Exhibit (8)(p)(i)
PARTICIPATION AGREEMENT
THIS AGREEMENT, is made as of April 30, 1997, by and among Great American
Reserve Insurance Company ("Company"), on its own behalf and on behalf of Great
American Reserve Variable Annuity Account C and Great American Reserve Variable
Annuity Account E, segregated asset accounts of the Company (collectively,
"Account"), Strong Variable Insurance Funds, Inc. ("Strong Variable") on behalf
of the Portfolios of Strong Variable listed on the attached Exhibit A as such
Exhibit may be amended from time to time (the "Designated Portfolios"), Strong
Special Fund II, Inc. ("Special Fund"), Strong Capital Management, Inc. (the
"Adviser"), the investment adviser and transfer agent for the Special Fund and
Strong Variable, and Strong Funds Distributors, Inc. ("Distributors"), the
distributor for Strong Variable and the Special Fund (each, a "Party" and
collectively, the "Parties").
PRELIMINARY STATEMENTS
A. Beneficial interests in Strong Variable are divided into several series
of shares, each representing the interest in a particular managed portfolio of
securities and other assets (each, a "Portfolio").
B. To the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of Special Fund and the Designated
Portfolios ("Fund" or "Funds" shall be deemed to refer to each Designated
Portfolio and to the Special Fund to the extent the context requires), on behalf
of the Account to fund the variable annuity contracts that use the Funds as an
underlying investment medium (the "Contracts").
C. The Company, Adviser and Distributors desire to facilitate the purchase
and redemption of shares of the Funds by the Company for the Account through one
account in each Fund (each an "Omnibus Account") to be maintained of record by
the Company, subject to the terms and conditions of this Agreement.
D. The Company desires to provide administrative services and functions
(the "Services") for purchasers of Contracts ("Owners") who are beneficial
owners of shares of the Funds on the terms and conditions set forth in this
Agreement.
AGREEMENTS
The parties to this Agreement agree as follows:
1. PERFORMANCE OF SERVICES. Company agrees to perform the administrative
functions and services specified in Exhibit B attached to this Agreement with
respect to the shares of the Funds beneficially owned by the Owners and included
in the Account.
2. THE OMNIBUS ACCOUNTS.
2.1 Each Omnibus Account will be opened based upon the information
contained in Exhibit C to this Agreement. In connection with each Omnibus
Account, Company represents and warrants that it is authorized to act on behalf
of each Owner effecting transactions in the Omnibus Account and that the
information specified on Exhibit C to this Agreement is correct.
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2.2 Each Fund shall designate each Omnibus Account with an account number.
These account numbers will be the means of identification when the Parties are
transacting in the Omnibus Accounts. The assets in the Accounts are segregated
from the Company's own assets. The Adviser agrees to cause the Omnibus Accounts
to be kept open on each Fund's books, as applicable, regardless of a lack of
activity or small position size except to the extent the Company takes specific
action to close an Omnibus Account or to the extent a Fund's prospectus reserves
the right to close accounts which are inactive or of a small position size. In
the latter two cases, the Adviser will give prior written notice to the Company
before closing an Omnibus Account.
2.3 The Company agrees to provide Adviser such information as Adviser or
Distributors may reasonably request concerning Owners as may be necessary or
advisable to enable Company and Distributors to comply with applicable laws,
including state "Blue Sky" laws relating to the sales of shares of the Funds to
the Accounts.
3. FUND SHARES TRANSACTIONS.
3.1 IN GENERAL. Shares of the Funds shall be sold on behalf of the Funds by
Distributors and purchased by Company for the Account and, indirectly for the
appropriate subaccount thereof at the net asset value next computed after
receipt by Distributors of each order of the Company or its designee, in
accordance with the provisions of this Agreement, the then current prospectuses
of the Funds, and the Contracts. Company may purchase shares of the Funds for
its own account subject to (a) receipt of prior written approval by
Distributors; and (b) such purchases being in accordance with the then current
prospectuses of the Fund and the Contracts. The Board of Directors of each Fund
("Directors") may refuse to sell shares of the applicable Fund to any person, or
suspend or terminate the offering of shares of the Fund if such action is
required by law or by regulatory authorities having jurisdiction. Company agrees
to purchase and redeem the shares of the Funds in accordance with the provisions
of this Agreement, of the Contracts and of the then current prospectuses for the
Contracts and Funds. Except as necessary to implement transactions initiated by
Owners, or as otherwise permitted by state or federal laws or regulations.
Company shall not redeem shares of Funds attributable to the Contracts.
3.2 PURCHASE AND REDEMPTION ORDERS. On each day that a Fund is open for
business (a "Business Day"), the Company shall aggregate and calculate the net
purchase or redemption order it receives for the Account from the Owners for
shares of the Fund that it received prior to the close of trading on the New
York Stock Exchange (the "NYSE") (i.e. 3:00 p.m., Central time, unless the NYSE
closes at an earlier time in which case such earlier time shall apply) and
communicate to Distributors, by telephone or facsimile (or by such other means
as the Parties to this Agreement may agree to in writing), the net aggregate
purchase or redemption order (if any) for the Omnibus Account for such Business
Day (such Business Day is sometimes referred to herein as the "Trade Date"). The
Company will communicate such orders to Distributors prior to 8:00 a.m., Central
time, on the next Business Day following the Trade Date. All trades communicated
to Distributors by the foregoing deadline shall be treated by Distributors as if
they were received by Distributors prior to the close of trading on the Trade
Date.
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3.3 SETTLEMENT OF TRANSACTIONS.
(a) PURCHASES. Company will wire, or arrange for the wire of, the
purchase price of each purchase order to the custodian for the Fund in
accordance with written instructions provided by Distributors to the Company so
that either (1) such funds are received by the custodian for the Fund prior to
12:00 (noon), Central time, on the next Business Day following the Trade Date,
or (2) Distributors is provided with a Federal Funds wire system reference
number prior to such 12:00 noon deadline evidencing the entry of the wire
transfer of the purchase price to the applicable custodian into the Federal
Funds wire system prior to such time. Company agrees that if it fails to provide
funds to the Fund's custodian by the close of business on the next Business Day
following the Trade Date, then, at the option of Distributors, (i) the
transaction may be canceled, or (ii) the transaction may be processed at the
next-determined net asset value for the applicable Fund after purchase order
funds are received. In such event, the Company shall indemnify and hold harmless
Distributors, Adviser and the Funds from any liabilities, costs and damages
either may suffer as a result of such failure.
