Exhibit 8(c)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the 2nd day of December, 2002, by and between
Lord Xxxxxx Series Fund, Inc. ("Fund"), a Maryland Corporation, on its behalf
and on behalf of each separate investment series thereof, whether existing as
of the date above or established subsequent thereto, (each a "Portfolio" and
collectively, the "Portfolios"), Lord, Xxxxxx & Co. LLC (the "Adviser"), Lord
Xxxxxx Distributor LLC, a New York limited liability Company (the
"Distributor"), and First SunAmerica Life Insurance Company (the "Company"), a
life insurance company organized under the laws of the State of New York.
WHEREAS, Fund is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the "'40 Act"),
as an open-end, diversified management investment company; and
WHEREAS, Fund is organized as a series fund comprised of separate
investment series, namely the Portfolios; and
WHEREAS, Fund was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable
Contracts") offered by life insurance companies through separate accounts of
such life insurance companies and also offers its shares to certain qualified
pension and retirement plans; and
WHEREAS, Fund has filed an application with the SEC requesting an order
granting relief from various provisions of the '40 Act and the rules thereunder
to the extent necessary to permit Fund shares to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated participating insurance companies accounts
("Participating Companies") and qualified pension and retirement plans outside
the separate account context (including, without limitation, those trusts,
plans, accounts contracts or annuities described in Sections 401(a), 403(a),
403(b), 408(a), 408(b), 414(d), 457(b), 408(k), 501(c)(18) of the Internal
Revenue Code of 1986, as amended (the "Code") and any other trust, plan,
account, contract or annuity trust that is determined to be within the scope of
Treasury Regulation Section 1.817.5(f)(3)(iii)("Plans"); and
WHEREAS, the Company has established or will establish one or more
separate accounts ("Separate Accounts") to offer Variable Contracts and is
desirous of having Fund as one of the underlying funding vehicles for such
Variable Contracts; and
WHEREAS, Distributor is registered with the SEC as a broker-dealer under
the Securities Exchange Act of 1934, as amended and acts as Fund's principal
underwriter; and
WHEREAS, Adviser serves as investment adviser and manager of the Fund; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of Fund to fund the
aforementioned Variable Contracts and Fund is authorized to sell such shares to
the Company at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
Fund, and Distributor agree as follows:
Article I. SALE OF FUND SHARES
1.1 Fund agrees to make Variable Contract Class shares ("Shares") of
the Fund available to the Separate Accounts of the Company for investment of
purchase payments of Variable Contracts allocated to the designated Separate
Accounts as provided in Fund's then current prospectus and statement of
additional information. Company agrees to purchase and redeem the Shares of the
Portfolios offered by the then current prospectus and statement of additional
information of the Fund in accordance with the provisions of such prospectus
and statement of additional information. Company shall not permit any person
other than a Variable Contract owner or someone authorized by a Variable
Contract owner to give instructions to Company which would require Company to
redeem or exchange Shares of the Fund, except as the Company may otherwise be
legally permitted or obligated.
1.2 Fund agrees to sell to the Company those Shares of the selected
Portfolios of Fund which the Company orders, executing such orders on a daily
basis at the net asset value next computed after receipt by Fund or its
designee of the order for the Shares of Fund. For purposes of this Section 1.2,
the Company shall be the designee of Fund for receipt of such orders from the
designated Separate Account and receipt by such designee shall constitute
receipt by Fund; provided that the Company receives the order by 4:00 p.m.
Eastern time and Fund receives notice from the Company by telephone, facsimile
(orally confirmed) or by such other means as Fund and the Company may mutually
agree of such order by 9:00 a.m. Eastern 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 Fund calculates its net asset value pursuant to
the rules of the SEC.
1.3 Fund agrees to redeem on the Company's request, any full or
fractional Shares of Fund held by the Company, executing such requests on a
daily basis at the net asset value next computed after receipt by Fund or its
designee of the request for redemption, in accordance with the provisions of
this Agreement and Fund's then current registration statement. For purposes of
this Section 1.3, the Company shall be the designee of Fund for receipt of
requests for redemption from the designated Separate Account and receipt by
such designee shall constitute receipt by Fund; provided that the Company
receives the request for redemption by 4:00 p.m. Eastern time and Fund receives
notice from the Company by telephone, facsimile (orally confirmed) or by such
other means as Fund and the Company may mutually agree of such request for
redemption by 9:00 a.m. Eastern time on the next following Business Day.
