-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UIpE1KP9bpHYyrzrLsO7YqPeWJVgTwIvxz1x1CLANObm4t5/LRXFHxxOvdDHsIYC 4IpEK3AnffbhhURppXUuAQ== 0000004977-98-000026.txt : 19981230 0000004977-98-000026.hdr.sgml : 19981230 ACCESSION NUMBER: 0000004977-98-000026 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19981229 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AFLAC INC CENTRAL INDEX KEY: 0000004977 STANDARD INDUSTRIAL CLASSIFICATION: ACCIDENT & HEALTH INSURANCE [6321] IRS NUMBER: 581167100 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-69795 FILM NUMBER: 98776812 BUSINESS ADDRESS: STREET 1: 1932 WYNNTON RD CITY: COLUMBUS STATE: GA ZIP: 31999 BUSINESS PHONE: 4043233431 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN FAMILY CORP DATE OF NAME CHANGE: 19920306 S-3 1 AFLAC NY STOCK BONUS PLAN As filed with the Securities and Exchange Commission on December 29, 1998 Registration Statement No. 333_______ ------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------------- AFLAC INCORPORATED ------------------------------------------------------ (Exact Name of Registrant as Specified in Its Charter) Georgia -------------------------------------------------------------- (State or Other Jurisdiction of Incorporation or Organization) 58-1167100 --------------------------------------- (I.R.S. Employer Identification Number) 1932 Wynnton Road, Columbus, Georgia 31999 706-323-3431 ------------------------------------------------------------- (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) AFLAC NEW YORK ASSOCIATE STOCK BONUS PLAN ----------------------------------------- (Full Title of the Plan) DANIEL P. AMOS Chief Executive Officer AFLAC Incorporated 1932 Wynnton Road, Columbus, Georgia 31999 706-323-3431 --------------------------------------------------------- (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) The Securities and Exchange Commission is requested to send copies of all communication and notices to: MICHAEL P. ROGAN, ESQ. Skadden, Arps, Slate, Meagher & Flom LLP 1440 New York Avenue, N.W. Washington, DC 20005 Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement, in connection with the AFLAC New York Associate Stock Bonus Plan described herein. - --------------------------------------------------------------------------- If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. --------- If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. X --- If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. - -------------- ----------------------------- If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. - -------------- If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. -------- CALCULATION OF REGISTRATION FEE --------------------------------------- Proposed Maximum Proposed Title of Aggregate Maximum Shares Amount Offering Aggregate Amount of to be to be Price Offering Registration Registered Registered(1) Per Share(2) Price Fee - --------------------------------------------------------------------------- Common Stock, 500,000 $41.46875 $20,734,375 $5,764.16 $.10 par value shares ("Common Stock") (1) Includes an indeterminate number of shares of Common Stock that may be issuable by reason of stock splits, stock dividends, or similar transactions in accordance with Rule 416 under the Securities Act of 1933. (2) Based on the reported average high and low prices of the Common Stock of AFLAC Incorporated as of December 22, 1998. - --------------------------------------------------------------------------- The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. i AFLAC INCORPORATED 1932 Wynnton Road Columbus, Georgia 31999 Telephone No. (706) 323-3431 AFLAC New York Associate Stock Bonus Plan 500,000 Shares of Common Stock We will distribute these shares to certain associates, soliciting brokers, sales coordinators and special associates of one of our wholly-owned subsidiaries, American Family Life Assurance Company of New York ("AFLAC NY"), pursuant to the AFLAC New York Associate Stock Bonus Plan (the "Bonus Plan"). We will not receive any proceeds from the distribution of these shares. We have not and will not pay any underwriting discounts in connection with the distribution of these shares. AFLAC NY will bear all expenses in connection with the registration and distribution of shares. The common stock of AFLAC Incorporated is traded on the New York Stock Exchange under the symbol "AFL", the Pacific Stock Exchange under the symbol "AFL" and the Tokyo Stock Exchange. - --------------------------------------------------------------------------- NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. December __, 1998 1 Table of Contents Page No. -------- Important Information......................................... 3 Additional Information........................................ 3 Information Incorporated by Reference......................... 4 Description of the AFLAC New York Associate Stock Bonus Plan.. 5 General Information...................................... 5 Administration........................................... 5 Eligibility and Enrollment............................... 6 Contributions............................................ 7 Charges Against Participant Accounts..................... 8 Investments.............................................. 9 Participant Accounts..................................... 9 Vesting and Distribution of Benefits; Forfeitures; Voting.................................... 10 Restrictions on Resale................................... 13 Transferability.......................................... 14 Amendment and Termination................................ 14 Mandatory Arbitration.................................... 14 Tax Consequences......................................... 15 2 IMPORTANT INFORMATION You should rely only on the information contained in this prospectus or any supplement. We have not authorized anyone else to provide you with any information that is different. This prospectus is not an offer or solicitation in any state or jurisdiction in which such an offer or solicitation is illegal. You should not assume that the information in this prospectus or any supplement is accurate as of any date other than the date on the front of those documents. ADDITIONAL INFORMATION We have filed with the Securities and Exchange Commission (the "SEC") a registration statement regarding the common shares to be distributed pursuant to the Bonus Plan. This prospectus is a summary and does not contain all the information set forth in the registration statement and its exhibits. For additional information with respect to AFLAC Incorporated and the Bonus Plan, please read the registration statement, including its exhibits. We also file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy these reports, including the registration statement, at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. You can request copies of these documents, upon payment of a duplication fee, by writing to the SEC's Reference Section. Please call the SEC at 1-800-SEC- 0330 for further information on the operation of the public reference rooms. Our filings with the SEC are also available on the SEC's internet site (http://www.sec.gov). Our common stock is listed on the New York Stock Exchange and the Pacific Stock Exchange. You can inspect our reports, proxy statements and other information filed with these exchanges at the offices of these exchanges. Our common stock is also listed on the Tokyo Stock Exchange. 3 INFORMATION INCORPORATED BY REFERENCE AFLAC Incorporated has previously filed the following documents with the SEC and hereby incorporates them by reference in this prospectus: Our Annual Report on Form 10-K for the year ended December 31, 1997. Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, June 30, 1998 and September 30, 1998. All other reports we have filed pursuant to Sections 13(a) or 15(d) of the Exchange Act since December 31, 1997. The description of the common stock contained in a registration statement filed under the Exchange Act, and any amendments or reports filed with the Commission for the purpose of updating such description. AFLAC Incorporated hereby incorporates by reference in this prospectus the following documents which will be filed with the SEC in the future. These documents will be incorporated by reference only if they are filed prior to the filing of a post-effective amendment which (a) indicates that all common stock to be distributed pursuant to the Bonus Plan has been distributed or (b) which deregisters the common stock not so distributed All documents we subsequently file pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, shall be deemed to be incorporated by reference in the Registration Statement and to be a part thereof from the date of filing of such documents. You should consider the documents incorporated by reference herein to be modified or superseded to the extent that a statement in this prospectus, or in any other subsequently filed document which is also incorporated by reference herein, modifies or supersedes the earlier filed document. Any such statements or documents do not constitute a part of this prospectus except as modified or superseded. You may request a copy of these reports, at no cost, by writing or telephoning us at the following address: AFLAC Incorporated Investor Relations Department 1932 Wynnton Road Columbus, Georgia 31999 Telephone: (800) 235-2667 4 DESCRIPTION OF THE AFLAC NEW YORK ASSOCIATE STOCK BONUS PLAN GENERAL INFORMATION: AFLAC NY's Board of Directors adopted the Bonus Plan on December 28, 1998. The Bonus Plan became effective as of January 1, 1999. The purposes of the Bonus Plan are to provide an incentive to associates, soliciting brokers, sales coordinators and special associates of AFLAC NY to market AFLAC NY's specialized insurance policies, and to enable AFLAC NY to retain experienced sales and supervisory personnel. The Bonus Plan rewards these individuals for sales of AFLAC NY insurance policies, and encourages them to acquire and retain a proprietary interest in the success of AFLAC NY and AFLAC Incorporated. The Bonus Plan is not subject to any provisions of the Employee Retirement Income Security Act of 1974. Because this prospectus is a summary of the Bonus Plan, it may not contain all the information that may be important to you. You should therefore read the entire Bonus Plan and the related Trust agreement carefully. You may request a copy of the Bonus Plan and related Trust agreement, which we will provide without charge, by writing to the Stock Bonus Department, 1932 Wynnton Road, Columbus, Georgia 31999, or by calling the Stock Bonus Department at 1-800-99-AFLAC. ADMINISTRATION: THE BONUS PLAN The Stock Bonus Management Committee will consist of three officers designated by AFLAC NY's Board of Directors. To the extent permitted by law, the Stock Bonus Management Committee's decisions on all matters within the scope of its authority are final. The AFLAC NY Board of Directors designates, and has the right to remove, the members of the Stock Bonus Management Committee. The Stock Bonus Management Committee may delegate its administrative duties and responsibilities to such persons as it selects. THE TRUST The assets of the Bonus Plan are held by a Trust established under the Bonus Plan. The Trust is administered by three Trustees chosen by AFLAC NY's Board of Directors. Trustees are chosen for four-year terms, and each is subject to removal by AFLAC NY's Board of Directors. The Trustees have broad powers in the management of the Trust, including authority to acquire and dispose of stock or other assets. The Trustees receive no compensation for their services as trustees. The present Trustees are: Paul S. Amos, Chairman of the Board of AFLAC Incorporated and Member of the Board of AFLAC NY; Daniel P. Amos, Chief Executive Officer and Vice Chairman of the Board of AFLAC Incorporated and President and Chairman of the Board of AFLAC NY; and 5 Kriss Cloninger, III, Executive Vice President, Treasurer and Chief Financial Officer of AFLAC Incorporated and Executive Vice President of AFLAC NY. INDEMNIFICATION Under the Bonus Plan and the Trust, AFLAC NY has agreed to indemnify the Trustees, the members of the Stock Bonus Management Committee and the AFLAC NY Board of Directors, and any other party acting at the request of AFLAC NY or the Stock Bonus Management Committee with respect to the Bonus Plan. This indemnification covers their liability for their acts, omissions or conduct in such capacities, except to the extent that their liability results from their own willful misconduct or gross negligence. ACCOUNT INFORMATION Participants in the Bonus Plan receive quarterly reports of the balances in their accounts if they have account activity during the quarter. Upon request, Participants will also be provided with additional copies of this prospectus, Bonus Plan financial statements, copies of the Bonus Plan and related Trust agreement and other documents. AFLAC NY provides all necessary forms and accounting and other services required to carry out the proper administration of the Bonus Plan. You may obtain additional information about the Bonus Plan and its administrators from the Stock Bonus Department, 1932 Wynnton Road, Columbus, Georgia 31999. You may make requests by telephone by calling 1-800-99-AFLAC. ELIGIBILITY AND ENROLLMENT: Each associate, soliciting broker and sales coordinator is eligible to participate in the Bonus Plan. An ASSOCIATE is any person or entity associated with AFLAC NY pursuant to an Associate's Contract pertaining to services in the United States, its territories and possessions, and any other location or country designated by AFLAC NY, who is paid on a commission basis and who is actively performing sales and servicing functions for AFLAC NY. A SOLICITING BROKER is an associate who is also providing services to AFLAC NY pursuant to a standardized Soliciting Broker Contract A SALES COORDINATOR is an associate who is also providing services to AFLAC NY pursuant to a contract as a district, regional or state sales coordinator. SPECIAL ASSOCIATES are persons or entities associated with AFLAC NY pursuant to a special written agreement who are engaged in the sale of insurance products for AFLAC NY and are paid on a commission basis. Special associates are eligible to participate in the Bonus Plan only if the written agreement between AFLAC NY and the special associate so provides. 