(b) REDEMPTIONS. The Adviser will use its best efforts to cause to be
transmitted to such custodial account as Company shall direct in writing, the
proceeds of all redemption orders placed by Company by 8:00 a.m., Central time,
on the Business Day immediately following the Trade Date, by wire transfer on
that Business Day. Should Company need to extend the settlement on a trade, it
will contact Adviser to discuss the extension. For purposes of determining the
length of settlement, Adviser agrees to treat the Account no less favorably than
other shareholders of the Funds. Each wire transfer of redemption proceeds shall
indicate, on the Federal Funds wire system, the amount thereof attributable to
each Fund: PROVIDED, HOWEVER, that if the number of entries would be too great
to be transmitted through the Federal Funds wire system, the Adviser shall, on
the day the wire is sent, fax such entries to Company or if possible, send via
direct or indirect systems access until otherwise directed by the Company in
writing.
(c) AUTHORIZED PERSONS. The following persons are each duly authorized
to act on behalf of the Company under this Agreement. The Funds, Adviser and
Distributors are entitled to conclusively rely on verbal or written instructions
that Adviser or Distributors reasonably believes were originated by any one of
said persons. The Company shall inform Adviser and Distributors of additions to
or subtractions from this list of authorized persons pursuant to Section 13,
hereof:
L. Xxxxxxx Xxxxxxxxx
Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxxx
3.4 BOOK ENTRY ONLY. Issuance and transfer of shares of a Fund will be by
book entry only. Stock certificates will not be issued to the Company or the
Account. Shares of the Funds ordered from Distributors will be recorded in the
appropriate book entry title for the Account.
3.5 DISTRIBUTION INFORMATION. The Adviser or Distributors shall provide the
Company with all distribution announcement information as soon as it is
announced by the Funds. The distribution information shall set forth, as
applicable, ex-dates, record date, payable date,
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distribution rate per share, record date share balances, cash and reinvested
payment amounts and all other information reasonably requested by the Company.
Where possible, the Adviser or Distributors shall provide the Company with
direct or indirect systems access to the Adviser's systems for obtaining such
distribution information.
3.6 REINVESTMENT. All dividends and capital gains distributions will be
automatically reinvested on the payable date in additional shares of the
applicable Fund at net asset value in accordance with each Fund's then current
prospectus.
3.7 PRICING INFORMATION. Distributors shall use its best efforts to furnish
to the Company prior to 6:00 p.m., Central time, on each Business Day each
Fund's closing net asset value for that day, and for those Funds for which such
information is calculated, the daily accrual for interest rate factor (mil
rate). Such information shall be communicated via fax, or indirect or direct
systems access acceptable to the Company.
3.8 PRICE ERRORS.
(a) In the event adjustments are required to correct any error in the
computation of the net asset value of shares of a Fund, the Fund or Adviser
shall promptly notify Company after discovering the need for those adjustments
which result in a reimbursement to an Account in accordance with such Fund's
then current policies on reimbursement. Notification may be made orally or via
direct or indirect systems access. Any such notification shall be promptly
followed by a letter written on Fund or Adviser letterhead and shall state for
each day for which an error occurred the incorrect price, the correct price,
and, to the extent communicated to the Fund's shareholder, the reason for the
price change. Funds and Adviser agree that Company may send this writing, or
derivation thereof (so long as such derivation is approved in advance by Funds
or Adviser, which approval shall not be unreasonably withheld) to Owners that
are affected by the price change.
(b) If the Account received amounts in excess of the amounts to which
it otherwise would have been entitled prior to an adjustment for an error,
Company, when requested by Funds or Adviser, will use its best efforts to
collect such excess amounts from the accounts of the Owners. In no event,
however, shall Company be liable to Funds or Adviser for any such amounts.
(c) If an adjustment is to be made in accordance with subsection (a)
above to correct an error which has caused the Account to receive an amount less
than that to which it is entitled, Funds or Adviser shall make all necessary
adjustments (within the parameters specified in subsection (a)) to the number of
shares owned in the Account and distribute to the Company the amount of such
underpayment for credit to the accounts of the Owners.
3.9 AGENCY. Distributors hereby appoints the Company as its agent for the
limited purpose of accepting purchase and redemption instructions from the
Owners for the purchase and redemption of shares of the Funds by the Company on
behalf of Account.
3.10 QUARTERLY REPORTS. Adviser agrees to provide Company a statement of
Fund assets as soon as practicable and in any event within 30 days after the end
of each fiscal quarter, and a statement certifying the compliance by the Funds
during that fiscal quarter with the
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diversification requirements and qualification as a regulated investment
company. In the event of a breach of Section 6.4(a), Adviser will take all
reasonable steps (a) to notify Company of such breach and (b) to adequately
diversify the Fund so as to achieve compliance within the grace period afforded
by Treasury Regulation 1.817-5.
4. PROXY SOLICITATIONS AND VOTING. The Company shall, at its expense, distribute
or arrange for the distribution of all proxy materials furnished by the Funds to
the Account and shall: (i) solicit voting instructions from Owners; (ii) vote
the Fund shares in accordance with instructions received from Owners; and (iii)
vote the Fund shares for which no instructions have been received, as well as
shares attributable to it, in the same proportion as Fund shares for which
instructions have been received from Owners, so long as and to the extent that
the Securities and Exchange Commission (the "SEC") continues to interpret the
Investment Company Act of 1940, as amended (the "1940 Act"), to require
pass-through voting privileges for various contract owners. The Company and its
agents will not recommend action in connection with, or oppose or interfere
with, the solicitation of proxies for the Fund shares held for Owners.
5. CUSTOMER COMMUNICATIONS.
5.1 PROSPECTUSES. The Adviser or Distributors, at its expense, will provide
the Company with as many copies of the current prospectus for the Funds as the
Company may reasonably request for distribution, at the Company's expense, to
existing or prospective Owners.
5.2 SHAREHOLDER MATERIALS. The Adviser and Distributors shall, as
applicable, provide in bulk to the Company or its authorized representative, at
a single address and at no expense to the Company, the following shareholder
communications materials prepared for circulation to Owners in quantities
requested by the Company which are sufficient to allow mailing thereof by the
Company and, to the extent required by applicable law, to all Owners: proxy or
information statements, annual reports, semi-annual reports, and all initial and
updated prospectuses, supplements and amendments thereof. None of the Funds, the
Adviser or Distributors shall be responsible for the cost of distributing such
materials to Owners.