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1.4 Fund shall furnish, on or before the ex-dividend date, notice to
the Company of any income dividends or capital gain distributions payable on
the Shares of any Portfolios of Fund. The Company hereby elects to receive all
such income dividends and capital gain distributions as are payable on a
Portfolio's Shares in additional Shares of the Portfolio. Fund shall notify
the Company or its designee of the number of Shares so issued as payment of
such dividends and distributions.
1.5 Fund shall make the net asset value per share for the selected
Portfolios available to the Company on a daily basis, via a mutually agreeable
form, as soon as reasonably practicable after the net asset value per share is
calculated but shall use its best efforts to make such net asset value
available by 6:30 p.m. Eastern time.
1.6 At the end of each Business Day, the Company shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, the Company shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. Eastern time) to determine the net dollar amount
of Fund Shares which shall be purchased or redeemed at that day's closing net
asset value per share. The net purchase or redemption orders so determined
shall be transmitted to Fund by the Company by 9:00 a.m. Eastern time on the
Business Day next following the Company's receipt of such requests and premiums
in accordance with the terms of Sections 1.2 and 1.3 hereof.
1.7 If the Company's order requests the purchase of Fund Shares, the
Company shall pay for such purchase by wiring federal funds to Fund or its
designated custodial account on the day the order is transmitted by the
Company. If the Company's order requests a net redemption resulting in a
payment of redemption proceeds to the Company, Fund shall use its best efforts
to wire the redemption proceeds to the Company by the next Business Day, unless
doing so would require Fund to dispose of Portfolio securities or otherwise
incur additional costs and the Fund has determined to settle redemption
transactions for all shareholders on a delayed basis. In any event, proceeds
shall be wired to the Company within three Business Days or such longer period
permitted by the '40 Act or the rules, orders or regulations thereunder and
Fund shall notify the person designated in writing by the Company as the
recipient for such notice of such delay by 3:00 p.m. Eastern time the same
Business Day that the Company transmits the redemption order to Fund.
1.8 Fund agrees that all Shares of the Portfolios of Fund will be sold
only to Participating Insurance Companies which have agreed to participate in
Fund to fund their Separate Accounts and/or to Plans, all in accordance with
the requirements of Section 817(h) of the Code and Treasury Regulation 1.817-5.
Shares of the Portfolios of Fund will not be sold directly to the general
public.
1.9 Fund may refuse to sell Shares of any Portfolios to any person, or
suspend or terminate the offering of the Shares of any Portfolios if such
action is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Board of Directors/Trustees of the Fund (the
"Board"), deemed necessary, desirable or appropriate. Without limiting the
foregoing, it has been determined that there is a significant risk that the Fund
and its shareholders may be adversely affected by short-term or excessive
trading activity, particularly activity used to try and take advantage of
short-term swings in the market. According, the Fund reserves right to reject
any purchase order, includes those purchase orders with respect to shareholders
or accounts whose trading has been or may be disruptive to the Fund or that may
otherwise adversely affect the Fund. The Company agrees to cooperate with the
Fund with respect to the Fund's policies and restrictions on short-term or
excessive trading activity.
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1.10 Issuance and transfer of Portfolio Shares will be by book entry
only. Stock certificates will not be issued to the Company or the Separate
Accounts. Shares ordered from Portfolios will be recorded in appropriate book
entry titles for the Separate Accounts.
Article II. FEES AND EXPENSES
2.1 Except as otherwise provided under this Agreement, the Shareholder
Services Agreement and the Administrative Services Agreement, the Fund and
Distributor shall pay no fee or other compensation to Company, and Company
shall pay no fee or other compensation to the Fund or Distributor, except as
made a part of such agreements as they may be amended from time to time. All
expenses incident to performance by each party of its respective duties under
such agreements shall be paid by that party, unless otherwise specified therein.
Article III. REPRESENTATIONS AND WARRANTIES
3.1 The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of New York and that it has
legally and validly established each Separate Account as a segregated asset
account under such laws.
3.2 The Company represents and warrants that it has registered or,
prior to any issuance or sale of the Variable Contracts, will register each
Separate Account as a unit investment trust ("UIT") in accordance with the
provisions of the '40 Act and cause each Separate Account to remain so
registered to serve as a segregated asset account for the Variable Contracts,
unless an exemption from registration is available.
