Exhibit 8(b)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is entered into as of the 2nd day of December, 2002, among
First SunAmerica Life Insurance Company ("First SunAmerica"), a life insurance
company organized under the laws of the State of New York and having a business
address of 000 0xx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 100110017; American Funds
Insurance Series (the "Series"), an open-end management investment company
organized under the laws of the Commonwealth of Massachusetts; and Capital
Research and Management Company ("CRMC"), a corporation organized under the
laws of the State of Delaware, and having a business address of 000 Xxxxx Xxxx
Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000.
WITNESSETH:
WHEREAS, First SunAmerica has issued or proposed to issue to the public,
now and in the future, certain variable annuity contracts (the "Contracts") as
set forth in Schedule A, as may be supplemented from time to time by First
SunAmerica, with notice to CRMC and the Series; and
WHEREAS, First SunAmerica has established one or more separate accounts
(the "Account") as set forth in Schedule B, as may be supplemented from time to
time by First SunAmerica, with notice to CRMC and the Series, for the purposes
of issuing the Contracts and has or will register the Account with the United
States Securities and Exchange Commission (the "SEC") as a unit investment
trust under the Investment Company Act of 1940 (the "1940 Act") and pursuant to
the New York Insurance Code; and
WHEREAS, the Series is divided into various funds (the "Funds"), each Fund
being subject to certain fundamental investment policies which may not be
changed without a majority vote of the shareholders of such Fund; and
WHEREAS, certain Funds will serve as the underlying investment medium for
the Contracts as set forth in Schedule C, as may be supplemented from time to
time by mutual agreement among First SunAmerica, CRMC and the Series; and
WHEREAS, the Series has received a "Mixed and Shared Funding Order" from
the SEC granting relief from certain provisions of the 1940 Act and the rules
thereunder to the extent necessary to permit shares of the Funds to be sold to
variable annuity and life insurance separate accounts of unaffiliated insurance
companies; and
WHEREAS, CRMC is the investment adviser for the Series.
NOW, THEREFORE, in consideration of the foregoing and of mutual covenants
and conditions set forth herein and for other good and valuable consideration,
First SunAmerica, the Account, the Series and CRMC hereby agree as follows:
1. The Series and CRMC each represents and warrants to First SunAmerica that:
(i) a registration statement under the Securities Act of 1933 (the "1933 Act")
and under the 1940 Act with respect to the Series has been filed with the SEC
in the form previously delivered to First SunAmerica, and copies of any and all
amendments thereto will be forwarded to First SunAmerica at the time that they
are filed with the SEC; (ii) the Series is, and shall be at all times while
this Agreement is in force, lawfully organized and validly existing under the
laws of the Commonwealth of Massachusetts; (iii) the Series is and shall remain
registered as an open-end management investment company under the 1940 Act; and
(iv) the Series registration statement and any further amendments or
supplements thereto will, when they become effective, conform in all material
respects to the requirements of the 1933 Act and the 1940 Act, and the rules
and regulations of the SEC thereunder, and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statement therein not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Series by First SunAmerica expressly
for use therein.
2. First SunAmerica represents and warrants to the Series and CRMC that the
Contracts are or will be registered under the 1933 Act or are exempt or not
subject to registration thereunder, and that the Contracts will be issued, sold
and distributed in compliance in all material respects with all applicable state
and federal laws, rules and regulations. First SunAmerica further represents and
warrants that each Account has been, or will be, established as a segregated
asset account under applicable law and has registered or, prior to the issuance
or sale of the Contracts, will register each Account as a unit investment trust
in accordance with the 1940 Act (unless exempt therefrom) to serve as segregated
asset accounts for the Contracts, and that First SunAmerica will maintain such
registration for so long as any Contracts are outstanding. First SunAmerica
shall amend all registration statements under the 1933 Act and the 1940 Act, as
applicable, with respect to both the Accounts and the Contracts from time to
time as required in order to effect the continuous offering of the Contracts or
as may otherwise be required by applicable law. First SunAmerica shall register
and qualify the Contracts for sale in accordance with the securities laws of the
various states only if and to the extent deemed necessary by First SunAmerica.
2a. The Series and CRMC represent that the Series is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code") and that each will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision,
and that each will notify First SunAmerica immediately upon having a reasonable
basis for believing that the Series has ceased to so qualify or that the Series
might not so qualify in the future.
