Exhibit 8
FUND PARTICIPATION AGREEMENT
AGREEMENT, made on this ________ day of ________________, 20____,
between FIRST SUNAMERICA LIFE COMPANY (the "Company"), a life insurance company
organized under the laws of the State of New York], on behalf of itself and on
behalf of FS VARIABLE ANNUITY ACCOUNT FIVE ("Variable Account"), a separate
account of the Company existing pursuant to the laws of the State of New York
and SEASONS SERIES TRUST ("Fund"), an open-end management investment company
established pursuant to the laws of the Commonwealth of Massachusetts under a
Declaration of Fund dated October 11, 1995, which is composed of multiple
investment series ("Portfolios").
WITNESSETH:
WHEREAS, the Company, by resolution, has established the Variable
Account on its books of account for the purpose of funding certain variable
annuity contracts issued by it; and
WHEREAS, the Variable Account is divided into various portfolios
("Divisions") under which the income, gains and losses, whether or not realized,
from assets allocated to each such Division are, in accordance with the
applicable variable annuity contracts, credited to or charged against such
Division without regard to any income, gains or losses of other Divisions or
separate accounts of the Company; and
WHEREAS, the Variable Account is registered with the Securities and
Exchange Commission as a unit investment trust under the Investment Company Act
of 1940 ("Act"); and
WHEREAS, the Fund, a registered, open-end, diversified management
investment company, is divided into various Portfolios, each Portfolio being
subject to separate investment objectives and restrictions which may not be
changed without a majority vote of the shareholders of each such Portfolio; and
WHEREAS, the Variable Account desires to purchase shares of the Fund in
connection with the issuance of certain variable annuity contracts which are
listed in Appendix A and may be amended from time to time; (collectively with
other contracts and policies that may be funded through the Fund, "Contracts");
and
WHEREAS, the Fund agrees to make shares of certain of its Portfolios
available to serve as underlying investment media for the corresponding
Divisions of the Variable Account; and
WHEREAS, AIG SUNAMERICA CAPITAL SERVICES, INC. ("Distributor"), which
serves as the distributor for the Contracts funded in the Variable Account
pursuant to an agreement with the Company on behalf of itself and the Variable
Account is a broker-dealer registered as such under the Securities Exchange Act
of 1934 and a member of the National Association of Securities Dealers, Inc.;
NOW, THEREFORE, in consideration of the foregoing and of mutual
covenants and conditions set forth herein and for other good and valuable
consideration, the Company (on behalf of itself and the Variable Account) and
the Fund hereby agree as follows:
1. The Contracts funded by the Variable Account will provide for
the allocation of net amounts among certain Divisions of the Variable Account
for investment in the shares of the portfolios of the Fund underlying each such
Division. The selection of a particular Division is to be made (and such
selection may be changed) in accordance with the terms of the applicable
Contract.
2. No representation is made as to the number or amount of such
Contracts to be sold. The Company, pursuant to its agreement with Distributor,
will make reasonable efforts to market those Contracts it determines from time
to time to offer for sale and, although it is not required to offer for sale new
Contracts, the Company will accept payments and otherwise service existing
Contracts funded in the Variable Account.
3. Fund shares to be made available to the respective Divisions of
the Variable Account shall be sold by each of the respective Portfolios of the
Fund and purchased by the Company for that Division at the net asset value next
computed after receipt of each order, as established in accordance with the
provisions of the then current prospectus of the Fund. Shares of a particular
Portfolio of the Fund shall be ordered in such quantities and at such times as
determined by the Company to be necessary to meet the requirements of those
Contracts having amounts allocated to the Division for which the Fund Portfolio
shares serve as the underlying investment medium. Orders and payments for shares
purchased will be sent promptly to the Fund and will be made payable in the
manner established from time to time by the Fund for the receipt of such
payments. The Fund reserves the right to delay transfer of its shares until the
payment check has cleared. The Fund has the obligation to insure that its shares
to be made available to the appropriate Division(s) under the Contracts are
registered at all times under the Securities Act of 1933 ("1933 Act").
4. The Fund will redeem the shares of the various Portfolios when
requested by the Company on behalf of the corresponding Division of the Variable
Account at the net asset value next computed after receipt of each request for
redemption, as established in accordance with the provisions of the then current
prospectus of the Fund. The Fund will make payment in the manner established
from time to time by the Fund for the receipt of such redemption requests, but
in no event shall payment be delayed for a greater period than is permitted by
the Act.