3.3 The Company represents and warrants that the income, gains and
losses, whether or not realized, from assets allocated to each Separate Account
are, in accordance with the applicable Variable Contracts, to be credited to or
charged against such Separate Account without regard to other income, gains or
losses from assets allocated to any other accounts of the Company. The Company
represents and warrants that the assets of the Separate Account are and will be
kept separate from the General Account of the Company and any other separate
accounts the Company may have, and will not be charged with liabilities from any
business that the Company may conduct or the liabilities of any companies
affiliated with the Company.
3.4 The Company represents and warrants that the Variable Contracts will
be registered under the Securities Act of 1933 (the "'33 Act") unless an
exemption from registration is available prior to any issuance or sale of the
Variable Contracts and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws.
Company agrees to notify each Fund promptly of any investment restrictions
imposed by state insurance law and applicable to the Fund.
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3.5 The Company represents and warrants that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify Fund immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
3.6 Fund, together with the Adviser, represents and warrants that the
Portfolio Shares offered and sold pursuant to this Agreement will be registered
under the '33 Act and sold in accordance with all applicable federal and state
laws, and Fund shall be registered under the '40 Act prior to and at the time
of any issuance or sale of such Shares. Fund, subject to Section 1.9 above,
shall amend its registration statement under the '33 Act and the '40 Act from
time to time as required in order to effect the continuous offering of its
Shares. Fund shall register and qualify its Shares for sale in accordance with
the laws of the various states only if and to the extent deemed advisable by
Fund.
3.7 Fund, together with the Adviser, represents and warrants that each
Portfolio will comply with the diversification requirements set forth in
Section 817(h) of the Code, and the rules and regulations thereunder, including
without limitation Treasury Regulation 1.817-5, and will notify the Company
immediately upon having a reasonable basis for believing any Portfolio has
ceased to comply or might not so comply and will immediately take all
reasonable steps to adequately diversify the Portfolio to achieve compliance.
3.8 Fund, together with the Adviser, represents and warrants that each
Portfolio invested in by the Separate Account intends to elect to be treated as
a "regulated investment company" under Subchapter M of the Code, and to qualify
for such treatment for each taxable year and will notify the Company
immediately upon having a reasonable basis for believing it has ceased to so
qualify or might not so qualify in the future.
3.9 Distributor represents and warrants that it is and will be a member
in good standing of the National Association of Securities Dealers, Inc.
("NASD") and is and will be registered as a broker-dealer with the SEC.
Distributor further represents that it will sell and distribute Portfolio
Shares in accordance with all applicable state and federal laws and
regulations, including without limitation the '33 Act, the '34 Act and the
'40 Act.
3.10 Distributor represents and warrants that it will remain duly
registered and licensed in all material respects under all applicable federal
and state securities laws and shall perform its obligations hereunder in
compliance in all material respects with any applicable state and federal laws.
3.11 Fund and Advisor represent and warrant that all its directors,
trustees, officers, employees, and other individuals/entities who deal with the
money and/or securities of the Fund are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund and Advisor in an amount not less than that required by Rule 17g-1 under
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the '40 Act. The aforesaid bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company. The Fund and
Advisor shall make all reasonable efforts to see that this bond or another bond
containing these same provisions is always in effect, and each agrees to notify
the Company in the event such coverage no longer applies.
3.12 Company represents and warrants that all of its employees and
agents who deal with the money and/or securities of each Fund are and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage in an amount not less than that required to be maintained by entities
subject to the requirements of Rule 17g-1 of the '40 Act . The aforesaid bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company. Company shall make all reasonable efforts to see
that this bond or another bond containing these same provisions is always in
effect, and each agrees to notify the Fund in the event such coverage no longer
applies.