6. REPRESENTATIONS AND WARRANTIES.
6.1 The Company represents and warrants that:
(a) It is an insurance company duly organized and in good standing
under the laws of the State of Texas and that it has legally and validly
established the Account prior to any issuance or sale thereof as a segregated
asset account and that the Company has and will maintain the capacity to issue
all Contracts that may be sold: and that it is and will remain duly registered,
licensed, qualified and in good standing, to sell the Contracts in all the
jurisdictions in which such Contracts are to be offered or sold;
(b) It is and will remain duly registered and licensed in all material
respects under all applicable federal and state securities and insurance laws
and shall perform its obligations under this Agreement in compliance in all
material respects with any applicable state and federal laws;
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(c) The Contracts are and will be registered under the Securities Act
of 1933, as amended (the "1933 Act"), and are and will be registered and
qualified for sale in the states where so required; and the Account is and will
be registered as a unit investment trust in accordance with the 1940 Act and
shall be a segregated investment account for the Contracts;
(d) The Contracts are currently treated as annuity contracts, under
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Company will maintain such treatment and will notify Adviser,
Distributors and Funds promptly upon having a reasonable basis for believing
that the Contracts have ceased to be so treated or that they might not be so
treated in the future;
(e) It is registered as a transfer agent pursuant to Section 17A of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), or is not required
to be registered as such;
(f) The arrangements provided for in this Agreement will be disclosed
to the Owners; and
(g) It is registered as a broker-dealer under the 1934 Act and any
applicable state securities laws, including as a result of entering into and
performing the Services set forth in this Agreement, or is not required to be
registered as such.
6.2 The Funds each represent and warrant that Fund shares sold pursuant to
this Agreement are and will be registered under the 1933 Act and the Fund is and
will be registered as a registered investment company under the Investment
Company Act of 1940, in each case, except to the extent the Company is so
notified in writing;
6.3 Distributors represents and warrants that:
(a) It is and will be a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD") and is and will be registered
as a broker-dealer with the SEC; and
(b) It will sell and distribute Fund shares in accordance with all
applicable state and federal laws and regulations.
6.4 Adviser represents and warrants that:
(a) It will cause each Fund to invest money from the Contracts in such
a manner as to ensure that the Contracts will be treated as variable annuity
contracts under the Code and the regulations issued thereunder, and that each
Fund will comply with Section 817(h) of the Code as amended from time to time
and with all applicable regulations promulgated thereunder;
(b) It is and will remain duly registered and licensed in all material
respects under all applicable federal and state securities and insurance laws
and shall perform its obligations under this Agreement in compliance in all
material respects with any applicable state and federal laws; and
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6.5 Each of the Parties to this Agreement represents and warrants to the
others that:
(a) It has full power and authority under applicable law, and has taken
all action necessary, to enter into and perform this Agreement and the person
executing this Agreement on its behalf is duly authorized and empowered to
execute and deliver this Agreement;
(b) This Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms and it shall comply in all
material respects with all laws, rules and regulations applicable to it by
virtue of entering into this Agreement;
(c) No consent or authorization of, filing with, or other act by or in
respect of any governmental authority, is required in connection with the
execution, delivery, performance, validity or enforceability of this Agreement;
(d) The execution, performance and delivery of this Agreement will not
result in it violating any applicable law or breaching or otherwise impairing
any of its contractual obligations;
(e) Each Party to this Agreement is entitled to rely on any written
records or instructions provided to it by another Party; and
(f) Its directors, officers, employees, and investment advisers, and
other individuals/entities dealing with the money or securities of a Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
amount required by the applicable rules of the NASD and the federal securities
laws, which bond shall include coverage for larceny and embezzlement and shall
be issued by a reputable bonding company.
7. SALES MATERIAL AND INFORMATION
7.1 NASD FILINGS. The Company shall promptly inform Distributors as to the
status of all sales literature filings pertaining to the Funds and shall
promptly notify Distributors of all approvals or disapprovals of sales
literature filings with the NASD. For purposes of this Section 7, the phrase
"sales literature or other promotional material" shall be construed in
accordance with all applicable securities laws and regulations.
7.2 COMPANY REPRESENTATIONS. The Company shall not make any material
representations concerning the Adviser, the Distributors, or a Fund other than
the information or representations contained in: (a) a registration statement of
the Fund or prospectus of a Fund, as amended or supplemented from time to time;
(b) published reports or statements of the Funds which are in the public domain
or are approved by Distributors or the Funds; or (c) sales literature or other
promotional material of the Funds.
7.3 ADVISER, DISTRIBUTORS AND FUND REPRESENTATIONS. None of Adviser,
Distributors or any Fund shall make any material representations concerning the
Company other than the information or representations contained in: (a) a
registration statement or prospectus for the Contracts, as amended or
supplemented from time to time; (b) published reports or statements of
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the Contracts or the Account which are in the public domain or are approved by
the Company; or (c) sales literature or other promotional material of the
Company.
7.4 TRADEMARKS, ETC. Except to the extent required by applicable law, no
Party shall use any other Party's names, logos, trademarks or service marks,
whether registered or unregistered, without the prior consent of such Party.
7.5 INFORMATION FROM DISTRIBUTORS AND ADVISER. Upon request, Distributors
or Adviser will provide to Company at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, solicitations for voting instructions, applications
for exemptions, requests for no action letters, and all amendments to any of the
above, that relate to the Funds, in final form as filed with the SEC, NASD and
other regulatory authorities.
7.6 INFORMATION FROM COMPANY. Upon request, Company will provide to
Distributors at least one complete copy of all registration statements,
prospectuses, Statements of Additional Information, reports, solicitations for
voting instructions, sales literature and other promotional materials,
applications for exemptions, requests for no action letters and all amendments
to any of the above, that relate to a Fund and the Contracts, in final form as
filed with the SEC, NASD and other regulatory authorities.
7.7 REVIEW OF MARKETING MATERIALS. If so requested by Company, the Adviser
or Distributors will use its best efforts to review sales literature and other
marketing materials prepared by Company which relate to the Funds, the Adviser
or Distributors for factual accuracy as to such entities, provided that the
Adviser or Distributors is provided at least five (5) Business Days to review
such materials. Neither the Adviser nor Distributors will review such materials
for compliance with applicable laws. Company shall provide the Adviser with
copies of all sales literature and other marketing materials which refer to the
Funds, the Company or Distributors within five (5) Business Days after their
first use, regardless of whether the Adviser or Distributors has previously
reviewed such materials. If so requested by the Adviser or Distributors. Company
shall cease to use any sales literature or marketing materials which refer to
the Funds, the Adviser or Distributors that the Adviser or Distributors
determines to be inaccurate, misleading or otherwise unacceptable.
8. FEES AND EXPENSES.
8.1 FUND REGISTRATION EXPENSES. Fund or Distributors shall bear the cost of
registration and qualification of Fund shares; preparation and filing of Fund
prospectuses and registration statements, proxy materials and reports;
preparation of all other statements and notices relating to the Fund or
Distributors required by any federal or state law; payment of all applicable
fees, including, without limitation, any fees due under Rule 24f-2 of the 1940
Act, relating to a Fund; and all taxes on the issuance or transfer of Fund
shares on the Fund's records.
