1
Exhibit 1.(8)(f)
PARTICIPATION AGREEMENT
Among
RUSSELL INSURANCE FUNDS,
RUSSELL FUND DISTRIBUTORS, INC.
and
GENERAL AMERICAN LIFE INSURANCE COMPANY
THIS AGREEMENT is made and entered into as on this 1st day of October
--- -------
1996, by and among GENERAL AMERICAN LIFE INSURANCE COMPANY, a Missouri
corporation (hereinafter the "Company"), on its own behalf and on behalf of
each segregated asset account of the Company set forth on Schedule A hereto
as such schedule may be amended from time to time (each such account
hereinafter referred to as the "Account" and collectively as the "Accounts"),
and RUSSELL INSURANCE FUNDS, a Massachusetts Business Trust (hereinafter the
"Investment Company"), and RUSSELL FUND DISTRIBUTORS, INC. a Washington
corporation (hereinafter the "Underwriter").
WHEREAS, Investment Company engages in business as a diversified open-end
management investment company and is available to act as the investment vehicle
for separate accounts established for variable life insurance policies and
variable annuity contracts (collectively, the "Variable Insurance Products");
and
WHEREAS, the beneficial interest in the Investment Company is divided
into several series of shares, referred to individually as "Funds" and
representing the interest in a particular managed portfolio of securities and
other assets; and
WHEREAS, Investment Company is registered as an open-end management
investment company under the 1940 Act, and its shares are registered under
the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Frank Russell Investment Management Company (the "Adviser") is
registered as an investment adviser under the federal Investment Advisers Act
of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life contracts under the 1933 Act, and offers or will offer for sale certain
variable life contracts which are or will be exempt from registration; and
2
WHEREAS, each Account is a duly organized, validly existing, segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set
aside and invest assets attributable to one or more variable life contracts;
and
WHEREAS, the Company has registered or will register one of the
Accounts as a unit investment trust under the 1940 Act and other Accounts are
exempt from registration; and
WHEREAS, the Underwriter is registered as a broker/dealer with the SEC
under the Securities Exchange Act of 1934, as amended (hereinafter the "1934
Act") and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Funds on behalf of
each Account to fund certain of the aforesaid variable life contracts, and
the Underwriter is authorized to sell such shares to unit investment trusts
such as each Account at net asset value
NOW THEREFORE, in consideration of the premises and of the mutual
convenants herein contained and other good and valuable consideration the
receipt of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
ARTICLE I. Sale of Investment Company Shares
---------------------------------
1.1 The Underwriter agrees to sell to the Company those shares of the
Investment Company which each Account orders, executing such orders on a
daily basis at the net asset value next computed after receipt by the
Investment Company or its designee of the order for the shares of the
Investment Company. For purposes of this Section 1.1, the Company shall be
the designee of the Investment Company for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the
Investment Company; provided that the Investment Company receives notice of
such order by 8:00 a.m. Pacific time on the next following Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange is
open for trading and on which Investment Company calculates its net asset
value pursuant to the rules of the Securities and Exchange Commission.
1.2 The Investment Company agrees to make its shares available
indefinitely for purchase at the applicable net asset value per share by the
Company and its Accounts on those days on which the Investment Company
calculates its net asset value pursuant to rules of the Securities and
Exchange Commission, and the Investment Company shall use reasonable efforts
to calculate such net asset value on each day which the New York Stock
Exchange is open for trading. Notwithstanding the foregoing, the Board of
Directors of the Investment Company (hereinafter the "Board") may refuse to
sell shares of any Fund, or suspend or terminate the offering of shares of
any Fund if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of the Board acting in good
faith and in light of their fiduciary duties under federal and any applicable
state laws, necessary in the best interests of the shareholders of such Fund.
3
1.3 The Investment Company and the Underwriter agree that no shares
of any Fund will be sold to the general public.
1.4 The Investment Company agrees to redeem for cash, on the
Company's request, any full or fractional shares of the Investment Company
held by the Company, executing such requests on a daily basis at the net
asset value next computed after receipt by the Investment Company or its
designee of the request for redemption. For purposes of this Section 1.4, the
Company shall be the designee of the Investment Company for receipt of
requests for redemption from each Account, and receipt by such designee shall
constitute receipt by the Investment Company; provided that the Investment
Company receives notice of such request for redemption by 8:00 a.m. Pacific
time on the next following Business Day.