5. Transfer of the Fund's shares will be by book entry only. No
stock certificates will be issued to the Variable Account. Shares ordered from a
particular Portfolio to the Fund will be recorded in an appropriate title for
the corresponding Division of the Variable Account.
6. The Fund shall furnish notice promptly to the Company of any
dividend or distribution payable on its shares which are subject to this
Agreement. All of such dividends and distributions as are payable on each of the
Portfolio shares in the title for the corresponding
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Division of the Variable Account shall be automatically reinvested in additional
shares of that Portfolio of the Fund. The Fund shall notify the Company of the
number of shares so issued.
7. All expenses incident to the performance of the Fund under this
Agreement shall be paid by the Fund. The Fund shall ensure that all of its
shares which are subject to this Agreement are registered and authorized for
issue in accordance with applicable federal and state laws prior to their
purchase by the Variable Account. The Company shall bear none of the expenses
for the cost of registration of the Fund's shares, preparation of the Fund's
prospectuses, proxy materials and reports, the distribution of such items to
shareholders, the preparation of all statements and notices required by any
federal or state law or any taxes on the issue or transfer of the Fund's shares
subject to this Agreement, except to the extent such costs are related to the
marketing the variable annuity Contracts.
8. The Company, either directly or through Distributor, shall make
no representations concerning the Fund's shares which are subject to this
Agreement other than those contained in the then current prospectus of the Fund
and in printed information subsequently issued by the Fund as supplemental to
such prospects.
9. The Company and the Fund acknowledge that in the future, the
Fund's shares may become available for investment by separate accounts of other
insurance companies, which may or may not be affiliated persons (as that term is
defined in the Act) of the Company (collectively with the Company,
"Participating Insurers"). In such event, (a) the Fund shall undertake that its
Board of Trustees ("Board") will monitor the Fund for the existence of material
irreconcilable conflicts that may arise between the Contract owners of
Participating Insurers, for the purpose of identifying and remedying any such
conflict and (b) paragraphs 10, 11 and 12 shall apply. In discharging its
responsibilities under paragraphs 10, 11 and 12 hereinafter, the Company will
cooperate and coordinate, to the extent necessary, with the Board and with other
Participating Insurers. The Fund agrees that it will require, as a condition to
participation, that all Participating Insurers shall have obligations and
responsibilities regarding conflicts of interest corresponding to those that are
agreed to herein by the Company pursuant to such paragraphs 10, 11 and 12 and
pursuant to this paragraph 9.
10. The Company shall provide pass-through voting privileges to all
variable Contract owners so long as the U.S. Securities and Exchange Commission
continues to interpret the Act to require pass-through voting privileges for
variable Contract owners. The Company shall be responsible for assuring that the
Variable Account calculates voting privilege in a manner consistent with
separate accounts of other Participating Insurers, as determined by the Board.
The Company will vote shares for which it has not received voting instructions
in the same proportion as it votes shares for which it has received
instructions.
11. The Company will report to the Board any potential or existing
conflicts of which it is or becomes aware between any of its Contract owners or
between any of its Contract owners and Contract owners of other Participating
Insurers. The Company will be responsible for assisting the
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Board in carrying out its responsibilities to identify material conflicts by
providing the Board with all information available to it that is reasonably
necessary for the Board to consider any issues raised, including information as
to a decision by the Company to disregard voting instructions of its Contract
owners.
12. The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly by it to the
Company and other Participating Insurers. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance tax, or securities laws or regulations, or a public ruling, private
letter ruling, or any similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any relevant
proceeding; (d) the manner in which the investments of any Portfolio are being
managed; (e) a difference in voting instructions given by variable annuity
Contract owners and variable life insurance Contract owners or by Contract
owners of different Participating Insurers; or (f) a decision by a Participating
Insurer to disregard the voting instructions of variable Contract owners.
