<PAGE> 1
File Nos.33-39888
811-6313
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 14 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [X]
Amendment No. 15
(Check appropriate box or boxes)
VARIABLE ANNUITY ACCOUNT ONE
(Exact Name of Registrant)
First SunAmerica Life Insurance Company
(Name of Depositor)
733 Third Avenue, 4th Floor
New York, New York 10017
(Address of Depositor's Principal Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (310) 772-6000
Susan L. Harris, Esq.
First SunAmerica Life Insurance Company
c/o SunAmerica Inc.
1 SunAmerica Center
Los Angeles, California 90067-6022
(Name and Address of Agent for Service)
<TABLE>
<CAPTION>
Title and Amount
of Securities
Being Registered Amount of
Fee Registration
- ---------------- ---------------
<S> <C> <C>
Flexible Payment Pursuant to Rule 24f-2, the $
Deferred Annuity Registrant has filed an election
Contracts to register an indefinite
number of securities under the
Securities Act of 1933
</TABLE>
It is proposed that this filing will become effective:
-- immediately upon filing pursuant to paragraph (b) of Rule 485
X on February 2, 1998 pursuant to paragraph (b) of Rule 485
-- 60 days after filing pursuant to paragraph (a) of Rule 485
-- on [date] pursuant to paragraph (a) of Rule 485
The registrant has elected pursuant to Rule 24f-2 under the Investment Company
Act of 1940 to register an indefinite amount of securities. The Registrant
intends to file its Rule 24f-2 Notice for the fiscal year ended December 31,
1997 on or about February 27, 1998.
<PAGE> 2
VARIABLE ANNUITY ACCOUNT ONE
Cross Reference Sheet
PART A - PROSPECTUS
-------------------
<TABLE>
<CAPTION>
Item Number in Form N-4 Caption
- ----------------------- -------
<S> <C> <C>
1. Cover Page............................. Cover Page
2. Definitions............................ Definitions
3. Synopsis............................... Summary
4. Condensed Financial Information........ Condensed Financial
Information-Accumulation
Unit Values
5. General Description of Registrant, Depositor and
Portfolio Companies................... Description of the
Company and the
Separate Account; Anchor
Series Trust
6. Deductions............................. Contract Charges
7. General Description of
Variable Annuity Contracts............. Description of the
Contracts
8. Annuity Period......................... Annuity Period
9. Death Benefit.......................... Description of the
Contracts; Annuity Period
10. Purchases and Contract Value........... Purchases and Contract
Value
11. Redemptions............................ Purchases and Contract
Value
12. Taxes.................................. Taxes
13. Legal Proceedings...................... Legal Proceedings
14. Table of Contents of Statement
of Additional Information.............. Table of Contents of the
Statement of Additional
Information
</TABLE>
<PAGE> 3
PART B - STATEMENT OF ADDITIONAL INFORMATION
Certain information required in part B of the Registration Statement
has been included within the prospectus forming part of this Registration
Statement; the following cross-references suffixed with a "P" are made by
reference to the captions in the prospectus.
<TABLE>
<CAPTION>
Item Number in Form N-4 Caption
- ----------------------- -------
<S> <C> <C>
15. Cover Page............................. Cover Page
16. Table of Contents...................... Table of Contents
17. General Information and History........ Company
18. Services............................... Not Applicable
19. Purchase of Securities Being Offered... Purchases and Contract
Value(P)
20. Underwriters........................... Distributor
21. Calculation of Performance Data........ Performance Data
22. Annuity Payments....................... Annuity Payments
23. Financial Statements................... Financial Statements
</TABLE>
<PAGE> 4
- --------------------------------------------------------------------------------
FLEXIBLE PAYMENT VARIABLE ANNUITY
CONTRACTS
- --------------------------------------------------------------------------------
ISSUED BY
FIRST SUNAMERICA LIFE INSURANCE COMPANY
IN CONNECTION WITH
VARIABLE ANNUITY ACCOUNT ONE
CORPORATE OFFICE:
733 THIRD AVENUE, 4TH FLOOR
NEW YORK, NEW YORK 10017
<TABLE>
<S> <C>
CORRESPONDENCE ACCOMPANIED ALL OTHER CORRESPONDENCE,
BY PAYMENTS: ADMINISTRATIVE SERVICE CENTER:
P.O. BOX 100357 P.O. BOX 54299
PASADENA, CALIFORNIA 91189-0357 LOS ANGELES, CA 90054-0299
TELEPHONE NUMBER: (800) 99-NYSUN
</TABLE>
The Contracts offered by this Prospectus provide for accumulation of
Contract Values and payment of annuity benefits on a variable basis. The
Contracts are available for both Qualified and Nonqualified Plans. (See
"Taxes").
Purchase Payments under the Contracts may be allocated among the Divisions
of the Separate Account, and/or to the Fixed Account option funded through the
Company's General Account. Each of the eleven Divisions of the Separate Account
described in this Prospectus are invested solely in the shares of one of the
following currently available portfolios of Anchor Series Trust:
<TABLE>
<S> <C>
- Foreign Securities Portfolio - Strategic Multi-Asset Portfolio
- Capital Appreciation Portfolio - Multi-Asset Portfolio
- Growth Portfolio - High Yield Portfolio
- Natural Resources Portfolio - Fixed Income Portfolio
- Growth and Income Portfolio - Government and Quality Bond Portfolio
(formerly the Convertible Securities - Money Market Portfolio
Portfolio)
</TABLE>
Additional Portfolios may be made available in the future.
The Fixed Account option pays a fixed rate of interest declared by the
Company for one year from the date amounts are allocated to it.
This Prospectus concisely sets forth the information a prospective investor
ought to know before investing. PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN
IT FOR YOUR FUTURE REFERENCE. Owners bear the complete investment risk for all
Purchase Payments allocated to the Separate Account.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE CONTRACTS OFFERED BY THIS PROSPECTUS INVOLVE RISK, INCLUDING LOSS OF
PRINCIPAL, AND ARE NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THE CONTRACTS OFFERED BY THIS PROSPECTUS ARE NOT AVAILABLE IN ALL STATES.
A Statement of Additional Information about the variable portion of the
Contracts has been filed with the Commission, as part of the Registration
Statement, and is available without charge upon written or oral request to the
Company at its Administrative Service Center at the address and telephone number
set forth above. The Statement of Additional Information is incorporated herein
by reference. The Table of Contents of the Statement of Additional Information,
dated February 2, 1998, appears on page 27 of this Prospectus.
This Prospectus is dated February 2, 1998.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
- ---------------------------------------------------------------------------------------------------- ----
<S> <C>
DEFINITIONS......................................................................................... 2
SUMMARY............................................................................................. 4
FEE TABLES.......................................................................................... 6
EXAMPLES............................................................................................ 7
EXPLANATION OF FEE TABLES AND EXAMPLES.............................................................. 7
CONDENSED FINANCIAL INFORMATION -- ACCUMULATION UNIT VALUES......................................... 8
PERFORMANCE DATA.................................................................................... 9
DESCRIPTION OF THE COMPANY AND THE SEPARATE ACCOUNT................................................. 9
Company......................................................................................... 9
Separate Account................................................................................ 10
FINANCIAL STATEMENTS................................................................................ 10
ANCHOR SERIES TRUST................................................................................. 10
Equity Portfolios............................................................................... 11
Managed Portfolios.............................................................................. 11
Fixed Income Portfolios......................................................................... 11
Contract Owners in Target '98 Portfolio......................................................... 12
Voting Rights................................................................................... 12
Substitution of Securities...................................................................... 12
CONTRACT CHARGES.................................................................................... 13
Mortality and Expense Risk Charge............................................................... 13
Administrative Charges.......................................................................... 13
Administrative Expense Charge................................................................. 13
Records Maintenance Charge.................................................................... 13
Sales Charges................................................................................... 13
Withdrawal Charge............................................................................. 13
Annuity Charge................................................................................ 14
Deduction for Separate Account Income Taxes..................................................... 14
Other Expenses.................................................................................. 14
Reduction of Charges for Sales to Certain Groups................................................ 14
DESCRIPTION OF THE CONTRACTS........................................................................ 15
Transfer During Accumulation Period............................................................. 15
Automatic Dollar Cost Averaging Program......................................................... 16
Modification of the Contract.................................................................... 16
Assignment...................................................................................... 16
Death of Owner of Non-Qualified Contract........................................................ 16
Death Benefit................................................................................... 17
Beneficiary..................................................................................... 17
ANNUITY PERIOD...................................................................................... 18
Annuity Date.................................................................................... 18
Allocation of Annuity Payments.................................................................. 18
Annuity Options................................................................................. 18
Other Options................................................................................... 19
Transfer During Annuity Period.................................................................. 20
Death Benefit During Annuity Period............................................................. 20
PURCHASES AND CONTRACT VALUE........................................................................ 20
Minimum Purchase Payment........................................................................ 20
Maximum Purchase Payment........................................................................ 20
Allocation of Purchase Payments................................................................. 20
Accumulation Unit Value......................................................................... 21
Distribution of Contracts....................................................................... 21
Withdrawals (Redemptions)....................................................................... 22
Systematic Withdrawal Program................................................................... 22
ERISA Plans..................................................................................... 23
Minimum Contract Value.......................................................................... 23
ADMINISTRATION...................................................................................... 23
TAXES............................................................................................... 23
General......................................................................................... 23
Withholding Tax on Distributions................................................................ 24
Diversification................................................................................. 24
Multiple Contracts.............................................................................. 25
Tax Treatment of Assignments.................................................................... 25
Tax Treatment of Withdrawals -- Non-Qualified Contracts......................................... 25
Qualified Plans................................................................................. 25
Tax Treatment of Withdrawals -- Qualified Contracts............................................. 26
Tax Sheltered Annuities -- Withdrawal Limitations............................................... 27
Deferred Compensation Plans -- Section 457...................................................... 27
LEGAL PROCEEDINGS................................................................................... 27
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION........................................ 27
</TABLE>
(i)
<PAGE> 6
- --------------------------------------------------------------------------------
DEFINITIONS
- --------------------------------------------------------------------------------
The following terms, as used in this Prospectus, have the indicated
meanings:
ACCUMULATION PERIOD -- The period between the Issue Date of the Contract and the
Annuity Date, the build-up phase of the Contract.
ACCUMULATION UNIT -- A unit of measurement which the Company uses to calculate
Contract Value during the Accumulation Period.
ADMINISTRATIVE SERVICE CENTER -- Its current address and phone number are: P.O.
Box 54299, Los Angeles, California 90054-0299, (800) 99-NYSUN. Correspondence
accompanying a payment should be directed to P.O. Box 100357, Pasadena,
California 91189-0357. The Company will notify Contract Owners of any change in
address or telephone number.
ANNUITANT(S) -- The person(s) designated on the application to receive or who
actually receive(s) annuity payments. Annuity payments involving life
contingencies depend on the continuation of an Annuitant's life.
ANNUITIZATION -- The process by which an Owner converts from the Accumulation
Period to the Annuity Period. Upon Annuitization, the Contract is converted from
the build-up phase to the phase during which the Annuitant(s) receive(s)
periodic annuity payments.
ANNUITY DATE -- The date on which annuity payments are to begin.
ANNUITY PERIOD -- The period starting on the Annuity Date.
ANNUITY UNIT -- A unit of measurement which the Company uses to calculate the
amount of Variable Annuity payments.
BENEFICIARY(IES) -- The person designated to receive any benefits under a
Contract upon the death of the Annuitant or the Owner. If the Owner dies during
the Accumulation Period, the Beneficiary will, unless the Owner has elected
otherwise, become the Owner of the Contract.
CODE -- The Internal Revenue Code of 1986, as amended.
COMPANY -- First SunAmerica Life Insurance Company, a New York corporation.
CONTRACT(S) -- The flexible payment variable annuity contracts offered by this
Prospectus.
CONTRACT OWNER(S) OR OWNER(S) -- The person(s) having the privileges of
ownership defined in the Contract. If an Owner dies during the Accumulation
Period, the Beneficiary will, unless the Owner has elected otherwise, become the
Owner of the Contract. Joint Owners have equal ownership interests in the
Contract unless the Company is advised otherwise in writing. Only spouses may be
Joint Owners.
CONTRACT VALUE -- The sum of the values of the Owner's interest in the General
Account and the Separate Account Divisions.
CONTRACT YEAR -- A year starting from the Issue Date in one calendar year and
ending on the Issue Date in the succeeding calendar year.
CONTRIBUTION YEAR -- With respect to a given Purchase Payment, a year starting
from the date of the Purchase Payment in one calendar year and ending on the day
before the anniversary of such date in the succeeding calendar years. The
Contribution Year in which a Purchase Payment is made is "Contribution Year 1";
subsequent Contribution Years are successively numbered beginning with
Contribution Year 2.
DIVISION OR SEPARATE ACCOUNT DIVISION -- A Division of the Separate Account
invested wholly in shares of one of the Portfolios of the Trust.
DUE PROOF OF DEATH -- (1) A certified copy of a death certificate; or (2) a
certified copy of a decree of a court of competent jurisdiction as to the
finding of death; or (3) a written statement by a medical doctor who attended
the deceased at time of death; or (4) any other proof satisfactory to the
Company.
FIXED ANNUITY -- A series of payments that are fixed in amount and made during
the Annuity Period to a payee under a Contract.
GENERAL ACCOUNT -- The Company's general investment account which contains all
the assets of the Company, with the exception of the Separate Account and other
segregated asset accounts.
ISSUE DATE -- The date a Contract is issued.
2
<PAGE> 7
NON-QUALIFIED PLAN -- A retirement plan which does not receive favorable tax
treatment under Sections 401, 403(b), 408 or 457 of the Code.
PORTFOLIO -- One of the investment options available under the Contract in the
Trust.
PURCHASE PAYMENTS -- Amounts paid to the Company by a Contract Owner.
QUALIFIED PLAN -- A retirement plan which receives favorable tax treatment under
Sections 401, 403(b), 408 or 457 of the Code.
SEPARATE ACCOUNT OR ACCOUNT -- A segregated investment account of the Company
entitled "Variable Annuity Account One" established by the Company.
TRUST -- Anchor Series Trust.
VALUATION DATE -- Monday through Friday except for New Year's Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas Day.
VALUATION PERIOD -- The period commencing at 4:00 p.m. New York time on each
Valuation Date and ending at 4:00 p.m. New York time on the next succeeding
Valuation Date.
VARIABLE ANNUITY -- A series of payments made during the Annuity Period which
varies in amount in accordance with the investment experience of the Separate
Account Division(s).
WITHDRAWAL CHARGE -- The contingent deferred sales charge assessed against
certain withdrawals or annuitizations.
WITHDRAWAL VALUE -- Contract Value, less any premium tax payable if the Contract
is being annuitized, minus any applicable Withdrawal Charge.
3
<PAGE> 8
- --------------------------------------------------------------------------------
SUMMARY
- --------------------------------------------------------------------------------
This Prospectus describes the uses and objectives of the Contracts, their
costs, and the rights and privileges of the Owner. It also contains information
about the Company, the Separate Account and its Divisions, and the Portfolios in
which the Divisions invest. We urge you to read it carefully and retain it and
the Prospectus for the Trust for future reference. (The Prospectus for the Trust
is attached to and follows this Prospectus).
WHAT IS THE CONTRACT?
The Contract offered is a tax deferred annuity which provides fixed
benefits, variable benefits or a combination of both. Individuals wishing to
purchase a Contract must complete an application and provide an initial Purchase
Payment which will be sent to the Company at its Administrative Service Center
or in such other manner as deemed acceptable to the Company. The minimum and
maximum of Purchase Payments vary depending upon the type of Contract purchased.
(See "Minimum Purchase Payment").
WHAT IS THE DIFFERENCE BETWEEN A VARIABLE ANNUITY AND A FIXED ANNUITY?
The Contract has appropriate provisions relating to variable and fixed
accumulation values and variable and fixed annuity payments. A Variable Annuity
and a Fixed Annuity have certain similarities. Both provide that Purchase
Payments, less certain deductions, will be accumulated prior to the Annuity
Date. After the Annuity Date, annuity payments will be made to a designated
payee for the life of the Annuitant or a period certain or a combination
thereof. The Company assumes mortality and expense risks under the Contracts,
for which it receives certain compensation.
The most significant difference between a Variable Annuity and a Fixed
Annuity is that under a Variable Annuity, all investment risk before and after
the Annuity Date is assumed by the Owner or other payee; the amounts of the
annuity payments vary with the investment performance of the Divisions of the
Separate Account selected by the Owner. Under a Fixed Annuity, in contrast, the
investment risk after the Annuity Date is assumed by the Company and the amounts
of the annuity payments do not vary.
HOW MAY PURCHASE PAYMENTS BE ALLOCATED?
Purchase Payments for the Contracts may be allocated pursuant to
instructions in the application to one or more Divisions of the Separate
Account, and/or to the Company's General Account. The Separate Account invests
in shares of the following Portfolios (see "Anchor Series Trust"):
<TABLE>
<S> <C>
* FOREIGN SECURITIES * MULTI-ASSET
* CAPITAL APPRECIATION * HIGH-YIELD
* GROWTH * FIXED INCOME
* NATURAL RESOURCES * GOVERNMENT AND QUALITY BOND
* GROWTH AND INCOME * MONEY MARKET
* STRATEGIC MULTI-ASSET
</TABLE>
Purchase Payments allocated to the General Account will earn interest at the
current rate then being offered by the Company for a one year period beginning
on the date amounts are allocated to it.
Prior to the Annuity Date, transfers may be made among the Divisions and/or
the General Account. Fifteen transfers are permitted before a transfer fee will
be assessed. (See "Description of the Contracts -- Transfer During Accumulation
Period").
MAY WITHDRAWALS BE MADE BEFORE ANNUITIZATION?
Except as explained below, Contract Value may be withdrawn at any time
during the Accumulation Period. In addition to potential losses due to
investment risks, withdrawals may be reduced by a Withdrawal Charge, and a
penalty tax and income tax may apply. Contracts in connection with Qualified
Plans may be subject to additional withdrawal restrictions imposed by the plan.
Earnings under a Contract may be withdrawn at any time during such period free
of a Withdrawal Charge. Alternatively, there is a free withdrawal amount which
applies to the first withdrawal during a Contract Year after the first Contract
Year. (See "Contract Charges -- Sales Charges -- Withdrawal Charge"). Certain
Owners of Nonqualified Plan Contracts and Contracts issued in connection with
Individual Retirement Annuities ("IRAs") may choose to withdraw amounts which in
the aggregate add up to 10%
4
<PAGE> 9
of their Purchase Payments annually pursuant to a systematic withdrawal program
without charge. (See "Purchases and Contract Value -- Systematic Withdrawal
Program"). Withdrawals are taxable and a 10% federal tax penalty may apply to
withdrawals before age 59 1/2.
Owners should consult their own tax counsel or other tax adviser regarding
any withdrawals or distributions.
CAN I EXAMINE THE CONTRACT?
The Contract Owner may return the Contract to the Company within 10 days
after it is received by delivering or mailing it to the Company's Administrative
Service Center. If the Contract is returned to the Company, it will be
terminated and the Company will pay the Owner an amount equal to the Contract
Value represented by the Contract on the date it is received by the Company.
WHAT ARE THE CHARGES AND DEDUCTIONS UNDER A CONTRACT?
A mortality and expense risk charge is assessed daily against the assets of
each Division at an annual rate of 1.25%. An administrative expense charge is
assessed daily against the assets of each Division at an annual rate of 0.15%.
The Contracts also provide for certain deductions and charges, including a
Records Maintenance Charge of $30 annually, which is guaranteed not to increase.
The Contract permits up to 15 free transfers each Contract Year, after which
point a $25 transfer fee is applicable to each subsequent transfer.
Additionally, a Withdrawal Charge may be assessed against the Contract Value
during the first five Contribution Years (5%-4%-3%-2%-1%) when a withdrawal is
made. (See "Contract Charges").
DOES THE CONTRACT PAY ANY DEATH BENEFITS?
A Death Benefit is provided in the event of the death of the Owner during
the Accumulation Period. The Death Benefit is equal to the greater of: (1) the
Contract Value upon receipt of Due Proof of Death; or (2) the total of Purchase
Payments made prior to the death of the Owner, minus any partial withdrawals
and/or partial annuitizations and contract charges; or (3) after the fifth
Contract Year, the Contract Value at the last anniversary of the Issue Date of
the Contract minus any partial withdrawals and/or partial annuitizations since
that anniversary. (See "Description of the Contracts -- Death Benefit").
WHAT ARE THE AVAILABLE ANNUITY OPTIONS UNDER THE CONTRACT?
There are three available annuity options under the Contract. They include
an annuity for life, a joint and survivor annuity, and monthly payments for a
specified number of years. If a Contract Owner does not elect otherwise, monthly
annuity payments generally will be made under the first option to provide a life
annuity with 120 monthly payments certain. (See "Annuity Period -- Annuity
Options").
DOES THE OWNER HAVE ANY VOTING RIGHTS UNDER THE CONTRACT?
Owners will have the right to vote on matters affecting the Portfolios to
the extent that proxies are solicited by the Trust. If the Owner does not vote,
the Company will vote such interests in the same proportion as it votes shares
for which it has received instructions. (See "Anchor Series Trust -- Voting
Rights").
5
<PAGE> 10
- --------------------------------------------------------------------------------
FEE TABLES
- --------------------------------------------------------------------------------
OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE (AS A PERCENTAGE OF PURCHASE PAYMENTS):
<TABLE>
<CAPTION>
CONTRIBUTION YEAR
<S> <C>
One....................................................................................... 5%
Two....................................................................................... 4%
Three..................................................................................... 3%
Four...................................................................................... 2%
Five...................................................................................... 1%
Six and later............................................................................. 0%
ANNUAL RECORDS MAINTENANCE CHARGE............................................................... $30
TRANSFER FEE.................................................................................... $25
(applies solely to transfers in excess of fifteen in a Contract Year)
</TABLE>
- ---------------
The Owner Transaction Expenses apply to the Contract Value allocated to the
General Account, as well as the Separate Account.
- --------------------------------------------------------------------------------
ANNUAL SEPARATE ACCOUNT EXPENSES
(AS A PERCENTAGE OF DAILY NET ASSET VALUE)
<TABLE>
<S> <C>
MORTALITY RISK CHARGE.......................................................................... 0.90%
EXPENSE RISK CHARGE............................................................................ 0.35%
ADMINISTRATION EXPENSE CHARGE.................................................................. 0.15%
------
TOTAL EXPENSE CHARGE..................................................................... 1.40%
======
</TABLE>
- ---------------
ANNUAL TRUST EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS FOR THE FISCAL YEAR ENDED DECEMBER 31,
1996):
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT FEE OTHER EXPENSES EXPENSES
-------------- -------------- ------------
<S> <C> <C> <C>
Foreign Securities............................................... .9% .5% 1.4%
Capital Appreciation............................................. .7% .1% .8%
Growth........................................................... .7% .1% .8%
Natural Resources................................................ .8% .1% .9%
Growth and Income................................................ .7% .2% .9%
Strategic Multi-Asset............................................ 1.0% .4% 1.4%
Multi-Asset...................................................... 1.0% .1% 1.1%
High Yield....................................................... .7% .2% .9%
Target '98....................................................... .6% .3% .9%
Fixed Income..................................................... .6% .2% .8%
Government & Quality Bond........................................ .6% .1% .7%
Money Market..................................................... .5% .1% .6%
</TABLE>
6
<PAGE> 11
- --------------------------------------------------------------------------------
EXAMPLES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPARATE CONDITIONS
ACCOUNT A Contract Owner would pay the following expenses on a TIME PERIODS
DIVISION $1,000 investment assuming 5% annual return on assets: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOREIGN (a) upon surrender at the end of the stated time period. (a) $ 79 $ 116 $ 160 $319
SECURITIES (b) if the Contract WAS NOT surrendered. (b) 29 89 151 319
- ---------------------------------------------------------------------------------------------------------------------------
CAPITAL SAME (a) 73 98 130 260
APPRECIATION (b) 23 71 121 260
- ---------------------------------------------------------------------------------------------------------------------------
GROWTH SAME (a) 73 98 130 260
(b) 23 71 121 260
- ---------------------------------------------------------------------------------------------------------------------------
NATURAL SAME (a) 74 101 135 270
RESOURCES (b) 24 74 126 270
- ---------------------------------------------------------------------------------------------------------------------------
GROWTH AND SAME (a) 74 101 135 270
INCOME (b) 24 74 126 270
- ---------------------------------------------------------------------------------------------------------------------------
STRATEGIC SAME (a) 79 116 160 319
MULTI-ASSET (b) 29 89 151 319
- ---------------------------------------------------------------------------------------------------------------------------
MULTI-ASSET SAME (a) 76 107 145 290
(b) 26 80 136 290
- ---------------------------------------------------------------------------------------------------------------------------
HIGH YIELD SAME (a) 74 101 135 270
(b) 24 74 126 270
- ---------------------------------------------------------------------------------------------------------------------------
TARGET '98 SAME (a) 74 101 135 270
(b) 24 74 126 270
- ---------------------------------------------------------------------------------------------------------------------------
FIXED SAME (a) 73 98 130 260
INCOME (b) 23 71 121 260
- ---------------------------------------------------------------------------------------------------------------------------
GOV'T & SAME (a) 72 95 125 250
QUALITY BOND (b) 22 68 116 250
- ---------------------------------------------------------------------------------------------------------------------------
MONEY MARKET SAME (a) 71 92 120 240
(b) 21 65 111 240
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
EXPLANATION OF FEE TABLES
AND EXAMPLES
- --------------------------------------------------------------------------------
1. The purpose of the foregoing tables and examples is to assist the Contract
Owner in understanding the various costs and expenses that he or she will
bear directly or indirectly. The table reflects expenses of the Separate
Account as well as the Trust. For additional information see "Contract
Charges" of this Prospectus and "Management of the Trust" of the Prospectus
for the Trust. The examples do not illustrate the tax consequences of
surrendering a Contract.
2. The examples assume that there were no transactions which would result in
the imposition of the Transfer Fee. The Contracts are sold only in the State
of New York, which does not assess premium taxes. Accordingly, premium taxes
are not reflected.
3. For purposes of the amounts reported in the examples, the Records
Maintenance Charge is reflected by dividing the total amount of Records
Maintenance Charges anticipated to be collected during the year by the total
net assets of the Separate Account's Divisions and the related Fixed Account
assets.
4. NEITHER THE FEE TABLES NOR THE EXAMPLES ARE REPRESENTATIONS OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
7
<PAGE> 12
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
9/23/91 FISCAL FISCAL FISCAL FISCAL FISCAL
(INCEPTION) YEAR YEAR YEAR YEAR YEAR
TO ENDED ENDED ENDED ENDED ENDED
SEPARATE ACCOUNT DIVISION 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- -------------------------- ----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Foreign Securities
Beginning AUV........... $ 11.66 $11.26 $ 9.64 $12.39 $11.83 $13.13
End AUV................. $ 11.26 $ 9.64 $12.39 $11.83 $13.13 $14.43
End # AU's.............. 6,197 32,027 110,045 165,468 130,525 81,476
Capital Appreciation
Beginning AUV........... $ 13.71 $15.36 $19.09 $22.79 $21.62 $28.68
End AUV................. $ 15.36 $19.09 $22.79 $21.62 $28.68 $35.39
End # AU's.............. 244 27,092 111,129 167,384 131,688 106,421
Growth
Beginning AUV........... $ 23.45 $23.36 $27.40 $29.12 $27.36 $34.08
End AUV................. $ 26.36 $27.40 $29.12 $27.36 $34.08 $42.03
End # AU's.............. 4,483 108,874 179,035 170,859 146,484 97,902
Natural Resources
Beginning AUV........... $ 11.51 $11.13 $11.25 $15.11 $15.05 $17.43
End AUV................. $ 11.13 $11.25 $15.11 $15.05 $17.43 $19.61
End # AU's.............. 451 8,283 20,215 43,075 23,005 21,096
Growth and Income
Beginning AUV........... $ 12.66 $13.12 $15.55 $18.70 $16.67 $19.16
End AUV................. $ 13.12 $15.55 $18.70 $16.67 $19.16 $22.69
End # AU's.............. 1,911 19,305 58,427 69,818 59,120 49,540
Strategic Multi-Asset
Beginning AUV........... $ 12.65 $13.55 $13.88 $15.78 $15.16 $18.35
End AUV................. $ 13.55 $13.88 $15.78 $15.16 $18.35 $20.78
End # AU's.............. 545 11,556 32,409 77,616 55,855 34,452
Multi-Asset
Beginning AUV........... $ 13.78 $14.98 $15.97 $16.90 $16.39 $20.19
End AUV................. $ 14.98 $15.97 $16.90 $16.39 $20.19 $22.67
End # AU's.............. 8,409 141,059 310,679 287,625 241,450 171,566
High Yield
Beginning AUV........... $ 13.75 $14.44 $16.24 $19.07 $17.96 $21.03
End AUV................. $ 14.44 $16.24 $19.07 $17.96 $21.03 $23.17
End # AU's.............. 1,395 34,946 63,091 80,486 64,930 42,707
Target '98
Beginning AUV........... $ 13.80 $15.11 $15.97 $17.52 $16.57 $18.72
End AUV................. $ 15.11 $15.97 $17.52 $16.57 $18.72 $19.15
End # AU's.............. 4,195 23,426 51,836 61,733 61,464 30,036
Fixed Income
Beginning AUV........... $ 19.00 $20.31 $21.34 $22.71 $21.67 $25.46
End AUV................. $ 20.31 $21.34 $22.71 $21.67 $25.46 $25.73
End # AU's.............. 1,266 40,684 66,362 56,430 36,124 16,119
Government &
Quality Bond
Beginning AUV........... $ 19.61 $21.00 $22.13 $23.63 $22.60 $26.60
End AUV................. $ 21.00 $22.13 $23.63 $22.60 $26.60 $26.99
End # AU's.............. 3,572 177,925 217,255 176,490 148,101 90,313
Money Market
Beginning AUV........... $ 15.06 $15.23 $15.53 $15.72 $16.10 $16.77
End AUV................. $ 15.23 $15.53 $15.72 $16.10 $16.77 $17.36
End # AU's.............. 48 91,048 82,889 15,560 29,241 12,090
</TABLE>
AUV -- Accumulation Unit Value.
AU -- Accumulation Units.
8
<PAGE> 13
- --------------------------------------------------------------------------------
PERFORMANCE DATA
- --------------------------------------------------------------------------------
From time to time the Separate Account may advertise its Money Market
Division's "yield" and "effective yield." Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the Money Market Division refers to the net income generated for a
Contract funded by an investment in the Division over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized."
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The "effective yield" is calculated similarly but,
when annualized, the income earned by an investment in the Division is assumed
to be reinvested at the end of each seven-day period. The "effective yield" will
be slightly higher than the "yield" because of the compounding effect of this
assumed reinvestment. Neither the yield nor the effective yield takes into
consideration the effect of any capital changes that might have occurred during
the seven-day period, nor do they reflect the impact of premium taxes or any
Annuity Charges or Withdrawal Charges. The impact of other, recurring charges on
both yield figures is, however, reflected in them to the same extent it would
affect the yield (or effective yield) for a Contract of average size.
In addition, the Separate Account may advertise "total return" data for its
other Divisions. Like the yield figures described above, total return figures
are based on historical data and are not intended to indicate future
performance. The "total return" is a computed rate of return that, when
compounded annually over a stated period of time and applied to a hypothetical
initial investment in a Division made at the beginning of the period, will
produce the same Contract Value at the end of the period that the hypothetical
investment would have produced over the same period (assuming a complete
redemption of the Contract at the end of the period). Recurring Contract charges
are reflected in the total return figures in the same manner as they are
reflected in the yield data for Contracts funded through the Money Market
Division. The effect of applicable Withdrawal Charges due to the assumed
redemption will be reflected in the return figures, but may be omitted in
additional return figures given for comparison.
For periods starting prior to September 23, 1991, the date the Contracts
were first offered the public, the total return data will be derived from the
performance of the corresponding Portfolios of the Trust, modified to reflect
the same charges and expenses as if the Division had been in existence since the
inception date of each respective Portfolio. Thus, such performance figures
should not be construed to be actual historic performance of the Division.
Rather, they are intended to indicate the historic performance of the Trust,
adjusted to provide direct comparability to the performance of the Division
after September 23, 1991. The Trust has served since its inception as an
underlying investment medium for separate accounts of other insurance companies
having the same fee and charge schedules as those of the Separate Account.
For a more complete description of Contract charges, see "Contract
Charges"; for a more detailed description of the performance data computations,
please refer to the Statement of Additional Information.
- --------------------------------------------------------------------------------
DESCRIPTION OF THE COMPANY AND THE SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
COMPANY
The Company is a stock life insurance company organized under the laws of
the state of New York on December 5, 1978. Its legal domicile is 733 Third
Avenue, New York, New York 10017. The Company is an indirect, wholly owned
subsidiary of SunAmerica Inc., a Maryland corporation.
The Company and its affiliates, SunAmerica Life Insurance Company, Anchor
National Life Insurance Company, CalAmerica Life Insurance Company, SunAmerica
National Life Insurance Company, SunAmerica Asset Management Corp., Imperial
Premium Finance, Inc., Resources Trust Company and four broker-dealers,
specializes in retirement savings and investment products and services,
including fixed and variable annuities, mutual funds, premium finance,
broker-dealer and trust administration services. The Company is admitted to
conduct life insurance and annuity business in the state of New York.
The Company may from time to time publish in advertisements, sales
literature and reports to Owners, the ratings and other information assigned to
it by A.M. Best Company ("A.M. Best"). A.M. Best's ratings reflect its
9
<PAGE> 14
current opinion on the relative financial strength and operating performance of
an insurance company in comparison to the norms of the life/health insurance
industry. Its ratings do not apply to the Separate Account. However, the
contractual obligations under the Contracts are general corporate obligations of
the Company.
The Contracts offered by this Prospectus are issued by the Company and will
be funded in the Separate Account, as well as in the Company's General Account.
SEPARATE ACCOUNT
The Separate Account was established pursuant to New York insurance law on
May 30, 1990. The Separate Account is registered with the Securities and
Exchange Commission as a unit investment trust under the Investment Company Act
of 1940. This registration does not involve supervision of the management of the
Separate Account or the Company by the Securities and Exchange Commission.
The assets of the Separate Account are the property of the Company.
However, the assets of the Separate Account, equal to the reserves and other
contract liabilities of the Separate Account, are not chargeable with
liabilities arising out of any other business the Company may conduct. The
Company's obligations arising under the Contracts are general corporate
obligations of the Company.
Income, gains and losses, whether or not realized, from assets allocated to
the Separate Account are credited to or charged against the Separate Account
without regard to other income, gains or losses of the Company.
The Separate Account is divided into Divisions, with the assets of each
Division invested in the shares of one of the eleven Portfolios of the Trust.
The Company does not guarantee the investment performance of the Separate
Account or its Divisions. Values allocated to the Separate Account and the
amount of variable annuity payments will vary with the value of shares of the
Portfolios and the Contract charges.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Financial statements of the Separate Account appear in the Statement of
Additional Information. Financial information regarding the General Account is
reported in the Company's financial statements. The Company's financial
statements are also included in the Statement of Additional Information. A copy
of the Statement of Additional Information may be obtained by contacting the
Company at its Administrative Service Center.
- --------------------------------------------------------------------------------
ANCHOR SERIES TRUST
- --------------------------------------------------------------------------------
Each of the eleven Divisions of the Separate Account invests solely in the
shares of one of the eleven Portfolios of Anchor Series Trust. The Trust is an
open-end diversified management investment company registered under the
Investment Company Act of 1940. While a brief summary of the investment
objectives is set forth below, more comprehensive information, including a
discussion of potential risks, is found in the Prospectus for the Trust.
Additional copies of this Prospectus, the Trust's Prospectus and the Statement
of Additional Information can be obtained by calling the Administrative Service
Center number on the cover page of this Prospectus. Both prospectuses should be
read carefully before investing to understand all aspects of the Contract, the
Separate Account and the Portfolios. SunAmerica Asset Management Corp. ("SAAM"),
an affiliate of the Company, is the investment manager for the Trust. Wellington
Management Company, LLP ("WMC"), which is not affiliated with the Company,
serves as sub-adviser for the Trust. (See the Trust Prospectus for information
concerning the investment management fees.)
10
<PAGE> 15
The eleven Portfolios and their investment objectives are:
EQUITY PORTFOLIOS
FOREIGN SECURITIES PORTFOLIO seeks long-term capital appreciation. This
Portfolio will invest primarily in a diversified group of equity securities
issued by foreign companies and primarily denominated in foreign currencies.
CAPITAL APPRECIATION PORTFOLIO seeks long-term capital appreciation. This
Portfolio will invest in growth equity securities which are widely diversified
by industry and company and may engage in transactions involving stock index
futures and options thereon as a hedge against changes in market conditions.
GROWTH PORTFOLIO seeks long-term capital appreciation through investments
in growth equity securities. This Portfolio may engage in transactions involving
stock index futures and options thereon as a hedge against changes in market
conditions.
NATURAL RESOURCES PORTFOLIO seeks a total return in excess of the U.S. rate
of inflation as represented by the Consumer Price Index. This Portfolio will
invest primarily in equity securities of U.S. or foreign companies which are
expected to provide favorable returns in periods of rising inflation.
GROWTH AND INCOME PORTFOLIO seeks high current income and long-term capital
appreciation. This Portfolio will invest primarily in securities that provide
the potential for growth and offer income, such as dividend-paying stocks and
securities convertible into common stock. This Portfolio may also engage in
transactions involving stock index futures and options thereon as a hedge
against changes in market conditions.
MANAGED PORTFOLIOS
STRATEGIC MULTI-ASSET PORTFOLIO seeks high long-term total investment
return. This Portfolio will invest in a diversified group of securities of the
following types: growth equity and aggressive growth equity securities,
including the securities of smaller companies which may be newer and less
seasoned, investment grade and high-yield, high-risk bonds, international
securities and money market instruments. The Portfolio may also engage in
transactions involving stock index futures contracts and options thereon, and
Financial Futures Contracts and options thereon, as a hedge against changes in
market conditions.
MULTI-ASSET PORTFOLIO seeks long-term total investment return consistent
with moderate investment risk. This Portfolio will invest in a diversified group
of securities, including: growth equity securities, convertible securities,
investment grade fixed income securities and money market securities. The
Portfolio also may engage in transactions involving stock index futures
contracts and options thereon, and Financial Futures Contracts and options
thereon, as a hedge against changes in market conditions.
FIXED INCOME PORTFOLIOS
HIGH YIELD PORTFOLIO seeks high current income. A secondary investment
objective is capital appreciation. This Portfolio will seek its objectives by
investing, except for temporary defensive purposes, at least 65% of its assets
in high-yielding, high-risk, income-producing corporate bonds, which generally
carry ratings lower than those assigned to investment grade bonds by Moody's
Investor's Service, Inc. ("Moody's") or Standard & Poor's Corporation ("Standard
& Poor's"), or which are unrated. This Portfolio may also engage in transactions
involving Financial Futures Contracts and options thereon as a hedge against
changes in market conditions. High-yield, high-risk bonds typically are subject
to greater risks than are investments in lower-yielding, higher-rated bonds. See
the Trust's Prospectus for more information.
FIXED INCOME PORTFOLIO seeks high level of current income consistent with
preservation of capital. This Portfolio will invest primarily in investment
grade, fixed income securities and may engage in Financial Futures Contracts and
options thereon as a hedge against changes in market conditions.
GOVERNMENT AND QUALITY BOND PORTFOLIO seeks relatively high current income,
liquidity and security of principal. This Portfolio will invest in obligations
issued, guaranteed or insured by the U.S. Government, its agencies or
instrumentalities and in corporate debt securities rated Aa or better by Moody's
or AA or better by Standard & Poor's.
11
<PAGE> 16
MONEY MARKET PORTFOLIO seeks current income consistent with stability of
principal through investment in a diversified portfolio of money market
instruments maturing in 397 days or less. The Portfolio will maintain a dollar-
weighted average portfolio maturity of not more than 90 days.
There is no assurance that the investment objective of any of the
Portfolios will be met. Contract Owners bear the complete investment risk for
Purchase Payments allocated to a Division. Contract Values will fluctuate in
accordance with the investment performance of the Division(s) to which Purchase
Payments are allocated, and in accordance with the imposition of the fees and
charges assessed under the Contracts.
Shares of the Trust are, and will be, issued and redeemed only in
connection with investments in and payments under variable contracts sold by the
Company and its affiliate, Anchor National Life Insurance Company as well as two
unaffiliated companies, Presidential Life Insurance Company and Phoenix Mutual
Life Insurance Company. No disadvantage to Contract Owners is seen to arise from
the fact that the Trust offers its shares in this fashion.
Additional Portfolios may be established by the Trust from time to time and
may be made available to Contract Owners. However, there is no assurance that
this will occur.