1.5 The Company agrees to purchase and redeem the shares of selected
Funds offered by the then-current prospectus of the Investment Company and in
accordance with the provisions of such prospectus. The Company agrees that
all net amounts available under the variable life contracts with the form
numbers(s) which are listed on Schedule B attached hereto and incorporated
herein by this reference, as such Schedule B may be amended from time to time
hereafter by mutual written agreement of all the parties hereto (the
"Contracts"), may be invested in the Investment Company, in such other
investment companies advised by the Adviser as may be mutually agreed to in
writing by the parties hereto, in the Company's general account or in other
separate accounts of the Company managed by the Company or an affiliate,
provided that such amounts may also be invested in an investment company
other than the Investment Company if (a) such other investment company, or
series thereof, has investment objectives or policies that are substantially
different from the investment objectives and policies of all the Funds of the
Investment Company and (b) the Company gives the Investment Company and the
Underwriter 45 days written notice of its intention to make such other
investment company available as a funding vehicle for the Contracts and (c)
the Investment Company or Underwriter consents to the use of such other
investment company.
1.6 The Company shall pay for Investment Company shares on the next
Business Day after an order to purchase Investment Company shares is made in
accordance with the provisions of Section 1.1 hereof. Payment shall be in
federal funds transmitted by wire.
1.7 Issuance and transfer of the Investment Company's shares will be
by book entry only. Stock certificates will not be issued to the Company or
any Account. Shares ordered from the Investment Company will be recorded in
an appropriate title for each Account.
1.8 The Investment Company shall furnish same day notice (by wire,
facsimile transmission, or telephone, followed by written confirmation) to
the Company of any income dividends or capital gain distributions payable on
the Investment Company's shares. The Company hereby elects to receive all
such income dividends and capital gain distributions as are payable on the
Fund shares in additional shares of that Fund. The Company reserves the right
to
4
revoke this election and to receive all such income dividends and capital
gain distributions in cash. Investment Company shall notify the Company of
the number of shares so issued as payment of such dividends and
distributions.
1.9 The Investment Company shall make the net asset value per share
for each Fund available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated.
ARTICLE II. Representations and Warranties
------------------------------
2.1 The Company represents and warrants that the Contracts are
registered under the 1933 Act or are exempt from registration thereunder;
that the Contracts will be issued and sold in compliance in all material
respects with all applicable Federal and State laws and that the sale of the
Contracts shall comply in all material respects with state insurance
suitability requirements. The Company further represents and warrants that it
is an insurance company duly organized and in good standing under applicable
law and that it has legally and validly established each Account prior to any
issuance or sale thereof as a segregated asset account under Section 376.309
of the Insurance Code of the State of Missouri and that each Account is or
will be registered as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as a segregated investment account for
the Contracts or is exempt from registration thereunder.
2.2 The Investment Company represents and warrants that Investment
Company shares sold pursuant to this Agreement shall be registered under the
1933 Act, duly authorized for issuance and sold in compliance with the laws
of the States of Missouri and Washington and all applicable federal and state
securities laws and that the Investment Company is and shall remain
registered under the 1940 Act. The Investment Company shall amend the
Registration Statement for its shares under the 1933 and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares. The Investment Company shall register and qualify the shares for sale
in accordance with the laws of the various states only if and to the extent
deemed advisable by the Investment Company or the Underwriter.
2.3 The Investment Company represents that it is currently qualified
as a Regulated Investment Company under Subchapter M of the Internal Revenue
Code of 1986, as amended, (the "Code") and that it will make every effort to
maintain such qualification (under Subchapter M or any successor or similar
provision) and that it will notify the Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
2.4 The Company represents that the Contracts are currently treated
as endowment, annuity or life insurance contracts, under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it will notify the Investment Company and the Underwriter
immediately 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.
5
2.5 The Investment Company currently does not intend to make any
payments to finance distribution expenses pursuant to Rule 12b-l under the
1940 Act or otherwise, although it may make such payments in the future. To
the extent that it decides to finance distribution expenses pursuant to Rule
12b-l, the Investment Company undertakes to have a board of trustees, a
majority of whom are not interested persons of the Investment Company,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6 The Investment Company makes no representation as to whether any
aspect of its operations (including, but not limited to, fees and expenses
and investment policies) complies with the insurance laws or regulations of
the various states.
