PARTICIPATION AGREEMENT
THIS AGREEMENT, is made as of _____________, 2001, by and among American
Family Life Insurance Company ("Company"), on its own behalf and on behalf of
American Family Variable Account I and II, segregated asset accounts of the
Company (each an "Account"), Strong Variable Insurance Funds, Inc. ("Strong
Variable") on behalf of the portfolios of Strong Variable listed on the
attached Exhibit A as such exhibit may be amended from time to time (the
"Designated Portfolios"), Strong Opportunity Fund II, Inc. ("Opportunity Fund
II"), Strong Capital Management, Inc. (the "Adviser"), the investment adviser
for the Opportunity Fund II and Strong Variable, and Strong Investments, Inc.
("Distributors"), the Distributors for Strong Variable and the Opportunity
Fund II (each, a "Party" and collectively, the "Parties").
PRELIMINARY STATEMENTS
A. Beneficial interests in Strong Variable are divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets (each, a "Portfolio").
B. To the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of Opportunity Fund II
and the Designated Portfolios ("Fund" or "Funds" shall be deemed to refer to
each Designated Portfolio and to the Opportunity Fund II to the extent the
context requires), on behalf of the Accounts to fund the variable annuity and
variable life insurance contracts that use the Funds as an underlying
investment medium (collectively the "Contracts").
C. The Company, Adviser and Distributors desire to facilitate the
purchase and redemption of shares of the Funds by the Company or one or more
of its wholly owned subsidiaries (each a "Designee"), for the Accounts
through one or more accounts, which number shall be as mutually agreed upon
by the parties, in each Fund (each an "Omnibus Account"), to be maintained of
record by the Company, subject to the terms and conditions of this Agreement.
AGREEMENTS
The parties to this Agreement agree as follows:
1. PERFORMANCE OF SERVICES. Company agrees to perform certain
administrative functions and services as set forth in the separate letter
agreement entered into by and between the parties in conjunction with this
Agreement with respect to the shares of the Funds beneficially owned by the
purchasers of Contracts ("Owners") and included in the Accounts.
2. THE OMNIBUS ACCOUNTS.
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2.1 Each Omnibus Account will be opened based upon the information
contained in Exhibit B to this Agreement. In connection with each Omnibus
Account, Company represents and warrants that it is authorized to act on
behalf of each Owner effecting transactions in the Omnibus Account and that
the information specified on Exhibit B to this Agreement is correct.
2.2 Each Fund shall designate each Omnibus Account with an account
number. These account numbers will be the means of identification when the
Parties are transacting in the Omnibus Accounts. The assets in the Accounts
are segregated from the Company's own assets. The Adviser agrees to cause the
Omnibus Accounts to be kept open on each Fund's books, as applicable,
regardless of a lack of activity or small position size except to the extent
the Company takes specific action to close an Omnibus Account or to the
extent a Fund's prospectus as of the date of this Agreement reserves the
right to close accounts which are inactive or of a small position size. In
the latter two cases, the Adviser will give at least 180 days prior notice to
the Company before closing an Omnibus Account.
2.3 The Company agrees to provide Adviser such information as Adviser
or Distributors may reasonably request concerning Owners as may be necessary
or advisable to enable Adviser and Distributors to comply with applicable
laws, including state "Blue Sky" laws relating to the sales of shares of the
Funds to the Accounts.
3. FUND SHARES TRANSACTIONS.
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3.1 IN GENERAL. Shares of the Funds shall be sold on behalf of the
Funds by Distributors and purchased by Company for the Accounts and,
indirectly for the appropriate subaccount thereof at the net asset value next
computed after receipt by Distributors of each order of the Company or its
Designee, in accordance with the provisions of this Agreement, the then
current prospectuses of the Funds, and the Contracts. Company may purchase
shares of the Funds for its own account subject to (a) receipt of prior
written approval by Distributors; and (b) such purchases being in accordance
with the then current prospectuses of the Fund and the Contracts. The Board
of Directors of each Fund ("Directors") may refuse to sell shares of the
applicable Fund to any person, or suspend or terminate the offering of shares
of the Fund if such action is required by law or by regulatory authorities
having jurisdiction. Notice of election to suspend or terminate shall be
furnished by a Fund, said termination to be effective, where practicable, ten
(10) business after receipt of such notice by the Company in order to give
the Company sufficient time to take appropriate steps in response to such
suspension or termination. Company agrees to purchase and redeem the shares
of the Funds in accordance with the provisions of this Agreement, of the
Contracts and of the then current prospectuses for the Contracts and Funds.
Except as necessary to implement transactions initiated or approved by
Owners, or as otherwise permitted by state or federal laws or regulations,
Company shall not redeem shares of Funds attributable to the Contracts.
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3.2 PURCHASE AND REDEMPTION ORDERS. On each day that a Fund is open for
business, the Company or its Designee shall aggregate and calculate the net
purchase or redemption order it receives for the Accounts from the Owners for
shares of the Fund that it received prior to the close of trading on the New
York Stock Exchange (the "NYSE") (i.e. 3:00 p.m., Central time, unless the
NYSE closes at an earlier time in which case such earlier time shall apply)
and communicate to Distributors, by telephone or facsimile (or by such other
means as the Parties to this Agreement may agree to in writing), the net
aggregate purchase or redemption order (if any) for the Omnibus Account for
such business day (a business day is each day the NYSE is open for business
and the Fund values its shares (a "Business Day"); a Business Day is
sometimes referred to herein as the "Trade Date"). The Company or its
Designee will communicate such orders to Distributors prior to 9:00 a.m.,
Central Time, on the next Business Day following the Trade Date. All trades
communicated to Distributors by the foregoing deadline shall be treated by
Distributors as if they were received by Distributors prior to the close of
trading on the Trade Date.
3.3 SETTLEMENT OF TRANSACTIONS.
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(a) PURCHASES. Company or its Designee will wire, or arrange for
the wire of, the purchase price of each purchase order to the custodian for
the Fund in accordance with written instructions provided by Distributors to
the Company so that either (i) such funds are received by the custodian for
the Fund prior to 12:00 p.m., Central time, on the next Business Day
following the Trade Date, or (ii) Distributors is provided with a Federal
Funds wire system reference number prior to such 12:00 p.m. deadline
evidencing the entry of the wire transfer of the purchase price to the
applicable custodian into the Federal Funds wire system prior to such time.