CONTRACT OWNERS IN TARGET '98 PORTFOLIO
As of January 1, 1998, no Purchase Payments or transfers into the Target
'98 Division are being accepted. Purchase Payments may be allocated among the
other eleven Divisions of the Separate Account and/or Fixed Account option.
Contract Owners currently in the Target '98 Division must provide the
Company with reallocation instructions before November 15, 1998. If the Company
does not receive reallocation instructions before November 15, 1998, Contract
Values will be automatically reallocated to the Money Market Division.
Reallocations of Contract Values from the Target '98 Division will not be
considered "transfers" for purposes of determining any applicable transfer fees.
Other transfers out of the Target '98 Division will not be permitted after
October 15, 1998. None of the foregoing constraints affect a Contract Owner's
right to redeem his or her Contract Value at any time (See "Purchases and
Contract Value -- Withdrawals (Redemption)").
VOTING RIGHTS
In accordance with its view of present applicable law, the Company will
vote the shares of the Trust held in the Separate Account at special meetings of
the shareholders of the Trust in accordance with instructions received from
persons having the voting interest in the Separate Account. The Company will
vote shares for which it has not received instructions in the same proportion as
it votes shares for which it has received instructions. The Trust does not hold
regular meetings of shareholders.
The number of shares which a person has a right to vote will be determined
as of a date to be chosen by the Company not more than 60 days prior to the
meeting of the Trust's shareholders. Voting instructions will be solicited by
written communication at least 14 days prior to such meeting. The person having
such voting rights will be the Contract Owner before the Annuity Date or the
death of the Annuitant; thereafter the payee entitled to receive payments under
the Contract. Voting rights attributable to a Contract will generally decrease
as Contract Values decrease.
SUBSTITUTION OF SECURITIES
If the shares of any of the Portfolios should no longer be available for
investment by the Separate Account or if, in the judgment of the Company's Board
of Directors, further investment in the shares of a Portfolio is no longer
appropriate in view of the purpose of the Contract, the Company may substitute
shares of another open-end management investment company (or series thereof) for
Portfolio shares already purchased or to be purchased in the future by Purchase
Payments under the Contract. No substitution of securities may take place
without prior approval of the Securities and Exchange Commission and under such
requirements as it may impose.
12
<PAGE> 17
- --------------------------------------------------------------------------------
CONTRACT CHARGES
- --------------------------------------------------------------------------------
MORTALITY AND EXPENSE RISK CHARGE
The Company deducts a risk charge from each Division of the Separate
Account during each Valuation Period. The risk charge is equal, on an annual
basis, to 1.25% of the daily net asset value of each Division (approximately
.90% is for mortality risks and approximately .35% is for expense risks). The
mortality risks assumed by the Company arise from its contractual obligations to
make annuity payments after the Annuity Date for the life of the Annuitant(s),
to waive the Withdrawal Charge in the event of the death of the Annuitant, and
to provide the death benefit prior to the Annuity Date. The expense risk assumed
by the Company is that the costs of administering the Contracts and the Separate
Account will exceed the amount received from the Records Maintenance Charge and
the Administrative Expense Charge. (See "Administrative Charges"). This charge
is guaranteed by the Company and cannot be increased.
ADMINISTRATIVE CHARGES
ADMINISTRATIVE EXPENSE CHARGE
The Company deducts an Administrative Expense Charge from each Division of
the Separate Account which is equal, on an annual basis, to .15% of the daily
net asset value of each Division. This charge is designed to cover those
administrative expenses which exceed the revenues from the Records Maintenance
Charge. The Company does not intend to profit from this charge. The Company
believes that the Administrative Expense Charge has been set at a level that
will recover no more than the actual costs associated with administering the
Contract. In the event that it exceeds the amount necessary to reimburse the
Company for its administrative expenses, the charge will be appropriately
reduced. In no event will this charge be increased. The Administrative Expense
Charge is assessed during both the Accumulation Period and the Annuity Period.
RECORDS MAINTENANCE CHARGE
An annual Records Maintenance Charge of $30 is charged against each
Contract. The amount of this charge is guaranteed and cannot be increased by the
Company. This charge reimburses the Company for expenses incurred in
establishing and maintaining records relating to a Contract. The Records
Maintenance Charge will be assessed each Contract Year on the anniversary of the
Issue Date of the Contract. In the event that a total surrender of Contract
Value is made, the Charge will be assessed as of the date of surrender without
proration.
SALES CHARGES
The Withdrawal Charge and the Annuity Charge are sales charges.
WITHDRAWAL CHARGE
Effective January 1, 1989, federal tax law limits withdrawals from annuity
contracts issued in connection with 403(b) Qualified Plans. Subject to those
limitations, the Contract Value may be withdrawn at any time during the
Accumulation Period. Contract Owners should consult their own tax counsel or
other tax adviser regarding any withdrawals. (See "Taxes -- Tax Treatment of
Withdrawals -- Non-Qualified Contracts" and "Taxes -- Tax Treatment of
Withdrawals -- Qualified Contracts").
There is a Free Withdrawal Amount which applies to the first withdrawal
during a Contract Year after the first Contract Year. The Free Withdrawal Amount
is equal to 10% of the aggregate Purchase Payments less prior withdrawals.
Alternatively, certain Owners of Non-Qualified Contracts and Contracts issued in
connection with IRAs may choose to withdraw amounts which in the aggregate add
up to 10% of their initial Purchase Payments annually pursuant to the Systematic
Withdrawal Program without charge. To participate in the Systematic Withdrawal
Program, Owners must complete an enrollment form which describes the program and
send it to the Company, c/o its Administrative Service Center. Depending on
fluctuations in the net asset value of the Separate Account's Divisions,
systematic withdrawals may reduce or even exhaust Contract Value. (See
"Purchases and Contract Value -- Systematic Withdrawal Program").
13
<PAGE> 18
A contingent deferred sales charge, which is referred to as the Withdrawal
Charge, may be imposed upon other withdrawals. Withdrawal Charges will vary in
amount depending upon the Contribution Year in which the Purchase Payment being
withdrawn was made, and will be calculated based on the Withdrawal Charge Table,
below, and the amount of Purchase Payment withdrawn which is still subject to
the Withdrawal Charge and not previously withdrawn. The Withdrawal Charge is
deducted from remaining Contract Value so that the actual reduction in Contract
Value as a result of the withdrawal will be greater than the withdrawal amount
requested and paid. Free withdrawals and other withdrawals will be allocated to
Purchase Payments on a first-in-first-out basis so that all withdrawals are
allocated to Purchase Payments to which the lowest Withdrawal Charge, if any,
applies.
WITHDRAWAL CHARGE TABLE
<TABLE>
<CAPTION>
APPLICABLE WITHDRAWAL
CONTRIBUTION YEAR CHARGE PERCENTAGE
------------------------------------------------------------- ---------------------
<S> <C>
First........................................................ 5%
Second....................................................... 4%
Third........................................................ 3%
Fourth....................................................... 2%
Fifth........................................................ 1%
Sixth and later.............................................. 0%
</TABLE>
Where legally permitted, the Withdrawal Charge will be eliminated when a
Contract is issued to an officer, director or employee of the Company or its
affiliates, or an immediate family member of such person. In addition, the
Withdrawal Charge may be waived by the Company on withdrawals where the amount
withdrawn is used to purchase another annuity contract issued by the Company.
Additional information regarding the elimination or waiver of the Withdrawal
Charge may be obtained by contacting the Company.
The amounts obtained from the Withdrawal Charge will be used to pay sales
commissions and other promotional or distribution expenses associated with the
marketing of the Contracts. To the extent that the Withdrawal Charge is
insufficient to cover all sales commissions and other promotional or
distribution expenses, the Company may use any of its corporate assets,
including potential profit which may arise from the Mortality and Expense Risk
Charge (See "Contract Charges -- Mortality and Expense Risk Charge"), to make up
any difference.
ANNUITY CHARGE
If a Contract Owner elects to have annuity payments made under annuity
option 1, Life Income with Installments Guaranteed or annuity option 2, Joint
and Survivor Annuity (See "Annuity Period -- Annuity Options"), no Annuity
Charge applies and 100% of Contract Value is applied.
If a Contract Owner elects annuity option 3, Income for a Specified Period,
and if Purchase Payments were made in the Contract Year in which annuity
payments are to begin or any of the four preceding Contract Years, an Annuity
Charge may apply. This Annuity Charge equals the Withdrawal Charge that would
apply if the Contract were being surrendered. Further, no Annuity Charge will be
assessed if annuity option 3 is elected by a Beneficiary under the Death
Benefit.
The Annuity Charge also applies to certain annuitizations of Contract
Values allocated to the General Account.
DEDUCTION FOR SEPARATE ACCOUNT INCOME TAXES
While the Company is not currently maintaining a provision for taxes, the
Company has reserved the right to establish such a provision for taxes in the
future if it determines in its sole discretion, that it will incur a tax as a
result of the operation of the Separate Account. The Company will deduct for any
taxes incurred by it as a result of the operation of the Separate Account
whether or not there was a provision for taxes and whether or not it was
sufficient. (See "Taxes").
OTHER EXPENSES
There are other deductions from and expenses paid out of the assets of the
Trust which are described in the accompanying Trust Prospectus.
REDUCTION OF CHARGES FOR SALES TO CERTAIN GROUPS
The Company may reduce the charges on individual Contracts sold to certain
groups of individuals, or to a trustee, employer or other entity representing a
group, where it is expected that such sales will result in savings of
14
<PAGE> 19
sales or administrative expenses. The Company determines the eligibility of
groups for such reduced charges, and the amount of such reductions for
particular groups, by considering the following factors: (1) the size of the
group; (2) the total amount of Purchase Payments expected to be received from
the group; (3) the nature of the group for which the Contracts are purchased,
and the persistency expected in that group; (4) the purpose for which the
Contracts are purchased and whether that purpose makes it likely that expenses
will be reduced; and (5) any other circumstances which the Company believes to
be relevant to determining whether reduced sales or administrative expenses may
be expected. None of the reductions in charges for group sales is contractually
guaranteed. Such reductions may be withdrawn or modified by the Company on a
uniform basis. The Company's reductions in charges for group sales will not be
unfairly discriminatory to the interests of any Contract Owners.
- --------------------------------------------------------------------------------
DESCRIPTION OF THE CONTRACTS
- --------------------------------------------------------------------------------
TRANSFER DURING ACCUMULATION PERIOD
During the Accumulation Period, the Contract Owner, or his or her agent,
may transfer Contract Values among Divisions and/or the General Account, by
written request or by telephone authorization pursuant to a duly executed
Telephone Transfer Authorization Form delivered to the Company at its
Administrative Service Center, if applicable law permits. The Company has in
place procedures which are designed to provide reasonable assurance that
telephone authorizations are genuine, including tape recording all telephone
communications and requesting identifying information. Accordingly, the Company
and its affiliates disclaim all liability for any claim, loss or expense
resulting from any alleged error or mistake in connection with a telephone
transfer which was not properly authorized by the Contract Owner. However, if
the Company fails to employ reasonable procedures to ensure that all telephone
transfers are properly authorized, the Company may be held liable for such
losses. The Company reserves the right to modify or discontinue at any time and
without notice the use of telephone transfers and acceptance of telephone
transfer instructions from someone other than the Contract Owner. Telephone
calls authorizing transfers must be completed by 4:00 p.m. Eastern time in order
to effect the transfer the day of receipt. All other transfers will be processed
on the next business day.
Transactions effecting transfer may not be made more than fifteen times in
any Contract Year without charge. A charge of $25 per transaction is assessed
against any transaction effecting transfer in excess of the fifteen permitted
without charge in any Contract Year or, if all or part of a Contract Owner's
interest in a Division is transferred to another Division, within 30 days of the
Issue Date. Transfers made under the Dollar Cost Averaging Program, described
below, are counted against this limitation in the same manner as other
transfers. The fee will be deducted from Contract Values which remain in the
Division from which the transfer was made. If the remaining Contract Value is
insufficient to pay the transfer fee, then the fee will be deducted from
transferred Contract Values. The transfer fee is at cost with no margin included
for profit. The transfer fee may be waived, under certain circumstances, in
connection with pre-approved transfer programs.
This transfer privilege may be suspended, modified or terminated at any
time without notice. (See "Taxes -- Diversification").
The minimum partial transfer amount is $500. No partial transfer may be
made if the value of the Contract Owner's interest in the Division from which a
transfer is being made would be less than $500 after the transfer. As with
initial Purchase Payments, at least $500 must be allocated to a Division before
another Division is selected. These dollar amounts are subject to change at the
Company's option. The Company may waive the minimum partial transfer amount in
connection with pre-authorized automatic transfer programs.
Any amounts allocated or transferred to the General Account may only be
transferred from the General Account once each Contract Year during the 30-day
period following the anniversary of such allocation or transfer. If a transfer
request is received prior to the anniversary of an allocation or transfer, then
the transfer will take effect on the next Valuation Date following the
anniversary if the anniversary is not a Valuation Date. If the Company receives
the transfer request within the 30 days following the anniversary of an
allocation or transfer to the General Account the transfer will be effective on
the next following Valuation Date. The foregoing limitations may be waived in
connection with pre-authorized automatic transfer programs.
15
<PAGE> 20
AUTOMATIC DOLLAR COST AVERAGING PROGRAM
Contract Owners who wish to purchase units of the Separate Accounts over a
period of time may be able to do so through the Dollar Cost Averaging ("DCA")
Program. Under this DCA Program, a Contract Owner may authorize the automatic
transfer of a fixed dollar amount ($100 minimum) or percentage of his or her
choice at regular intervals from either the Money Market Portfolio, Government
and Quality Bond Portfolio or the General Account to one or more of the Separate
Accounts (other than the Money Market Portfolio or the Government and Quality
Bond Portfolio) at the unit values determined on the dates of the transfers. The
intervals between transfers from the Money Market Portfolio or Government and
Quality Bond Portfolio may be monthly, quarterly, semi-annually or annually, at
the option of the Contract Owner. Transfers from the General Account must be
made by percentage and at quarterly intervals only and are limited to 8% of the
value of the Contract Owner's interest in the General Account in any Contract
Year. The theory of dollar cost averaging is that greater numbers of units are
purchased at times when the unit prices are relatively low than are purchased
when the prices are higher. This has the effect of reducing the aggregate
average cost per unit to less than the average of the unit prices on the same
purchase dates. However, participation in the DCA Program does not assure the
Contract Owner of a greater profit, or any profit, from his or her purchases
under the DCA Program; nor will it prevent or necessarily alleviate losses in a
declining market.
Although the various options under the DCA Program will allow transfers to
be made either from the Money Market Portfolio, Government and Quality Bond
Portfolio or the General Account, a Contract Owner must elect to have the
transfers made exclusively from one or the other of these three sources. A
Contract Owner may elect to increase, decrease or change the frequency or amount
of Purchase Payments under a DCA Program. The application and any Purchase
Payments should be sent to the Company at the address set forth on the first
page for correspondence accompanied by payments. The Company reserves the right
to modify, suspend or terminate the DCA Program at any time.
A Contract Owner may not simultaneously participate in both the DCA Program
and the Systematic Withdrawal Program. Participation in the DCA Program will be
effective one week after the Company has received and approved the application
to participate in the DCA Program.
MODIFICATION OF THE CONTRACT
Only the Company's President or Secretary may approve a change or waive the
provisions of the Contract. Any change or waiver must be in writing. No agent
has the authority to change or waive the provisions of the Contract.
ASSIGNMENT
Contracts issued pursuant to Non-Qualified Plans that are not subject to
Title 1 of the Employee Retirement Income Security Act of 1974 ("ERISA") may be
assigned by the Owner at any time during the lifetime of the Annuitant prior to
the Annuity Date. The Company will not be bound by any assignment until written
notice is received by the Company, c/o its Administrative Service Center. The
Company is not responsible for the validity, tax or other legal consequences of
any assignment. An assignment will not affect any payments the Company may make
or actions it may take before it receives notice of the assignment.
If the Contract is issued pursuant to a Qualified Plan (or a Non-Qualified
Plan that is subject to Title 1 of ERISA), it may not be assigned, pledged or
otherwise transferred except under such conditions as may be allowed under
applicable law.
BECAUSE AN ASSIGNMENT MAY BE A TAXABLE EVENT, CONTRACT OWNERS SHOULD
CONSULT COMPETENT TAX ADVISERS SHOULD THEY WISH TO ASSIGN THEIR CONTRACTS.
DEATH OF OWNER OF NON-QUALIFIED CONTRACT
The following section applies only if the Contract is issued on a
Non-Qualified basis and if either of the two following conditions exists:
(A) The Owner and the Annuitant are the same individual and that
individual dies during the Accumulation Period; or
(B) The Owner and Annuitant are different persons and the Owner dies
during the Accumulation Period prior to the Annuitant's death.
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If either of the above conditions occurs, the following provisions apply:
(1) If the Beneficiary is the spouse of the Owner, then the
Beneficiary may elect to become the Owner and maintain the Contract in full
force and effect. A spouse Beneficiary may alternatively choose to take a
lump sum distribution. (See below).
(2) If the Beneficiary is a natural person and not the spouse of the
Owner, the Beneficiary can elect to have the existing Contract Value paid
under one of the annuity options set forth in the Contract over a period
not extending beyond the life expectancy of the Beneficiary at the time of
the election, or such a Beneficiary can elect to take a lump sum
distribution. (See below). Payments under any annuity option selected must
begin not later than one year after the date of death of the Owner.
(3) If there is no Beneficiary or if the Beneficiary is not a natural
person, then the entire Contract Value must be paid out within five years
of the Owner's death.
The amount of a lump sum distribution is the greater of:
(1) the current Contract Value at the time of election; or
(2) the total amount of Purchase Payments made under the Contract less
the aggregate dollar amount of any partial withdrawals and any Withdrawal
Charges which were assessed at the time of withdrawal. Under this
alternative election, the lump sum must be paid to the Beneficiary within
five years of the Owner's death.
If the Contract is issued pursuant to a Qualified Plan, similar provisions
will apply upon the death of the Contract Owner. Purchasers acquiring Contracts
pursuant to Qualified Plans should consult a qualified pension or tax adviser.
DEATH BENEFIT
If the Annuitant dies during the Accumulation Period, a Death Benefit will
be payable to the Beneficiary upon receipt by the Company of Due Proof of Death
of the Annuitant.
The Death Benefit is equal to the greater of:
(1) the Contract Value at the end of the Valuation Period during which
Due Proof of Death and an election of the type of payment to be made to the
Beneficiary is received by the Company, c/o its Administrative Service
Center; or
(2) the total amount of Purchase Payments minus the amount of partial
withdrawals and/or partial annuitizations and applicable contract charges;
or
(3) after the fifth Contract Year, the Contract Value at the last
anniversary of the Issue Date of the Contract minus the total amount of any
partial withdrawals and/or partial annuitizations made since that
anniversary.
Payment of the Death Benefit may be made in one lump sum or applied under
one of the annuity options.
BENEFICIARY
The Contract Owner may designate the Beneficiary(ies) to receive any amount
payable on death. However, where a Contract is jointly owned, each joint Owner
shall be a primary Beneficiary. The original Beneficiary(ies) will be named in
the application. Unless an irrevocable Beneficiary(ies) designation was
previously filed or unless the Contract is jointly owned, the Contract Owner may
change the Beneficiary(ies) prior to the Annuity Date by written request
delivered to the Company, c/o its Administrative Service Center, or by
completing a Change of Beneficiary Form provided by the Company. Any change will
take effect when recorded by the Company. The Company is not liable for any
payment made or action taken before it records the change.
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ANNUITY PERIOD
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ANNUITY DATE
The Contract Owner selects an Annuity Date (the date on which annuity
payments are to begin) at the time of application. The Annuity Date must always
be the first day of a calendar month and must be at least one month after the
Issue Date. Annuity payments will begin no later than the first day of the
calendar month following the Annuitant's 85th birthday. Where joint Annuitants
are named, the Annuity Date may not be later than the first of the month
following the 85th birthday of the youngest Annuitant. The Contract Owner may
change the Annuity Date at any time at least seven days prior to the Annuity
Date then indicated on the Company's records by written notice to the Company,
c/o its Administrative Service Center.
The actual dollar amount of variable annuity payments is dependent upon:
(1) the Contract Value at the time of annuitization; (2) the annuity table
specified in the Contract; (3) the annuity option selected; and (4) the
investment performance of the Divisions selected. In addition, if annuity option
3, Income for a Specified Period, is elected, an Annuity Charge may apply. (See
"Contract Charges -- Sales Charges" and "Contract Charges -- Annuity Charge").
The annuity tables contained in the Contract are based on a 5% assumed
investment rate. If the actual net investment rate exceeds 5%, payments will
increase. Conversely, if the actual rate is less than 5%, annuity payments will
decrease. If a higher assumed investment rate were used, the initial payment
would be higher, but the actual net investment rate would have to be higher in
order for annuity payments to increase.
The Annuitant receives the value of a fixed number of Annuity Units each
month. The value of a fixed number of Annuity Units will reflect the investment
performance of the Divisions elected, and the amount of each annuity payment
will vary accordingly.
ALLOCATION OF ANNUITY PAYMENTS
If all of the Contract Value on the seventh calendar day before the Annuity
Date is allocated to the General Account, the Annuity will be paid as a fixed
annuity. If all of the Contract Value on that date is allocated to the Separate
Account, the Annuity will be paid as a Variable Annuity. If the Contract Value
on that date is allocated to both the General Account and the Separate Account,
the Annuity will be paid as a combination of a fixed annuity and a Variable
Annuity to reflect the allocation between the Accounts. Variable Annuity
payments will reflect the investment performance of the Separate Account
Divisions. The payee(s) may, by written notice to the Company, convert Variable
Annuity payments to fixed annuity Payments. However, fixed annuity Payments may
not be converted to Variable Annuity payments.
ANNUITY OPTIONS
The Contract Owner, or any Beneficiary who is so entitled, may elect to
receive a lump sum at the end of the Accumulation Period. However, a lump sum
distribution may be deemed to be a withdrawal, and at least a portion of it may
be subject to federal income tax. (See "Taxes -- Tax Treatment of
Withdrawals -- Non-Qualified Contracts" and "Tax Treatment of
Withdrawals -- Qualified Contracts"). Alternatively, an annuity option may be
elected. The Contract Owner may elect an annuity option or change an annuity
option at any time during the lifetime of the Annuitant prior to the Annuity
Date. The Annuitant may make the election on the Annuity Date unless the
Contract Owner has restricted the right to make such an election. The
Beneficiary may elect an annuity option upon the Annuitant's death unless the
Contract Owner has restricted this right.
If no other annuity option is elected, monthly annuity payments will be
made in accordance with annuity option 1 below with a 10 year period certain.
Generally, annuity payments will be made in monthly installments. However, if
the amount available to apply under an annuity option is less than $2,000, the
Company has the right to pay the annuity in one lump sum. In addition, if the
first payment provided would be less than $20, the Company shall have the right
to change the frequency of payments to be at quarterly, semi-annual or annual
intervals so as to result in an initial payment of at least $20.
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Contract Owners may elect to have annuity payments electronically wired to
his or her financial institution by completing the instructions on the
Electronic Fund Transfer Form or by written request delivered to the Company at
its Administrative Service Center. A voided check (for checking accounts), the
account number and bank ABA number must accompany all requests. Electronic
transfers may also be requested on the Annuity Option Selection Form. The
Company reserves the right to modify, suspend or terminate the availability of
electronic fund transfers at any time.
The following annuity options are generally available under the Contract.
However, there may be restrictions in the retirement plan pursuant to which a
Contract issued on a qualified basis has been purchased.
OPTION 1 -- LIFE INCOME WITH INSTALLMENTS GUARANTEED
An annuity payable monthly during the lifetime of the payee. Upon election
a guaranteed payment period of either 10 years or 20 years may be chosen. If the
payee dies before the end of the guaranteed period, the present value, based on
a 5% annual interest rate, of any remaining guaranteed payments will be paid to
the payee's estate or to the Beneficiary.
OPTION 2 -- JOINT AND SURVIVOR ANNUITY
An annuity payable monthly while both payees are living. Upon the death of
either payee, the monthly income payable will continue during the lifetime of
the surviving payee at the percentage of the full amount chosen at the time of
election of this annuity option. This is the automatic form of annuity where
joint Annuitants are named, but a different option may be elected.
Annuity payments terminate automatically and immediately upon the death of
the surviving payee without regard to the number or total amount of payments
received.
There is no minimum number of guaranteed payments and it is possible to
have only one annuity payment if both payees die before the due date of the
second payment.
No Annuity Charge applies if either option 1 or option 2 is elected.
OPTION 3 -- INCOME FOR A SPECIFIED PERIOD
If Purchase Payments were made in the Contract Year in which annuity
payments are to begin or in any of the four preceding Contract Years, an Annuity
Charge may apply. The Annuity Charge equals the Withdrawal Charge that would
apply if the Contract were being surrendered. No Annuity Charge will be assessed
if annuity option 3 is elected by a Beneficiary under the Death Benefit.
Under this option, a payee can elect an annuity payable monthly for any
period of years from 5 to 30. This election must be made for full 12 month
periods. In the event the payee dies before the specified number of payments has
been made, the Beneficiary may elect to continue receiving the scheduled
payments or may alternatively elect to receive the present value, based on a 5%
annual interest rate, of any remaining guaranteed payments. Because Contract
Values are redeemable even after the Annuity Date under this option at any time
while payments are being made, the payee may elect to receive the present value
of the remaining payments, commuted at the interest rate used to create the
annuity factor for this option.
The value of an Annuity Unit, regardless of the option chosen, takes into
account the Mortality and Expense Risk Charge. (See "Contract
Charges -- Mortality and Expense Risk Charge"). Since annuity option 3, Income
for a Specified Period, does not contain an element of mortality risk, the payee
is not getting the benefit of this Charge. There shall be no right to terminate
the Contract during the Annuity Period if the option elected contains an element
of mortality risk.
OTHER OPTIONS
At the sole discretion of the Company, other annuity options may be made
available to the Contract Owner. However, to the extent that Withdrawal Charges
would otherwise apply to a withdrawal or termination, the identical Withdrawal
Charge may apply with respect to any additional options.
With respect to Contracts issued under Sections 401, 403(b) or 408 of the
Code, any payments will be made only to the Annuitant and the Annuitant's
spouse.
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TRANSFER DURING ANNUITY PERIOD
During the Annuity Period, the payee has the sole right to transfer the
Contract Value to the General Account and/or among Separate Account Division(s)
by written request to the Company. The following limitations apply:
(1) No transfer to a Separate Account Division may be made during the
first year of the Annuity Period. Thereafter, only one transfer per
Division is permitted during each Contract Year of the Annuity Period.
(2) The entire value in a Separate Account Division must be
transferred.
(3) The request for transfer must be received by the Company, c/o its
Administrative Service Center, during the 45 days preceding the anniversary
of the Contract's Issue Date. The transfer will be effected at the next
Annuity Unit value calculation after receipt of a valid transfer request
which meets the limitations and conditions as are prescribed for transfers
during the Accumulation Period. (See "Transfer During Accumulation
Period").
(4) The amount allocated to the General Account in the event of a
transfer from a Separate Account Division will be equal to the annuity
reserve for the payee's interest in that Separate Account Division. The
annuity reserve is the product of "(A)" multiplied by "(B)" multiplied by
"(C)", where "(A)" is the number of Annuity Units representing the payee's
interest in the Separate Account Division per annuity payment; "(B)" is the
Annuity Unit value for the Separate Account Division; and "(C)" is the
present value of $1.00 per payment period as of the adjusted age of the
payee attained at the time of transfer, determined by using the 1983 Table
A, projected at Scale G with interest at the rate of 5% per annum. Amounts
transferred to the General Account will be applied under the annuity option
originally elected, except that adjustment will be made for the time
elapsed since the Annuity Date. All amounts and Annuity Unit values will be
determined as of the end of the Valuation Period preceding the effective
date of transfer.
(5) The transfer privilege may be suspended or discontinued at any
time.
DEATH BENEFIT DURING ANNUITY PERIOD
If the payee dies after the Annuity Date while the Contract is in force,
the death proceeds, if any, will depend upon the annuity option in effect at the
time of the payee's death. If the Owner or Annuitant, if different, dies after
the Annuity Date and before the entire interest in the Contract has been
distributed, the remaining interest, if any, as provided for in the annuity
option elected will be distributed at least as rapidly as under the method of
distribution in effect at the Owner's or Annuitant's death.
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PURCHASES AND CONTRACT VALUE
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MINIMUM PURCHASE PAYMENT
The minimum initial Purchase Payment for Contracts issued pursuant to a
Non-Qualified Plan is $1,000. Minimum additional Purchase Payments may be made
in amounts of $500. The minimum Purchase Payment for a Contract issued pursuant
to a Qualified Plan is $100. A minimum of $500 must be allocated to one Division
or the General Account before transfers are permitted. (See "Description of the
Contracts -- Transfer During Accumulation Period"). The Company reserves the
right to refuse any Purchase Payment at any time.
MAXIMUM PURCHASE PAYMENT
Purchase Payments of more than $1,000,000 require prior Company approval.
ALLOCATION OF PURCHASE PAYMENTS
Purchase Payments are allocated to the General Account and/or the
Division(s) of the Separate Account selected by the Contract Owner. The current
General Account allocation option pays a fixed rate of interest declared by the
Company for one year from the date amounts are allocated to it. The Company, at
its discretion, may offer other General Account allocation options which are
subject to different terms and conditions than apply to the current option.
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Contract Owners making initial Purchase Payments should be sure to specify
their allocations on the application for a Contract. If the application is in
good order, the Company will apply the initial Purchase Payment to the General
Account and the selected Division(s), and credit the Contract with Accumulation
Units within two business days of receipt at the P.O. Box for the Company's
Administrative Service Center. The number of Accumulation Units in a Division
attributable to a Purchase Payment is determined by dividing that portion of the
Purchase Payment which is allocated to the Division by the Division's
Accumulation Unit value during the Valuation Period when the allocation occurs.
IF THE APPLICATION DOES NOT SPECIFY AN ALLOCATION, THE APPLICATION IS NOT
IN GOOD ORDER.
If the application for a Contract is not in good order, the Company will
attempt to rectify it within five business days of its receipt at the P.O. Box
for the Company's Administrative Service Center. The Company will credit the
initial Purchase Payment within two business days after the application has been
rectified. Unless the Contract Owner consents otherwise, the application and the
initial Purchase Payment will be returned if the application cannot be put in
good order within five business days of its receipt.
Just like Contract Owners making initial Purchase Payments, Contract Owners
making subsequent Purchase Payments should be sure to specify how they want
their payments allocated. OTHERWISE, THE COMPANY WILL AUTOMATICALLY PROCESS THE
PURCHASE PAYMENT BASED ON THE PREVIOUS ALLOCATION.
A Contract Owner may elect to increase, decrease or change the frequency or
amount of Purchase Payments. The application and any Purchase Payments should be
sent to the Company at its Administrative Service Center.
ACCUMULATION UNIT VALUE
Accumulation Unit value is determined Monday through Friday (except for the
following Federal holidays) as of 4:00 p.m. New York time.
<TABLE>
<S> <C>
New Year's Day Independence Day
President's Day Labor Day
Good Friday Thanksgiving
Memorial Day Christmas Day
</TABLE>
A separate Accumulation Unit value is determined for each Division. If the
Company elects or is required to assess a charge for taxes, a separate
Accumulation Unit value may be calculated for Non-Qualified and Qualified
Contracts within each Division.
The net assets are determined by calculating the total value of each
Division's assets (that is, the aggregate value of the shares of the Portfolio
of the Trust held by the Division). After calculation of the net assets of a
Division, that amount is reduced by the accrued but unpaid daily charge for
mortality and expense risks and administration expense (which together amount to
1.40% per annum) and any provision for taxes which may occur. After that
calculation, the resulting number is then divided by the number of Accumulation
Units outstanding at the end of the Valuation Period to determine Accumulation
Unit value.
The Accumulation Unit value for each Division will vary with the price of a
share in the underlying Portfolio and in accordance with the Mortality and
Expense Risk Charge, Administrative Expense Charge, and any provision for taxes.
Assessments of Withdrawal Charges and Records Maintenance Charges are made
separately for each Contract. They do not affect Accumulation Unit value.
DISTRIBUTION OF CONTRACTS
The Contracts are only available in the State of New York.
Contracts are sold by registered representatives of broker-dealers who are
licensed insurance agents of the Company, either individually or through an
incorporated insurance agency. Commissions paid to registered representatives
may vary, but in the aggregate are not anticipated to exceed 5% of any Purchase
Payment.
SunAmerica Capital Services, Inc., located at 733 Third Avenue, 4th Floor,
New York, New York 10017 serves as distributor of the Contracts. SunAmerica
Capital Services, Inc., an indirect wholly owned subsidiary of SunAmerica Inc.,
is registered as a broker-dealer under the Securities Exchange Act of 1934, as
amended, and is a member of the National Association of Securities Dealers, Inc.
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WITHDRAWALS (REDEMPTIONS)
Except as explained below, the Contract Owner may redeem a Contract for all
or a portion of the Contract Value during the Accumulation Period. The Contract
Owner may also redeem Contract Values after the Annuity Date if annuity option 3
is elected. Withdrawal Charges may be assessed. (See "Contract
Charges -- Withdrawal Charge").
Effective January 1, 1989, withdrawals of amounts attributable to
contributions made pursuant to a salary reduction agreement (as defined in
Section 403(b)(11) of the Code) are limited to circumstances only: when the
Contract Owner attains age 59 1/2, separates from service, dies, becomes
disabled (within the meaning of Section 72(m)(7) of the Code), or in the case of
hardship. Withdrawals for hardship are restricted to the portion of the Contract
Owner's Contract Value which represents contributions made by the Contract Owner
and does not include any investment results. These limitations on withdrawals
apply to: (1) salary reduction contributions made after December 31, 1988; (2)
income attributable to such contributions; and (3) income attributable to
amounts held as of December 31, 1988. The limitations on withdrawals do not
affect rollovers or exchanges between certain Qualified Plans. Tax penalties may
also apply. (See "Taxes -- Tax Sheltered Annuities -- Withdrawal Limitations").
While the foregoing limitations only apply to certain contracts issued in
connection with 403(b) Qualified Plans, all Contract Owners should seek
competent tax advice regarding any withdrawals or distributions.
Except in connection with the Systematic Withdrawal Program, the minimum
partial withdrawal amount is $500, or the Owner's entire interest in the
Division from which a withdrawal is requested. The Owner's interest in the
Division from which the withdrawal is requested must be at least $500 after the
withdrawal is completed if anything is left in that Division.
A written withdrawal request or Systematic Withdrawal Program enrollment
form, as the case may be, must be sent to the Company, c/o its Administrative
Service Center. The required form will not be in good order unless it includes
the Contract Owner's Tax I.D. Number (e.g., Social Security Number) and provides
instructions regarding withholding of income taxes. The Company provides the
required forms.
If the request is for total withdrawal, the Contract or a Lost Contract
Affidavit (which may be obtained by calling the Company's Administrative Service
Center) must be submitted as well. The Withdrawal Value is determined on the
basis of the Accumulation Unit values next computed following receipt of a
request in proper order. The Withdrawal Value will be paid within seven days
after the day a proper request is received by the Company. However, the Company
may suspend the right of withdrawal or delay payment more than seven days: (1)
during any period when the New York Stock Exchange is closed (other than
customary weekend and holiday closings); (2) when trading on the markets the
Separate Account or Portfolios normally utilize is restricted or an emergency
exists as determined by the Securities and Exchange Commission so that disposal
of the Separate Account's or a Portfolio's investments or determination of
Accumulation Unit value is not reasonably practicable; or (3) for such other
periods as the Securities and Exchange Commission, by order, may permit for
protection of Contract Owners.
SYSTEMATIC WITHDRAWAL PROGRAM
Certain Participants of Nonqualified Plan Contracts and Contracts issued in
connection with IRAs may choose to withdraw amounts which in the aggregate add
up to a maximum of 10% of their Purchase Payments annually pursuant to a
Systematic Withdrawal Program without charge. Withdrawals are taxable and a 10%
federal tax penalty may apply to withdrawals before age 59 1/2. Participants
must complete an enrollment form which describes the program and send it to the
Company, c/o its Administrative Service Center. Participation in the Systematic
Withdrawal Program may be elected at the time the Contract is issued or on any
date prior to the Annuity Date. Depending on fluctuations in the net asset value
of the Portfolios, systematic withdrawals may reduce or even exhaust Contract
Value. The minimum systematic withdrawal amount is $250 per withdrawal.
Amounts withdrawn under to the Systematic Withdrawal Program may be
electronically wired to the Contract Owner's financial institution by completing
the instructions on the Electronic Fund Transfer Form or by written request
delivered to the Company at its Administrative Service Center. A voided check
(for checking accounts), the account number and bank ABA number must accompany
all requests. Electronic transfers may also be requested on the Systematic
Withdrawal Request Form. The Company reserves the right to modify, suspend or
terminate the Systematic Withdrawal Progam and the availability of electronic
fund transfers at any time.
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ERISA PLANS
Spousal consent may be required when a married Contract Owner seeks a
distribution from a Contract that has been issued in connection with a Qualified
Plan or a Non-Qualified Plan that is subject to Title I of ERISA. Owners should
obtain competent advice.
MINIMUM CONTRACT VALUE
If the Contract Value is less than $500 and no Purchase Payments have been
made during the previous three full calendar years, the Company reserves the
right, after 60 days written notice to the Owner, to terminate the Contract and
distribute the Withdrawal Value to the Owner. This privilege will be exercised
only if the Contract Value has been reduced to less than $500 as a result of
withdrawals. In no instance shall such termination occur if the value has fallen
below $500 due to either decline in Accumulation Unit value or the imposition of
fees and charges.
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ADMINISTRATION
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The Company has primary responsibility for all administration of the
Contracts and the Separate Account. Its Administrative Service Center is located
at P.O. Box 54299, Los Angeles, California 90054-0299 and its telephone number
is (800) 99-NYSUN.
The administrative services provided include, but are not limited to:
issuance of the Contracts; maintenance of Contract Owner records; Contract Owner
services; calculation of unit values; and preparation of Contract Owner reports.
Contract statements and transaction confirmations are mailed to Contract
Owners at least quarterly. Contract Owners should read their statements
carefully and verify their accuracy. Questions about periodic statements should
be communicated to the Company promptly. The Company will investigate all
complaints and make any necessary adjustments retroactively, provided that it
has received notice of a potential error within 30 days after the date the
Contract Owner receives the questioned statement. If the Company has not
received notice of a potential error within this time, any adjustment shall be
made as of the date that the Administrative Service Center receives notice of
the potential error.
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TAXES
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NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING
OF CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE
COMPANY CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE
MADE. PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE
POSSIBILITY OF SUCH CHANGES. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF
THE CONTRACTS. PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE
TREATED AS "ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS.
GENERAL
Section 72 of the Code governs taxation of annuities in general. A Contract
Owner is not taxed on increases in the value of a Contract until distribution
occurs, either in the form of a lump sum payment or as annuity payments under
the annuity option elected. For a lump sum payment received as a total surrender
(total redemption), the recipient is taxed on the portion of the payment that
exceeds the cost basis of the Contract. For a payment received as a withdrawal
(partial redemption), federal tax liability is determined on a last-in-first-out
basis, meaning taxable income is withdrawn before the cost basis of the Contract
is withdrawn. For Non-Qualified Contracts, the cost basis is generally the
Purchase Payments, while for Qualified Contracts there may be no cost basis. The
taxable portion of the lump sum payment is taxed at ordinary income tax rates.
Tax penalties may also apply.
For annuity payments, the taxable portion is determined by a formula which
establishes the ratio that the cost basis of the Contract bears to the total
value of annuity payments for the term of the annuity Contract. The taxable
portion is taxed at ordinary income tax rates. For certain types of Qualified
Plans there may be no cost basis in the
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<PAGE> 28
Contract within the meaning of Section 72 of the Code. Contract Owners,
Annuitants and Beneficiaries under the Contracts should seek competent financial
advice about the tax consequences of distributions under the retirement plan
under which the Contracts are purchased.
The Company is taxed as a life insurance company under the Code. For
federal income tax purposes, the Separate Account is not a separate entity from
the Company and its operations form a part of the Company.
WITHHOLDING TAX ON DISTRIBUTIONS
The Code generally requires the Company (or, in some cases, a plan
administrator) to withhold tax on the taxable portion of any distribution or
withdrawal from a Contract. For "eligible rollover distributions" from Contracts
issued under certain types of Qualified Plans, 20% of the distribution must be
withheld, unless the payee elects to have the distribution "rolled over" to
another eligible plan in a direct "trustee to trustee" transfer. This
requirement is mandatory and cannot be waived by the Contract Owner. Withholding
on other types of distributions can be waived.