2.7 The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the
Investment Company shares in accordance with any applicable state laws and
federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8 The Investment Company represents that it is lawfully organized
and validly existing under the laws of the Commonwealth of Massachusetts and
that it does and will comply in all material respects with the 1940 Act.
2.9 The Underwriter represents and warrants that it and the Adviser
each is lawfully formed and validly existing under the laws of the State of
Washington and that they each are registered under and do and will comply in
all material respects with all applicable federal and state securities laws
and that the Adviser shall perform its obligations for the Investment Company
in compliance in all material respects with any applicable state laws and
federal securities laws.
2.10 The Investment Company and Underwriter represent and warrant that
all of their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money or securities of the Investment
Company are and shall continue to be at all times covered by a blanket
fidelity bond or similar coverage for the benefit of the Investment Company
in an amount not less than the minimal coverage as required currently by Rule
17g-(1) of the 1940 Act or related provisions as may be promulgated from time
to time. The aforesaid Bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.11 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other entities dealing with the
money or securities of the Investment Company are and shall continue to be at
all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Investment Company in an amount not less than five million
dollars ($5 million). The aforesaid Bond shall include coverage for larceny
and embezzlement and shall be issued by a reputable bonding company.
6
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1 The Underwriter shall provide the Company with as many printed
copies of the Investment Company's current prospectus and Statement of
Additional Information as the Company may reasonably request. If requested by
the Company in lieu thereof; the Investment Company shall provide
camera-ready film or computer diskettes containing the Investment Company's
prospectus and Statement of Additional Information and such other assistance
as is reasonably necessary in order for the Company once each year (or more
frequently if the prospectus and/or Statement of Additional Information for
the Investment Company is amended during the year) to have the prospectus for
the Contracts and the Investment Company's prospectus printed together in one
document, and to have the Statement of Additional Information for the
Investment Company and the Statement of Additional Information for the
Contracts printed together in one document. Alternatively, the Company may
print the Investment Company's prospectus and/or its Statement of Additional
Information in combination with other fund companies' prospectuses approved
pursuant to Section 1.5 and statements of additional information. Except as
provided in the following three sentences, all expenses of printing and
distributing Investment Company prospectuses and Statements of Additional
Information shall be the expense of the Company. For Prospectuses and
Statements of Additional Information provided by the Company to its existing
owners of Contracts in order to update disclosure as required by the 1933 Act
and/or the 1940 Act, the cost of printing shall be borne by the Investment
Company. If the Company chooses to receive camera-ready film or computer
diskettes in lieu of receiving printed copies of the Investment Company's
prospectus, the Investment Company will reimburse the Company in an amount
equal to the product of A and B where A is the number of such prospectuses
distributed to owners of the Contracts, and B is the Investment Company's per
unit cost of typesetting and printing the Investment Company's prospectus.
The same procedures shall be followed with respect to the Investment
Company's Statement of Additional Information.
The Company agrees to provide the Investment Company or its designee
with such information as may be reasonably requested by the Investment
Company to assure that the Investment Company's expenses do not include the
cost of printing any prospectuses or Statements of Additional Information
other than those actually distributed to existing owners of the Contracts.
3.2 The Investment Company's prospectus shall state that the
Statement of Additional Information for the Investment Company is available
from the Underwriter or the Company (or in the Fund's discretion, the
Prospectus shall state that such Statement is available from the Investment
Company).
3.3 The Investment Company, at its expense, shall provide the Company
with copies of its proxy statements, reports to shareholders, and other
required communications (except for prospectuses and Statements of Additional
Information, which are covered in Section 3.1) to shareholders in such
quantity as the Company shall reasonably require for distributing to Contract
owners.
3.4 If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
7
(ii) vote Investment Company shares in accordance with
instructions received from Contract owners: and
(iii) vote Investment Company shares for which no instructions
have been received in the same proportion as Investment
Company shares of such Fund for which instructions have
been received,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote
Investment Company shares held in any segregated asset account in its own
right, to the extent permitted by law.
3.5 The Investment Company will comply with all provisions of the
1940 Act requiring voting by shareholders, and in particular the Investment
Company will either provide for annual or special meetings or comply with the
requirements of Section 16(c) of the 1940 Act (although the Investment
Company is not one of the trusts described in Section 16(c) of that Act) as
well as with Sections 16(a) and, if and when applicable, 16(b). Further, the
Investment Company will act in accordance with the SEC's interpretation of
the requirements of Section 16(a) with respect to periodic elections of
directors and with whatever rules the SEC may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
------------------------------
4.1 The Company shall furnish, or shall cause to be furnished, to the
Investment Company or its designee, each piece of sales literature or other
promotional material, or component thereof, in which the Investment Company,
the Adviser, or the Underwriter is named, at least fifteen Business Days
prior to its use. No such material shall be used if the Investment Company or
its designee object to such use within fifteen Business Days after receipt of
such material.