3. First SunAmerica represents and warrants to the Series and CRMC that the
Contracts are currently and at the time of issuance will be treated as annuity
contracts under applicable provisions of the Code, that it will maintain such
treatment and that it will notify the Series and CRMC 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.
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4. The Series will furnish to First SunAmerica such information with respect
to the Series in such form and signed by such of its officers as First
SunAmerica may reasonably request, and will warrant that the statements therein
contained when so signed will be true and correct. The Series will advise First
SunAmerica immediately of: (a) any non-routine request by the SEC (i) for
amendment of the registration statement relating to the Series or (ii) for
additional information; (b) the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement of the Series or the
initiation of any proceeding for that purpose; (c) the institution of any
proceeding, investigation or hearing involving the offer or sale of the
Contracts or the Series of which it becomes aware; or (d) the happening of any
material event, if known, which makes untrue any statement made in the
registration statement of the Series or which requires the making of a change
therein in order to make any statement therein not misleading.
5. The Series will use best efforts to register for sale under the 1933 Act
and, if required, under state securities laws, such additional shares of the
Series as may reasonably be necessary for use as the funding vehicle for the
Contracts.
6. The Series agrees to make Class 2 shares of the Funds specified in
Schedule C available to the Accounts for the Contracts. First SunAmerica will
be entitled to a fee from the Series of 0.25% per annum of Class 2 assets
attributable to the Contracts to offset Contract servicing expenses for as long
as the Series' Class 2 Rule 12b-1 plan remains in effect and Accounts remain
invested in shares of the Series. The fee to be received from the Series by
First SunAmerica will be paid monthly in arrears.
6a. Any material error in the calculation of the net asset value, dividends or
capital gain information shall be reported as soon as practicable upon
discovery to First SunAmerica. In the event of any material error in the
calculation or communication of net asset value, dividends or capital gain
information or delay in the communication by CRMC, the Series will act in
accordance with its then current policies and procedures relating to error
correction.
7. Fund shares to be made available to Accounts for the Contracts shall be
sold by the Series and purchased by First SunAmerica for a given Account at the
net asset value (without the imposition of a sales load) next computed after
receipt of each order by the Series or its designee, as established in
accordance with the provisions of the then current prospectus of the Series. For
purposes of this Xxxxxxxxx 0, Xxxxx XxxXxxxxxx shall be a designee of the Series
for receipt of such orders from each Account, and receipt by such designee as of
4:00 p.m. Eastern time shall constitute receipt by the Series; provided that the
Series receives notice of such order by 9:30a.m. Eastern time on the following
Business Day. "Business Day" shall mean any day on which the New York Stock
Exchange ("NYSE") is open for trading and on which the Series calculates its net
asset value pursuant to the rules of the SEC. The Series will make its shares
available indefinitely for the purchase at the applicable net asset value per
share by First SunAmerica and its Accounts on those days on which the Series
calculates its net asset value pursuant to the rules of the SEC, and the Series
shall use its best efforts to calculate such net asset value on each day on
which the NYSE is open for trading. The Series shall make the net asset value
per share for each of the Funds available to First SunAmerica on a daily basis
as soon as reasonably practical after the Series calculates its net asset value
per share, and the Series shall use its best efforts to
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make such net asset value per share available by 6:30 p.m. Eastern time. The
Series is responsible for maintaining net asset values for the Funds in
accordance with the requirements of the 1940 Act and its current prospectus.
Shares of particular Funds shall be ordered in such quantities and at such times
as determined by First SunAmerica to be necessary to meet the requirements of
the Contracts.
8. With respect to payment of the purchase price by First SunAmerica and of
the redemption proceeds by the Series, First SunAmerica and the Series shall
net purchase and redemption orders with respect to each Fund and shall transmit
one net payment for all of the Funds in accordance with Section 9 hereof.
9. In the event of net purchases, First SunAmerica shall pay for the shares
of the Series by 2:00 p.m. Eastern Time on the next business day after an order
to purchase such shares is made in accordance with the provisions of Section 7
hereof. All such payments shall be in federal funds transmitted by wire. In the
event of net redemption, the Series shall pay redemption proceeds by 2:00 p.m.
Eastern time on the next business day after an order to redeem such shares is
made in accordance with the provisions of Section 7 hereof.
