PARTICIPATION AGREEMENT Between Nationwide Life Insurance Company and BB&T Asset Management, Inc. and BB&T Variable Insurance Funds
EXHIBIT (h)(9)
Between
Nationwide Life Insurance Company
Nationwide Life Insurance Company
and
BB&T Asset Management, Inc.
and
BB&T Variable Insurance Funds
THIS AGREEMENT, dated as of March 5, 2007 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, 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 March 5, 2007;
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
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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.
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(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.
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(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
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.
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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.
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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 $5 million. 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.
2.13. 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
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
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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
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
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
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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.
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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.
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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 31
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 untrue statements of any material fact contained in the registration statement, prospectus (which shall include a written description of a Contract that is not 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 than statements or representations contained in the registration statement, prospectus, SAI, or sales literature of the Trust not supplied by the Company 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 |
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(iii) | arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, SAI, or sales literature of the Trust or any amendment thereof or supplement thereto or the 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 the services and furnish the materials required to be provided by the Company under the terms of this Agreement (including a material failure, whether unintentional 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/or warranty made by the Company in this Agreement or arise out of or result from 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
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(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 than statements or representations contained in the registration statement, prospectus, SAI or sales literature for the Contracts not supplied by the Trust 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 material fact contained in a registration statement, prospectus, SAI or sales literature covering the Contracts, or any amendment thereof or supplement thereto, 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 | ||
(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; |
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 services and furnish the materials required to be provided by the Trust under the terms of this Agreement; or |
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(ii) | arise out of or result from any material breach of any representation and/or warranty made by the Trust in this Agreement or arise out of or result from any 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
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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:
(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
(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
(c) 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
(d) 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
(e) 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
(f) 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
(g) 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
(h) 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) 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
(j) 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
(k) termination by any party in the event that the Board determines that a material
irreconcilable conflict exists as provided in Article VII.
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.
10.2. 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. |
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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
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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: | /s/ Vice President — Investment and Advisory Services | |||
Title: | Vice President — Investment and Advisory Services | |||
Date: | 3/05/2007 | |||
BB&T Asset Management, Inc.:
|
By its authorized officer | |||
By: | /s/ Xxxxxx X. Xxxxxxx III | |||
Title: | Sr. Vice President | |||
Date: | 8/10/07 | |||
BB&T Variable Insurance Funds:
|
By its authorized officer | |||
By: | /s/ Xxxxx X. Xxxxxxxxx | |||
Title: | Vice President | |||
Date: | 8/9/07 |
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Schedule A
Accounts | Designated Portfolio(s) | |
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 |
-20-
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/Sery / 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.
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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
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.
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(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 the Trust 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 9:00 a.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
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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.
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.
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