Company agrees that if it fails to provide funds to the Fund's custodian by
the close of business on the next Business Day following the Trade Date,
then, at the option of Distributors, (A) the transaction may be canceled, or
(B) the transaction may be processed at the next-determined net asset value
for the applicable Fund after purchase order funds are received. In such
event, the Company shall indemnify and hold harmless Distributors, Adviser
and the Funds from any liabilities, costs and damages either may suffer as a
result of such failure. For purposes of Section 6.5 (f), upon receipt by the
Fund of the Federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of the Fund.
(b) REDEMPTIONS. The Adviser will use its best efforts to cause to be
transmitted to such custodial account as Company shall direct in writing, the
proceeds of all redemption orders placed by Company or its Designee by 9:00
a.m., Central time, on the Business Day immediately following the Trade Date,
by wire transfer on that Business Day. Should Adviser need to extend the
settlement on a trade, it will contact Company to discuss the extension. For
purposes of determining the length of settlement, Adviser agrees to treat the
Accounts no less favorably than other shareholders of the Funds. Any
extension of the settlement on a trade will not prevent the prompt payment of
redemption proceeds to Owners
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consistent with Section 22 (e) of the Investment Company Act or 1940, as
amended (the "1940 Act") and any rules thereunder. Each wire transfer of
redemption proceeds shall indicate, on the Federal Funds wire system, the
amount thereof attributable to each Fund; PROVIDED, HOWEVER, that if the
number of entries would be too great to be transmitted through the Federal
Funds wire system, the Adviser shall, on the day the wire is sent, fax such
entries to Company or if possible, send via direct or indirect systems access
until otherwise directed by the Company in writing.
3.4 BOOK ENTRY ONLY. Issuance and transfer of shares of a Fund will be
by book entry only. Stock certificates will not be issued to the Company or
the Accounts. Shares of the Funds ordered from Distributors will be recorded
in the appropriate book entry title for the Accounts.
3.5 DISTRIBUTION INFORMATION. The Adviser or Distributors shall provide
the Company with all distribution announcement information as soon as it is
announced by the Funds. The distribution information shall set forth, as
applicable, ex-dates, record date, payable date, distribution rate per share,
record date share balances, cash and reinvested payment amounts and all other
information reasonably requested by the Company. Where possible, the Adviser
or Distributors shall provide the Company with direct or indirect systems
access to the Adviser's systems for obtaining such distribution information.
3.6 REINVESTMENT. All dividends and capital gains distributions will be
automatically reinvested on the payable date in additional shares of the
applicable Fund at net asset value in accordance with each Fund's then
current prospectus.
3.7 PRICING INFORMATION. Distributors shall use its best efforts to
furnish to the Company prior to 6:00 p.m., Central time, on each Business Day
each Fund's closing net asset value for that day, and for those Funds for
which such information is calculated, the daily accrual for interest rate
factor (mil rate). Such information shall be communicated via fax, or
indirect or direct systems access acceptable to the Company.
3.8 PRICE ERRORS.
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(a) NOTIFICATION. If an adjustment is required in accordance with
a Fund's then current policies on reimbursement ("Fund Reimbursement
Policies") to correct a material error, as defined by the Securities and
Exchange Commission (the "SEC") guidelines regarding Owner reimbursement, in
place on the date of this Agreement, in the computation of the net asset
value of Fund shares ("Price Error"), Adviser or Distributors shall notify
Company as soon as practicable after discovering the Price Error. Notice may
be made via facsimile or via direct or indirect systems access and shall
state the incorrect price, the correct price and, to the extent communicated
to the Fund's shareholders (it being understood for this purpose shareholders
means Owners), the reason for the price change.
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(b) UNDERPAYMENTS. If a Price Error causes an Account to receive
less than the amount to which it otherwise would have been entitled, Adviser
shall make all necessary adjustments (subject to the Fund Reimbursement
Policies) so that the Account receives the amount to which it would have been
entitled.
(c) OVERPAYMENTS. If a Price Error causes an Account to receive
more than the amount to which it otherwise would have been entitled, Company,
when requested by Adviser (in accordance with the Fund Reimbursement
Policies), will use its best efforts to collect such excess amounts from the
applicable Owners.
(d) FUND REIMBURSEMENT POLICIES. Adviser agrees to treat
Company's customers no less favorably than Adviser treats its retail
shareholders in applying the provisions of paragraphs 3.8(b) and 3.8(c).
(e) EXPENSES. Adviser shall reimburse Company for all reasonable
and necessary out-of-pocket expenses incurred by Company for payroll
overtime, stationery and postage in adjusting Owner accounts affected by a
Price Error described in paragraphs 3.8(b) and 3.8(c). Company shall use its
best efforts to mitigate all expenses which may be reimbursable under this
section 3.8(e) and agrees that payroll overtime shall not include any time
spent programming computers or otherwise customizing Company's recordkeeping
system. Upon requesting reimbursement, Company shall present an itemized xxxx
to Adviser detailing the costs for which it seeks reimbursement.
3.9 AGENCY. Distributors hereby appoints the Company or its Designee as
its agents for the limited purpose of accepting purchase and redemption
instructions from the Owners for the purchase and redemption of shares of the
Funds by the Company on behalf of the Accounts.
3.10 QUARTERLY REPORTS. Adviser agrees to provide Company a statement of
Fund assets as soon as practicable and in any event within 30 days after the
end of each fiscal quarter, and a statement certifying the compliance by the
Funds during that fiscal quarter with the diversification requirements and
qualification as a regulated investment company. In the event of a breach of
Section 6.4(a), Adviser will take all reasonable steps (a) to notify Company
of such breach and (b) to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Treasury Regulation 1.817-5.
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4. PROXY SOLICITATIONS AND VOTING. The Company shall, at its expense,
distribute or arrange for the distribution of all proxy materials furnished
by the Funds to the Accounts and shall: (a) solicit voting instructions from
Owners; (b) vote the Fund shares in accordance with instructions received
from Owners; and (c) vote the Fund shares for which no instructions have been
received, as well as shares attributable to it, in the same proportion as
Fund shares for which instructions have been received from Owners, so long as
and to the extent that the SEC continues to interpret the 1940 Act, to
require pass-through voting privileges for various contract owners. The
Company and its Designees will not recommend action in connection with, or
oppose or interfere with, the solicitation of proxies for the Fund shares
held for Owners, except Company may recommend action when such action is in
the best interest of the Owners.