An "eligible rollover distribution" is the estimated taxable portion of any
amount received by a covered employee from a plan qualified under section 401(a)
or 403(a) of the Code, or from a tax-sheltered annuity qualified under section
403(b) of the Code (other than (1) annuity payments for the life (or life
expectancy) of the employee, or joint lives (or joint life expectancies) of the
employee and his or her designated Beneficiary, or for a specified period of ten
years or more; and (2) distributions required to be made under the Code).
Failure to "roll over" the entire amount of an eligible rollover distribution
(including an amount equal to the 20% portion of the distribution that was
withheld) could have adverse tax consequences, including the imposition of a
penalty tax on premature withdrawals, described later in this section.
Withdrawals or distributions from a Contract other than eligible rollover
distributions are also subject to withholding on the estimated taxable portion
of the distribution, but the Contract Owner may elect in such cases to waive the
withholding requirement. If not waived, withholding is imposed (1) for periodic
payments, at the rate that would be imposed if the payments were wages, or (2)
for other distributions, at the rate of 10%. If no withholding exemption
certificate is in effect for the payee, the rate under (1) above is computed by
treating the payee as a married individual claiming 3 withholding exemptions.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified, in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the Contract as
an annuity contract would result in imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contracts meet the
diversification requirements if, as of the close of each quarter, the underlying
assets meet the diversification standards for a regulated investment company,
and no more than 55% of the total assets consist of cash, cash items, U.S.
Government securities and securities of other regulated investment companies.
The Treasury Department has issued Regulations which establish
diversification requirements for the investment portfolios underlying variable
contracts such as the Contracts. The Regulations amplify the diversification
requirements for variable contracts set forth in the Code and provide an
alternative to the safe harbor provision described above. Under the Regulations
an investment portfolio will be deemed adequately diversified if: (1) no more
than 55% of the value of the total assets of the portfolio is represented by any
one investment; (2) no more than 70% of the value of the total assets of the
portfolio is represented by any two investments; (3) no more than 80% of the
value of the total assets of the portfolio is represented by any three
investments; and (4) no more than 90% of the value of the total assets of the
portfolio is represented by any four investments. For purposes of determining
whether or not the diversification standards imposed on the underlying assets of
variable contracts by Section 817(h) of the Code have been met, "each United
States government agency or instrumentality shall be treated as a separate
issuer."
The Company intends that each Portfolio of the Trust underlying the
Contracts will be managed by the investment adviser for the Trust in such a
manner as to comply with these diversification requirements.
24
<PAGE> 29
MULTIPLE CONTRACTS
Multiple annuity contracts which are issued within a calendar year to the
same contract owner by one company or its affiliates are treated as one annuity
contract for purposes of determining the tax consequences of any distribution.
Such treatment may result in adverse tax consequences including more rapid
taxation of the distributed amounts from such combination of contracts. The
Company believes that Congress intended to affect the purchase of multiple
deferred annuity contracts which may have been purchased to avoid withdrawal
income tax treatment. Contract Owners should consult a tax adviser prior to
purchasing more than one annuity contract in any calendar year.
TAX TREATMENT OF ASSIGNMENTS
An assignment of a Contract may be a taxable event and may be prohibited by
ERISA in some circumstances. Contract Owners should therefore consult competent
tax advisers should they wish to assign their Contracts.
TAX TREATMENT OF WITHDRAWALS -- NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate Purchase
Payments made, any amount withdrawn not in form of an annuity payment will be
treated as coming first from the earnings and then, only after the income
portion is exhausted, as coming from the principal. Withdrawn earnings are
includible in a taxpayer's gross income. Section 72 further provides that a 10%
penalty will apply to the income portion of any premature distribution. The
penalty is not imposed on amounts received: (1) after the taxpayer reaches
59 1/2; (2) upon the death of the Contract Owner; (3) if the taxpayer is totally
disabled; (4) in a series of substantially equal periodic payments made for the
life of the taxpayer or for the joint lives of the taxpayer and his Beneficiary;
(5) under an immediate annuity; or (6) which are allocable to purchase payments
made prior to August 14, 1982.
The above information applies to Qualified Contracts issued pursuant to
Section 457 of the Code, but does not apply to other Qualified Contracts.
Separate tax withdrawal penalties and restrictions apply to Qualified Contracts.
(See "Tax Treatment of Withdrawals -- Qualified Contracts").
QUALIFIED PLANS
The Contracts offered by this Prospectus are designed to be suitable for
use under various types of Qualified Plans. Taxation of participants in each
Qualified Plan varies with the type of plan and the terms and conditions of each
specific plan. Contract Owners, Annuitants and Beneficiaries are cautioned that
benefits under a Qualified Plan may be subject to the terms and conditions of
the plan, regardless of the terms and conditions of the contracts issued
pursuant to the plan.
Following are general descriptions of the types of Qualified Plans with
which the Contracts may be used. Such descriptions are not exhaustive and are
for general informational purposes only. The tax rules regarding Qualified Plans
are very complex and will have differing applications depending on individual
facts and circumstances. Each purchaser should obtain competent tax advice prior
to purchasing a Contract issued under a Qualified Plan.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available and described in
this Prospectus. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals -- Qualified Contracts").
(A) H.R. 10 OR KEOGH PLANS
Section 401 of the Code permits self-employed individuals to establish
Qualified Plans for themselves and their employees, commonly referred to as
"H.R. 10" or "Keogh" plans. Contributions made to the plan for the benefit
of the employees will not be included in the gross income of the employees
until distributed from the plan. The tax consequences to participants may
vary depending upon the particular plan design. However, the Code places
limitations and restrictions on all plans on such items as: amounts of
allowable contributions; form, manner and timing of distributions; vesting
and nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. (See "Tax Treatment of
25
<PAGE> 30
Withdrawals -- Qualified Contracts"). Purchasers of Contracts for use with
an H.R. 10 Plan should obtain competent tax advice as to the tax treatment
and suitability of such an investment.
(B) TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits the purchase of "tax-sheltered
annuities" by public schools and certain charitable, educational and
scientific organizations described in Section 501(c)(3) of the Code. These
qualifying employers may make contributions to the Contracts for the
benefit of their employees. Such contributions are not includible in the
gross income of the employee until the employee receives distributions from
the Contract. The amount of contributions to the tax-sheltered annuity is
limited to certain maximums imposed by the Code. Furthermore, the Code sets
forth additional restrictions governing such items as transferability,
distributions, nondiscrimination and withdrawals. (See "Tax Treatment of
Withdrawals -- Qualified Contracts"). Any employee should obtain competent
tax advice as to the tax treatment and suitability of such an investment.
(C) INDIVIDUAL RETIREMENT ANNUITIES
Section 408(b) of the Code permits eligible individuals to contribute
to an individual retirement program known as an "Individual Retirement
Annuity" ("IRA"). Under applicable limitations, certain amounts may be
contributed to an IRA which will be deductible from the individual's gross
income. These IRAs are subject to limitations on eligibility,
contributions, transferability and distributions. (See "Tax Treatment of
Withdrawals -- Qualified Contracts"). Under certain conditions,
distributions from other IRAs and other Qualified Plans may be rolled over
or transferred on a tax-deferred basis into an IRA. Sales of Contracts for
use with IRAs are subject to special requirements imposed by the Code,
including the requirement that certain informational disclosure be given to
persons desiring to establish an IRA. Purchasers of Contracts to be
qualified as IRAs should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
(D) CORPORATE PENSION AND PROFIT-SHARING PLANS
Sections 401(a) and 401(k) of the Code permit corporate employers to
establish various types of retirement plans for employees. These retirement
plans may permit the purchase of the Contracts to provide benefits under
the plan. Contributions to the plan for the benefit of employees will not
be includible in the gross income of the employee until distributed from
the plan. The tax consequences to participants may vary depending upon the
particular plan design. However, the Code places limitations on all plans
on such items as amount of allowable contributions; form, manner and timing
of distributions; vesting and nonforfeitability of interests;
nondiscrimination in eligibility and participation; and the tax treatment
of distributions, withdrawals and surrenders. (See "Tax Treatment of
Withdrawals -- Qualified Contracts"). Purchasers of Contracts for use with
corporate pension or profit sharing plans should obtain competent tax
advice as to the tax treatment and suitability of such an investment.
TAX TREATMENT OF WITHDRAWALS -- QUALIFIED CONTRACTS
Section 72(t) of the Code imposes a 10% penalty tax on the taxable portion
of any early distribution from qualified retirement plans, including contracts
issued and qualified under Code Sections 401 (H.R. 10 and Corporate Pension and
Profit Sharing Plans), 403(b) (Tax-Sheltered Annuities) and 408(b) (IRAs).
The tax penalty will not apply to the following distributions: (1) if
distribution is made on or after the date on which the Contract Owner or
Annuitant (as applicable) reaches age 59 1/2; (2) distributions following the
death or disability of the Contract Owner or Annuitant (as applicable) (for this
purpose "disability" is defined in Section 72(m)(7) of the Code); (3)
distributions that are part of substantially equal periodic payments made not
less frequently than annually for the life (or life expectancy) of the Contract
Owner or Annuitant (as applicable) or the joint lives (or joint life
expectancies) of such Contract Owner or Annuitant (as applicable) and his or her
designated Beneficiary; (4) distributions to a Contract Owner or Annuitant (as
applicable) who has separated from service after he or she has attained age 55;
(5) distributions made to the Contract Owner or Annuitant (as applicable) to the
extent such distributions do not exceed the amount allowable as a deduction
under Code Section 213 to the Contract Owner or Annuitant (as applicable) for
amounts paid during the taxable year for medical care; and (6) distributions
made to an alternate payee pursuant to a qualified domestic relations order.
The exceptions stated in items (4), (5) and (6) above do not apply in the
case of an IRA.
26
<PAGE> 31
The taxable portion of a withdrawal or distribution from Contracts issued
under certain types of plans may, under some circumstances, be "rolled over"
into another eligible plan so as to continue to defer income tax on the taxable
portion. Effective January 1, 1993, such treatment is available for any
"eligible rollover distribution" made by certain types of plans (as described
above under "Taxes -- Withholding Tax on Distributions") that is transferred
within 60 days of receipt into a plan qualified under section 401(a) or 403(a)
of the Code, a tax-sheltered annuity, an IRA, or an individual retirement
account described in section 408(a) of the Code. Plans making such eligible
rollover distributions are also required, with some exceptions specified in the
Code, to provide for a direct "trustee to trustee" transfer of the distribution
to the transferee plan designated by the recipient.
TAX SHELTERED ANNUITIES -- WITHDRAWAL LIMITATIONS
The Tax Reform Act of 1986, effective January 1, 1989, limits the
withdrawal of amounts attributed to contributions made pursuant to a salary
reduction agreement (as defined in Section 403(b)(11) of the Code) to
circumstances only: when the Contract Owner attains age 59 1/2, separates from
service, dies, becomes disabled (within the meaning of Section 72(m)(7) of the
Code), or in the case of hardship. Withdrawals for hardship are restricted to
the portion of the Contract Owner's Contract Value which represents
contributions by the Contract Owner and does not include any investment results.
These limitations on withdrawals apply only to salary reduction contributions
made after December 31, 1988, to income attributable to such contributions, and
to income attributable to amounts held as of December 31, 1988. The limitations
on withdrawals do not affect rollovers or exchanges between certain Qualified
Plans. Contract Owners should consult their own tax counsel or other tax adviser
regarding any distributions.
DEFERRED COMPENSATION PLANS -- SECTION 457
Under Section 457 of the Code, governmental and certain other tax exempt
employers may establish deferred compensation plans for the benefit of their
employees which may invest in annuity contracts. The Code, as in the case of
Qualified Plans, establishes limitations and restrictions on eligibility,
contributions, and distributions. Under these plans, contributions made for the
benefit of the employees will not be includible in the employees' gross income
until distributed from the plan. However, under a 457 plan all the plan assets
shall remain solely the property of the employer, subject only to the claims of
the employer's general creditors until such time as made available to a
participant or a beneficiary.
- --------------------------------------------------------------------------------
LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
There are no legal proceedings to which the Separate Account is a party or
to which the assets of the Separate Account are subject. The Company is engaged
in various kinds of routine litigation that in the Company's judgment will not
have a material adverse impact upon the Company's financial position.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
OF THE STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ITEM PAGE
----
<S> <C>
COMPANY................................................................................... 1
INDEPENDENT ACCOUNTANTS................................................................... 1
DISTRIBUTOR............................................................................... 1
PERFORMANCE DATA.......................................................................... 1
Money Market Division................................................................... 2
Other Divisions......................................................................... 3
ANNUITY PAYMENTS.......................................................................... 4
Annuity Unit Value...................................................................... 4
Amount of Annuity Payments.............................................................. 5
Subsequent Monthly Payments............................................................. 5
FINANCIAL STATEMENTS...................................................................... 5
</TABLE>
27
<PAGE> 32
Please forward a copy (without charge) of the Statement of Additional
Information concerning ICAP II
Variable Annuity Contracts issued by First SunAmerica Life Insurance Company to:
(Please print or type and fill in all information.)
- ------------------------------------------------------------------------------
Name
- ------------------------------------------------------------------------------
Address
- ------------------------------------------------------------------------------
City/State/Zip
- ------------------------------------------------------------------------------
Date: ________________________ Signed: _____________________________________
Return to: First SunAmerica Life Insurance Company, Annuity Service Center, P.O.
Box 54299, Los Angeles, California 90054-0299.
<PAGE> 33
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED
VARIABLE ANNUITY CONTRACTS
ISSUED BY
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION
SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE INDIVIDUAL FLEXIBLE
PREMIUM DEFERRED VARIABLE ANNUITY CONTRACTS WHICH ARE REFERRED TO HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE
INVESTOR OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS DATED
FEBRUARY 2, 1998, AS IT MAY BE SUPPLEMENTED, CALL OR WRITE THE COMPANY C/O ITS
ADMINISTRATIVE SERVICE CENTER, P.O. BOX 54299, LOS ANGELES, CALIFORNIA
90054-0299, 1-800-445-SUN2.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED
FEBRUARY 2, 1998
<PAGE> 34
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page
- ---- ----
<S> <C>
Company....................................................................................... 1
Independent Accountants....................................................................... 1
Distributors.................................................................................. 1
Performance Data.............................................................................. 1
Money Market Division...................................................................... 2
Other Divisions............................................................................ 3
Annuity Payments.............................................................................. 4
Annuity Unit Value......................................................................... 4
Amount of Annuity Payments................................................................. 5
Subsequent Monthly Payments................................................................ 5
Financial Statements.......................................................................... 5
</TABLE>
<PAGE> 35
COMPANY
Information regarding First SunAmerica Life Insurance Company (the
"Company") and its ownership is contained in the Prospectus.
INDEPENDENT ACCOUNTANTS
The financial statements of the Company as of September 30, 1997 and
1996 and for each of the three years in the period ended September 30, 1997 are
presented in this Statement of Additional Information. The financial statements
of the Company should be considered only as bearing on the ability of the
Company to meet its obligation under the Contracts. The financial statements of
the Separate Account as of December 31, 1996 and for each of the two years in
the period ended December 31, 1996, also are included in this Statement of
Additional Information.
Price Waterhouse LLP, 400 South Hope Street, Los Angeles, California
90071, serves as the independent accountants for the Separate Account and the
Company. The financial statements referred to above included in this Statement
of Additional Information have been so included in reliance on the reports of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
DISTRIBUTOR
The Contracts are sold by licensed insurance agents, where the Contracts
may be lawfully sold, who are registered representatives of broker-dealers which
are registered under the Securities Exchange Act of 1934 and are members of the
National Association of Securities Dealers, Inc.
The offering is on a continuous basis.
Effective January 28, 1994, the Contracts are offered through the
distributor for the Separate Account, SunAmerica Capital Services, Inc., 733
Third Avenue, 4th Floor, New York, New York 10017, which is an indirect wholly
owned subsidiary of SunAmerica Inc. Prior to this time, Royal Alliance
Associates, Inc. and SunAmerica Securities, Inc., both affiliates of SunAmerica
Capital Services, Inc. and located at 733 Third Avenue, 4th Floor, New York, New
York 10017 and 2201 East Camelback Road, Phoenix, Arizona 85016, respectively,
served as co-distributors of the Contracts. Royal Alliance Associates, Inc. and
SunAmerica Capital Services, Inc. are each an indirect, wholly-owned subsidiary
of SunAmerica Inc.
For the year ended December 31, 1994, the aggregate amount of
underwriting commissions paid by the Company to SunAmerica Capital Services,
Inc. was $248,222, of which $25,262 was retained by them. For the year ended
December 31, 1995, the aggregate amount of underwriting commissions paid by the
Company to SunAmerica Capital Services, Inc. was $23,437, of which $2,329 was
retained by them. For the year ended December 31, 1996, the aggregate amount of
underwriting commissions paid by the Company to SunAmerica Capital Services,
Inc. was $19,219, of which $1,872 was retained by them.
PERFORMANCE DATA
Performance data for the various Divisions of the Separate Account are
determined in the manner described on the following page.
1
<PAGE> 36
Money Market Division
The annualized current yield and the effective yield for the Money
Market Division for the seven day period ended December 31, 1996 were 3.28% and
3.33%, respectively.
Current yield is computed by first determining the Base Period Return
attributable to a hypothetical Contract having a balance of one Accumulation
Unit at the beginning of a 7 day period using the formula:
Base Period Return = (EV-SV-RMC)/(SV)
where:
SV = value of one Accumulation Unit at the start of a 7 day period
EV = value of one AccumulationUnit at the end of the 7 day period
RMC = an allocated portion of the $30 annual Records Maintenance
Charge, prorated for 7 days.
The change in the value of an Accumulation Unit during the 7 day period
reflects the income received, minus any expenses accrued, during such 7 day
period. The Records Maintenance Charge (RMC) is first allocated among the
Divisions and the General Account so that each Division's allocated portion of
the charge is proportional to the percentage of the number of Contract Owners'
accounts that have money allocated to that Division. The portion of the Charge
allocable to the Money Market Division is further reduced, for purposes of the
yield computation, by multiplying it by the ratio that the value of the
hypothetical Contract bears to the value of an account of average size for
Contracts funded by the Money Market Division. Finally, as is done with the
other charges discussed above, the result is multiplied by the fraction 7/365 to
arrive at the portion attributable to the 7 day period.
Since the Separate Account was first offered to the public, the
performance of the Money Market Division (and other Divisions) has been computed
on the basis of assumptions about the average account size and the allocation of
contract charges among the various Divisions. These assumptions are based on the
actual experience of another separate account offered for sale in states other
than New York that is used to fund variable annuity contracts that are similar
in all material respects to the Contracts. That separate account, like the
Separate Account, invests in the various Portfolios of the Trust. The Separate
Account will substitute the data derived from its own experience at the earliest
practicable date after such data is judged by the Company to be statistically
reliable. The performance data obtained using these assumptions may be higher or
lower than would have been obtained using different values for allocation and
account size.
The current yield is then obtained by annualizing the Base Period
Return:
Current Yield = (Base Period Return) x (365/7)
The Money Market Division also quotes an "effective yield" that differs
from the current yield given above in that it takes into account the effect of
dividend reinvestment in the Money Market Division. The effective yield, like
the current yield, is derived from the Base Period Return over a 7 day period.
However, the effective yield accounts for dividend reinvestment by compounding
the current
2
<PAGE> 37
yield according to the formula:
365/7
Effective Yield = [(Base Period Return+1) -1].
Net investment income for yield quotation purposes will not include
either realized capital gains and losses or unrealized appreciation and
depreciation, whether reinvested or not. The yield quotations also do not
reflect any impact of transfer fees or Withdrawal or Annuity Charges.
The yields quoted should not be considered a representation of the yield
of the Money Market Division in the future since the yield is not fixed. Actual
yields will depend not only on the type, quality and maturities of the
investments held by the Money Market Division and changes in interest rates on
such investments, but also on factors such as a Contract Owner's account size
(since the impact of fixed dollar charges will be greater for small accounts
than for larger accounts).
Yield information may be useful in reviewing the performance of the
Money Market Division and for providing a basis for comparison with other
investment alternatives. However, the Money Market Division's yield fluctuates,
unlike bank deposits or other investments that typically pay a fixed yield for a
stated period of time.
Other Divisions
Divisions of the Separate Account other than the Money Market Division
compute their performance data as "total return." The total returns of the
various Divisions over the last one, five and ten year periods, and since their
inception, are shown below, both with and without an assumed complete redemption
at the end of the period.
TOTAL ANNUAL RETURN (IN PERCENT) FOR PERIODS ENDING ON 12/31/96:
(RETURN WITH/WITHOUT REDEMPTION)
<TABLE>
<CAPTION>
INCEPTION SINCE
DIVISION DATE 1 YEAR 5 YEARS 10 YEARS** INCEPTION
- -------- ----------- ------ ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Foreign Securities 9/23/91 4.79/9.79 4.84/4.99 ---- 3.82/3.82
Capital Appreciation 9/23/91 18.33/23.33 18.01/18.10 ---- 19.71/19.71
Growth 9/23/91 18.29/23.29 9.60/9.72 11.60/11.60 11.82/11.82
Natural Resources 9/23/91 7.35/12.35 11.77/11.88 ---- 11.06/11.06
Growth and Income* 9/23/91 13.54/18.54 11.38/11.50 ---- 11.68/11.68
Strategic Multi-Asset 9/23/91 8.16/13.16 8.71/8.84 ---- 9.60/9.60
Multi-Asset 9/23/91 7.24/12.24 8.47/8.60 ---- 9.86/9.86
High Yield 9/23/91 5.07/10.07 9.73/9.85 7.20/7.20 10.11/10.11
Target '98 9/23/91 -2.80/2.20 4.64/4.79 ---- 6.00/6.00
Fixed Income 9/23/91 -4.04/0.96 4.64/4.79 5.99/5.99 5.59/5.59
Gov't and Quality Bond 9/23/91 -3.50/1.50 4.95/5.10 6.83/6.83 5.92/5.92
</TABLE>
- -------------
The total return figures are based on historical data and are not intended to
indicate future performance.
* Formerly the Convertible Securities Division.
** For periods starting prior to September 23, 1991, the date the Contracts were
first offered the public, the total return data is and will be initially derived
from the performance of the corresponding Portfolios of the Trust, modified to
reflect the same charges and expenses as if the Division had been in existence
since the inception date of each respective Portfolio. Thus, such performance
figures should not be construed to be actual historic performance of the
Separate Account. Rather, they are intended to indicate the historic performance
of the Trust, adjusted to provide direct comparability to the performance of the
Division since it was first offered to the public. The Trust has served since
its inception as an underlying investment medium for separate accounts of other
insurance companies having the same fee and charge schedules as those of the
Separate Account.
3
<PAGE> 38
These figures show the total return hypothetically experienced by
Contracts funded through the various Divisions of the Account over the time
period shown.
Total return for a Division represents a computed annual rate of return
that, when compounded annually over the time period shown and applied to a
hypothetical initial investment in a Contract funded by that Division made at
the beginning of the period, will produce the same Contract Value at the end of
the period that the hypothetical investment would have produced over the same
period. The total rate of return (T) is computed so that it satisfies the
formula:
n
P(1+T) = ERV
where:
P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1000 payment
made at the beginning of the 1, 5, or 10 year periods at
the end of the 1, 5, or 10 year periods (or fractional
portion thereof).
The total return figures given reflect the effects of both non-recurring
and recurring charges, as discussed herein. Recurring charges are taken into
account in a manner similar to that used for the yield computations for the
Money Market Division, described above. The applicable Withdrawal Charge (if
any) is deducted as of the end of the period, to reflect the effect of the
assumed complete redemption in the case of the first of the two figures given in
the table above for each Division and time period. Because the impact of Records
Maintenance Charges on a particular Contract Owner's account would generally
have differed from that assumed in the computation, due to differences between
most actual allocations and the assumed one, as well as differences due to
varying account sizes, the total return experienced by an actual account over
these same time periods would generally have been different from those given
above. As with the Money Market Division yield figures, total return figures are
derived from historical data and are not intended to be a projection of future
performance.
ANNUITY PAYMENTS
Annuity Unit Value
The value of an Annuity Unit is determined independently for each
Separate Account Division.
For each Division, the value of an Annuity Unit for any Valuation Period
is determined by multiplying the Annuity Unit value for the immediately
preceding Valuation Period by the net investment factor for the Valuation Period
for which the Annuity Unit Value is being calculated and multiplying the result
by an interest factor which offsets the effect of the investment earnings rate
of five percent (5%) per annum that is assumed in the annuity table contained in
the Contract.
The net investment factor for each Division for a Valuation Period is
determined by dividing (a) by (b) and subtracting (c) from the result where: (a)
is the value of an Accumulation Unit from the applicable Division as of the end
of the current Valuation Period; (b) is the value of an Accumulation Unit for
the applicable Division as of the end of the immediately preceding Valuation
Period; and (c) is a factor
4
<PAGE> 39
representing the daily charge for mortality and expense risks and administration
of 1.40% per annum.
Amount of Annuity Payments
The initial annuity payment is determined by applying the Contract
Value, less any Annuity Charge (if annuity option 3 is elected), to the annuity
table specified in the Contract. Those tables are based on a set amount per
$1,000 of proceeds applied. The appropriate rate must be determined by the sex
and adjusted age of the Annuitant and joint Annuitant, if any. The adjusted age
is determined from the actual age to the nearest birthday at the Annuity Date
according to the table below. The Adjusted Age Table is used to correct for
population mortality improvements over time.
ADJUSTED AGE TABLE
<TABLE>
<CAPTION>
ADJUSTMENT ADJUSTMENT
CALENDAR TO ACTUAL CALENDAR TO ACTUAL
YEAR OF BIRTH AGE YEAR OF BIRTH AGE
- -------------- ------------ -------------- ------------
<S> <C> <C> <C>
1899-1905 +6 1946-1951 -1
1906-1911 +5 1952-1958 -2
1912-1918 +4 1959-1965 -3
1919-1925 +3 1966-1972 -4
1926-1932 +2 1973-1979 -5
1933-1938 +1 1980-1985 -6
1939-1945 0 1986-1992 -7
</TABLE>
The dollars applied are then divided by 1,000 and multiplied by the
appropriate annuity factor to indicate the amount of the first annuity payment.
That amount is divided by the value of an Annuity Unit as of the Annuity Date to
establish the number of Annuity Units representing each annuity payment. The
number of Annuity Units determined for the first annuity payment remains
constant for the second and subsequent monthly payments.
Subsequent Monthly Payments
The amount of the second and subsequent annuity payments is determined
by multiplying the number of Annuity Units by the Annuity Unit value as of the
Valuation Period next preceding the date on which each annuity payment is due.
The dollar amount of the first annuity payment determined as above is divided by
the value of an Annuity Unit as of the Annuity Date to establish the number of
Annuity Units representing each annuity payment. The number of Annuity Units
determined for the first annuity payment remains constant for the second and
subsequent monthly payments.
FINANCIAL STATEMENTS
The financial statements of the Company included herein should be
considered only as bearing upon the ability of the Company to meet its
obligations under the Contracts. The financial statements of the Separate
Account are also included in this Statement of Additional Information.
5
<PAGE> 40
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of
First SunAmerica Life Insurance Company
In our opinion, the accompanying balance sheet and the related income
statement and statement of cash flows present fairly, in all material respects,
the financial position of First SunAmerica Life Insurance Company at September
30, 1997 and 1996, and the results of its operations and its cash flows for each
of the three years in the period ended September 30, 1997, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Los Angeles, California
November 7, 1997
6
<PAGE> 41
FIRST SUNAMERICA LIFE INSURANCE COMPANY
BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------------
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Investments:
Cash and short-term investments............................. $ 1,689,000 $ 6,707,000
Bonds and notes:
Available for sale, at fair value (amortized cost: 1997,
$184,709,000; 1996, $146,908,000)...................... 188,533,000 146,401,000
Common stocks, at fair value (cost: 1997 and 1996, $0)...... 19,000 129,000
------------ ------------
Total investments........................................... 190,241,000 153,237,000
Variable annuity assets....................................... 171,475,000 68,901,000
Accrued investment income..................................... 2,179,000 1,462,000
Deferred acquisition costs.................................... 18,094,000 12,127,000
Income taxes currently receivable............................. -- 299,000
Other assets.................................................. 861,000 842,000
------------ ------------
TOTAL ASSETS.................................................. $382,850,000 $236,868,000
============ ============
LIABILITIES AND SHAREHOLDER'S EQUITY
Reserves, payables and accrued liabilities:
Reserves for fixed annuity contracts........................ $180,805,000 $140,613,000
Payable to brokers for purchases of securities.............. 1,010,000 1,939,000
Income taxes currently payable.............................. 540,000 --
Other liabilities........................................... 1,722,000 845,000
------------ ------------
Total reserves, payables and accrued liabilities............ 184,077,000 143,397,000
------------ ------------
Variable annuity liabilities.................................. 171,475,000 68,901,000
------------ ------------
Deferred income taxes......................................... 1,836,000 1,350,000
------------ ------------
Shareholder's equity:
Common Stock................................................ 3,000,000 3,000,000
Additional paid-in capital.................................. 14,428,000 14,428,000
Retained earnings........................................... 7,096,000 5,973,000
Net unrealized gains (losses) on debt and equity
securities available for sale.......................... 938,000 (181,000)
------------ ------------
Total shareholder's equity.................................. 25,462,000 23,220,000
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY.................... $382,850,000 $236,868,000
============ ============
</TABLE>
See accompanying notes.
7
<PAGE> 42
FIRST SUNAMERICA LIFE INSURANCE COMPANY
INCOME STATEMENT
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
--------------------------------------------
1997 1996 1995
------------ ----------- -----------
<S> <C> <C> <C>
Investment income............................... $ 12,781,000 $ 9,957,000 $ 7,834,000
------------ ----------- -----------
Interest expense on:
Fixed annuity contracts....................... (10,089,000) (7,155,000) (5,042,000)
Senior indebtedness........................... -- (4,000) (8,000)
------------ ----------- -----------
Total interest expense........................ (10,089,000) (7,159,000) (5,050,000)
------------ ----------- -----------
NET INVESTMENT INCOME........................... 2,692,000 2,798,000 2,784,000
------------ ----------- -----------
NET REALIZED INVESTMENT GAINS (LOSSES).......... 360,000 (539,000) (1,348,000)
------------ ----------- -----------
Fee income:
Variable annuity fees......................... 1,712,000 690,000 412,000
Surrender charges............................. 304,000 221,000 194,000
------------ ----------- -----------
TOTAL FEE INCOME................................ 2,016,000 911,000 606,000
------------ ----------- -----------
GENERAL AND ADMINISTRATIVE EXPENSES............. (1,842,000) (1,480,000) (1,004,000)
------------ ----------- -----------
AMORTIZATION OF DEFERRED ACQUISITION COSTS...... (1,158,000) (500,000) (300,000)
------------ ----------- -----------
ANNUAL COMMISSIONS.............................. (18,000) (19,000) (33,000)
------------ ----------- -----------
PRETAX INCOME................................... 2,050,000 1,171,000 705,000
------------ ----------- -----------
Income tax expense.............................. (927,000) (448,000) (182,000)
------------ ----------- -----------
NET INCOME...................................... $ 1,123,000 $ 723,000 $ 523,000
============ =========== ===========
</TABLE>
See accompanying notes.
8
<PAGE> 43
FIRST SUNAMERICA LIFE INSURANCE COMPANY
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-----------------------------------------------
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................... $ 1,123,000 $ 723,000 $ 523,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Interest credited to fixed annuity
contracts................................ 10,089,000 7,155,000 5,042,000
Net realized investment (gains) losses...... (360,000) 539,000 1,348,000
Accretion of net discounts on investments... (97,000) (343,000) (394,000)
Amortization of goodwill.................... 57,000 58,000 58,000
Provision for deferred income taxes......... (116,000) 740,000 333,000
Change in:
Deferred acquisition costs.................. (8,467,000) (5,736,000) (2,740,000)
Income taxes receivable/payable............. 839,000 (322,000) (418,000)
Other, net.................................... (382,000) (254,000) (323,000)
------------- ------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES..... 2,686,000 2,560,000 3,429,000
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of:
Bonds and notes............................. (101,287,000) (124,681,000) (125,130,000)
Common stock................................ -- -- (112,000)
Sales of:
Bonds and notes............................. 49,018,000 80,440,000 55,553,000
Common stock................................ 140,000 -- --
Redemptions and maturities of:
Bonds and notes............................. 13,856,000 11,514,000 21,369,000
Mortgage loans.............................. -- 4,736,000 35,000
------------- ------------- -------------
NET CASH USED BY INVESTING ACTIVITIES......... (38,273,000) (27,991,000) (48,285,000)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Premium receipts on fixed annuity contracts... $ 70,812,000 $ 45,417,000 $ 51,681,000
Net exchanges from the fixed accounts of
variable annuity contracts.................. (22,346,000) (4,719,000) (87,000)
Withdrawal payments on fixed annuity
contracts................................... (15,310,000) (9,850,000) (14,131,000)
Claims and annuity payments on fixed annuity
contracts................................... (3,176,000) (3,752,000) (2,974,000)
Net receipts from (repayments of) other short-
term financings............................. 589,000 (1,340,000) 1,964,000
------------- ------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES..... 30,569,000 25,756,000 36,453,000
------------- ------------- -------------
NET INCREASE/(DECREASE) IN CASH AND SHORT-TERM
INVESTMENTS................................. (5,018,000) 325,000 (8,403,000)
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING
OF PERIOD................................... 6,707,000 6,382,000 14,785,000
------------- ------------- -------------
CASH AND SHORT-TERM INVESTMENTS AT END OF
PERIOD...................................... $ 1,689,000 $ 6,707,000 $ 6,382,000
============= ============= =============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid on indebtedness............... $ -- $ 4,000 $ 8,000
============= ============= =============
Net income taxes paid....................... $ 203,000 $ 30,000 $ 254,000
============= ============= =============
</TABLE>
See accompanying notes.
9
<PAGE> 44
FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS
First SunAmerica Life Insurance Company (The "Company") is a New
York-domiciled life insurance company engaged primarily in the business of
writing fixed and variable annuity contracts in the state of New York.
The operations of the Company are influenced by many factors, including
general economic conditions, monetary and fiscal policies of the federal
government, and policies of state and other regulatory authorities. The level of
sales of the Company's financial products is influenced by many factors,
including general market rates of interest; strengths, weaknesses and volatility
of equity markets; and terms and conditions of competing financial products. The
Company is exposed to the typical risks normally associated with a portfolio of
fixed-income securities, namely interest rate, option, liquidity and credit
risk. The Company controls its exposure to these risks by, among other things,
closely monitoring and matching the duration of its assets and liabilities,
monitoring and limiting prepayment and extension risk in its portfolio,
maintaining a large percentage of its portfolio in highly liquid securities, and
engaging in a disciplined process of underwriting, reviewing and monitoring
credit risk. The Company also is exposed to market risk, as market volatility
may result in reduced fee income in the case of assets held in separate
accounts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION: The accompanying financial statements have been
prepared in accordance with generally accepted accounting principles and include
the accounts of the Company, an indirect wholly owned subsidiary of SunAmerica
Inc. (the "Parent"). Certain prior period amounts have been reclassified to
conform with the 1997 presentation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the amounts reported in the financial statements and the
accompanying notes. Actual results could differ from those estimates.
INVESTMENTS: Cash and short-term investments primarily include cash,
commercial paper, money market investments, repurchase agreements and short-term
bank participations. All such investments are carried at cost plus accrued
interest, which approximates fair value, have maturities of three months or less
and are considered cash equivalents for purposes of reporting cash flows.
Bonds and notes available for sale and common stocks are carried at
aggregate fair value and changes in unrealized gains or losses, net of tax, are
credited or charged directly to shareholder's equity. Bonds and notes are
reduced to estimated net realizable value when necessary for declines in value
considered to be other than temporary. Estimates of net realizable value are
subjective and actual realization will be dependent upon future events.
Realized gains and losses on the sale of investments are recognized in
operations at the date of sale and are determined using the specific cost
identification method. Premiums and discounts on investments are amortized to
investment income using the interest method over the contractual lives of the
investments.
DEFERRED ACQUISITION COSTS: Policy acquisition costs are deferred and
amortized, with interest, in relation to the incidence of estimated gross
profits to be realized over the estimated lives of the annuity contracts.
Estimated gross profits are composed of net interest income, net realized
investment gains and losses, variable annuity fees, surrender charges and direct
administrative expenses. Deferred acquisition costs consist of commissions and
other costs that vary with, and are primarily related to, the production or
acquisition of new business.
10
<PAGE> 45
FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
As debt and equity securities available for sale are carried at aggregate
fair value, an adjustment is made to deferred acquisition costs equal to the
change in amortization that would have been recorded if such securities had been
sold at their stated aggregate fair value and the proceeds reinvested at current
yields. The change in this adjustment, net of tax, is included with the change
in net unrealized gains or losses on debt and equity securities available for
sale that is credited or charged directly to shareholder's equity. Deferred
Acquisition Costs have been decreased by $2,400,000 at September 30, 1997 and
increased by $100,000 at September 30, 1996 for this adjustment.
VARIABLE ANNUITY ASSETS AND LIABILITIES: The assets and liabilities
resulting from the receipt of variable annuity premiums are segregated in
separate accounts. The Company receives fees for assuming mortality and certain
expense risks. Such fees are included in Variable Annuity Fees in the income
statement.
GOODWILL: Goodwill, amounting to $763,000 at September 30, 1997, is
amortized by using the straight-line method over a period of 25 years and is
included in Other Assets in the balance sheet. Goodwill is evaluated for
impairment when events or changes in economic conditions indicate that the
carrying amount may not be recoverable.
CONTRACTHOLDER RESERVES: Contractholder reserves for fixed annuity
contracts are accounted for as investmenttype contracts in accordance with
Statement of Financial Accounting Standards No. 97, "Accounting and Reporting by
Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains
and Losses from the Sale of Investments," and are recorded at accumulated value
(premiums received, plus accrued interest, less withdrawals and assessed fees).
FEE INCOME: Variable annuity fees and surrender charges are recorded in
income as earned.
INCOME TAXES: The Company is included in the consolidated federal income
tax return of the Parent and files as a "life insurance company" under the
provisions of the Internal Revenue Code of 1986. Income taxes have been
calculated as if the Company filed a separate return. Deferred income tax assets
and liabilities are recognized based on the difference between financial
statement carrying amounts and income tax bases of assets and liabilities using
enacted income tax rates and laws.
11
<PAGE> 46
FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENTS
The amortized cost and estimated fair value of bonds and notes available
for sale by major category follow:
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
------------ ------------
<S> <C> <C>
AT SEPTEMBER 30, 1997:
Securities of the United States
Government.............................. $ 11,073,000 $ 11,224,000
Mortgage-backed securities................. 69,355,000 70,677,000
Securities of public utilities............. 4,426,000 4,496,000
Corporate bonds and notes.................. 78,372,000 80,405,000
Other debt securities...................... 21,483,000 21,731,000
------------ ------------
Total available for sale................... $184,709,000 $188,533,000
============ ============
AT SEPTEMBER 30, 1996:
Securities of the United States
Government.............................. $ 9,631,000 $ 9,562,000
Mortgage-backed securities................. 75,846,000 75,607,000
Securities of public utilities............. 1,032,000 971,000
Corporate bonds and notes.................. 41,545,000 41,722,000
Other debt securities...................... 18,854,000 18,539,000
------------ ------------
Total available for sale................... $146,908,000 $146,401,000
============ ============
</TABLE>
The amortized cost and estimated fair value of bonds and notes available
for sale by contractual maturity, as of September 30, 1997, follow:
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
------------ ------------
<S> <C> <C>
Due in one year or less...................... $ 250,000 $ 251,000
Due after one year through five years........ 23,461,000 23,749,000
Due after five years through ten years....... 54,161,000 55,688,000
Due after ten years.......................... 37,482,000 38,168,000
Mortgage-backed securities................... 69,355,000 70,677,000
------------ ------------
Total available for sale..................... $184,709,000 $188,533,000
============ ============
</TABLE>
Actual maturities of bonds and notes will differ from those shown above due
to prepayments and redemptions.
12
<PAGE> 47
FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENTS (CONTINUED)
Gross unrealized gains and losses on bonds and notes available for sale by
major category follow:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED
GAINS LOSSES
---------- -----------
<S> <C> <C>
AT SEPTEMBER 30, 1997:
Securities of the United States Government..... $ 151,000 $ --
Mortgage-backed securities..................... 1,393,000 (71,000)
Securities of public utilities................. 70,000 --
Corporate bonds and notes...................... 2,132,000 (99,000)
Other debt securities.......................... 256,000 (8,000)
---------- -----------
Total available for sale....................... $4,002,000 $ (178,000)
========== ===========
AT SEPTEMBER 30, 1996:
Securities of the United States Government..... $ 55,000 $ (124,000)
Mortgage-backed securities..................... 515,000 (754,000)
Securities of public utilities................. -- (61,000)
Corporate bonds and notes...................... 749,000 (572,000)
Other debt securities.......................... 3,000 (318,000)
---------- -----------
Total available for sale....................... $1,322,000 $(1,829,000)
========== ===========
</TABLE>
At September 30, 1997, gross unrealized gains on equity securities
available for sale aggregated $19,000 and there were no unrealized losses. At
September 30, 1996, gross unrealized gains on equity securities available for
sale aggregated $129,000 and there were no unrealized losses.