6 Any associate, soliciting broker, sales coordinator or eligible special associate shall become a participant in the Bonus Plan on the day that he first becomes an associate, soliciting broker, sales coordinator or special associate, unless he notifies AFLAC NY in writing that he does not wish to become a participant. All persons or entities who participate in the Bonus Plan are hereafter referred to as "Participants." The Bonus Plan shall not be deemed to constitute a contract between AFLAC NY and the Participant, or to be consideration, or an inducement, for the association of any Participant with AFLAC NY . No provision of the Bonus Plan shall be deemed to give any Participant the right to be retained or employed in association with AFLAC NY, or be deemed to interfere with the right of AFLAC NY to discharge any Participant at any time regardless of the effect which such discharge will have upon the Participant. Each Participant, for himself and his heirs, assigns and estate, shall be deemed conclusively by his participation in the Bonus Plan to have agreed to and accepted the terms and conditions of the Bonus Plan. A Participant may terminate his participation in the Bonus Plan at any time by giving written notice to AFLAC NY. CONTRIBUTIONS: Contributions to the Bonus Plan, if any, are made by AFLAC NY. The Board of Directors of AFLAC NY may however authorize contributions from other sources. No contributions may be made by any Participant. AFLAC NY will generally credit contributions to Participant accounts for certain insurance policies sold by a Participant. Contributions are based on commissionable premiums which are actually collected by AFLAC NY during the first twelve months of a policy. Contributions are made only with respect to insurance policies designated as "Bonus Policies" by AFLAC NY. A list of those policies which are designated as Bonus Policies is included in the AFLAC NY Commission Structure which is distributed periodically to sales coordinators. The sales coordinators then communicate such information to associates and soliciting brokers. Participants may obtain copies of the current list from sales coordinators or the Marketing Department of AFLAC NY. Insurance policies must have been issued on or after January 1, 1999, in order to be considered Bonus Policies. AFLAC NY may, at any time and in its sole discretion, change the insurance policies to be designated as Bonus Policies. Currently, AFLAC NY will contribute the following amount with respect to Bonus Policies: for associates and soliciting brokers, 3.5% of the first year premiums actually received on Bonus Policies sold by the Participant; for sales coordinators, .7% of the first year premiums actually received on Bonus Policies sold by each Participant who is assigned in writing to the sales coordinator; and for special associates, the amount contributed with respect to Bonus Policies sold is determined in accordance with the written agreement between the special associate and AFLAC NY. 7 The Stock Bonus Management Committee may, at any time and in its sole discretion, change the amount to be contributed on behalf of associates, soliciting brokers and sales coordinators. All contributions to the Bonus Plan are made to the Trust. Contributions are made not later than the last business day of the month (the "Allocation Date") following the month in which first-year commissionable premiums are actually collected. AFLAC NY bears all costs incurred in the operation of the Bonus Plan and the Trust, other than brokerage and other fees directly related to the purchase of shares of AFLAC Incorporated common stock or other permitted investments. Such brokerage and other related fees are charged against the investments prior to allocation to the Participant's accounts. CHARGES AGAINST PARTICIPANT ACCOUNTS: AFLAC NY may, in certain circumstances described below, make charges against Participant's accounts. In the event that AFLAC NY, for any reason and acting in its sole discretion, determines to refund all or a part of the first-year premiums collected on a Bonus Policy, it is entitled to recover from the Trust, and there may be charged against the Participant's accounts, an amount equal to the amount previously credited to the Participant with respect to the first-year premiums which were refunded. To the extent that any amounts recoverable by AFLAC NY as a result of lapsed or cancelled Bonus Policies, refunds on such Policies or otherwise, have been distributed to a Participant and cannot be recovered by a reduction in the amount to be allocated in subsequent periods to a Participant's accounts, then the amount of such distribution creates a liability to AFLAC NY on the part of the Participant. This liability will be charged back as a first lien against future earned commissions on first year or renewal business written by the Participant, or will be paid to AFLAC NY at the demand of AFLAC NY. Subject to any applicable legal limitations, AFLAC NY has the right to charge against any benefits owed to a Participant under the Bonus Plan the amount of certain obligations of such Participant to AFLAC NY. Under the terms of the Bonus Plan, "obligations" include any indebtedness of the Participant to AFLAC NY including, but not limited to, any advances (including advances pursuant to the Bonus Plan), loans, unearned commissions or credits made by or from AFLAC NY to the Participant. In addition, AFLAC NY will have a lien against assets or benefits which have or may become due to such Participant (or his beneficiary) under the Bonus Plan, which lien will be a first lien in favor of AFLAC NY as to such assets or benefits. The Bonus Plan provides that, in consideration of the right to participate in the Bonus Plan and the benefits paid under such Plan to the Participant by AFLAC NY, each Participant grants and assigns to AFLAC NY a security interest in all assets, rights and benefits which have or may become due to the Participant pursuant to the Bonus Plan. In the event of the insolvency of AFLAC NY, all assets contributed to the Trust, including any forfeited amount that is credited to a Participant's account, and income thereon then held pursuant to the Trust shall be available for satisfaction of the claims of the general creditors of AFLAC NY in accordance with state and federal laws. AFLAC NY will be 8 considered insolvent if it is unable to pay its debts as they become due or if it is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. AFLAC NY will not receive the benefit of or have the right to any portion of the assets of the Bonus Plan, except in the event of the insolvency of AFLAC NY or in the event of a forfeiture or mistaken contribution. All assets of the Bonus Plan must be held for the exclusive purpose of providing benefits to Participants. INVESTMENTS: It is the express intent of the Bonus Plan, and the Trust established thereunder, that contributions be invested in common stock of AFLAC Incorporated. The Trust agreement provides that, if shares of common stock of AFLAC Incorporated are not available or cannot be purchased under applicable law, the assets of the Trust may be invested in cash or cash equivalents. The Trustees may direct the Trust to acquire common stock of AFLAC Incorporated through purchases either in the public trading market or from the treasury. PARTICIPANT ACCOUNTS: Each Participant will have an individual fund account and an individual shares account maintained in his name. We will also maintain unallocated funds and unallocated shares accounts which will contain contributions to which no Participant is initially entitled, forfeitures and other amounts recoverable by AFLAC NY. AFLAC NY contributions are credited to each Participant's fund account as of the Allocation Date. The balance in the Participant's fund account will then be reduced to as close to zero as possible to reflect the allocation of shares of common stock of AFLAC Incorporated to the Participant's shares account. AFLAC NY generally makes contributions to the Trust, and the Trust generally purchases shares of common stock of AFLAC Incorporated, either in the open market or from the treasury, several times each month. For purposes of adjusting the accounts as of the Allocation Date, the cost of shares of common stock of AFLAC Incorporated to be charged against each Participant's fund account is deemed to be the weighted average purchase price (including any brokerage and other fees directly related thereto) of all shares of common stock of AFLAC Incorporated purchased for the reporting month to which the Allocation Date relates. Shares of common stock of AFLAC Incorporated held as unallocated shares (as a result of forfeitures or for any other reason) which are subsequently transferred to a Participant's share account will be deemed to have been purchased at a price equal to: in the case of shares of common stock of AFLAC Incorporated which were held as unallocated shares as a result of forfeiture, the closing market price on the last business day of the reporting month to which such forfeiture relates; 9 in the case of shares of common stock of AFLAC Incorporated surrendered as the result of obligations owed to AFLAC NY or as the result of the distribution of cash in lieu of fractional shares, the closing market price on the date of surrender; and in the case of shares of common stock of AFLAC Incorporated which were held as unallocated shares as a result of any other event, the weighted average purchase price (including brokerage and other fees directly related thereto) of all shares of common stock of AFLAC Incorporated purchased for the reporting month to which the event relates. In the discretion of AFLAC NY, all cash and common stock of AFLAC Incorporated held as unallocated funds and unallocated shares may revert back to AFLAC NY, and become the sole property of AFLAC NY, subject only to AFLAC NY's obligation to recontribute amounts to the Bonus Plan upon a Participant's reassociation with AFLAC NY. AFLAC NY may instead decide to use unallocated funds and unallocated shares to offset all or a part of the unallocated funds and unallocated shares against its contribution obligations under the Bonus Plan, or AFLAC NY may request that the Bonus Plan purchase shares of common stock of AFLAC Incorporated held as unallocated shares. In the case that AFLAC NY chooses either alternative in the preceding sentence, the shares of common stock of AFLAC Incorporated held as unallocated shares will be valued at a price equal to: in the case of shares of common stock of AFLAC Incorporated which were held as unallocated shares as a result of forfeiture, the closing market price on the last business day of the reporting month to which the forfeiture relates; in the case of shares of common stock of AFLAC Incorporated surrendered as the result of obligations owed to AFLAC NY or as the result of the distribution of cash in lieu of fractional shares, the closing market price on the date of surrender; and in the case of shares of common stock of AFLAC Incorporated which were held as unallocated shares as a result of any other event, the weighted average purchase price (including brokerage and other fees directly related thereto) of all shares of common stock of AFLAC Incorporated purchased for the reporting month to which the event relates. Cash and stock dividends on common stock of AFLAC Incorporated held in share accounts are allocated to such share accounts or the corresponding fund accounts. Cash and stock dividends on common stock of AFLAC Incorporated held as unallocated shares are designated as unallocated funds or unallocated shares, respectively. VESTING AND DISTRIBUTION OF BENEFITS; FORFEITURES; VOTING: VESTING The provisions of the Bonus Plan relating to vesting, distribution and forfeiture of benefits for associates, soliciting brokers and sales associates are described below. Special associates are also subject to these provisions unless the written agreement between AFLAC NY and the special associate provides otherwise. 10 25% of a Participant's interest in the Bonus Plan will vest after five years of credited service with AFLAC NY, and 100% will vest after ten years of credited service. 100% of a Participant's interest will vest at death, retirement at age 65 or over, or upon total and permanent disability while still in service with AFLAC NY. Any amounts related to Bonus Policies prior to the end of the calendar month in which the termination date occurs will be credited to the Participant's accounts. The accounts will then be reduced to reflect any amounts recoverable by AFLAC NY with respect to lapsed or cancelled policies and refunded premiums up to the last business day of the calendar month in which the termination occurred. If a Participant's association with AFLAC NY is terminated for cause in accordance with the terms and provisions of the written contract or agreement between such Participant and AFLAC NY, the Participant will be entitled to receive all amounts which vested prior to the date of termination. Neither the Participant nor any person claiming on behalf of such Participant will be entitled to receive any other distribution or benefits under the Bonus Plan. Service credited for purposes of vesting includes all periods for which a Participant is actively performing services for AFLAC NY pursuant to a written contract as an associate, soliciting broker, sales associate or special associate, subject to certain special rules and exceptions. Periods for which a Participant actively performed services pursuant to a written contract for American Family Life Assurance Company of Columbus shall also be included for purposes of vesting subject to certain special rules and exceptions. Length of service for purposes of vesting is determined by the time elapsed from commencement of service to severance from service, as determined under the Bonus Plan, in years and fractions based on the number of days with 365 days constituting a full year. If a Participant has a break in service, the period of service before the break is credited as service for purposes of vesting. DISTRIBUTIONS The following paragraphs describe the general timing and method of distributions of benefits under the Bonus Plan. In any event, no Bonus Plan benefits will be distributed to Participants prior to the fiscal quarter ended March 31, 2000. In general, distributions will be made within 45 days after the end of each calendar quarter. We will use the closing market price on the 15th day of the month following the end of the quarter (if it is a business day) to value the shares of stock. If the 15th day of the month following the end of the quarter is not a business day, then we will use the business day immediately following the 15th day of the month. 