8.2 CONTRACT REGISTRATION EXPENSES. The Company shall bear the expenses for
the costs of preparation and filing of the Company's prospectus and registration
statement with respect to the Contracts; preparation of all other statements and
notices relating to the Account or the Contracts required by any federal or
state law; expenses for the solicitation and sale of the
Contracts including all costs of printing and distributing all copies of
advertisements, prospectuses, Statements of Additional Information, proxy
materials, and reports to Owners or potential purchasers of the Contracts as
required by applicable state and federal law; payment of all applicable fees
relating to the Contracts; all costs of drafting, filing and obtaining approvals
of the Contracts in the various states under applicable insurance laws; filing
of annual reports on form N-SAR, and all other costs associated with ongoing
compliance with all such laws and its obligations under this Agreement.
9. INDEMNIFICATION.
9.1 INDEMNIFICATION BY COMPANY.
(a) Company agrees to indemnify and hold harmless the Funds, Adviser
and Distributors and each of their directors, officers, employees and agents,
and each person, if any, who controls any of them within the meaning of Section
15 of the 1933 Act (each, an "Indemnified Party" and collectively, the
"Indemnified Parties" for purposes of this Section 9.1) from and against any and
all losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of Company), and expenses (including reasonable legal
fees and expenses) (collectively, hereinafter "Losses"), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such Losses:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the registration
statement, prospectus or sales literature for the Contracts or contained in the
Contracts (or any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, PROVIDED that this paragraph 9.1 (a) shall not apply as
to any Indemnified Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with written information
furnished to Company by or on behalf of a Fund, Distributors or Adviser for use
in the registration statement or prospectus for the Contracts or in the
Contracts (or any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares: or
(ii) arise out of or as a result of statements or representations
or wrongful conduct of Company or persons under its control, with respect to the
sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement, prospectus,
or sales literature covering a Fund or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading, if such a statement or omission was made in reliance upon written
information furnished to a Fund, Adviser or Distributors by or on behalf of
Company; or
(iv) arise out of, or as a result of, any failure by Company or
persons under its control to provide the Services and furnish the materials
contemplated under the terms of this Agreement; or
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(v) arise out of, or result from, any material breach of any
representation or warranty made by Company or persons under its control in this
Agreement or arise out of or result from any other material breach of this
Agreement by Company or persons under its control; as limited by and in
accordance with the provisions of Sections 9.1(b) and 9.1(c) hereof; or
(vi) arise out of, or as a result of adherence by Adviser or
Distributors to instructions that it reasonably believes were originated by
persons specified in Section 3.3(c), hereof.
This indemnification provision is in addition to any liability which
the Company may otherwise have.
(b) Company shall not be liable under this indemnification provision
with respect to any Losses to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations or duties
under this Agreement.
(c) Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Parry shall have notified Company in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify Company of any such claim shall not
relieve Company from any liability which it may have to the Indemnified Party
otherwise than on account of this indemnification provision. In case any such
action is brought against any Indemnified Party, and it notified the
indemnifying Party of the commencement thereof, the indemnifying Party will be
entitled to participate therein and, to the extent that it may wish, assume the
defense thereof, with counsel satisfactory to such Indemnified Party. After
notice from the indemnifying Party of its intention to assume the defense of an
action, the Indemnified Party shall bear the expenses of any additional counsel
obtained by it, and the indemnifying Party shall not be liable to such
Indemnified Party under this Section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation. The Indemnified Party may
not settle any action without the written consent of the indemnifying Party. The
indemnifying Party may not settle any action without the written consent of the
Indemnified Party unless such settlement completely and finally releases the
Indemnified Party from any and all liability. In either event, consent shall not
be unreasonably withheld.
(d) The Indemnified Parties will promptly notify Company of the
commencement of any litigation or proceedings against the Indemnified Parties in
connection with the issuance or sale of Fund shares or the Contracts or the
operation of a Fund.
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9.2 INDEMNIFICATION BY ADVISER AND DISTRIBUTORS.
(a) Adviser and Distributors agrees to indemnify and hold harmless
Company and each of its directors, officers, employees and agents and each
person, if any, who controls Company within the meaning of Section 15 of the
1933 Act (each, an "Indemnified Party" and collectively, the "Indemnified
Parties" for purposes of this Section 9.2) from and against any and all Losses
to which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such Losses:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement or
prospectus or sales literature of a Fund (or any amendment or supplement to any
of the foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this
Section 9.2(a) shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance upon and in
conformity with written information furnished to a Fund. Adviser or Distributors
by or on behalf of Company for use in the registration statement or prospectus
for a Fund or in sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of, or as a result of, statements or
representations or wrongful conduct of Adviser or Distributors or persons under
its control, with respect to the sale or distribution of Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement, prospectus,
or sales literature covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, if such statement or omission was made in reliance upon
written information furnished to Company by or on behalf of Adviser or
Distributors; or
(iv) arise out of, or as a result of, any failure by Adviser or
Distributors or persons under its control to provide the services and furnish
the materials contemplated under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation or warranty made by Adviser or Distributors or persons under its
control in this Agreement or arise out of or result from any other material
breach of this Agreement by Adviser or Distributors or persons under its
control; as limited by and in accordance with the provisions of Sections 9.2(b)
and 9.2(c) hereof.
This indemnification provision is in addition to any liability which
Adviser and Distributors may otherwise have.
(b) Adviser and Distributors shall not be liable under this
indemnification provision with respect to any Losses to which an Indemnified
Party would otherwise be subject by reason of such Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the
11
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement.
(c) Adviser and Distributors shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified Adviser and Distributors
in writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify Adviser
and Distributors of any such claim shall not relieve Adviser and Distributors
from any liability which it may have to the Indemnified Party otherwise than on
account of this indemnification provision. In case any such action is brought
against any Indemnified Party and it notified the indemnifying Party of the
commencement thereof, the indemnifying Party will be entitled to participate
therein and, to the extent that it may wish, assume the defense thereof, with
counsel satisfactory to such Indemnified Party. After notice from the
indemnifying Party of its intention to assume the defense of an action, the
Indemnified Party shall bear the expenses of any additional counsel obtained by
it, and the indemnifying Party shall not be liable to such Indemnified Party
under this Section for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof other than reasonable
costs of investigation. The Indemnified Party may not settle any action without
the written consent of the indemnifying Party. The indemnifying Party may not
settle any action without the written consent of the Indemnified Party unless
such settlement completely and finally releases the Indemnified Party from any
and all liability. In either event, consent shall not be unreasonably withheld.