Gross realized investment gains and losses on sales of investments are as
follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-----------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
BONDS AND NOTES:
Realized gains..................................... $ 1,163,000 $ 1,039,000 $ 423,000
Realized losses.................................... (863,000) (1,295,000) (1,771,000)
COMMON STOCKS:
Realized gains/losses.............................. 140,000 (112,000) --
IMPAIRMENT WRITEDOWNS................................ (80,000) (171,000) --
----------- ---------- ----------
Total net realized investment gains/losses......... $ 360,000 $ (539,000) $(1,348,000)
=========== ========== ==========
</TABLE>
The sources and related amounts of investment income are as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
---------------------------------------
1997 1996 1995
----------- ---------- ----------
<S> <C> <C> <C>
Short-term investments................................. $ 234,000 $ 390,000 $1,045,000
Bonds and notes........................................ 12,547,000 9,186,000 6,291,000
Mortgage loans......................................... -- 381,000 498,000
----------- ---------- ----------
Total investment income.............................. $12,781,000 $9,957,000 $7,834,000
=========== ========== ==========
</TABLE>
Expenses incurred to manage the investment portfolio amounted to $99,000
for the year ended September 30, 1997, $121,000 for the year ended September 30,
1996, and $125,000 for the year ended September 30, 1995 and are included in
General and Administrative Expenses in the income statement.
13
<PAGE> 48
FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENTS (CONTINUED)
The carrying values of investments in any one entity or its affiliates
exceeding 10% of the Company's shareholder's equity at September 30, 1997 are as
follows:
<TABLE>
<S> <C>
Bonds and notes:
Lockheed Martin Corp.......................................... $4,078,000
Nabisco Inc................................................... 4,061,000
PacificCorp................................................... 3,033,000
==========
</TABLE>
At September 30, 1997, bonds and notes included $13,082,000 (fair value of
$13,969,000) of bonds and notes not rated investment grade. The Company had no
material concentrations of non-investment-grade assets at September 30, 1997.
At September 30, 1997, there were no investments in default as to the
payment of principal or interest.
At September 30, 1997, $518,000 of bonds, at amortized cost, were on
deposit with regulatory authorities in accordance with statutory requirements.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following estimated fair value disclosures are limited to reasonable
estimates of the fair value of only the Company's financial instruments. The
disclosures do not address the value of the Company's recognized and
unrecognized nonfinancial assets and liabilities or the value of anticipated
future business. The Company does not plan to sell most of its assets or settle
most of its liabilities at these estimated fair values.
The fair value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than in a forced or liquidation sale. Selling expenses and potential taxes
are not included. The estimated fair value amounts were determined using
available market information, current pricing information and various valuation
methodologies. If quoted market prices were not readily available for a
financial instrument, management determined an estimated fair value.
Accordingly, the estimates may not be indicative of the amounts the financial
instruments could be exchanged for in a current or future market transaction.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
CASH AND SHORT-TERM INVESTMENTS: Carrying value is considered to be a
reasonable estimate of fair value.
BONDS AND NOTES: Fair value is based principally on independent pricing
services, broker quotes and other independent information.
COMMON STOCKS: Fair value is based principally on independent pricing
services, broker quotes and other independent information.
VARIABLE ANNUITY ASSETS: Variable annuity assets are carried at the market
value of the underlying securities.
RESERVES FOR FIXED ANNUITY CONTRACTS: Deferred annuity contracts are
assigned a fair value equal to current net surrender value. Annuitized contracts
are valued based on the present value of future cash flows at current pricing
rates.
14
<PAGE> 49
FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
4. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
PAYABLE TO BROKERS FOR PURCHASES OF SECURITIES: Such obligations represent
net transactions of a short-term nature for which the carrying value is
considered a reasonable estimate of fair value.
VARIABLE ANNUITY LIABILITIES: Fair values of contracts in the accumulation
phase are based on net surrender values. Fair values of contracts in the payout
phase are based on the present value of future cash flows at assumed investment
rates.
The estimated fair values of the Company's financial instruments at
September 30, 1997 and 1996, compared with their respective carrying values, are
as follows:
<TABLE>
<CAPTION>
CARRYING FAIR
VALUE VALUE
------------ ------------
<S> <C> <C>
1997:
ASSETS:
Cash and short-term investments............................. $ 1,689,000 $ 1,689,000
Bonds and notes............................................. 188,533,000 188,533,000
Common stocks............................................... 19,000 19,000
Variable annuity assets..................................... 171,475,000 171,475,000
LIABILITIES:
Reserves for fixed annuity contracts........................ 180,805,000 171,809,000
Payable to brokers for purchases of securities.............. 1,010,000 1,010,000
Variable annuity liabilities................................ 171,475,000 163,045,000
============ ============
1996:
ASSETS:
Cash and short-term investments............................. $ 6,707,000 $ 6,707,000
Bonds and notes............................................. 146,401,000 146,401,000
Common stocks............................................... 129,000 129,000
Variable annuity assets..................................... 68,901,000 68,901,000
LIABILITIES:
Reserves for fixed annuity contracts........................ 140,613,000 134,479,000
Payable to brokers for purchases of securities.............. 1,939,000 1,939,000
Variable annuity liabilities................................ 68,901,000 65,546,000
============ ============
</TABLE>
5. CONTINGENT LIABILITIES
The Company is involved in various kinds of litigation common to its
business. These cases are in various stages of development and, based on reports
of counsel, management believes that provisions made for potential losses
relating to such litigation are adequate and any further liabilities and costs
will not have a material adverse impact upon the Company's financial position or
results of operations.
6. SHAREHOLDER'S EQUITY
The Company is authorized to issue 300 shares of its $10,000 par value
Common Stock. At September 30, 1997 and 1996, 300 shares were outstanding.
15
<PAGE> 50
FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
6. SHAREHOLDER'S EQUITY (CONTINUED)
Changes in shareholder's equity are as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-----------------------------------------
1997 1996 1995
---------- ---------- -----------
<S> <C> <C> <C>
RETAINED EARNINGS:
Beginning balance................................ $5,973,000 $5,250,000 $ 4,727,000
Net income....................................... 1,123,000 723,000 523,000
---------- ---------- -----------
Ending balance................................... $7,096,000 $5,973,000 $ 5,250,000
========== ========== ===========
NET UNREALIZED GAINS/LOSSES ON DEBT AND EQUITY
SECURITIES AVAILABLE FOR SALE:
Beginning balance............................. $ (181,000) $ (860,000) $(2,340,000)
Change in net unrealized gains/losses on debt
securities available for sale............... 4,331,000 939,000 4,254,000
Change in net unrealized gains/losses on
equity securities available for sale........ (110,000) 206,000 (77,000)
Change in adjustment to deferred acquisition
costs....................................... (2,500,000) (100,000) (1,900,000)
Tax effect of net changes..................... (602,000) (366,000) (797,000)
---------- ---------- -----------
Ending balance................................... $ 938,000 $ (181,000) $ (860,000)
========== ========== ===========
</TABLE>
For a life insurance company domiciled in the State of New York, no
dividend may be distributed to any shareholder unless notice of the domestic
insurer's intention to declare such dividend and the amount have been filed with
the Superintendent of Insurance not less than 30 days in advance of such
proposed declaration, or if the Superintendent disapproves the distribution of
the dividend within the 30-day period. No dividends were paid in fiscal years
1997, 1996 or 1995.
Under statutory accounting principles utilized in filings with insurance
regulatory authorities, the Company's net income for the nine months ended
September 30, 1997 was $7,000. The statutory net loss for the year ended
December 31, 1996 was $450,000 and the statutory net loss for the year ended
December 31, 1995 was $2,083,000. The Company's statutory capital and surplus
was $12,696,000 at September 30, 1997, $13,126,000 at December 31, 1996 and
$13,862,000 at December 31, 1995.
16
<PAGE> 51
FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
7. INCOME TAXES
The components of the provisions for income taxes on pretax income consist
of the following:
<TABLE>
<CAPTION>
NET REALIZED
INVESTMENT
GAINS (LOSSES) OPERATIONS TOTAL
-------------- ---------- ----------
<S> <C> <C> <C>
1997:
Currently payable...................................... $ 88,000 $ 955,000 $1,043,000
Deferred............................................... 60,000 (176,000) (116,000)
--------- --------- ---------
Total income tax expense............................... $ 148,000 $ 779,000 $ 927,000
========= ========= =========
1996:
Currently payable...................................... $ (121,000) $ (171,000) $ (292,000)
Deferred............................................... (105,000) 845,000 740,000
--------- --------- ---------
Total income tax expense............................... $ (226,000) $ 674,000 $ 448,000
========= ========= =========
1995:
Currently payable...................................... $ (592,000) $ 441,000 $ (151,000)
Deferred............................................... (28,000) 361,000 333,000
--------- --------- ---------
Total income tax expense............................... $ (620,000) $ 802,000 $ 182,000
========= ========= =========
</TABLE>
Income taxes computed at the United States federal income tax rate of 35%
and income taxes provided differ as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
----------------------------------------
1997 1996 1995
-------------- ---------- ----------
<S> <C> <C> <C>
Amount computed at statutory rate...................... $ 718,000 $ 410,000 $ 247,000
Increases (decreases) resulting from:
Amortization of differences between book and tax
bases of net assets acquired...................... 20,000 20,000 20,000
State income taxes, net of federal tax benefit....... 200,000 25,000 (86,000)
Other, net........................................... (11,000) (7,000) 1,000
--------- --------- ---------
Total income tax expense............................... $ 927,000 $ 448,000 $ 182,000
========= ========= =========
</TABLE>
17
<PAGE> 52
FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
7. INCOME TAXES (CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax reporting purposes. The significant
components of the liability for Deferred Income Taxes are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
DEFERRED TAX LIABILITIES:
Investments..................................................... $ 153,000 $ 225,000
Deferred acquisition costs...................................... 6,191,000 3,902,000
Net unrealized gains on debt and equity securities available for
sale.......................................................... 505,000 --
Other liabilities............................................... 75,000 84,000
----------- -----------
Total deferred tax liabilities........................ 6,924,000 4,211,000
----------- -----------
DEFERRED TAX ASSETS:
Contractholder reserves......................................... (4,898,000) (2,582,000)
State income taxes.............................................. (79,000) (79,000)
Net unrealized losses on debt and equity securities available
for sale...................................................... -- (97,000)
Other assets.................................................... (111,000) (103,000)
----------- -----------
Total deferred tax assets............................. (5,088,000) (2,861,000)
----------- -----------
Deferred income taxes........................................... $ 1,836,000 $ 1,350,000
=========== ===========
</TABLE>
8. RELATED PARTY MATTERS
The Company pays commissions to three affiliated companies, SunAmerica
Securities, Inc., Advantage Capital Corp. and Royal Alliance Associates, Inc.
These broker-dealers represent a significant portion of the Company's business,
amounting to approximately 57.1%, 57.9% and 31.2% of premiums in 1997, 1996 and
1995, respectively. Commissions paid to these broker-dealers totaled $4,486,000
in 1997, $2,646,000 in 1996, and $761,000 in 1995. No single unaffiliated
broker-dealer was responsible for more than 13% of total sales in the years
ended September 30, 1997, 1996, and 1995.
The Company paid occupancy and office services expenses to Royal Alliance
Associates, Inc. totaling $15,000 for the year ended September 30, 1996 and
$113,000 for the year ended September 30, 1995. The Company paid no such charges
in the year ended September 30, 1997.
The Company purchases administrative, investment management, accounting,
marketing and data processing services from SunAmerica Financial, Inc., whose
purpose is to provide services to the SunAmerica companies. Amounts paid for
such services totaled $2,454,000 for the year ended September 30, 1997,
$2,097,000 for the year ended September 30, 1996 and $722,000 for the year ended
September 30, 1995. Such amounts are included in General and Administrative
Expenses in the Income Statement.
9. SUBSEQUENT EVENTS
On October 31, 1997, the Company merged with John Alden Life Insurance
Company of New York, an affiliate, which had approximately $1,375,000,000 of
annuity reserves at September 30, 1997.
18
<PAGE> 53
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
FINANCIAL STATEMENTS
DECEMBER 31, 1996
19
<PAGE> 54
REPORT OF INDEPENDENT ACCOUNTANTS
February 14, 1997
To the Board of Directors of First SunAmerica Life Insurance Company
and the Contractholders of its separate account, Variable Annuity Account One
In our opinion, the accompanying statement of net assets, including the
schedule of portfolio investments, and the related statements of
operations and of changes in net assets present fairly, in all material
respects, the financial position of each of the Variable Accounts
constituting Variable Annuity Account One, a separate account of First
SunAmerica Life Insurance Company (the "Separate Account") at December
31, 1996, the results of their operations for the year then ended, and
the changes in their net assets for each of the two years in the period
then ended, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Separate Account's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities owned at
December 31, 1996 by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.
20
<PAGE> 55
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS
December 31, 1996
<TABLE>
<CAPTION>
Foreign Capital Natural
Securities Appreciation Growth Resources
Portfolio Portfolio Portfolio Portfolio
----------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $1,175,132 $3,766,018 $4,114,793 $ 413,759
Liabilities 0 0 0 0
----------------------------------------------------------
Net Assets $1,175,132 $3,766,018 $4,114,793 $ 413,759
==========================================================
Accumulation units outstanding 81,476 106,421 97,902 21,096
==========================================================
Unit value of accumulation units $ 14.43 $ 35.39 $ 42.03 $ 19.61
==========================================================
</TABLE>
<TABLE>
<CAPTION>
Growth and Strategic
Income Multi-Asset Multi-Asset
Portfolio Portfolio Portfolio
------------------------------------------
<S> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $1,124,214 $ 716,205 $3,890,174
Liabilities 0 0 0
------------------------------------------
Net Assets $1,124,214 $ 716,205 $3,890,174
==========================================
Accumulation units outstanding 49,540 34,452 171,566
==========================================
Unit value of accumulation units $ 22.69 $ 20.78 $ 22.67
==========================================
</TABLE>
See accompanying notes to financial tatements.
21
<PAGE> 56
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS
December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Government and
High Yield Target '98 Fixed Income Quality Bond
Portfolio Portfolio Portfolio Portfolio
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 989,621 $ 575,039 $ 414,823 $ 2,437,322
Liabilities 0 0 0 0
----------------------------------------------------------------
Net Assets $ 989,621 $ 575,039 $ 414,823 $ 2,437,322
================================================================
Accumulation units outstanding 42,707 30,036 16,119 90,313
================================================================
Unit value of accumulation units $ 23.17 $ 19.15 $ 25.73 $ 26.99
================================================================
</TABLE>
<TABLE>
<CAPTION>
Money
Market
Portfolio TOTAL
--------------------------------
<S> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 209,941 $19,827,041
Liabilities 0 0
--------------------------------
Net Assets $ 209,941 $19,827,041
================================
Accumulation units outstanding 12,090
================================
Unit value of accumulation units $ 17.36
================================
</TABLE>
See accompanying notes to financial tatements.
22
<PAGE> 57
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1996
<TABLE>
<CAPTION>
Market Value Market
Variable Accounts Shares Per Share Value Cost
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Foreign Securities Portfolio 90,801 $12.94 $ 1,175,132 $ 968,412
Capital Appreciation Portfolio 134,509 28.00 3,766,018 2,771,584
Growth Portfolio 177,402 23.19 4,114,793 3,620,981
Natural Resources Portfolio 24,532 16.87 413,759 359,110
Growth and Income Portfolio 82,734 13.59 1,124,214 1,075,009
Strategic Multi-Asset Portfolio 58,702 12.20 716,205 731,310
Multi-Asset Portfolio 291,399 13.35 3,890,174 3,838,180
High Yield Portfolio 118,056 8.38 989,621 1,005,618
Target '98 Portfolio 49,270 11.67 575,039 643,106
Fixed Income Portfolio 31,182 13.30 414,823 435,533
Government and Quality Bond Portfolio 178,285 13.67 2,437,322 2,485,645
Money Market Portfolio 209,941 1.00 209,941 209,941
------------------------------
$19,827,041 $18,144,429
==============================
</TABLE>
See accompanying notes to financial statements.
23
<PAGE> 58
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
December 31, 1996
<TABLE>
<CAPTION>
Foreign Capital Natural
Securities Appreciation Growth Resources
Portfolio Portfolio Portfolio Portfolio
-------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 21,109 $ 145,850 $ 191,089 $ 8,915
-------------------------------------------------------
Total investment income 21,109 145,850 191,089 8,915
-------------------------------------------------------
Expenses:
Mortality risk charge (13,287) (35,184) (40,209) (3,659)
Expense risk charge (5,167) (13,683) (15,637) (1,423)
Administrative expense charge (2,214) (5,864) (6,701) (610)
-------------------------------------------------------
Total expenses (20,668) (54,731) (62,547) (5,692)
-------------------------------------------------------
Net investment income 441 91,119 128,542 3,223
-------------------------------------------------------
Net realized gains (losses) from securities transactions:
Proceeds from shares sold 792,066 1,711,587 2,065,387 169,085
Cost of shares sold (669,886) (1,273,607) (1,974,485) (151,212)
-------------------------------------------------------
Net realized gains (losses) from securities transactions 122,180 437,980 90,902 17,873
-------------------------------------------------------
Net unrealized appreciation (depreciation) of investments:
Beginning of period 187,767 718,529 (209,961) 31,827
End of period 206,720 994,434 493,812 54,649
-------------------------------------------------------
Change in net unrealized appreciation/depreciation
of investments 18,953 275,905 703,773 22,822
-------------------------------------------------------
Increase (decrease) in net assets from operations $141,574 $ 805,004 $ 923,217 $ 43,918
=======================================================
</TABLE>
<TABLE>
<CAPTION>
Growth and Strategic
Income Multi-Asset Multi-Asset
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 64,674 $ 95,910 $ 398,266
-----------------------------------------
Total investment income 64,674 95,910 398,266
-----------------------------------------
Expenses:
Mortality risk charge (10,320) (9,055) (38,373)
Expense risk charge (4,013) (3,522) (14,923)
Administrative expense charge (1,720) (1,509) (6,396)
-----------------------------------------
Total expenses (16,053) (14,086) (59,692)
-----------------------------------------
Net investment income 48,621 81,824 338,574
-----------------------------------------
Net realized gains (losses) from securities transactions:
Proceeds from shares sold 382,113 698,937 1,710,461
Cost of shares sold (381,764) (722,445) (1,704,286)
-----------------------------------------
Net realized gains (losses) from securities transactions 349 (23,508) 6,175
-----------------------------------------
Net unrealized appreciation (depreciation) of investments:
Beginning of period (100,197) (81,109) (85,064)
End of period 49,205 (15,105) 51,994
-----------------------------------------
Change in net unrealized appreciation/depreciation
of investments 149,402 66,004 137,058
-----------------------------------------
Increase (decrease) in net assets from operations $198,372 $124,320 $ 481,807
=======================================
</TABLE>
See accompanying notes to financial statements.
24
<PAGE> 59
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
December 31, 1996
(Continued)
<TABLE>
<CAPTION>
High Yield Target '98 Fixed Income
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 117,358 $ 77,056 $ 40,164
--------------------------------------------------
Total investment income 117,358 77,056 40,164
--------------------------------------------------
Expenses:
Mortality risk charge (11,171) (8,026) (5,761)
Expense risk charge (4,345) (3,122) (2,241)
Administrative expense charge (1,862) (1,338) (960)
--------------------------------------------------
Total expenses (17,378) (12,486) (8,962)
--------------------------------------------------
Net investment income 99,980 64,570 31,202
--------------------------------------------------
Net realized gains (losses) from securities transactions:
Proceeds from shares sold 660,171 766,464 667,604
Cost of shares sold (672,011) (814,655) (693,906)
--------------------------------------------------
Net realized gains (losses) from securities transactions (11,840) (48,191) (26,302)
--------------------------------------------------
Net unrealized appreciation (depreciation) of investments:
Beginning of period (43,117) (67,230) (6,560)
End of period (15,997) (68,067) (20,710)
--------------------------------------------------
Change in net unrealized appreciation/depreciation
of investments 27,120 (837) (14,150)
--------------------------------------------------
Increase (decrease) in net assets from operations $ 115,260 $ 15,542 $ (9,250)
==================================================
</TABLE>
<TABLE>
<CAPTION>
Government and Money
Quality Bond Market
Portfolio Portfolio TOTAL
<S> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 181,645 $ 17,597 $ 1,359,633
--------------------------------------------------
Total investment income 181,645 17,597 1,359,633
--------------------------------------------------
Expenses:
Mortality risk charge (28,625) (3,237) (206,907)
Expense risk charge (11,132) (1,259) (80,467)
Administrative expense charge (4,771) (539) (34,484)
--------------------------------------------------
Total expenses (44,528) (5,035) (321,858)
--------------------------------------------------
Net investment income 137,117 12,562 1,037,775
--------------------------------------------------
Net realized gains (losses) from securities transactions:
Proceeds from shares sold 1,730,405 454,716 11,808,996
Cost of shares sold (1,747,243) (454,716) (11,260,216)
--------------------------------------------------
Net realized gains (losses) from securities transactions (16,838) 0 548,780
--------------------------------------------------
Net unrealized appreciation (depreciation) of investments
Beginning of period 62,622 0 407,507
End of period (48,323) 0 1,682,612
--------------------------------------------------
Change in net unrealized appreciation/depreciation
of investments (110,945) 0 1,275,105
--------------------------------------------------
Increase (decrease) in net assets from operations $ 9,334 $ 12,562 $ 2,861,660
==================================================
</TABLE>
See accompanying notes to financial statements.
25
<PAGE> 60
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
December 31, 1996
<TABLE>
<CAPTION>
Foreign Capital Natural
Securities Appreciation Growth Resources
Portfolio Portfolio Portfolio Portfolio
------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 441 $ 91,119 $ 128,542 $ 3,223
Net realized gains (losses) from securities transactions 122,180 437,980 90,902 17,873
Change in net unrealized appreciation/depreciation
of investments 18,953 275,905 703,773 22,822
------------------------------------------------------------
Increase (decrease) in net assets from operations 141,574 805,004 923,217 43,918
------------------------------------------------------------
From capital transactions:
Net proceeds from units sold 72,656 40,997 82,593 31,742
Cost of units redeemed (785,878) (1,582,302) (1,906,002) (124,789)
Net transfers 33,284 725,436 23,348 61,808
------------------------------------------------------------
Decrease in net assets from capital transactions (679,938) (815,869) (1,800,061) (31,239)
------------------------------------------------------------
Increase (decrease) in net assets (538,364) (10,865) (876,844) 12,679
Net assets at beginning of period 1,713,496 3,776,883 4,991,637 401,080
------------------------------------------------------------
Net assets at end of period $1,175,132 $ 3,766,018 $4,114,793 $ 413,759
===========================================================
ANALYSIS OF INCREASE (DECREASE) IN UNITS
OUTSTANDING:
Units sold 5,285 1,221 2,340 1,647
Units redeemed (56,705) (48,122) (51,274) (6,689)
Units transferred 2,371 21,634 352 3,133
------------------------------------------------------------
Decrease in units outstanding (49,049) (25,267) (48,582) (1,909)
Beginning units 130,525 131,688 146,484 23,005
------------------------------------------------------------
Ending units 81,476 106,421 97,902 21,096
===========================================================
</TABLE>
<TABLE>
<CAPTION>
Growth and Strategic
Income Multi-Asset Multi-Asset
Portfolio Portfolio Portfolio
-----------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 48,621 $ 81,824 $ 338,574
Net realized gains (losses) from securities transactions 349 (23,508) 6,175
Change in net unrealized appreciation/depreciation
of investments 149,402 66,004 137,058
-----------------------------------------
Increase (decrease) in net assets from operations 198,372 124,320 481,807
-----------------------------------------
From capital transactions:
Net proceeds from units sold 19,997 38,541 53,194
Cost of units redeemed (344,238) (518,547) (1,599,522)
Net transfers 117,567 46,676 78,687
-----------------------------------------
Decrease in net assets from capital transactions (206,674) (433,330) (1,467,641)
-----------------------------------------
Increase (decrease) in net assets (8,302) (309,010) (985,834)
Net assets at beginning of period 1,132,516 1,025,215 4,876,008
-----------------------------------------
Net assets at end of period $1,124,214 $ 716,205 $3,890,174
=========================================
ANALYSIS OF INCREASE (DECREASE) IN UNITS
OUTSTANDING:
Units sold 938 2,013 2,654
Units redeemed (16,332) (25,718) (76,228)
Units transferred 5,814 2,302 3,690
--------------------------------------------
Decrease in units outstanding (9,580) (21,403) (69,884)
Beginning units 59,120 55,855 241,450
--------------------------------------------
Ending units 49,540 34,452 171,566
============================================
</TABLE>
See accompanying notes to financial statements.
26
<PAGE> 61
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Government and
High Yield Target '98 Fixed Income Quality Bond
Portfolio Portfolio Portfolio Portfolio
----------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 99,980 $ 64,570 $ 31,202 $ 137,117
Net realized gains (losses) from securities transactions (11,840) (48,191) (26,302) (16,838)
Change in net unrealized appreciation/depreciation
of investments 27,120 (837) (14,150) (110,945)
----------------------------------------------------------
Increase (decrease) in net assets from operations 115,260 15,542 (9,250) 9,334
----------------------------------------------------------
From capital transactions:
Net proceeds from units sold 5,521 1,644 11,333 9,313
Cost of units redeemed (626,641) (671,884) (414,860) (1,267,417)
Net transfers 129,591 79,032 (92,348) (252,913)
----------------------------------------------------------
Decrease in net assets from capital transactions (491,529) (591,208) (495,875) (1,511,017)
----------------------------------------------------------
Increase (decrease) in net assets (376,269) (575,666) (505,125) (1,501,683)
Net assets at beginning of period 1,365,890 1,150,705 919,948 3,939,005
----------------------------------------------------------
Net assets at end of period $ 989,621 $ 575,039 $ 414,823 $2,437,322
==========================================================
ANALYSIS OF INCREASE (DECREASE) IN UNITS
OUTSTANDING:
Units sold 311 61 429 323
Units redeemed (28,513) (35,739) (16,587) (48,405)
Units transferred 5,979 4,250 (3,847) (9,706)
----------------------------------------------------------
Decrease in units outstanding (22,223) (31,428) (20,005) (57,788)
Beginning units 64,930 61,464 36,124 148,101
----------------------------------------------------------
Ending units 42,707 30,036 16,119 90,313
==========================================================
</TABLE>
<TABLE>
<CAPTION>
Money
Market
Portfolio TOTAL
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations: $ 12,562 $ 1,037,775
Net investment income 0 548,780
Net realized gains (losses) from securities transactions
Change in net unrealized appreciation/depreciation 0 1,275,105
of investments --------------------------
12,562 2,861,660
Increase (decrease) in net assets from operations --------------------------
From capital transactions: 167 367,698
Net proceeds from units sold (198,089) (10,040,169)
Cost of units redeemed (95,011) 855,157
Net transfers --------------------------
(292,933) (8,817,314)
Decrease in net assets from capital transactions --------------------------
(280,371) (5,955,654)
Increase (decrease) in net assets 490,312 25,782,695
Net assets at beginning of period --------------------------
$ 209,941 $ 19,827,041
Net assets at end of period ==========================
ANALYSIS OF INCREASE (DECREASE) IN UNITS
OUTSTANDING: 30
Units sold (11,580)
Units redeemed (5,601)
Units transferred ----------
(17,151)
Decrease in units outstanding 29,241
Beginning units ----------
12,090
Ending units ==========
</TABLE>
See accompanying notes to financial statements.
27
<PAGE> 62
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
December 31, 1995
<TABLE>
<CAPTION>
Foreign Capital
Securities Appreciation Growth
Portfolio Portfolio Portfolio
--------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ (15,211) $ 7,964 $ 729,239
Net realized gains (losses) from securities transactions 29,210 78,887 (32,402)
Change in net unrealized appreciation/depreciation
of investments 175,250 933,407 399,144
--------------------------------------------------------
Increase in net assets from operations 189,249 1,020,258 1,095,981
--------------------------------------------------------
From capital transactions:
Net proceeds from units sold 23,722 108,878 95,285
Cost of units redeemed (381,388) (565,025) (730,635)
Net transfers (74,677) (405,952) (143,399)
--------------------------------------------------------
Increase (decrease) in net assets from capital transactions (432,343) (862,099) (778,749)
--------------------------------------------------------
Increase (decrease) in net assets (243,094) 158,159 317,232
Net assets at beginning of period 1,956,590 3,618,724 4,674,405
--------------------------------------------------------
Net assets at end of period $ 1,713,496 $ 3,776,883 $ 4,991,637
========================================================
ANALYSIS OF INCREASE (DECREASE) IN UNITS
OUTSTANDING:
Units sold 1,955 4,288 3,093
Units redeemed (30,745) (23,995) (22,813)
Units transferred (6,153) (15,989) (4,655)
--------------------------------------------------------
Increase (decrease) in units outstanding (34,943) (35,696) (24,375)
Beginning units 165,468 167,384 170,859
--------------------------------------------------------
Ending units 130,525 131,688 146,484
========================================================
</TABLE>
<TABLE>
<CAPTION>
Natural Convertible Strategic
Resources Securities Multi-Asset Multi-Asset
Portfolio Portfolio Portfolio Portfolio
----------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 8,121 $ 122,457 $ 154,426 $ 500,751
Net realized gains (losses) from securities transactions 4,836 (40,521) (39,213) (39,975)
Change in net unrealized appreciation/depreciation
of investments 46,598 82,047 94,730 584,478
----------------------------------------------------------
Increase in net assets from operations 59,555 163,983 209,943 1,045,254
----------------------------------------------------------
From capital transactions:
Net proceeds from units sold 20,164 24,270 19,142 70,884
Cost of units redeemed (140,816) (233,872) (221,790) (882,866)
Net transfers (186,152) 14,511 (158,795) (70,567)
----------------------------------------------------------
Increase (decrease) in net assets from capital transactions (306,804) (195,091) (361,443) (882,549)
----------------------------------------------------------
Increase (decrease) in net assets (247,249) (31,108) (151,500) 162,705
Net assets at beginning of period 648,329 1,163,624 1,176,715 4,713,303
----------------------------------------------------------
Net assets at end of period $ 401,080 $ 1,132,516 $ 1,025,215 $ 4,876,008
==========================================================
ANALYSIS OF INCREASE (DECREASE) IN UNITS
OUTSTANDING:
Units sold 1,232 1,355 1,145 3,848
Units redeemed (8,606) (12,863) (13,408) (46,193)
Units transferred (12,696) 810 (9,498) (3,830)
----------------------------------------------------------
Increase (decrease) in units outstanding (20,070) (10,698) (21,761) (46,175)
Beginning units 43,075 69,818 77,616 287,625
----------------------------------------------------------
Ending units 23,005 59,120 55,855 241,450
===========================================================
</TABLE>
See accompanying notes to financial statements.
28
<PAGE> 63
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
December 31, 1995
(Continued)
<TABLE>
<CAPTION>
Government and
High Yield Target '98 Fixed Income
Portfolio Portfolio Portfolio
--------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 132,254 $ 91,858 $ 69,986
Net realized gains (losses) from securities transactions (22,928) (11,685) (13,387)
Change in net unrealized appreciation/depreciation
of investments 107,285 56,281 130,778
--------------------------------------------------
Increase in net assets from operations 216,611 136,454 187,377
--------------------------------------------------
From capital transactions:
Net proceeds from units sold 27,610 982 16,991
Cost of units redeemed (271,101) (141,382) (506,734)
Net transfers (53,225) 131,987 (609)
--------------------------------------------------
Increase (decrease) in net assets from capital transactions (296,716) (8,413) (490,352)
--------------------------------------------------
Increase (decrease) in net assets (80,105) 128,041 (302,975)
Net assets at beginning of period 1,445,995 1,022,664 1,222,923
--------------------------------------------------
Net assets at end of period $ 1,365,890 $ 1,150,705 $ 919,948
==================================================
ANALYSIS OF INCREASE (DECREASE) IN UNITS
OUTSTANDING:
Units sold 1,412 55 719
Units redeemed (14,247) (7,742) (20,999)
Units transferred (2,721) 7,418 (26)
--------------------------------------------------
Increase (decrease) in units outstanding (15,556) (269) (20,306)
Beginning units 80,486 61,733 56,430
--------------------------------------------------
Ending units 64,930 61,464 36,124
==================================================
</TABLE>
<TABLE>
<CAPTION>
Money
Quality Bond Market
Portfolio Portfolio TOTAL
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 237,252 $ 31,912 $ 2,071,009
Net realized gains (losses) from securities transactions (11,401) 0 (98,579)
Change in net unrealized appreciation/depreciation
of investments 431,227 0 3,041,225
--------------------------------------------------
Increase in net assets from operations 657,078 31,912 5,013,655
--------------------------------------------------
From capital transactions:
Net proceeds from units sold 30,918 64,034 502,880
Cost of units redeemed (508,459) (1,013,590) (5,597,658)
Net transfers (228,308) 1,157,365 (17,821)
--------------------------------------------------
Increase (decrease) in net assets from capital transactions (705,849) 207,809 (5,112,599)
--------------------------------------------------
Increase (decrease) in net assets (48,771) 239,721 (98,944)
Net assets at beginning of period 3,987,776 250,591 25,881,639
--------------------------------------------------
Net assets at end of period $ 3,939,005 $ 490,312 $ 25,782,695
==================================================
ANALYSIS OF INCREASE (DECREASE) IN UNITS
OUTSTANDING:
Units sold 1,251 3,896
Units redeemed (20,400) (60,633)
Units transferred (9,240) 70,418
-------------------------------
Increase (decrease) in units outstanding (28,389) 13,681
Beginning units 176,490 15,560
-------------------------------
Ending units 148,101 29,241
===============================
</TABLE>
See accompanying notes to financial statements.
29
<PAGE> 64
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Variable Annuity Account One of First SunAmerica Life Insurance Company
(the "Separate Account") is a segregated investment account of First
SunAmerica Life Insurance Company (the "Company"). The Company is an
indirect, wholly owned subsidiary of SunAmerica Inc. The Separate
Account is registered as a segregated unit investment trust pursuant to
the provisions of the Investment Company Act of 1940, as amended.
The Separate Account is composed of twelve variable portfolios (the
"Variable Accounts"). Each of the Variable Accounts is invested solely
in the shares of a designated portfolio of the Anchor Series Trust (the
"Trust"). The Trust is a diversified, open-end, affiliated investment
company, which retains an investment advisor to assist in the
investment activities of the Trust. The contractholder may elect to
have payments allocated to a guaranteed-interest fund of the Company
(the "General Account"), which is not a part of the Separate Account.
The financial statements include balances allocated by the
contractholder to the twelve Variable Accounts and do not include
balances allocated to the General Account.
The investment objectives and policies of the twelve portfolios of the
Trust are summarized below:
The FOREIGN SECURITIES PORTFOLIO seeks long-term capital appreciation.
This portfolio invests primarily in a diversified group of equity
securities issued by foreign companies and primarily denominated in
foreign currencies.
The CAPITAL APPRECIATION PORTFOLIO seeks long-term capital
appreciation. This portfolio invests in growth equity securities which
are widely diversified by industry and company and may engage in
transactions involving stock index futures and options thereon as a
hedge against changes in market conditions.
The GROWTH PORTFOLIO seeks long-term capital appreciation. This
portfolio invests in growth equity securities and may engage in
transactions involving stock index futures and options thereon as a
hedge against changes in market conditions.
30
<PAGE> 65
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The NATURAL RESOURCES PORTFOLIO seeks a total return in excess of the
U.S. rate of inflation as represented by the Consumer Price Index. This
portfolio invests primarily in equity securities of U.S. or foreign
companies which are expected to provide favorable returns in periods of
rising inflation.
The GROWTH AND INCOME PORTFOLIO (formerly the Convertible Securities
Portfolio) seeks to provide high current income and long-term capital
appreciation. This portfolio invests primarily in securities that
provide the potential for growth and offer income, such as
dividend-paying stocks and securities convertible into common stock.
This portfolio may also engage in transactions involving stock index
futures and options thereon as a hedge against changes in market
conditions.
The STRATEGIC MULTI-ASSET PORTFOLIO seeks high long-term total
investment return. This portfolio invests in growth equity securities,
aggressive growth equity securities, investment grade bonds,
high-yield, high-risk bonds, international equity securities and money
market instruments. This portfolio may also engage in transactions
involving stock index futures contracts and options thereon, and
transactions involving the future delivery of fixed-income securities
("Financial Futures Contracts") and options thereon as a hedge against
changes in market conditions.
The MULTI-ASSET PORTFOLIO seeks long-term total investment return
consistent with moderate investment risk. This portfolio invests in
growth equity securities, convertible securities, investment grade
fixed-income securities and money market securities. This portfolio may
also engage in transactions involving stock index futures contracts and
options thereon, and Financial Futures Contracts and options thereon as
a hedge against changes in market conditions.
The HIGH YIELD PORTFOLIO seeks high current income. A secondary
investment objective is capital appreciation. This portfolio invests at
least 65% of its assets in high-yielding, high-risk, income-producing
corporate bonds, which generally carry ratings lower than those
assigned to investment grade bonds by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Corporation ("S&P"), or which are
unrated. This portfolio may also engage in transactions involving
Financial Futures Contracts and options thereon as a hedge against
changes in market conditions.
31
<PAGE> 66
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The TARGET '98 PORTFOLIO seeks a predictable compounded investment
return for the specified time period, consistent with preservation of
capital. This portfolio invests primarily in zero coupon securities and
current, interest-bearing, investment grade debt obligations which are
issued by the U.S. Government, its agencies and instrumentalities, and
both domestic and foreign corporations.
The FIXED INCOME PORTFOLIO seeks a high level of current income
consistent with preservation of capital. This portfolio invests
primarily in investment grade, fixed-income securities and may engage
in Financial Futures Contracts and options thereon as a hedge against
changes in market conditions.
The GOVERNMENT AND QUALITY BOND PORTFOLIO seeks relatively high current
income, liquidity and security of principal. This portfolio invests in
obligations issued, guaranteed or insured by the U.S. Government, its
agencies or instrumentalities and in corporate debt securities rated Aa
or better by Moody's or AA or better by S&P.
The MONEY MARKET PORTFOLIO seeks current income consistent with
stability of principal through investment in a diversified portfolio of
money market instruments maturing in 397 days or less. The portfolio
will maintain a dollar-weighted average portfolio maturity of not more
than 90 days.
Purchases and sales of shares of the portfolios of the Trust are valued
at the net asset values of the shares on the date the shares are
purchased or sold. Dividends and capital gains distributions are
recorded when received. Realized gains and losses on the sale of
investments in the Trust are recognized at the date of sale and are
determined on an average cost basis.
Accumulation unit values are computed daily based on the total net
assets of the Variable Accounts.
32
<PAGE> 67
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
2. CHARGES AND DEDUCTIONS
Charges and deductions are applied against the current value of the
Separate Account and are paid as follows:
WITHDRAWAL CHARGE: The contract value may be withdrawn at any time
during the accumulation period. There is a free withdrawal amount for
the first withdrawal during a contract year after the first contract
year. The free withdrawal amount is equal to 10% of aggregate purchase
payments that remain subject to the withdrawal charge and that have not
previously been withdrawn. Should a withdrawal exceed the free
withdrawal amount, a withdrawal charge, in certain circumstances, is
imposed and paid to the Company.
Withdrawal charges vary in amount depending upon the contribution year
in which the purchase payment being withdrawn was made. The withdrawal
charge is deducted from the remaining contract value so that the actual
reduction in contract value as a result of the withdrawal will be
greater than the withdrawal amount requested and paid. For purposes of
determining the withdrawal charge, withdrawals will be allocated to
purchase payments on a first-in, first-out basis so that all
withdrawals are allocated to purchase payments to which the lowest (if
any) withdrawal charge applies.