11 Whenever the market value of the shares to be distributed to a Participant is less than $1,000, we will distribute cash to the Participant instead of shares of stock. After five years of service, the vested amount of whole shares of common stock of AFLAC Incorporated (which includes amounts allocated to his shares account for the third month of the calendar quarter in which the Participant vests) will be distributed to the Participant within 45 days after the end of the calendar quarter. No further distributions will be made until the Participant becomes 100% vested, through years of service or otherwise. After ten years of service, the vested amount of whole shares of common stock of AFLAC Incorporated (which includes amounts allocated to his shares account for the third month of the calendar quarter in which the Participant vests) will be distributed to the Participant within 45 days after the end of the calendar quarter. The Participant shall thereafter be 100% vested at all times in the balances of his accounts. Within 45 days after the end of each calendar year until the Participant terminates his association with AFLAC NY, the Bonus Plan will distribute to the Participant the balance of the Participant's shares account as of the end of such year (including amounts allocated to the account for the twelfth month of the calendar year). Final distribution of balances of the Participant's accounts will be made within 45 days after the end of the calendar quarter in which such termination occurs. If a Participant becomes 100% vested upon termination at age 65 or later, or as a result of death or total and permanent disability, the vested amounts will be distributed to the Participant or his estate within 45 days after the end of the calendar quarter in which the date of termination occurs. If the Participant is a corporation, partnership or other legal entity, the Stock Bonus Management Committee shall determine rights to distribution under these circumstances. If the distribution is a final distribution, the Participant or his estate will generally receive all whole shares of common stock of AFLAC Incorporated credited to the participant's shares account, cash in lieu of any fractional shares of stock held in such account and the cash held in the Participant's fund account. If the distribution is not a final distribution, the Participant will receive only the whole shares of common stock of AFLAC Incorporated credited to his individual shares account. In limited extraordinary circumstances, AFLAC NY, in its sole discretion, may accelerate the distribution of benefits to a Participant. The Stock Bonus Management Committee has absolute discretion to determine the form of distribution under the Bonus Plan to a Participant or estate who is at the time of distribution an "affiliate" of the Company within the meaning of Rule 144 under the Securities Act of 1933 ("1933 Act"), as amended. Shares of common stock of AFLAC Incorporated acquired by affiliates will be 12 subject to certain restrictions on resale. See "Restrictions on Resale" below. Benefits under the Bonus Plan may, to the extent permitted by law, be applied to satisfy a Participant's obligations to AFLAC NY, before any benefits are distributed directly to such Participant, in which case the Trust pays such amounts directly to AFLAC NY. See "Additional Charges Against Participant Accounts." FORFEITURES A Participant forfeits the portion of his accounts which is not vested upon termination of his association with AFLAC NY. However, if a Participant has a break in service of less than one year, then on the first Allocation Date occurring after the break, the Participant's individual fund account will be credited with the cash and the market value of the shares common stock of AFLAC Incorporated held in the Participant's accounts on the last business day of the month following the month in which the Participant's termination of association previously occurred. VOTING Participants become entitled to exercise rights as stockholders of AFLAC Incorporated upon distribution to them of shares of common stock of AFLAC Incorporated to which they have vested rights under the Bonus Plan. Under its listing agreement with the New York Stock Exchange, AFLAC Incorporated has agreed that the shares of common stock of AFLAC Incorporated held by the Trust shall be voted by the Trustees at all stockholders' meetings in favor of or against proposals made to stockholders in proportion to the vote of the other holders of AFLAC Incorporated's common stock. RESTRICTIONS ON RESALE: Shares of common stock of AFLAC Incorporated received upon distribution of Participant accounts may, in general, be resold to the public without registration or other restriction under the 1933 Act, if at the time of resale the Participant (or his beneficiary) is not an "affiliate" of the Company within the meaning of the 1933 Act. Such shares may not, however, be resold to the public by an "affiliate" without registration under the 1933 Act, except in compliance with the applicable requirements of Rule 144 under the 1933 Act, or pursuant to any other applicable exemption. An "affiliate" is a person who directly or indirectly controls, or is controlled by, or is under common control with, the Company. Rule 144 generally requires that: there be available adequate current public information about AFLAC Incorporated (which requirement is satisfied by the filing of reports under the Securities Exchange Act of 1934); the amount of all issued securities sold by the affiliate during any three-month period may not exceed the greater of one percent of the outstanding shares or the average weekly reported volume of trading in common stock of AFLAC Incorporated on all national 13 securities exchanges during the four calendar weeks preceding the filing of the required notice of proposed sale; and all securities be sold in "brokers' transactions" (as defined in Rule 144). TRANSFERABILITY: The Bonus Plan provides that, except as provided therein or as otherwise required by law, a Participant cannot assign or transfer his interest in the Bonus Plan. Furthermore, a Participant's interest in the Bonus Plan is not liable for or subject to his debts, contracts, liabilities, engagements or torts other than obligations owed to AFLAC NY or to the AFLAC Federal Credit Union (if the Participant secures a loan therefrom with a pledge of his benefits). AMENDMENT AND TERMINATION: AFLAC NY expects the Bonus Plan to be continued indefinitely. However, AFLAC NY has the right at any time to reduce or discontinue permanently its contributions to the Bonus Plan or to amend or terminate the Bonus Plan by action of its Board of Directors without the consent of the Trustees or Participants. Unless necessary to meet the requirements of any state or federal law or regulation, no modification or termination of the Bonus Plan may: cause or permit any part of the Trust to be used for, or diverted to, purposes other than the exclusive benefit of Participants in the Bonus Plan or their beneficiaries (subject to the events described in "Charges Against Participant Accounts" above), have the effect of revesting in or causing to inure to the benefit of AFLAC NY any portion of the Trust (subject to the events described in "Charges Against Participant Accounts" and "Participant Accounts" above), or operate to deprive any Participant or beneficiary of any vested right. Upon termination of the Bonus Plan, AFLAC NY will deliver a written notice of termination of the Plan to the Trustees and will direct the Trustees, as soon as practicable, to bring the balance of all accounts up to date after allowing for amounts necessary and proper to pay the expenses of the distribution and other expenses and liquidation costs of the Bonus Plan and Trust. Upon completion of such accounting, the Trustees shall disburse to each Participant or estate, as the case may be, the full amount then standing to his credit in his fund account and the full number of shares in his share account. MANDATORY ARBITRATION Any dispute arising under the Bonus Plan, to the maximum extent permitted by applicable law, is subject to mandatory, binding arbitration pursuant to the terms of the Federal Arbitration Act. The primary arbitration terms are as follows: Arbitration is the sole remedy for disputes regarding the Bonus Plan. 14 The decision of the arbitration panel shall be final and binding as among the parties. Any arbitration will be conducted in Columbus, Georgia. The arbitrators may grant all relief allowable under law except for temporary restraining orders, interlocutory or preliminary injunctive relief, and punitive or exemplary damages. Each party may select one arbitrator, who need not be neutral, and, if either party so requests, the Senior Judge of the Superior Court of Muscogee County, Georgia will also select a neutral third arbitrator. The arbitration panel shall provide for a hearing and a majority of the arbitration panel shall render an award within 10 days of the completion of the hearing. Each party will pay for the fees and expenses of its arbitrator and, if appointed, will split the fees and expenses of any neutral third arbitrator. The prevailing party in the arbitration shall be entitled to recover its costs and attorneys' fees from the other party. TAX CONSEQUENCES The Bonus Plan is not eligible for treatment as a "qualified" employee pension, profit sharing or stock bonus plan under section 401(a) of the Internal Revenue Code of 1986, as amended ("Code"), because the Bonus Plan covers associates who are independent contractors. Under section 83 of the Code and the Treasury regulations thereunder, the value of the common stock of AFLAC Incorporated is includible in the gross income of a Participant when his ownership interest in the common stock becomes substantially vested. Shares of common stock of AFLAC Incorporated received by a Participant will have a tax basis in his hands for computing future gain or loss equal to the amount includible in his gross income attributable to such shares. Under sections 404(d) and/or 83(h) of the Code and the Treasury regulations thereunder, AFLAC NY generally receives deductions with respect to the common stock of AFLAC Incorporated at the time it is includible in the gross income of a Participant. Different rules may apply in the case of any Participant who is subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended. The above is a summary only. Please refer to the Code and its regulations for a complete statement of the relevant provisions. We urge you to consult with your tax advisor regarding the consequences to you under federal, state, local, and other law of participation in the Bonus Plan. 15 PART II: INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The estimated expenses in connection with distribution of the securities being registered, are as follows: SEC registration fee $ 5,800.00 Legal fees and expenses 7,500.00 Accounting fees and expenses 5,500.00 Miscellaneous 15,000.00 --------- Total $33,800.00 Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Georgia Business Corporation Code provides that, under certain circumstances, directors, officers, employees and agents of a Georgia corporation may be indemnified against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by them in connection with settling, or otherwise disposing of, suits or threatened suits to which they are a party or threatened to be named a party by reason of acting in any of such capacities if such person acted in a manner such person believed in good faith to be in, or not opposed to, the best interests of the corporation. The By-Laws of the Company provide for indemnification of officers and directors to the fullest extent permitted by such Georgia law. The Company's Articles of Incorporation also limit the potential personal monetary liability of the members of the Company's Board of Directors to the Company or its stockholders for certain breaches of their duty of care or other duties as a director. The Company maintains (i) director and officer liability insurance that provides for indemnification of the directors and officers of the Company and of its majority-owned subsidiaries, and (ii) company reimbursement insurance that provides for indemnification of the Company and its majority-owned subsidiaries in those instances where the Company and/or its majority-owned subsidiaries indemnified its directors and officers. 16 Item 16. EXHIBITS The following exhibits are filed with this registration statement: Exhibit No. (per Exhibit Table in Item 601 of Regulation S-K) Description of Exhibit --------------- ---------------------- 5.1 Opinion of Joey M. Loudermilk, Esq. 15 Letter of KPMG Peat Marwick LLP Re: Unaudited Interim Financial Information 23.1 Consent of Joey M. Loudermilk, Esq. (included in Exhibit 5.1) 23.2 Consent of KPMG Peat Marwick LLP 99 AFLAC New York Associate Stock Bonus Plan and Related Trust Agreement Item 17. UNDERTAKINGS a. RULE 415 OFFERING. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represents a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (i) and (ii) do not apply if the registration statement is on Form S-3 or Form S-8 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. 17 (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. b. FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT REPORTS BY REFERENCE. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. c. REQUEST FOR ACCELERATION OF THE EFFECTIVE DATE OR FILING OF REGISTRATION STATEMENT ON FORM S-8. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 18 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Columbus, State of Georgia, on December 28, 1998. AFLAC INCORPORATED Dated: December 28, 1998 By: /s/ Daniel P. Amos ----------------------- -------------------------------------- Daniel P. Amos Chief Executive Officer Dated: December 28, 1998 By: /s/ Kriss Cloninger, III ----------------------- -------------------------------------- Kriss Cloninger, III Executive Vice President, Chief Financial Officer and Treasurer Dated: December 28, 1998 By: /s/ Norman P. Foster ----------------------- -------------------------------------- Norman P. Foster Executive Vice President, Corporate Finance 19 Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. SIGNATURE TITLE DATE ----------- --------- -------- /s/ Daniel P. Amos Chief Executive Officer December 28, 1998 - ------------------------ and Vice Chairman of ----------------- Daniel P. Amos the Board /s/ Paul S. Amos Chairman of the Board December 28, 1998 - ------------------------ ----------------- Paul S. Amos /s/ John Shelby Amos, II Director December 28, 1998 - ------------------------ John Shelby Amos, II /s/ Michael H. Armacost Director December 28, 1998 - ------------------------ Michael H. Armacost /s/ M. Delmar Edwards, M.D. Director December 28, 1998 - ------------------------ M. Delmar Edwards, M.D. /s/ George W. Ford, Jr. Director December 28, 1998 - ------------------------ George W. Ford, Jr. /s/ Joe Frank Harris Director December 28, 1998 - ------------------------ Joe Frank Harris /s/ Elizabeth J. Hudson Director December 28, 1998 - ------------------------ Elizabeth J. Hudson /s/ Kenneth S. Janke, Sr. Director December 28, 1998 - ------------------------ Kenneth S. Janke, Sr. /s/ Charles B. Knapp, Ph.D. Director December 28, 1998 - ------------------------ Charles B. Knapp, Ph.D. 20 Director December 28, 1998 - ------------------------ Hisao Kobayashi /s/ Yoshiki Otake Director December 28, 1998 - ------------------------ Yoshiki Otake /s/ E. Stephen Purdom Director December 28, 1998 - ------------------------ E. Stephen Purdom /s/ Barbara K. Rimer Director December 28, 1998 - ------------------------ Barbara K. Rimer /s/ Henry C. Schwob Director December 28, 1998 - ------------------------ Henry C. Schwob /s/ J. Kyle Spencer Director December 28, 1998 - ------------------------ J. Kyle Spencer /s/ Glenn Vaughn, Jr. Director December 28, 1998 - ------------------------ Glenn Vaughn, Jr. 21 EXHIBIT INDEX NUMBER DESCRIPTION -------- ------------- 5.1 Opinion of Joey M. Loudermilk, Esq. 15 Letter of KPMG Peat Marwick LLP Re: Unaudited Interim Financial Information 23.1 Consent of Joey M. Loudermilk, Esq. (included in Exhibit 5.1) 23.2 Consent of KPMG Peat Marwick LLP 99 AFLAC New York Associate Stock Bonus Plan and Related Trust Agreement 22 EX-5.1 2 LEGAL OPINION EXHIBIT 5.1 December 28, 1998 The Board of Directors AFLAC Incorporated 1932 Wynnton Road Columbus, Georgia 31999 Re: Registration Statement on Form S-3 Ladies and Gentlemen: I am Senior Vice President and General Counsel of AFLAC Incorporated, a Georgia corporation (the "Company"). The Company is filing a Registration Statement on Form S-3 (the "Registration Statement") with the Securities and Exchange Commission relating to 500,000 shares of common stock, par value $.10 per share (the "Common Stock"), of the Company (the "Shares") issuable pursuant to the AFLAC New York Associate Stock Bonus Plan (the "Plan"). This opinion is delivered in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the "Act"). In connection with this opinion, I have reviewed such documents as I have deemed necessary or appropriate as a basis for the opinion set forth below. In my examination, I have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to me as originals, the conformity to original documents of all documents submitted to me as certified or photostatic copies, and the authenticity of the originals of such copies. As to any facts material to this opinion that I did not independently establish or verify, I have relied upon representations or certificates of the officers and directors of the Company. I am a member of the State Bar of Georgia and I express no opinion as to the laws of any other jurisdiction. Based upon the foregoing, and subject to the qualifications set forth herein, I am of the opinion that the Shares have been duly and validly authorized and when acquired from the Company by the Trust established