5. CUSTOMER COMMUNICATIONS.
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5.1 PROSPECTUSES. The Adviser or Distributors, at its expense, will
provide the Company with as many copies of the current prospectus for the
Funds as the Company may reasonably request for distribution, at the
Company's expense, to existing or prospective Owners.
5.2 SHAREHOLDER MATERIALS. The Adviser and Distributors shall, as
applicable, provide in bulk to the Company or its authorized representative,
at a single address and at no expense to the Company, the following
shareholder communications materials prepared for circulation to Owners in
quantities requested by the Company which are sufficient to allow mailing
thereof by the Company and, to the extent required by applicable law, to all
Owners: proxy or information statements, annual reports, semi-annual reports,
and all initial and updated prospectuses, supplements and amendments thereof.
None of the Funds, the Adviser or Distributors shall be responsible for the
cost of distributing such materials to Owners.
5.3 GENERAL DUTY. The Adviser and the Distributors will provide the
Company with as much notice as is reasonably practicable of any proxy
solicitation for a Fund, and of any material change in a Fund's registration
statement or prospectus, particularly any change that may result in a change
to the registration statement or prospectus for the Accounts. The Adviser and
Distributors will provide reasonable assistance to the Company so as to
enable the Company to solicit proxies from Owners, or to make changes to its
registration statement or prospectus, in an orderly manner.
6. REPRESENTATIONS AND WARRANTIES.
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6.1 The Company represents and warrants that:
(a) It is an insurance company duly organized and in good standing
under the laws of the State of Wisconsin and that it has legally and validly
established the Accounts prior to any issuance or sale thereof as segregated
asset accounts and that the Company has and will maintain the capacity to
issue all Contracts that may be sold; and that it is and will remain duly
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registered, licensed, qualified and in good standing to sell the Contracts in
all the jurisdictions in which such Contracts are to be offered or sold;
(b) It and each of its Designees is and will remain duly registered and
licensed in all material respects under all applicable federal and state
securities and insurance laws and shall perform its obligations under this
Agreement in compliance in all material respects with any applicable state
and federal laws;
(c) The Contracts are and will be registered under the Securities Act
of 1933, as amended (the "1933 Act"), and are and will be registered and
qualified for sale in the states where so required; and each Account is and
will be registered as a unit investment trust in accordance with the 1940 Act
and shall be a segregated investment account for the Contracts;
(d) The Contracts are currently treated as annuity contracts, under
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Company, subject to each Fund's compliance with applicable
diversification requirements, will maintain such treatment and will notify
Adviser, Distributors and Funds promptly upon having a reasonable basis for
believing that the Contracts have ceased to be so treated or that they might
not be so treated in the future;
(e) If required by applicable law, the arrangements provided for in
this Agreement will be disclosed to the Owners; and
6.2 The Funds each represent and warrant that:
(a) Fund shares sold pursuant to this Agreement are and will be
registered under the 1933 Act and the Fund is and will be registered as a
registered investment company under the 1940 Act, in each case, except to the
extent the Company is so notified in writing;
(b) It is currently qualified and will continue to be qualified as
a Regulated Investment Company under Subchapter M of the Code and shall
notify the Company immediately upon having a reasonable basis for believing
that it has ceased to so qualify or that it might not so qualify in the
future;
(c) It currently complies and will continue to comply with the
diversification provisions of Section 817(h) of the Code and the regulations
issued thereunder relating to the diversification requirements for variable
life insurance policies and variable annuity contracts and shall notify the
Company immediately upon having a reasonable basis for believing that it has
ceased to so comply or that it might not so comply in the future;
(d) It is duly organized under applicable state law, and is in
good standing under applicable law; and
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(e) It will take all actions as are necessary to permit the sale
of its shares to the Accounts, including maintaining its registration as an
investment company under the 1940 Act, registering its shares sold to the
Accounts under the 1933 Act for as long as required by applicable law,
amending its registration statement filed with the SEC under the 1933 Act and
the 1940 Act from time to time as required in order to effect the continuous
offering of its shares and register and qualify its shares for sale in
accordance with the laws of the various states to the extent deemed necessary
by it or Distributors.
6.3 Distributors represents and warrants that:
(a) It is and will be a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD") and is and will be
registered as a broker-dealer with the SEC;
(b) It is duly organized and in good standing under the laws of
the State of Wisconsin, and will remain so under state law: and
(c) It will sell and distribute Fund shares in accordance with all
applicable state and federal laws and regulations.
6.4 Adviser represents and warrants that:
(a) It will cause each Fund to invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
annuity contracts under the Code and the regulations issued thereunder, and
that each Fund complies and will comply with Section 817(h) of the Code as
amended from time to time and with all applicable regulations promulgated
thereunder;
(b) It is and will remain duly registered and licensed in all
material respects under all applicable federal and state securities and
insurance laws and shall perform its obligations under this Agreement in
compliance in all material respects with any applicable state and federal
laws; and
(c) It is duly organized and in good standing under the laws of
the State of Wisconsin, and will remain so under state law.
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6.5 Each of the Parties to this Agreement represents and warrants to
the others that:
(a) It has full power and authority under applicable law, and has
taken all action necessary, to enter into and perform this Agreement and the
person executing this Agreement on its behalf is duly authorized and
empowered to execute and deliver this Agreement;
(b) This Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms and it shall
comply in all material respects with all laws, rules and regulations
applicable to it by virtue of entering into this Agreement;
(c) No consent or authorization of, filing with, or other act by
or in respect of any governmental authority, is required in connection with
the execution, delivery, performance, validity or enforceability of this
Agreement;
(d) The execution, performance and delivery of this Agreement will
not result in it violating any applicable law or breaching or otherwise
impairing any of its contractual obligations;
(e) Each Party to this Agreement is entitled to rely on any
written records or instructions provided to it by another Party; and
(f) Its directors, officers, employees, and investment advisers,
and other individuals/entities dealing with the money or securities of a Fund
are and shall continue to be at all times covered by a blanket fidelity bond
or similar coverage for the benefit of the Fund in an amount not less than
the amount required by the applicable rules of the NASD and the federal
securities laws, which bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
7. SALES MATERIAL AND INFORMATION
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7.1 NASD FILINGS. The Company shall promptly inform Distributors as to
the status of all sales literature filings pertaining to the Funds and shall
promptly notify Distributors of all approvals or disapprovals of sales
literature filings with the NASD. For purposes of this Section 7, the phrase
"sales literature or advertisement" shall be construed in accordance with all
applicable securities laws and regulations including, but not limited to,
NASD Conduct Rule 2210.
