Exhibit 14.(xi)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is entered into as of this [____]th day of April, 2002
among GENERAL AMERICAN LIFE INSURANCE COMPANY ("General American"), a life
insurance company organized under the laws of the State of Missouri (on behalf
of itself and certain of its separate accounts); AMERICAN FUNDS INSURANCE SERIES
("Series"), an open-end management investment company organized under the laws
of the Commonwealth of Massachusetts, and CAPITAL RESEARCH AND MANAGEMENT
COMPANY ("CRMC"), a corporation organized under the laws of the State of
Delaware.
WITNESSETH:
WHEREAS, General American proposes to issue certain multi-manager
variable life insurance policies that provide certain funds ("Funds") of the
Series as investment options (the "Contracts");
WHEREAS, General American has established pursuant to Missouri
insurance law one or more separate accounts (each, an "Account") for purposes of
issuing the Contracts and has or will register each Account (unless the Account
is exempt from such registration) with the United States Securities and Exchange
Commission (the "Commission") as a unit investment trust under the Securities
Act of 1933 (the "1933 Act") and the Investment Company Act of 1940 (the "1940
Act");
WHEREAS, the Contracts, which are or will be registered by General
American with the Commission for offer and sale, will be in compliance with all
applicable laws prior to being offered for sale;
WHEREAS, the Series has received a "Mixed and Shared Funding Order"
from the Commission granting relief from certain provisions of the 1940 Act and
the rules thereunder to the extent necessary to permit shares of the Series to
be sold to variable annuity and life insurance separate accounts of unaffiliated
insurance companies;
WHEREAS, the Series is divided into various Funds, each Fund being
subject to certain fundamental investment policies which may not be changed
without a majority vote of the shareholders of such Fund;
WHEREAS, certain Funds listed in Attachment A to this Agreement will
serve as certain of the underlying investment mediums for the Contracts; and
WHEREAS, CRMC is the investment adviser for the Series.
NOW, THEREFORE, in consideration of the foregoing and of mutual
covenants and conditions set forth herein and for other good and valuable
consideration, General American the
Series and CRMC hereby agree as follows:
1. The Series and CRMC each represents and warrants to General
American that: (a) a registration statement under the 1933 Act and under the
1940 Act with respect to the Series has been filed with the Commission in the
form previously delivered to General American, and copies of any and all
amendments thereto will be forwarded to General American at the time that they
are filed with the Commission; (b) the Series is, and shall be at all times
while this Agreement is in force, lawfully organized, validly existing, and
properly qualified as an open-end management investment company in accordance
with the laws of the Commonwealth of Massachusetts; and (c) the Series'
registration statement and any further amendments thereto will, when they become
effective, and all definitive prospectuses and statements of additional
information and any further supplements thereto (the "Prospectus") shall,
conform in all material respects to the requirements of the 1933 Act and the
1940 Act and the rules and regulations of the Commission thereunder, and will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statement therein
not misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Series by General American
expressly for use therein.
2. The Series will furnish to General American such information
with respect to the Series in such form and signed by such of its officers as
General American may reasonably request, and will warrant that the statements
therein contained when so signed will be true and correct. The Series will
advise General American immediately of: (a) the issuance by the Commission of
any stop order suspending the effectiveness of the registration statement of the
Series or the initiation of any proceeding for that purpose; (b) the institution
of any proceeding, investigation or hearing involving the offer or sale of the
Contracts or the Series of which it becomes aware; or (c) the happening of any
material event, if known, which makes untrue any statement made in the
registration statement of the Series or which requires the making of a change
therein in order to make any statement made therein not misleading.
3. The Series will use best efforts to register for sale under
the 1933 Act and, if required, under state securities laws, such additional
shares of the Series as may reasonably be necessary for use as the funding
vehicle for the Contracts.
4. The Series agrees to make Class 2 shares of the Funds listed
on Attachment A hereto available to the Contracts. General American will be
entitled to a Rule 12b-1 service fee to be accrued daily and paid monthly at an
annual rate of 0.25% of the average daily net assets of the Class 2 shares of
each Fund attributable to the Contracts for personal services and account
maintenance services for Contract owners with investments in subaccounts
corresponding to the Class 2 shares of each Fund (each, a "Subaccount") for as
long as the Series' Plan of Distribution pursuant to Rule 12b-1 under the 1940
Act (the "12b-1 plan") remains in effect. Fund shares to be made available to
Accounts for the Contracts shall be sold by the Series and purchased by General
American for a given Account at the net asset value of the respective class of
the respective Fund (without the imposition of a sales load) next computed after
receipt of each order by the Series or its designee, as established in
accordance with the provisions of the then current
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Prospectus of the Series. For purposes of this Paragraph 4, General American
shall be a designee of the Series for receipt of such orders from each Account,
and receipt by such designee by 4:00 p.m. Eastern time (or other such time the
Board of Trustees of the Series shall so designate) shall constitute receipt by
the Series; provided that the Series receives notice of such order by 10:00 a.m.
