PARTICIPATION AGREEMENT
THIS AGREEMENT, is made as of______, 1998, by and among Business Men's
Assurance Company of America ("Company"), on its own behalf and on behalf of
Variable Universal Life Separate Account A, a segregated asset account of the
Company ("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 and transfer agent for
the Opportunity Fund II and Strong Variable, and Strong Funds Distributors, Inc.
("Distributors"), the distributor 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 Account to fund the variable annuity contracts that
use the Funds as an underlying investment medium (the "Contracts").
C. The Company, Adviser and Distributors desire to facilitate the
purchase and redemption of shares of the Funds by the Company for the Account
through one account in each Fund (each an "Omnibus Account") to be maintained of
record by the Company, subject to the terms and conditions of this Agreement.
D. The Company desires to provide administrative services and
functions (the "Services") for purchasers of Contracts ("Owners") who are
beneficial owners of shares of the Funds on the terms and conditions set forth
in this Agreement.
AGREEMENTS
The parties to this Agreement agree as follows:
1. PERFORMANCE OF SERVICES. Company agrees to perform the
administrative functions and services specified in Exhibit B attached to this
Agreement with respect to the shares of the Funds beneficially owned by the
Owners and included in the Account. Nothing in this Agreement shall limit
Company's right to engage one or more of its wholly owned subsidiaries (each, a
"Designee") to provide all or any portion of the Services, but no such
engagement shall relieve Company of its duties, responsibilities or liabilities
under this Agreement.
2. THE OMNIBUS ACCOUNTS.
2.1 Each Omnibus Account will be opened based upon the information
contained in Exhibit C 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 C 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 reserves the right to close accounts which are inactive or of a small
position size. In the latter two cases, the Adviser will give prior written
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.
3.1 IN GENERAL. Shares of the Funds shall be sold on behalf of the
Funds by Distributors and purchased by Company for the Account 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. 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 by
Owners, or as otherwise permitted by state or federal laws or regulations,
Company shall not redeem shares of Funds attributable to the Contracts.
2
3.2 PURCHASE AND REDEMPTION ORDERS. On each day that a Fund is open
for business (a "Business Day"), the Company or its Designee shall aggregate and
calculate the net purchase or redemption order it receives for the Account 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 (such Business Day is sometimes referred to herein as the "Trade
Date"). The Company or its Designee will communicate such orders to Distributors
prior to 8:00 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.
(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 (1) such funds
are received by the custodian for the Fund prior to 12:00 (noon),
Central time, on the next Business Day following the Trade Date, or
(2) Distributors is provided with a Federal Funds wire system
reference number prior to such 12:00 noon 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, (i) the
transaction may be canceled, or (ii) 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.
(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 8:00 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
Account no less favorably than other shareholders of the Funds. 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
(c) AUTHORIZED PERSONS. The following persons are each duly
authorized to act on behalf of the Company under this Agreement. The
Funds, Adviser and Distributors are entitled to conclusively rely on
verbal or written instructions that Adviser or Distributors reasonably
believes were originated by anyone of said persons. The Company shall
inform Adviser and Distributors of additions to or subtractions from
this list of authorized persons pursuant to Section 13, hereof:
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
Account. Shares of the Funds ordered from Distributors will be recorded in the
appropriate book entry title for the Account.
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.
(a) In the event adjustments are required to correct any
error in the computation of the net asset value of shares of a Fund,
the Fund or Adviser shall promptly notify Company after discovering
the need for those adjustments which result in a reimbursement to an
Account in accordance with such Fund's then current policies on
reimbursement. Notification may be made orally or via direct or
indirect systems access. Any such notification shall be promptly
followed by a letter written on Fund or Adviser letterhead and shall
state for each day
4
for which an error occurred the incorrect price, the correct price,
and, to the extent communicated to the Fund's shareholder, the reason
for the price change. Funds and Adviser agree that Company may send
this writing, or derivation thereof (so long as such derivation is
approved in advance by Funds or Adviser, which approval shall not be
unreasonably withheld) to Owners that are affected by the price
change.