under the Plan as described in the Registration Statement, the Shares will be validly issued, fully paid and nonassessable. I hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement and to the use of my name in the Prospectus that is a part of the Registration Statement. Very truly yours, /s/ Joey M. Loudermilk --------------------------- Joey M. Loudermilk Senior Vice President and General Counsel EX-15 3 KPMG LETTER EXHIBIT 15 KPMG Peat Marwick LLP 303 Peachtree Street, N.E. Suite 2000 Atlanta, Georgia 30308 The Board of Directors AFLAC Incorporated Columbus, Georgia Gentlemen: Re: Registration Statement Form S-3 With respect to the subject registration statement dated December 28, 1998, we acknowledge our awareness of the use therein of our reports dated May 4, 1998, July 27, 1998 and October 26, 1998 related to our reviews of interim financial information. Pursuant to Rule 436(c) under the Securities Act of 1933, such reports are not considered a part of a registration statement prepared or certified by an accountant or reports prepared or certified by an accountant within the meaning of sections 7 and 11 of the Act. Very truly yours, KPMG PEAT MARWICK LLP Atlanta, Georgia December 28, 1998 EX-23.2 4 CONSENT OF KPMG EXHIBIT 23.2 KPMG Peat Marwick LLP 303 Peachtree Street, N.E. Suite 2000 Atlanta, Georgia 30308 The Board of Directors AFLAC Incorporated Columbus, Georgia We consent to incorporation by reference in the registration statement dated December 28, 1998, on Form S-3 of AFLAC Incorporated of our report dated January 29, 1998, relating to the consolidated balance sheets of AFLAC Incorporated and subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of earnings, shareholders' equity, cash flows and comprehensive income for each of the years in the three-year period ended December 31, 1997 which report appears in the December 31, 1997, annual report on Form 10-K of AFLAC Incorporated, incorporated herein by reference. KPMG PEAT MARWICK LLP Atlanta, Georgia December 28, 1998 EX-99 5 NEW YORK STOCK BONUS PLAN AFLAC NEW YORK ASSOCIATE STOCK BONUS PLAN WITH RELATED TRUST AGREEMENT JANUARY 1, 1999 AFLAC NEW YORK ASSOCIATE STOCK BONUS PLAN The AFLAC New York Associate Stock Bonus Plan is hereby adopted, effective as of January 1, 1999, as follows: ARTICLE 1 DEFINITIONS As used herein, the following words and phrases shall have the meaning indicated unless otherwise defined or required by the context: 1.1 "Active Association" shall mean the performance of services by an Associate, Soliciting Broker, Sales Coordinator or Special Associate pursuant to a written contract with the Plan Sponsor for the solicitation of applications for certain insurance products of the Plan Sponsor, and the servicing of accounts, prior to the effective date of any termination of such contract whether for cause or without cause. Active Association shall also include a period of employment as an employee of the Plan Sponsor to the extent that such employment immediately precedes or follows a period of Active Association defined above. 1.2 "Allocation Date" shall mean, with respect to each month, a day, determined in the discretion of the Stock Bonus Management Committee, not later than the last day of the following month. 1.3 "Associate" shall mean any person or entity associated with the Plan Sponsor pursuant to an Associate's contract pertaining to services in the United States, its territories and possessions, and any other location or country designated by the Plan Sponsor, who is paid on a commission basis and whose Active Association with the Plan Sponsor has not been terminated. 1.4 "Board" shall mean the Board of Directors of American Family Life Assurance Company of New York. 1.5 "Bonus Policy/Policies" shall mean those insurance policies issued by the Plan Sponsor which the Plan Sponsor, acting in its sole discretion, designates as "Bonus Policies." 1.6 "Break in Service" shall mean the period of time commencing on the date on which a Participant's Active Association terminates for any reason whatsoever, and ending on the day before the Participant's subsequent Commencement Date. 1.7 "Commencement Date" shall mean the date on which one first begins Active Association or, in the case of a Participant who has incurred a Break in Service, the first date following such Break in Service on which he or she again commences Active Association. 1.8 "First Year Premiums" shall mean premiums scheduled to be received for the first twelve months of coverage after a Bonus Policy sold by a Participant is made effective at the home office of the Plan Sponsor. 1 1.9 "Forfeited Amount" shall mean (i) the cash held in a Participant's Individual Fund Account, and (ii) the fair market value of the number of shares of Stock held in the Participant's Individual Shares Account, all determined on the last business day of the month following the month in which the Participant's Active Association with the Plan Sponsor is terminated. 1.10 "Individual Accounts" shall mean Participants' Individual Fund Accounts and/or Individual Shares Accounts. 1.11 "Individual Fund Account" shall mean the Individual Fund Account for a Participant as described in Section 4.1(b). 1.12 "Individual Shares Account" shall mean the Individual Shares Account for a Participant as described in Section 4.1(a). 1.13 "Participant" shall mean any Associate, Soliciting Broker, Sales Coordinator or Special Associate participating in this Plan. 1.14 "Plan" shall mean the AFLAC New York Associate Stock Bonus Plan, as contained herein and as amended from time to time. 1.15 "Plan Sponsor" shall mean the American Family Life Assurance Company of New York, a New York corporation, and any subsidiary or affiliate corporation which may hereafter adopt the Plan with the permission of the Board. 1.16 "Reporting Month" shall mean a period of time beginning on the day following the close of the previous reporting month and ending on the last day that policy accounting is performed for such month. 1.17 "Sales Coordinator" shall mean any Associate who is also providing services to the Plan Sponsor pursuant to a contract as a District Sales Coordinator, Regional Sales Coordinator, or State Sales Coordinator, and who is paid on a commission basis. 1.18 "Soliciting Broker" shall mean any Associate who is also providing services to the Plan Sponsor pursuant to a standardized Soliciting Broker contract and who is paid on a commission basis. 1.19 "Special Associate" shall mean any person or entity associated with the Plan Sponsor pursuant to a special written agreement, who is engaged in the sale of the products of the Plan Sponsor and is paid on a commission basis, and whose Active Association with the Plan Sponsor has not been terminated. 1.20 "Stock" or "Shares of Stock" shall mean the common stock of AFLAC Incorporated. 1.21 "Stock Bonus Management Committee" shall mean the Committee which shall oversee the operation of this Plan and shall be composed of three officers of the Plan Sponsor as designated from time to time by the Board. The Board may remove any member of this Committee at any time in its absolute discretion. 1.22 "Trust" shall mean the trust created and existing pursuant to this Plan and designated as the Trust Agreement dated January 1, 1999, as such Agreement may be amended from time to time. 2 1.23 "Trustees" shall mean the Trustees of the Trust. 1.24 "Year of Service" shall mean a period of time in which a Participant has accumulated 365 days of Active Association. Nonsuccessive and less than whole year periods of Active Association shall be aggregated on the basis that 365 days of Active Association equals one whole Year of Service, and a Year of Service shall be expressed as a number of whole years plus a fraction of a year, if any, computed on the same basis. In no event will a Participant accumulate more than one Year of Service for any 12 consecutive-month period. 1.25 "Years of Credited Service" shall mean the Participant's Years of Service (including whole years plus fractions of a year) during the period from the Participant's Commencement Date until such Participant's Active Association with the Plan Sponsor is terminated, subject to and computed in accordance with the rules on computing Years of Credited Service upon reassociation after a Break in Service as set forth in Section 5.6 of this Plan. "Years of Credited Service" shall also include a Participant's Active Association pursuant to a written contract with American Family Life Assurance Company of Columbus to the extent such Active Association with American Family Life Assurance Company of Columbus immediately precedes or follows a period of Active Association with Plan Sponsor, subject to the same definitions, rules and conditions set forth herein. ARTICLE 2 ELIGIBILITY AND PARTICIPATION 2.1 CONDITIONS OF ELIGIBILITY. Each Associate, Soliciting Broker and Sales Coordinator is eligible to become a Participant in the Plan. Special Associates shall be eligible to participate in this Plan only if so provided in the written agreement between the Special Associate and the Plan Sponsor. 2.2 PARTICIPATION. As of the effective date of this Plan, any current Associate, Soliciting Broker, Sales Coordinator or, subject to Section 2.1, any Special Associate, shall immediately become a Participant, unless he or she notifies the Plan Sponsor in writing that he or she will not become a Participant. After the effective date of this Plan, any Associate, Soliciting Broker, Sales Coordinator or, subject to Section 2.1, any Special Associate, shall immediately become a Participant on his or her Commencement Date, unless he or she notifies the Plan Sponsor in writing that he or she will not become a Participant. 2.3 ACCEPTANCE. The Plan shall not be deemed to constitute a contract between the Plan Sponsor and the Participant or to be consideration, or an inducement, for the association of any Participant. No provision of the Plan shall be deemed to give any Participant the right to be retained in association with the Plan Sponsor, or to interfere with the right of the Plan Sponsor to discharge any Participant at any time regardless of the effect which such discharge will have upon him as a Participant. Each Participant for himself or herself and his or her heirs and assigns shall be deemed conclusively by his or her act of participation herein, to have agreed to and accepted the terms and conditions of this Plan. 3 ARTICLE 3 CONTRIBUTIONS, INVESTMENTS AND EXPENSES 3.1 CONTRIBUTIONS BY PLAN SPONSOR. All contributions, if any, shall be made by the Plan Sponsor. No contributions will be made by any Participant. 3.2 COMPUTATION OF CONTRIBUTIONS FOR BONUS POLICIES. Subject to Section 3.3, the amount of Plan Sponsor contributions to be made on or before each Allocation Date shall be equal to the applicable percentage of First Year Premiums actually collected on Bonus Policies issued on or after January 1, 1999 by the Plan Sponsor during the month to which such Allocation Date relates. 3.3 ADDITIONAL CONTRIBUTIONS. In addition to the contributions required pursuant to Section 3.2, the Plan Sponsor shall contribute amounts required pursuant to Section 5.6 relating to crediting of Forfeited Amounts following a Break in Service of less than 12 months. 3.4 REFUNDS. In the event that the Plan Sponsor, for any reason and acting in its sole discretion, determines to refund all or a part of the First Year Premiums collected on a Bonus Policy, the Plan Sponsor shall be entitled to recover from the Trust, and there may be charged against the Participant's Individual Accounts, an amount equal to the applicable percentage of such First Year Premiums which were refunded. 3.5 OFFSET AGAINST CONTRIBUTIONS; RECOVERY OF CREDITED AMOUNTS. (a) Notwithstanding the provisions of Sections 3.2 and 3.3 , the amount to be contributed by the Plan Sponsor may, in the sole discretion of the Plan Sponsor, be reduced to reflect (1) the amounts recoverable by the Plan Sponsor with respect to refunded First Year Premiums as provided for in Section 3.4; or (2) amounts forfeited by Participants as provided in Section 5.5. Alternatively, the Plan Sponsor may, with respect to all or part of such reductions, request that the Plan pay to the Plan Sponsor an amount equal to such reductions. (b) On each Allocation Date, the amount to be allocated to a Participant's Individual Fund Account shall be reduced by amounts recoverable by the Plan Sponsor pursuant to Section 3.4 relating to refunded First Year Premiums, for the month to which such Allocation Date relates. If the amount of such reduction exceeds the amount otherwise allocable to the Participant's Individual Fund Account, then the excess shall be applied first to reduce the balance in the Individual Fund Account to zero and then against the balance of the Participant's Individual Shares Account. For purposes of reducing the balance of the Participant's Individual Shares Account, the cost of Shares of Stock shall be deemed to be the weighted average purchase price (including brokerage and other fees directly related thereto) of all Shares of Stock purchased for the Reporting Month to which the Allocation Date relates. If the Participant's Individual Shares Account is thus reduced to zero and the full amount of the reduction has not yet been made, the Participant's Individual Fund Account shall have a negative balance equal to the remaining reduction amount. 4 (c) To the extent that the amounts recoverable by the Plan Sponsor have been distributed to a Participant and cannot be recovered pursuant to the procedures set forth in paragraph (b) above, then the amount of such distribution shall create a liability to the Plan Sponsor on the part of the Participant (1) to be charged back as a first lien against future earned commissions on first year or renewal business written by the Participant, or (2) to be paid to the Plan Sponsor on demand of the Plan Sponsor. 3.6 APPLICABLE PERCENTAGE FOR BONUS POLICIES. Subject to Sections 3.2, 3.4 and 3.5, the applicable percentage of First Year Premiums received on Bonus Policies shall be as follows: (a) ASSOCIATES AND SOLICITING BROKERS. The Plan Sponsor shall contribute three and one-half percent (3.5%) (or such other percentage as is determined to be appropriate by the Stock Bonus Management Committee) of the First Year Premiums actually received for each Bonus Policy sold by a Participant. (b) SALES COORDINATORS. The Plan Sponsor shall contribute seven-tenths of one percent (.7%) (or such other percentage as is determined to be appropriate by the Stock Bonus Management Committee) of the First Year Premiums actually received for each Bonus Policy sold by a Participant who is assigned in writing to a Sales Coordinator. (c) SPECIAL ASSOCIATES. The applicable percentage of First Year Premiums to be contributed with respect to Bonus Policies sold by a Special Associate shall be determined in accordance with the written agreement between the Special Associate and the Plan Sponsor. 3.7 DESIGNATION OF BONUS POLICIES. All Participants shall be informed as to those policies that are designated as Bonus Policies for purposes of the Plan. 3.8 INVESTMENT OF CONTRIBUTIONS; TRUST. All contributions or advances made to the Plan shall be made to the Trust. The Trustees of the Trust shall be appointed by the Board and may consist of one or more in number. Trustees may be employees of the Plan Sponsor. Unless otherwise determined by the Trustees, all amounts held by the Trust shall be invested in Stock or in as much Stock as is available, and all Stock purchased by the Trust shall be purchased in the open market or from AFLAC Incorporated Treasury shares. Pending investment in Stock, amounts in the Trust shall be held in cash or cash equivalents. The Trustees, in their sole discretion, shall purchase Stock at such time and in such amounts as they deem to be reasonable and practicable, provided all such purchases shall be in accordance with applicable provisions of the federal securities law. 3.9 EXPENSES. Subject to the provisions of Section 7.3, the Plan Sponsor shall bear all costs incurred in the operation of the Plan other than brokerage and other fees directly related to the purchase of Shares of Stock or other permitted investments. Such brokerage and other related fees shall be charged against the investments prior to allocation to the Participant's Individual Accounts. 