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Exhibit 1.(8)(a)
PARTICIPATION AGREEMENT
This Participation Agreement, dated [---------], by and among General
American Life Insurance Company, a stock insurance company organized under
the laws of Missouri ("General American"); General American Capital Company,
an investment company organized under the laws of Maryland ("Capital
Company"); and Walnut Street Securities, Inc., a broker/dealer corporation
organized under the laws of Missouri ("Walnut Street"), restates and replaces
the previous participation agreement by and among the parties.
WHEREAS, Capital Company is a registered investment management company
under the Investment Company Act of 1940 ("1940 Act") and offers a series of
different investment funds to insurance companies as funding vehicles for
variable life insurance and variable annuities; and
WHEREAS, General American desires to offer its customers the
opportunity to direct premium payments from variable contracts (a "Contract"
or the "Contracts") through one or more separate accounts to Capital
Company's funds (the "Funds"); and
WHEREAS, Capital Company desires to sell its shares to the separate
accounts of General American (an "Account" or the "Accounts") on the same
basis that it sells shares to other insurance companies and their separate
accounts; and
WHEREAS Capital Company has obtained from the Securities and Exchange
Commission (the "SEC") an order, dated July 24, 1987, authorizing Capital
Company to accept funds from and sell shares to registered and unregistered
separate accounts related to variable annuities and variable life insurance;
and
WHEREAS Capital Company's investment adviser, Conning Asset Management
Company ("Conning"), is duly registered as an investment adviser under the
Investment Advisers Act of 1940 and applicable state law; and
WHEREAS Shares of Capital Company will be distributed by Walnut Street
which is registered as a broker/dealer with the SEC and a member in good
standing of the National Association of Securities Dealers, Inc. (the
"NASD").
NOW THEREFORE, in consideration of the premises and of the mutual
covenants here 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:
1. SALE OF CAPITAL COMPANY SHARES.
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1.1. Walnut Street agrees to sell to General American those shares of
Capital Company which it orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Capital Company or its
designee of the order for the shares of the
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Capital Company. For purposes of this Section 1.1., General American shall be
the designee of the Capital Company for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Capital
Company; provided that Capital Company receives notice of such order by 8:30
a.m. St. Louis 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 Capital Company calculates its net asset value pursuant to the rules of
the SEC.
1.2. Capital Company agrees to make shares of its Funds available
indefinitely for purchase at the applicable net asset value per share by
General American and its Accounts on those days on which the Capital Company
calculates its net asset value pursuant to rules of the SEC, and Capital
Company shall use reasonable efforts to calculate such net asset value on
each day on which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Board of Directors of the Capital Company
(the "Board") may refuse to sell shares of any Fund to any person, 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.
1.3. Capital Company and Walnut Street agree that shares of the Funds
will be sold only to participating insurance companies and their separate
accounts. No shares of the Fund will be sold to the general public.
1.4. Capital Company agrees to redeem for cash, on General American's
request, any full or fractional shares of the Funds held by General American,
executing such requests on a daily basis at the net asset value next computed
after receipt by Capital Company or its designee of the request for
redemption. For purposes of this Section 1.4., General American shall be the
designee of the Capital Company for receipt of requests for redemption from
each account and receipt by such designee shall constitute receipt by Capital
Company; provided that Capital Company receives notice of such request for
redemption on the next following Business Day.
1.5. General American agrees to purchase and redeem shares of the
Funds offered by the then-current prospectus of Capital Company and in
accordance with the provisions of such prospectus.
1.6. General American shall pay for Capital Company shares on the next
Business Day after an order to purchase Capital 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 Fund shares shall be by book entry only.
Stock certificates shall not be issued to General American or any Account.
Shares ordered from the Capital Company shall be recorded in an appropriate
title for each Account or the appropriate subaccount of each Account.
1.8. Capital Company shall furnish same day notice (by wire or
telephone, followed by written confirmation) to General American of any
income dividends or capital gain distributions payable on the Funds' shares.
General American hereby elects to receive all such
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income, dividends, and capital gain distributions as are payable on the Funds'
shares in additional shares of that Fund. Capital Company shall notify General
American of the number of shares so issued as payment of such dividends and
distributions.
1.9. Capital Company shall make the net asset value per share for each
Fund available to General American on a daily basis as soon as reasonably
practical after the net asset value per share is calculated.
2. PROSPECTUSES AND PROXY STATEMENTS; VOTING.
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2.1. Walnut Street shall provide General American, at General
American's expense, with as many copies of Capital Company's current
prospectus as General American may reasonably request. If requested by
General American in lieu thereof, Capital Company shall provide such
documentation (including a final copy of the new prospectus as set in type at
Capital Company's expense) and other assistance as is reasonably necessary in
order for General American once each year (or more frequently if the
prospectus for Capital Company is amended) to have the prospectus or private
offering memorandum for the Contracts and Capital Company's prospectus
printed together in one document, such printing to be at General American's
expense.