Eastern time on the following Business Day ("Next Business Day"). "Business Day"
shall mean any day on which the New York Stock Exchange ("NYSE") is open for
trading and on which the Series calculates the net asset values of each class of
shares of each Fund pursuant to the rules of the Commission. The Series will
make the shares of each class of each Fund available indefinitely for purchase
at the applicable net asset value per share by General American and its Accounts
on those days on which the Series calculates the net asset values of each such
class pursuant to the rules of the Commission, and the Series shall use its best
efforts to calculate such net asset values on each day on which the NYSE is open
for trading. The Series shall make the net asset value per share for each class
of each Fund available to General American on a daily basis as soon as
reasonably practical after the Series calculates such net asset values per
share, and the Series shall use its best efforts to make such net asset values
per share available by 6:30 p.m. Eastern time. If the Series provides incorrect
net asset values to General American with respect to any class of shares of any
Fund on any Business Day, General American shall be entitled (on behalf of each
affected Account) to an adjustment to the number of shares purchased or redeemed
of such class of shares to reflect the correct net asset value per share. Any
error in the calculation or reporting of net asset values per share, dividends,
or capital gain information shall be reported promptly to General American. Any
costs incurred by General American with respect to correcting Contract owner
accounts, including, but not limited to, amounts paid to Contract owners and
administrative expenses, shall be promptly reimbursed by CRMC. The Series and
CRMC are responsible for maintaining net asset values for each class of each
Fund in accordance with the requirements of the 1940 Act and the Series' then
current Prospectus. Payments for shares purchased will be made in federal funds
transmitted by wire on the Next Business Day, and General American and the Fund
shall each use commercially reasonable efforts to wire (or cause to be wired)
funds to the other, for the purpose of settling net purchase orders or orders of
redemption, by 3:00 p.m. Eastern time on the Next Business Day.
The Series reserves the right to temporarily suspend sales if
the Board of Trustees of the Series deems it appropriate and in the best
interests of the Series or in response to the order of an appropriate regulatory
authority. General American reserves the right to refuse, to impose limitations
on, or to limit any transaction request if the request would tend to disrupt
Contract administration or is not in the best interest of the Contract holders
or an Account or Subaccount.
5. The Contracts funded through each Account will provide for the
allocation of net amounts among certain Subaccounts for investment in shares of
a class of the Funds as may be offered from time to time in the Contracts. The
selection of the particular Subaccount is to be made by the Contract owner and
such selection may be changed in accordance with the terms of the Contracts.
6. Transfer of the Series' shares will be by book entry only. No
stock certificates will be issued to the Account. Shares ordered from a
particular Fund will be recorded by the
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Series as instructed by General American in an appropriate title for the
corresponding Account or Subaccount.
7. The Series shall furnish notice promptly to General American
of any dividend or distribution payable on any shares underlying Subaccounts.
General American hereby elects to receive all such dividends and distributions
as are payable on shares of a Fund recorded in the title for the corresponding
Subaccount in additional shares of that Fund. The Series shall notify General
American of the number of shares so issued. General American reserves the right
to revoke this election and to receive all such income dividends and capital
gain distributions in cash.
8. The Series shall redeem its shares in accordance with the
terms of its then current Prospectus. For purposes of this Paragraph 8, General
American shall be a designee of the Series for receipt of requests for
redemption from each Account, and receipt by such designee by 4:00 p.m. Eastern
time (or other such time the Board of Trustees of the Series shall so designate)
shall constitute receipt by the Series; provided that the Series receives notice
of such request for redemption by 10:00 a.m. Eastern time on the Next Business
Day. General American shall purchase and redeem the shares of Funds offered by
the then current Prospectus of the Series in accordance with the provisions of
such Prospectus.
9. The Series shall pay all expenses incidental to its
performance under this Agreement. The Series shall see to it that all of its
shares are registered and authorized for issue in accordance with applicable
federal and state laws prior to their purchase for the Account. The Series shall
bear the expenses for the cost of registration of its shares, preparation of
prospectuses and statements of additional information to be sent to existing
Contract owners (upon request in the case of the statement of additional
information), proxy statements and related materials and annual and semi-annual
shareholder reports, the printing and distribution of such items to each
Contract owner who has allocated net amounts to any Subaccount, the preparation
of all statements and notices required from it by any federal or state law, and
taxes on the issue or transfer of the Series' shares subject to this Agreement.