5 ARTICLE 4 PLAN ASSETS 4.1 INDIVIDUAL ACCOUNTS. Each Participant shall have two (2) Individual Accounts in his name, designated and described as follows: (a) INDIVIDUAL SHARES ACCOUNT. The balance in this Account represents the number of Shares of Stock that have been allocated to the Participant in accordance with the Plan, including Stock paid for with amounts from the Participant's Individual Fund Account and Stock received as a result of Stock dividends or Stock splits on Stock allocated to the Individual Shares Account. (b) INDIVIDUAL FUND ACCOUNT. The balance in this Account represents the portion of Plan Sponsor contributions allocated to the Participant on account of his sale of Bonus Policies, any Plan Sponsor contribution allocated to this Account in accordance with Section 5.6(a)(1), and cash dividends on Shares of Stock which are allocated to the Participant's Individual Shares Account, less any amounts used to pay for Shares of Stock. 4.2 UNALLOCATED AMOUNTS. Amounts not allocated to Individual Accounts shall be designated and described as follows: (a) UNALLOCATED FUNDS. The balance of Unallocated Funds at any time represents Plan Sponsor contributions prior to allocation to Individual Accounts, forfeited portions of Individual Fund Accounts and cash dividends on Unallocated Shares, less any amounts used to pay for Shares of Stock. (b) UNALLOCATED SHARES. The balance of Unallocated Shares at any time represents the number of Shares of Stock that have been (i) forfeited from Individual Shares Accounts or paid for with amounts from Unallocated Funds, (ii) received as a result of Stock dividends or Stock splits on Unallocated Shares, (iii) surrendered pursuant to the provisions of Section 3.5(b), (iv) surrendered pursuant to Section 5.3, or (v) surrendered as a result of obligations owed to the Plan Sponsor pursuant to Section 8.1. 4.3 EXPRESSED IN DOLLARS OR SHARES. Individual Fund Accounts and Unallocated Funds shall be expressed in dollars and cents. Individual Shares Accounts and Unallocated Shares shall be expressed in the number of Shares of Stock held calculated to three decimal places. 4.4 DIVIDENDS. In the event that cash or Stock is paid to the Trust as a dividend or Stock split with respect to Stock held by the Trust, the amount of such cash or Stock (a) with respect to Stock allocated to Individual Shares Accounts shall be allocated to Individual Accounts, cash dividends to Individual Fund Accounts and Stock to Individual Shares Accounts, in proportion to the number of Shares of Stock held for the Participants in their Individual Shares Accounts, and (b) with respect to Unallocated Shares shall be allocated to Unallocated Funds and Unallocated Shares, respectively. 4.5 MONTHLY ADJUSTMENT OF ACCOUNTS. As of the Allocation Date for each month, the accounts in the Trust shall be adjusted as follows: 6 (a) Plan Sponsor contributions made during the month shall be credited to each Individual Fund Account based on the applicable percentage of First Year Premiums actually received on Bonus Policies sold by the Participant, subject to reduction as provided in Sections 3.4 and 3.5. (b) Each Participant's Individual Fund Account shall then be reduced by the cost of the Shares of Stock which are purchased with funds from such Account. Similarly, the Unallocated Funds shall be reduced by the cost of the Shares of Stock which are purchased with Unallocated Funds or, in the event of a distribution of cash pursuant to Section 5.3, the cost of the Shares of Stock which are transferred out of Individual Shares Accounts thus becoming Unallocated Shares. For purposes of adjusting the accounts, the cost of Shares of Stock shall be deemed to be the weighted average purchase price (including brokerage and other fees directly related thereto) of all Shares of Stock purchased for the Reporting Month to which the Allocation Date relates. Shares of Stock held as Unallocated Shares (as a result of forfeitures or for any other reason) which are transferred to Individual Shares Accounts shall be deemed to have been purchased by the Plan at a price equal to (1) the closing market value on the last business day of the Reporting Month to which the forfeiture relates in the case of Shares of Stock which were held as Unallocated Shares as a result of forfeiture, (2) the closing market value on the date of surrender in the case of Shares of Stock which were held as Unallocated Shares as a result of surrender pursuant to Section 5.3 or 8.1, and (3) the weighted average purchase price (including brokerage and other fees directly related thereto) of all Shares of Stock purchased for the Reporting Month to which the event relates in the case of Shares of Stock which were held as Unallocated Shares as a result of an event other than forfeiture or surrender pursuant to Section 5.3 or 8.1. (c) Cash and Stock paid to the Trust during the month as a dividend or Stock split with respect to Stock held by the Trust shall be credited and allocated to accounts in accordance with Section 4.4. (d) The forfeited portions of the Individual Fund Accounts and Individual Shares Accounts of Participants who terminated Active Association with the Plan Sponsor during the previous month shall become Unallocated Funds and Unallocated Shares, respectively. (e) All cash held as Unallocated Funds and all Shares of Stock held as Unallocated Shares shall, in the discretion of the Plan Sponsor, revert back to the Plan Sponsor, and upon transfer to the Plan Sponsor shall thereupon become the sole property of the Plan Sponsor, subject only to the Plan Sponsor's obligation to recontribute amounts to the Plan upon a Participant's reassociation as a Participant as provided in Section 5.6. Alternatively, the Plan Sponsor may (1) offset all or a part of the cash held as Unallocated Funds and/or Shares of Stock held as Unallocated Shares against the Plan Sponsor's contribution obligations under the Plan, or (2) request that the Plan purchase Shares of Stock held as Unallocated Shares; for purposes of (1) or (2), the Shares of Stock held as Unallocated Shares shall be valued at a price equal to (1) the closing market value on the last business day of the Reporting Month to which the forfeiture relates in the case of Shares of Stock which were held as Unallocated Shares as a result of forfeiture, (2) the closing market value on the date of surrender in the case of Shares of Stock which were held as Unallocated Shares as a result of surrender pursuant to Section 5.3 or 8.1, and (3) the weighted average purchase price (including brokerage and other fees directly related 7 thereto) of all Shares of Stock purchased for the Reporting Month to which the event relates in the case of Shares of Stock which were held as Unallocated Shares as a result of an event other than forfeiture or surrender pursuant to Section 5.3 or 8.1. 4.6 REPORTING. The Plan Sponsor shall report to each Participant the cash and total number of Shares of Stock held in the Participant's Individual Accounts. Such reporting shall be made quarterly, and shall be mailed, first class mail, to each Participant who has account activity during the subject quarter. ARTICLE 5 VESTING, DISTRIBUTION AND FORFEITURES 5.1 VESTING AND TIMING OF DISTRIBUTIONS. Upon completing the number of Years of Credited Service specified in paragraphs (a) and (b) below or upon the occurrence of the events specified in paragraphs (c), (d) or (e) below, and subject to the provisions of Sections 5.3 and 5.6, a Participant shall become vested (subject to the provisions of Sections 3.5, 5.5, 8.1, 9.1 and 10.4) in the percentage specified below of the balances, if any, of the Participant's Individual Accounts, including any portion of such balances deemed to be advances. (a) FIVE YEARS OF CREDITED SERVICE. On the day on which a Participant completes five Years of Credited Service, he or she shall become vested in 25% of the balance, if any, of his or her Individual Shares Account. Beginning with the quarter ended March 31, 2000, and subject to the provisions of Section 5.3 for values less than $1,000.00, the vested amount of whole Shares (which shall include amounts allocated to the Account for the third month of the calendar quarter in which a Participant vests) shall be distributed to the Participant within 45 days after the end of such calendar quarter. Following such distribution, the Participant shall have no vested interest in his or her Individual Accounts, except as vesting may occur under paragraphs (b), (c), (d), and (e) below. (b) TEN YEARS OF CREDITED SERVICE. On the day on which a Participant completes ten Years of Credited Service, he or she shall become vested in 100% of the then existing balances, if any, of his or her Individual Accounts. Beginning with the quarter ended March 31, 2000 and subject to the provisions of Section 5.3 for values less than $1,000.00, the vested amount of whole Shares (which shall include amounts allocated to a Participant's Individual Shares Account for the third month of the calendar quarter in which a Participant vests) shall be distributed to the Participant within 45 days after the end of such calendar quarter. The Participant shall thereafter be 100% vested at all times in the balances of his or her Individual Accounts and, within 45 days after the end of each calendar year until the Participant terminates his or her Active Association with the Plan Sponsor, the Plan shall distribute to the Participant the balance of the Participant's Individual Shares Account as of the end of such year (including amounts allocated to the Account for the twelfth month of the calendar year). Final distribution of balances of the Participant's Individual Accounts shall be made within 45 days after the end of the calendar quarter in which such termination occurs. 8 (c) AGE 65. Each Participant who, on or after the Participant's 65th birthday, terminates his or her Active Association with the Plan Sponsor, shall be 100% vested in the balances of the Participant's Individual Accounts on the date of termination. Beginning with the quarter ended March 31, 2000, and subject to the provisions of Section 5.3, the vested amounts shall be distributed to the Participant within 45 days after the end of the calendar quarter in which the date of termination occurs. (d) DEATH. In the event of the death of a Participant, the Participant shall be deemed to be 100% vested in the balances of his or her Individual Accounts on the day prior to the day of such death. Beginning with the quarter ended March 31, 2000, and subject to the provisions of Section 5.3, the vested amounts shall be distributed to the Participant's estate, within 45 days after the end of the calendar quarter in which the death of the Participant occurs. (e) TOTAL AND PERMANENT DISABILITY. In the event of a Participant's termination of Active Association with the Plan Sponsor by reason of the Participant's total and permanent disability, such Participant shall be 100% vested in the balances of his or her Individual Accounts on the date of such termination. Disability shall mean any medically determinable physical or mental impairment which totally disables the Participant from performing any "compensable work" as defined by the Social Security Act, as amended. The determination as to the existence of any Participant's total and permanent disability shall be made solely by the Stock Bonus Management Committee which may require such medical and other evidence as in its judgment is necessary to make the determination. Beginning with the quarter ended March 31, 2000, and subject to the provisions of Section 5.3, the vested amounts shall be distributed to the Participant within 45 days after the end of the calendar quarter in which (1) the date of termination occurs, or (2) if later, the date on which the Stock Bonus Management Committee determines that the Participant is totally and permanently disabled. (f) In the event of a termination pursuant to this Section 5.1, the Participant will be credited with First-Year Premiums on Bonus Policies prior to the end of the calendar month in which the termination date occurs, and the Participant's Accounts will be reduced to reflect amounts recoverable by the Plan Sponsor with respect to refunded First Year Premiums (as provided for in Section 3.4) up to the last business day of the calendar month in which the date of termination occurs. (g) The Stock Bonus Management Committee shall determine whether vesting has occurred under paragraphs (c), (d) and (e) of this Section 5.1 if the Participant is a corporation, partnership or other legal entity. (h) All payments and distributions of a Participant's Individual Account due or made after the death of a Participant shall be to Participant's estate, notwithstanding any prior or other designations of beneficiaries other than Participant's estate. 5.2 SPECIAL DISTRIBUTIONS. Nothing set forth in this Article 5 shall prevent the Plan Sponsor from distributing at any time, in addition to the distributions set forth in Section 5.1, any part or all of the balances in the Individual Accounts of one or more Participants, subject to whatever conditions the Plan Sponsor, in its discretion, may impose. 9 5.3 FORM OF DISTRIBUTIONS. In the event of a final distribution, the Participant or his estate shall receive all whole Shares of Stock credited to the Participant's Individual Shares Account, cash in lieu of any fractional Shares of Stock held in such Account, and the cash held in the Participant's Individual Fund Account. If the distribution is not a final distribution, the Participant shall receive only the whole Shares of Stock credited to his Individual Shares Account. Only the Participant or his estate shall be entitled to receive a distribution under the Plan. Distributions shall be made within 45 days following the end of each calendar quarter and shall be valued by using the closing market value price as of the 15th day of the month following the end of each quarter, or the business day immediately following the 15th day of the month. Notwithstanding the foregoing, in the event that the market value of all Shares of Stock to be distributed is less than $1,000, the distribution shall be paid in the form of cash, in lieu of Shares of Stock. 5.4 DISTRIBUTIONS TO AFFILIATES. The Stock Bonus Management Committee shall have absolute discretion to determine the form of distribution under the Plan to a Participant who is at the time of distribution an "affiliate" of AFLAC Incorporated within the meaning of Rule 144 under the Securities Act of 1933, as amended. The Stock Bonus Management Committee shall determine which Participants are covered by this provision. In so doing, the Stock Bonus Management Committee shall take into account any information and conclusions furnished to it by the Plan Sponsor and AFLAC Incorporated, and may in its discretion seek advice of counsel. 