Article IV. PROSPECTUS AND PROXY STATEMENTS
4.1 Fund shall prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of Fund.
4.2 At least annually, Fund or its designee shall provide the Company,
free of charge, with as many copies of the current prospectus for the Shares of
the Portfolios as the Company may reasonably request for distribution to
existing Variable Contract owners whose Variable Contracts are funded by such
Shares. Fund or its designee shall provide the Company, at the Company's
expense, with as many more copies of the current prospectus for the Shares as
the Company may reasonably request for distribution to prospective purchasers
of Variable Contracts. If requested by the Company in lieu thereof, Fund or its
designee shall provide such documentation in a mutually agreeable form and such
other assistance as is reasonably necessary in order for the parties hereto
once a year (or more frequently if the prospectus for the Shares is
supplemented or amended) to have the prospectus for the Variable Contracts and
the prospectus for the Fund Shares and any other fund shares offered as
investments for the Variable Contracts printed together in one document,
provided however that Company shall ensure that, except as expressly authorized
in writing by Fund, no alterations, edits or changes whatsoever are made to
prospectuses or other Fund documentation after such documentation has been
furnished to Company or its designee, and Company shall assume liability for
any and all alterations, errors or other changes that occur to such
prospectuses or other Fund documentation after it has been furnished to Company
or its designee. The Fund or its designee shall reimburse the Company for the
pro-rata share of the printing costs (excluding any non-printing costs such as
composition and document layout costs) in a manner to be agreed upon by the
parties, but at a minimum for those pages that contain the prospectus for the
Shares that the Company may reasonably print for distribution to existing
Variable Contract owners whose Variable Contracts are funded by Fund Shares.
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4.3 The Fund shall provide the Company with copies of the Fund's proxy
statements, Fund reports to shareholders, and other Fund communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Variable Contract owners. Fund shall bear the costs of
distributing Fund proxy statements to Variable Contract owners up to the maximum
amount provided for by applicable law or regulation, if any.
4.4 Fund will provide the Company with at least one complete copy of
all prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, and all amendments or supplements to any of the above
that relate to the Portfolios promptly after the filing of each such document
with the SEC or other regulatory authority. The Company will provide Fund with
at least one complete copy of all prospectuses, statements of additional
information, annual and semi-annual reports, proxy statements, and all
amendments or supplements to any of the above that relate to a Separate Account
promptly after the filing of each such document with the SEC or other regulatory
authority.
Article V. SALES MATERIALS
5.1 The Company will furnish, or will cause to be furnished, to Fund or
Distributor, each piece of sales literature or other promotional material in
which Fund, Distributor or any affiliate thereof is named, at least five (5)
Business Days prior to its intended use. No such material shall be used unless
the Fund or Distributor approves such material. Such approval shall be presumed
given if notice to the contrary is not received by Company within five Business
Days after receipt by the Fund or Distributor of such material.
5.2 Fund or Distributor will furnish, or will cause to be furnished, to
the Company, each piece of sales literature or other promotional material in
which the Company or its Separate Accounts are named, at least five (5) Business
Days prior to its intended use. No such material shall be used unless the
Company approves such material. Such approval shall be presumed given if notice
to the contrary is not received by Fund or within five Business Days after
receipt by the Company of such material.
5.3 Except with the permission of the Company, neither the Fund nor
Distributor shall give any information or make any representations on behalf of
the Company or concerning the Company, the Separate Accounts, or the Variable
Contracts other than the information contained in the registration statement or
prospectus for such Variable Contracts, as such registration statement and
prospectus may be amended or supplemented from time to time, or in reports of
the Separate Accounts for distribution to owners of such Variable Contracts, or
in sales literature or other promotional material approved by the Company or its
designee. Neither the Fund nor Distributor shall give such information or make
such statements in a context that causes the information, representations or
statements to be false or misleading.
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5.4 Except with the permission of the Fund or Distributor, neither the
Company nor its affiliates or agents shall give any information or make any
representations or statements on behalf of the Fund, Distributor or any
affiliate thereof or concerning the Fund, Distributor or any affiliate thereof,
other than the information or representations contained in the registration
statements or prospectuses for the Fund, as such registration statements and
prospectuses may be amended or supplemented from time to time, or in reports to
shareholders or proxy statements for the Fund, or in sales literature or other
promotional material approved by the Fund or Distributor or designee thereof.
Neither Company nor its affiliates or agents shall give such information or make
such representations or statements in a context that causes the information,
representations or statements to be false or misleading.
5.5 For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, 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 (such as any written communication distributed
or made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts, or
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, registration
statements, prospectuses, statements of additional information, shareholder
reports and proxy materials, and any other material constituting sales
literature or advertising under NASD rules, the '40 Act or the '33 Act.