10. The Series reserves the right to suspend or terminate sales of the Series'
shares to First SunAmerica and the Accounts if such action is required by law,
or if the Board of Trustees of the Series (the "Board") while exercising its
independent judgement and acting in good faith and in light of its fiduciary
duties under federal law and any applicable state laws, deems it necessary,
appropriate and in the best interest of the Series and its shareholders or in
response to the order of an appropriate regulatory authority.
11. The Contracts funded through the Account will provide for the allocation
of net amounts among certain subaccounts for investment in such shares of the
Funds as may be offered from time to time in the Contracts. The selection of
the particular subaccount is to be made by the Contract owner and such
selection may be changed in accordance with the terms of the Contracts.
12. Transfer of the Series' shares will be by book entry only. No stock
certificates will be issued to the Account. Shares ordered from a particular
Fund will be recorded by CRMC or the Series' transfer agent as instructed by
First SunAmerica in an appropriate title for the corresponding Account or
subaccount.
13. The Series shall furnish notice promptly to First SunAmerica of any
dividend or distribution payable on any shares underlying subaccounts. First
SunAmerica hereby elects to receive all such dividends and distributions as are
payable on shares of a Series recorded in the title for the corresponding
subaccount in additional shares of that Fund. The Series shall notify First
SunAmerica of the number of shares so issued. First SunAmerica reserves the
right to revoke this election and to receive all such income dividends and
capital gain distributions in cash.
14. The Series shall pay all expenses incidental to its performance under this
Agreement.
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The Series shall see to it that all of its shares are registered and authorized
for issue in accordance with applicable federal and state securities laws prior
to their purchase for the Account. The Series shall bear the expenses for the
cost of registration of its shares, preparation of Series prospectuses to be
sent to existing Contract owners, proxy materials and reports, the printing and
distribution of such items to each Contract owner who has allocated net amounts
to any subaccount, the preparation of all statements and notices required from
it by any federal or state law, and taxes on the issue or transfer of the
Series' shares subject to this Agreement. The Series will make available to
First SunAmerica at its request, at least once a year, with enough copies of
its Statement of Additional Information to be able to distribute one to each
Contract owner or prospective contract owner who requests such Statement of
Additional Information. The Series shall provide, at its expense, such
documentation (in camera ready form) and other assistance as is reasonably
necessary in order for First SunAmerica once each year (or more frequently if
the prospectus for the Series is amended) to have the prospectus or
prospectuses for the Contracts and the Series' prospectus printed together in
one or more documents (the cost of such printing to be allocated pro rata,
based on the portion of the cost attributable to the Series prospectus).
15. First SunAmerica shall pay all expenses incidental to its performance
under this Agreement. First SunAmerica shall bear the expenses for the cost of
preparation and delivery of the Contract and Series prospectuses to be sent to
prospective Contract owners.
16. First SunAmerica represents and warrants to the Series that any
information furnished in writing by First SunAmerica to the Series for use in
the registration statement of the Series will not result in the registration
statement's failing to conform in all respects to the requirements of the 1933
Act and the 1940 Act and the rules and regulations thereunder or containing any
untrue statement of a material fact or omission to state a material fact
required to be state therein or necessary to make the statements therein not
misleading.
17. First SunAmerica and its affiliates shall make no representations
concerning the Series' shares except those contained in the then current
prospectus of the Series, in such printed information subsequently issued on
behalf of the Series or the other funds managed by CRMC as supplemental to the
appropriate fund prospectus or in material approved by CRMC as provided in the
Business Agreement in effect among First SunAmerica, SunAmerica Capital
Services, Inc., American Funds Distributors, Inc. and CRMC dated December 2,
2002.
18. Shares of the Series may be offered to separate accounts of various
insurance companies in addition to First SunAmerica and otherwise in accordance
with the Mixed and Shared Funding Order. No shares of the Series shall be sold
to the general public in contravention of Section 817 of the Internal Revenue
Code of 1986 as amended and the regulations thereunder ("Section 817").
19. The Series hereby notifies First SunAmerica that it may be appropriate to
include in the prospectus pursuant to which a Contract is offered disclosure
regarding the risks of mixed and shared funding.
