FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is entered into as of the 30th day of September, 2002,
among AIG SunAmerica Life Assurance Company, formerly known as and currently
doing business as Anchor National Life Insurance Company ("AIG SunAmerica"), a
life insurance company organized under the laws of the State of Arizona and
having a business address of 0 XxxXxxxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000;
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, AIG 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 AIG
SunAmerica, with notice to CRMC and the Series; and
WHEREAS, AIG 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 AIG 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
Arizona 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 Schedules C and D, as may be supplemented from
time to time by mutual agreement among AIG 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, AIG SunAmerica, the Account, the Series and CRMC hereby agree as
follows:
1. The Series and CRMC each represents and warrants to AIG 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 AIG SunAmerica, and copies of any and all
amendments thereto will be forwarded to AIG 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 AIG SunAmerica expressly for use therein.
2. AIG 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. AIG
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 AIG SunAmerica
will maintain such registration for so long as any Contracts are
outstanding. AIG 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. AIG 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 AIG 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 AIG
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. AIG 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.
4. The Series will furnish to AIG SunAmerica such information with respect
to the Series in such form and signed by such of its officers as AIG
SunAmerica may reasonably request, and will warrant that the statements
therein contained when so signed will be true and correct. The Series
will advise AIG SunAmerica immediately of: (a) any 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 (except for the
American Pathway II Contracts). AIG 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 Series further agrees to
make Class 3 shares of the Funds specified in Schedule D available
solely to the Accounts for the American Pathway II Contract invested in
Anchor Pathway Fund. Availability of Class 3 shares is contingent upon
the SEC's approval of an exemptive order permitting AIG SunAmerica to
substitute the Series Class 3 shares for Anchor Pathway Fund shares.
AIG SunAmerica will be entitled to 0.18% per annum of the Class 3
assets attributable to the Contracts to offset Contract servicing
expenses for as long as the Series' Class 3 Rule 12b-1 remains in
effect and the Accounts remain invested in shares of the Series. The
fee to be received from the Series by AIG 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 AIG 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 AIG 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, XXX
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 AIG 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 AIG 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
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 AIG SunAmerica to be
necessary to meet the requirements of the Contracts.
8. With respect to payment of the purchase price by AIG SunAmerica and of
the redemption proceeds by the Series, AIG 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, AIG 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 AIG 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 AIG SunAmerica in an appropriate title for the
corresponding Account or subaccount.
13. The Series shall furnish notice promptly to AIG SunAmerica of any
dividend or distribution payable on any shares underlying subaccounts.
AIG 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 AIG SunAmerica of the number of shares so
issued. AIG 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. 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 AIG 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 AIG 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. AIG SunAmerica shall pay all expenses incidental to its performance
under this Agreement. AIG 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. AIG SunAmerica represents and warrants to the Series that any
information furnished in writing by AIG 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. AIG 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 AIG SunAmerica, SunAmerica Capital Services, Inc.,
American Funds Distributors, Inc. and CRMC dated September 30, 2002.
18. Shares of the Series may be offered to separate accounts of various
insurance companies in addition to AIG 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 AIG 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.
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, AIG 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 AIG SunAmerica's
remedial action does not adequately remedy any material irreconcilable
conflict, AIG 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 AIG 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. AIG 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 AIG
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 AIG SunAmerica; (c) unlawful conduct by AIG
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 AIG SunAmerica
harmless against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses) which AIG 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
AIG SunAmerica includes in its materials, provided AIG 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 AIG SunAmerica or from AIG SunAmerica failure to fulfill
its duties and obligations arising under this Agreement.
24. AIG 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 AIG 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 AIG SunAmerica, upon ten calendar days' prior written
notice, if the shares of the Series are not reasonably available;
(c) at the option of AIG 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 AIG SunAmerica; in such event
prompt notice shall be given by AIG 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 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 AIG SunAmerica:
AIG 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 AIG 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 investments in any Fund and/or invest in the Series upon the
making of additional purchase payments under the Existing Contracts. AIG
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, AIG 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. AIG SunAmerica also agrees that the
obligations of each Fund hereunder shall be several and not joint, in accordance
with its proportionate interest hereunder, and AIG SunAmerica agrees not to
proceed against any Fund for the obligations of another Fund. Notwithstanding
the foregoing, if AIG SunAmerica seeks satisfaction for any liability of the
Series in respect of this Agreement, AIG SunAmerica and the Account may seek
recourse against CRMC for any amounts due AIG 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.
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
----------------------------
AIG SUNAMERICA LIFE ASSURANCE COMPANY
(on behalf of itself and the Account)
Attest: By: ____________________________________
Its: President
----------------------------
SCHEDULE A
CONTRACTS
AIG SunAmerica Variable Annuities including, without limitation, Polaris II,
Polaris II A-Class, Polaris Platinum II, Polaris Choice II, Polaris Advisor,
American Pathway II, and other contracts to which AIG SunAmerica may make the
Series available after notice to CRMC and the Series.
SCHEDULE B
ACCOUNTS
Variable Separate Account
Variable Annuity Account Seven
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
SCHEDULE D
PARTICIPATING FUNDS - CLASS 3
American Funds Insurance Series Growth Fund
American Funds Insurance Series International Fund
American Funds Insurance Series Growth-Income Fund
American Funds Insurance Series Asset Allocation Fund
American Funds Insurance Series High-Income Bond Fund
American Funds Insurance Series U.S. Government/AAA-Rated Securities Fund
American Funds Insurance Series Cash Management Fund