Article VI. POTENTIAL CONFLICTS
6.1 The parties acknowledge that Fund has received an exemptive order
from the SEC granting relief from various provisions of the '40 Act and the
rules thereunder to the extent necessary to permit Fund Shares to be sold to and
held by variable annuity and variable life insurance separate accounts of
Participating Companies and Plans. The terms of such exemptive order (the "Mixed
and Shared Funding Exemptive Order"), shall require Fund and each Participating
Company and Plan to comply with conditions and undertakings substantially as
provided in this Article. In the event of any inconsistencies between the terms
of the Mixed and Shared Funding Exemptive Order and those provided for in this
Article, the conditions and undertakings imposed by the Mixed and Shared Funding
Exemptive Order shall govern this Agreement.
6.2 The Fund's Board will monitor the Fund for the existence of any
material irreconcilable conflict between and among the interests of the Variable
Contract owners of all Participating Companies and of Plan Participants and
Plans investing in the Fund, and determine
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what action, if any, should be taken in response to such conflicts. An
irreconcilable material conflict may arise for a variety of reasons, which may
include: (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 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 Fund are being managed; (e) a difference in voting instructions
given by variable annuity and variable life insurance contract owners; (f) a
decision by a Participating Insurance Company to disregard the voting
instructions of Variable Contract owners and (g) if applicable, a decision by a
Plan to disregard the voting instructions of plan participants.
6.3 The Company will report any potential or existing conflicts to the
Board. The Company will be obligated to assist the Board in carrying out its
duties and responsibilities under the Mixed and Shared Funding Exemptive Order
by providing the Board with all information reasonably necessary for the Board
to consider any issues raised. The responsibility includes, but is not limited
to, an obligation by the Company to inform the Board whenever it has determined
to disregard Variable Contract owner voting instructions.
6.4 If a majority of the Board, or a majority of its disinterested
Board members, determines that a material irreconcilable conflict exists with
regard to contract owner investments in the Fund, the Board shall give prompt
notice of the conflict and the implications thereof to all Participating
Companies and Plans. If the Board determines that Company is a relevant
Participating Company or Plan with respect to said conflict, Company shall at
its sole cost and expense, and to the extent reasonably practicable (as
determined by a majority of the disinterested Board members), take such action
as is necessary to remedy or eliminate the irreconcilable material conflict.
Such necessary action may include but shall not be limited to: (a) withdrawing
the assets allocable to some or all of the Separate Accounts from Fund or any
Portfolio thereof and reinvesting those assets in a different investment medium,
which may include another Portfolio of Fund, or another investment company; (b)
submitting the question as to whether such segregation should be implemented to
a vote of all affected Variable Contract owners and as appropriate, segregating
the assets of any appropriate group (i.e variable annuity or variable life
insurance contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected Variable
Contract owners the option of making such a change; and (c) establishing a new
registered management investment company (or series thereof) or managed separate
account. If a material irreconcilable conflict arises because of the Company's
decision to disregard Variable Contract owner voting instructions, and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the election of Fund to withdraw the Separate
Account's investment in Fund, and no charge or penalty will be imposed as a
result of such withdrawal. The responsibility to take such remedial action shall
be carried out with a view only to the interests of the Variable Contract
owners.
For the purposes of this Article, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict but in no event will
Fund or its investment adviser (or any other investment adviser of Fund)
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be required to establish a new funding medium for any Variable Contract.
Further, the Company shall not be required by this Article to establish a new
funding medium for any Variable Contracts if any offer to do so has been
declined by a vote of a majority of Variable Contract owners materially and
adversely affected by the irreconcilable material conflict.
6.5 The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to the Company.
6.6 No less than annually, the Company shall submit to the Board such
reports, materials or data as the Board may reasonably request so that the Board
may fully carry out its obligations. Such reports, materials, and data shall be
submitted more frequently if deemed appropriate by the Board.
6.7 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the '40
Act or the rules thereunder with respect to mixed and shared funding on terms
and conditions materially different from any exemptions granted in the Mixed and
Shared Funding Exemptive Order, then Fund, and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rule 6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such Rules are applicable.
6.8 The Company acknowledges it has been advised by Fund that it may be
appropriate for Company to disclose the potential risks of mixed and shared
funding in prospectuses or other applicable disclosure documents.
Article VII. VOTING
7.1 The Company will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the '40 Act
as requiring pass-through voting privileges for Variable Contract owners.