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7.2 COMPANY REPRESENTATIONS. Except with the prior written permission
of the Distributors, Adviser or the Funds, or its respective designee, and
except as required by law or regulatory authority, neither the Company nor
any of its Designees shall make any material representations concerning the
Adviser, the Distributors, or a Fund other than the information or
representations contained in: (a) a registration statement of the Fund or
prospectus of a Fund, as amended or supplemented from time to time; (b)
published reports or statements of the Funds which are in the public domain
or are approved by Distributors or the Funds; or (c) sales literature or
advertisement of the Funds.
7.3 ADVISER, DISTRIBUTORS AND FUND REPRESENTATIONS. Except with the
prior written permission of the Company or its Designee, and except as
required by law or regulatory authority, none of Adviser, Distributors or any
Fund shall give any information or make any material representations
concerning the Company or its Designees, the Accounts, or the Contracts
issued by the Company other than the information or representations contained
in: (a) a registration statement or prospectus for the Contracts, as amended
or supplemented from time to time; (b) published reports or statements of the
Contracts or the Accounts which are in the public domain or are approved by
the Company; or (c) sales literature or advertisement of the Company.
7.4 TRADEMARKS, ETC. Except to the extent required by applicable law,
no Party shall use any other Party's names, logos, trademarks or service
marks, whether registered or unregistered, without the prior consent of such
Party.
7.5 INFORMATION FROM DISTRIBUTORS AND ADVISER. Upon request,
Distributors or Adviser will provide to Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, solicitations for voting
instructions, applications for exemptions, requests for no action letters,
and all amendments to any of the above, that relate to the Funds, in final
form as filed with the SEC, NASD and other regulatory authorities.
7.6 INFORMATION FROM COMPANY. Upon request, Company will provide to
Distributors at least one complete copy of all registration statements,
prospectuses, Statements of Additional Information, reports, solicitations
for voting instructions, sales literature and advertisements, applications
for exemptions, requests for no action letters, and notices, orders or
responses relating thereto and all amendments and supplements to any of the
above, that relate to a Fund and the Contracts, in final form as filed with
the SEC, NASD and other regulatory authorities.
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7.7 REVIEW OF MARKETING MATERIALS.
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(a) The Company shall furnish, or shall cause to be furnished, to
the Adviser or Distributors, or a designee of such party, each piece of sales
literature or advertisement in which the Fund, the Adviser, or Distributors
is named at least fifteen (15) business days prior to the anticipated use of
such material, and no such sales literature or advertisement shall be used
unless the Adviser or Distributors, or its designee approves the material or
does not respond with comments on the material within ten (10) business days
from receipt of the material; provided, however, neither the Adviser nor
Distributors will review such materials for compliance with applicable laws.
The Adviser and Distributors, or their designees reserve the right to
reasonably object to the continued use of any such sales literature or
advertisement in which the Fund, the Adviser, or Distributors is named, and
no such material shall be used if the Adviser or the Distributors, or their
designees so object.
(b) The Distributors or its designee shall furnish, or shall cause
to be furnished, to the Company or its Designee, each piece of sales
literature or advertisement in which the Company, the Accounts, or the
Contracts issued by the Company are named at least fifteen (15) business days
prior to the anticipated use of such material, and no such sales literature
or advertisement shall be used unless the Company or its Designee either
approve the material or do not respond with comments on the material within
ten (10) business days from receipt of the material. The Company or its
Designee reserves the right to reasonably object to the continued use of any
such sales literature or advertisement in which the Company, the Accounts, or
the Contracts issued by the Company are named, and no such material shall be
used if the Company or its Designee so object.
8. FEES AND EXPENSES.
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8.1 FUND REGISTRATION EXPENSES. Fund or Distributors shall bear the
cost of registration and qualification of Fund shares; preparation and filing
of Fund prospectuses and registration statements, proxy materials and
reports; preparation of all other statements and notices relating to the Fund
or Distributors required by any federal or state law; all costs of printing
all copies of all Fund sales literature or advertisement prepared by
Distributors, prospectuses, Statements of Additional Information, proxy
materials, information statements, reports, and supplements, and amendments
thereof, as required by applicable state and federal law, as these expenses
relate to materials provided by Fund, the Adviser or Distributors to Company;
payment of all applicable fees, including, without limitation, any fees due
under Rule 24f-2 of the 1940 Act, relating to a Fund; and all taxes on the
issuance or transfer of Fund shares on the Fund's records, and all other
costs associated with ongoing compliance by the Funds or Distributors with
all such laws, and its obligations under this Agreement, as these expenses
and responsibilities relate to materials prepared by the Fund, the Adviser or
Distributors.
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8.2 CONTRACT REGISTRATION EXPENSES. The Company shall bear the expenses
for the costs of preparation and filing of the Company's prospectus and
registration statement with respect to the Contracts; preparation of all
other statements and notices relating to the Accounts or the Contracts
required by any federal or state law; expenses for the solicitation and sale
of the Contracts including all costs of printing and distributing all copies
of sales literature or advertisement prepared by Company or its Designee,
prospectuses, Statements of Additional Information, proxy materials, and
reports to Owners or potential purchasers of the Contracts as required by
applicable state and federal law; payment of all applicable fees relating to
the Contracts; all costs of drafting, filing and obtaining approvals of the
Contracts in the various states under applicable insurance laws; filing of
annual reports for the Accounts on form N-SAR, and all other costs associated
with ongoing compliance by Company with all such laws and its obligations
under this Agreement.
9. INDEMNIFICATION.
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9.1 INDEMNIFICATION BY COMPANY.