(b) If the Account received amounts in excess of the amounts
to which it otherwise would have been entitled prior to an adjustment
for an error, Company, when requested by Funds or Adviser, will use
its best efforts to collect such excess amounts from the accounts of
the Owners. In no event, however, shall Company be liable to Funds or
Adviser for any such amounts.
(c) If an adjustment is to be made in accordance with
subsection (a) above to correct an error which has caused the Account
to receive an amount less than that to which it is entitled, Funds or
Adviser shall make all necessary adjustments (within the parameters
specified in subsection (a)) to the number of shares owned in the
Account and distribute to the Company the amount of such underpayment
for credit to the accounts of the Owners.
3.9 AGENCY. Distributors hereby appoints the Company as its agent 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 Account.
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.
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 Account and shall: (i) solicit voting instructions from Owners;
(ii) vote the Fund shares in accordance with instructions received from Owners;
and (iii) 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 Securities and Exchange Commission (the "SEC") continues to interpret
the Investment Company Act of 1940, as amended (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.
5
5. CUSTOMER COMMUNICATIONS.
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.
6. REPRESENTATIONS AND WARRANTIES.
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 Missouri and that it has
legally and validly established the Account prior to any issuance or
sale thereof as a segregated asset account 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 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 the 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 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;
6
(e) It and each of its Designees is registered as a transfer
agent pursuant to Section 17A of the Securities Exchange Act of 1934,
as amended (the "1934 Act"), or is not required to be registered as
such;
(f) The arrangements provided for in this Agreement will be
disclosed to the Owners; and
(g) It and each of its Designees is registered as a
broker-dealer under the 1934 Act and any applicable state securities
laws, including as a result of entering into and performing the
Services set forth in this Agreement, or is not required to be
registered as such.
6.2 The Funds each represent and warrant that 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
Investment Company Act of 1940, in each case, except to the extent the Company
is so notified in writing;
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; and
(b) 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 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
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
7
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
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 other promotional material" shall be construed in
accordance with all applicable securities laws and regulations.
7.2 COMPANY REPRESENTATIONS. 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 other promotional material of the Funds.
8
7.3 ADVISER. DISTRIBUTORS AND FUND REPRESENTATION. None of Adviser,
Distributors or any Fund shall make any material representations concerning the
Company or its Designees 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 Account which are in the public domain or are approved by the
Company; or (c) sales literature or other promotional material 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 other promotional materials,
applications for exemptions, requests for no action letters and all amendments
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.
7.7 REVIEW OF MARKETING MATERIALS. If so requested by Company, the
Adviser or Distributors will use its best efforts to review sales literature and
other marketing materials prepared by Company which relate to the Funds, the
Adviser or Distributors for factual accuracy as to such entities, provided that
the Adviser or Distributors is provided at least five (5) Business Days to
review such materials. Neither the Adviser nor Distributors will review such
materials for compliance with applicable laws. Company shall provide the Adviser
with copies of all sales literature and other marketing materials which refer to
the Funds, the Adviser or Distributors within five (5) Business Days after their
first use, regardless of whether the Adviser or Distributors has previously
reviewed such materials. If so requested by the Adviser or Distributors, Company
shall cease to use any sales literature or marketing materials which refer to
the Funds, the Adviser or Distributors that the Adviser or Distributors
determines to be inaccurate, misleading or otherwise unacceptable.
8. FEES AND EXPENSES.
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
9
registration statements, proxy materials and reports; preparation or all other
statements and notices relating to the Fund or Distributors required by any
federal or state law; 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.
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 Account 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 advertisements,
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 on form
N-SAR, and all other costs associated with ongoing compliance with all such laws
and its obligations under this Agreement.