5.5 FORFEITURES. (a) Subject to the provisions of Section 5.1, any portion of a Participant's Individual Accounts which is not vested on the date the Participant's Active Association with the Plan Sponsor is terminated, shall be forfeited. (b) Notwithstanding any provision to the contrary in this Plan, in the event that a Participant's Active Association with the Plan Sponsor is terminated for cause in accordance with the terms and provisions of the written contract or agreement between such Participant and the Plan Sponsor, the Participant will be entitled to receive all amounts which vested prior to the date of termination, but neither the Participant nor his estate (nor any person claiming on behalf of such Participant or his estate) is entitled to receive any other distribution or benefits under the Stock Bonus Plan. (c) In the event that Participant or Participant's license to sell insurance is suspended so that Participant is unable to sell Plan Sponsor's policies of insurance, Participants shall forfeit all rights to any stock accruals or appreciations in stock during the time of such suspension and the time period for the suspension shall not be counted for purposes of computing Years of Credited Service. At such time as the suspension is lifted and Participant actively begins selling Plan Sponsor's insurance again, then stock accruals will continue under the Stock Bonus Plan and time shall again be counted for the purpose of computing Years of Credited Service. The rules for Vesting Upon Reassociation set forth in Section 5.6 shall apply at such time as well. 10 5.6 VESTING UPON REASSOCIATION. If a Participant's Active Association with the Plan Sponsor is terminated, and the Participant subsequently again enters into Active Association with the Plan Sponsor, the following rules shall apply: (a) BREAK OF LESS THAN 12 MONTHS. In the event that the Participant's Break in Service is for a period of less than twelve (12) consecutive months, then: (1) On the first Allocation Date occurring after the Participant again enters into Active Association with the Plan Sponsor, the Participant's Individual Fund Account shall be credited with the Participant's Forfeited Amount, and (2) All of the Participant's Years of Credited Service prior to the Break in Service shall be counted for purposes of computing Years of Credited Service. (b) BREAK OF 12 MONTHS OR MORE. In the event the Participant's Break in Service is equal to or greater than twelve (12) consecutive months, then: (1) When the Participant again enters into Active Association with the Plan Sponsor, his or her Individual Accounts shall not be credited with the Forfeited Amount, and (2) All of the Participant's Years of Credited Service prior to the Break in Service shall be counted for purposes of computing Years of Credited Service. 5.7 VESTING, DISTRIBUTION AND FORFEITURES FOR SPECIAL ASSOCIATES. Notwithstanding anything to the contrary in this Article 5, if the written agreement between the Plan Sponsor and a Special Associate includes provisions regarding vesting, distribution and forfeiture of benefits which are inconsistent with the provisions of this Article 5, the provisions of such written agreement shall govern with respect to such Special Associate. ARTICLE 6 ADMINISTRATION OF PLAN 6.1 ADMINISTRATION. (a) The Stock Bonus Management Committee shall administer and have complete control of the Plan, subject to the provisions hereof, with all powers necessary to enable it properly to carry out its duties in that respect. Not in limitation, but in amplification of the foregoing, the Stock Bonus Management Committee shall have the power to construe the Plan and to determine all questions that may arise hereunder, including all questions relating to the eligibility of Associates, Soliciting Brokers, Sales Coordinators or Special Associates to participate in the Plan and the amount of benefit to which any Participant may become entitled hereunder. The decision of the Stock Bonus Management Committee upon all matters within the scope of its authority shall be final. (b) The Stock Bonus Management Committee may establish uniform rules and procedures to be followed by Participants regarding any matter required to administer the Plan. 11 (c) The Stock Bonus Management Committee shall prepare and distribute information concerning the Plan to the Participants in such manner as it shall deem appropriate and as required by law. (d) The Stock Bonus Management Committee shall be entitled to rely upon all certificates and reports, if any, furnished by the consultant or actuary of the Plan Sponsor, and upon all opinions given by any legal counsel, accountant or doctor selected or approved by the Plan Sponsor; any action taken or suffered by the Stock Bonus Management Committee in good faith in reliance upon the advice or opinion of such consultant, actuary, legal counsel, accountant or doctor shall be conclusive upon each of them and upon all Participants or other persons interested in the Plan. 6.2 RECORDS. All material acts and determinations of the Stock Bonus Management Committee shall be duly recorded and all such records, together with such other documents as may be necessary for the administration of the Plan, shall be preserved in the custody of the Plan Sponsor. The Plan Sponsor shall provide all necessary forms, and accounting, clerical and other such services required to carry out the proper administration of the Plan. 6.3 FINANCIAL STATEMENTS. The Trustees shall cause financial statements of the Trust to be prepared annually and at such other times as they deem appropriate. All accounting for the Trust shall be on an accrual basis. 6.4 DELEGATION OF AUTHORITY AND EXEMPTION FROM LIABILITY. The administrative duties and responsibilities set forth in this Article 6 may be delegated by the Stock Bonus Management Committee in whatever manner and to whatever extent it chooses to such persons as the Stock Bonus Management Committee selects. To the extent permitted by law, the Plan Sponsor shall indemnify and hold harmless the Trustees, each member of the Stock Bonus Management Committee, any member of the Board of Directors of the Plan Sponsor, and any other party acting with respect to the Plan at the request of the Plan Sponsor or the Stock Bonus Management Committee, against any and all claims, demands, suits, loss, damages, expense and liability arising from any act or failure to act with respect to the Plan, including any act or failure to act which is deemed to be a breach of such individual's fiduciary responsibilities, unless the same is determined to be due to gross negligence or willful misconduct. ARTICLE 7 AMENDMENT AND TERMINATION OF PLAN 7.1 AMENDMENT OF THE PLAN. The Plan Sponsor shall have the right at any time to modify, alter, or amend the Plan in whole or in part by instrument in writing duly executed; provided, however, that unless it is necessary to meet the requirements of any state or federal law or regulation, no amendment shall (i) cause or permit any part of the Trust to be used for, or diverted to, purposes other than the exclusive benefit of the Participants (subject to the provisions of Section 9.1 hereof), (ii) have the effect of revesting in or causing to inure to the benefit of the Plan Sponsor any portion of the Trust (subject to the provisions of Sections 4.5(e), 8.1 and 9.1 hereof), or (iii) operate to deprive any Participant of any vested right under this Plan. 12 7.2 TERMINATION OF THE PLAN. The Plan Sponsor has adopted this Plan with the intent that it be continued indefinitely; however, the Plan Sponsor reserves the right at any time to reduce or to discontinue permanently the Plan Sponsor contributions to the Plan or to terminate the Plan by action of the Board. Such reduction or permanent discontinuance of Plan Sponsor contributions or termination may be made without the consent of the Trustees, the Participants , or any other persons. 7.3 DISTRIBUTION ON TERMINATION. The distribution of Plan assets on termination of the Plan shall be determined as follows. Upon termination of the Plan, the Plan Sponsor shall deliver a written notice of termination of the Plan to the Trustees and shall direct the Trustees, as soon as practicable and not later than the last day of the calendar quarter in which the Trustees are so notified, to reduce to cash the assets of the Trust, if any, other than the Shares of Stock held by the Trust, and to pay or provide for all liabilities and obligations of the Trust, including the expenses of the distribution and other expenses and liquidation costs of the Plan and Trust. If the amount of Unallocated Funds is insufficient to pay or provide for any liabilities and expenses, such liabilities and expenses shall be paid or provided for out of Unallocated Shares. If Unallocated Funds and Unallocated Shares are exhausted, liabilities and expenses may be paid first from the Individual Fund Accounts, on a pro rata basis, and, if necessary, then from the Individual Shares Accounts, on a pro rata basis. The balance of all Individual Accounts shall be brought up to date in accordance with Section 4.5 as of the last day of the calendar quarter in which the Trustees are notified of the termination, after payment or provision for all liabilities and expenses as aforesaid. Upon completion of such accounting, the Trustees shall disburse to each Participant the full amount then standing to his credit in his Individual Fund Account and the full number of Shares of Stock then standing to his credit in his Individual Shares Account, including any portion of such balances deemed to be advances; provided that cash shall be distributed in lieu of any fractional Shares of Stock held in any Individual Shares Account. ARTICLE 8 PLAN SPONSOR'S RIGHT OF SETOFF AGAINST PARTICIPANT'S VESTED BENEFITS 8.1 RIGHT OF SETOFF; GRANT OF SECURITY INTEREST. Subject to any applicable legal limitations, the Plan Sponsor shall have the right to charge against any benefits owed to a Participant under this Plan the amount of certain obligations of such Participant to the Plan Sponsor. The Plan Sponsor may exercise such right by notifying the Trustees of the claim and the exercise of such right, and directing that the Trustees promptly deliver to the Plan Sponsor all or a part of the Plan assets held in the Trust for such Participant. The Trustees shall thereupon, and without further notice to such Participant, deliver such Plan assets to the Plan Sponsor for application against obligations owed to the Plan Sponsor by the Participant. For purposes of this Section 8.1, "obligations" shall include any indebtedness of the Participant to the Plan Sponsor including, but not limited to, any advances, loans, unearned commissions or credits made by or from the Plan Sponsor to the Participant. In addition, the Plan Sponsor shall have a lien against Plan assets or benefits which have, or may become, due to such Participant under this Plan, which lien shall be a first lien in favor of the Plan Sponsor as to such assets or benefits. In 13 consideration of the right to participate in this Plan and for the benefits paid hereunder to the Participant by the Plan Sponsor, each Participant grants and assigns the Plan Sponsor a security interest in all assets, rights and benefits which have, or may become, due to the Participant pursuant to this Plan. ARTICLE 9 RIGHTS OR CREDITORS OF PLAN SPONSOR AND AFLAC INCORPORATED 9.1 CREDITORS' RIGHTS UPON INSOLVENCY. Notwithstanding anything to the contrary herein, in the event of the insolvency of the Plan Sponsor, all assets contributed to the Trust, including any Forfeited Amount that is credited to a Participant's Individual Fund Account, and income thereon then held pursuant to the Trust shall be available for satisfaction of the claims of the general creditors of the Plan Sponsor in accordance with state and federal laws. For purposes of this Section, the Plan Sponsor shall be considered insolvent if it is either (i) unable to pay its debts as they become due, or (ii) subject to a pending proceeding as a debtor under the United States Bankruptcy Code. ARTICLE 10 MISCELLANEOUS 10.1 HEADINGS. The headings and subheadings in the Plan have been inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof. 10.2 CONSTRUCTION. In the construction of the Plan, the masculine shall include the feminine and the singular the plural in all cases where such meanings would be appropriate. The Plan shall be construed in accordance with the laws of the State of Georgia. 10.3 INCORPORATION, ETC. In the event that an individual Participant's business as an Associate is transferred to a corporation, partnership, or other legal entity that becomes an Associate and Participant hereunder, such entity shall, if the Stock Bonus Management Committee so determines, succeed to the individual Participant's benefits and rights hereunder, and the entity's Years of Credited Service may, at the Stock Bonus Management Committee's discretion, include the individual's service as an Associate. Conversely, in the event that an Associate that is a corporation, partnership, or other legal entity ceases to be an Associate, any individual Associate who succeeds to the business of that entity shall, if the Stock Bonus Management Committee so determines, succeed to the benefits and rights of that entity hereunder, and such individual Associate's Years of Credited Service may, at the Stock Bonus Management Committee's discretion, include the entity's service as an Associate. 10.4 SPENDTHRIFT CLAUSE. Except as provided in the Plan or as otherwise required by law, no benefits under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber or charge shall be void; provided, however, that an Associate may pledge his benefits to the AFLAC Federal Credit Union to secure a loan. No such benefit shall in any manner be 14 liable for or subject to the debts, contracts, liabilities, engagements, or torts of the person entitled to such benefit except as specifically provided in the Plan. 10.5 LEGALLY INCOMPETENT. If any Participant is in the judgment of the Stock Bonus Management Committee legally incapable of personally receiving and giving a valid receipt for any payment due him hereunder, the Stock Bonus Management Committee may, unless and until claim shall have been made by a guardian of such person duly appointed by a court of competent jurisdiction, direct that payment or any part thereof be made to such person or to such person's spouse, child, parent, brother or sister, or other person deemed by the Stock Bonus Management Committee to be a proper person to receive such payment. If the Stock Bonus Management Committee is unable, after reasonable effort, to ascertain the identity, whereabouts or existence of any Participant to whom a benefit is payable under this Plan, the benefits otherwise payable to such person shall be forfeited, anything to the contrary contained elsewhere in this Plan notwithstanding. However, if a claim is subsequently made by such person, or if satisfactory proof of death of such person is received by the Stock Bonus Management Committee, the Plan Sponsor shall make a contribution to the Plan which, notwithstanding any provision of this Plan to the contrary, shall be for and so as to enable such benefit to be paid to such person or his estate, as the case may be. Any benefits lost by reason of escheat under applicable state law shall also be forfeited, but shall not be subject to reinstatement. 