Accordingly, the Company, where applicable, will vote Shares of the Portfolio
held in its Separate Accounts in a manner consistent with voting instructions
timely received from its Variable Contract owners. The Company will be
responsible for assuring that each of its Separate Accounts that participates in
Fund calculates voting privileges in a manner consistent with other
Participating Insurance Companies. The Company will vote Shares for which it has
not received timely voting instructions, as well as Shares it owns, in the same
proportion as its votes
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those Shares for which it has received voting instructions. Company and its
agents shall not oppose or interfere with the solicitation of proxies for Fund
Shares held for such Variable Contract owners.
Article VIII. INDEMNIFICATION
8.1 Indemnification by the Company.
(a) Subject to Section 8.4 below, the Company agrees to indemnify and
hold harmless Fund and Distributor, and each of their trustees, directors,
members, principals, officers, partners, employees and agents and each person,
if any, who controls Fund or Distributor within the meaning of Section 15 of the
'33 Act (collectively, the "Indemnified Parties" for purposes of this Article)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company, which consent shall not
be unreasonably withheld) 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 Fund's Shares or the Variable Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained
in the registration statement or prospectus for the
Variable Contracts or contained in the Variable 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 an Indemnified Party for use
in the registration statement or prospectus for the
Variable Contracts or in the Variable Contracts or sales
literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Variable
Contracts or Fund 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 Fund 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 Variable Contracts or Fund
Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, or sales literature of Fund or any
amendment thereof or supplement thereto or the omission
or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading if such statement or
omission or such alleged statement or omission was made
in reliance upon and in conformity with information
furnished to Fund 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
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(v) arises out of information or instructions from the
Company or its agents concerning the purchase,
redemption, transfer or other transaction in Fund
Shares; or
(vi) arise out of or result from any material breach of
any representation and/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.
(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.
(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 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 an Indemnified Party, 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.
8.2 Indemnification by Fund and Distributor.
(a) Subject to Section 8.4 below, the Fund and Distributor agree to
indemnify and hold harmless the Company and each of its directors, officers,
employees, and agents and each person, if any, who controls the Company within
the meaning of Section 15 of the '33 Act (collectively, the "Indemnified
Parties" for the purposes of this Article) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of Fund and Distributor which consent shall not be unreasonably
withheld) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, or 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 Fund's Shares or the Variable Contracts and:
12
(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 of
Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a
material fact required to be stated therein or necessary
to make the statements therein not misleading, provided
that this 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 Fund
or Distributor by or on behalf of the Company for use in
the registration statement or prospectus for Fund (or any
amendment or supplement) or otherwise for use in
connection with the sale of the Variable Contracts or
Fund 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 for the Variable Contracts not supplied
by Fund or Distributor or persons under its control) or
wrongful conduct of Fund or Distributor or persons under
its control, with respect to the sale or distribution of
the Variable Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement or prospectus covering the Variable Contracts,
or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make
the statements therein not misleading if such statement
or omission or such alleged statement or omission was
made in reliance upon and in conformity with information
furnished to the Company for inclusion therein by or on
behalf of Fund or Distributor; or
(iv) arise as a result of a failure by Fund or Distributor to
provide the services and furnish the materials under the
terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by Fund or
Distributor in this Agreement or arise out of or result
from any other material breach of this Agreement by Fund
or Distributor.
(b) Fund or Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would
13
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.
(c) Fund or Distributor, as the case may be, 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 Fund or
Distributor, as the case may be, 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 Fund or Distributor of any such claim shall not
relieve Fund or Distributor 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, Fund or Distributor shall be entitled to participate at
its own expense in the defense thereof. Fund or Distributor also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from Fund or Distributor to such party of
Fund's or Distributor's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and Fund or Distributor 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.
8.3 Indemnification by Adviser.
(a) Subject to Section 8.4 below, the Adviser agrees to indemnify and
hold harmless the Company and each of its directors, officers, employees, and
agents and each person, if any, who controls the Company within the meaning of
Section 15 of the '33 Act (collectively, the "Indemnified Parties" for the
purposes of this Article) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Adviser which consent shall not be unreasonably withheld) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, or 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 Fund's Shares
or the Variable Contracts and:
(vi) 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 of Fund (or
any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the
alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
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
14
with information furnished to Adviser by or on behalf of
the Company for use in the registration statement or
prospectus for Fund (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Variable Contracts or Fund Shares; or
(vii) arise out of or as a result of statements representations
(other than statements or representations contained in
the registration statement, prospectus or sales
literature for the Variable Contracts not supplied by
Adviser or persons under its control) or wrongful conduct
of Adviser or persons under its control, with respect to
the sale or distribution of the Variable Contracts or
Fund Shares; or
(viii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement or prospectus covering the Variable Contracts,
or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make
the statements therein not misleading if such statement
or omission or such alleged statement or omission was
made in reliance upon and in conformity with information
furnished to the Company for inclusion therein by or on
behalf of Adviser; or
(ix) arise out of or result from any material breach of any
representation and/or warranty made by Adviser, Fund
and/or Distributor in this Agreement or arise out of or
result from any other material breach of this Agreement
by Adviser.