(d) The Indemnified Parties will promptly notify Adviser and
Distributors of the commencement of any litigation or proceedings against the
Indemnified Parties in connection with the issuance or sale of the Contracts or
the operation of the Account.
10. POTENTIAL CONFLICTS.
10.1 MONITORING BY DIRECTORS FOR CONFLICTS OF INTEREST. The Directors of
each Fund will monitor the Fund for any potential or existing material
irreconcilable conflict of interest between the interests of the contract owners
of all separate accounts investing in the Fund, including such conflict of
interest with any other separate account of any other insurance company
investing in the Fund. An irreconcilable material conflict may arise for a
variety of reasons, including: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretive letter, or any similar action by insurance, tax or
securities regulatory authorities; (c) an administrative or judicial decision in
any relevant proceeding; (d) the manner in which the investments of the Fund are
being managed; (e) a difference in voting instructions given by variable annuity
contract owners and variable life insurance contract owners or by contract
owners of different life insurance companies utilizing the Fund; or (f) a
decision by Company to disregard the voting instructions of Owners. The
Directors shall promptly inform the Company, in writing, if they determine that
an irreconcilable material conflict exists and the implications thereof.
12
10.2 MONITORING BY THE COMPANY FOR CONFLICTS OF INTEREST. The Company will
promptly notify the Directors, in writing, of any potential or existing material
irreconcilable conflicts of interest, as described in Section 10.1 above, of
which it is aware. The Company will assist the Directors in carrying out their
responsibilities under any applicable provisions of the federal securities laws
and any exemptive orders granted by the SEC ("Exemptive Order"), by providing
the Directors, in a timely manner, with all information reasonably necessary for
the Directors to consider any issues raised. This includes, but is not limited
to, an obligation by the Company to inform the Directors whenever Owner voting
instructions are disregarded.
10.3 REMEDIES. If it is determined by a majority of the Directors, or a
majority of disinterested Directors, that a material irreconcilable conflict
exists, as described in Section 10.1 above, the Company shall, at its own
expense take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including, but not limited to: (a),
withdrawing the assets allocable to some or all of the separate accounts from
the applicable Fund and reinvesting such assets in a different investment
medium, including (but not limited to) another fund managed by the Adviser, or
submitting the question whether such segregation should be implemented to a vote
of all affected Owners and, as appropriate, segregating the assets of any
particular group that votes in favor of such segregation, or offering to the
affected owners the option of making such a change; and (b), establishing a new
registered management investment company or managed separate account.
10.4 CAUSES OF CONFLICTS OF INTEREST.
(a) STATE INSURANCE REGULATORS. If a material irreconcilable conflict
arises because a particular state insurance regulator's decision applicable to
the Company conflicts with the majority of other state regulators, then the
Company will withdraw the affected Account's investment in the applicable Fund
and terminate this Agreement with respect to such Account within the period of
time permitted by such decision, but in no event later than six months after the
Directors inform the Company in writing that it has determined that such
decision has created an irreconcilable material conflict; PROVIDED, HOWEVER,
that such withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority of
the disinterested Directors. Until the end of the foregoing period, the
Distributors and Funds shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund to the extent
such actions do not violate applicable law.
(b) DISREGARD OF OWNER VOTING. If a material irreconcilable conflict
arises because of Company's decision to disregard Owner voting instructions and
that decision represents a minority position or would preclude a majority vote,
Company may be required, at the applicable Fund's election, to withdraw the
Account's investment in said Fund. No charge or penalty will be imposed against
the Account as a result of such withdrawal.
10.5 LIMITATIONS ON CONSEQUENCES. For purposes of Sections 10.3 through
10.5 of this Agreement, a majority of the disinterested Directors shall
determine whether any proposed action adequately remedies any irreconcilable
material conflict. In no event will a Fund, the Adviser or the Distributors be
required to establish a new funding
13
medium for any of the Contracts. The Company shall not be required by Section
10.3 to establish a new funding medium for the Contracts if an offer to do so
has been declined by vote of a majority of Owners affected by the irreconcilable
material conflict. In the event that the Directors determine that any proposed
action does not adequately remedy any reconcilable material conflict, then the
Company will withdraw the Account's investment in the applicable Fund and
terminate this Agreement as quickly as may be required to comply with applicable
law, but in no event later than six (6) months after the Directors inform the
Company in writing of the foregoing determination, PROVIDED, HOWEVER, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict.
10.6 CHANCES IN LAWS. If and to the extent that Rule 6e-2 and Rule 6e-3(T)
are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the Act or the rules promulgated thereunder with respect to mixed
or shared funding (as defined in the Funds' Exemptive Order) on terms and
conditions materially different from those contained in the Funds' Exemptive
Order, then (a) the Funds and/or the Company, as appropriate, shall take such
steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections
10.1, 10.2, 10.3 and 10.4 of this Agreement shall continue in effect only to the
extent that terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
11. MAINTENANCE OF RECORDS.
(a) Recordkeeping and other administrative services to Owners shall be
the responsibility of the Company and shall not be the responsibility of the
Funds, Adviser or Distributors. None of the Funds, the Adviser or Distributors
shall maintain separate accounts or records for Owners. Company shall maintain
and preserve all records as required by law to be maintained and preserved in
connection with providing the Services and in making shares of the Funds
available to the Account.
(b) Upon the request of the Adviser or Distributors, the Company shall
provide copies of all the historical records relating to transactions between
the Funds and the Account, written communications regarding the Funds to or from
the Account and other materials, in each case (1) as are maintained by the
Company in the ordinary course of its business and in compliance with applicable
law, and (2) as may reasonably be requested to enable the Adviser and
Distributors, or its representatives, including without limitation its auditors
or legal counsel, to (A) monitor and review the Services, (B) comply with any
request of a Governmental body or self-regulatory organization or the Owners,
(C) verify compliance by the Company with the terms of this Agreement, (D) make
required regulatory reports, or (E) perform general customer supervision. The
Company agrees that it will permit the Adviser and Distributors or such
representatives of either to have reasonable access to its personnel and records
in order to facilitate the monitoring of the quality of the Services.
(c) Upon the request of the Company, the Adviser and Distributors shall
provide copies of all the historical records relating to transactions between
the Funds and the Account, written communications regarding the Funds to or from
the Account and other materials, in each case (1) as are maintained by the
Adviser and Distributors, as the case may be, in the ordinary course of its
business and in compliance with applicable law, and (2) as may reasonably be
requested to enable the Company, or its representatives, including without
14
limitation its auditors or legal counsel, to (A) comply with any request of a
governmental body or self-regulatory organization or the Owners, (B) verify
compliance by the Adviser and Distributors with the terms of this Agreement, (C)
make required regulatory reports, or (D) perform general customer supervision.