4.2 The Company shall not give any information or make any
representations or statements on behalf of the Investment Company or
concerning the Investment Company in connection with the sale of the
Contracts other than the information or representations contained in the
registration statement or prospectus for the Investment Company shares, as
such registration statement and prospectus may be amended or supplemented
from time to time, or in reports or proxy statements for the Investment
Company, or in sales literature or other promotional material approved by the
Investment Company or its designee or by the Underwriter, except with the
permission of the Investment Company or the Underwriter or the designee of
either.
4.3 The Investment Company, the Underwriter, or their designees shall
furnish, or shall cause to be furnished, to the Company or its designee, each
piece of sales literature or other promotional material, or component
thereof, in which the Company or its separate Accounts are named at least
fifteen Business Days prior to its use. No such material shall be used if
the Company or its designee objects to such use within fifteen Business Days
after receipt of such material.
8
4.4 The Investment Company and the Underwriter shall not give any
information or make any representations on behalf of the Company or
concerning the Company, each Account, or the Contracts other than the
information or representations contained in a registration statement,
prospectus or offering materials for the Contracts, as such may be amended or
supplemented from time to time, or in published reports for each Account
which are in the public domain or approved by the Company for distribution to
Contract owners, or in sales literature or other promotional material
approved by the Company or its designee, except with the permission of the
Company.
4.5 The Investment Company will provide to the Company at least one
complete copy of all registration statements, prospectuses, Statements of
Additional Information, reports, proxy statements, 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 the
Investment Company or its shares, contemporaneously with the filing of such
document with the Securities and Exchange Commission or other regulatory
authorities.
4.6 The Company will provide to the Investment Company 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 the Contracts or each Account, contemporaneously with the filing of
such document with the SEC or other regulatory authorities. In the case of
unregistered Contracts, in lieu of providing prospectuses and Statements of
Additional Information, the Company shall provide the Investment Company with
one complete copy of the offering materials for the Contracts.
4.7 For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine,
or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, electronic media, or
other public media), sales literature (i.e., any written communication
distributed or made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form letters, seminar
texts, reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other communications
distributed or made generally available to some or all agents or employees,
and registration statements, prospectuses, Statements of Additional
Information, shareholder reports, and proxy materials.
ARTICLE V. Fees and Expenses
-----------------
5.1 The Investment Company and the Underwriter shall pay no fee or
other compensation to the Company under this Agreement, except that if the
Investment Company or any Fund adopts and implements a plan pursuant to Rule
12b-l to finance distribution expenses, then the Underwriter may make
payments to the Company or to the underwriter for the Contracts
9
if and in amounts agreed to by the Underwriter in writing and such payments
will be made out of existing fees otherwise payable to the Underwriter, past
profits of the Underwriter or other resources available to the Underwriter.
No such payments shall be made directly by the Investment Company.
Currently, no such payments are contemplated.
5.2 All expenses incident to performance by the Investment Company
under this Agreement shall be paid by the Investment Company. The Investment
Company shall see to it that all its shares are registered and authorized for
issuance in accordance with applicable federal law and, if and to the extent
deemed advisable by the Investment Company, in accordance with applicable
state laws prior to their sale. The Investment Company shall bear the
expenses for the cost of registration and qualification of the Investment
Company's shares, preparation and filing of the Investment Company's
prospectus and registration statement, proxy materials and reports, setting
the prospectus in type, setting in type and printing the proxy materials and
reports to shareholders (including the costs of printing a prospectus that
constitutes an annual report), the preparation of all statements and notices
required by any federal or state law, all taxes on the issuance or transfer
of the Investment Company's shares.
5.3 The Company shall bear the expenses of distributing the
Investment Company's prospectus, proxy materials, and reports to owners of
Contracts issued by the Company.
ARTICLE VI. Diversification
---------------
6.1 The Investment Company will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be treated as
variable contracts under the Internal Revenue Code and the regulations issued
thereunder. Without limiting the scope of the foregoing, the Investment
Company will at all times comply with Section 817(h) of the Code and Treasury
Regulation 1.817-5, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts and any amendments or other
modifications to such Section or Regulations.