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(a) Company agrees to indemnify and hold harmless the Funds,
Adviser and Distributors and each of their directors, officers, employees and
agents, and each person, if any, who controls any of them within the meaning
of Section 15 of the 1933 Act, except for any other insurance company
participating in the Funds (each, an "Indemnified Party" and collectively,
the "Indemnified Parties" for purposes of this Section 9.1) from and against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of Company), and expenses including
reasonable legal fees and expenses, (collectively, hereinafter "Losses"), to
which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise insofar as such Losses:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the registration
statement, prospectus, sales literature or advertisement for the Contracts or
contained in 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
paragraph 9.1(a) 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 written information furnished to Company
by or on behalf of a Fund, Distributors or Adviser for use in the
registration statement, prospectus, sales literature or advertisement for the
Contracts or in the Contracts (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of, or as a result of, statements or
representations or wrongful conduct of Company, its Designees or its agents,
with respect to the sale or distribution of the Contracts or Fund 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, or sales literature or advertisement covering a Fund 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 written information furnished to a Fund,
Adviser or Distributors by or on behalf of Company; or
(iv) arise out of, or as a result of, any failure by
Company, its Designees or persons under the Company's or Designees' control
to furnish the materials contemplated under the terms of this Agreement; or
(v) arise out of, or result from, any material breach of
any representation or warranty made by Company, its Designees or persons
under the Company's or Designees' control in this Agreement or arise out of
or result from any other material breach of this Agreement by Company, its
Designees or persons under the Company's or Designees' control; as limited by
and in accordance with the provisions of Sections 9.1(b) and 9.1(c) hereof; or
(vi) arise out of, or as a result of, adherence by Adviser
or Distributors to instructions that it reasonably believes were originated
by an authorized agent of Company. For purposes of this paragraph,
"authorized agent of Company" shall mean any individual set forth in
Exhibit D to this Agreement.
This indemnification provision is in addition to any liability, which
the Company or its Designees may otherwise have.
(b) Company shall not be liable under this indemnification provision
with respect to any Losses 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 or
duties under this Agreement.
(c) 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 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 Company of any such claim shall
not relieve Company from any liability which it may have to the Indemnified
Party otherwise than on account of this indemnification provision. In case
any such action is brought against any Indemnified Party, and it notified the
indemnifying Party of the commencement thereof, the
13
indemnifying Party will be entitled to participate therein and, to the extent
that it may wish, assume the defense thereof, with counsel satisfactory to
such Indemnified Party. After notice from the indemnifying Party of its
intention to assume the defense of an action, the Indemnified Party shall
bear the expenses of any additional counsel obtained by it, and the
indemnifying Party shall not be liable to such Indemnified Party under this
Section for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation. The Indemnified Party may not settle any
action without the written consent of the indemnifying Party. The
indemnifying Party may not settle any action without the written consent of
the Indemnified Party unless such settlement completely and finally releases
the Indemnified Party from any and all liability. In either event, consent
shall not be unreasonably withheld.
(d) The Indemnified Parties will promptly notify Company of the
commencement of any litigation or proceedings against the Indemnified Parties
in connection with the issuance or sale of Fund shares or the Contracts or
the operation of a Fund.
9.2 INDEMNIFICATION BY ADVISER AND DISTRIBUTORS.
-------------------------------------------
(a) Adviser and Distributors agrees to indemnify and hold harmless
Company and each of its directors, officers, employees and agents and each
person, if any, who controls Company within the meaning of Section 15 of the
1933 Act (each, an "Indemnified Party" and collectively, the "Indemnified
Parties" for purposes of this Section 9.2) from and against any and all
Losses to which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such Losses:
(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 sales literature or advertisement of a Fund (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 Section 9.2(a) 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
written information furnished to a Fund, Adviser or Distributors by or on
behalf of Company for use in the registration statement or prospectus for a
Fund or in sales literature or advertisement (or any amendment or supplement)
or otherwise for use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of, or as a result of, statements or
representations or wrongful conduct of Adviser or Distributors or persons
under its control, with respect to the sale or distribution of Fund shares; or
14
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, or sales literature or advertisement 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 statements therein not misleading, if such statement or
omission was made in reliance upon written information furnished to Company
by or on behalf of Adviser or Distributors; or
(iv) arise out of, or as a result of, any failure by Adviser
or Distributors or persons under its control to furnish the materials
contemplated under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation or warranty made by the Funds, Adviser or Distributors or
persons under their control in this Agreement or arise out of or result from
any other material breach of this Agreement by Adviser or Distributors or
persons under their control (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification requirements
specified in Section 6.2(c) and Section 6.4(a) of this Agreement, or to
qualify as a regulated investment company under Subchapter M of the Code; as
limited by and in accordance with the provisions of Sections 9.2(b) and
9.2(c) hereof.
This indemnification provision is in addition to any liability which
Adviser and Distributors may otherwise have.
(b) Adviser and Distributors shall not be liable under this
indemnification provision with respect to any Losses 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.
(c) Adviser and Distributors 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 Adviser
and Distributors 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 Adviser and Distributors of any such claim shall not
relieve Adviser and Distributors from any liability which it may have to the
Indemnified Party otherwise than on account of this indemnification
provision. In case any such action is brought against any Indemnified Party,
and it notified the indemnifying Party of the commencement thereof, the
indemnifying Party will be entitled to participate therein and, to the extent
that it may wish, assume the defense thereof, with counsel satisfactory to
such Indemnified Party. After notice from the indemnifying Party of its
intention to assume the defense of an action, the Indemnified Party shall
bear the expenses of any additional counsel
15
obtained by it, and the indemnifying Party shall not be liable to such
Indemnified Party under this Section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation. The Indemnified
Party may not settle any action without the written consent of the
indemnifying Party. The indemnifying Party may not settle any action without
the written consent of the Indemnified Party unless such settlement
completely and finally releases the Indemnified Party from any and all
liability. In either event, consent shall not be unreasonably withheld.
(d) The Indemnified Parties will promptly notify Adviser and
Distributors of the commencement of any litigation or proceedings against the
Indemnified Parties in connection with the issuance or sale of the Contracts
or the operation of the Accounts.
10. POTENTIAL CONFLICTS.
-------------------
10.1 MONITORING BY DIRECTORS FOR CONFLICTS OF INTEREST. The Directors of
each Fund will monitor the Fund for any potential or existing material
irreconcilable conflict of interest between the interests of the contract
owners of all separate accounts investing in the Fund, including such
conflict of interest with any other separate account of any other insurance
company investing in the Fund. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretive letter, or any similar action by insurance,
tax or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments
of the Fund are being managed; (e) a difference in voting instructions given
by variable annuity contract owners and variable life insurance contract
owners or by contract owners of different life insurance companies utilizing
the Fund; or (f) a decision by Company to disregard the voting instructions
of Owners. The Directors shall promptly inform the Company, in writing, if
they determine that an irreconcilable material conflict exists and the
implications thereof.