The Series will provide General American, at least once a year, with enough
copies of its Statement of Additional Information to be able to distribute one
to each Contract owner or prospective Contract owner who requests such Statement
of Additional Information.
10. General American shall bear the expenses for the cost of
preparation and delivery of Series prospectuses (and supplements thereto) to be
sent to prospective Contract owners. The Series shall provide, at its expense,
such documentation (in camera-ready or other mutually agreeable form) and other
assistance as is reasonably necessary in order for General American once each
year (or more frequently if the prospectus for the Series is amended), and twice
each year in the case of the annual and semi-annual shareholder reports, to have
the prospectus or prospectuses, and the annual and semi-annual shareholder
reports for the Contracts and the Series, printed together in one or more
documents (such printing to be done at General American's expense with respect
to prospective investors).
11. General American represents and warrants to the Series that
any information
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furnished in writing by General American to the Series for use in the
registration statement of the Series will not result in the registration
statement's failing to conform in all respects to the requirements of the 1933
Act and the 1940 Act and the rules and regulations thereunder or containing any
untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
12. General American and its affiliates shall make no
representations concerning the Series' shares except those contained in the then
current Prospectus of the Series, in such printed information subsequently
issued on behalf of the Series or other funds managed by CRMC as supplemental to
the Series' Prospectus, in information published on the Series' or CRMC's
internet site, or in materials approved by AFD, as provided in the Business
Agreement in effect among General American, AFD, and CRMC dated as of April
_______, 2002 (the "Business Agreement").
13. Shares of the Series may be offered to separate accounts of
various insurance companies in addition to General American. The Series and the
General American each represents, warrants and covenants that no shares of the
Series shall be sold to the general public in contravention of Section 817 of
the Internal Revenue Code of 1986 as amended and the regulations thereunder (the
"Code") ("Section 817"). The Series agrees that each Fund will comply with the
diversification requirements of Section 817. The Series also agrees to maintain
each Fund's qualification as a "regulated investment company" ("RIC") under the
Code. The Series will provide General American with securities holdings reports
for each Fund within ten days after each calendar quarter.
14. The parties to this Agreement recognize that due to
differences in tax treatment or other considerations, the interests of various
Contract owners participating in one or more Funds might, at some time, be in
conflict. Each party shall report to the other party any potential or existing
conflict of which it becomes aware. The Board of Trustees of the Series shall
promptly notify General American of the existence of irreconcilable material
conflict and its implications. If such a conflict exists, General American will,
at its own expense, take whatever action it deems necessary to remedy such
conflict; in any case, Contract owners will not be required to bear such
expenses.
15. General American agrees to indemnify and hold the Series
harmless against, any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses) to which the Series may be subject under
any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
arising as a result of General American's: (a) making untrue statements of
material facts or omitting material facts in a Contract's registration
statement, prospectus, statement of additional information, semi-annual or
annual reports to Contract owners or sales literature for the Contracts; (b)
making untrue statements of material facts that the Series includes in the same
materials of the Series, provided that Series relies on information supplied by
General American; (c) unlawful conduct, bad faith, willful malfeasance, or gross
negligence by General American with respect to the sale of the Contracts or Fund
shares; and (d) breaching this Agreement or a representation or warranty.
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16. The Series and CRMC each agrees to indemnify and hold General
American harmless against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses) which General American may be
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements arising as a result of the Series', or CRMC's: (a) making untrue
statements of material facts or omitting material facts in the Series'
registration statement, prospectuses or statements of additional information,
semi-annual and annual reports to shareholders, and sales literature; (b) making
untrue statements of material facts that the Series includes in its materials,
provided General American relies on information supplied by the Series; (c)
unlawful conduct, bad faith, willful malfeasance, or gross negligence by the
Series with respect to the sale of the Contracts or Fund shares or the operation
of the Series or a Fund; (d) failure of the Series to comply with any Fund's
investment objectives, policies and restrictions; and (e) breaching this
Agreement or a representation or warranty, including, but not limited to, the
representations, warranties and covenants in Section 13.
17. General American shall be responsible for assuring that the
Account calculates pass-through voting privileges of Contract owners in a manner
consistent with the method of calculating pass-through voting privileges set
forth in the current Contract.