10.6 ARBITRATION. Except for temporary restraining orders and interlocutory or preliminary injunctive relief, any claim, controversy or dispute with respect to this Plan, including any alleged tort related to this Plan or the activities associated with this Plan, to the maximum extent allowed by applicable law and irrespective of the form of relief sought, shall be submitted to and resolved by arbitration. Such arbitration shall be the sole remedy with respect to such matter. The arbitration shall be conducted in Columbus, Georgia, and shall be conducted pursuant to the terms of the Federal Arbitration Act, except as otherwise specified herein including, without limitation, the exception that the arbitrators cannot award punitive or exemplary damages or any damages other than compensatory. Any party may notify the other party at any time of the existence of an arbitrable controversy by certified mail and shall attempt in good faith to resolve their differences within 15 days after the receipt of such notice. Notice to the Participant shall be sent to Participant's address as it appears in the records of AFLAC New York and notice to AFLAC New York shall be sent to: Arbitration Officer, AFLAC New York, 1932 Wynnton Road, Columbus, Georgia 31999. If the dispute cannot be resolved within the 15-day period, any party may file a written demand for arbitration with the other party. The party filing such demand shall simultaneously specify its arbitrator, giving the name, address and telephone number of said arbitrator. The party receiving such notice shall notify the party demanding the arbitration of its arbitrator, giving the name, address and telephone number of the arbitrator within five days of the receipt of such demand. The arbitrators named by the respective parties need not be neutral. The Senior Judge of the Superior Court of Muscogee County, Georgia, on request by either party, shall appoint a neutral person to serve as the third arbitrator, and shall also appoint an arbitrator for any party failing or refusing to name his arbitrator within the time herein specified. Each party shall pay the fees and expenses of the arbitrator selected by that party or appointed for that party. The 15 fees and expenses of the neutral arbitrator appointed by the Senior Judge of the Superior Court of Muscogee County, Georgia shall be paid equally by the parties. The arbitrators thus constituted shall promptly meet, select a chairperson, fix the time and place of the hearing, and notify the parties. To the extent practical, the arbitrators shall provide for the hearing to commence within 60 days after the arbitrators have been empaneled. The majority of the panel shall render an award within 10 days of the completion of the hearing, and shall promptly transmit an executed copy of the award to the respective parties. The award of the arbitrators shall be final, binding and conclusive upon the parties hereto. The prevailing party shall be entitled to recover its costs and attorneys' fees which shall be taxed by the arbitrators within 30 days after the award. Each party shall have the right to have the award enforced by any court of competent jurisdiction. 10.7 CORRECTION OF ERRORS. If any change in records or error results in any Participant being credited with or receiving from the Plan more or less than the person would have been entitled to had the records been correct or had the error not been made, the Stock Bonus Management Committee, upon discovery of such error, shall adjust, as far as practicable, the account or payments, as the case may be, in such a manner as to correct the error. Any Plan Sponsor contribution made by mistake of fact shall be returned to the Plan Sponsor. 10.8 EXCLUSIVE BENEFIT. Except as otherwise specifically provided in this Plan, all assets of the Plan and Trust and all contributions of the Plan Sponsor under the Plan shall be held and used for the exclusive purpose of providing benefits for Participants, and no portion of the Trust shall inure to the benefit of or revert to the Plan Sponsor. 10.9 LIABILITY OF PLAN SPONSOR AND AFLAC INCORPORATED. Notwithstanding any provision to the contrary in this Plan or the Trust Agreement, the Plan Sponsor shall at all times remain liable to each Participant for the payment of any vested amounts distributable pursuant to the terms of this Plan to such Participant which are not so distributed by the Trust in accordance with the terms of this Plan. In addition, AFLAC Incorporated hereby guarantees the payment of such amounts. 10.10 PARTIAL INVALIDITY. If any provision of this Plan is held invalid or unenforceable, its invalidity or unenforceability shall not affect any other provision and this Plan shall be construed and enforced as if such provision had not been included. 16 IN WITNESS WHEREOF, the Plan Sponsor has caused the Plan to be signed and adopted, this 28th day of December, 1998, effective as of January 1, 1999. AMERICAN FAMILY LIFE ASSURANCE COMPANY OF NEW YORK By: /s/ Daniel P. Amos ------------------------------------ Daniel P. Amos President Attest: /s/ Joey M. Loudermilk -------------------------------- Joey M. Loudermilk Secretary IN WITNESS WHEREOF, AFLAC Incorporated hereby agrees and consents to the provisions of Section 10.9 hereof as of this 28th day of December, 1998, effective as of January 1, 1999. AFLAC INCORPORATED By: /s/ Daniel P. Amos -------------------------------- Daniel P. Amos President Attest: /s/ Joey M. Loudermilk ---------------------------- Joey M. Loudermilk Secretary IN WITNESS WHEREOF, the Trustees of the AFLAC New York Associate Stock Bonus Plan acknowledge receipt of the Plan as signed and adopted the day affixed next to their name, effective as of January 1, 1999. December 28, 1998 /s/ Paul S. Amos ----------------------------- Paul S. Amos, Trustee December 28, 1998 /s/ Kriss Cloninger, III ----------------------------- Kriss Cloninger, III, Trustee December 28, 1998 /s/ Daniel P. Amos ----------------------------- Daniel P. Amos, Trustee 17 TRUST AGREEMENT THIS TRUST AGREEMENT (the "Agreement"), effective as of January 1, 1999, entered into by and between American Family Life Assurance Company of New York ("Plan Sponsor"), an insurance corporation organized under the laws of the State of New York with its principal office in Albany, New York and Paul S. Amos, Kriss Cloninger, III and Daniel P. Amos, the Trustees (hereinafter called individually "Trustee" and collectively the "Trustees"), W I T N E S S E T H T H A T: WHEREAS, the Plan Sponsor has adopted the AFLAC New York Associate Stock Bonus Plan for the benefit of Participants as defined in said Plan; WHEREAS, said Plan provides that investment of all contributions made to said Plan and payment of benefits thereunder will be accomplished by a Trust Agreement, as it may be amended from time to time, which shall constitute a part of said Plan, and WHEREAS, the Plan Sponsor has adopted, as of January 1, 1999, said Plan (hereinafter called the "Plan"), and it is desired to so adopt the related Trust Agreement between the Plan Sponsor and the Trustees. NOW THEREFORE, in consideration of the premises and the further obligations and undertakings hereinafter set forth, it is agreed as follows: ARTICLE 1 THE TRUST (a) The Plan Sponsor, in accordance with the terms of the Plan, which Plan is made a part of this Agreement, hereby establishes with the Trustees, a trust which shall be designated the AFLAC New York Associate Stock Bonus Trust (hereinafter called the "Trust"), in which the Trustees shall hold such cash, securities and other property as shall from time to time constitute the assets of the Plan (hereinafter called the "Fund"). The Fund shall be held, managed, and administered by the Trustees in trust for the purpose of discharging the Plan Sponsor's legal obligations under the Plan and in accordance with the Plan and the provisions of this Agreement. The Trust is intended to be a grantor trust, of which the Plan Sponsor is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A, of the Internal Revenue Code of 1986, as amended from time to time, and shall be construed accordingly. (b) Subject to the right of the Plan Sponsor as set forth in the Plan to charge against the Trust assets in order to satisfy obligations owed to the Plan Sponsor by a Participant (whether arising under this Plan or otherwise) and to the right of creditors of the Plan Sponsor to assert claims against assets of the Trust that were contributed to the Trust and the income thereon held pursuant to the Trust in the case of the Insolvency of the Plan Sponsor (as herein defined), the Trustees shall discharge their duties hereunder solely in the interests of the Participants of the Plan, for the exclusive purpose of providing benefits to Participants and defraying certain specified expenses of the Plan. Such duties shall be discharged with the care, skill, prudence and due diligence under the 18 circumstances then prevailing that a prudent man acting in the like capacity and familiar with such matters would use in the conduct of an enterprise with like aims. Prior to the satisfaction of all liabilities with respect to benefits of Participants, no part of the corpus or income of the Fund other than (i) such part as is required to pay taxes and expenses as set forth in Article 9 hereof, (ii) such part as is permitted to be reached by the creditors of the Plan Sponsor in the event of Insolvency as set forth in Article 6 hereof, or (iii) such part as is permitted to be paid to the Plan Sponsor or to charge against amounts owed by the Participant to the Plan Sponsor pursuant to the provisions of the Plan, shall be used for, or diverted to, purposes other than the exclusive benefit of such Participants. (c) To the extent permitted by law, the Trustees shall not be liable for the making, retention, or sale of any investment or reinvestment of assets of the Fund made by them nor for any loss to or diminution of the Fund, and the Trustees, and each Trustee, shall be free from all liability, joint or several, for their acts, omissions and conduct, and for the acts, omissions and conduct of their duly constituted agents, in the administration of the Trust. The Plan Sponsor shall indemnify and save them, and each of them, harmless from effects and consequences of their acts, omissions and conduct in their official capacity, except to the extent that such effects and consequences shall result from their own willful misconduct or gross negligence. (d) In addition to every power and discretion conferred upon the Trustees by any other provisions of this Agreement, the Trustees will have all the usual powers conferred by law on trustees; provided, however, that if an insurance policy is held as an asset of the Trust, the Trustees shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. The duties and obligations of the Trustees with respect to the Plan and Trust are limited to those assumed by the Trustees by the terms of this Agreement and imposed by applicable law or regulation. The Trustees shall not be deemed by virtue hereof to be Administrator or Sponsor of the Plan, and shall not be responsible for receiving any order or consent of any court, for filing any reports, returns or disclosures with any government agency, for reporting to any court, or for giving any bond. (e) Each Trustee, by accepting this Trust, hereby acknowledges that he has received notification of the Plan Sponsor's lien and security interest in the Trust assets for the purpose of satisfying obligations the Participant may owe the Plan Sponsor. ARTICLE 2 CONTRIBUTIONS TO TRUSTEES Contributions shall be paid by the Plan Sponsor into the Fund from time to time in accordance with the terms of the Plan. It shall be the duty of the Trustees to receive, hold, invest and reinvest the assets of the Fund, to collect all interest, dividend and other income thereon, to hold the assets from time to time constituting the Fund under such conditions of custody and safekeeping as the Trustees shall deem appropriate for the particular type of asset, to make payments to the Plan 19 Sponsor as permitted pursuant to the Plan or this Agreement, to make payments to creditors of the Plan Sponsor as permitted pursuant to the Plan or this Agreement, and to make payments and distributions from the Fund, all in accordance with the provisions of this Agreement and the Plan. The Trustees shall be under no duty to enforce payment of any contribution to the Fund, and shall be accountable only for money, securities and other property actually received by them. ARTICLE 3 MANAGEMENT OF FUND (a) In accordance with the provisions of the Plan, the funding policy of the Trust shall be to invest wholly in shares of Common Stock of AFLAC Incorporated (the "Stock"), but in the event that Stock is not available or cannot be purchased, temporarily, under any applicable law, then and in that event the Trustees shall invest the assets of the Fund in cash or cash equivalents. (b) Neither by way of limitation nor in derogation but in amplification of any powers granted herein, the Trustees are further authorized: (1) to hold cash awaiting investment and to keep such portion of the Fund in cash or cash balances in such amounts as the Trustees may from time to time deem to be reasonable and necessary to meet anticipated distributions or costs without liability for interest or to be otherwise in the best interest of the Trust; (2) to sell for cash or credit, redeem, exchange for other property, convey, transfer or otherwise dispose of any property held in the Fund in any manner and at any time, by private contract or at public auction or otherwise; (3) to enter into contracts for or to make commitments either alone or in company with others to purchase or sell at any future date any property acquired for the Fund; (4) to vote or to refrain from voting upon any stocks, bonds or other securities held in the Fund, to give general or special proxies or powers of attorney with or without power of substitution with respect to such securities (provided, however, that if the Plan Sponsor or AFLAC Incorporated has entered into any binding agreement with respect to the manner in which shares of Stock held in the Plan shall be voted, the Trustees shall vote such shares of Stock in accordance with such agreement), to exercise any conversion privileges, subscription rights or other options or privileges with respect to such securities and make any payments incidental thereto, to oppose or consent to or otherwise participate in corporate reorganizations or other changes affecting corporate securities held in the Fund, delegate discretionary powers, deposit securities under a deposit agreement, pay any assessments or charges in connection therewith, and accept, hold and retain any securities or other property which may be so acquired, and generally to exercise, personally or by general or limited power of attorney, any of the powers of an owner with respect to stocks, bonds, securities or other property held in the fund at any time; 20 (5) to register any investment of the Fund in their own name or in the name of a nominee or nominees and to hold any investment in bearer form, to deposit or arrange for the deposit of such securities in a qualified central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depository with other securities deposited therein by any other person, but the books and records of the Trustees shall at all times show that all such investments are part of the Fund; (6) to enforce by suit or otherwise or to waive any right or claim on behalf of the Trustees or the Fund, to extend the time of payments of any obligation at any time owing to the Fund, to sell, compromise, adjust or submit to arbitration any claim or right in favor of or against the Trustees or the Fund, to commence or defend suits or legal proceedings whenever in the Trustees' judgment any interest of the Fund requires it, and to represent the Fund in all suits or legal proceedings in any court of law or equity or before any body or tribunal; (7) to employ suitable consultants, depositories, agents, legal counsel and auditors, provided that the reasonable expenses and compensation incurred in connection therewith shall be paid by the Plan Sponsor; (8) to construe this Agreement and determine all questions that may arise hereunder, and to establish such rules, regulations and procedures as they deem to be required to administer the Trust in accordance with provisions of the Plan and the Trust and applicable laws; and (9) to do any and all acts and things, including but not limited to making, executing, acknowledging and delivering any and all documents of transfer and conveyance and any and all other instruments, such as contracts, waivers, or releases, which they may deem necessary or proper and to exercise any and all powers herein granted. (c) Notwithstanding any powers granted to the Trustees pursuant to this Trust Agreement or applicable law, the Trustees shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code. ARTICLE 4 VALUATION For each calendar quarter, as the Plan Sponsor may request in writing, and as may be required by law, the Trustees shall report to the Plan Sponsor in writing the value of the Fund and the balances of all accounts maintained under the Plan in terms of the number of shares of Stock, the fair market value, as determined by the Trustees, of the balance of other investments, including any cash, and the amount of any liabilities or obligations of the Trust. 