Any amount withdrawn which exceeds a free withdrawal may be subject to
a withdrawal charge in accordance with the withdrawal charge table
shown below:
<TABLE>
<CAPTION>
Contribution Applicable Withdrawal
Year Charge Percentage
------------ ---------------------
<S> <C>
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth 1%
Sixth and later 0%
</TABLE>
33
<PAGE> 68
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
2. CHARGES AND DEDUCTIONS (continued)
ANNUITY CHARGE: Contractholders may elect a lump sum payment or one of
three annuity options. Option 1 provides a life income with
installments guaranteed, Option 2 provides a joint and survivor
annuity, and Option 3 provides income for a specified period. No
annuity charge is assessed if Option 1 or Option 2 is elected. If a
contractholder elects Option 3, an annuity charge equal to the
withdrawal charge if the contract were surrendered may be applied. No
annuity charge will be assessed if Option 3 is elected by a beneficiary
under the death benefit.
RECORDS MAINTENANCE CHARGE: An annual records maintenance charge of $30
is charged against each contract, which reimburses the Company for
expenses incurred in establishing and maintaining records relating to a
contract. The records maintenance charge will be assessed on each
anniversary of the issue date of the contract. In the event that a
total surrender of contract value is made, the charge will be assessed
as of the date of surrender without proration.
TRANSFER FEE: A transfer fee of $25 per transaction is assessed on each
transfer of funds in excess of fifteen transactions within a contract
year or if a transfer is made within 30 days of the issue date of the
contract.
MORTALITY AND EXPENSE RISK CHARGE: The Company deducts mortality and
expense risk charges, which total to an annual rate of 1.25% of the net
asset value of each portfolio, computed on a daily basis. The mortality
risk charge is compensation for the mortality risks assumed by the
Company from its contractual obligations to make annuity payments after
the contract has annuitized for the life of the annuitant, to waive the
withdrawal charge in the event of the death of the annuitant and to
provide a death benefit if the annuitant dies prior to the date annuity
payments begin. The expense risk charge is compensation for the risk
assumed by the Company that the cost of administering the contracts
will exceed the amount received from the records maintenance charge and
the administrative expense charge. Both of the charges are guaranteed
by the Company and cannot be increased.
34
<PAGE> 69
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
2. CHARGES AND DEDUCTIONS (continued)
ADMINISTRATIVE EXPENSE CHARGE: The Company deducts an administrative
expense charge at an annual rate of 0.15% of the net asset value of
each portfolio, computed on a daily basis. The administrative expense
charge is designed to cover those expenses which exceed the revenues
from the records maintenance charge.
SEPARATE ACCOUNT INCOME TAXES: The Company currently does not maintain
a provision for taxes, but has reserved the right to establish such a
provision for taxes in the future if it determines, in its sole
discretion, that it will incur a tax as a result of the operation of
the Separate Account.
3. INVESTMENT IN ANCHOR SERIES TRUST
The aggregate cost of the Trust's shares acquired and the aggregate
proceeds from shares sold during the year ended December 31, 1996
consist of the following:
<TABLE>
<CAPTION>
Cost of Shares Proceeds from
Variable Accounts Acquired Shares Sold
----------------- -------------- -------------
<S> <C> <C>
Foreign Securities Portfolio $ 112,569 $ 792,066
Capital Appreciation Portfolio 986,837 1,711,587
Growth Portfolio 393,867 2,065,387
Natural Resources Portfolio 141,069 169,085
Growth and Income Portfolio 224,062 382,113
Strategic Multi-Asset Portfolio 347,431 698,937
Multi-Asset Portfolio 581,393 1,710,461
High Yield Portfolio 268,623 660,171
Target '98 Portfolio 239,824 766,464
Fixed Income Portfolio 202,931 667,604
Government and Quality Bond
Portfolio 356,505 1,730,405
Money Market Portfolio 174,344 454,716
============ =============
</TABLE>
35
<PAGE> 70
VARIABLE ANNUITY ACCOUNT ONE
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
4. FEDERAL INCOME TAXES
The Company qualifies for federal income tax treatment granted to life
insurance companies under subchapter L of the Internal Revenue Service
Code (the "Code"). The operations of the Separate Account are part of
the total operations of the Company and are not taxed separately. The
Separate Account is not treated as a regulated investment company under
the Code.
36
<PAGE> 71
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The following financial statements are included in Part A of the
Registration Statement:
None
The following financial statements are included in Part B of the
Registration Statement:
Financial Statements of First SunAmerica
Life Insurance Company for the fiscal year ended September 30,
1997
Financial Statements of Variable Annuity Account One for the
fiscal year ended December 31, 1996
<TABLE>
<CAPTION>
(b) Exhibits
- ----------------
<S> <C>
(1) Resolutions Establishing Separate Account...... Filed Herewith
(2) Custody Agreements............................. Not Applicable
(3) (a) Distribution Contract...................... Filed Herewith
(b) Form of Selling Agreement.................. Filed Herewith
(4) Variable Annuity Contract...................... Filed Herewith
(5) Application for Contract....................... Filed Herewith
(6) Depositor - Corporate Documents
(a) Certificate of Incorporation............... Filed Herewith
(b) By-Laws.................................... Filed Herewith
(7) Reinsurance Contract........................... Not Applicable
(8) Fund Participation Agreement................... Filed Herewith
(9) Opinion of Counsel............................. Filed Herewith
Consent of Counsel............................. Filed Herewith
(10) Consent of Independent Accountants............. Filed Herewith
(11) Financial Statements Omitted from Item 23...... None
(12) Initial Capitalization Agreement............... Not Applicable
(13) Performance Computations....................... Not Applicable
(14) Diagram and Listing of All Persons Directly
or Indirectly Controlled By or Under Common
Control with First SunAmerica Life Insurance
Company, the Depositor of Registrant........... Filed Herewith
(15) Powers of Attorney............................. Filed Herewith
(27) Financial Data Schedules....................... Not Applicable
</TABLE>
Item 25. Directors and Officers of the Depositor
The officers and directors of First SunAmerica Life Insurance Company
are listed below. Their principal business address is 1 SunAmerica Center, Los
Angeles, California 90067-6022, unless otherwise noted.
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
Eli Broad Chairman, President and
Chief Executive Officer
Jay S. Wintrob Director and Executive Vice
President
David W. Ferguson(1) Director
Thomas A. Harnett(2) Director
Lester Pollack(3) Director
Richard D. Rohr(4) Director
Margery K. Neale (5) Director
Jana W. Greer Director and Senior Vice
President
Peter McMillan Director
</TABLE>
<PAGE> 72
<TABLE>
<S> <C>
James R. Belardi Director and Senior Vice
President
Lorin M. Fife Director, Senior Vice
President, General Counsel
and Assistant Secretary
Susan L. Harris Director, Senior Vice
President and Secretary
Scott L. Robinson Director, Senior Vice
President and Treasurer
James W. Rowan Director and Senior Vice
President
N. Scott Gillis Senior Vice President and
Controller
Edwin R. Reoliquio Senior Vice President and
Chief Actuary
Victor E. Akin Senior Vice President
Keith B. Jones Vice President
Michael Lindquist Vice President
Gregory M. Outcalt Vice President
Scott H. Richland Vice President and
Assistant Treasurer
</TABLE>
- -----------------
(1) One Chase Manhattan Plaza, New York, New York 10005
(2) 99 Park Avenue, New York, New York 10063
(3) One Rockerfeller Plaza, Suite 1025, New York, New York 10020
(4) 100 Renaissance Center, 34th Floor, Detroit, Michigan 48243
(5) 919 Third Avenue, New York, New York 10022-9998
Item 26. Persons Controlled By or Under Common Control With Depositor or
Registrant
The Registrant is a separate account of First SunAmerica Life Insurance
Company (Depositor). For a complete listing and diagram of all persons directly
or indirectly controlled by or under common control with the Depositor or
Registrant, see Exhibit 14 incorporated herein by reference.
Item 27. Number of Contract Owners
As of December 31, 1997, the number of Contracts funded by the Variable
Annuity Account One of First SunAmerica Life Insurance Company was 506, of which
214 were Qualified Contracts and 292 were Nonqualified Contracts.
Item 28. Indemnification
None.
Item 29. Principal Underwriter
SunAmerica Capital Services, Inc. serves as distributor to the
Registrant.
Its principal business address is 733 Third Avenue, 4th Floor, New
York, New York 10017. The following are the directors and officers of SunAmerica
Capital Services, Inc.
<TABLE>
<CAPTION>
Name Position with Distributor
---- -------------------------
<S> <C>
J. Steven Neamtz Director and President
Robert M. Zakem Director, Executive Vice
President and Assistant
Secretary
Peter Harbeck Director
Gary W. Krat Director
Enrique Lopez-Balboa Vice President
Steven Rothstein Treasurer
Susan L. Harris Secretary
Lorin M. Fife Assistant Secretary
</TABLE>
<PAGE> 73
<TABLE>
<CAPTION>
Net
Distribution Compensation
Name of Discounts and on Redemption Brokerage
Distributor Commissions Annuitization Commission Commissions*
- ------------ -------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
SunAmerica None None None None
Capital
Services, Inc.
</TABLE>
- ---------------
* The distribution fee is paid by First SunAmerica Life Insurance Company.
Item 30. Location of Accounts and Records
First SunAmerica Life Insurance Company, the Depositor for the
Registrant, is located at 733 Third Avenue, 4th Floor, New York, New York 10017.
SunAmerica Capital Services, Inc., the distributor of the Contracts, is located
at 733 Third Avenue, 4th Floor, New York, New York 10017. Each maintains those
accounts and records required to be maintained by it pursuant to Section 31(a)
of the Investment Company Act and the rules promulgated thereunder.
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02100, maintains certain accounts and records pursuant to the
instructions of the Registrant.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
Registrant undertakes to (1) file post-effective amendments to this
Registration Statement as frequently as is necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16 months
old for so long as payments under the variable annuity Contracts may be
accepted; (2) include either (A) as part of any application to purchase a
Contract offered by the prospectus forming a part of the Registration Statement,
a space that an applicant can check to request a Statement of Additional
Information, or (B) a postcard or similar written communication affixed to or
included in the Prospectus that the Applicant can remove to send for a Statement
of Additional Information; and (3) deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form N-4 promptly upon written or oral request.
Further, Registrant undertakes to deduct mortality and expense risk
charges, distribution expense charges, withdrawal charges (contingent deferred
sales charges), contract maintenance fees and transfer fees that are in the
aggregate (1) reasonable in relation to the risks assumed by the Company and (2)
reasonable in amount as compared with other variable annuity products. Those
determinations are based on the Company's analysis of publicly available
information about similar industry practices, and by taking into consideration
factors such as current charge levels and benefits provided, the existence of
expense charge guarantees and guaranteed annuity rates.
Item 33. Representation
The Company hereby represents that it is relying upon a No-Action
Letter issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88) and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration
<PAGE> 74
statement, including the prospectus, used in connection with the offer
of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in
connection with the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by
Section 403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b)
annuity contract, prior to or at the time of such purchase, a signed
statement acknowledging the participant's understanding of (1) the
restrictions on redemption imposed by Section 403(b)(11), and (2) other
investment alternatives available under the employer's Section 403(b)
arrangement to which the participant may elect to transfer his contract
value.
<PAGE> 75
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant certifies that it meets the requirements of
Securities Act Rule 485 for effectiveness of this Registration Statement and
has caused this Post-Effective Amendment to the Registration Statement to be
signed on its behalf, in the City of Los Angeles, and the State of California,
on this 29th day of January, 1998.
VARIABLE ANNUITY ACCOUNT ONE
(Registrant)
By: FIRST SUNAMERICA LIFE INSURANCE COMPANY
(Depositor)
By: /s/ JAY S. WINTROB
----------------------------------------------
Jay S. Wintrob
Executive Vice President
By: FIRST SUNAMERICA LIFE INSURANCE COMPANY
(Depositor, on behalf of itself and Registrant)
By: /s/ JAY S. WINTROB
-----------------------------------------------
Jay S. Wintrob
Executive Vice President
As required by the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
ELI BROAD* President, Chief Executive
- --------------------- Officer, & Chairman of
Eli Broad Board
(Principal Executive Officer)
SCOTT L. ROBINSON* Senior Vice President,
- --------------------- Treasurer & Director
Scott L. Robinson (Principal Financial Officer)
N. SCOTT GILLIS* Senior Vice President &
- --------------------- Controller
N. Scott Gillis (Principal Accounting Officer)
JAMES R. BELARDI* Director
- ---------------------
James R. Belardi
DAVID W. FERGUSON* Director
- ---------------------
David W. Ferguson
LORIN M. FIFE* Director
- ---------------------
Lorin M. Fife
JANA W. GREER* Director
- ---------------------
Jana W. Greer
</TABLE>
<PAGE> 76
<TABLE>
<S> <C> <C>
THOMAS A. HARNETT* Director
- ---------------------
Thomas A. Harnett
MARGERY K. NEALE* Director
- ---------------------
Margery K. Neale
JAY S. WINTROB* Director
- ---------------------
Jay S. Wintrob
/s/ SUSAN L. HARRIS Director January 29, 1998
- ---------------------
Susan L. Harris
PETER MCMILLAN* Director
- ---------------------
Peter McMillan
JAMES W. ROWAN* Director
- ---------------------
James W. Rowan
LESTER POLLACK* Director
- ---------------------
Lester Pollack
RICHARD D. ROHR* Director
- ---------------------
Richard D. Rohr
*By:/s/ SUSAN L. HARRIS Attorney-in-Fact
-------------------
Susan L. Harris
Date: January 29, 1998
</TABLE>
<PAGE> 77
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
(1) Resolution Establishing Separate Account
(3)(a) Distribution Agreement
(3)(b) Selling Agreement
(4) Variable Annuity Contract
(5) Application for Contract
(6)(a) Certificate of Incorporation
(6)(b) By-Laws
(8) Fund Participation Agreement
(9) Opinion/Consent of Counsel
(10) Consent of Independent Accountants
(14) Diagram and Listing of All Persons
Directly or Indirectly Controlled By
or Under Common Control with First
SunAmerica Life Insurance Company,
the Depositor of Registrant
(15) Powers of Attorney
</TABLE>
<PAGE> 1
EXHIBIT 1
SECRETARY's CERTIFICATE
I, the undersigned, the duly elected, qualified and acting Secretary of
FIRST SUNAMERICA LIFE INSURANCE COMPANY, a New York corporation (this
"Corporation"), do hereby certify that the Board of Directors of this
Corporation, by unanimous written consent dated May 30, 1990 adopted the
following resolutions and that said resolutions are in full force and effect:
WHEREAS, this Corporation desires to sell variable annuity products in
the State of New York; and
WHEREAS, this Corporation specifically desires to sell a flexible
premium deferred variable annuity product ("ICAP II") pursuant to the policy
form presented to this Board and submitted to the Department;
NOW, THEREFORE, BE IT RESOLVED, that the officers of this Corporation
be, and they hereby are, authorized to establish for the accounts of this
Corporation the Variable Annuity Account One ("Separate Account") in accordance
with the insurance laws of the State of New York, to provide the investment
medium for contracts to be issued by this Corporation ("Contracts") as may be
designated as participating therein. The Separate Account shall receive, hold,
invest and reinvest only the monies arising from: (1) premiums, contributions or
payments made pursuant to Contracts participating therein; (2) such assets of
this Corporation as may be deemed necessary for the orderly operation of such
Separate Account; and (3) the dividends, interest and gains produced by the
foregoing; and
RESOLVED FURTHER, that the Separate Account shall be administered and
accounted for as part of the general business of this Corporation, but the
income, gains and losses of the Separate Account shall be credited to or charged
solely against the assets held in the Separate Account, without regard to any
other income arising out of other business that this Corporation may conduct.
The assets of such Separate Account shall not be chargeable with the liabilities
arising out of any other business that this Corporation may conduct; and
RESOLVED FURTHER, that the officers of this Corporation be, and they
hereby are, authorized:
(i) to take whatever actions are necessary to see to it that the
Contracts are registered under the provisions of the Securities Act of 1933 to
the extent that they shall determine that such registration is necessary;
(ii) to take whatever actions are necessary to assure that such
Separate Account is properly registered with the Securities and Exchange
Commission under the provisions of the Investment Company Act of 1940;
(iii) to prepare, execute and file such amendments to any
registration statements filed under the aforementioned Acts (including such
pre-effective and post-effective amendments), supplements and exhibits thereto
as they may deem necessary or desirable;
(iv) to apply for exemption from those provisions of the
aforementioned Acts and the rules promulgated thereunder as they may deem
necessary or desirable and to take any and all other actions which they may deem
necessary, desirable or appropriate in connection with such Acts;
(v) to take whatever actions are necessary to assure that the
Contracts are filed with the appropriate state insurance regulatory authority
and to prepare and execute all necessary documents to obtain approval of the
insurance regulatory authority;
(vi) to prepare or have prepared and executed all necessary
documents to obtain approval of, or clearance with, or other appropriate actions
required by, any other regulatory authority that may be necessary in connection
with the foregoing matters;
(vii) to enter into agreements with appropriate entities for the
provision of administrative and other required services on behalf of the
Separate Account and for the safekeeping of assets of such Separate Account; and
RESOLVED FURTHER, that the form of any resolutions required by any
regulatory authority to be filed in connection with any of the documents or
instruments referred to in any of the preceding resolutions be, and the same
hereby are, adopted as fully set forth herein if (i) in the opinion of the
officers of this Corporation the adoption of the resolutions is advisable; and
(ii) the Corporate Secretary or Assistant Secretary of this Corporation
evidences such adoption by inserting into these minutes copies of such
resolutions; and
<PAGE> 2
RESOLVED FURTHER, that the officers of this Corporation, and each of
them are hereby authorized to prepare and to execute the necessary documents and
to take such further actions as may be deemed necessary or appropriate, in their
discretion, to implement the purpose of the foregoing resolutions; and
RESOLVED FURTHER that this Corporation hereby ratifies any and all
actions that may have previously been taken by the officers of this Corporation
in connection with the foregoing resolutions and authorizes the officers of this
Corporation to take any and all such further actions as may be appropriate to
reflect these resolutions and to carry out their tenor, effect and intent.
IN WITNESS WHEREOF the undersigned has executed this Certificate and
affixed the seal of this
Corporation this 8th day of April, 1991.
/s/ SUSAN L. HARRIS
------------------------------------
Susan L. Harris
<PAGE> 1
EXHIBIT 3A
DISTRIBUTION AGREEMENT
THIS AGREEMENT, entered into as of this 28th day of January, 1994, by
and between FIRST SUNAMERICA LIFE INSURANCE COMPANY ("First Sun") , a life
insurance company organized under the laws of the State of New York, on behalf
of itself and VARIABLE ANNUITY ACCOUNT ONE ("Separate Account"), a Separate
Account established by First Sun pursuant to the insurance laws of the State of
New York, and SUNAMERICA CAPITAL SERVICES, INC., ("Distributor"), a corporation
organized under the laws of the state of Delaware.
WITNESSETH:
WHEREAS, First Sun issues to the public certain variable annuity
contracts identified on the contract specification sheet attached hereto as
Attachment A ("Contracts") , which Contracts are currently distributed by Royal
Alliance Associates, Inc.; and
WHEREAS, First Sun, by resolution adopted on May 30, 1990 established
the Separate Account on its books of account, for the purpose of issuing
variable annuity contracts; and
WHEREAS, the Separate Account is registered with the Securities and
Exchange Commission ("Commission") as a unit investment trust under the
Investment Company Act of 1940 (File No. 811-6313) ; and
WHEREAS, the Contracts to be issued by First Sun are registered with the
Commission under the Securities Act of 1933 (the "Act") (File No. 33-39888) for
offer and sale to the public, and otherwise are in compliance with all
applicable laws; and
WHEREAS, the Distributor, a broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc., proposes to act as distributor on an agency basis in
the marketing and distribution of said Contracts; and
WHEREAS, First Sun desires to obtain the services of the Distributor as
distributor of said Contracts issued by First Sun through the Separate Account
to replace Royal Alliance Associates, Inc.;
NOW THEREFORE, in consideration of the foregoing, and of the mutual
covenants and conditions set forth herein, and for other good and valuable
consideration, First Sun, the Separate Account, and Distributor hereby agree as
follows:
1. The Distributor will serve as distributor on an agency basis for the
Contracts which will be issued by First Sun through the Separate
Account.
<PAGE> 2
2. The Distributor will, either directly or through an affiliate,
provide information and marketing assistance to licensed insurance
agents and broker-dealers on a continuing basis. The Distributor shall
be responsible for compliance with the requirements of state
broker-dealer regulations and the Securities Exchange Act of 1934 as
each applies to Distributor in connection with its duties as distributor
of said Contracts. Moreover, the Distributor shall conduct its affairs
in accordance with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc.
3. Subject to the agreement of First Sun, the Distributor may enter
into dealer agreements with broker-dealers registered under the
Securities Exchange Act of 1934 and authorized by applicable law to sell
variable annuity contracts issued by First Sun through the Separate
Account. Any such contractual arrangement is expressly made subject to
this Agreement, and the Distributor will at all times be responsible to
First Sun for purposes of the federal securities laws for the
distribution of Contracts issued through the Separate Account. The
Distributor expressly assumes any dealer agreements entered into by
Royal Alliance Associates, Inc. with respect to the Contracts.
4. Warranties
(a) First Sun represents and warrants to the Distributor that:
(i) Registration Statements on Form N-4 for each of the
Contracts identified on Attachment A have been filed with
the Commission in the form previously delivered to the
Distributor and that copies of any and all amendments
thereto will be forwarded to the Distributor at the time
that they are filed with the Commission;
(ii) The Registration Statement and any further amendments
or supplements thereto will, when they become effective,
conform in all material respects to the requirements of
the Securities Act of 1933 and the Investment Company Act
of 1940, and the rules and regulations of the Commission
under such Acts, and will not contain an untrue statement
of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any
statement or omission made in reliance upon and in
conformity with information furnished in writing to First
Sun by the Distributor expressly for use therein;
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<PAGE> 3
(iii) First Sun is validly existing as a stock life
insurance company in good standing under the laws of the
State of New York, with power (corporate or other) to own
its properties and conduct its business as described in
the Prospectus, and has been duly qualified for the
transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require
such qualification;
(iv) The Contracts to be issued through the Separate
Account and offered for sale by the Distributor on behalf
of First Sun hereunder have been duly and validly
authorized and, when issued and delivered against payment
therefor as provided herein, will be duly and validly
issued and will conform to the description of such
Contracts contained in the Prospectuses relating thereto;
(v) Those persons who offer and sell the Contracts are to
be appropriately licensed in a manner as to comply with
the state insurance laws;
(vi) The performance of this Agreement and the
consummation of the transactions contemplated by this
Agreement will not result in a breach or violation of any
of the terms or provisions of, or constitute a default
under any statute, any indenture, mortgage, deed of trust,
note agreement or other agreement or instrument to which
First Sun is a party or by which First Sun is bound, First
Sun's Charter as a stock life insurance company or
By-laws, or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over First
Sun or any of its properties; and no consent, approval,
authorization or order of any court or governmental agency
or body is required for the consummation by First Sun of
the transactions contemplated by this Agreement, except
such as may be required under the Securities Exchange Act
of 1934 or state insurance or securities laws in
connection with the distribution of the Contracts by the
Distributor; and
(vii) There are no material legal or governmental
proceedings pending to which First Sun or the Separate
Account is a party or of which any property of First Sun
or the Separate Account is the subject, other than as set
forth in the Prospectus relating to the Contracts, and
other
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<PAGE> 4
than litigation incident to the kind of business conducted
by First Sun, if determined adversely to First Sun, would
individually or in the aggregate have a material adverse
effect on the financial position, surplus or operations of
First Sun.
(b) The Distributor represents and warrants to First Sun that:
(i) It is a broker-dealer duly registered with the
Commission pursuant to the Securities Exchange Act of 1934
and a member in good standing of the National Association
of Securities Dealers, Inc., and is in compliance with the
securities laws in those states in which it conducts
business as a broker-dealer;
(ii) The performance of this Agreement and the
consummation of the transactions herein contemplated will
not result in a breach or violation of any of the terms or
provisions of or constitute a default under any statute,
any indenture, mortgage, deed of trust, note agreement or
other agreement or instrument to which the Distributor is
a party or by which the Distributor is bound, the
Certificate of Incorporation or Bylaws of the Distributor,
or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Distributor or its property; and
(iii) To the extent that any statements or omissions made
in the Registration Statement, or any amendment or
supplement thereto are made in reliance upon and in
conformity with written information furnished to First Sun
by the Distributor expressly for use therein, such
Registration Statement and any amendments or supplements
thereto will, when they become effective or are filed with
the Commission, as the case may be, conform in all
material respects to the requirements of the Securities
Act of 1933 and the rules and regulations of the
Commission thereunder and will not contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make
the statements therein not misleading.
5. The Distributor, or an affiliate thereof, shall keep, or shall cause
to be kept, in a manner and form prescribed or approved by First Sun and
in accordance with Rules 17a-3 and
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<PAGE> 5
17a-4 under the Securities Exchange Act of 1934, correct records and
books of account as required to be maintained by a registered
broker-dealer, acting as distributor, of all transactions entered into
on behalf of First Sun and with respect to its activities under this
Agreement for First Sun. The party maintaining the books and records
required hereunder shall make such records and books of account
available for inspection by the Commission, and First Sun shall have the
right to inspect, make copies of or take possession of such records and
books of account at any time on demand.
6. Subsequent to having been authorized to commence the activities
contemplated herein, the Distributor, or an affiliate thereof, will
cause the currently effective Prospectus relating to the subject
Contracts in connection with its marketing and distribution efforts to
be utilized. As to the other types of sales material, the Distributor,
or an affiliate thereof, agrees that it will cause to be used only sales
materials as have been authorized for use by First Sun and which conform
to the requirements of federal and state laws and regulations, and which
have been filed where necessary with the appropriate regulatory
authorities, including the National Association of Securities Dealers,
Inc.
7. The Distributor, or such other person as referred to in paragraph 6
above, will not distribute any Prospectus, sales literature, or any
other printed matter or material in the marketing and distribution of
any Contract if, to the knowledge of the Distributor, or such other
person, any of the foregoing misstates the duties, obligation or
liabilities of First Sun or the Distributor.
8. Expenses of providing sales presentations, mailings, advertising and
any other marketing efforts conducted in connection with the
distribution or sale of the Contracts shall be borne by First Sun.
9. The Distributor, as distributor of the Contracts, shall not be
entitled to remuneration for its services.
10. All premium payments collected on the sale of the Contracts by the
Distributor, if any, shall be transmitted to First Sun for immediate
allocation to the Separate Account in accordance with the directions
furnished by the purchasers of such Contracts at the time of purchase.
11. The Distributor makes no representations or warranties regarding the
number of Contracts to be sold by licensed broker-dealers and insurance
agents or the amount to be paid thereunder. The Distributor does,
however, represent that
- 5 -
<PAGE> 6
it will actively engage in its duties under this Agreement on a
continuous basis while there is an effective registration statement with
the Commission.
12. It is understood and agreed that the Distributor may render similar
services or act as a distributor or dealer in the distribution of other
variable contracts.
13. First Sun will use its best efforts to assure that the Contracts are
continuously registered under the Securities Act of 1933 and should it
ever be required, under state Blue Sky Laws an@ to file for approval
under state insurance laws when necessary.
14. First Sun reserves the right at any time to suspend or limit the
public offering of the subject Contracts.
15. First Sun agrees to advise the Distributor immediately of:
(a) any request by the Commission (i) for amendment of the
Registration Statement relating to the Contracts, or (ii) for
additional information;
(b) the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement relating to the
Contracts or the initiation of any proceedings for that purpose;
and
(c) the happening of any material event, if known, which makes
untrue any statement made in the Registration Statement relating
to the Contracts or which requires the making of a change therein
in order to make any statement made therein not misleading.
16. First Sun will furnish to the Distributor such information with
respect to the Separate Account and the Contracts in such form and
signed by such of its officers as the Distributor may reasonably
request; and will warrant that the statements therein contained when so
signed will be true and correct.
17. Each of the undersigned parties agrees to notify the other in
writing upon being apprised of the institution of any proceeding,
investigation or hearing involving the offer or sale of the subject
Contracts.
18. This Agreement will terminate automatically upon its assignment to
any person other than a person which is a wholly owned subsidiary of
SunAmerica Inc. This Agreement shall terminate, without the payment of
any penalty by either party:
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<PAGE> 7
(a) at the option of First Sun, upon sixty days' advance written
notice to the Distributor; or
(b) at the option of the Distributor upon 90 days' written notice
to First Sun; or
(c) at the option of First Sun upon institution of formal
proceedings against the Distributors by the National Association
of Securities Dealers, Inc. or by the Commission; or
(d) at the option of either party, if the other party or any
representative thereof at any time (i) employs any device,
scheme, or artifice to defraud; makes any untrue statement of a
material fact or omits to state a material fact necessary in
order to make the statements made, in light of the circumstances
under which they were made, not misleading; or engages in any
act, practice, or course of business which operates or would
operate as a fraud or deceit upon any person; or (ii) violates
the conditions of this Agreement.
19. Each notice required by this Agreement may be given by telephone or
telefax and confirmed in writing.
20. (a) First Sun will indemnify and hold harmless the Distributor and
each person, if any, who controls the Distributor within the meaning of
the Act against any losses, claims, damages or liabilities to which the
Distributor or such controlling person may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement, Prospectus or Statement of Additional
Information or any other written sales material prepared by First Sun
which is utilized by the Distributor in connection with the sale of
Contracts or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein
or (in the case of the Registration Statement, Prospectus and Statement
of Additional Information) necessary to make the statement therein not
misleading or (in the case of such other sales material) necessary to
make the statement therein not misleading or (in the case of such other
sales material) necessary to make the statements therein not misleading
in the light of the circumstances under which they were made and will
reimburse the Distributor and each such controlling person for any legal
or other expenses reasonably incurred by the Distributor or such
controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action, provided,
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<PAGE> 8
however, that First Sun will not be liable in any such case to the
extent that any such loss, claim, or omission or alleged omission made
in such Registration Statement, Prospectus or Statement of Additional
Information in conformity with information furnished to First Sun
specifically for use therein; and provided, further, that nothing herein
shall be so construed as to protect the Distributor against any
liability to First Sun or the Contract Owners to which the Distributor
would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence, in the performance of its duties, or by reason of
the reckless disregard by the Distributor of its obligations and duties
under this Agreement.
(b) The Distributor will likewise indemnify and hold harmless
First Sun, each of its directors and officers and each person, if any,
who controls the Trust within the meaning of the Act to the extent, but
only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in conformity with
written information furnished to the Trust by the Distributor
specifically for use therein.
21. This Agreement shall be subject to the laws of the State of
California and construed so as to interpret the Contracts and insurance
contracts written within the business operation of First Sun.
22. This Agreement covers and includes all agreements, verbal and
written, between First Sun and the Distributor with regard to the
marketing and distribution of the Contracts, and supersedes and annuls
any and all agreements between the parties with regard to the
distribution of the Contracts; except that this Agreement shall not
affect the operation of previous or future agreements entered into
between First Sun and the Distributor unrelated to the sale of the
Contracts.
- 8 -
<PAGE> 9
THIS AGREEMENT, along with any Attachment attached hereto and
incorporated herein by reference, may be amended from time to time by the mutual
agreement and consent of the undersigned parties; provided that such amendment
shall not affect the rights of existing Contract Owners, and that such amendment
be in writing and duly executed.
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement
to be duly executed and their respective corporate seals to be hereunto affixed
and attested on the date first stated above.
FIRST SUNAMERICA LIFE
INSURANCE COMPANY
/s/ JAY S. WINTROB
By:----------------------------------
Jay S. Wintrob
Executive Vice President
VARIABLE ANNUITY ACCOUNT ONE
By: FIRST SUNAMERICA LIFE
INSURANCE COMPANY
/s/ JAY S. WINTROB
By:-------------------------
Executive Vice President
SUNAMERICA CAPITAL SERVICES, INC.
/s/ PETER HARBECK
By:----------------------------------
Peter Harbeck
Executive Vice President
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<PAGE> 10
Attachment A
CONTRACT SPECIFICATION SHEET
----------------------------
The following variable annuity contracts are the subject of the Distribution
Agreement between First SunAmerica Life Insurance Company and SunAmerica Capital
Services, Inc. dated January 28, 1994 regarding the sale of the following
contracts funded in Variable Annuity Account One:
1. ICAP II
<PAGE> 1
EXHIBIT 3B
FIRST SUNAMERICA Mailing Address:
LIFE INSURANCE COMPANY P.O. Box 54299 FIRST SUNAMERICA
733 Third Avenue Los Angeles, CA 90054-0299 A SUNAMERICA COMPANY
New York, New York 10017
SELLING
AGREEMENT
With First SunAmerica
Life Insurance Company
(the "Insurer")
<PAGE> 2
SELLING AGREEMENT
This SELLING AGREEMENT ("Agreement"), dated, __________________________________
is by and among FIRST SUNAMERICA LIFE INSURANCE ("Insurer"), SUNAMERICA CAPITAL
SERVICES, INC. ("Distributor") and ____________ together with its duly licensed
insurance affiliate indicated on the signature page hereof (the "Affiliate" and
collectively, "Broker/Dealer").
If no Affiliate is indicated on the signature page, Broker/Dealer is acting as
general agent hereunder and shall be responsible for the duties of
broker/dealer and general agent hereunder. If Broker/Dealer does not hold a
corporate insurance license, the appropriate duly licensed insurance affiliate
identified on the signature page shall act as general agent hereunder. Upon
execution, such Affiliate agrees to be bound by the terms hereof as if it were
included in the definition of Broker/Dealer.
1. Appointment. This Agreement is for the purpose of arranging for the
distribution of certain variable and fixed annuity contracts and any other
life insurance products identified on Exhibit 1 (the "Contracts"), issued
by the Insurer and, in the case of variable contracts, for which
Distributor is distributor, through sales people who are licensed agents
of the Insurer for insurance purposes, are associated with and registered
representatives of Broker/Dealer (each, a "Subagent"). In consideration of
the mutual promises and covenants contained in this Agreement, the Insurer
and Distributor each appoint Broker/Dealer and, as provided in Section 3,
its Subagents, to solicit and procure applications for the Contracts. This
appointment is not deemed to be exclusive in any manner and only extends
to those jurisdictions where the Contracts have been approved for sale and
in which Insurer and Broker/Dealer are both licensed as required by
prevailing regulatory requirements.
2. Representations and Warranties.
A. Each party hereto represents and warrants to each other party, as
follows:
(1) it is duly organized, validly existing and in good standing
under the laws of the state of its incorporation or other
corresponding applicable law and has all requisite power, corporate
or otherwise to carry on its business as now being conducted and to
perform its obligations as contemplated by this Agreement.
(ii) it has all licenses, approvals, permits and authorizations of,
and registrations with, all authorities and agencies, including
non-governmental self-regulatory agencies, required under all
federal, state, and local laws and regulations to enable it to
perform its obligations as contemplated by this Agreement.
(iii) The execution, delivery and performance of this Agreement have
been duly and validly authorized by all necessary corporate action,
if applicable, and this Agreement constitutes the legal, valid and
binding agreement of such party, enforceable against it in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
generally and general principles of equity.
B. Broker/Dealer additionally represents and warrants as follows:
(1) it is registered as a broker and dealer under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and is a member
in good standing of the National Association of Securities Dealers,
Inc. ("NASD").
(ii) it will comply with all applicable laws, rules and regulations
of, as well as any and all directives and guidelines issued by any
agency or other regulatory body with authority
1
<PAGE> 3
is by and among FIRST over Broker/Dealer or over the premises on
which Broker/Dealer and its Subagents are soliciting the sale of
Contracts.
(iii) it is duly licensed as a corporate insurance agent or it has
identified on the signature page its Affiliate which holds such
license and such Affiliate has executed this Agreement.
3. Subagents. Broker/Dealer is authorized to recommend Subagents for
appointment to solicit sales of the Contracts. Broker/Dealer is
responsible for investigating the character, work experience and
background of any proposed Subagent prior to recommending appointment by
Insurer. No Subagent shall act on behalf of Insurer until properly
appointed by Insurer. To the extent that Exhibit 1 does not include all
annuity Contracts of Insurer which are registered as securities under the
Federal Securities laws, Broker/Dealer is responsible for ensuring that
its Subagents, unless otherwise agreed to with Insurer in writing, do not
offer to sell any other variable annuity contracts issued by Insurer,
other than the Contracts, unless a selling agreement with respect thereto
has been executed by the parties. Broker/Dealer is responsible for
supervising the activities of its Subagents and for ensuring that
Subagents are properly licensed and in compliance with all applicable
federal, state and local laws and regulations and all rules and procedures
of Insurer. Broker/Dealer shall notify Insurer promptly, in writing, of
any giving or receiving of notice of termination of any Agent. Insurer
reserves the right to refuse to appoint any proposed Subagent and to
terminate any relationship with any Subagent, with or without cause, at
any time. By submitting a Subagent for appointment, Broker/Dealer warrants
that: (1) such Subagent is recommended for appointment; (2) such Subagent
is fully licensed under applicable laws to transact business with Insurer
and is a duly registered representative of Broker/Dealer; and (3) all
background investigations required by state and federal laws have been
made with respect to such Subagent.
4. Sales Material.
A. Broker/Dealer shall not use any written or audiovisual sales
material (including prepared scripts for oral presentations) in
connection with the sales of the Contracts or solicitations thereof,
unless such material has been provided by, or approved in writing in
advance of such use by, the Insurer and Distributor.
B. In accordance with the requirements of federal and certain state
laws, Broker/Dealer shall, to the extent required by such laws,
maintain complete records indicating the manner and extent of
distribution of any such sales material. This material shall be made
available to appropriate federal and state regulatory agencies as
required by law or regulation and to Distributor and Insurer upon
written request.
5. Prospectuses. For any Contract which is a registered security,
Broker/Dealer warrants that solicitation will be made by use of currently
effective prospectuses for the Contract and the underlying funds; and if
required by state law, the Statement of Additional Information for the
Contract; that the prospectuses will be delivered concurrently with each
sales presentation and that no statements shall be made to a client
superseding or controverting or otherwise inconsistent with any statement
made in the prospectus. The Insurer and Distributor shall furnish
Broker/Dealer, at no cost to such party, reasonable quantities of
currently effective prospectuses.
6. Conduct of Business.
A. Broker/Dealer will fully comply with the requirements of
all applicable laws, rules and regulations of regulatory
authorities (including self-regulatory organizations)
having jurisdiction over the activities of Broker/Dealer
or over the activities contemplated by this Agreement to
be conducted by Broker/Dealer.
2
<PAGE> 4
B. Neither Broker/Dealer nor any Subagent shall solicit an application
from, or recommend the purchase of a Contract to, an applicant
without having reasonable grounds to believe, in accordance with,
among other things, applicable regulations of any state insurance
commission, the Securities and Exchange Commission ("SEC") and the
NASD, that such purchase is suitable for the applicant. While not
limited to the following, a determination of suitability shall be
based on information supplied after a reasonable inquiry concerning
the applicant's insurance and investment objectives and financial
situation and needs.
C. Broker/Dealer has or will have established, prior to its
commencement of any solicitation of sales of Contracts pursuant to
the terms of this Agreement, such rules, procedures, supervisory and
inspection techniques as necessary to diligently supervise the
activities of its Subagents pursuant to this Agreement and to ensure
compliance with the terms of this Agreement necessary to establish
diligent supervision. Broker/Dealer shall be responsible for
securities training, supervision and control of its Subagents in
connection with their solicitation activities with respect to the
Contracts and shall supervise compliance with applicable federal and
state securities laws and NASD requirements in connection with such
solicitation activities. Broker/Dealer will observe, and will comply
activities pursuant to this Agreement. Upon request by Insurer or
Distributor, Broker/Dealer will furnish appropriate records as are
necessary to establish diligent supervision.
D. Broker/Dealer will fully comply with the requirements of applicable
state insurance laws and regulations and will maintain all books and
records and file all reports required thereunder to be maintained or
filed by a licensed insurance agent. Broker/Dealer shall comply with
the terms and conditions of any letter issued by the Staff of the
SEC with respect to the non-registration as a broker-dealer under
the 1934 Act of a corporation licensed as an insurance agent and
associated with a registered broker-dealer. Broker/Dealer shall
notify Distributor immediately in writing if Broker/Dealer fails to
comply with any such terms and conditions and shall take such
measures as may be necessary to comply with any such terms and
conditions.
E. Broker/Dealer shall promptly notify Insurer and Distributor of any
written customer complaint or notice of any regulatory investigation
or proceeding received by Broker/Dealer or any Subagent relating to
a Contract or any activities undertaken in connection with this
Agreement. Insurer and Broker/Dealer shall each cooperate fully in
any investigation or proceeding including but not limited to any
securities or insurance regulatory investigation or proceeding or
judicial proceeding arising in connection with the Contracts.
F. Broker/Dealer shall pay all expenses incurred by it in the
performance of this Agreement unless otherwise specifically provided
for in this Agreement or in a writing signed by Insurer and/or
Distributor and Broker/Dealer.