2.2. Capital Company's prospectus shall state that a statement of
additional information for Capital Company is available from Capital Company,
at its expense. Capital Company shall provide such statement of additional
information free of charge to General American and to any owner of a Contract
or prospective owner who requests such statement.
2.3. Capital Company, at its expense, shall provide General American
with copies of any proxy material, reports to shareholders, and other
communications to shareholders in such quantity as General American shall
reasonably require for distributing to Contract Owners.
2.4. If and to the extent required by law, General American shall:
(i) solicit voting instructions from Contract Owners;
(ii) vote Fund shares in accordance with instructions received from
Contract Owners; and
(iii) vote Capital Company shares for which no instructions have been
received in the same proportion as shares of such Fund for
which instructions have been received,
so long as and to the extent that the SEC continues to interpret the 1940 Act
to require pass through voting privileges for variable Contract Owners.
General American reserves the right to vote as it sees fit Capital Company
shares held in any segregated asset Account in its own right, to the extent
permitted by law.
2.5. Capital Company will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular Capital Company will
either provide for annual meetings or comply with the requirements of
Sec.16(a) of the 1940 Act with respect to periodic elections of directors and
with whatever rules the SEC may promulgate with respect thereto.
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3. SALES MATERIAL AND INFORMATION.
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3.1. General American shall furnish, or shall cause to be furnished,
to Walnut Street, Capital Company, or their designees each piece of sales
literature or other promotional material in which Capital Company, Conning,
or Walnut Street is named, at least 15 Business Days prior to its use. No
such material shall be used if Walnut Street, Capital Company, or their
respective designees object to such use within 15 business days after receipt
of such material.
3.2. General American shall not give any information or make any
representations or statements on behalf of Capital Company or concerning
Capital Company in connection with the sale of the Contracts other than the
information or representations contained in the registration statement or
prospectus for Capital 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 Capital Company, or in sales literature or other
promotional material approved by the Capital Company or its designee or by
Walnut Street, except with the permission of the Capital Company or Walnut
Street or the designee of either.
3.3. Capital Company, Walnut Street, or their respective designees
shall furnish, or shall cause to be furnished, to General American or its
designee, each piece of sales literature or other promotional material in
which General American or its separate accounts is named at least 15 Business
Days prior to its use. No such material shall be used if General American or
its designee objects to such use within 15 Business Days after receipt of
such material.
3.4. Capital Company and Walnut Street shall not give any information
or make any representations on behalf of General American or concerning
General American, each Account, or the Contracts other than the information
or representations contained in a registration statement, private offering
memorandum, or prospectus for the Contracts, as such registration statement,
private offering memorandum, and prospectus 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 General American for distribution to Contract
Owners, or in sales literature or other promotional material approved by
General American or its designee, except with the permission of General
American.
3.5. Capital Company will provide to General American 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 Capital
Company or its shares, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
3.6. General American will provide to Capital Company at least one
complete copy of all private offering memoranda, 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
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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
or first use if there is no such filing.
3.7. For purposes of this Article 3, 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, 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, illustrative software, 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, private
offering memoranda, statements of additional information, shareholder
reports, and proxy materials.
4. FEES AND EXPENSES.
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4.1. Capital Company and Walnut Street shall pay no fee or other
compensation to General American or each other under this agreement, unless
and until a Fund adopts and implements a plan pursuant to Rule 12b-1 of the
1940 Act to finance distribution expenses.
4.2. All expenses incident to performance by Capital Company under
this Agreement shall be paid by Capital Company. Capital 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 Capital Company, in accordance with applicable state laws prior
to their sale. Capital Company shall bear the expenses for the cost of
registration and qualification of Capital Company's shares, preparation and
filing of Capital 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, and all
taxes on the issuance or transfer of Capital Company's shares.
4.3. General American shall bear the expenses of printing and
distributing Capital Company's prospectus to owners of Contracts issued by
General American and of distributing Capital Company's proxy materials and
reports to such Contract Owners.
5. DIVERSIFICATION.
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Capital Company shall 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, Capital Company
shall at all times comply with Sec.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.
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6. POTENTIAL CONFLICTS.
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6.1. The Board will monitor Capital Company for the existence of any
material irreconcilable conflict between the interests of the Contract Owners
of all separate accounts investing in Capital Company. 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
interpretative 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 any Fund are
being managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance Contract Owners; or (f) a
decision by an insurer to disregard the voting instructions of Contract
Owners. The Board shall promptly inform General American if it determines
that an irreconcilable material conflict exists and the implications thereof.