10.2 MONITORING BY THE COMPANY FOR CONFLICTS OF INTEREST. The Company
will promptly notify the Directors, in writing, of any potential or existing
material irreconcilable conflicts of interest, as described in Section 10.1
above, of which it is aware. The Company will assist the Directors in
carrying out their responsibilities under any applicable provisions of the
federal securities laws and any exemptive orders granted by the SEC
("Exemptive Order"), by providing the Directors, in a timely manner, with all
information reasonably necessary for the Directors to consider any issues
raised. This includes, but is not limited to, an obligation by the Company to
inform the Directors whenever Owner voting instructions are disregarded.
10.3 REMEDIES. If it is determined by a majority of the Directors, or a
majority of disinterested Directors, that a material irreconcilable conflict
exists, as described in Section 10.1 above, the Company shall, at its own
expense take whatever steps are necessary to remedy or
16
eliminate the irreconcilable material conflict, up to and including, but not
limited to: (a) withdrawing the assets allocable to some or all of the
separate accounts from the applicable Fund and reinvesting such assets in a
different investment medium, including (but not limited to) another fund
managed by the Adviser, or submitting the question whether such segregation
should be implemented to a vote of all affected Owners and, as appropriate,
segregating the assets of any particular group that votes in favor of such
segregation, or offering to the affected owners the option of making such a
change; and (b) establishing a new registered management investment company
or managed separate account.
10.4 CAUSES OF CONFLICTS OF INTEREST.
-------------------------------
(a) STATE INSURANCE REGULATORS. If a material irreconcilable
conflict arises because a particular state insurance regulator's decision
applicable to the Company conflicts with the majority of other state
regulators, then the Company will withdraw the affected Account's investment
in the applicable Fund and terminate this Agreement with respect to such
Account within the period of time permitted by such decision, but in no event
later than six months after the Directors inform the Company in writing that
it has determined that such decision has created an irreconcilable material
conflict; PROVIDED, HOWEVER, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested Directors. Until
the end of the foregoing period, the Distributors and Funds shall continue to
accept and implement orders by the Company for the purchase (and redemption)
of shares of the Fund to the extent such actions do not violate applicable
law.
(b) DISREGARD OF OWNER VOTING. If a material irreconcilable
conflict arises because of Company's decision to disregard Owner voting
instructions and that decision represents a minority position or would
preclude a majority vote, Company may be required, at the applicable Fund's
election, to withdraw the Account's investment in said Fund. No charge or
penalty will be imposed against the Account as a result of such withdrawal.
10.5 LIMITATIONS ON CONSEQUENCES. For purposes of Sections 10.3 through
10.5 of this Agreement, a majority of the disinterested Directors shall
determine whether any proposed action adequately remedies any irreconcilable
material conflict. In no event will a Fund, the Adviser or the Distributors
be required to establish a new funding medium for any of the Contracts. The
Company shall not be required by Section 10.3 to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of a
majority of Owners affected by the irreconcilable material conflict. In the
event that the Directors determine that any proposed action does not
adequately remedy any irreconcilable material conflict, then the Company will
withdraw the Account's investment in the applicable Fund and terminate this
Agreement as quickly as may be required to comply with applicable law, but in
no event later than six (6) months after the Directors inform the Company in
writing of the foregoing determination,
17
PROVIDED, HOWEVER, that such withdrawal and termination shall be limited to
the extent required by any such material irreconcilable conflict.
10.6 CHANGES IN LAWS. 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 Act or the rules promulgated thereunder with
respect to mixed or shared funding (as defined in the Funds' Exemptive Order)
on terms and conditions materially different from those contained in the
Funds' Exemptive Order, then (a) the Funds and/or the Adviser, as
appropriate, 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 10.1, 10.2, 10.3 and 10.4 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.
11. MAINTENANCE OF RECORDS.
----------------------
(a) Recordkeeping and other administrative services to Owners
shall be the responsibility of the Company and shall not be the
responsibility of the Funds, Adviser or Distributors. None of the Funds, the
Adviser or Distributors shall maintain separate accounts or records for
Owners. Company shall maintain and preserve all records as required by law to
be maintained and preserved in making shares of the Funds available to the
Accounts.
(b) Upon the request of the Adviser or Distributors, the Company
shall provide copies of all the historical records relating to transactions
between the Funds and the Accounts, written communications regarding the
Funds to or from the Accounts and other materials, in each case (i) as are
maintained by the Company in the ordinary course of its business and in
compliance with applicable law, and (ii) as may reasonably be requested to
enable the Adviser and Distributors, or its representatives, including
without limitation its auditors or legal counsel, to (A) comply with any
request of a governmental body or self-regulatory organization or the Owners,
(B) verify compliance by the Company with the terms of this Agreement, (C)
make required regulatory reports, (D) verify to Advisor's reasonable
satisfaction that all purchase and redemption orders aggregated for each
Trade Date were received by Company prior to the close of trading on the NYSE
on such Trade Date, or (E) perform general customer supervision.
(c) Upon the request of the Company, the Adviser and Distributors
shall provide copies of all the historical records relating to transactions
between the Funds and the Accounts, written communications regarding the
Funds to or from the Accounts and other materials, in each case (i) as are
maintained by the Funds, Adviser and Distributors, as the case may be, in the
ordinary course of its business and in compliance with applicable law, and
(ii) as may reasonably be requested to enable the Company, or its
representatives, including without limitation its auditors or legal counsel,
to (A) comply with any request of a governmental body or self-regulatory
organization or the Owners, (B) verify compliance by the Funds, Adviser and
18
Distributors with the terms of this Agreement, (C) make required regulatory
reports, or (D) perform general customer supervision.
(d) The Parties agree to cooperate in good faith in providing
records to one another pursuant to this Section 11.
12. TERM AND TERMINATION.
--------------------
12.1 TERM AND TERMINATION WITHOUT CAUSE. The initial term of this
Agreement shall be for a period of one year from the date hereof. Unless
terminated as to any Fund upon not less than thirty (30) days prior written
notice to the other Parties, this Agreement shall thereafter automatically
renew for the remaining Funds from year to year, subject to termination at
the next applicable renewal date upon not less than 30 days prior written
notice. Any Party may terminate this Agreement as to any Fund following the
initial term upon six (6) months advance written notice to the other Parties.