(b) Adviser 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.
(c) Adviser shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified Adviser in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify Adviser of any such claim shall not
relieve Adviser 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, Adviser shall be entitled to participate at its own expense
in the defense thereof. Adviser also shall
15
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from Adviser to such party of Adviser's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and Adviser 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.
8.4 Indemnification for Errors.
In the event of any error or delay with respect to information regarding the
purchase, redemption, transfer or registration of Shares of the Fund, the
parties agree that each is obligated to make the Separate Accounts and/or the
Fund, respectively, whole for any error or delay that it causes, subject in the
case of pricing errors to the related Portfolio's policies on materiality of
pricing errors. In addition, each party agrees that neither will receive
compensation from the other for the costs of any reprocessing necessary as a
result of an error or delay. Each party agrees to provide the other with prompt
notice of any errors or delays of the type referred to in this Section.
Article IX. TERM; TERMINATION
9.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated, as to the Fund or any Portfolio, in
accordance with the provisions herein.
9.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of the Company or Fund at any time from the date
hereof upon ninety (90) days notice, unless a shorter time is
agreed to by the parties;
(b) At the option of the Company, if Fund Shares are not reasonably
available to meet the requirements of the Variable Contracts as
determined by the Company. Prompt notice of election to terminate
shall be furnished by the Company, said termination to be
effective ten days after receipt of notice unless Fund makes
available a sufficient number of Shares to reasonably meet the
requirements of the Variable Contracts within said ten-day period;
(c) At the option of the Company, upon the institution of formal
proceedings against Fund by the SEC, the National Association of
Securities Dealers, Inc., or any other regulatory body, the
expected or anticipated ruling, judgment or outcome of which
would, in the Company's reasonable judgment, materially impair
Fund's ability to meet and perform Fund's obligations and duties
hereunder. Prompt notice of election to terminate shall be
furnished by the Company with said termination to be effective
upon receipt of notice;
16
(d) At the option of Fund, upon the institution of formal proceedings
against the Company by the SEC, the NASD, or any other regulatory
body, the expected or anticipated ruling, judgment or outcome of
which would, in Fund's reasonable judgment, materially impair the
Company's ability to meet and perform its obligations and duties
hereunder. Prompt notice of election to terminate shall be
furnished by Fund with said termination to be effective upon
receipt of notice;
(e) In the event Fund's Shares are not registered, issued or sold in
accordance with applicable state or federal law, or such law
precludes the use of such Shares as the underlying investment
medium of Variable Contracts issued or to be issued by the
Company. Termination shall be effective upon such occurrence
without notice;
(f) At the option of Fund if the Variable Contracts cease to qualify as
annuity contracts or life insurance contracts, as applicable,
under the Code, or if Fund reasonably believes that the Variable
Contracts may fail to so qualify. Termination shall be effective
upon receipt of notice by the Company;
(g) At the option of the Company, upon Fund's breach of any material
provision of this Agreement, which breach has not been cured to
the satisfaction of the Company within ten days after written
notice of such breach is delivered to Fund;
(h) At the option of Fund, upon the Company's breach of any material
provision of this Agreement, which breach has not been cured to
the satisfaction of Fund within ten days after written notice of
such breach is delivered to the Company;
(i) At the option of Fund, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal
and/or state law. Termination shall be effective immediately
upon such occurrence without notice;
(j) In the event this Agreement is assigned without the prior written
consent of the Company, Fund, and Distributor, termination shall
be effective immediately upon such occurrence without notice.