9. INDEMNIFICATION.
9.1 INDEMNIFICATION BY COMPANY.
(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 (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 or sales
literature 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 or
prospectus 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
10
(ii) arise out of, or as a result of, statements
or representations or wrongful conduct of Company, its
Designees or persons under Company's or Designees' control,
with respect to the sale or distribution of the Contracts or
Fund shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature
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 Company's or
Designees' control to provide the Services and 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 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 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 persons specified in Section
3.3(c), hereof.
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
11
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 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 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 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
12
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, 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 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
provide the services and 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 Adviser or
Distributors or persons under its 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
its control; 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 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
13
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 Account.
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 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)
14
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, PROVIDED, HOWEVER, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict.
15
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 connection with
providing the Services and in making shares of the Funds available to
the Account.
(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 Account, written communications
regarding the Funds to or from the Account and other materials, in
each case (1) as are maintained by the Company in the ordinary course
of its business and in compliance with applicable law, and (2) as may
reasonably be requested to enable the Adviser and Distributors, or its
representatives, including without limitation its auditors or legal
counsel, to (A) monitor and review the Services, (B) comply with any
request of a governmental body or self-regulatory organization or the
Owners, (C) verify compliance by the Company with the terms of this
Agreement, (D) make required regulatory reports, or (E) perform
general customer supervision. The Company agrees that it will permit
the Adviser and Distributors or such representatives of either to have
reasonable access to its personnel and records in order to facilitate
the monitoring of the quality of the Services.
(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 Account, written
communications regarding the Funds to or from the Account and other
materials, in each case (1) as are maintained by the Adviser and
Distributors, as the case may be, in the ordinary course of its
business and in compliance with applicable law, and (2) 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 Adviser and
Distributors with the terms of this Agreement, (C) make required
regulatory reports, or (D) perform general customer supervision.
16
(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); or (d) Distributors or Adviser 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.
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 Account, Company, any Designees, Funds,
Adviser or Distributors by the NASD, the SEC or any other regulatory body
provided that the 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
17
upon the assignment of this Agreement in contravention of the terms hereof, or
(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.
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. 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.
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 (postage
prepaid, return receipt requested) to the respective Parties as follows:
If to Strong Variable:
Strong Variable Insurance Funds, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Opportunity Fund II:
Strong Opportunity Fund II, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Adviser:
Strong Capital Management, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
18
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Distributors:
Strong Funds Distributors, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Company:
Business Men's Assurance Company of America
000 Xxxxx Xxxxxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxxx, Senior Vice President
of Marketing
Facsimile No.:__________________________
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.
19
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.
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;
PROVIDING, 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
20
14.13. 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.
21
14.14. 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 provision of Services or the shares of funds other than
the Funds offered to the Account.
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
BY:-------------------------------------------
Its:------------------------------------------
STRONG CAPITAL MANAGEMENT, INC.
----------------------------------------------
Xxxxxx X. Xxxxx, Senior Vice President
Strong Intermediary Services
STRONG FUNDS DISTRIBUTORS, INC.
Xxxxxxx X. Xxxxxxxxxxx, Vice President
STRONG VARIABLE INSURANCE FUNDS, INC. on behalf
of the Designated Portfolios
-----------------------------------------------
Xxxxxxx X. Xxxxxxxxxxx, Vice President
STRONG OPPORTUNITY FUND II, INC.
-----------------------------------------------
Xxxxxxx X. Xxxxxxxxxxx, Vice President
22
EXHIBIT A
The following is a list of Designated Portfolios under this Agreement:
Strong Discovery Fund II
Strong Growth Fund II
23
EXHIBIT B
THE SERVICES
Company or its Designees shall perform the following services. Such
services shall be the responsibility of the Company and shall not be the
responsibility of the Funds, Adviser or Distributors.
1. Maintain separate records for each Account, which records shall
reflect Fund shares ("Shares") purchased and redeemed, including the date and
price for all transactions, Share balances, and the name and address of each
Owner, including zip codes and tax identification numbers.
2. Credit contributions to individual Owner accounts and invest such
contributions in shares of the Funds to the extent so designated by the Owner.