12.2 TERMINATION BY FUND, DISTRIBUTORS OR ADVISER FOR CAUSE. Adviser,
Fund or Distributors may terminate this Agreement by written notice to the
Company, if any of them shall determine, in its sole judgment exercised in
good faith, that (a) 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 (b) any of
the Contracts are not registered, issued or sold in accordance with
applicable state and federal law or such law precludes the use of Fund shares
as the underlying investment media of the Contracts issued or to be issued by
the Company.
12.3 TERMINATION BY COMPANY FOR CAUSE. Company may terminate this
Agreement by written notice to the Adviser, Funds and Distributors in the
event that (a) any of the Fund shares are not registered, issued or sold in
accordance with applicable state 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; (b) the Funds cease to qualify as Regulated
Investment Companies under Subchapter M of the Code or under any successor or
similar provision, or if the Company reasonably believes that the Funds may
fail to so qualify; (c) a Fund fails to meet the diversification requirements
specified in Section 6.4(a); (d) if the shares of the Funds are not
reasonably available to meet the requirement of the Contracts issued by the
Company, as determined by the Company; or (e) upon the sale, acquisition or
change of control of the Adviser.
12.4 TERMINATION BY ANY PARTY. This Agreement may be terminated as to
any Fund by any Party at any time (a) by giving 30 days' written notice to
the other Parties in the event of a material breach of this Agreement by the
other Party or Parties that is not cured during such 30-day period, and (b)
(i) upon institution of formal proceedings relating to the legality of the
terms and conditions of this Agreement against the Accounts, Company, any
Designee, the Funds, Adviser or Distributors by the NASD, the SEC or any
other regulatory body provided that the
19
terminating Party has a reasonable belief that the institution of formal
proceedings is not without foundation and will have a material adverse impact
on the terminating Party, (ii) by the non-assigning Party upon the assignment
of this Agreement in contravention of the terms hereof, (iii) as is required
by law, order or instruction by a court of competent jurisdiction or a
regulatory body or self-regulatory organization with jurisdiction over the
terminating Party or, (iv) by any Party by advance written notice upon the
"assignment" of the Agreement (as defined under the 0000 Xxx) unless made
with the written consent of each Party to the Agreement.
12.5 LIMIT ON TERMINATION. Notwithstanding the termination of this
Agreement with respect to any or all Funds, for so long as any Contracts
remain outstanding and invested in a Fund each Party to this Agreement shall
continue to perform such of its duties under this Agreement as are necessary
to ensure the continued tax deferred status thereof and the payment of
benefits thereunder, except to the extent proscribed by law, the SEC or other
regulatory body. Except to the extent termination of this Agreement pursuant
to Section 12.2, 12.3 or 12.4 makes it impracticable, for a period of one (1)
year following the termination of this Agreement, for Contracts in effect on
the effective date of such termination (the "Existing Contracts"), and based
upon instructions from the Owners of the Existing Contracts, the Accounts
shall be permitted to: (a) purchase additional shares of each Fund; and (b)
reallocate investments among the Funds. Notwithstanding the foregoing,
nothing in this Section 12.5 obligates a Fund to continue in existence. In
the event that any Fund elects to terminate its operations, the Company
shall, as soon as practicable, obtain an exemptive order or order of
substitution from the SEC to remove all Owners from the applicable Fund.
Notwithstanding any other provision in this Agreement, upon termination of
this Agreement, the Accounts shall be permitted to redeem shares in the Funds
based upon instructions from the Owners of Existing Contracts.
20
13. NOTICES.
-------
All notices under this Agreement shall be given in writing (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
facsimile, by registered or certified mail or by overnight delivery or by a
nationally-recognized delivery service (postage prepaid, return receipt
requested) to the respective Parties as follows:
If to Strong Variable:
Strong Variable Insurance Funds, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Opportunity Fund II:
Strong Opportunity Fund II, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Adviser:
Strong Capital Management, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Distributors:
Strong Investments, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
21
If to Company:
American Family Life Insurance Company
0000 Xxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxx Xxxxxx
Facsimile No.: (000) 000-0000
14. MISCELLANEOUS.
-------------
14.1. CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way affect the construction or effect
of any provisions hereof.
14.2. ENFORCEABILITY. If any portion 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.
14.3. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which taken together shall constitute one
and the same instrument.
14.4. REMEDIES NOT EXCLUSIVE. 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 to
this Agreement are entitled to under state and federal laws.
14.5. CONFIDENTIALITY. Subject to the requirements of legal process and
regulatory authority, the Funds and Distributors shall treat as confidential
the names and addresses of the owners of the Contracts and all information
reasonably identified as confidential in writing by the Company to this
Agreement 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 Company until such
time as it may come into the public domain.
14.6. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the internal laws of the State of Wisconsin
applicable to agreements fully executed and to be performed therein;
exclusive of conflicts of laws.
14.7. SURVIVABILITY. Sections 6, 7.2, 7.3, 7.4, 9, 11 and 12.5 hereof
shall survive termination of this Agreement. In addition, all provisions of
this Agreement shall survive termination of this Agreement in the event that
any Contracts are invested in a Fund at the time the termination becomes
effective and shall survive for so long as such Contracts remain so invested.
22
14.8. AMENDMENT AND WAIVER. No modification of any provision of this
Agreement will be binding unless in writing and executed by the Party to be
bound thereby. No waiver of any provision of this Agreement will be binding
unless in writing and executed by the Party granting such waiver.
Notwithstanding anything in this Agreement to the contrary, the Adviser may
unilaterally amend Exhibit A to this Agreement to add additional series of
Strong Variable Funds ("New Funds") as Funds by sending to the Company a
written notice of the New Funds. Any valid waiver of a provision set forth
herein shall not constitute a waiver of any other provision of this
Agreement. In addition, any such waiver shall constitute a present waiver of
such provision and shall not constitute a permanent future waiver of such
provision.
14.9. ASSIGNMENT. This Agreement shall be binding upon and shall inure
to the benefit of the Parties and their respective successors and assigns;
PROVIDED, HOWEVER, that neither this Agreement nor any rights, privileges,
duties or obligations of the Parties may be assigned by any Party without the
written consent of the other Parties or as expressly contemplated by this
Agreement.
14.10. ENTIRE AGREEMENT. This Agreement contains the full and complete
understanding between the Parties with respect to the transactions covered
and contemplated under this Agreement, and supersedes all prior agreements
and understandings between the Parties relating to the subject matter hereof,
whether oral or written, express or implied.