17
9.3 Notwithstanding any termination of this Agreement pursuant to
Section 9.2 hereof, Fund at the option of the Company will continue to make
available additional Fund Shares, as provided below, pursuant to the terms and
conditions of this Agreement, for all Variable 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 or the Company, whichever shall have legal authority to do
so, shall be permitted to reallocate investments in Fund, redeem investments in
Fund and/or invest in Fund upon the payment of additional premiums under the
Existing Contracts.
Article X. NOTICES
Any notice hereunder shall be given by registered or certified mail
return receipt requested 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 Funds:
Lord Xxxxxx Family of Funds
00 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: General Counsel
with a copy to:
Lord, Xxxxxx & Co.
00 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
If to the Distributor:
Lord Xxxxxx Distributor LLC
00 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: General Counsel
If to the Company:
First SunAmerica Life Insurance Company
c/o SunAmerica Inc.
0 XxxXxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx
18
With a copy to:
First SunAmerica Life Insurance Company
c/o SunAmerica Inc.
0 XxxXxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: General Counsel
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article XI. MISCELLANEOUS
11.1 Privacy. Each party hereto acknowledges that, by reason of its
performance under this Agreement, it shall have access to, and shall receive
from the other party (and its affiliates, partners and employees), the
confidential information of the other party (and its affiliates, partners and
employees), including but not limited to the "nonpublic personal information" of
their consumers within the meaning of SEC Regulation S-P (collectively,
"Confidential Information"). Each party shall hold all such Confidential
Information in the strictest confidence and shall use such Confidential
Information solely in connection with its performance under this Agreement and
for the business purposes set forth in this Agreement. Under no circumstances
may a party cause any Confidential Information of the other party to be
disclosed to any third party or reused or redistributed without the other
party's prior written consent.
11.2 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which taken together shall constitute one and the
same instrument.
11.3 Severability. If any provision 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.
11.4 Governing Law. This Agreement shall be construed and the
provisions hereof interpreted under and in accordance with the laws of the State
of New York. It shall also be subject to the provisions of the federal
securities laws and the rules and regulations thereunder and to any orders of
the SEC granting exemptive relief therefrom and the conditions of such orders.
11.5 Liability. This Agreement has been executed on behalf of the Fund
by the undersigned officer of the Fund in his or her capacity as an officer of
the Fund. The obligations of this Agreement shall be binding upon the assets and
property of the Fund and each respective Portfolio thereof only and shall not be
binding on any Director/Trustee, officer or shareholder of the Fund
individually. In addition, notwithstanding any other provision of this
Agreement, no Portfolio shall be liable for any loss, expense, fee, charge or
liability of any kind relating to or
19
arising from the actions or omissions of any other Portfolio or from the
application of this Agreement to any other Portfolio. It is also understood that
each of the Portfolios shall be deemed to be entering into a separate Agreement
with the Company so that it is as if each of the Portfolios had signed a
separate Agreement with the Company and that a single document is being signed
simply to facilitate the execution and administration of the Agreement.
11.6 Inquiries and Investigations. Each party 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.
11.7 Survival. The terms and provisions contained in this Agreement
which by their terms require their performance by either party after the
expiration or other termination of this Agreement, including but not limited to
Article VIII, shall be and remain enforceable notwithstanding such expiration or
other termination of this Agreement for any reason whatsoever.
11.8 Client Lists. Company hereby consents to Distributor's, Fund's, or
its investment adviser's use or reference to the Company's name in connection
with any full, partial or representative list of clients.
11.9 Entire Agreement. This Agreement constitutes the entire agreement
and understanding between the parties hereto and supersedes all prior
agreement and understandings relating to the subject matter hereof.
11.10 Amendment, Waiver and Other Matters. Neither this Agreement, nor
any provision hereof, may be amended, waived, modified or terminated in any
manner except by a written instrument properly authorized and executed by all
parties hereto. 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.
20
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Fund Participation Agreement as of the date and year first above
written.
Lord Xxxxxx Series Fund, Inc.
By: /s/ Xxxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Vice President & Assistant Secretary
Lord Xxxxxx & Co. LLC
By: /s/ Xxxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Member & Deputy General Counsel
Lord Xxxxxx Distributor LLC
By: Lord, Xxxxxx & Co., it's Managing Member
By: /s/ Xxxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Member & Deputy General Counsel
First SunAmerica Life Insurance Company
By: /s/ Xxxx Xxxxxx Xxxxx
-----------------------------------------
Name: Xxxx Xxxxxx Xxxxx
Title: Senior Vice President
21
