EXHIBIT (h)(i)
[FORM OF]
FUND PARTICIPATION AGREEMENT
AGREEMENT, made on this ____________________, between [NAME OF LIFE
INSURANCE COMPANY] (the Life Company"), a life insurance company organized under
the laws of the State of ____________, on behalf of itself and on behalf of
VARIABLE SEPARATE ACCOUNT ("Variable Account"), a separate account of the Life
Company existing pursuant to the laws of the State of ______________, and
SUNAMERICA SERIES TRUST ("Fund"), an open-end management investment company
established pursuant to the laws of the Commonwealth of Massachusetts under a
Declaration of Trust dated September 11, 1992, as amended, which is composed of
multiple investment series ("Portfolios").
WITNESSETH:
WHEREAS, the Life 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 Life 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 to be
marketed under the name Polaris (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, SUNAMERICA CAPITAL SERVICES, INC. ("Distributor"), which
serves as the distributor for the Contracts funded in the Variable Account
pursuant to an agreement with the Life 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 Life 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 particular portfolio 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 Life 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 Life 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 Life 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 Life 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 Life 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, for the purpose of (a) paying to the Life Company the
Contract Administration Charges, Premium Taxes, Contingent Deferred Sales
Charges, Expense Risk Charges, Distribution Expense Risk Charges, Mortality Risk
Premiums and all other amounts payable to the Life Company as specified in the
Contracts to be charged against VARIABLE Account or to be deducted from the Net
Contract Value upon withdrawal, and (b) funding all amounts due the holder of
the Contract. 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.
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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 Life 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 Division of the Variable
Account shall be automatically reinvested in additional shares of that Portfolio
of the Fund. The Fund shall notify the Life 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 Life 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.
8. The Life 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 Life 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 Life Company (collectively with the Life
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 Life 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 Life Company pursuant to such
paragraphs 10, 11 and 12 and pursuant to this paragraph 9.
10. The Life 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 Life 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
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Life 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 Life 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 Life Company will be responsible for assisting the
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 Life 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 Life 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 Life Company Contract owners, the Life 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 Life Company
shall take such steps at its expense if the conflict affects solely the
interests of the owners of the Life 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 Life
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 Life Company's decision to disregard Contract owner voting
instructions and that decision represents a minority position or would preclude
a majority vote, the Life 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 Life Company agrees to take such remedial
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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 Life Company 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. This Agreement shall terminate:
(a) at the option of the Life Company or the Fund upon 60
days' advance written notice to all other parties to
this Agreement; or
(b) at the option of the Life 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 Life Company.
Prompt notice of election to terminate shall be
furnished by the Life Company; or
(c) at the option of the Life 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 Life 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.
15. 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.
16. 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.
[NAME OF LIFE COMPANY]
By: ______________________________
Name:
Title:
VARIABLE SEPARATE ACCOUNT
BY: [NAME OF LIFE COMPANY]
By: ______________________________
Name:
Title:
SUNAMERICA SERIES TRUST
By: ______________________________
Name:
Title:
Acknowledged and Agreed:
SUNAMERICA CAPITAL SERVICES, INC.
By: ______________________________ Dated: _____________
Name:
Title:
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