(d) The Parties agree to cooperate in good faith in providing records
to one another pursuant to this Section 11.
12. TERM AND TERMINATION.
12.1 TERM AND TERMINATION WITHOUT CAUSE. The initial term of this Agreement
shall be for a period of one year from the date hereof. Unless terminated as to
any Fund upon not less than thirty (30) days prior written notice to the other
Parties, this Agreement shall thereafter automatically renew for the remaining
Funds from year to year, subject to termination at the next applicable renewal
date upon not less than 30 days prior written notice. Any Party may terminate
this Agreement as to any Fund following the initial term upon six (6) months
advance written notice to the other Parties.
12.2 TERMINATION BY FUND, DISTRIBUTORS OR ADVISER FOR CAUSE. Adviser, Fund
or Distributors may terminate this Agreement by written notice to the Company,
if any of them shall determine, in its sole judgment exercised in good faith,
that (a) the Company has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or (b) any of the Contracts are
not registered, issued or sold in accordance with applicable state and federal
law or such law precludes the use of Fund shares as the underlying investment
media of the Contracts issued or to be issued by the Company.
12.3 TERMINATION BY COMPANY FOR CAUSE. Company may terminate this Agreement
by written notice to the Adviser, Funds and Distributors in the event that (a)
any of the Fund shares are not registered, issued or sold in accordance with
applicable state or federal law or such law precludes the use of such shares as
the underlying investment media of the Contracts issued or to be issued by the
Company; (b) the Funds cease to qualify as Regulated Investment Companies under
Subchapter M of the Code or under any successor or similar provision, or if the
Company reasonably believes that the Funds may fail to so qualify; (c) a Fund
fails to meet the diversification requirements specified in Section 6.4(a); or
(d) Distributors or Adviser has suffered a material adverse change in its
business, operations, financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity.
12.4 TERMINATION BY ANY PARTY. This Agreement may be terminated as to any
Fund by any Party at any time (A) by giving 30 days' written notice to the other
Parties in the event of a material breach of this Agreement by the other Party
or Parties that is not cured during such 30-day period, and (B) (i) upon
institution of formal proceedings relating to the legality of the terms and
conditions of this Agreement against the Account, Company, Funds, Adviser or
Distributors by the NASD, the SEC or any other regulatory body provided that the
terminating Party has a reasonable belief that the institution of formal
proceedings is not without foundation and will have a material adverse impact on
the terminating Party, (ii) by the non-assigning Party upon the assignment of
this Agreement in contravention of the terms hereof, or (iii) as is required by
law,
15
order or instruction by a court of competent jurisdiction or a regulatory body
or self-regulatory organization with jurisdiction over the terminating Party.
12.5 LIMIT ON TERMINATION. Notwithstanding the termination of this
Agreement with respect to any or all Funds, for so long as any Contracts remain
outstanding and invested in a Fund each Party to this Agreement shall continue
to perform such of its duties under this Agreement as are necessary to ensure
the continued tax deferred status thereof and the payment of benefits
thereunder, except to the extent proscribed by law, the SEC or other regulatory
body. Notwithstanding the foregoing, nothing in this Section 12.5 obligates a
Fund to continue in existence. In the event that any Fund elects to terminate
its operations, the Company shall, as soon as practicable, obtain an exemptive
order or order of substitution from the SEC to remove all Owners from the
applicable Fund and Adviser or Distributors shall reimburse Company for any
necessary and reasonable expenses (including expenses of legal counsel) incurred
by Company to obtain such order up to a maximum amount of reimbursement of
$5,000.
13. NOTICES.
All notices under this Agreement shall be given in writing (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
facsimile, by registered or certified mail or by overnight delivery (postage
prepaid, return receipt requested) to the respective Parties as follows:
If to Strong Variable:
Strong Variable Insurance Funds, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Special Fund:
Strong Special Fund II, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Adviser:
Strong Capital Management, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Distributors:
16
Strong Funds Distributors, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Company:
Great American Reserve Insurance Co.
00000 Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: L. Xxxxxxx Xxxxxxxxx, Senior Vice President
Facsimile No.: 317/817-2342
14. MISCELLANEOUS.
14.1 CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way affect the construction or effect of any
provisions hereof.
14.2 ENFORCEABILITY. If any portion of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
14.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
14.4 REMEDIES NOT EXCLUSIVE. The rights, remedies and obligations contained
in this Agreement are cumulative and are in addition to any and all rights,
remedies and obligations, at law or in equity, which the Parties to this
Agreement are entitled to under state and federal laws.
14.5 CONFIDENTIALITY. Subject to the requirements of legal process and
regulatory authority, the Funds and Distributors shall treat as confidential the
names and addresses of the owners of the Contracts and all information
reasonably identified as confidential in writing by the Company to this
Agreement and, except as permitted by this Agreement, shall not disclose,
disseminate or utilize such names and addresses and other confidential
information without the express written consent of the Company until such time
as it may come into the public domain.
14.6 GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the internal laws of the State of Wisconsin applicable to
agreements fully executed and to be performed therein; exclusive of conflicts of
laws.
14.7 SURVIVABILITY. Sections 6, 7.2, 7.3, 7.4, 9, 11 and 12.5 hereof shall
survive termination of this Agreement. In addition, all provisions of this
Agreement shall survive termination of this Agreement in the event that any
Contracts are invested in a Fund at the time the termination becomes effective
and shall survive for so long as such Contracts remain so invested.
17
14.8 AMENDMENT AND WAIVER. No modification of any provision of this
Agreement will be binding unless in writing and executed by the Party to be
bound thereby. No waiver of any provision of this Agreement will be binding
unless in writing and executed by the Party granting such waiver.
Notwithstanding anything in this Agreement to the contrary, the Company may
unilaterally amend Exhibit A to this Agreement to add additional series of
Strong Variable Funds ("New Funds") as Funds by sending to the Company a written
notice of the New Funds. Any valid waiver of a provision set forth herein shall
not constitute a waiver of any other provision of this Agreement. In addition,
any such waiver shall constitute a present waiver of such provision and shall
not constitute a permanent future waiver of such provision.
14.9 ASSIGNMENT. This Agreement shall be binding upon and shall inure to
the benefit of the Parties and their respective successors and assigns;
PROVIDED, HOWEVER, that neither this Agreement nor any rights, privileges,
duties or obligations of the Parties may be assigned by any Party without the
written consent of the other Parties or as expressly contemplated by this
Agreement.