ARTICLE VII. Indemnification
---------------
7.1. Indemnification By The Company
------------------------------
7.1(a). The Company agrees to indemnify and hold harmless the
Investment Company and each member of the Board and officers and each person,
if any, who controls the Investment Company within the meaning of Section 15
of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 7.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Company) or litigation (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are related to the
sale or acquisition of the Investment Company's shares or the Contracts and:
10
(i) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact contained in any
Registration Statement, prospectus or other offering materials for the
Contracts or contained in the Contracts or sales literature for 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 agreement to indemnify 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 information furnished to
the Company by or on behalf of the Investment Company for use in any
Registration Statement or prospectus for the Contracts or in the
Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or
Investment Company's shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained in
the Registration Statement, prospectus or sales literature of the
Investment Company not supplied by the Company, or persons under its
control) or wrongful conduct of the Company or persons under its
control, with respect to the sale or distribution of the Contracts or
Investment Company 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 of the Investment Company 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 information furnished
to the Investment Company by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of a result from any material breach of any
representation or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company, as limited by and in accordance with the provisions of
Sections 7.1(b) and 7.1(c) hereof.
7.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from 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 or to the Investment Company, whichever is applicable.
7.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal
11
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 the Company of any such claim shall not relieve the Company from any
liability which it may have to the Indemnified Party against whom such action
is brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, the Company
shall be entitled to participate, at its own expense, in the defense of such
action. The Company also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action. After notice from
the Company to such party of the Company's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be liable to such
party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
7.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Investment Company shares or the Contracts
or the operation of the Investment Company.
7.2 Indemnification by the Underwriter
----------------------------------
7.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 7.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter or litigation
(including legal and other expenses) to which the Indemnified Parties may
become 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 are related to the sale or acquisition of the
Investment Company's shares or the Contracts and:
(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 the
Investment Company (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 agreement to indemnify 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
information furnished to the Underwriter or Investment Company by or on
behalf of the Company for use in the Registration Statement or
prospectus for the Investment Company or in the sales literature (or
any amendment or supplement) or otherwise for use in connection with
the sale of the Contracts or Investment Company shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained in
any Registration Statement, prospectus, other offering materials or
sales literature for the Contracts not supplied by the Underwriter or
12
persons under its control) or wrongful conduct of the Investment
Company, Adviser, or Underwriter or persons under their control, with
respect to the sale or distribution of the Contracts or Investment
Company shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement,
prospectus, other offering materials 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 statement or statements
therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on behalf of
the Investment Company; or
(iv) arise as a result of any failure by the Investment
Company to provide the services and furnish the materials under the
terms of this Agreement (including a failure, whether unintentional or
in good faith or otherwise, to comply with the diversification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of
any representation or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Underwriter; as limited by and in accordance with
the provisions of Sections 7.2(b) and 7.2(c) hereof.
7.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith,
or gross negligence in the performance of such indemnified Party's duties or
by reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Company or each Account, whichever is
applicable.
7.2(c). The Underwriter 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 the
Underwriter 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 the Underwriter of any such claim shall not relieve the
Underwriter from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Underwriter will be entitled to participate, at its
own expense, in the defense thereof. The Underwriter also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party named
in the action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently
in connection with the defense thereof other than reasonable costs of
investigation.
13
7.2(d). The Company agrees promptly to notify the Underwriter of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of any Account.
7.3 Indemnification By the Investment Company
-----------------------------------------
7.3(a). The Investment Company agrees to indemnify and hold
harmless the Company, and each of its directors and officers and each person,
if any, who controls the Company within the meaning of Section 15 of the 1933
Act (collectively, the "Indemnified Parties" for purposes of this Section
7.3) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Investment Company
or litigation (including legal and other expenses) to which the Indemnified
Parties may become 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 result from the gross negligence, bad
faith or willful misconduct of the Board or any member thereof, are related
to the operations of the Investment Company and:
(i) arise as a result of any failure by the Investment
Company to provide the services and furnish the materials under the
terms of this Agreement (including a failure to comply with the
diversification requirements specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material breach of
any representation or warranty made by the Investment Company in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Investment Company, as limited by and in
accordance with the provisions of Sections 7.3(b) and 7.3(c) hereof.
