoff Time, Nationwide will verify that the
Instruction was received by the Trust.
(c) In
the event that an Instruction transmitted by Nationwide on any Business Day
is
not received by the Trust or its designee by the Instruction Cutoff Time,
due to
mechanical difficulties or for any other reason beyond Nationwide’s reasonable
control, such Instruction shall nonetheless be treated by theTrust as if
it had
been received by the Instruction Cutoff Time, provided that Nationwide
retransmits such Instruction by facsimile transmission to the Trust or its
designee and such Instruction is received by the Trust's financial control
representative no later than 9:00 a.m. ET on T+1. In addition,
Nationwide will place a phone call to a financial control representative
of the
Trust prior to 9:00a.m. ET on T+1 to advise the Trust that a facsimile
transmission concerning the Instruction is being sent.
(d) With
respect to all Instructions, the Trust’s financial control representative
will manually adjust a Fund’s records for the Trade Date to reflect any
Instructions sent by Nationwide.
(e) By
no later than 4:00 p.m. on T+1, and based on the information transmitted
to the
Trust or its designee pursuant to Paragraph 3(c) above, Nationwide will use
its
best efforts to verify that all Instructions provided to the Trust or its
designee on T+1 were accurately received and that the trades for each Account
were accurately completed and Nationwide will use its best efforts to notify
the
Trust of any discrepancies.
4. As
set forth below, upon the timely receipt from Nationwide of the Instructions,
the Fund will execute the purchase or redemption transactions (as the case
may
be) at the Share Price for each Fund computed as of the Close of Trading
on the
Trade Date.
(a) Except
as otherwise provided herein, all purchase and redemption transactions will
settle on T+1. Settlements will be through net Federal Wire transfers
to an account designated by a Fund. In the case of Instructions which
constitute a net purchase order, settlement shall occur by Nationwide initiating
a wire transfer by 1:00 p.m. ET on T+1 to the custodian for the Fund for
receipt
by the Funds’ custodian by no later than the Close of Business at the New York
Federal Reserve Bank on T+1, causing the remittance of the requisite funds
to
the Trust to cover such net purchase order. In the case of
Instructions which constitute a net redemption order, settlement shall occur
by
the Trust causing the remittance of the requisite funds to cover such net
redemption order by Federal Funds Wire by 1:00 p.m. ET on T+1, provided that
the
Fund reserves the right to 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. Settlements shall be in
U.S. dollars.
(b) Nationwide
(and its Variable Accounts) shall be designated as record owner of each account
(“Record Owner”). The Trust shall provide, or shall cause
to be provided, to Nationwide all written confirmations required under federal
and state securities laws.
(c) On
any Business Day when the Federal Reserve Wire Transfer System is closed,
all
communication and processing rules will be suspended for the settlement of
Instructions. Instructions will be settled on the next Business Day
on which the Federal Reserve Wire Transfer System is open. The
original T+1 Settlement Date will not apply. Rather, for purposes of
this Paragraph 4(c) only, the Settlement Date will be the date on which the
Instruction settles.
(d) Nationwide
shall, upon receipt of any confirmation or statement concerning the accounts
by
such method acceptable to the Trust and Nationwide, verify the accuracy of
the information contained therein against the information contained in
Nationwide’s internal record-keeping system and shall promptly advise the Trust
in writing of any discrepancies between such information. The Trust
and Nationwide shall cooperate to resolve any such discrepancies as soon
as
reasonably practicable.
4. Indemnification
In
the
event of any error or delay with respect to both the Fund/SERV Processing
Procedures and the Manual Processing Procedures outlined in Exhibit C
herein: (i) which is caused by the Funds or the Trust, the Trust
shall make any adjustments on the Funds’ accounting system necessary to correct
such error or delay and the responsible party or parties shall reimburse
the
contract owner and Nationwide, as appropriate, for any losses or reasonable
costs incurred directly as a result of the error or delay but specifically
excluding any and all consequential punitive or other indirect damages or
(ii)
which is caused by Nationwide, the Trust shall make any adjustment on
the Funds’ accounting system necessary to correct such error or delay and the
affected party or parties shall be reimbursed by Nationwide for any losses
or
reasonable costs incurred directly as a result of the error or delay, but
specifically excluding any and all consequential punitive or other indirect
damages. In the event of any such adjustments on the Funds’
accounting system, Nationwide shall make the corresponding adjustments on
its
internal record-keeping system. In the event that errors or delays
with respect to the Procedures are contributed to by more than one party
hereto,
each party shall be responsible for that portion of the loss or reasonable
cost
which results from its error or delay. All parties agree to provide
the other parties prompt notice of any errors or delays of the type referred
to
herein and to use reasonable efforts to take such action as may be appropriate
to avoid or mitigate any such costs or losses.