G. Applications shall be taken only on preprinted application forms
supplied by the Insurer. The Contract forms and applications are the
sole property of the Insurer. No person other than the Insurer has
the authority to make, alter or discharge any policy, Contract
application, Contract certificate, supplemental contract or form
issued by the Insurer. No person other than the Insurer has the
right to waive any provision with respect to any Contract or policy.
No person other than the Insurer has the authority to enter into any
proceeding in a court of law or before a regulatory agency in the
name of or on behalf of the Insurer.
H. Broker/Dealer and Subagent shall accept premiums in the form of a
check or money order made payable to Insurer. Broker/Dealer shall
ensure that all checks and money orders and applications for the
Contracts received by it or any Subagent are remitted promptly to
Insurer. In the event that any other premiums are sent to a Subagent
or Broker/Dealer
3
<PAGE> 5
rather than to Insurer, they shall promptly remit such premiums to
Insurer. Broker/Dealer acknowledges that if any premium is held at
any time by it, such premium shall be held on behalf of Insurer, and
Broker/Dealer shall segregate such premium from its own funds and
promptly remit such premium to Insurer. All such premiums, whether
by check, money order or wire, shall at all times be the property of
Insurer.
I. Upon issuance of a Contract by Insurer and delivery of such Contract
to Broker/Dealer, Broker/Dealer shall promptly deliver such Contract
to its purchaser. For purposes of this provision, "promptly" shall
be deemed to mean not later than five calendar days, or such shorter
period as is reasonable under the circumstances. Broker/Dealer shall
return promptly to Insurer all receipts for delivered Contracts, all
undelivered Contracts and all receipts for cancellation, in
accordance with the instructions from Insurer.
J. Unless required by a determination of suitability, during the term
of this Agreement and after termination hereof, Broker/Dealer
covenants on behalf of itself and any Subagent appointed hereunder,
that they shall not solicit, induce or attempt to solicit or induce
Contract owners to terminate, surrender, cancel, replace or exchange
such Contract. Broker/Dealer acknowledges and agrees that the
provisions contained in this Section 6 may be enforced by an action
for an injunction, as well as or in addition to any action for
damages.
7. Commission Payments.
A. Broker/Dealer shall be entitled to receive a commission based upon
premiums received and accepted by the Insurer for Contracts issued
pursuant to this Agreement, based on the applicable rate of
commission set forth in the Commission Schedule attached hereto as
Exhibit 1 which is incorporated herein by reference. Broker/Dealer
shall be solely responsible for the payment of any commission or
consideration of any kind to subagents.
B. In no event shall the Insurer be liable for the payment of any
commissions with respect to any solicitation made, in whole or in
part, by any person not appropriately licensed and registered prior
to the commencement of such solicitation.
C. If a Contract is returned to the Insurer pursuant to the "Free Look"
provision or any other right to examine provision of the Contract,
the full commission paid by the Insurer will be unearned and shall
be returned to the Insurer upon demand or, in the absence of such
demand, charged back to the recipient of the commission.
Broker/Dealer covenants and agrees to promptly deliver Contracts and
to hold the Insurer harmless from and against any claim arising from
market loss resulting from their breach of this covenant.
D. in no event shall Insurer incur obligations under this Agreement to
issue any Contracts or pay any commission in connection therewith if
the Contract owner is over the maximum issue age with respect to
that product when the Contract application was accepted. With
respect to such Contracts, the full commission paid by the Insurer
will be unearned and shall be returned to the Insurer upon demand
or, in the absence of such demand, charged back to the recipient of
the commission.
E. With respect to any Contract that is rescinded, as determined by the
Insurer in its sole discretion (other than a rescission with respect
to which a surrender charge applies), or if the Insurer otherwise
determines that a commission has not been earned (but such
determination may not contravene any other provision of this
Agreement), 100% of such unearned commission will be returned to
the Insurer upon demand or, in the absence of such demand, charged
back to the recipient of the commission.
4
<PAGE> 6
F. Compensation for the sale of any Contract which is renewed, changed,
exchanged or otherwise converted from any other contract issued by
the Company shall be paid according to the Insurer's guidelines and
practices.
G. With respect to any Contract, or group of Contracts which the
Insurer in its sole discretion deems to be a single case, and which
at the time of application submission the initial purchase payment
is greater than $500,000, the Insurer may determine in its sole
discretion that the commissions set forth on Exhibit 1 not apply. In
the event the Insurer determines that the commission(s) do not
apply, the Insurer may establish an alternate commission for such
Contract or Contracts.
8. Indemnification
A. Broker/Dealer shall indemnify, defend and hold harmless Insurer and
Distributor and each person who controls or is associated with
Insurer or Distributor within the meaning of the federal securities
laws and any director, officer, corporate agent, employee, attorney
and any representative thereof, from and against all losses,
expenses, claims, damages and liabilities (including any costs of
investigation and legal expenses and any amounts paid in settlement
of any action, suit or proceeding of any claim asserted) which
result from, arise out of or are based upon:
(1) any breach by Broker/Dealer or its Affiliate of any
representation, warranty or other provision of this Agreement,
including any acts or omissions of Broker/Dealer, Affiliate,
Subagents and other associated persons; or
(ii) any violation by Broker/Dealer, its Affiliate or any Subagent
of any federal or state securities law or regulation, insurance law
or regulation or any rule or requirement of the NASD;
(iii) the use by Broker/Dealer, its Affiliate or any Subagent of any
sales or promotional material which has not received specific
written approval of Insurer and Distributor as provided in Section 4
of this Agreement, any oral or written misrepresentations or any
unlawful sales practices concerning the Contracts by Broker/Dealer,
its Affiliate or any Subagent; or
(iv) claims by Subagents or other agents or representatives of
Broker/Dealer for commissions or other compensation or remuneration
of any type.
B. The indemnification provided for herein shall survive termination of
this Agreement.
9. Fidelity Bond. Broker/Dealer represents that all directors, officers,
employees, representatives and/or Subagents who are appointed pursuant to
this Agreement or who have access to funds of the Insurer are and will
continue to be covered by a blanket fidelity bond including coverage for
larceny, embezzlement or any other defalcation, issued by a reputable
bonding company. This bond shall be maintained at Broker/Dealer's expense.
Such bond shall be at least equivalent to the minimal coverage required
under the NASD Rules of Fair Practice, endorsed to extend coverage to life
insurance and annuity transactions. Broker/Dealer acknowledges that the
Insurer may require evidence that such coverage is in force and
Broker/Dealer shall promptly give notice to the Insurer of any notice of
cancellation or change of coverage. Broker/Dealer assigns any proceeds
received from the fidelity bond company to the Insurer to the extent of
the Insurer's loss due to activities covered by the bond. If there is any
deficiency, Broker/Dealer will promptly pay the Insurer that amount on
demand, and Broker/Dealer shall indemnify and hold harmless the Insurer
from any deficiency and from the cost of collection.
10. Market Timer Program. Insurer has available a Market Timer Program which
allows a market timer service to effect multiple transfers or other
transactions. Parties may use this program at
5
<PAGE> 7
the discretion of Insurer and upon execution of a Market Timer Agreement.
Among other provisions, the Market Timer Agreement specifies that if the
impact of processing exchange transactions received from all outside
sources is deemed to be injurious to one of the separate accounts or a
subaccount thereof, then Insurer in its sole discretion may elect not to
process the exchanges and that Insurer will notify the Market Timer
Service of the inability to process the requested exchange. Insurer
reserves the right to terminate participation in or the entire Market
Timer Program at any time and for any reason.
11. RapidApp Program. If applications are transmitted to the Insurer pursuant
to the Insurer's RapidApp Program, the following provisions shall apply to
such applications and Contracts issued pursuant to the RapidApp Program.
A. Broker/Dealer agrees to communicate with owners of the Contracts
issued through the RapidApp Program in order to obtain and deliver
to the Insurer the signed confirmation for the Contract.
Broker/Dealer further agrees to provide any assistance or
cooperation required to enforce a Contract issued under the RapidApp
Program which shall include, but not be limited to, providing the
Insurer access to recordings of telephone conversations with
customers containing their consent to the purchase of Contracts, or
providing statements or affidavits from such Subagents as to the
customer's consent to the making of the Contract.
B. In the event the owner of a Contract repudiates or rescinds the
Contract and the Insurer, in its sole discretion, waives any
surrender charges, the full commission paid by the Insurer will be
returned to the Insurer upon demand or, in the absence of such
demand, charged back to the recipient of the commission. In
addition, all amounts equal to any market loss arising from such
rescission or repudiation will be paid by Broker/Dealer on demand,
or in the absence of such demand, charged back to Broker/Dealer.
C. Broker/Dealer agrees that it will be solely responsible for the
transmission or failure of transmission of application information
to the Insurer. Broker/Dealer warrants that all application
information will be accurate and can be relied upon by the Insurer.
D. Broker/Dealer agrees to pay the Insurer all amounts equal to any
market loss resulting from the misallocation of the initial purchase
payment into the subaccounts, which misallocation was the result of
Insurer relying on Broker/Dealer's or their Subagents' application
information. In the absence of a demand for payment, such amounts
shall be charged back to Broker/Dealer.
E. Broker/Dealer agrees that its Subagents who are resident and
licensed in those jurisdictions approved by the Insurer may submit
applications to the Insurer pursuant to the RapidApp Program and
agree to the provisions of this Section 11. Broker/Dealer
acknowledges that agreeing to the provisions of this Section 11 does
not require its Subagents to submit all applications to the Insurer
pursuant to the RapidApp Program.
12. Termination.
A. Normal Termination. This Agreement shall continue for an indefinite
term, subject to the termination by either party upon written notice
to the other parties hereto, which shall be effective upon receipt
thereof. In addition, Insurer may terminate this Agreement without
notice if Broker/Dealer fails to satisfy the Insurer's production
requirements, as determined in the sole discretion of the Insurer.
B. Automatic Termination for Cause. This Agreement shall automatically
terminate upon: (1) a material breach of this Agreement, including
without limitation the failure to comply with the laws or
regulations of any state or other governmental agency or body having
jurisdiction over the sale of insurance; and (2) the suspension,
revocation or non-renewal
6
<PAGE> 8
of any then required insurance or securities license of
Broker/Dealer, or the deregistration of the Broker/Dealer or
its termination of membership with the NASD.
C. Rights and Obligations. Upon termination of this Agreement, except
as otherwise provided herein, all authorizations, rights and
obligations shall cease. If this Agreement is terminated for cause
as described above, Broker/Dealer's right to receive compensation
shall immediately terminate.
13. General Provisions.
A. Waiver. Waiver by any of the parties to promptly insist upon strict
compliance with any of the obligations of any other party under this
Agreement will not be deemed to constitute a waiver of the right to
enforce strict compliance.
B. Independent Contractor. Broker/Dealer is an independent contractor
and its Subagents who are appointed as insurance agents of Insurer
are agents of Broker/Dealer and not employees, agents or
representatives of Insurer or Distributor.
C. Independent Assignment. No assignment of this Agreement or of
commissions or other payments under this Agreement shall be valid
without the prior written consent of the Insurer.
D. Notice. Any notice pursuant to this Agreement shall be mailed,
postage paid, to the last address communicated by the receiving
party to the other parties to this Agreement.
E. Severability. To the extent this Agreement may be in conflict with
any applicable law or regulation, this Agreement shall be construed
in a manner not inconsistent with such law or regulation. The
invalidity or illegality of any provision of this Agreement shall
not be deemed to affect the validity or legality of any other
provision of this Agreement.
F. Amendment. No Amendment to this Agreement shall be effective unless
in writing and signed by all the parties hereto.
G. New York Law. This Agreement shall be construed in accordance with
the laws of the State of New York.
H. Effectiveness. This Agreement shall be effective as of the date
set forth above.
7
<PAGE> 9
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
representatives of the parties to this Agreement as of the date set forth above.
"INSURER":
FIRST SUNAMERICA LIFE INSURANCE COMPANY
By: ---------------------------------------------
"DISTRIBUTOR":
SUNAMERICA CAPITAL SERVICES, INC.
By: /s/ PETER A. HARBECK
----------------------------------------------
Peter A. Harbeck, President
"BROKER/DEALER":
By:
----------------------------------------------
The undersigned is affiliated with Broker/Dealer and represents that it holds
the necessary corporate insurance license to act as general agent in connection
with the sale of Contracts in the state of New York. By executing this Agreement
below, the undersigned agrees to be bound by the terms and conditions of the
Agreement.
"AFFILIATE":
- --------------------------------------------------
By:
-----------------------------------------------
Tax I.D. Number:
----------------------------------
8
<PAGE> 10
BANK RIDER
This Rider is appended to that certain Selling Agreement dated ________ between
First SunAmerica Life Insurance Company ("Insurer"), SunAmerica Capital
Services, Inc. ("Distributor") and ___________, together with its duly licensed
insurance affiliates indicated on Annex I of the Selling Agreement
("Broker/Dealer"). This Rider is to be executed by any Broker/Dealer which is
selling Contracts, or intends to sell, on the premises of any federal or state
chartered bank, thrift or savings and loan institution (collectively, "Bank").
Pursuant hereto, Broker/Dealer represents and warrants that it will comply with
the requirements of applicable laws, regulations and guidelines of any
regulatory authority having jurisdiction over the activities of Bank or
occurring on Bank premises, including without limitation, the Interagency
Statement on Retail Sales of Nondeposit Investment Products (Board of Governors
of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of
the Comptroller of the Currency, and Office of Thrift Supervision, February 14,
1994) and any subsequent release designed to provide governance to banks in
connection with the sale of nondeposit investment products ("applicable banking
laws"). Broker/Dealer agrees that it shall be responsible for ensuring that
applicable banking laws are complied with in connection with the activities
undertaken pursuant to the Selling Agreement, including without limitation,
ensuring that all advertisements and sales literature used by Broker/Dealer
comply with applicable banking laws. Broker/Dealer further agrees that it shall
inform the Insurer in writing of any legends and other disclosures that are
required by applicable banking laws to be contained in advertisements or sales
literature for policies issued by the Insurer.
"Broker/Dealer"
By:
--------------------------------
--------------------------------
Printed Name & Title
<PAGE> 11
EXHIBIT I
Commission Schedule
This Commission Schedule is hereby incorporated in and made a part of the
Selling Agreement dated as of _______________ ("Agreement") by and between First
SunAmerica Life Insurance Company ("Insurer"), SunAmerica Capital Services, Inc.
and ___________ together with its duly licensed insurance affiliate indicated on
the signature page to the Agreement (collectively, "Broker/Dealer").
1. In no event shall the Insurer be liable for the payment of any commissions
with respect to any solicitation made, in whole or in part, by any person not
appropriately licensed and registered prior to the commencement of such
solicitation.
2. If a Contract is returned to the Insurer pursuant to the "Free Look"
provision or any other right to examine provision of the Contract, the full
commission paid by the Insurer will be unearned and shall be returned to the
Insurer upon demand or, in the absence of such demand, charged back to the
recipient of the commission.
3. With respect to any Contract that is rescinded, as determined by the Insurer
in its sole discretion (other than a rescission with respect to which a
surrender charge applies), or if the Insurer otherwise determines that a
commission has not been earned (but such determination may not contravene any
other provision of this Agreement), 100% of such unearned commission will be
returned to the Insurer upon demand or, in the absence of such demand, charged
back to the recipient of the commission.
4. The following commission rates shall apply to Contracts issued by Insurer.
Commissions are paid in respect of the aggregate purchase payments received and
accepted by the Insurer with complete application information and documentation
as required by the Insurer or as a subsequent purchase payment under a Contract
after the Contract is in force.
ICAP II CONTRACTS. Commissions will be paid in the amount of five percent (5%).
ICAP II GROUP CONTRACTS. Commissions will be paid in the amount of five percent
(5%).
With respect to any ICAP Group II Contract the following commission chargebacks
will apply:
(1) Upon termination of the Contract, all commissions paid on premiums
received in the 12 months prior to termination of the Contract will
be deemed unearned and shall be returned to the Insurer upon demand
or, in the absence of such demand, charged back to the recipient of
the commission; and
(2) If, within the first four years of the contract, any participant
under the contract retires or terminates employment resulting in a
withdrawal of the participant's funds from the Contract, all
commissions paid on behalf of such participant's contributions will
be deemed unearned and shall be returned to the Insurer upon demand
or, in the absence of such demand, charged back to the recipient of
the commission; if no premium information is available with respect
to that participant, the charge back will be calculated based upon
the amount of the withdrawal of funds.
POLARIS CONTRACTS (OTHER THAN POLARIS UNALLOCATED GROUP CONTRACTS). With
respect to Polaris Contracts issued to persons age 80 or younger (at date of
issue), commissions will be paid pursuant to one or more of the options set
forth below, as selected by Broker/Dealer or General Agent. If more than one
commission option is chosen, Broker/Dealer or General Agent. If more than one
commission option is chosen, Broker/Dealer agrees that Subagents may select from
the specified commission options at the time a Contract is sold, which selection
may not be changed at a later time. If more than one commission option is
selected, Broker/Dealer must also specify a "default" commission option, which
will apply in the event the Subagent does not select a commission option at the
time of the sale of a Contract. If Broker/Dealer does not specify a "default"
commission option, the "default" commission option shall be Option 2.
<PAGE> 12
<TABLE>
<CAPTION>
Options Commission Rate Annual Trail Commission
------- --------------- -----------------------
<S> <C> <C>
Option 1 6.00% None
(3.5% representing commission,
2.5% representing expense
allowance)
Option 2 5.25% For Contracts in force 15 months or longer,
.25% annually, payable in .0625% quarterly
installments.
Option 3 2.50% For Contracts in force 15 months or longer,
.65% annually, payable in .1625% quarterly
installments.
The following commission option(s) is selected: [ ] Option 1
[ ] Option 2
[ ] Option 3
</TABLE>
If more than one commission option has been selected, a "default" commission
option must be selected: [choose one only]:
[ ] Option 1
[ ] Option 2
[ ] Option 3
With respect to Polaris Contracts (other than Polaris Unallocated Group
Contracts) sold to persons age 81 through 90 (at date of issue), commissions
will be paid as set forth below:
<TABLE>
<CAPTION>
Issue Age Commission Rate
--------- ---------------
<S> <C>
81-85 2.50%
86-90 2.25%
</TABLE>
POLARIS UNALLOCATED GROUP CONTRACTS. Commissions will be paid in the amount of
four and one half percent (4.50%).
POLARIS UNALLOCATED GROUP TAKEOVER VERSION. Commissions will be paid in the
amount of one percent (l%) on the initial purchase payment. Annual trail
commissions for Contracts in force 3 months or longer will be in the amount of
one percent (1%) annually, payable in .25% quarterly installments. No
commissions will be paid on subsequent purchase payments.
Broker/Dealer, on behalf of itself and its Affiliate, acknowledges and agrees to
Insurer's policies with respect to commission chargebacks which are provided for
in the Agreement and herein.
"BROKER/DEALER":
By:
-----------------------------------
Name:
---------------------------------
Its:
<PAGE> 1
First SunAmerica
Life Insurance Company First SunAmerica
505 Park Avenue, 8th Floor A SunAmerica Company
New York, New York 10022
(212) 888-4540
- --------------------------------------------------------------------------------
This is an annuity contract on the life of the Annuitant. We will make periodic
annuity payments beginning on the Annuity Date, as set forth in this Contract.
This contract is owned by you, the Contract Owner.
This Contract has been issued in return for the attached application and for the
initial Purchase Payment made.
TEN-DAY FREE LOOK
To be sure that you are satisfied with this Contract, you have a ten-day free
look. Within ten days of the day you receive this Contract, it may be returned
by delivering it or mailing it to us at our Annuity Service Office listed on the
Contract Data Page, or to the agent through whom it was purchased. Within seven
days of receipt of this Contract by us, we will pay you the Contract Value
computed as of the date of surrender. The date of surrender is the date the
Contract Owner transfers possession of the Contract with a written request for
cancellation to the Company or to an authorized representative of the Company.
Signed for the Company.
/s/ SUSAN L. HARRIS /s/ ROBERT P. SALTZMAN
- ---------------------- --------------------------
Susan L. Harris Robert P. Saltzman
Secretary President
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE ANNUITY CONTRACT
NONPARTICIPATING
NO DIVIDENDS
ANNUITY PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT.
PLEASE READ THIS CONTRACT CAREFULLY, IT DEFINES YOUR LEGAL RIGHTS AND IS A
CONVENIENT SOURCE OF INFORMATION AND REFERENCE IN HELPING YOU FULLY UNDERSTAND
AND BENEFIT FROM YOU CONTRACT.
THE VARIABLE PROVISIONS OF THIS CONTRACT
CAN BE FOUND ON PAGES 6 AND 9.
<PAGE> 2
CONTRACT DATA PAGE
ANNUITANT: CONTRACT NUMBER:
ISSUE DATE: CONTRACT OWNER:
ANNUITY DATE: INITIAL PURCHASE PAYMENT:
NON-QUALIFIED PLAN
ANNUITY SERVICE OFFICE:
FIRST SUNAMERICA
LIFE INSURANCE COMPANY
505 PARK AVENUE, 8TH FLOOR
NEW YORK, NY 10022
MONEY MARKET PORTFOLIO
GOVERNMENT AND QUALITY BOND PORTFOLIO
FIXED INCOME PORTFOLIO
GROWTH PORTFOLIO
HIGH YIELD PORTFOLIO
AGGRESSIVE GROWTH PORTFOLIO
FOREIGN SECURITIES PORTFOLIO
CONVERTIBLE SECURITIES PORTFOLIO
MULTI-ASSET PORTFOLIO
AGGRESSIVE MULTI-ASSET PORTFOLIO
NATURAL RESOURCES PORTFOLIO
TARGET '98 PORTFOLIO
A TOTAL WITHDRAWAL OR A PARTIAL WITHDRAWAL IN EXCESS OF THE WITHDRAWAL WITHOUT
WITHDRAWAL CHARGE AMOUNT WILL BE SUBJECT TO A WITHDRAWAL CHARGE ON PURCHASE
PAYMENTS WITHDRAWN BEFORE THE END OF THE FIFTH CONTRIBUTION YEAR. THE WITHDRAWAL
CHARGE IS 5% IN THE FIRST CONTRIBUTION YEAR AND REDUCES BY 1% EACH FOLLOWING
CONTRIBUTION YEAR, SO THAT THERE IS NO CHARGE IN THE SIXTH AND LATER
CONTRIBUTION YEARS.
ANNUITY PAYMENTS WILL NOT DECREASE AS LONG AS THE INVESTMENT RETURN OF THE
SEPARATE ACCOUNT ASSETS EQUALS OR EXCEEDS 6.40% ON AN ANNUAL BASIS.
FOR USE WITH
VARIABLE ANNUITY ACCOUNT ONE
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C>
Definitions 7
Purchase Payments 7
Accumulation Period 8
Withdrawal Charge Table 9
Death Benefit 10
Death of Owner 10
Annuity Period 10
Table of Monthly Installments Under Option 1 13
Table of Monthly Installments Under Option 2 14
General Provisions 14
</TABLE>
<PAGE> 4
DEFINITIONS
ACCUMULATION PERIOD - The period between the Issue Date of this Contract and the
Annuity Date, the build-up phase of this Contract.
ACCUMULATION UNIT - A unit of measurement which we use to calculate the Contract
Value during the Accumulation Period.
ANNUITANT - The person designated in the Application and shown on the Contract
Data Page to receive or who is actually receiving annuity payments.
ANNUITIZATION - The process by which an Owner converts from the Accumulation
Period to the Annuity Period. That is, you convert your Contract from the
build-up phase to the phase during which the Annuitant receives periodic annuity
payments.
ANNUITY DATE - The date on which annuity payments are to begin.
ANNUITY PERIOD - The period starting on the Annuity Date.
ANNUITY UNIT - A unit of measurement we use to calculate the amount of Variable
Annuity payments.
BENEFICIARY - The person designated to receive any benefits under this Contract
upon the death of the Annuitant during the Accumulation Period. If the Owner
dies during the Accumulation Period, the Beneficiary will, unless the Owner has
elected otherwise, become the Owner of this Contract.
CONTRACT OWNER OR OWNER - You, the person having the privileges of ownership
defined in this Contract. If the Owner dies during the Accumulation Period, the
Beneficiary will, unless the Owner has elected otherwise, become the Owner of
this Contract.
CONTRACT VALUE - The sum of the values of your interest in the Separate Account
Divisions.
CONTRACT YEAR - The period between anniversaries of the Issue Date of this
Contract.
CONTRIBUTION YEAR - Each Contract Year in which a Purchase Payment is made and
each succeeding year measured from the end of the Contract Year during which
such Purchase Payment was made.
DIVISION OR SEPARATE ACCOUNT DIVISION - A Division of the Separate Account
invested wholly in shares of one of the Eligible Portfolios.
ISSUE DATE - The date shown on the Contract Data Page on which the first
Contract Year and first Contribution Year begin.
NON-QUALIFIED PLAN - A retirement plan which does not receive favorable tax
treatment under Section 401, 403(b), 408 or 457 of the Internal Revenue Code.
PORTFOLIOS - One of the Portfolios shown on the Contract Data Page.
PURCHASE PAYMENTS - Amounts you pay to us under this Contract.
QUALIFIED PLAN - A retirement plan which receives favorable tax treatment under
Sections 401, 403(b), 408 or 457 of the Internal Revenue Code.
SEPARATE ACCOUNT OR ACCOUNT - A segregated investment account entitled,
"Variable Annuity Account One", established by us.
VALUATION DATE - Monday through Friday except New Year's Day, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving, and
Christmas Day.
VALUATION PERIOD - The interval between two consecutive Valuation Dates measured
from 5:00 P.M. New York time.
WITHDRAWAL CHARGE - The charge assessed against certain withdrawals or
annuitizations of Accumulation Units in their first five (5) Contribution Years.
WITHDRAWAL VALUE - The Contract Value, less any premium tax payable if the
Contract is being annuitized, minus any applicable Withdrawal Charge.
<PAGE> 5
PURCHASE PAYMENTS
Purchase Payments are flexible. This means that you, subject to the minimums and
maximums given below, may change the amount and the frequency of timing of
Purchase Payments. The minimum initial Purchase payment we will accept for a
Contract issued pursuant to a Non-Qualified Plan is $1,000. Subsequent Purchase
Payments must be at least $500. The minimum initial Purchase Payment we will
accept for a Contract issued pursuant to a Qualified Plan is $100.
Purchase Payments will be allocated to one or more Separate Account Divisions.
At least $500 must be allocated to each Division selected before an allocation
can be made to an additional Division.
If the Contract Value is less than $500, and no Purchase Payments have been made
during the previous three full calendar years, we reserve the right, after 60
days written notice to you, to terminate this Contract and distribute the
Contract Value to you.
ACCUMULATION PERIOD
PURCHASE PAYMENTS AND CONTRACT VALUE - We will credit a Contract with the number
of Accumulation Units in a Division which results from dividing the Purchase
Payment(s) allocated to that Division, or the amount transferred into the
Division, by the Accumulation Unit Value for that Division at the end of the
Valuation Period next concluding after the allocation or transfer.
The Contract Value for any Valuation Period is determined by multiplying the
number of Accumulation Units credited to each Division by the Accumulation Unit
Value for that Division at the end of the Valuation Period and then adding the
resultant values.
ACCUMULATION UNIT VALUE - The Accumulation Unit Value of a Separate Account
Division for any Valuation Period is calculated by subtracting (2) from (1) and
dividing the result by (3) where:
(1) is the total value of the assets of the Separate Account Division minus
total liabilities;
(2) is the cumulative unpaid charge for assumption or mortality and expense
risks;
(3) is the number of Accumulation Units outstanding at the end of such
Valuation Period.
During the Accumulation Period, each Separate Account Division is assessed with
a daily charge for mortality and expense risks. The charge will equal an
aggregate of 1.25% per annum of the average daily net asset value of each
Division. Net asset value of each Division for any Valuation Period is
calculated by dividing (1) above by (3) above.
The Accumulation Unit Value may increase or decrease from Valuation Period to
Valuation Period.
RECORDS MAINTENANCE CHARGE - During the Accumulation Period, a Records
Maintenance Charge of $30 is assessed each Contract Year against each Contract
in force on the anniversary of the Issue Date. If a total surrender of Contract
Value is made, the charge will be assessed as of the date of surrender. If the
Contract participates in more than one Separate Account Division, an equal share
of the $30 charge will be made against each Division. The number of Accumulation
Units representing your Contract's interest in the affected Separate Account
Divisions will be reduced to reflect the Records Maintenance Charge.
ADMINISTRATIVE EXPENSE CHARGE - During the Accumulation Period, each Separate
Account Division is assessed with a daily charge for administrative expenses.
The charge will equal an aggregate of .15% per annum of the average daily net
asset value of each Division. Net asset value of each Division for any Valuation
Period is calculated dividing (1) by (3) as described in the Accumulation Unit
Value provision. This charge will be reduced to the extent it exceeds that
required for administrative expenses.
TRANSFERS DURING ACCUMULATION PERIOD - You may transfer all or part of the
Contract Value among Separate Account Divisions subject to the following
conditions:
(1) the minimum amount which may be transferred from a Division is $500 or,
the remaining Contract Value in a Separate Account Division if less than
$500;
<PAGE> 6
(2) no partial transfer can be made if your remaining Contract Value in a
Separate Account Division will be less than $500 after the transfer;
(3) transfers will be honored on the Valuation Date next following receipt
by us of a written direction (containing all required information);
(4) if you make a transfer within 30 days of a prior transfer, or within 30
days of the Issue Date, a transfer fee of $25 ($10 in Pennsylvania and
Texas) will be charged.
We reserve the right to suspend, modify, or terminate the transfer privilege
with notice if there is a cessation of market trading.
The Accumulation Units credited to a Separate Account Division will be reduced
based on the Accumulation Unit Value at the end of the Valuation Period next
following the Valuation Period during which we receive a completely detailed
request for a transfer. Accumulation Units will be credited to the Contract
Value in the Separate Account Division to which the transfer is being made at
the same time.
TOTAL WITHDRAWAL DURING THE ACCUMULATION PERIOD - You may, during the
Accumulation Period, withdraw all the Contract Value remaining after deduction
of the Withdrawal Charge, if any.
An election for total withdrawal must be made in writing to us at our Annuity
Service Office. Payment made by us in honoring an election for total withdrawal
prior to receipt by us of notice of the death of the Annuitant or the Owner will
discharge our obligations under this Contract.
PARTIAL WITHDRAWALS DURING THE ACCUMULATION PERIOD - You may, during the
Accumulation Period, withdraw portions of the Contract Value, subject to the
following conditions:
(1) each partial withdrawal must be for an amount which is not less than
$500 or, if smaller, the remaining value in a Separate Account Division;
(2) the remaining value in each Separate Account Division from which a
partial withdrawal is requested must be at least $500 after the partial
withdrawal is completed;
(3) an election to make a partial withdrawal must be made in writing to us
at our Annuity Service Office;
(4) the election must indicate the amount(s) and the Separate Account
Division(s) from which the partial withdrawal is requested;
(5) the maximum amount of a partial withdrawal will be equal to the Contract
Value in the Division minus the amount of the Withdrawal Charge, if any;
and
(6) you have the right to specify the Division from which a withdrawal is to
be made.
Any payment made by us for partial withdrawal prior to receipt by us of notice
of the death of the Annuitant or the Owner will discharge our obligation under
this Contract to the extent of the payment.
IF A WITHDRAWAL CHARGE IS APPLICABLE. THE REDUCTION IN THE CONTRACT VALUE
REQUIRED TO PRODUCE THE AMOUNT OF THE PARTIAL WITHDRAWAL REQUESTED WILL BE
GREATER THAN THE AMOUNT ACTUALLY PAID BY US TO YOU. THE ACTUAL DOLLAR AMOUNT OF
A PARTIAL WITHDRAWAL REQUESTED WILL BE THE AMOUNT PAID TO YOU.
PARTIAL WITHDRAWAL WITHOUT WITHDRAWAL CHARGE -
(1) all Purchase Payments in a given Contract Year are totalled and are used
separately in calculating applicable Withdrawal Charges.
(2) all withdrawals will be assessed first against Purchase Payments in the
earliest Contract Years.
(3) the amount which may be withdrawn in any Contract Year without a
Withdrawal Charge is 10% of aggregate Purchase Payments made as of the
date of the partial withdrawal, less prior withdrawals. A withdrawal
without withdrawal charges can be made only once per Contract Year and
must be the first withdrawal in that Contract Year. No withdrawal
without withdrawal charges is permitted during the first Contract Year.
(4) any amount withdrawn which exceeds the limitations specified in (3)
above will be subject to a Withdrawal Charge in accordance with the
Withdrawal Charge Table.
WITHDRAWAL CHARGE TABLE
CONTRIBUTION YEAR Rate
================= ====
<PAGE> 7
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth 1%
Sixth and later 0%
The Rate applies to Purchase Payments.
WITHDRAWAL PROCEDURES - The Accumulation Units credited to a Contract in a
Separate Account Division will be reduced based on the Accumulation Unit Value
at the end of the Valuation Period during which an election of withdrawal
completely containing all required information is received by us at our Annuity
Service Office. An amount withdrawn will be paid within seven calendar days
after the date proper written election is received by us, except as provided
below.
SUSPENSION OF WITHDRAWAL PRIVILEGES - We may suspend the right of withdrawal
privileges or delay payment more than seven calendar days:
(1) during any period when the New York Stock Exchange is closed (other than
customary weekend and holiday closings);
(2) when trading in the markets the Account or a Portfolio normally utilizes
is restricted or an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the Account's or Portfolio's
investments or determination of Accumulation Unit Value is not
reasonably practicable; or;
(3) for such other periods as the Securities and Exchange Commission by
order may permit for protection of the Contract Owners.
DEATH BENEFIT
The Death Benefit is equal to the greater of:
(1) the Contract Value at the end of the Valuation Period during which Due
Proof of death and an election of the type of payment by the Beneficiary
is received by us at our Annuity Service Office; or
(2) the total dollar amount of Purchase Payments minus the total dollar
amount of partial withdrawals and applicable withdrawal charges; and
(3) after the fifth Contract Year, the Contract Value at the last Contract
Anniversary minus the total dollar amount of partial withdrawals made
since that anniversary.
Payment of Death Benefit may be made in one lump sum or applied under one of the
Annuity Options.
Due Proof of death means a certified copy of a death certificate or a certified
copy of a decree of a court of competent jurisdiction as to a finding of death,
or written statement by a Doctor of Medicine who attended the deceased at time
of death, or any other proof satisfactory to us.
DEATH OF ANNUITANT - The Death Benefit will be payable to the Beneficiary upon
receipt by us of Due Proof of the Annuitant's death during the Accumulation
Period.
DEATH OF OWNER
The following section applies only if this Contract is issued on a non-qualified
basis and if either of the two following conditions exit:
(A) The Owner and the Annuitant are the same individual and that individual
dies during the Accumulation Period; or
(B) The Owner and Annuitant are different persons and the Owner dies during
the Accumulation Period prior to the Annuitant's death.
If either of the above conditions occur, the following provisions apply:
(1) If the Beneficiary is the spouse of the Owner, then the Beneficiary
becomes the Owner and this Contract remains in full force and effect.
(2) If the Beneficiary is a natural person and not the spouse of the Owner,
the Beneficiary becomes the Owner. The Beneficiary can elect to have the
existing Contract Value paid under one of the Annuity Options set forth
in this Contract over a period not extending beyond the life expectancy
of the Beneficiary at the time of the election; however,
<PAGE> 8
payments under any Annuity Option selected must being not later than one
year after the date of death of the previous Owner.
Alternatively, the Beneficiary may elect to receive a lump sum
distribution of the greater of: (a) the current Contract Value at the
time of election; or (b) the total amount of Purchase Payments made
under the Contract less the aggregate dollar amount of any partial
withdrawals. Under this alternative election, the lump sum must be paid
to the Beneficiary within five years of the previous Owner's death.
(3) If there is no Beneficiary or if the Beneficiary is not a natural
person, then the entire Contract Value must be paid out within five
years of the Owner's death.
ANNUITY PERIOD
ELECTION OF ANNUITY OPTION AND ALLOCATION OF ANNUITY PAYMENTS - Election of an
Annuity Option must be made by written notice to us at our Annuity Service
Office. The election may be made:
(1) by the Owner prior to the Annuity Date and Annuitant's death;
(2) by the Annuitant on the Annuity Date unless the Owner has restricted the
right to make an election; or
(3) by the Beneficiary upon the Annuitant's death unless the Owner has
restricted the right to make an election.
If the Contract Value to be applied is less than $2,000, we may make payment in
one lump sum. If the amount of the first scheduled payment is less than $20, we
may increase the interval between payments to a quarterly, semi-annual or annual
payment to make the first payment at least $20. Payments must be made to a
natural person referred to as the payee.
The amount we use in determining annuity payments under Options 1, 2 and 3,
subject to adjustment for any applicable Withdrawal Charge and premium taxes, is
the Contract Value at the end of the Valuation Period immediately preceding the
Valuation Period which includes the Annuity Date. If Option 1 and 2 is elected,
no Withdrawal Charge will apply.
Payment under Option 3 or in accordance with the Other Settlement Arrangements
section may subject the Contract Value to a Withdrawal Charge. If Option 3 is
elected, the Contract Value may be subject to a Withdrawal Charge in accordance
with the Withdrawal Charge Table.
If no other Annuity Option is elected, the amount payable will be made under
Option 1 with a 10 year period certain.
ANNUITY OPTIONS - The amount payable may be paid under one of the following
options or in any other manner agreed to by us:
OPTION 1 - LIFE ANNUITY WITH INSTALLMENTS GUARANTEED - We will make
monthly payments for the guaranteed period elected and then for the
remaining lifetime of the payee. The period elected may be only 10 or 20
years. If the payee dies before the end of the guaranteed period, the
present value, based on a 5% annual interest rate, of remaining
guaranteed payments will be paid to the payee's estate or the
Beneficiary.
OPTION 2 - JOINT AND SURVIVOR ANNUITY - We will pay the full monthly
income while both payees are living. Upon the death of either payee,
income will continue during the lifetime of the surviving payee at the
percentage of such full amount chosen when this option was elected.
OPTION 3 - INCOME FOR SPECIFIED PERIOD - We will make monthly payments
for the period elected but not less that 5 years or more than 30 years.
The election must be made for full twelve-month periods.
OTHER SETTLEMENT ARRANGEMENTS - Our agreement is necessary for other payment
methods.
VARIABLE ANNUITY - The Contract Value at the end of the Valuation Period
immediately preceding the Valuation Period which includes the Annuity Date will
first be reduced by the dollar amount of any Withdrawal Charge and then by any
applicable premium taxes. The remaining value will be used to calculate the
<PAGE> 9
first monthly annuity payment. For Annuity Options 1, 2 and 3, the first monthly
annuity payment will be based upon the Annuity Option elected and the
appropriate Annuity Option Table.
With respect to Options 1, 2 and 3, the number of Annuity Units for each
Separate Account Division for purposed of determining subsequent annuity
payments is determined by dividing the amount of the first monthly annuity
payment attributable to the Contract Value in that Separate Account Division by
the Annuity Unit Value for the Division at the end of the Valuation Period
immediately preceding the Valuation Period which includes the Annuity Date. The
number of Annuity Units per payment will remain fixed unless a transfer is made.
The amount of any subsequent annuity payments will be determined by multiplying
the number of Annuity Units per payment in each Separate Account Division by the
Annuity Unit Value for that Division at the end of the Valuation Period
immediately preceding the Valuation Period which includes the date on which
payment is to be made and then adding the resultant values. The Annuity Unit
Value may increase or decrease from Valuation Period to Valuation Period.
We guarantee that the dollar amount of each annuity payment after the first will
not be adversely affected by variations in actual expense or by variations in
mortality experience from the expense and mortality assumptions on which the
first payment is based.
The Annuity Tables are based on the 1983 Table A, projected at Scale G with
interest at the rate of 5% per annum and assume births in year 1942. The amount
of each annuity payment will depend upon the sex and adjusted age of the
Annuitant, the joint annuitant, if any, or other payee. The adjusted age is
determined from the actual age nearest birthday at the time the first monthly
annuity payment is due according to the Table A below.
TABLE A
<TABLE>
<CAPTION>
Adjustment Adjustment
Calendar to Actual Calendar to Actual
Year of Birth Age Year to Birth Age
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
1899 - 1905 +6 1946 - 1951 -1
1906 - 1911 +5 1952 - 1958 -2
1912 - 1918 +4 1959 - 1965 -3
1919 - 1925 +3 1966 - 1972 -4
1926 - 1932 +2 1973 - 1979 -5
1933 - 1938 +1 1980 - 1985 -6
1939 - 1945 0
</TABLE>
ANNUITY UNIT VALUE - For each Separate Account Division, the value of an Annuity
Unit at the end of any Valuation Period is determined by multiplying the Annuity
Unit Value for the immediately preceding Valuation Period by the net investment
factor for the Valuation Period for which the Annuity Unit Value is being
calculated, and multiplying the result by an interest factor of .999866337 per
calendar day of such Valuation Period to offset the effect of the assumed rate
of 5.00% per annum in the Annuity Option Table.