3. Disburse or credit to the Owners, and maintain records of, all
proceeds of redemptions of Fund shares and all other distributions not
reinvested in shares.
4. Prepare and transmit to the Owners, periodic account statements
showing, among other things, the total number of Fund shares owned as of the
statement closing date, purchases and redemptions of shares during the period
covered by the statement, the net asset value of the Funds as of a recent date,
and the dividends and other distributions paid during the statement period
(whether paid in cash or reinvested in shares).
5. Transmit to the Owners, as required by applicable law,
prospectuses, proxy materials, shareholder reports, and other information
provided by the Adviser, Distributors or Funds and required to be sent to
shareholders under the Federal securities laws.
6. Transmit to Distributors purchase orders and redemption requests
placed by the Account and arrange for the transmission of funds to and from the
Funds.
7. Transmit to Distributors such periodic reports as Distributors
shall reasonably conclude is necessary to enable the Funds to comply with
applicable Federal securities and state Blue Sky requirements.
8. Transmit to each Account confirmations of purchase orders and
redemption requests placed by each Account.
9. Maintain all account balance information for the Account and daily
and monthly purchase summaries expressed in shares and dollar amounts.
24
10. Prepare, transmit and file any Federal, state and local government
reports and returns as required by law with respect to each account maintained
on behalf of the Account.
11. Respond to Owners' inquiries regarding, among other things, share
prices, account balances, dividend options, dividend amounts, and dividend
payment dates.
25
EXHIBIT C
ACCOUNT INFORMATION
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:-------------------------------
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 STRONG FUNDS
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: --------------------------
--------------------------
--------------------------
--------------------------
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 Participation Agreement between the Company,
the Funds, Adviser and Distributors:
--------------------------------- ---------------
(SIGNATURE OF AUTHORIZED OFFICER) (DATE)
26
9. Company represents under penalty of perjury that:
(i) The employer ID number on this form is correct; and
(ii) Company is not subject to backup withholding because (a) Company
is exempt from backup withholding, (b) Company has not been notified
by the 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.)
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.
FOR STRONG INTERNAL USE: THIS ACCOUNT INFORMATION FORM MAY BE A COPY. THE
ORIGINAL ACCOUNT INFORMATION FORM IS ATTACHED TO THE PARTICIPATION AGREEMENT
WITH THE ADVISER AND RETAINED IN THE LEGAL DEPARTMENT.
27
Re: Fee Letter Relating to the Business Men's Assurance Company of
America Participation Agreement.
Dear Xxxxxxx:
Pursuant to the Participation Agreement by and among Strong Capital
Management, Inc. ("Strong"), Business Men's Assurance Company of America (the
"Company"), Strong Variable Insurance Funds, Inc., Strong Opportunity Fund II,
Inc. and Strong Funds Distributors, Inc. ("Distributors") dated as of
____________, 1998 (the "Participation Agreement"), the Company or its Designee
will provide certain administrative services on behalf of the registered
investment companies or series thereof specified in Exhibit A (each a "Fund" and
collectively the "Funds").
In recognition of the reduction in administrative expenses that
derives from the performance of said administrative services, Strong agrees to
pay the Company the fee specified below for each Fund specified in Exhibit A to
this Agreement.
(a) For average aggregate amounts (as calculated in
paragraph (b), below) invested through variable insurance products
issued by the Company with the Funds, the monthly fee shall equal the
percentage (calculated in paragraph (b), below) of the applicable
annual fee for each Fund specified in Exhibit A.
(b) For purposes of computing the fee contemplated in
paragraph (a) above, Strong shall calculate and pay to the Company an
amount with respect to each Fund equal to the product of: (a) the
product of (i) the number of calendar days in the applicable month
divided by the number of calendar days in that year (365 or 366 as
applicable) and (ii) the applicable percentage specified in Exhibit A,
to this Agreement, multiplied by (b) the average daily market value of
the e investments held in such Fund pursuant to the Participation
Agreement computed by totaling the aggregate investment (share net
asset value multiplied by the total number of shares held) on each day
during the calendar month and dividing by the total number of days
during such month.