14.10 ENTIRE AGREEMENT. This Agreement contains the full and complete
understanding between the Parties with respect to the transactions covered and
contemplated under this Agreement, and supersedes all prior agreements and
understandings between the Parties relating to the subject matter hereof,
whether oral or written, express or implied.
14.11 RELATIONSHIP OF PARTIES; NO JOINT VENTURE, ETC. Except for the
limited purpose provided in Section 3.8, it is understood and agreed that the
Company shall be acting as an independent contractor and not as an employee or
agent of the Adviser, Distributors or the Funds, and none of the Parties shall
hold itself out as an agent of any other Party with the authority to bind such
Party. Neither the execution nor performance of this Agreement shall be deemed
to create a partnership or joint venture by and among any of the Company, Funds,
Adviser, or Distributors.
14.12 EXPENSES. All expenses incident to the performance by each Party of
its respective duties under this Agreement shall be paid by that Party.
14.13 Each of the Parties acknowledges and agrees that this Agreement and
the arrangements described herein are intended to be non-exclusive and that each
of the Parties is free to enter into similar agreements and arrangements with
other entities.
14.14 OPERATIONS OF FUNDS. In no way shall the provisions of this Agreement
limit the authority of the Funds, the Company or Distributors to take such
action as it may deem appropriate or advisable in connection with all matters
relating to the operation of such Fund and the sale of its shares. In no way
shall the provisions of this Agreement limit the authority of the Company to
take such action as it may deem appropriate or advisable in connection with all
matters relating to the provision of Services or the shares of funds other than
the Funds offered to the Account.
18
GREAT AMERICAN RESERVE INSURANCE COMPANY
/s/ L. Xxxxxxx Xxxxxxxxx
------------------------------------------------------------
L. Xxxxxxx Xxxxxxxxx, Senior Vice President
STRONG CAPITAL MANAGEMENT, INC.
/s/ Xxxxxxxx Xxxx Xxxxxxx
------------------------------------------------------------
Xxxxxxxx Xxxx Xxxxxxx, President of Strong Advisory Services,
a division of Strong Capital Management, Inc.
STRONG FUNDS DISTRIBUTORS, INC.
/s/ Xxxxxxx X. Xxxxxxxxxxx
------------------------------------------------------------
Xxxxxxx X. Xxxxxxxxxxx, Vice President
STRONG VARIABLE INSURANCE FUNDS, INC., on behalf
of the Designated Portfolios
/s/ Xxxxxxx X. Xxxxxxxxxxx
------------------------------------------------------------
Xxxxxxx X. Xxxxxxxxxxx, Vice President
STRONG SPECIAL FUND II, INC.
/s/ Xxxxxxx X. Xxxxxxxxxxx
------------------------------------------------------------
Xxxxxxx X. Xxxxxxxxxxx, Vice President
19
EXHIBIT A
The following is a list of Designated Portfolios under this Agreement:
Strong Discovery Fund II
Strong Growth Fund II
20
EXHIBIT B
THE SERVICES
Company shall perform the following services. Such services shall be the
responsibility of the Company and shall not be the responsibility of the Funds,
Adviser or Distributors.
1. Maintain separate records for each Account, which records shall reflect
Fund shares ("Shares") purchased and redeemed, including the date and price for
all transactions, Share balances, and the name and address of each Owner,
including zip codes and tax identification numbers.
2. Credit contributions to individual Owner accounts and invest such
contributions in shares of the Funds to the extent so designated by the Owner.
3. Disburse or credit to the Owners, and maintain records of, all proceeds
of redemptions of Fund shares and all other distributions not reinvested in
shares.
4. Prepare and transmit to the Owners, periodic account statements showing,
among other things, the total number of Fund shares owned as of the statement
closing date, purchases and redemptions of shares during the period covered by
the statement, the net asset value of the Funds as of a recent date, and the
dividends and other distributions paid during the statement period (whether paid
in cash or reinvested in shares).
5. Transmit to the Owners, as required by applicable law, prospectuses,
proxy materials, shareholder reports, and other information provided by the
Adviser, Distributors or Funds and required to be sent to shareholders under the
Federal securities laws.
6. Transmit to Distributors purchase orders and redemption requests placed
by the Account and arrange for the transmission of funds to and from the Funds.
7. Transmit to Distributors such periodic reports as Distributors shall
reasonably conclude is necessary to enable the Funds to comply with applicable
Federal securities and state Blue Sky requirements.
8. Transmit to each Account confirmations of purchase orders and redemption
requests placed by each Account.
9. Maintain all account balance information for the Account and daily and
monthly purchase summaries expressed in shares and dollar amounts.
10. Prepare, transmit and file any Federal, state and local government
reports and returns as required by law with respect to each account maintained
on behalf of the Account.
11. Respond to Owners' inquiries regarding, among other things, share
prices, account balances, dividend options, dividend amounts, and dividend
payment dates.
21
EXHIBIT C
ACCOUNT INFORMATION
1. Entity in whose name each account will be opened: Great American Reserve Insurance
Mailing address: --------------------------------
00000 X. Xxxxxxxxxxxx Xxxxxx
-------------------------------------
Xxxxxx, XX 00000
-----------------------------------
2. Employer ID number (FOR INTERNAL USAGE ONLY): 00-0000000
----------
3. Authorized contact persons: The following persons are authorized on behalf
of the Company to effect transactions in each account:
Name: Xxxxxx XxXxxx Name:
------------------------------ ------------------------------
Phone: 000-000-0000 Phone:
------------------------------ -----------------------------
4. Will the accounts have telephone exchange? ____Yes ____ No
(THIS OPTION LETS COMPANY REDEEM SHARES BY TELEPHONE AND APPLY THE
PROCEEDS FOR PURCHASE IN ANOTHER IDENTICALLY REGISTERED STRONG FUNDS
ACCOUNT.)
5. Will the accounts have telephone redemption? ____Yes ____ No
(THIS OPTION LETS COMPANY SELL SHARES BY TELEPHONE. THE PROCEEDS WILL
BE WIRED TO THE BANK ACCOUNT SPECIFIED BELOW.)
6. All dividends and capital gains will be reinvested automatically.
7. Instructions for all outgoing wire transfers: Bankers Trust Company
New York, NY
ABA #021601033
Great American Reserve
# 00223319
8. If this Account Information Form contains changed information, the
undersigned authorized officer has executed this amended Account Information
Form as of the date set forth below and acknowledges the agreements and
representations set forth in the Participation Agreement between the Company,
the Funds, Adviser and Distributors:
/s/ L. Xxxxxxx Xxxxxxxxx 12/12/97
----------------------------------- ---------------------
(SIGNATURE OF AUTHORIZED OFFICER) (DATE)
9. Company represents under penalty of perjury that:
(i) The employer ID number on this form is correct; and
22
(ii) Company is not subject to backup withholding because (a) Company is
exempt from backup withholding, (b) Company has not been notified by the IRS
that it is subject to backup withholding as a result of failure to report all
interest or dividends, or (c) the IRS has notified the Company that it is no
longer subject to backup withholding. (Cross out (ii) if Company has been
notified by the IRS that it is subject to backup withholding because of
underreporting interest or dividends on its tax return.)