13. If it is determined by a majority of the Board or a majority of
its disinterested Trustees that a material irreconcilable conflict exists that
affects the interests of the Company Contract owners, the Company shall, in
cooperation with other Participating Insurers whose Contract owners' interests
are also affected by the conflict, take whatever steps are necessary to remedy
or eliminate the irreconcilable material conflict, which steps could include:
(a) withdrawing the assets allocable to the Variable Account from the Fund or
any portfolio and reinvesting such assets in a different investment medium,
including another Portfolio of the Fund, or submitting the question of whether
such segregation should be implemented to a vote of all affected Contract owners
and, as appropriate, segregating the assets of any particular group (e.g.,
annuity Contract owners or life insurance Contract owners) that votes in favor
of such segregation, or offering to the affected Contract owners of the option
of making such a change; and (b) establishing a new registered management
investment company or managed separate account. The Company shall take such
steps at its expense if the conflict affects solely the interests of the owners
of the Company Contracts, but shall bear only its equitable portion of any such
expense if the conflict also affects the interest of the Contract owners of one
or more Participating Insurers other than the Company, provided: that this
sentence shall not be construed to require the Fund to bear any portion of such
expense. If a material irreconcilable conflict arises because of the Company's
decision to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at Fund's election, to withdraw the Variable Account's
investment in the Fund, and no charge or penalty will be imposed against the
Variable Account as a result of such a withdrawal. The Company agrees to take
such remedial action as may be required under this paragraph 13 with a view only
to the interests of its Contract owners. For purposes of this paragraph 13, a
majority of the disinterested members of the Board shall determine whether or
not any proposed action adequately remedies any irreconcilable conflict, but in
no event will Fund be required to establish a new funding medium for any
variable Contracts. The Company
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shall not be required by this paragraph 13 to establish a new funding medium for
any variable Contract if an offer to do so has been declined by vote of a
majority of affected Contract owners.
14.1. The Company agrees to indemnify and hold harmless the Fund and
each of its Trustees, officers, employees and agents and each person, if any,
who controls the Fund within the meaning of Section 15 of the 1933 Act,
(collectively the "Indemnified Parties" for purposes of this Article 5) against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company) or expenses (including the
reasonable costs of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in connection
therewith) (collectively, "Losses"), to which such Indemnified Parties may
become subject under any statute or regulation, or common law or otherwise,
insofar as such Losses:
a. arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a
registration statement or prospectus for the Contracts or in the
Contracts or sales literature generated or approved by the
Company on behalf of the Contracts or Variable Account (or any
amendment or supplement to any of the foregoing) (collectively,
"the Company's documents" for the purposes of this Section 14),
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 indemnity 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 was
accurately derived from written information furnished to the
Company by or on behalf of the Fund for use in the Company's
documents or otherwise for use in connection with the sale of
the Contracts or Shares; or
b. arise out of or result from statements or representation (other
than statements or representations contained in and accurately
derived from the Fund's documents (as defined in Section 14.2
(a) below or wrongful conduct of the Company or persons under
its control, with respect to the sale or acquisition of the
Contracts or Shares; or
c. arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in the Fund's
documents 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 was made in reliance upon and accurately derived from
written information furnished to the Fund by or on behalf of the
Company; or
d. arise out of or result from any failure by the Company to
provide the services or furnish the materials required under the
terms of this Agreement provided by the Fund furnished the
Company written notice of such failure and the Company did not
cure such failure within a reasonable period after receipt of
such notice; or
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e. 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.
14.2 The Fund agrees to indemnify and hold harmless the Company, the
Variable Account 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 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 14) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Fund) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage liability or expense and reasonable legal counsel fees incurred in
connection therewith) (collectively, "Losses"), to which such Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
(a) 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 Fund (or any
amendment or supplement thereto) or in sales literature approved
by the Fund (but solely with respect to statements regarding the
Fund), (collectively, " Fund's documents" for the purposes of
this Section 14), 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 indemnity
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 was accurately derived from written
information furnished to the Fund by or on behalf of the Company
for use in Fund's documents or otherwise for use in connection
with the sale of the Contracts or shares;
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately
derived from the Company's documents) or wrongful conduct of the
Fund or persons under its control, with respect to the sale or
acquisition of the Contracts or Shares; or
(c) arise out of or result from any untrue statement or alleged
untrue statement of material fact contained in the Company's
documents or the omission or alleged omission to state therein
or necessary to make the statements therein not misleading if
such statement or omission was made in reliance upon and
accurately derived from written information furnished to the
Company by or on behalf of the Fund; or
(d) arise out of result from any failure by the Fund to provide the
services or furnish the materials required under the terms of
this Agreement provided the Company
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furnished the Fund written notice of such failure and the Fund
did not cure such failure within a reasonable period after
receipt of such notice; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund.