14.11. RELATIONSHIP OF PARTIES; NO JOINT VENTURE, ETC. Except for the
limited purpose provided in Section 3.8, it is understood and agreed that the
Company and each of its Designees shall be acting as an independent
contractor and not as an employee or agent of the Adviser, Distributors or
the Funds, and none of the Parties shall hold itself out as an agent of any
other Party with the authority to bind such Party. Neither the execution nor
performance of this Agreement shall be deemed to create a partnership or
joint venture by and among any of the Company, any Designees, Funds, Adviser,
or Distributors.
14.12. EXPENSES. All expenses incident to the performance by each
Party of its respective duties under this Agreement shall be paid by that
Party.
14.13. TIME OF ESSENCE. Time shall be of the essence in this
Agreement.
14.14. NON-EXCLUSIVITY. Each of the Parties acknowledges and agrees
that this Agreement and the arrangements described herein are intended to be
non-exclusive and that each of the Parties is free to enter into similar
agreements and arrangements with other entities.
23
14.15. OPERATIONS OF FUNDS. In no way shall the provisions of this
Agreement limit the authority of the Funds, the Adviser or Distributors to
take such action as it may deem appropriate or advisable in connection with
all matters relating to the operation of such Fund and the sale of its
shares. In no way shall the provisions of this Agreement limit the authority
of the Company to take such action as it may deem appropriate or advisable in
connection with all matters relating to the shares of funds other than the
Funds offered to the Accounts.
AMERICAN FAMILY LIFE INSURANCE COMPANY
----------------------------------------
By:
Name:
Title:
STRONG CAPITAL MANAGEMENT, INC.
----------------------------------------
By:
Name:
Title:
STRONG INVESTMENTS, INC.
----------------------------------------
By:
Name:
Title:
STRONG VARIABLE INSURANCE FUNDS, INC.
on behalf of the Designated Portfolios
----------------------------------------
By:
Name:
Title:
STRONG OPPORTUNITY FUND II, INC.
----------------------------------------
By:
Name:
Title:
24
EXHIBIT A
The following is a list of Designated Portfolios under this Agreement:
Strong Mid Cap Growth Fund II
25
EXHIBIT B--ACCOUNT INFORMATION
(FOR ACCOUNTS TO HAVE DIVIDENDS AND CAPITAL GAINS REINVESTED AUTOMATICALLY)
1. Entity in whose name each Account will be opened: ___________________________
Mailing address: ___________________________
___________________________
___________________________
2. Employer ID number (FOR INTERNAL USAGE ONLY): ___________________________
3. Authorized contact persons: The following persons are authorized on
behalf of the Company to effect transactions in each Account:
Name:________________________________ Phone:___________________________________
Name:________________________________ Phone:___________________________________
Name:________________________________ Phone:___________________________________
Name:________________________________ Phone:___________________________________
4. Will the Accounts have telephone exchange? ____ Yes ____ No
(THIS OPTION LETS COMPANY REDEEM SHARES BY TELEPHONE AND APPLY THE PROCEEDS
FOR PURCHASE IN ANOTHER IDENTICALLY REGISTERED ACCOUNT.)
5. Will the Accounts have telephone redemption? ____ Yes ____ No
(THIS OPTION LETS COMPANY SELL SHARES BY TELEPHONE. THE PROCEEDS WILL BE
WIRED TO THE BANK ACCOUNT SPECIFIED BELOW.)
6. All dividends and capital gains will be reinvested automatically.
7. Instructions for all outgoing wire transfers: ____________________________
____________________________
____________________________
____________________________
26
8. If this Account Information Form contains changed information, the
undersigned authorized officer has executed this amended Account Information
Form as of the date set forth below and acknowledges the agreements and
representations set forth in the Services Agreement between the Company,
Strong Capital Management, Inc. and Strong Investments, Inc.
9. COMPANY CERTIFIES UNDER PENALTY OF PERJURY THAT:
(i) THE NUMBER SHOWN ON THIS FORM IS THE CORRECT EMPLOYER ID NUMBER
(OR THAT COMPANY IS WAITING TO BE ISSUED AN EMPLOYER ID NUMBER), AND
(ii) COMPANY IS NOT SUBJECT TO BACKUP WITHHOLDING BECAUSE (a) COMPANY
IS EXEMPT FROM BACKUP WITHHOLDING, OR (b) COMPANY HAS NOT BEEN NOTIFIED BY
THE INTERNAL REVENUE SERVICE ("IRS") THAT IT IS SUBJECT TO BACKUP WITHHOLDING
AS A RESULT OF FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR (c) THE IRS
HAS NOTIFIED THE COMPANY THAT IT IS NO LONGER SUBJECT TO BACKUP WITHHOLDING.
(CROSS OUT (ii) IF COMPANY HAS BEEN NOTIFIED BY THE IRS THAT IT IS SUBJECT TO
BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST OR DIVIDENDS ON ITS TAX
RETURN.)
THE IRS DOES NOT REQUIRE COMPANY'S CONSENT TO ANY PROVISION OF THIS
DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
-------------------------------------- --------------------------------
(SIGNATURE OF AUTHORIZED OFFICER) (DATE)
(Company shall inform Adviser and Distributors of any changes to information
provided in this Account Information Form pursuant to Section 13 of the
Agreement.)
PLEASE NOTE: DISTRIBUTORS EMPLOYS REASONABLE PROCEDURES TO CONFIRM THAT
INSTRUCTIONS COMMUNICATED BY TELEPHONE ARE GENUINE AND MAY NOT BE LIABLE FOR
LOSSES DUE TO UNAUTHORIZED OR FRAUDULENT INSTRUCTIONS. PLEASE SEE THE
PROSPECTUS FOR THE APPLICABLE FUND FOR MORE INFORMATION ON THE TELEPHONE
EXCHANGE AND REDEMPTION PRIVILEGES.
27
EXHIBIT C
Billing and Count Information
Contact person that will furnish participant/shareholder counts:
Name: ___________________________________
Title: ___________________________________
Company Name: ___________________________________
Address: ___________________________________
City, State, Zip: ___________________________________
Phone Number: ___________________________________
Fax Number: ___________________________________
E-mail address: ___________________________________
28
EXHIBIT D
(list of authorized Am Fam representatives)
29