The net investment factor for each Division for any Valuation Period is
determined by dividing:
(1) the value of an Accumulation Unit of the applicable Division as of the
end of the current Valuation Period; by
(2) the value of an Accumulation Unit of the applicable Division as of the
end of the immediately preceding Valuation Period.
TRANSFERS DURING THE ANNUITY PERIOD - During the Annuity Period, the payee(s)
may transfer the Contract Value in the Separate Account Divisions. To do so,
send a written request to our Annuity Service Office. A transfer may be made
subject to the following:
(1) a transfer may be made once each Contract Year;
(2) a request for a transfer must be received by us at our Annuity Service
Office at least 45 days before the Contract Anniversary as of which the
transfer will take effect;
(3) a transfer will be effected at the next Annuity Unit Value calculated
after we receive the transfer request;
<PAGE> 10
(4) no transfer may be made during the first year of the Annuity Period;
(5) the entire interest in a Separate Account Division must be
transferred.
The number of Annuity Units per payment attributable to a Separate Account
Division to which a transfer(s) is made, determined as of the effective date of
the transfer, will be equal to the number of Annuity Units per payment in the
Division from which the transfer(s) is being made multiplied by the Annuity Unit
Value for that Division, the amount being divided by the Annuity Unit Value for
the Separate Account Division to which transfer is being made. We reserve the
right without prior notice to any party to terminate, suspend or modify the
transfer privileges described above if there is a cessation of market trading.
SUPPLEMENTARY ANNUITY AGREEMENT - An Annuity Agreement will be issued to reflect
payments to be made under an Annuity Option. If settlement is a result of
Annuitant's death or the Owner's death, the effective date of the Annuity
Agreement will be the date of receipt of Due Proof of death, as defined above.
Otherwise, the effective date will be the date specified in the Annuity
Agreement.
CHANGE OF ANNUITY DATE - You may elect to change the Annuity Date during the
lifetime of the Annuitant. An election to change the Annuity Date must be in
written form received by us at our Annuity Service Office at least 7 days before
the Annuity Date then reflected on our records.
EVIDENCE OF AGE, SEX AND SURVIVAL - We may require satisfactory evidence of:
(1) the age and sex of any person(s) on whose life the annuity payments are
to be based; and
(2) the continued survival of any person(s) on whose life the annuity
payments are based.
DISBURSEMENT OF FUNDS UPON DEATH OF PAYEE - At the payee's death, unless
otherwise provided in the Annuity Agreement, the commuted value, based on 5.00%
interest of any remaining unpaid guaranteed installments, will be paid in one
sum to the Beneficiary. The value (to be commuted) of the remaining installments
will be determined by using (for all payments) the Annuity Unit Value next
determined after Due Proof of death is received by us.
PROTECTION OF BENEFITS - Unless otherwise provided in the Annuity Agreement, the
payee may not commute, anticipate, assign, alienate or otherwise encumber any
payment to be made.
CREDITORS - Proceeds under this Contract and any payment under any of the above
options will be exempt from the claims of creditors and from legal process to
the extent permitted by law.
<PAGE> 11
TABLES OF MONTHLY INSTALLMENTS UNDER OPTION 1
Monthly installments for ages not shown will be furnished on request.
OPTION 1 Life Annuity with Installments Guaranteed
Guaranteed Period - 10 Years
<TABLE>
<CAPTION>
Adjusted Monthly Installment Adjusted Monthly Installment
Age for each $1,000 of Age for each $1,000 of
- ------------ Amount Applied ------------ Amount Applied
Male Female Male Female
- ---------------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C>
40 46 $4.74 58 64 $5.63
41 47 4.77 59 65 5.70
42 48 4.81 60 66 5.79
43 49 4.84 61 67 5.87
44 50 4.88 62 68 5.96
45 51 4.92 63 69 6.06
46 52 4.96 64 70 6.15
47 53 5.00 65 71 6.26
48 54 5.05 66 72 6.36
49 55 5.09 67 73 6.48
50 56 5.14 68 74 6.59
51 57 5.19 69 75 6.71
52 58 5.24 70 6.84
53 59 5.30 71 6.97
54 60 5.36 72 7.10
55 61 5.42 73 7.23
56 62 5.49 74 7.37
57 63 5.56 75 7.51
- --------------------------------------------------------------------------------
</TABLE>
OPTION 1 Life Annuity with Installments Guaranteed
Guaranteed Period - 20 Years
<TABLE>
<CAPTION>
Adjusted Monthly Installment Adjusted Monthly Installment
Age for each $1,000 of Age for each $1,000 of
- ------------ Amount Applied ------------ Amount Applied
Male Female Male Female
- ---------------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C>
40 46 $4.69 58 64 $5.39
41 47 4.72 59 65 5.44
42 48 4.75 60 66 5.49
43 49 4.78 61 67 5.54
44 50 4.81 62 68 5.59
45 51 4.84 63 69 5.65
46 52 4.87 64 70 5.70
47 53 4.91 65 71 5.75
48 54 4.95 66 72 5.81
49 55 4.98 67 73 5.86
50 56 5.02 68 74 5.91
51 57 5.06 69 75 5.96
52 58 5.11 70 6.01
53 59 5.15 71 6.06
54 60 5.19 72 6.10
55 61 5.24 73 6.15
56 62 5.29 74 6.19
57 63 5.34 75 6.22
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 12
TABLE OF MONTHLY INSTALLMENTS UNDER OPTION 2
Monthly instaLLments for ages or combination of ages not shown
will be furnished on request.
OPTION 2 Joint and Survivor Annuity
Adjusted Age
of Other Payee Adjusted Age of Annuitant
- ----------------- ----------------------------------------------------------
<TABLE>
<CAPTION>
51 56 58 61 63 66 71
Male Female 57 62 64 67 69 72 77
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 56 $4.72 $4.80 $4.84 $4.88 $4.91 $4.95 $5.01
55 61 4.81 4.92 4.96 5.03 5.07 5.13 5.23
57 63 4.84 4.97 5.02 5.09 5.14 5.21 5.32
60 66 4.89 5.04 5.10 5.19 5.25 5.34 5.47
62 68 4.93 5.08 5.15 5.25 5.32 5.42 5.58
65 71 4.97 5.15 5.23 5.35 5.43 5.55 5.75
70 76 5.04 5.25 5.35 5.50 5.60 5.77 6.05
</TABLE>
TABLE OF MONTHLY INSTALLMENTS UNDER OPTION 3
OPTION 3 income for Specified Period
<TABLE>
<CAPTION>
Monthly Monthly
Specified Installment Specified Installment
Period for each $1,000 of Period for each $1,000 of
(Years) Amount AppLied (Years) Amount AppLied
--------- ------------------ --------- ------------------
<S> <C> <C> <C>
5 $18.74 18 $6.94
6 15.99 19 6.71
7 14.02 20 6.51
8 12.56 21 6.33
9 11.42 22 6.17
10 10.51 23 6.02
11 9.77 24 5.88
12 9.16 25 5.76
13 8.64 26 5.65
14 8.20 27 5.54
15 7.82 28 5.45
16 7.49 29 5.36
17 7.20 30 5.28
</TABLE>
<PAGE> 13
GENERAL PROVISIONS
THE CONTRACT - This Contract and the attached AppLication are the entire
contract between the parties. ALL statements made in the Application are deemed
representations and not warranties. No statement wiLL void this Contract or be
used as a defense to a claim unless it is contained in the AppLication.
MODIFICATION OF CONTRACT - OnLy our President or Secretary may approve a change
or waive the provisions of this Contract. Any change or waiver must be in
writing. No agent has authority to change or waive the provisions of this
Contract.
INCONTESTABILITY - This Contract wiLL not be contestable after it has been in
force for a period of two years from the Issue Date.
MISSTATEMENT OF AGE OR SEX - If a payee's age or sex is misstated, we wiLL
adjust any amount to be paid based upon the corrected age or sex; the date of
the first payfnent wiLL not be changed. Any underpayment wilt be paid
immediately or accruing at the rate of interest of 6%. Any overpayment wiLL be
deducted from payments subsequently accruing at the rate of interest of 6%.
BENEFICIARY - You may designate a Beneficiary to receive any amount payable on
death. The original Beneficiary wiLL be named in the AppLication. You may change
the Beneficiary by filing a written request with us at our Annuity Service
Office unless an irrevocable Beneficiary designation was previously filed with
us. However, any change will take effect as of the date such request was signed,
except as to any payment made or other action taken by us before the change was
recorded.
If there is more than one Beneficiary, the interest of any Beneficiary who
predeceases the Annuitant will pass to the survivor or survivors, share and
share alike, unless otherwise provided in the Beneficiarydesignation. If no
designated Beneficiary survives the Annuitant, the Beneficiary wiLL be the
Annuitant's estate.
CHANGE OF OWNERSHIP - NOTE: A CHANGE OF OWNERSHIP MAY BE A TAXABLE EVENT.
YOU SHOTJLD FIRST CONSULT WITH YOUR TAX ADVISOR.
OWNERSHIP - If no designated Beneficiary who is a natural person survives the
Owner, the Owner's estate wiLL become the new Owner.
Ownership may be changed at any time during the Annuitant's Lifetime. A change
must be made by written notice from the Owner sent to us at our Annuity Service
office with information sufficient to cLearLy identify the new Owner to us. No
change wiLL take effect until received by us. Upon being received, any change
wiLL take effect as of the date it was signed, except for action taken by us
before the change was received. We reserve the right to require this Contract
for endorsement of a change.
ASSIGNMENT - No assignment of this Contract is binding until received by us at
our Annuity Service office. We assume no responsibility for the validity of any
assignment.
NOTE: AN ASSIGNMENT MAY CONSTITUTE A TAXABLE EVENT. YOU SHOULD FIRST
CONSULT WITH YOUR TAX ADVISOR.
Any claim under an assignment is subject to proof of the extent of interest. If
this Contract is assigned, your rights and the Beneficiary's rights are subject
to the rights of any assignee of record.
OWNERSHIP OF THE SEPARATE ACCOUNT ASSETS - We have exclusive ownership and
control of aLL assets in the Separate Account.
LIABILITIES OF SEPARATE ACCOUNTS - The assets held in the Separate Account wiLL
not be charged with LiabiLities arising out of any other business we may
conduct. The assets are held and applied excLusiveLy for the benefit of Owners,
Annuitants, Beneficiaries or payees of the VariabLe Annuity Contracts.
NONPARTICIPATION IN SURPLUS - This Contract does not share in our profits or
surplus.
SUSPENSION OF PAYMENTS - We may suspend or postpone payments if any of the
foLLowing occur:
(1) during any period when the New York Stock Exchange is closed
(other than customary weekend and holiday closings);
<PAGE> 14
(2) when trading in the markets the Account or a portfolio normally
utilizes is restricted, or an emergency exists as determined by
the Securities and Exchange Commission so that disposal of the
Account's or a Portfoliols investments or determination of
AccumuLation Unit VaLue is not reasonably practicable or
(3) for such other periods as the Securities and Exchange Commission
by order may permit for the protection of the Contract Owners.
REPORTS - Once each Contract Year, we wiLL furnish you with an AnnuaL Report of
the Separate Account and a statement showing the Contract VaLue as weLL as the
wording describing any WithdrawaL VaLue and/or any Death Benefit.
ADDITION, SUBSTITUTION AND CONVERSION - Any of the additions, substitutions and
conversions Listed below are subject to the approval of the Superintendent. We
reserve the right to add additional ELigibLe Portfotios from time to time. If
additional ELigible PortfoLios are added, we wiLL notify you in writing.
If shares of a PortfoLio are not available for purchase or if, in our judgment,
further investment in the shares is no longer appropriate in view of the
purposes of the Separate Account, shares of or interests in another investment
portfolio or company may be substituted for PortfoLio shares held or to be
purchased by future Purchase Payments or transfers under this Contract.
CHANGES IN THE LAW - If laws governing this Contract or the taxation of benefits
under this Contract change, we wiLL amend this Contract to comply with these
changes.
<PAGE> 15
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE ANNUITY CONTRACT
NONPARTICIPATING
NO DIVIDENDS
First SunAmerica
Life Insurance Company
FIRST SUNAMERICA
505 Park Avenue, 8th Floor a SunAmerica Company
New York, New York 10022
212/888-4540
- --------------------------------------------------------------------------------
<PAGE> 16
First SunAmerica
Life Insurance Company FIRST SUNAMERICA
A SunAmerica Company
505 Park Avenue, 8th Floor
New York, New York 10022
212/888-4540
- --------------------------------------------------------------------------------
JOINT ANNUITANT ENDORSEMENT
This Endorsement is a part of the Annuity Contract to which it is attached.
The Effective Date of this Endorsement is the Issue Date stated in the Contract
Data/Specifications Page.
We agree that persons listed in the Annuity Contract Application have been named
as Joint Annuitants.
The Annuity Contract is changed as follows:
(1) Annuitant means all Joint Annuitants or, after the death of one, the
survivor(s).
(2) While all Annuitants are living, the Annuity Date will be not later than
the 85th birthday of the youngest Annuitant.
(3) The automatic form of annuity will be a Joint and Survivor Income
Option. Income payments will be made to the named Annuitants. A
different Annuity Income Option may be elected by the Annuity Contract
Owner(s) before income payments begin.
(4) The Annuity Value of the Annuity Contract may be applied to provide
Annuity income for each Annuitant. Any part of the Annuity Value may be
used to provide income for one Annuitant. The balance will be used to
provide income to the other Annuitant(s). The incomes may be paid under
the same or different forms of income options.
(5) Unless an Annuitant who dies is also the Annuity Contract Owner, no
settlement will be made upon the death of the first Annuitant to die
before the start of income payments. Such death will not affect the
Annuity Value. The Annuity Date will them be not later than the 85th
birthday of the youngest surviving Annuitant.
Signed for Us:
/s/ SUSAN L. HARRIS /s/ ROBERT P. SALTZMAN
- ----------------------- --------------------------
Susan L. Harris Robert P. Salztman
Secretary President
FSA-JtANN-E1
<PAGE> 17
First SunAmerica
Life Insurance Company FIRST SUNAMERICA
A SunAmerica Company
505 Park Avenue, 8th Floor
New York, New York 10022
212/888-4540
- -----------------------------------------------------------------------------
JOINT OWNER ENDORSEMENT
This Endorsement is a part of the Annuity Contract to which it is attached.
The Effective Date of this Endorsement is the Issue Date stated in the Contract
Data/Specifications Page.
We agree that persons listed in the Annuity Contract Application have been named
as Joint Owners, provided they are spouses of each other.
The Annuity Contract is changed as follows:
(1) Owner means all Joint Owners.
(2) Each Joint Owner has an equal ownership interest in the Annuity Contract
unless we are advised otherwise in writing.
(3) Each Joint Owner shall be a Primary Beneficiary. Upon the death of a
Joint Owner, the survivor shall be the Primary Beneficiary.
Signed for Us:
/s/ SUSAN L. HARRIS /s/ ROBERT P. SALTZMAN
- ----------------------- --------------------------
Susan L. Harris Robert P. Salztman
Secretary President
FSA-JtOWN-E2
<PAGE> 18
First SunAmerica
Life Insurance Company FIRST SUNAMERICA
A SunAmerica Company
505 Park Avenue, 8th Floor
New York, New York 10022
212/888-4540
- --------------------------------------------------------------------------------
DEATH BENEFIT ENDORSEMENT
This Endorsement is a part of the Annuity Contract to which it is attached.
The DEATH BENEFIT section provisions of the attached Contract are deleted and
replaced by the following:
GENERAL - A Death Benefit will be paid to the Annuitant's Beneficiary upon the
Annuitant's death. The Beneficiary may elect to receive a single sum
distribution or to receive annuity payments. If a single sum payment is
requested, we will pay proceeds attributed to any Separate Account Division
within 7 days of our Annuity Service Office's receipt of the Death Benefit
payment election and due proof of death. If any Annuity Option is desire, an
Option must be elected within sixty (60) days of our receipt of due proof of the
Annuitant's death at our Annuity Service Office; otherwise a single sun payment
will be made at the end of such 60 day period. Funds will remain allocated
pursuant to the last allocation and instructions in effect at the Annuitant's
death until our Annuity Service Office receives new written allocation
instructions:
PROOF OF DEATH - Due proof of death means:
(1) a certified copy of a death certificate; or
(2) a certified copy of a decree of a court of competent jurisdiction as to
the finding of death; or
(3) an attending physician's statement; or
(4) any other proof satisfactory to us.
AMOUNT OF DEATH BENEFIT - The amount of the Death Benefit is equal to the
greater of:
(1) the Contract Value at the end of the Valuation Period during which We
receive at Our Annuity Service Office due proof of the Annuitant's death
and an election of the type of payment to be made; or
(2) the total dollar amount of Purchase Payments minus the dollar amount of
partial withdrawals and applicable withdrawal charges; or
(3) After the fifth Contract Year, the Contract Value at the last Contract
Anniversary minus the total amount of partial withdrawals made since
that anniversary.
Signed for the Company:
/s/ SUSAN L. HARRIS /s/ ROBERT P. SALTZMAN
- ----------------------- --------------------------
Susan L. Harris Robert P. Salztman
Secretary President
FSA-JtOWN-E2
<PAGE> 19
First SunAmerica
Life Insurance Company
FIRST SUNAMERICA
A SunAmerica Company
505 Park Avenue, 8th Floor
New York, New York 10022
212/888-4540
- -------------------------------------------------------------------------------
GENERAL ACCOUNT ANNUITY CONTRACT RIDER
The Rider forms part of the Variable Annuity Contract (the "Contract") to which
it is attached. The following provisions add to or modify the Contract.
DEFINITIONS
Contract Value - The Contract Value is the sum of the values of the Owner's
interest in the Separate Account Divisions and the values of the Owner's
interest in the General Account.
Fixed Annuity - A series of payments made during the Annuity Period. These
payments are guaranteed as to dollar amount by the Company and do not vary with
the investment experience of the Separate Account.
General Account - The General Account is the Company's general investment
account. It contains all the assets of the Company except for ICAP Variable
Annuity Account One (the "Separate Account") and other segregated asset
accounts.
General Account Value - The Owner's interest in the General Account.
Separate Account Value - The sum of the Owner's interest in each of the Separate
Account Divisions.
Variable Annuity - A series of payments made during the Annuity Period which
vary in amount based upon the investment experience of the Separate Account
Division.
ACCUMULATION PERIOD
ALLOCATION OF PURCHASE PAYMENTS
Purchase Payments may be allocated to the General Account as elected by the
Owner. A minimum of $500 must be allocated to the General Account before
Purchase Payments or Transfers may be allocated to an additional Separate
Account Division.
GENERAL ACCOUNT VALUE
The General Account Value at any time is equal to:
(1) all Purchase Payments allocated to the General Account plus the
interest credited to those payments; plus
(2) The Separate Account Value transferred to the General Account plus the
interest credited to the transferred values; less
(3) any prior partial withdrawals and withdrawal charges deducted from the
General Account; less
(4) any General Account Value transferred to the Separate Account; less
(5) any prior annuity payments; less (6) Record Maintenance Charge,
Withdrawal Charges and Premium Taxes.
INTEREST TO BE CREDITED
We will credit interest to the General Account during the Accumulation Period at
a rate no less than 4%.
We may declare and credit additional interest at our sole discretion.
Declaration of excess interest is not guaranteed.
We guarantee that the interest rate credited to funds allocated to the General
Account will: (1) not be less than the Interest Rate described above; and (2)
not be modified for one year from the date such funds are allocated to the
General Account.
FSA-GENA-R1
<PAGE> 20
TRANSFERS DURING THE ACCUMULATION PERIOD
The Transfers During Accumulation Period section of the Contract is modified to
provide, in addition to the language relating to transfers among the Separate
Account Division(s), the following:
The Owner may transfer Contract Values between the General Account and the
Separate Account Division(s) subject to the following:
(1) a request to transfer amounts from a Separate Account Division(s) to the
General Account may be made at any time by written request;
(2) any funds allocated to the General Account must remain in the General
Account one year before being eligible to be transferred out of the
General Account to any Separate Account Division(s). A Contract Owner
may elect to make a transfer of funds out of the General Account to a
Separate Account Division(s) within 30 days of the anniversary of the
allocation of such funds to the General Account. If a Contract Year
Anniversary is not a Valuation Date, the transfer will take effect on
the next Valuation Date following the Contract Year Anniversary;
(3) a request to transfer funds out of the General Account must be in
written form satisfactory to and mailed to us at our Annuity Service
Office.
(4) the minimum amount which may be transferred between the General Account
and a Separate Account Division(s) is $500 or the remaining Contract
Value in the General Account or the Separate Account Division(s) is less
than $500; and
(5) no partial transfer may be made if your remaining Contract Value in the
General Account or Separate Account Division(s) will be less than $500
after the transfer.
CONTRACT CHARGES
The Records Maintenance Charge section of the Contract is $30 whether or not an
Owner elects to have Contract Values allocated to the General Account. There is
no extra charge if the General Account is elected. The Records Maintenance
Charge will also be deducted from the General Account in the same way as for the
Separate Account Divisions.
The Withdrawal Charge section of the Contract also applies to the total or
partial withdrawals of General Account Values in the same way as for the
withdrawals from the Separate Account Divisions.
Premium Taxes, as described in your Contract, are also applicable to any General
Account Values.
The Mortality and Expense Risk Charge, as described in your Contract, does not
apply to General Account Values.
SUSPENSION OF WITHDRAWAL OR TRANSFER
If a withdrawal or transfer is made from the General Account, we may defer
payment for the period permitted by law but not for more than six months after
written election is received by us.
ANNUITY PERIOD
If all of the Contract Value on the seventh calendar day before the Annuity Date
is allocated to: (1) the General Account, the Annuity will be paid as a Fixed
Annuity; (2) the Separate Account, the Annuity will be paid as a Variable
Annuity; (3) both the General Account and the Separate Account, the Annuity will
be paid as combination of a Fixed Annuity and a Variable Annuity to reflect the
allocation between the Accounts. Annuity Payments will reflect the investment
performance of the Separate Account Divisions in accordance with the allocation
of the Contract Value to the Separate Account Divisions on that date.
Thereafter, allocations may not be changed except as provided in the Transfers
During The Annuity Period section.
<PAGE> 21
The Withdrawal Charge sections of the Contract also apply to certain
annuitization of the General Account Value just as for certain annuitizations
from the Separate Account Divisions.
FIXED ANNUITY
The General Account Value on the day immediately preceding the Annuity Date will
first be reduced by the dollar amount of any applicable Withdrawal Charge and
then by any applicable premium taxes. The remaining value will be used to
determine the Fixed Annuity monthly payment. For Annuity Options 1, 2 and 3,
monthly annuity payments will be based upon the Annuity Option elected and the
appropriate Annuity Option Table and will remain constant throughout the Annuity
Period. The Annuity Option Tables are contained in the Contract and provide
guaranteed annuity rates. The Company reserves the right, when annuity payments
begin, to use Annuity Option Tables which provide for a greater monthly annuity
payment. The annuity payments at the time of their commencement will not be less
than those that would be provided by purchase of any single consideration
immediate annuity contract offered by the Company at the time to the same class
of annuitants.
TRANSFERS DURING THE ANNUITY PERIOD
The Transfers During The Annuity Period section of your Contract is modified to
provide, in addition to the language relating to transfers among Divisions, the
following:
The payee(s) may transfer, by written request, Contract Values among the
Divisions and/or the General Account subject to the following:
(1) During the Annuity Period, the payee(s) may, by written notice to the
Company: (A) convert Variable Annuity Payments to Fixed Annuity
Payments; or (B) have Variable Annuity Payments reflect the investment
experience of other Separate Account Divisions. The payee(s) may not
convert Fixed Annuity Payments to Variable Annuity Payments.
(2) The amount allocated to the General Account in the event of a transfer
from a Separate Account Division will be equal to the annuity reserve
for the payee's interest in that Separate Account Division. The annuity
reserve is the product of "(a)" multiplied by "(b)" multiplied by "(c)"
where "(a)" is the number of Annuity Units representing the payee's
interest in the Separate Account Division per Annuity payment; "(b)" is
the Annuity Unit Value for the Separate Account Division; and "(c)" is
the present value of $1.00 per payment period as of the Adjusted Age of
the payee attained at time of transfer, determined using the 1983 Table
A, projected at Scale G with interest at the rate of 5% per annum.
Amounts transferred to the General Account will be applied under the
original Annuity Option elected except that adjustment will be made for
the time elapsed since the Annuity Date. All amounts and Annuity Unit
Values will be determined as of the end of the Valuation Period
preceding the effective date of transfer.
GENERAL PROVISIONS
RESERVES, VALUES AND BENEFITS
All reserves are greater than or equal to those required by statute. Any values
and death benefits that may be available under the contract or this Rider are
not less than the minimum benefits required by any statute of the state in which
the Contract is delivered.
All other terms and conditions of the Contract remain unchanged.
Signed for the Company.
/s/ SUSAN L. HARRIS /s/ ROBERT P. SALTZMAN
- ----------------------------- ----------------------------
Susan L. Harris Robert P. Saltzman
Secretary President
FSA-GENA-R1
<PAGE> 22
First SunAmerica
Life Insurance Company
FIRST SUNAMERICA
A SunAmerica Company
505 Park Avenue, 8th Floor
New York, New York 10022
212/888-4540
- --------------------------------------------------------------------------------
VARIABLE ANNUITY QUALIFIED PLAN RIDER
This Rider is a part of the Contract to which it is attached. The effective date
of this Rider is the Issue Date stated in the Contract Data Page.
The attached Contract is issued on a tax qualified basis, so the following
provisions apply:
THE FOLLOWING PROVISIONS apply and replace Contract provisions if the
Application indicates the Contract is to be issued under Internal Revenue Code
("IRC") Section 401 or 408.
(1) Except in the case of a Pension, Profit Sharing, Keogh Plan or an IRC
Section 408(a) Plan, the Owner is the Annuitant.
(2) In the case of a 408(b), a Terminal Funding annuity or Keogh Plan,
transferability is not permitted except to us on surrender or
settlement.
(3) If issued under IRC Section 408(b) or as a Terminal Funding annuity,
this Contract, and the benefits under it, cannot be sold, assigned or
pledged as collateral for a loan or as security for the performance of
an obligation or for any other purpose to any person.
(4) The Annuitant's entire interest in this Contract is nonforfeitable.
(5) The Contract is amended as follows:
(A) Any payments under Annuity Option 1, if applicable, will be made
only to the Annuitant or the Annuitant's Beneficiary. The
guaranteed period will not exceed the life expectancy of the
Annuitant at the time the first payment is due. "Life expectancy"
means expectancy of life as determined according to the
individual annuity mortality tables we use as of the date on
which the first annuity payment is due.
(B) Any payments under Annuity Option 2, if applicable, will be made
only to the Annuitant and to the Annuitant's spouse, who will be
the payees.
(C) Any payments under Option 3, if applicable, will be made only to
the Annuitant or the Annuitant's Beneficiary. The period of
payment will not exceed the life expectancy of the Annuitant at
the time the first payment is due.
(6) THE FOLLOWING PROVISIONS will apply in addition to the above, and will
replace contrary Contract provisions, if the Application indicates the
Contract is to be issued as an IRA pursuant to IRC Section 408(b), a
rollover IRA pursuant to IRC Section 408(d) or a Simplified Employee
Pension Plan IRA pursuant to IRC Section 408(k).
(A) Within seven days of the date of the Application, you may revoke
the Application and receive a full refund of the Purchase
Payments paid. Your notice of revocation must be made be wire or
telephone to us at our Annuity Service Office.
(B) Except in the case of a rollover contribution, the total
annual Purchase Payments may not exceed the dollar limitation
for an IRA or a Simplified Employee Pension Plan IRA. For an
IRA, such dollar limitation will not exceed an amount equal to
100% of the compensation includable is an Annuitant's gross
income for any taxable year or $2,000, whichever is less. For
a Simplified Employee Pension Plan IRA, the dollar limitation
will not exceed an amount equal to 15% of compensation
includable in an Annuitant's gross income for any taxable year
or $30,000, whichever is less.
FSA-QUAL-R2
<PAGE> 23
(C) The Annuity Date will be no later than April 1 of the calendar
year during which the Annuitant attains age 70 1/2.
(D) A declaration of the Annuitant's intention as to the
disposition of the amount to be paid must be furnished to us
at our Annuity Service Office, except if the Annuitant attains
age 59 1/2, dies or becomes disabled, meaning unable to engage
in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be
expected to result in death or to be of long-continued and
indefinite duration,
(E) This Contract is established for the exclusive benefit of the
Annuitant and the Annuitant's Beneficiary.
(F) Life expectancy and joint and last survivor expectancy are
computed by use of the return multiples contained in Section
1.72-9 of the Income Tax Regulations.
(G) If the Annuitant dies before the Annuity Date, the Annuitant's
entire interest will be distributed in accordance with one of the
following four provisions:
(i) The Annuitant's entire interest will be paid within five
(5) years after the date of the Annuitant's death.
(ii) If the Annuitant's interest is payable to a
Beneficiary designated by the Annuitant and the
Annuitant has not elected (i) above, then the entire
interest will be distributed in substantially equal
installments over the life or life expectancy of the
Beneficiary beginning no later than one (1) year
after the date of the Annuitant's death. The
Beneficiary may elect at any time to receive greater
payments.
(iii) If the Beneficiary is the Annuitant's surviving
spouse, the spouse may elect within the five year
period beginning with the Annuitant's date of death
to receive equal or substantially equal payments over
the life or life expectancy of the surviving spouse
beginning at any date prior to the date on which the
deceased Annuitant would have attain age 70 1/2. The
surviving spouse may accelerate these payments at any
time.
(iv) If the Beneficiary is the Annuitant's surviving
spouse, the spouse may treat this Contract as his or
her own individual retirement arrangement (IRA).
This election will be deemed to have been made if the
surviving spouse makes a regular IRA contribution to
this Contract, makes a rollover to or from this
Contract or fails to elect any of the above three
provisions.
(H) If the Annuitant dies after the Annuity Date, any remaining
distribution will be made at least as rapidly as under the method
used prior to the Annuitant's death.
(I) Any payments made to a child of the Annuitant will be treated as
if paid to the Annuitant's spouse if, when the child reaches the
age of majority, remaining payments become payable to the spouse.
(J) Any refund of Purchase Payments (other than those attributable to
excess contributions) will be applied as future Purchase Payments
or to purchase additional benefits before the end of the calendar
year following the year of refund.
(K) The Company may, at its option, terminate this Contract by
payment in cash of the then present value of the paid-up benefit
if no Purchase Payments have been received for three (3) full
consecutive Contract Years and the paid-up annuity benefit at
maturity would be less than $20.00 per month.
FSA-QUAL-R2
<PAGE> 24
(7) THE FOLLOWING PROVISIONS in addition to those previously stated,
will apply and replace contrary Contract provisions, if the
Application indicates the Contract is to be issued under a Keogh
Plan pursuant to IRC Section 401.
(A) The Annuitant of this Contract will be the Participant
under the Plan and the Owner of this Contract will be the
Employer under the Plan.
(B) Unless another form of annuity payment is elected as
provided in this Contract, an Annuity will be paid under
Annuity Option 2, with the Annuitant's spouse's continuing
benefit established at 100%.
(8) THE FOLLOWING PROVISIONS, in addition to those previously stated,
will apply and replace contrary Contract provisions, if the
Application indicates the Contract is to be issued under IRC
Section 401 or 408(k).
(A) The last paragraph of the VARIABLE ANNUITY section of the
ANNUITY PERIOD provision is deleted and replaced by the
following paragraph:
"The Annuity Tables contained in this Contract are based
on the 1983 Table A, projected at Scale G with interest as
the rate of 5% per annum and assume births in the year
1942. Under the Annuity Options included in the Annuity
Tables, the amount of each installment will depend upon
the adjusted age of the Annuitant, the joint annuitant, if
any, or other payee. The adjusted age is determined from
the actual age nearest birthday at the time the first
scheduled payment is due according to the Table A below".
(B) The EVIDENCE OF AGE, SEX AND SURVIVAL section of the
ANNUITY PERIOD provision is deleted and replaced by the
following section entitled "EVIDENCE OF AGE AND SURVIVAL":
"EVIDENCE OF AGE AND SURVIVAL - We may require
satisfactory evidence of: (1) the age of any person(s) on
whose life the annuity payments are to be based; and (2)
the continued survival of any person(s) on whose life
annuity payments are based."
(C) The MISSTATEMENT OF AGE AND SEX section of the GENERAL
PROVISIONS is deleted and replaced by the following
section entitled "MISSTATEMENT OF AGE":
"MISSTATEMENT OF AGE - If a payee's age has been
misstated, any amount to be paid based on such age will be
adjusted. The adjustment will be made on the basis of the
corrected information without changing the date of the
first payment. The amount of any underpayment will be paid
accrued at the interest rate of 6%. The amount of any
overpayment will be deducted from payments subsequently
accruing at the interest rate of 6%.
<PAGE> 25
(D) The Tables of Monthly Installments under Option 1 are
deleted and replaced by the following:
TABLES OF MONTHLY INSTALLMENTS UNDER OPTION 1
Monthly installments for ages not shown will be furnished on request.
OPTION 1 Life Annuity with Installments Guaranteed
<TABLE>
<CAPTION>
Guaranteed Period - 10 Years
Adjusted Monthly Installment Adjusted Monthly Installments
Age for each $1,000 of Age for each $1,000 of
- ------------ Amount Applied ------------- Amount Applied
Male Female Male Female
- ---------------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C>
40 46 $4.74 58 64 $5.63
41 47 4.77 59 65 5.70
42 48 4.81 60 66 5.79
43 49 4.84 61 67 5.87
44 50 4.88 62 68 5.96
45 51 4.92 63 69 6.06
46 52 4.96 64 70 6.15
47 53 5.00 65 71 6.26
48 54 5.05 66 72 6.36
49 55 5.09 67 73 6.48
50 56 5.14 68 74 6.59
51 57 5.29 69 75 6.71
52 58 5.24 70 6.84
53 59 5.30 71 6.97
54 60 5.36 72 7.10
55 61 5.42 73 7.23
56 62 5.49 74 7.37
57 63 5.56 75 7.51
- --------------------------------------------------------------------------------
</TABLE>
"Guaranteed Period - 20 Years" table on the following page.
<PAGE> 26
OPTION 1 Life Annuity with Installments Guaranteed
Guaranteed Period - 20 Years
<TABLE>
<CAPTION>
Monthly Installment Monthly Installments
Adjusted for each $1,000 of Adjusted for each $1,000 of
Age Amount Applied Age Amount Applied
- ---------------------------------- -------------------------------------------
<S> <C> <C> <C>
40 $4.69 58 $5.39
41 4.72 59 5.44
42 4.75 60 5.49
43 4.78 61 5.54
44 4.81 62 5.59
45 4.84 63 5.65
46 4.87 64 5.70
47 4.91 65 5.75
48 4.95 66 5.81
49 4.98 67 5.86
50 5.02 68 5.91
51 5.06 69 5.96
52 5.11 70 6.01
53 5.15 71 6.06
54 5.19 72 6.10
55 5.24 73 6.15
56 5.29 74 6.19
57 5.34 75 6.22
- --------------------------------------------------------------------------------
</TABLE>
(E) The Table of Monthly Installments under Option 2 is deleted
and replaced by the following:
TABLE OF MONTHLY INSTALLMENTS UNDER OPTION 2
Monthly installments for ages or combination of ages not shown
will be furnished on request.
OPTION 2 Joint and Survivor Annuity
Adjusted Age Adjusted Age of Annuitant
of Other Payee -----------------------------------------------------------------
51 56 58 61 63 66 71
- --------------------------------------------------------------------------------
50 $ 4.72 $ 4.80 $ 4.84 $ 4.88 $ 4.91 $ 4.95 $ 5.01
55 4.81 4.92 4.96 5.03 5.07 5.13 5.23
57 4.84 4.97 5.02 5.09 5.14 5.21 5.32
60 4.89 5.04 5.10 5.19 5.25 5.34 5.47
62 4.93 5.08 5.15 5.25 5.32 5.42 5.58
65 4.97 5.15 5.23 5.35 5.43 5.55 5.75
70 5.04 5.25 5.35 5.50 5.60 5.77 6.05
- --------------------------------------------------------------------------------
All other terms and conditions of the Contract remain unchanged.
Signed for the Company.
/s/ SUSAN L. HARRIS /s/ ROBERT P. SALTZMAN
- -------------------------- -------------------------
Susan L. Harris Robert P. Saltzman
Secretary President
FSA-QUAL-R2
<PAGE> 27
First SunAmerica
Life Insurance Company First SunAmerica
A SunAmerica Company
505 Park Avenue, 8th Floor
New York, New York 10022
212/888-4540
- --------------------------------------------------------------------------
TAX SHELTERED VARIABLE ANNUITY RIDER
This Rider is a part of the Contract to which it is attached. The effective date
of this Rider is January 1, 1989, or later, the Contract Date (or Issue Date)
shown on the Contract Data Page. However, or tax sheltered annuity programs
established prior to January 1, 1989, the provisions of this Rider shall be
effective at any earlier date(s) as provided by law or regulation.
THE FOLLOWING PROVISIONS APPLY IF THE CONTRACT IS TO BE OR WAS ISSUED AS A
TAX-DEFERRED ANNUITY AS SPECIFIED UNDER SECTION 403(B) OF THE INTERNAL REVENUE
CODE. THE RIDER WILL BE AMENDED TO COMPLY WITH ANY CHANGES IN THE INTERNAL
REVENUE CODE PURSUANT TO SECTION 403(B).
(1) All references in this Contract to:
(a) "Internal Revenue Code" or "IRC" means the Internal Revenue Code
of 1986, as amended and all rules and regulations thereunder; and
(b) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended. A reference to an IRC Section includes any
successor or substituted provision and the regulations issued
thereunder.
(2) The Contract Owner is the Annuitant. The Annuitant must be an employee
("Employee") of an employer described in IRC Section 403(b)(1)(A)
("Employer"). If an Annuitant's employment with the Employer is
terminated, the Annuitant may continue to participate hereunder to the
extent of the Contract Value. No further Purchase Payments will be
accepted by us under the Contract on behalf of any Annuitant who is no
longer employed by the Employer. However, if an Annuitant is employed by
another Employer described in IRC Section 403(b)(1)(A) ("Successor
Employer"), the Annuitant may continue to participate hereunder and
future Purchase Payments may continue to be made. Any reference to
Employer in this Rider shall include a Successor Employer.
(3) Except as otherwise provided in the Internal Revenue Code, Purchase
Payments must be made by the Employer. Purchase Payments made for an
Annuitant's taxable year, other than rollover contributions, as defined
in IRC Section 403(b)(8) or 408(d)(3)(A)(iii), or a transfer made hereto
pursuant to IRC Section 1035, may not exceed:
(a) the exclusion allowance for a taxable year determined pursuant
to IRC Section 403(b)(2);
(b) the maximum amount permitted to be contributed for a taxable year
under IRC Section 415; and/or
(c) the applicable amount specified in IRC Section 402(g) for salary
reduction contributions (or elective deferrals) made under a
salary reduction agreement, as defined in IRC Section
402(g)(3)(C), except as otherwise provided in IRC Section 402(g),
provided that the limitation specified in IRC Section
403(b)(1)(e) is not exceeded. All Purchase Payments are subject
to our approval and acceptance.
(4) The Annuitant's entire interest in this Contract is 100 percent vested
and nonforfeitable. The Annuitants interests, rights and options under
this Contract are at all times subject to requirements and limitations
imposed by any plan pursuant to which this Contract was purchased, the
IRC and ERISA.
We are not a party to, nor bound by, any Plan or any other document or
agreement issued in connection with any Plan, other than this Contract.
We are not responsible for seeing that the funds under this Contract are
sufficient to provide the benefits under any Plan. The provisions of
this Contract govern with respect to Our rights and obligations, and
control over contrary provisions of any Plan.
FSA-TSA-R3
<PAGE> 28
(5) This Contract, and the benefits under it, cannot be sold, transferred,
assigned, discounted or pledged as collateral for a loan or as security
for the performance of any obligations or for any other purpose to any
person other than us. Payments under this Contract may not be commuted,
assigned, encumbered or anticipated in any manner.
(6) Withdrawal of amounts attributable to contributions made pursuant to a
salary reduction agreement, as defined in IRC Section 403(b)(11), may be
made only: (a) when the Contract Owner (Annuitant) attains age 50 1/2,
separates from service, dies or becomes disabled, meaning unable to
engage in any substantial gainful activity be reason of any medically
determinable physical or mental impairment which can be expected to
result in death or to be of long-continued and indefinite duration, or
in the case of hardship and (b) as determined in accordance with IRC
Section 403(b)(11), including with respect to the existence of hardship
circumstances.