18. The parties understand that there is no intention to create a
joint venture in the subject matter of this Agreement. Accordingly, the right to
terminate this Agreement and to engage in any activity not inconsistent with
this Agreement is absolute. This Agreement will terminate:
(a) by mutual agreement at any time; or
(b) any party at any time upon six months written notice to the
other parties; or
(c) at the option of General American or the Series upon ten
calendar days prior written notice to the other party if a
final non-appealable administrative or judicial decision is
entered against the other party which has a material impact on
the Contracts;
(d) at the option of General American, upon ten calendar days
prior written notice, if shares of the Series are not
reasonably available;
(e) at the option of General American, immediately upon written
notice, if the Series or CRMC fails to meet the requirements
for either diversification under Section 817 or RIC status
under the Code, or if the Board of the Series terminates the
12b-1 plan; or
(f) in the event the Series' shares are not registered, issued or
sold in accordance with applicable state and/or federal law or
such law precludes the use of such shares as an underlying
investment for the Contracts issued or to be issued by General
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American; in such event prompt notice shall be given by
General American or the Series to the other party.
The effective date for termination pursuant to any notice given under
this Paragraph shall be calculated beginning with the date of receipt of such
notice.
19. All notices, consents, waivers, and other communications under
this Agreement must be in writing, and will be deemed to have been duly
received: (a) when delivered by hand (with written confirmation of receipt); (b)
when sent by telecopier (with written confirmation of receipt), provided that a
copy is mailed by registered mail, return receipt requested; or (c) the day
after it is sent by a nationally recognized overnight delivery service, in each
case to the appropriate addresses and telecopier numbers set forth below (or to
such other addresses and facsimile numbers as a party may designate by notice to
the other parties):
IF TO GENERAL AMERICAN:
General American Life Insurance Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Associate General Counsel
Facsimile No.: 000-000-0000
WITH A COPY TO:
General American Life Insurance Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. XxXxxxxx, Senior Vice President
Facsimile No.: 000-000-0000
IF TO SERIES:
American Funds Insurance Series
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Senior Vice President
Facsimile No.: 000-000-0000
WITH A COPY TO:
Capital Research and Management Company
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Vice President and Senior Counsel,
Fund Business Management Group
Facsimile No.: 000-000-0000
IF TO CRMC:
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Capital Research and Management Company
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Senior Vice President and Legal Counsel,
Fund Business Management Group, and Secretary
Facsimile No.: 000-000-0000
WITH A COPY TO:
Capital Research and Management Company
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Vice President and Senior Counsel,
Fund Business Management Group
Facsimile No.: 000-000-0000
20. If this Agreement terminates, any provision of this Agreement
necessary to the orderly windup of business under it will remain in effect as to
that business, after termination.
21. If this Agreement terminates, the Series, at General
American's option, will continue to make additional shares of the Series
available for all existing Contracts as of the effective date of termination
(under the same terms and conditions as were in effect prior to termination of
this Agreement with respect to existing Contract owners), unless the Series
liquidates or applicable laws prohibit further sales. General American agrees
not to redeem shares unless (i) the Agreement is terminated pursuant to Section
18(e) or 18(f); (ii) legitimately required to do so according to a Contract
owner's request; or (iii) under an order from the Commission or pursuant to vote
of Contract owners.
22. The obligations of the Series under this Agreement are not
binding upon any of the Trustees, officers, employees, or shareholders (except
CRMC if it is a shareholder) of the Series individually, but bind only the
Series' assets. When seeking satisfaction for any liability of the Series in
respect of this Agreement, General American and the Account agree not to seek
recourse against said Trustees, officers, employees, or shareholders, or any of
them, or any of their personal assets for such satisfaction. Notwithstanding the
foregoing, if General American seeks satisfaction for any liability of the
Series in respect of this Agreement, General American (on behalf of itself or
any Account) may seek recourse against CRMC.
23. This Agreement shall be construed in accordance with the laws
of the Commonwealth of Massachusetts.
24. This Agreement and the parties' rights, duties, and
obligations under this Agreement are not transferable or assignable by any of
them without the express, prior written consent of the other party hereto. Any
attempt by a party to transfer or assign this Agreement or any of its rights,
duties or obligations under this Agreement without such consent is void;
provided, however, that a merger of, reinsurance arrangement by, or change of
control of a party shall not be deemed to be an assignment for purposes of this
Agreement.
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25. The following Paragraphs shall survive any termination of this
Agreement: 4, 15, 16, 17, 20, 21-26.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested as of the date first above written.
GENERAL AMERICAN LIFE INSURANCE
COMPANY (ON BEHALF OF ITSELF AND EACH
ACCOUNT)
Attest:
By: _______________________________
___________________________ Its:
AMERICAN FUNDS INSURANCE SERIES
Attest:
By: _______________________________
___________________________ Its: Senior Vice President
CAPITAL RESEARCH AND MANAGEMENT COMPANY
Attest:
By: _______________________________
___________________________ Its: Senior Vice President, Fund Business
Management Group, Legal Counsel
and Secretary
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Attachment A
American Funds Insurance Series:
- Global Small Capitalization Fund
- Growth Fund
- Growth - Income Fund