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20. The parties to this Agreement recognize that due to differences in tax
treatment or other considerations, the interests of various Contract owners
participating in one or more Funds might, at some time, be in conflict. Each
party shall report to the other party any potential or existing conflict of
which it becomes aware. The Board shall have sole authority to determine if an
irreconcilable material conflict exists and its implications. If such a
conflict exists, First SunAmerica will, at its own expense, take whatever
action it deems necessary to remedy such conflict; in any case, Contract owners
will not be required to bear such expenses. Notwithstanding the foregoing, in
the event that the Board determines, in its sole discretion, that First
SunAmerica's remedial action does not adequately remedy any material
irreconcilable conflict, First SunAmerica will withdraw from investment in the
Series each of the Accounts designated by the Board and terminate this
Agreement within six months after the Board informs First SunAmerica in writing
of the foregoing determination; provided, however, that such withdrawal and
termination shall be limited to the extent required to remedy any such material
irreconcilable conflict as determined by the Board.
21. The Series agrees to comply with the diversification requirements of
Section 817.
22. First SunAmerica agrees to indemnify and hold the Series and CRMC harmless
against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses) to which the Series and CRMC may be
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements arise as a result of First SunAmerica: (a) making untrue statements
of material facts or omitting material facts in the Contracts' registration
statement, prospectus or sales literature; (b) making untrue statements of
material facts that the Series includes in their materials, provided the Series
relies on information supplied by First SunAmerica; (c) unlawful conduct by
First SunAmerica with respect to the sale of the Contracts or Funds' shares;
and (d) breaching this Agreement or a representation or warranty; provided,
however, that indemnification will not be provided hereunder for any such
liability that results from the willful malfeasance or negligence of CRMC or
from CRMC's failure to fulfill its duties and obligations arising under this
Agreement.
23. The Series and CRMC each agrees to indemnify and hold First SunAmerica
harmless against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses) to which First SunAmerica may be subject
under any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
arise as a result of the Series' or CRMC's: (a) making untrue statements of
material facts or omitting material facts in the Series' registration
statement, prospectus or sales literature; (b) making untrue statements of
material facts that First SunAmerica includes in its materials, provided First
SunAmerica relies on information supplied by the Series; (c) unlawful conduct
by the Series with respect to the sale of the Contracts or Funds' shares; and
(d) breaching this Agreement or a representation or warranty; provided,
however, that indemnification will not be provided hereunder for any such
liability that results from the willful malfeasance or negligence of First
SunAmerica or from First SunAmerica failure to fulfill its duties and
obligations arising under this Agreement.
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24. First SunAmerica shall be responsible for assuring that the Account
calculates pass-through voting privileges of the Contract owners in a manner
consistent with the Mixed and Shared Funding Order.
24a. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including, but not limited to, the SEC,
the National Association of Securities Dealers 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.
25. No unregistered Account shall purchase shares of the Funds of the Series
under this Agreement.
26. The parties understand that there is no intention to create a joint
venture in the subject matter of this Agreement. Accordingly, the right to
terminate this Agreement and to engage in any activity not inconsistent with
this Agreement is absolute. This Agreement will terminate:
(a) at the option of First SunAmerica or the Series upon ten calendar
days' prior written notice to the other party if a final non-appealable
administrative or judicial decision is entered against the other party
which has a material impact on the Contracts;
(b) at the option of First SunAmerica, upon ten calendar days' prior
written notice, if the shares of the Series are not reasonably available;
(c) at the option of First SunAmerica, immediately upon written notice,
if the Series or CRMC fails to meet the requirements for either
diversification under Section 817 or registered investment company status;
(d) in the event the Series' shares are not registered, issued or sold
in accordance with applicable state and/or federal law or such law
precludes the use of such shares as an underlying investment for the
Contracts issued or to be issued by First SunAmerica; in such event prompt
notice shall be given by First SunAmerica or the Series to the other
party;
(e) by either party upon six months' written notice to the other party;
(f) by mutual agreement at any time.
The effective date for termination pursuant to any notice given under this
Paragraph shall be calculated beginning with the date of receipt of such
notice.