(c) Strong shall calculate the amount of the payment to be
made pursuant to this Letter Agreement at the end of each calendar
month and will make such payment to the Company within 30 days after
receiving the report referenced in paragraph (e), below. Fees will be
paid, at Strong's election, by wire transfer or by check. All payments
under this Agreement shall be considered final unless disputed by the
Company in writing within 60 days of receipt.
(d) The parties agree that the fees contemplated herein are
solely for shareholder servicing and other administrative services
provided by the Company and do not constitute payment in any manner
for investment advisory, distribution, trustee, or custodial
services.
(e) The Company agrees to provide Strong by the 15th day of
each month with a report which indicates the number of Owners that
hold through a Contract interests in each Account as of the last day
of the prior month.
(f) If requested in writing by Strong, and at Strong's
expense, the Company shall provide to Strong, by February 14th of each
year, a "Special Report" from a nationally
28
recognized accounting firm reasonably acceptable to Strong which
substantiates for each month of the prior calendar year: (a) the
number of Owners that hold, through an Account, interests in each
Account maintained by the Company on the last day of each month which
held shares for which the fee provided for in this Letter Agreement
was received by the Company, (b) that any fees billed to Strong for
such month were accurately determined in accordance with this Letter
Agreement, and (c) such other information in connection with this
Agreement and the Participation Agreement as may be reasonably
requested by Strong.
(g) The parties to this Agreement agree that Strong may
unilaterally amend. Schedule A to this Agreement to add additional
investment companies or series thereof ("New Funds") as Funds subject
to the provisions of this Letter Agreement by sending to the Company a
written notice of the New Funds and indicating therein the fees to be
paid to the Company with respect to the administrative services
provided pursuant to the Participation Agreement in connection with
such New Funds.
(h) The obligation to pay the fees specified in this Letter
Agreement shall survive the termination of the Participation Agreement
for a period of one year from the date of termination, provided that
Company continues to provide Services to the Owners with respect to
those assets invested in the Funds and provided that the Participation
Agreement has not been terminated because of an event described in
Sections 12.2, 12.3 or 12.4 of the Participation Agreement. Company
agrees that in the event of termination it will provide the Adviser
with any reports and certificates as requested by the Adviser to
determine that the continued payment of fees has been calculated in
accordance with this Letter Agreement.
(i) Capitalized terms not otherwise defined herein shall
have the meaning assigned to them in the Participation Agreement.
If you are in agreement with the foregoing, please sign and
date below where indicated and return one copy of this signed letter
agreement to me,
Very truly yours,
Xxxxxx X. Xxxxx, Senior Vice President
Strong Intermediary Services
Accepted and agreed as of______________________, 1998:
BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA
----------------------------------
By:-------------------------------
Its:------------------------------
29
EXHIBIT A
The Funds subject to this Agreement and applicable fees are as follows:
(i) For the aggregate value of the average daily market
value of Fund Shares held in the Omnibus Accounts each month up to one
hundred million dollars ($100,000,000), the applicable percentage for
each Fund to be applied for that month to that amount shall be as
follows:
FUND ANNUAL FEE
Strong Opportunity Fund II, Inc. .20%
Strong Variable Insurance Funds, Inc.
Strong Discovery Fund II .20%
Strong Growth Fund II .20%
; and
(ii) For the aggregate value of the average daily market
value of Fund Shares held in the Omnibus Accounts each month greater
than one hundred million dollars ($100,000,001), the applicable
percentage for each Fund to be applied for that month to that amount
shall be as follows:
FUND ANNUAL FEE
Strong Opportunity Fund II, Inc. .25%
Strong Variable Insurance Funds, Inc.
Strong Discovery Fund II .25%
Strong Growth Fund II .25%