6.2. General American shall report any potential or existing conflicts
of which it is aware to the Board. General American shall assist the Board
in carrying out its responsibilities under the rules governing shared
funding, by providing the Board with all information reasonably necessary for
the Board to consider any issues raised. This includes, but is not limited
to, an obligation by General American to inform the Board whenever Contract
Owner voting instructions are disregarded.
6.3. If it is determined by a majority of the Board, or a majority of
its disinterested members, that a material irreconcilable conflict exists,
General American and other participating insurance companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority
of the disinterested members), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (a)
withdrawing the assets allocable to some or all of the separate accounts from
Capital Company or any Fund and reinvesting such assets in a different
investment medium, including, but not limited to, another Fund, or submitting
the question whether such segregation should be implemented to a vote of all
affected Contract Owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more participating insurance
companies) that votes in favor of such segregation, or offering to the
affected Contract Owners the option of making such a change; and (b)
establishing a new registered management investment company or managed
separate account.
6.4. If a material irreconcilable conflict arises because of a
decision by General American to disregard Contract Owner voting instructions
and that decision represents a minority position or would preclude a majority
vote, General American may be required, at Capital Company's election, to
withdraw the affected Account's investment in the Capital Company and
terminate this Agreement with respect to such Account; 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 members of the Board. Any such withdrawal and termination
must take place within six (6) months after the Capital Company gives written
notice that this provision is being implemented, and until the end of that
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six (6) month period Walnut Street and Capital Company shall continue to
accept and implement orders by General American for the purchase and
redemption of Fund shares.
6.5. For purposes of Sec.Sec. 6.3 through 6.5 of this Agreement, a
majority of the disinterested members of the Board shall determine whether
any proposed action adequately remedies any irreconcilable material conflict,
but in no event will Capital Company be required to establish a new funding
medium for the Contracts. General American shall not be required by Sec.6.3
to establish a new funding medium for the Contracts if an offer to do so has
been declined by vote of a majority of Contract Owners materially adversely
affected by the irreconcilable material conflict. In the event that the
Board determines that any proposed action does not adequately remedy any
irreconcilable material conflict, then General American will withdraw the
Account's investment in the Capital Company and terminate this Agreement
within six (6) months after the Board informs 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 as determined by a majority of the disinterested
members of the Board.
7. TERMINATION OF AGREEMENT.
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7.1. This Agreement may be terminated at any time by General American
on 180 days' written notice to Capital Company and Walnut Street or by
Capital Company or Walnut Street on 180 days' written notice to General
American.
7.2. Notwithstanding any termination of this Agreement, Capital
Company and Walnut Street shall, at the option of General American, continue
to make available additional shares of the Capital Company pursuant to the
terms and conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement ("Existing Contracts").
Specifically, without limitation, the owners of the Existing Contracts shall
be permitted to reallocate investments in Capital Company, redeem investments
in Capital Company, or invest in Capital Company upon the making of
additional purchase payments under the Existing Contracts. A termination
under Sec.6 of this Agreement shall end rights of the owners of Existing
Contracts.
7.3. General American shall not redeem Capital Company shares
attributable to the Contracts (as opposed to Capital Company shares
attributable to General American's assets held in the Account) 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 (a "Legally Required Redemption"). Upon
request, General American will promptly furnish to Capital Company and Walnut
Street the opinion of counsel for General American (which counsel shall be
reasonably satisfactory to Capital Company and Walnut Street) 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 Capital Company or Walnut Street 90 days' notice of its
intention to do so.
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8. NOTICES. Any notice under this Agreement shall be in writing
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and: (a) if to Capital Company, delivered or mailed postage prepaid to it at
700 Market Street, St. Louis, MO 63101; (b) if to Walnut Street, delivered or
mailed postage prepaid to it at 400 South Fourth Street, Suite 1000, St.
Louis, MO 63102; and (c) if to General American, delivered, or mailed postage
prepaid to it at 700 Market Street, St. Louis, MO 63101. The parties shall
the have right to designate any other address hereafter by written notice to
the other parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their corporate names, all as of the date first above written.
GENERAL AMERICAN LIFE
INSURANCE COMPANY
ATTEST: -------------------------- BY --------------------------------
Robert J. Banstetter Richard A. Liddy
Secretary President
GENERAL AMERICAN
CAPITAL COMPANY
ATTEST: -------------------------- BY --------------------------------
Christopher A. Martin Richard A. Liddy
Secretary President
WALNUT STREET SECURITIES
ATTEST: -------------------------- BY --------------------------------
Joyce W. Hillebrand Milton F. Svetanics
Assistant Secretary Vice President
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