7.3(b). The Investment Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party
as such may arise from such Indemnified Party's willful misfeasance, bad
faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to the Company, the Investment
Company, the Underwriter or any Account, whichever is applicable.
7.3(c). The Investment Company shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified the
Investment 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 the Investment Company of any such claim shall not relieve
the Investment Company from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Investment Company will be entitled to
participate, at its own expense, in the defense thereof.
14
The Investment Company also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action. After notice
from the Investment Company to such party of the Investment Company's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the
Investment Company will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently
in connection with the defense thereof other than reasonable costs of
investigation.
7.3(d). The Company and the Underwriter agree promptly to notify
the Investment Company of the commencement of any litigation or proceedings
against it or any of its respective officers or directors in connection with
this Agreement, the issuance or sale of the Contracts, with respect to the
operation of any Account, or the sale or acquisition of shares of the
Investment Company.
ARTICLE VIII. Applicable Law
--------------
8.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Missouri.
8.2. To the extent they are applicable, this Agreement shall be subject
to the provisions of the 1933, 1934 and 1940 acts, and the rules and
regulations and rulings thereunder, including such exemptions from those
statutes, rules and regulations as the Securities and Exchange Commission may
grant and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE IX. Termination of Agreement
------------------------
9.1 This Agreement shall continue in full force and effect until the
first to occur of
(a) termination by any party for any reason by sixty (60) days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the
Investment Company and the Underwriter with respect to any Fund based
upon the Company's determination that shares of such Fund are not
reasonably available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the
Investment Company and the Underwriter with respect to any Fund in the
event any of the Fund's shares are not registered, issued, or sold
materially 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; or
15
(d) termination by the Company by written notice to the
Investment Company and the Underwriter with respect to any Fund in the
event that such Fund ceases to qualify as a Regulated Investment
Company under Subchapter M of the Code or under any successor or
similar provision, or if the Company reasonably believes that the
Investment Company may fail to so qualify; or
(e) termination by the Company by written notice to the
Investment Company and the Underwriter with respect to any Fund in the
event that such Fund fails to meet the diversification requirements
specified in Article VI hereof; or
(f) termination by either the Investment Company or the
Underwriter by written notice to the Company, if either one or both of
the Investment Company or the Underwriter respectively, shall
determine, in their sole judgment exercised in good faith, that the
Company or its affiliated companies 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
(g) termination by the Company by written notice to the
Investment Company and the Underwriter, if the Company shall determine,
in its sole judgment exercised in good faith, that either the
Investment Company or the Underwriter 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
(h) termination by the Investment Company or the Underwriter by
written notice to the Company if the Company gives the Investment
Company and the Underwriter the written notice specified in Section 1.5
hereof and at the time such notice was given there was no notice of
termination outstanding under any other provision of this Agreement;
provided, however, any termination under this Section 9.1(b) shall be
effective forty-five (45) days after the notice specified in Section
1.5 was given.
9.2 Notwithstanding any termination of this Agreement, the Investment
Company and the Underwriter shall at the option of the Company, continue to
make available additional shares of the Investment Company pursuant to the
terms and conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation, the owners of the
Existing Contracts shall be permitted to reallocate investment in the
Investment Company, redeem investments in the Investment Company, or invest
in the Investment Company upon the making of additional purchase payments
under the Existing Contracts.
9.3 The Company shall not redeem Investment Company shares
attributable to the Contracts (as opposed to Investment Company shares
attributable to the Company's assets held in any of the Accounts) except (i)
as necessary to implement Contract Owner initiated transactions, or (ii) as
required by state or federal laws or regulations or judicial or other legal
precedent of general application (hereinafter referred to as a "Legally
Required Redemption"). Upon request, the Company will promptly furnish to the
Investment Company and the Underwriter the opinion of counsel for the Company
(which counsel shall be reasonably
16
satisfactory to the Investment Company and the Underwriter) to the effect
that any redemption pursuant to clause (ii) above is a Legally Required
Redemption. Furthermore, except in cases where permitted under the terms of
the Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Fund that was otherwise available under the Contracts without
first giving the Investment Company or the Underwriter ninety (90) days
notice of its intention to do so.
ARTICLE X. Notices
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Investment Company:
909 A Street
Tacoma, Washington 98402
Attention: Karl J. Ege, Esq.