14.3 Neither the Company nor the Fund shall be liable under the
indemnification provisions of Section 14.1 or 14.2, as applicable, with respect
to any Losses incurred or assessed against any Indemnified Party to the extent
such Losses arise out of or result 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.
14.4 Neither the Company nor the Fund shall be liable under the
indemnification provisions of Section 14.1 or 14.2, as applicable, with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified the party against whom indemnification is sought in writing
within a reasonable time after the summons, or other first written notification,
giving information of the nature of the claim shall have been served upon or
otherwise received by such Indemnified Party (or after such Indemnified Party
shall have received notice of service upon or the notification to any designated
agent), but failure to notify the party against whom indemnification is sought
of any such claim shall not relieve that party from any liability that it may
have to the Indemnified Party in the absence of Sections 14.1 and 14.2.
14.5 In case any such action is brought against the Indemnified Parties, the
indemnifying party shall be entitled to participate, at its own expense, in the
defense of such action. The indemnifying party also shall be entitled to assume
the defense thereof, with counsel reasonably satisfactory to the party named in
the action. After notice from the indemnifying party to the Indemnified Party of
an election to assume such defense, the Indemnified party shall bear the fees
and expenses of any additional counsel retained by it, and the indemnifying
party will not be liable to the Indemnified Party under this Agreement for any
legal or other expenses subsequently incurred by such Indemnified Party
independently in connection with the defense thereof other than reasonable costs
of investigation.
14.6 The Company agrees to promptly notify the Fund of the commencement of
any litigation or proceedings against it or any of its officers or directors in
connection with the issuance or sale of the contracts or the operation of the
Variable Account.
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15. This Agreement shall terminate:
(a) at the option of the Company or the Fund upon 60 days'
advance written notice to all other parties to this
Agreement; or
(b) at the option of the Company if any of the Fund's shares
are not reasonably available to meet the requirements of
the Contracts funded in the Variable Account as
determined by the Company. Prompt notice of election to
terminate shall be furnished by the Company; or
(c) at the option of the Company upon institution of formal
proceedings against the Fund by the Securities and
Exchange Commission; or
(d) upon the vote of Contract owners having an interest in a
particular Division of the Variable Account to
substitute the shares of another investment company for
the corresponding Fund Portfolio shares in accordance
with the terms of the Contracts for which those Fund
shares had been selected to serve as the underlying
investment medium. The Company will give 30 days' prior
written notice to the Fund of the date of any proposed
action to replace the Fund's shares; or
(e) in the event the Fund's 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 the underlying investment medium of the
Contracts funded in the Variable Account. Prompt notice
shall be given by each party to all other parties in the
event that the conditions stated in subsections (b), (c)
or (d) of this paragraph 14 should occur.
16. Notwithstanding any other provisions of this Agreement, the
obligations of the Fund hereunder are not personally binding upon any of the
trustees, shareholders, officers, employees or agents of the Fund; resort in
satisfaction of such obligations shall be had only to the assets and property of
the Fund and not to the private property of any of such Fund's trustees,
shareholders, officers, employees or agents.
17. This Agreement shall be construed in accordance with the laws of
the State of California.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
FIRST SUNAMERICA LIFE INSURANCE COMPANY
By:
--------------------------
Xxx X. Xxxxxxx
President and Chief Executive Officer
FS VARIABLE ANNUITY ACCOUNT FIVE
BY: FIRST SUNAMERICA LIFE INSURANCE COMPANY
By:
--------------------------
Xxx X. Xxxxxxx
SEASONS SERIES TRUST
By:
----------------------------
Xxxxxx X. Xxxxx
President
Acknowledged and Agreed:
AIG SUNAMERICA CAPITAL SERVICES, INC.
By: Dated:
-------------------------- --------------------------
J. Xxxxxx Xxxxxx
President and Chief Executive Officer
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Appendix A
.. Seasons Select II
.. Seasons Triple Elite
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