PLEASE NOTE: DISTRIBUTORS EMPLOYS REASONABLE PROCEDURES TO CONFIRM THAT
INSTRUCTIONS COMMUNICATED BY TELEPHONE ARE GENUINE AND MAY NOT BE LIABLE FOR
LOSSES DUE TO UNAUTHORIZED OR FRAUDULENT INSTRUCTIONS. PLEASE SEE THE PROSPECTUS
FOR THE APPLICABLE FUND FOR MORE INFORMATION ON THE TELEPHONE EXCHANGE AND
REDEMPTION PRIVILEGES.
FOR STRONG INTERNAL USE: THIS ACCOUNT INFORMATION FORM MAY BE A COPY. THE
ORIGINAL ACCOUNT INFORMATION FORM IS ATTACHED TO THE PARTICIPATION AGREEMENT
WITH THE ADVISER AND RETAINED IN THE LEGAL DEPARTMENT.
23
Re: Fee Letter Relating to the Great American Reserve Insurance Company
Participation Agreement.
Dear Xxxx:
Pursuant to the Participation Agreement by and among Strong Capital
Management, Inc. ("Strong"), Great American Reserve Insurance Company (the
"Company"), Strong Variable Insurance Funds, Inc., Strong Special Fund II, Inc.
and Strong Funds Distributors, Inc. ("Distributors") dated as of April 30, 1997
(the "Participation Agreement"), the Company will provide certain administrative
services on behalf of the registered investment companies or series thereof
specified in Exhibit A (each a "Fund" and collectively the "Funds").
In recognition of the reduction in administrative expenses that derives
from the performance of said administrative services. Strong agrees to pay the
Company the fee specified below for each Fund specified in Exhibit A to this
Agreement.
(a) For average aggregate amounts (as calculated in paragraph (b),
below) invested through variable insurance products issued by the Company
with the Funds, the monthly fee shall equal the percentage (calculated in
paragraph (b), below) of the applicable annual fee for each Fund specified
in Exhibit A.
(b) For purposes of computing the fee contemplated in paragraph (a)
above, Strong shall calculate and pay to the Company an amount with respect
to each Fund equal to the product of: (a) the product of (i) the number of
calendar days in the applicable month divided by the number of calendar days
in that year (365 or 366 as applicable) and (ii) the applicable percentage
specified in Exhibit A to this Agreement, multiplied by (b) the average
daily market value of the investments held in such Fund pursuant to the
Participation Agreement computed by totaling the aggregate investment (share
net asset value multiplied by the total number of shares held) on each day
during the calendar month and value divided by the total number of days
during such month.
(c) Strong shall calculate the amount of the payment to be made
pursuant to this Letter Agreement at the end of each calendar month and will
make such payment to the Company within 30 days after receiving the report
referenced in paragraph (e), below. Fees will be paid, at Strong's election,
by wire transfer or by check. All payments under this Agreement shall be
considered final unless disputed by the Company in writing within 60 days of
receipt.
(d) The parties agree that the fees contemplated herein are solely for
shareholder servicing and other administrative services provided by the
Company and do not constitute payment in any manner for investment advisory
distribution, trustee, or custodial services.
(e) The Company agrees to provide Strong by the 15th day of each month
with a report which indicates the number of Owners that hold through a
Contract interests in each Account as of the last day of the prior month.
24
(f) If requested in writing by Strong, and at Strong's expense, the
Company shall provide to Strong, by February 14th of each year, a "Special
Report" from a nationally recognized accounting firm reasonably acceptable
to Strong which substantiates for each month of the prior calendar year: (a)
the number of Owners that hold, through an Account, interests in each
Account maintained by the Company on the last day of each month which held
shares for which the fee provided for in this Letter Agreement was received
by the Company, (b) that any fees billed to Strong for such month were
accurately determined in accordance with this Letter Agreement, and (c) such
other information in connection with this Agreement and the Participation
Agreement as may be reasonably requested by Strong.
(g) The parties to this Agreement agree that Strong may unilaterally
amend Schedule A to this Agreement to add additional investment companies or
series thereof ("New Funds"), as Funds subject to the provisions of this
Letter Agreement by sending to the Company a written notice of the New Funds
and indicating therein the fees to be paid to the Company with respect to
the administrative services provided pursuant to the Participation Agreement
in connection with such New Funds.
(h) This Letter Agreement shall terminate upon termination of the
Participation Agreement. Accordingly, all payments pursuant to this Letter
Agreement shall cease upon termination of the Participation Agreement.
(i) Capitalized terms not otherwise defined herein shall have the
meaning assigned to them in the Participation Agreement.
If you are in agreement with the foregoing, please sign and date below
where indicated and return one copy of this signed letter agreement to me.
Very truly yours,
/s/ Xxxxxxxx Xxxx Xxxxxxx
---------------------------------------------
Xxxxxxxx Xxxx Xxxxxxx
President, Strong Advisory Services, a
division of Strong Capital Management, Inc.
Accepted and agreed as of April 30, 1997.
GREAT AMERICAN RESERVE INSURANCE COMPANY
/s/ L. Xxxxxxx Xxxxxxxxx
--------------------------------------------
L. Xxxxxxx Xxxxxxxxx, Senior Vice President
25
EXHIBIT A
The Funds subject to this Agreement and applicable fees are as follows:
(i) For the aggregate value of the average daily market value of Fund
Shares held in the Omnibus Accounts each month up to one hundred million dollars
($100,000,000), the applicable percentage for each Fund to be applied for that
month to that amount shall be as follows:
FUND ANNUAL FEE
Strong Special Fund II, Inc. .20%
Strong Variable Insurance Funds, Inc.
Strong Discovery Fund II .20%
Strong Growth Fund II .20%
; and
(ii) For the aggregate value of the average daily market value of Fund
Shares held in the Omnibus Accounts each month greater than one hundred million
dollars ($100,000,001), the applicable percentage for each Fund to be applied
for that month to that amount shall be as follows:
FUND ANNUAL FEE
Strong Special Fund II, Inc. .25%
Strong Variable Insurance Funds, Inc.
Strong Discovery Fund II .25%
Strong Growth Fund II .25%
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