If to the Company:
13045 Tesson Ferry Road
St. Louis, Missouri 63128
Attention: Barbara Synder
If to the Underwriter:
909 A Street
Tacoma, Washington 98402
Attention: Karl J. Ege, Esq.
ARTICLE XI. Miscellaneous
-------------
11.1. All persons dealing with the Investment Company must look solely
to the property of the Investment Company for the enforcement of any claims
against the Investment Company as neither the Board, officers, agents or
shareholders assume any personal liability for obligations entered into on
behalf of the Investment Company.
11.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except
as permitted by this Agreement, shall not disclose, disseminate or utilize
such names and addresses and other confidential information until such time
as it may come into the public domain without the express written consent of
the affected party.
11.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
17
11.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.5. If any provisions 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.
11.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby. Notwithstanding the generality of the foregoing, each
party hereto further agrees to furnish the California Insurance Commissioner
with any information or reports in connection with services provided under
this Agreement which such Commissioner may request in order to ascertain
whether the variable life insurance operations of the Company are being
conducted in a manner consistent with the California Variable Life Insurance
Regulations and any other applicable law or regulations.
11.7 The Investment Company and Underwriter agree that to the extent
any advisory or other fees received by the Investment Company, the
Underwriter, or the Adviser are determined to be unlawful in legal or
administrative proceedings under the 1973 NAIC model variable life insurance
regulation in the states of California, Colorado, Maryland, or Michigan, the
Underwriter shall indemnify and reimburse the Company for any out of pocket
expenses and actual damages the Company has incurred as a result of any such
proceeding; provided however that the provisions of Section 7.2(b) and 7.2(c)
shall apply to such indemnification and reimbursement obligation. Such
indemnification and reimbursement obligation shall be in addition to any
other indemnification and reimbursement obligations of the Investment Company
or the Underwriter under this Agreement.
11.8 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 hereto are entitled to
under state and federal laws.
11.9 This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or
company under common control with the Underwriter, if such assignee is duly
licensed and registered to perform the obligations of the Underwriter under
this Agreement.
11.10 The Company shall furnish, or shall cause to be furnished, to the
Investment Company or its designee copies of the following reports:
(a) the Company's annual statement prepared under statutory
accounting principles, as soon as practical and in any event within 90 days
after the end of each fiscal year;
18
(b) the Company's quarterly statement (statutory), as soon as
practical and in any event within 45 days after the end of each quarterly
period; and
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders or policyholders, as soon as practical after the
delivery thereof; and
11.11 The Master Trust Agreement dated 11 July 1996, as amended from
time to time, establishing the Investment Company, which is hereby referred
to and a copy of which is on file with the Secretary of The Commonwealth of
Massachusetts provides that the name Russell Insurance Funds, means the
Trustees from time to time serving (as Trustees but not personally) under
said Master Trust Agreement. It is expressly acknowledged and agreed that
the obligations of the Investment Company hereunder shall not be binding upon
any of the shareholders, Trustees, officers, employees or agents of the
Investment Company, personally, but shall bind only the trust property of the
Investment Company, as provided in its Master Trust Agreement. The execution
and delivery of this Agreement have been authorized by the Trustees of the
Investment Company and signed by the President of the Investment Company,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of the personally,
but shall bind only the trust property of the Investment Company as provided
in its Master Trust Agreement.
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed in its name and on behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
GENERAL AMERICAN LIFE
INSURANCE COMPANY
ATTEST: --------------------- BY -----------------------------
Assistant Secretary Exec. Vice President - Individual
DATE:
RUSSELL INSURANCE FUNDS
ATTEST: --------------------- BY -----------------------------
Asst. Secretary President
DATE: 10/1/96
RUSSELL FUND
DISTRIBUTORS, INC.
ATTEST: --------------------- BY -----------------------------
Asst. Secretary President
DATE: 10/1/96
19
Schedule A
----------
Accounts
--------
Name of Account Date of Resolution of Company's
Board which Established the
Account
General American January 24, 1985
Separate Account Eleven
20
Schedule B
----------
Contracts
---------
1. Contract Form Numbers:
FRC-VUL 100003 (10/95)
2. Funds currently available to act as investment vehicles for certain of
the above-listed contracts:
General Account of General American Life Insurance Company
Money Market Fund of General American Capital Company
Russell Insurance Funds: Multi-Style Equity Fund
Aggressive Equity Fund
Non-U.S. Fund
Core Bond Fund