21 ARTICLE 5 DISBURSEMENTS The Trustees shall make payments from the Fund to such persons, in such manner and in such amounts as the Plan Sponsor may direct in writing from time to time. The Trustees shall be fully protected in acting upon any such written direction without inquiry or investigation, and shall have no duty or authority to determine the rights or benefits of any Participant and Beneficiary under the Plan, or to inquire into the right or power of the Plan Sponsor to direct any payment from the Fund. If any check in payment of a benefit hereunder, which had been mailed by regular U.S. mail to the last address of the payee, is returned undelivered, the Trustees shall so notify the Plan Sponsor and shall discontinue further payments to such payee until they receive further instructions from the Plan Sponsor. The Trustees shall have no duty to locate Participants. ARTICLE 6 INSOLVENCY (a) The Plan Sponsor shall be considered "Insolvent" for purposes of this Trust Agreement if it is (i) unable to pay its debts as they become due, or (ii) subject to a pending proceeding as a debtor under the United States Bankruptcy Code. (b) At all times during the continuance of this Trust, as provided in Article 1(f) hereof, the assets contributed to the Trust and the income thereon held pursuant to the Trust shall be subject to claims of general creditors of the Plan Sponsor under federal and state law as set forth below. (1) The Board of Directors and the Chief Executive Officer of the Plan Sponsor shall have the duty to inform the Trustees in writing of the Insolvency of the Plan Sponsor. If a person claiming to be a creditor of the Plan Sponsor alleges in writing to the Trustees that the Plan Sponsor has become Insolvent, the Trustees shall determine whether the allegation is true and, pending such determination, the Trustees shall discontinue payment of benefits to Participants of assets and the income thereon held pursuant to the Trust. (2) Unless the Trustees have actual knowledge of the Insolvency of the Plan Sponsor, or have received notice from the Plan Sponsor or a person claiming to be a creditor alleging the insolvency of the Plan Sponsor or AFLAC Incorporated, the Trustees shall have no duty to inquire whether the Plan Sponsor is Insolvent. The Trustees may in all events rely on such evidence concerning solvency as may be furnished to the Trustees and that provides the Trustees with a reasonable basis for making a determination concerning solvency. (3) If at any time the Trustees have determined that the Plan Sponsor is Insolvent, the Trustees shall (i) discontinue payments to Participants under this Trust Agreement of assets and the income thereon held pursuant to the Trust and (ii) hold such assets together with the accumulated income thereon then held pursuant to the Trust for the benefit of the Plan Sponsor's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Participants to pursue their rights as general creditors of the Plan Sponsor with respect to benefits due under the Plan or otherwise. 22 (4) The Trustees shall resume the payment of benefits to Participants of assets and the income thereon held pursuant to the Trust in accordance with the terms of this Trust Agreement only after the Trustees have determined that the Plan Sponsor is not Insolvent (or is no longer Insolvent). (c) Provided there are sufficient assets, if the Trustees discontinue the payment of benefits from the Trust pursuant to Article 6(b) hereof and subsequently resume such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Participants under the terms of the Plan for the period of such discontinuance that were not made, less the aggregate amount of any payments made to Participants by the Plan Sponsor or AFLAC Incorporated in lieu of the payments provided for hereunder during any such period of discontinuance. ARTICLE 7 SPENDTHRIFT CLAUSE Except for obligations which may be owed to the Plan Sponsor, as to which obligations benefits may, subject to any applicable legal limitations, be applied by the Plan Sponsor, no benefits under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber or charge shall be void. No such benefit shall in any manner be liable for or subject to the debts, contract, liabilities, engagements or torts of the person entitled to such benefit except as specifically provided in the Plan. ARTICLE 8 ACCOUNTING BY TRUSTEES (a) The Trustees shall keep accurate and detailed accounts of all investments, receipts, disbursements and other transactions hereunder, including all transactions in all accounts maintained under the Plan, and all accounts, books and records relating thereto shall be open to inspection and audit at all reasonable times by any person designated by the Plan Sponsor. For each calendar year, the Trustees shall file with the Plan Sponsor a written statement setting forth all investments, receipts, disbursements and other transactions, and all adjustments to all the accounts maintained under the Plan, effected since the previous statement. Such a statement setting forth all investments, receipts, disbursements and other transactions shall also be filed within 60 days after the death, removal or resignation of all the Trustees at one time. The Plan Sponsor shall, upon request, be entitled to further statements or statements at more frequent intervals from the Trustees, provided that such additional accounting is reasonable or is necessary to enable the Plan Sponsor to determine compliance of the Trustees with applicable laws and regulations. (b) Except to the extent otherwise provided by applicable law, no one other than the Plan Sponsor may require the Trustees to account or may institute an action or proceeding to account against the Trustees or the Fund, provided, however, that nothing herein shall in any way limit the Trustees' right to bring any action or proceeding to settle their account or for such other relief as they may deem appropriate. 23 (c) Upon the expiration of 90 days from the date of filing by the Trustee with the Plan Sponsor of a statement of accounting with respect to the Trust, the Trustees shall, to the extent permitted by law, be forever released and discharged from all liability and accountability to anyone with respect to the propriety of their acts and transactions shown in such statement, except with respect to any acts or transactions as to which the Plan Sponsor shall file with the Trustees written objection within such 90- day period. ARTICLE 9 EXPENSES The expenses incurred by the Plan Sponsor in the installation, administration and revision of the Plan and in the installation and revision of this Agreement, including fees for legal, accounting, actuarial or other professional services rendered to the Trustees in connection therewith, and such compensation, if any, to the Trustees as may be agreed upon in writing from time to time between the Plan Sponsor and the Trustees, shall be paid by the Plan Sponsor. Expenses incurred by the Trustees in the performance of their duties and all other proper charges and disbursements of the Trustees, authorized by the Trustees, shall be paid for by the Plan Sponsor. All commissions and fees on acquisitions or dispositions of securities and similar expenses of investment and reinvestment of the Fund, and all taxes of any and all kinds whatsoever that may be levied or assessed under existing or future laws upon or in respect of the Fund or the income thereof shall be paid from the Fund. ARTICLE 10 TRUSTEES (a) The Trustees shall be three in number and shall be elected by the Board of Directors of the Plan Sponsor. Each Trustee shall serve a term of four years. (b) A Trustee may resign at any time upon 60 days written notice delivered to the other Trustees and the Board. A Trustee may be removed by the Board upon written notice to the Trustee by the Board. (c) Upon the resignation, death or removal of a Trustee, the Board shall elect a Successor Trustee to serve the unexpired term. Upon the expiration of the term of a Trustee, the Board shall elect a Successor Trustee to serve a term of eight years. Upon acceptance in writing of appointment as a Successor Trustee, such Successor Trustee shall succeed to the powers, duties and responsibilities of the former Trustee as fully as if he had been originally named as a Trustee hereunder. (d) In the event that all of the Trustees die, are removed or resign at any one time, and successors are appointed hereunder, the Trustees shall assign, transfer and pay over to such successors the funds and properties then constituting the Fund, or the Plan Sponsor shall promptly establish an alternative funding medium and the Trustees shall assign, transfer and pay over the Fund, as then constituted, upon the directions of the Plan Sponsor. The Trustees shall continue to have the powers and duties as set forth in this Agreement until the assets constituting the Fund have been forwarded to Successor Trustees or an alternative funding medium. 24 (e) Action by the Trustees shall be upon the majority vote of all the Trustees, and the Trustees shall maintain minutes of all meetings of the Trustees; provided, however, that a Trustee who is also a Participant or Beneficiary under the Plan shall not vote upon matters relating specifically to his or her benefits under the Plan. ARTICLE 11 AMENDMENT AND TERMINATION (a) The Plan Sponsor reserves the right at any time and from time to time to amend, in whole or part, any or all of the provisions of this Agreement by written instrument signed by the Plan Sponsor and delivered to and acknowledged by the Trustees, provided that no amendment which affects the rights, duties or responsibilities of the Trustees may be made without their written consent, and provided further that unless it is necessary to meet the requirements of any state or federal law or regulation, no amendment shall authorize or permit, at any time prior to the satisfaction of all liabilities with respect to benefits of Participants, any part of the corpus or income of the Fund, other than as specifically provided in the Plan or in this Agreement, to be used for, or diverted to, purposes other than for the exclusive benefit of such Participants. (b) The Plan Sponsor reserves the right at any time to terminate the Plan as to any or all of the companies constituting the Plan Sponsor, upon written notice to the Trustees. Upon receipt of such notice, the Trustees shall continue to administer the Fund as herein provided and shall distribute the Fund at such time and manner as the Plan Sponsor shall determine in accordance with the terms of the Plan and notify the Trustees in writing. Following distribution of the entire Fund, this Agreement shall terminate. ARTICLE 12 MISCELLANEOUS (a) Unless the context of this Agreement clearly indicates otherwise, all terms defined in the Plan shall have the same meaning herein. (b) If any provision of this Agreement shall be held legally invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the remainder of this Agreement shall continue in effect and be construed and enforced as if such provision had not been included. (c) This Agreement shall be administered, construed and enforced according to the laws of the State of Georgia. (d) Whenever the words "Plan Sponsor" are used herein, they shall be construed to include the Stock Bonus Management Committee appointed in accordance with the provisions of the Plan. (e) When the Plan Sponsor gives instructions, requests, directions, requisitions or moneys or certificates to the Trustees, said communications shall be in writing, signed by such person as may have been previously designated in writing by the Plan Sponsor to sign on its behalf, unless otherwise agreed by the Trustees. When receiving a communication as 25 provided for in the preceding sentence, the Trustees shall be entitled to rely thereon as the authorized action of the Plan Sponsor, and the Plan Sponsor shall hold harmless, indemnify and defend the Trustees in respect of any action taken by them in reliance thereon. The Trustees shall incur no liability for failure to act without such a written communication. (f) Notwithstanding any other provisions of this Agreement, the Trustees may condition their delivery, transfer or distribution of any assets of the Fund, or any other action which they may take or are directed to take with respect to the Plan, Trust or Fund, upon the Trustees receiving assurances satisfactory to them that the approval of appropriate governmental or other authorities has been secured, that such action has been properly approved and authorized in accordance with the Plan and this Agreement, and that all notices or other procedures required by the Plan, this Agreement, or applicable law have been complied with. (g) No person dealing with the Trustees will be obligated to see to the application for any property paid or delivered to the Trustees or to inquire into the validity, expediency or propriety of any transaction or the Trustees' authority to consummate the same, except as may specifically be required by law. (h) The persons executing this Agreement on behalf of the Plan Sponsor certify thereby that they are authorized by the Plan Sponsor consistent with the terms of the Plan to do so. The Plan Sponsor, by executing this Agreement, certifies that no provision hereof is inconsistent with the terms of the Plan, that all conditions and limitations in the Plan which would limit the actions of the Trustees are expressly contained herein, and that the Plan Sponsor will promptly notify the Trustees of any amendments made to the Plan. IN WITNESS WHEREOF, the Plan Sponsor, by its duly authorized officers, has caused this Agreement to be executed, on this 28th day of December, 1998, effective as of January 1, 1999. AMERICAN FAMILY LIFE ASSURANCE COMPANY OF NEW YORK By: /s/ Daniel P. Amos ----------------------------------- Daniel P. Amos, CEO Attest: /s/ Joey M. Loudermilk - ---------------------------- Joey M. Loudermilk Secretary 26 IN WITNESS WHEREOF, the Trustees of the AFLAC New York Associate Stock Bonus Plan, by execution hereof, do hereby accept appointment as a Trustee of said Plan the day affixed next to their name, effective as of the 1st day of January, 1999. December 28, 1998 /s/ Paul S. Amos -------------------------------- Paul S. Amos, Trustee December 28, 1998 /s/ Kriss Cloninger, III -------------------------------- Kriss Cloninger, Trustee December 28, 1998 /s/ Daniel P. Amos -------------------------------- Daniel P. Amos, Trustee 27 -----END PRIVACY-ENHANCED MESSAGE-----