27. All notices, consents, waivers, and other communications under this
Agreement must be in writing, and will be deemed to have been duly received:
(a) when delivered by hand (with written confirmation of receipt); (b) when
sent by telecopier (with written confirmation receipt), provided that a copy is
mailed by registered mail, return receipt requested; or (c) the day after it
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is sent by a nationally recognized overnight delivery service, in each case to
the appropriate addresses and telecopier numbers set forth below (or to such
other addresses and telecopier numbers as a party may designate by notice to
the other parties):
If to First SunAmerica:
First SunAmerica Life Assurance Company
0 XxxXxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: General Counsel
Facsimile: 000-000-0000
If to the Fund:
American Funds Insurance Series
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Senior Vice President
Facsimile No.: 000-000-0000
If to the Adviser:
Capital Research and Management Company
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Senior Vice President and Legal Counsel,
Fund Business Management Group, and Secretary
Facsimile No.: 000-000-0000
In either case with a copy to:
Capital Research and Management Company 000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Vice President and Senior Counsel,
Fund Business Management Group
Facsimile No.: 000-000-0000
28. If this Agreement terminates, any provision of this Agreement necessary to
the orderly windup of business under it, including the continued availability
of the Funds pursuant to Section 29 below, will remain in effect as to that
business, after termination.
29. Notwithstanding any termination of this Agreement, the Series and CRMC
shall, at the option of First SunAmerica, continue to make available additional
shares of the Funds pursuant to the terms and conditions of this Agreement, for
all Contracts in effect on the effective date of termination of this Agreement
(the "Existing Contracts"), except as otherwise provided under Section 10 of
this Agreement. Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to transfer or reallocate investments under the
Contracts, redeem
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investments in any Fund and/or invest in the Series upon the making of
additional purchase payments under the Existing Contracts. First SunAmerica
agrees not to redeem shares unless legitimately required to do so according to
a contract owner's request or under an order from the SEC, or as otherwise
agreed to or permitted among the parties.
30. The obligations of the Series under this Agreement are not binding upon
any of the Trustees, officers, employees, or shareholders (except CRMC if it is
a shareholder), of the Series individually, but bind only the Series' assets.
When seeking satisfaction for any liability of the Series in respect of this
Agreement, First SunAmerica and the Account agree not to seek recourse against
said Trustees, officers, employees, or shareholders, or any of them, or any of
their personal assets for such satisfaction. First SunAmerica also agrees that
the obligations of each Fund hereunder shall be several and not joint, in
accordance with its proportionate interest hereunder, and First SunAmerica
agrees not to proceed against any Fund for the obligations of another Fund.
Notwithstanding the foregoing, if First SunAmerica seeks satisfaction for any
liability of the Series in respect of this Agreement, First SunAmerica and the
Account may seek recourse against CRMC for any amounts due First SunAmerica and
not recovered from the Series.
31. This Agreement shall be construed in accordance with the laws of the State
of California and subject to the provisions of all applicable federal
securities laws and the terms shall be construed in accordance therewith.
32. This Agreement and the parties' rights, duties, and obligations under this
Agreement are not transferable or assignable by any of them without the
express, prior written consent of the other party hereto, with such consent not
to be unreasonably withheld. Any attempt by a party to transfer or assign this
Agreement or any of its rights, duties or obligations under this Agreement
without such consent is void.
33. In addition to any provision of this Agreement which specifically states
that it survives termination of this Agreement, the following paragraphs shall
survive any termination hereof: 22-23 and 27-33.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and attested as of the date first above written.
AMERICAN FUNDS INSURANCE SERIES
Attest: By: ___________________________________
Its: Secretary
_______________________________
CAPITAL RESEARCH AND MANAGEMENT COMPANY
Attest: By: ___________________________________
Its: Vice President and Secretary
_______________________________
FIRST SUNAMERICA LIFE INSURANCE COMPANY
(on behalf of itself and the Account)
Attest: By: ___________________________________
Its: President
_______________________________
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SCHEDULE A
CONTRACTS
First SunAmerica Variable Annuities including, without limitation, FS Polaris,
Polaris II NY, Polaris Choice NY, WM Diversified Strategies III NY, Seasons
Triple Elite NY, and other contracts to which First SunAmerica may make the
Series available after notice to CRMC and the Series.
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SCHEDULE B
ACCOUNTS
FS Variable Separate Account
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SCHEDULE C
PARTICIPATING FUNDS - CLASS 2
American Funds Insurance Series Asset Allocation Fund
American Funds Insurance Series Global Growth Fund
American Funds Insurance Series Growth Fund
American Funds Insurance Series Growth-Income Fund
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