A hardship withdrawal may not include any income attributable to salary
reduction contributions.
The limitations on withdrawal apply only to salary reduction
contributions made after December 31,1988 and to income attributable to
such contributions and to income attributable to amounts held as of
December 31, 1988.
A withdrawal may be taxable and may be subject to penalty tax. If a
withdrawal is taxable, we will process required tax withholding against
the Contract Value. A Contract Owner (Annuitant) should first consult
with a tax advisor before making a withdrawal. A withdrawal which
violates these limitations may also immediately disqualify the Contract
Owner's Annuitant's) TSA under IRC Section 403(b) and may result in
immediate taxation.
(7) The Contract is amended as follows:
(a) Any payments under Annuity Option 1, if applicable, will be
made only to the Annuitant or the Annuitant's Beneficiary.
The guaranteed period cannot exceed the life expectancy of the
Annuitant, or the Beneficiary, at the time the first payment
is due. "Life expectancy" means expectation of life as
determined according to the individual annuity mortality
tables we use as of the date on which the first annuity
payment is due.
(b) Any payments under Annuity Option 2, if applicable, will be made
only to the Annuitant and to the Annuitant's spouse, who will be
the payees.
(c) Any payments under Annuity Option 3, if applicable, will be made
only to the Annuitant or the Annuitant's Beneficiary. The period
of payment cannot exceed the life expectancy of the Annuitant, or
the Beneficiary, at the time the first payment is due.
(d) The Annuity Option elected by an Annuitant or by or for a
Beneficiary shall meet the requirements of the Internal Revenue
Code.
(e) We will make payments in one lump sum, if the Contract Value to
be applied is less than $2,000, but only if this is permitted
under the Internal Revenue Code.
(8) The Annuity Date must be no later than, and can not be deferred beyond,
April 1 following the calendar year during which the Annuitant attains
age 70 1/2, except:
(a) for a governmental plan or church plan (as defined in IRC Section
89(i)(4)) for which the required beginning date shall mean April
1 of the calendar year following the later of (i) the calendar
year in which the Annuitant attains age 70 1/2, or (ii) the
calendar year in which the Annuitant retires; or
(b) as otherwise provided by law or regulation.
FSA-TSA-R3
<PAGE> 29
(9) If an Annuitant dies before the Annuity Date, the entire Death Benefit
must be distributed pursuant to the one of the following:
(a) the Annuitant's entire value will be paid within 5 years after
the date of the Annuitant's death, whether as a single sum
payment or otherwise; or
(b) if the Death Benefit is payable to a Beneficiary designated by
the Contract Owner (Annuitant) and the Beneficiary has elected to
receive annuity payments, then the entire value will be
distributed according to the Annuity Option elected. The term of
the Annuity Option may not exceed the Beneficiary's life
expectancy. Annuity payments must begin no later than one year
after the Annuitant's death; or
(c) if the Beneficiary is the Annuitant's spouse, distribution must
begin no later than the date on which the deceased Annuitant
would have attained age 70 1/2.
If the payee dies after the Annuity Date, he death proceeds, if any,
will depend upon the form of Annuity Option in effect at the time of the
payee's death. If the payee dies after the Annuity Date and before the
entire value in the Annuitant's account has been distributed, the
remaining value, if any, as provided for in the Option selected will be
distributed at least as rapidly as under the method of distribution in
effect at the payee's death.
(10) All contract payments and withdrawals attributed to (a) non-salary
reduction contributions made by a non-governmental employer on behalf of
the Annuitant, which are subject to ERISA, and (b) salary reduction
contributions made by a non-governmental employer for the Annuitant,
which are determined to be subject to ERISA, are subject to the
applicable qualified joint and survivor annuity requirements under IRC
Section 401(a)(11) and 417. If such requirements apply, then we may
require the written and signed consent and waiver to the Annuitant's
spouse. Such consent and waiver shall be in a form as required by law.
(11) The Annuitant or Beneficiary will furnish us with any records, data,
proofs and all other information which in our opinion, is necessary for
the administration of this Contract.
(12) The last paragraph of the VARIABLE ANNUITY provision of the ANNUITY
PERIOD section, the EVIDENCE OF AGE, SEX AND SURVIVAL provision of the
ANNUITY PERIOD section, and the MISSTATEMENT OF AGE OR SEX provision of
the GENERAL PROVISIONS section are changed by deleting any reference to
sex as a required factor in issuing this Contract or as a basis in
determining any annuity amounts paid pursuant to this Contract.
<PAGE> 30
(13) The Tables of Monthly Installments under Option 1 are deleted and
replaced by the following:
TABLES OF MONTHLY INSTALLMENTS UNDER OPTION
Monthly installments for ages not shown will be furnished on request.
OPTION 1 Life Annuity with Installments Guaranteed
Guaranteed Period - 10 Years
<TABLE>
<CAPTION>
Monthly Installment Monthly Installments
Adjusted for each $1,000 of Adjusted for each $1,000 of
Age Amount Applied Age Amount Applied
- ---------------------------------- --------------------------------------
<S> <C> <C> <C>
40 $4.74 58 $5.63
41 4.77 59 5.70
42 4.81 60 5.79
43 4.84 61 5.87
44 4.88 62 5.96
45 4.92 63 6.06
46 4.96 64 6.15
47 5.00 65 6.26
48 5.05 66 6.36
49 5.09 67 6.48
50 5.14 68 6.59
51 5.29 69 6.71
52 5.24 70 6.84
53 5.30 71 6.97
54 5.36 72 7.10
55 5.42 73 7.23
56 5.49 74 7.37
57 5.56 75 7.51
- --------------------------------------------------------------------------------
</TABLE>
OPTION 1 Life Annuity with Installments Guaranteed
Guaranteed Period - 20 Years
<TABLE>
<CAPTION>
Monthly Installment Monthly Installments
Adjusted for each $1,000 of Adjusted for each $1,000 of
Age Amount Applied Age Amount Applied
- ---------------------------------- ---------------------------------------
<S> <C> <C> <C>
40 $4.69 58 $5.39
41 4.72 59 5.44
42 4.75 60 5.49
43 4.78 61 5.54
44 4.81 62 5.59
45 4.84 63 5.65
46 4.87 64 5.70
47 4.91 65 5.75
48 4.95 66 5.81
49 4.98 67 5.86
50 5.02 68 5.91
51 5.06 69 5.96
52 5.11 70 6.01
53 5.15 71 6.06
54 5.19 72 6.10
55 5.24 73 6.15
56 5.29 74 6.19
57 5.34 75 6.22
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 31
(14) The Table of Monthly Installments under Option 2 is deleted and replaced
by the following:
TABLE OF MONTHLY INSTALLMENTS UNDER OPTION
Monthly installments for ages or combination of ages not shown
will be furnished on request.
OPTION 2 Joint Survivor Annuity
<TABLE>
<CAPTION>
Adjusted Age Adjusted Age of Annuitant
of Other Payee ---------------------------------------------------------------
51 56 58 61 63 66 71
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 $4.72 $4.80 $4.84 $4.88 $4.91 $4.95 $5.01
55 4.81 4.92 4.96 5.03 5.07 5.13 5.23
57 4.84 4.97 5.02 5.09 5.14 5.21 5.32
60 4.89 5.04 5.10 5.19 5.25 5.34 5.47
62 4.93 5.08 5.15 5.25 5.32 5.42 5.58
65 4.97 5.15 5.23 5.35 5.43 5.55 5.75
70 5.04 5.25 5.35 5.50 5.60 5.77 6.05
- --------------------------------------------------------------------------------
</TABLE>
All other terms and conditions of the Contract remain unchanged.
Signed for the Company.
/s/ SUSAN L. HARRIS /s/ ROBERT P. SALTZMAN
- -------------------------- -------------------------
Susan L. Harris Robert P. Saltzman
Secretary President
FSA-TSA-R3
<PAGE> 1
EXHIBIT 5
<TABLE>
<S> <C>
-----------------------------------------------------------
| | 01 |
FIRST SUNAMERICA | SEND APPLICATION AND CHECK TO: -----|
LIFE INSURANCE COMPANY | FIRST SUNAMERICA LIFE INSURANCE COMPANY |
733 THIRD AVENUE, FOURTH FLOOR | P.O. BOX 100357 |
NEW YORK, NEW YORK 10017 | LOS ANGELES, CA 91189-0357 |
-----------------------------------------------------------
VARIABLE ANNUITY APPLICATION
- -------------------------------------------------------------------------------------------------------------------
1. ANNUITANT 2. JOINT ANNUITANT
(a) Name __________________________________________ (a) Name __________________________________________
(b) Address _______________________________________ (b) Address _______________________________________
City __________________________________________ City __________________________________________
State ________________________ Zip ____________ State ________________________ Zip ___________
(c) M [ ] F [ ] (c) M [ ] F [ ]
(d) Social Security No. ___________________________ (d) Social Security No. ___________________________
(e) Date of Birth _________________________________ (e) Date of Birth _________________________________
Monthly Annuity Payments to begin on the date
listed here: ______________________________________
- -------------------------------------------------------------------------------------------------------------------
3. OWNERSHIP 4. JOINT OWNERSHIP
(Complete only if different from Annuitant) (Joint Owner must be Spouse and Primary Beneficiary)
(a) Name __________________________________________ (a) Name __________________________________________
(b) Address _______________________________________ (b) Address _______________________________________
City __________________________________________ City __________________________________________
State ________________________ Zip ____________ State _____________________________ Zip________
(c) Social Security No. ___________________________ (c) Social Security No. ___________________________
(d) Date of Birth _________________________________ (d) Date of Birth _________________________________
- -------------------------------------------------------------------------------------------------------------------
5. BENEFICIARIES (Show full names[s], relationship[s] and percentage each is to receive)
Primary Beneficiary ________________________________________________________________________________________
Contingent Beneficiary _____________________________________________________________________________________
- -------------------------------------------------------------------------------------------------------------------
6. TYPE OF PLAN 7. QUALIFIED TAX DEFERRED RETIREMENT PLANS
(a) [ ] Qualified (Complete Item 7) [ ] TERMINAL [ ] Direct Funding from Qualified Plan
[ ] Nonqualified [ ] 1035 Exchange FUNDING [ ] 1035 Exchange
-----------------------------------
(b) Initial Purchase Payment $_____________________ [ ] 401 QUALIFIED [ ] KEOGH (HR-10) Plan [ ] 401 (k)
Planned Subsequent Purchase Payments $_________ PLAN [ ] Corporate Plan
Subsequent purchase payments will be allocated HAS THE APPROPRIATE PLAN
as shown unless otherwise directed. BEEN ESTABLISHED: [ ] Yes [ ] No
-----------------------------------
(c) TOTAL ALLOCATION MUST EQUAL 100% [ ] 403 (b) [ ] Periodic Purchase [ ] 1035 Exchange
PORTFOLIOS TSA [ ] Public School
Money Market Portfolio ............ ___________% [ ] 501 (c) Non-Profit Organization
Government and Quality Bond Complete the acknowledgement on the
Portfolio ......................... ___________% reverse side of this application
Fixed Income Portfolio ............ ___________% -----------------------------------
Growth Portfolio .................. ___________% [ ] DEFERRED [ ] Period Purchase [ ] 1035 Exchange
High Yield Portfolio .............. ___________% COMPENSATION [ ] Non-Qualified
Capital Appreciation .............. ___________% -----------------------------------
Foreign Securities Portfolio ...... ___________% [ ] 408 IRA
Convertible Securities Portfolio .. ___________% TYPE OF PLAN [ ] Employee [ ] Working Spouse
Multi-Asset Portfolio ............. ___________% [ ] Non-Working Spouse
Strategic Multi-Asset Portfolio ... ___________%
Natural Resources Portfolio ....... ___________% SINGLE [ ] SEP-IRA Rollover
Target '98 Portfolio .............. ___________% CONTRIBUTION [ ] IRA Rollover from Qualified Plan
GENERAL ACCOUNT ................... %
=========== CONTINUING [ ] Regular IRA Year _______________
TOTAL ALLOCATION 100 % CONTRIBUTION [ ] Regular IRA Rollover
----------- [ ] Regular SEP-IRA Year ___________
- -------------------------------------------------------------------------------------------------------------------
8. CUSTOMER IDENTIFICATION NUMBER, IF APPLICABLE.
- -------------------------------------------------------------------------------------------------------------------
9. SPECIAL REQUESTS
- -------------------------------------------------------------------------------------------------------------------
10. CHECK HERE IF YOU WISH TO RECEIVE A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION. [ ]
- -------------------------------------------------------------------------------------------------------------------
11. IS THE ANNUITY APPLIED FOR TO REPLACE OR CHANGE ANY EXISTING LIFE INSURANCE OR ANNUITY? [ ] Yes [ ] No
- -------------------------------------------------------------------------------------------------------------------
FSA-CAP-APP1 FIRST SUNAMERICA F-5271NB (8/95)
</TABLE>
<PAGE> 2
- --------------------------------------------------------------------------------
12. I (WE) ACKNOWLEDGE RECEIPT OF THE CURRENT PROSPECTUS OF VARIABLE ANNUITY
ACCOUNT ONE AND ANCHOR SERIES TRUST. PAYMENTS AND VALUES PROVIDED BY THE
CONTRACT FOR WHICH APPLICATION IS MADE ARE VARIABLE AND ARE NOT GUARANTEED AS
TO DOLLAR AMOUNT. I (WE) CERTIFY, UNDER PENALTY OF PERJURY, THAT THE ABOVE
SOCIAL SECURITY NUMBER IS CORRECT.
This application has been signed in _________________________________, _________
City State
on___________________________________________________ month _________day 19 ____
Signature Signature
of Annuitant __________________________________ of Owner ______________________
(Owner unless otherwise indicated) (If other than Annuitant)
- --------------------------------------------------------------------------------
13. AGENT'S REPORT If Yes, [ ] Life Insurance
indicate which, cost [ ] Annuity
Is the annuity to basis and submit
replace or change any required replacement
existing life insurance [ ] Yes forms.
or annuity? [ ] No Cost Basis $______________
Signature of Agent _______________________________ Phone Number (___) __________
Name and Number of Agent _______________________________________________________
Name and Address of Firm _______________________________________________________
City_____________________________________________________ State ____ Zip ______
- --------------------------------------------------------------------------------
TAX SHELTERED ANNUITIES
403 (b) TSA
PARTICIPANT'S ACKNOWLEDGEMENT
I have entered into a salary reduction agreement [as defined in Internal
Revenue Code Section 402(g)(3)(C)] with my employer. Under that agreement,
contributions will be made to a retirement plan which receives favorable tax
treatment under Section 403(b) of the Internal Revenue Code. The retirement
plan is funded by a variable annuity contract issued by First SunAmerica Life
Insurance Company.
I hereby acknowledge that I understand the restrictions on redemption imposed
by Section 403(b)(11) of the Internal Revenue Code on the contributions made to
a Section 403(b) retirement plan and the earnings thereon. I also acknowledge
that I understand that there may be other investment alternatives available
under my employer's Section 403(b) arrangement to which I may elect to transfer
my contract value.
I have received a current prospectus for the variable annuity contract which
funds my 403(b) retirement plan, and acknowledge that it includes an
explanation of the withdrawal restrictions imposed by the Internal Revenue Code.
Dated
------------------------------------------------
- ------------------------------------------------------
(Signature of Participant)
- ------------------------------------------------------
(Print Name of Participant)
F-5271NB (8/95)
<PAGE> 1
EXHIBIT 6A
Short Certificate
State of New York
Insurance Department
It is hereby certified that the annexed copy of the Agreement and Plan of Merger
of JOHN ALDEN LIFE INSURANCE COMPANY OF NEW YORK, of Montebello, New York, into
FIRST SUNAMERICA LIFE INSURANCE COMPANY, of New York, New York (surviving
corporation), effective October 31, 1997, approved by this Department November
5, 1997, pursuant to Section 7105 of the New York Insurance Law
has been compared with the original on file in this Department and that it is a
correct transcript therefrom and of the whole of said original.
(SEAL) In Witness Whereof, I have hereunto set my hand and
affixed the official seal of this Department at the
City of Albany, this 5th day of November 1997.
/s/ Peter J. Molinaro
-----------------------------
Special Deputy Superintendent
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
of
JOHN ALDEN LIFE INSURANCE COMPANY OF NEW YORK
and FIRST SUNAMERICA LIFE INSURANCE COMPANY
Into FIRST SUNAMERICA LIFE INSURANCE COMPANY
--------------------------------------------
The following plan of merger has been approved by the Board of Directors of
JOHN ALDEN LIFE INSURANCE COMPANY OF NEW YORK by unanimous written consent of
its Board of Directors dated June 1, 1997. The plan of merger has been approved
by the Board of Directors of FIRST SUNAMERICA LIFE INSURANCE COMPANY, by
unanimous written consent of its Board of Directors dated June 1, 1997.
1. (a) The name of each constituent corporation to the merger is JOHN ALDEN
LIFE INSURANCE COMPANY OF NEW YORK, formerly known as American Accident
and Health Insurance Company, and FIRST SUNAMERICA LIFE INSURANCE
COMPANY, formerly known as The Capitol Life Insurance Company of New
York.
(b) The name of the surviving corporation is FIRST SUNAMERICA LIFE
INSURANCE COMPANY.
2. (a) JOHN ALDEN LIFE INSURANCE COMPANY OF NEW YORK has outstanding 360,000
shares of common stock, par value $20 per share.
(b) FIRST SUNAMERICA LIFE INSURANCE COMPANY has outstanding 300 shares of
common stock, par value $10,000 per share.
(c) The number of shares mentioned above is not subject to change prior
to the effective date of the merger.
3. The terms and conditions of the merger are as follows:
The charter of FIRST SUNAMERICA LIFE INSURANCE COMPANY, a constituent
corporation, shall be amended and restated in the form attached hereto and shall
be the charter of the surviving corporation and the by-laws of FIRST SUNAMERICA
LIFE INSURANCE COMPANy as in effect immediately prior to the time the merger
becomes effective shall be the by-laws of the surviving corporation.
The first annual meeting of the shareholders of the surviving corporation
held after the effective date of this merger shall be the next annual meeting
provided by the by-laws of FIRST SUNAMERICA LIFE
<PAGE> 3
INSURANCE COMPANY, one of the constituent corporations.
All persons who, on the date the merger becomes effective, are the
executive or administrative officers of FIRST SUNAMERICA LIFE INSURANCE COMPANY,
one of the constituent corporations, shall be and remain like officers of the
surviving corporation, until the board of directors of the surviving corporation
elects their respective successors, and the firm approved by the shareholders of
FIRST SUNAMERICA LIFE INSURANCE COMPANY as its auditors for 1997 shall be the
auditors of the surviving corporation for 1997.
The surviving corporation, FIRST SUNAMERICA LIFE INSURANCE COMPANY, shall
pay all expenses of carrying this plan of merger into effect and of
accomplishing the merger. When the merger shall become effective, the separate
existence of JOHN ALDEN LIFE INSURANCE COMPANY OF NEW YORK shall cease and said
corporation shall be merged into the surviving corporation, which shall possess
all the rights, privileges, powers and franchises of a public as well as of a
private nature and be subject to all the restrictions, disabilities, and duties
of each of the corporations that are parties to this agreement. The surviving
corporation shall be vested with the rights, privileges, powers, and franchise
of each of the constituent corporations; all property, real, personal, and
mixed; all debts due to each of the corporations on whatever account; as well as
for share subscriptions and all other things in action or belonging to each of
the corporations.
The title to any real estate, whether by deed or otherwise, vested in any
of the corporation shall not revert or be in any way impaired by reason of this
merger, provided that all rights of creditors and all liens upon the property of
any of the corporations shall be preserved unimpaired, and all debts,
liabilities, and duties of JOHN ALDEN LIFE INSURANCE COMPANY OF NEW YORK shall
attach to the surviving corporation, and may be enforced against it to the same
extent as if those debts, liabilities, and duties had been incurred or
contracted by it.
If at any time the surviving corporation shall consider or be advised that
any further assignments or assurances in law or any things are necessary or
desirable to vest in the surviving corporation the title to any property or
rights of JOHN ALDEN LIFE INSURANCE COMPANY OF NEW YORK, the proper officers and
directors of JOHN ALDEN LIFE INSURANCE COMPANY OF NEW YORK shall execute and
make all proper assignments and assurances and do all things necessary to vest
title in such property or rights in the surviving corporation, and otherwise to
carry out the purposes of this plan of merger.
<PAGE> 4
4. The manner and basis of conversion of the shares of the constituent
corporation are as follows:
(a) immediately upon effectiveness of the Merger, the outstanding $20 par
value shares of common stock of JOHN ALDEN LIFE INSURANCE COMPANY OF NEW YORK
are to be canceled and retired and will cease to exist and the value thereof, as
well as the paid in and contributed surplus, are to be contributed to the paid
in and contributed surplus of the surviving corporation; and
(b) the outstanding $10,000 par value shares of common stock of FIRST
SUNAMERICA LIFE INSURANCE COMPANY will constitute all of the outstanding shares
of the surviving corporation.
5. Notwithstanding authorization by shareholders of both corporations, at any
time prior to the filing of this Agreement and Plan of Merger with each of the
office of the clerk of New York County and the office of the clerk of Rockland
County, this Agreement and Plan of merger may be abandoned either (1) by mutual
consent of the constituent corporation, or (2) by the board of directors of
either corporation, if such board shall, in its exclusive discretion, determine
that to proceed with the merger would be inadvisable for any reason.
6. The effective date of this Agreement and Plan of Merger shall be 11:59 p.m.
Eastern Standard Time on October 31, 1997, provided that FIRST SUNAMERICA LIFE
INSURANCE COMPANY has caused the merger to be consummated by filing in the
office of the clerk of New York County and the office of the clerk of Rockland
County a copy of this Agreement and Plan of Merger with the approval of the New
York Superintendent of Insurance endorsed thereon no later than November 30,
1997.
<PAGE> 5
Date: October 27, 1997
JOHN ALDEN LIFE INSURANCE
COMPANY OF NEW YORK
/s/ Eli Broad
--------------------------
Name: Eli Broad
Title: President
ATTEST:
/s/ Susan L. Harris
- ------------------------
Name: Susan L. Harris
Title: Secretary (SEAL)
FIRST SUNAMERICA LIFE
INSURANCE COMPANY
/s/ Eli Broad
-----------------------
Name: Eli Broad
Title: President
ATTEST:
/s/ Susan L. Harris
- ---------------------
Name: Susan L. Harris (SEAL)
Title: Secretary
<PAGE> 6
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
FIRST: The name of this corporation is FIRST SUNAMERICA LIFE
INSURANCE COMPANY (the "Corporation"). The Corporation
was formed under the name The Capitol Life Insurance
Company of New York.
SECOND: The original certificate of incorporation of the
Corporation was filed with the office of the
Superintendent of Insurance of the State of New York
on December 5, 1978.
THIRD: The certificate of incorporation of the Corporation is
hereby amended and restated in full as follows:
Section 1. The name of the Corporation shall be FIRST SUNAMERICA LIFE
INSURANCE COMPANY.
Section 2. The principal office of the Corporation shall be located in
the county and state of New York.
Section 3. The kinds of insurance to be transacted by the Corporation
shall be:
(a) "Life insurance," meaning every insurance upon the lives of human
beings, and every insurance appertaining thereto, including the granting of
endowment benefits, additional benefits in the event of death by accident,
additional benefits to safeguard the contract from lapse, accelerated payments
of part or all of the death benefit, or a special surrender value upon diagnosis
(A) of terminal illness defined as a life expectancy of twelve months or less or
(B) of a medical condition requiring extraordinary medical care or treatment
regardless of life expectancy, or provide a special surrender value upon total
and permanent disability of the insured, and optional modes of settlement of
proceeds. "Life insurance" also includes additional benefits to safeguard the
contract against lapse in the event of unemployment of the insured. Amounts paid
to the Corporation for life insurance and proceeds applied under optional mode
of settlement or under dividend options may be allocated by the Corporation to
one or more separate accounts pursuant to Section 4240 of the Insurance Law.
<PAGE> 7
(b) "Annuities," meaning all agreements to make periodical payments for a
period certain or where the making or continuance of all or of some of a series
of such payments, or the amount of any such payment depends upon the continuance
of human life, except payments made under the authority of the preceding
sub-paragraph. Amounts paid to the Corporation to provide annuities and proceeds
applied under optional modes of settlement or under dividend options may be
allocated by the Corporation to one or more separate accounts pursuant to
Section 4240 of the New York Insurance Law.
(c) "Accident and health insurance," meaning (a) insurance against death or
personal injury by accident or by any specified kind or kinds of accident and
insurance against sickness, ailment or bodily injury, including insurance
providing disability benefits pursuant to article nine of the worker's
compensation law, except as specified in subparagraph (b) following; and (b)
non-cancellable disability insurance, meaning insurance against disability
resulting from sickness, ailment or bodily injury (but excluding insurance
solely against accidental injury), under any contract which does not give the
insurer the option to cancel or otherwise terminate the contract at or after one
year from its effective date or renewal date.
and such other insurance or other business as a stock like insurance company now
is or hereafter may be permitted to transact under the Insurance Law of the
State of New York or any other law applicable and for which the Corporation
shall have the required capital and surplus.
Section 4. The mode and manner in which the corporate powers of the
Corporation shall be exercised are through a Board of Directors and through such
officers and agents as such Board shall empower.
Section 5. The number of directors of the Corporation shall be not more
than nineteen (19) and in no case shall the number of directors be less than
thirteen (13), the number thereof to be determined as provided in the by-laws.
Each director shall be at least eighteen years of age and at all times a
majority of the directors of the Corporation shall be citizens and residents of
the United States, and at least three shall be resident of the State of New
York.
<PAGE> 8
Section 6. The annual meeting of the stockholders of the Corporation shall
be held on the fourth Tuesday or June of each year for the purpose of electing
directors and for the transaction of such other business as may properly be
brought before the meeting. At such annual meeting the directors shall be
elected for the ensuing year, the directors to take office immediately upon
election and to hold office until the next annual meeting, and until their
successors are elected and qualify. Whenever any vacancy shall occur in the
Board of Directors, by death, resignation or otherwise, the remaining members of
the Board, at a meeting called for that purpose or at any regular meeting, shall
elect a director or directors to fill the vacancy or vacancies then existing and
each director so elected shall hold office for the unexpired term of the
director whose place he has taken.
The officers of the Corporation shall be elected annually by the Board of
Directors of the Corporation at the meeting of the Board held immediately
following the annual meeting of the Stockholders and shall hold office at the
pleasure of the Board of Directors. A vacancy in any office resulting from
death, resignation or from any other cause shall be filled by the Board of
Directors at any meeting of the Board.
Section 7. The Board of Directors shall have power to make by-laws of the
corporation and to amend the same in whole or in part.
Section 8. The duration of the corporate existence of the Corporation shall
be perpetual.
Section 9. The amount of the capital of the Corporation shall be $3,000,000
to consist of 300 shares of a par value of $10,000 per share.
Section 10. No director shall be personally liable to the Corporation or
any of its shareholders for damages for any breach of duty as a director;
provided, however, that the foregoing provisions shall not eliminate or limit
(i) the liability of a director if a judgment or other final adjudication
adverse to him or her establishes that his or her acts or omissions were in bad
faith or involved intentional misconduct or any violation of the Insurance Law
of the State of New York or a knowing violation of any other law or that he or
she personally gained in fact a financial profit or other advantage to which he
or she was not legally entitled or that his or her acts violated Section 719 of
the Business Corporation Law of the State of new York; or (ii) the liability of
a director for any act or omission prior to the adoption of this Section 10 by
the
<PAGE> 9
shareholders of the Corporation.
FOURTH: The foregoing amendment and restatement of the Certificate of
Incorporation of the Corporation was authorized by resolution of the
Board of Directors of the Corporation, followed by the written
consent of the holder of all of the outstanding shares of the
Corporation entitled to vote on said amendment and restatement.
IN WITNESS WHEREOF, we have subscribed this document on the date set forth
below and do hereby affirm, under penalties of perjury, that the statements
contained herein have been examined by us and are true and correct.
Dated: October 27, 1997
FIRST SUNAMERICA LIFE INSURANCE
COMPANY
By: /s/ Eli Broad
---------------------------
Name: Eli Broad
Title: President
By: /s/ Susan L. Harris
--------------------------
Name: Susan L. Harris
Title: Secretary
<PAGE> 1
EXHIBIT 6B
BY-LAWS
OF
FIRST SUNAMERICA LIFE INSURANCE COMPANY
(formerly The Capitol Life Insurance Company of New York)
As Amended January 1, 1996
------
ARTICLE I
STOCKHOLDERS' MEETING
SECTION 1. Annual Meeting. The annual meeting of the stockholders for
the election of the directors and for the transaction of such other business as
may come before such meeting shall be held on the fourth Tuesday in June of each
year.
SECTION 2. Special Meetings. Special meetings of the stockholders may be
called by the Secretary upon written request of the Chairman of the Board, the
President, or of three directors. At a special meeting, no business will be
transacted and no corporate action shall be taken other than that stated in the
notice of the meeting except with the unanimous consent, either in person or by
proxy, of all the stockholders entitled to vote with respect to such business.
SECTION 3. Place of Meetings. All meetings of the stockholders shall be
held at the office of the Company in New York City, or at such other place or
places within or without the State of New York as shall from time to time be
designated by the board of directors.
SECTION 4. Notice of Meetings. Notice of all meetings, annual or
special, shall be given by mailing to each stockholder entitled to vote thereat,
at least ten days and not more than 50 days before such meeting, a written or
printed notice of the time, place and purpose or purposes thereof. Any notice of
meeting which has as one of its purposes the election of directors shall be
filed in the office of the Superintendent of Insurance of the State of New York
at least 10 days prior to the date of any such meeting.
SECTION 5. Quorum. The holders of a majority of the outstanding stock
entitled to vote at any meeting represented in person or by proxy, shall
constitute a quorum for all purposes. In the absence of a quorum, the
stockholders entitled to vote thereat, represented in person or by proxy, may
adjourn the meeting to a day certain.
SECTION 6. Voting. At all meetings of stockholders each share of stock
held by a stockholder entitled to vote on any matter, represented in person or
by proxy, shall be entitled to one vote, provided, however, that no stockholder
shall vote his stock within one year after the date of acquisition thereof or
until 10 days after written notice of acquisition thereof has been filed with
the Superintendent of Insurance of the State of New York, whichever shall first
occur. Proxies shall be in writing and shall be signed by the stockholder. Two
inspectors of election shall be appointed by the Chairman at any stockholders'
meeting at which inspectors are required.
SECTION 7. Written Consent. Any action required or permitted to be taken
at any meeting of stockholders may be taken without a meeting by the written
consent thereto of the stockholders, setting forth such action and signed by the
holders of all the outstanding shares entitled to vote thereon.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. Number, Authority and Qualifications. The business and
property of the Company shall be conducted and managed by a board of directors
consisting of not less than thirteen nor more than nineteen directors. The
number of directors shall be determined by vote of the stockholders at the
annual meeting and until the first such meeting, the number of directors shall
be fourteen. The number of directors determined by the stockholders at any
annual meeting may be increased or decreased, within the limits prescribed in
this section, by vote of the stockholders or the whole board of directors.
<PAGE> 2
At all times a majority of the directors shall be citizens and residents
of the United States, not less than one-third of the directors shall be persons
who are not officers or employees of the Company or of any entity controlling,
controlled by, or under common control with the Company and who are not
beneficial owners of a controlling interest in the voting stock of the Company
or any such entity ("Non-Affiliates"), and not fewer than three directors shall
be residents of the State of New York. Directors shall be at least eighteen
years of age but need not be stockholders.
SECTION 2. Election and Removal. The board of directors shall be elected
at the annual meeting of stockholders to serve until the next annual meeting and
until their successors shall be elected and qualify. Any or all of the directors
may be removed, with or without cause, by vote of the stockholders.
SECTION 3. Vacancies. Whenever any vacancy shall occur in the office of
a director, such vacancy may be filled for the unexpired term by vote of the
stockholders or by majority vote of the remaining directors. Where the number of
directors is increased, additional directors may be elected by the stockholders
or by the board of directors. No director elected pursuant to this section shall
take office or exercise the duties thereof until 10 days after written notice of
his election shall have been filed in the office of the Superintendent of
Insurance of the State of New York.
SECTION 4. Regular Meetings. Regular meetings of the board of
directors shall be held immediately following the annual meeting of the
stockholders and at such intervals and on such dates as the board may designate.
SECTION 5. Special Meetings. Special meetings of the board of
directors may be called by order of the Chairman of the Board, the President or
upon the written request of any two members of the board.
SECTION 6. Place of Meeting. Meetings of the board of directors shall be
held at the office of the Company in New York City or at such other place within
or without the State of New York as may be designated in the notice thereof.
SECTION 7. Notice of Meetings. Notice of all regular or special
meetings, other than the regular meeting held immediately following the annual
meeting of stockholders, shall be given by mailing to each director at least
three days before such meeting, a written or printed notice of the time and
place thereof. Such notice may also be given by telegram or personal delivery at
least one day before such meeting.
SECTION 8. Business Transacted at Meetings. No business and no corporate
action shall be considered at any special meeting of the board of directors
(other than that stated in any notice of such meeting) except by the unanimous
vote of all the directors present at such meeting.
SECTION 9. Quorum. A quorum shall consist of not less than a majority of
the directors then in office, provided, that a quorum must include at least one
Non-Affiliate.
SECTION 10. Action by the Board. Subject to the provisions of Article X,
Sections 4 and 5 hereof, any reference to corporate action to be taken by the
board of directors shall mean such action at a meeting of the board. The vote of
a majority of the directors present at the time of the vote, if a quorum is
present at such time, shall be the act of the board.
SECTION 11. Compensation. The compensation of directors shall be
regulated and determined by the stockholders. Nothing herein contained shall be
construed to preclude any director from serving the Company in any other
capacity, provided that no director who is also an officer of the Company shall
receive any fee for serving as a director of the Company.
ARTICLE III
EXECUTIVE COMMITTEE
SECTION 1. Membership. The board of directors by a majority vote of the
whole board may elect from its own number an Executive Committee, to serve at
the pleasure of the board, consisting of at least five members, one-third of
which are Non-Affiliates. The Executive Committee shall elect from among its
members a Chairman and a Secretary.
<PAGE> 3
SECTION 2. Powers of the Executive Committee. The Executive Committee
during the intervals between meetings of the board of directors shall have and
may exercise, except as otherwise provided by statute, all the powers of the
board with respect to the conduct and management of the business and property of
the Company and shall have power to authorize the seal of the Company to be
affixed to all papers which may require it.
SECTION 3. Meetings. Meetings of the Executive Committee may be called
by order of the Chairman of the Committee or of any two members of the
Committee. The Committee shall prepare regular minutes of the transactions at
its meetings and shall cause them to be recorded in books kept for that purpose.
All actions of the Committee shall be reported to the board of directors at its
next meeting succeeding the date of such action.
SECTION 4. Place of Meetings. Meetings of the Executive Committee shall
be held at the office of the Company in New York City or at such other place,
within or without the State of New York, as may be designated in the notice
thereof.
SECTION 5. Notice of Meetings. Notice of all meetings shall be given by
mailing to each member at least three days before such meeting, a written or
printed notice of the time and place thereof. Such notice may also be given by
telegram or personal delivery at least one day before such meeting.
SECTION 6. Quorum. A quorum shall consist of a majority of the total
number of members of the Committee then in office and shall include at least one
member who is a Non-Affiliate.
ARTICLE IV
FINANCE COMMITTEE
SECTION 1. Membership. The board of directors by a majority vote of the
whole board may elect from its own number a Finance Committee to serve at the
pleasure of the board, consisting of at least five members, one-third of which
are Non-Affilliates the number to be determined by the board of directors. The
Finance Committee shall elect from among its members a Chairman and a Secretary.
SECTION 2. Powers of the Finance Committee. The Finance Committee shall
possess and may exercise all the powers of the board of directors with respect
to the investments of the funds of the Company.
SECTION 3. Meetings. Meetings of the Finance Committee may be called by
order of the Chairman of the Committee or by any two members of the Committee.
The Committee shall prepare regular minutes of the transactions at its meetings
and shall cause them to be recorded in books kept for that purpose. All actions
of the Committee shall be reported to the board of directors at its next meeting
succeeding the date of such action.
SECTION 4. Place of Meeting. Meetings of the Finance Committee shall be
held at the office of the Company in New York City or at such other place within
or without the State of New York as may be designated in the notice thereof.
SECTION 5. Notice of Meetings. Notice of all meetings shall be given by
mailing to each member at least three days before such meeting, a written or
printed notice of the time and place thereof. Such notice may also be given by
telegram or personal delivery at least one day before such meeting.
SECTION 6. Quorum. A quorum shall consist of a majority of the total
number of members of the Committee then in office and shall include at least one
member who is a Non-Affiliate.
ARTICLE V
AUDIT COMMITTEE
SECTION 1. Membership. The board of directors by a majority vote of the
whole board shall elect from its own number an Audit Committee to serve at the
pleasure of the board, consisting of at least five members, all of which are
Non-Affiliates. The Audit Committee shall elect from among its members a
Chairman and a Secretary.
<PAGE> 4
SECTION 2. Powers of the Audit Committee. The Audit Committee shall
possess and have responsibility for recommending the selection of independent
certified public accountants, reviewing the Company's, financial condition, the
scope and results of the independent audit and any internal audit, nominating
candidates for director for election by shareholders or policyholders, and
evaluating the performance of officers deemed by the Audit committee to be
principal officers of the Company and recommending to the whole board the
selection and compensation of such principal officers.
SECTION 3. Meetings. Meetings of the Audit Committee may be called by
order of the Chairman of the Committee or by any two members of the Committee .
The Committee shall prepare regular minutes of the transactions at its meetings
and shall cause them to be recorded in books kept for that purpose. All actions
of the Committee shall be reported to the board of directors at its next meeting
succeeding the date of such action.
SECTION 4. Place of Meeting. Meetings of the Audit Committee shall be
held at the office of this Corporation in New York City or at such other place
within or without the State of New York as may be designated in the notice
thereof.
SECTION 5. Notice Of Meeting. Notice of all meetings shall be given by
mailing to each member at least three days before such meeting, a written or
printed notice of the time and place thereof. Such notice may also be given by
telegram or personal delivery at least one day before such meeting.
SECTION 6. Quorum. A quorum shall consist of a majority of the total
number of members of the Committee then in office.
ARTICLE VI
OFFICERS
SECTION 1. Duties in General. All officers of the Company, in addition
to the duties prescribed by the by-laws, shall perform such duties in the
conduct and management of the business and property of the Company as may be
determined by the board of directors. In the case of more than one person
holding an office of the same title, any of them may perform the duties of the
office except insofar as the board of directors, the Chairman of the Board, or
the President may otherwise direct.
SECTION 2. Number of Designation. The officers of the Company shall be a
Chairman of the Board, a President, one or more Vice Presidents, a Secretary, a
Treasurer, one or more Assistant Secretaries, one or more Assistant Treasurer,
and one or more Assistant Vice Presidents, and such other officers as the board
of directors may from time to time deem advisable.
SECTION 3. Election and Term of Office. All officers shall be elected
annually by the board of directors at the meeting of the board held immediately
following the annual meeting of stockholders and shall hold office at the
pleasure of the board until their successors shall have been duly elected and
qualify. The board of directors shall also have the power at any time and from
time to time to elect or appoint or delegate its power to appoint, any
additional officers not then elected, and any such officer so elected or
appointed shall serve at the pleasure of the board until the next annual meeting
of stockholders and until their respective successors shall be elected,
appointed or qualified. A vacancy in any office resulting from death,
resignation, removal, disqualification or from any other cause, shall be filled
for the balance of the unexpired term by the board of directors at a meeting
called for that purpose, or at any regular meeting, or, if such office had been
filled prior to such vacancy by appointment other than by the board, by the
committee or person making such appointment.
SECTION 4. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the stockholders and of the board of directors and he
shall perform such other duties as from time to time may be assigned to him by
the board of directors.
SECTION 5. President. The President, in the absence of the Chairman of
the Board, shall preside at all meetings of the stockholders and of the board of
directors. He shall be the chief executive officer and chief operating officer
of the Company in charge of the day-to-day operations of the Company.
SECTION 6. Vice Presidents. The Vice Presidents shall have such powers
and perform such duties as may be assigned to them from time to time by the
board of directors, the Chairman of the Board or the President. The board of
directors, the Chairman of the Board or the President may from time to time
determine the order of priority as between two or more Vice Presidents.
<PAGE> 5
SECTION 7. Secretary. The Secretary shall keep the minutes of the
meetings of the stockholders, of the board of directors, of the Executive
Committee and of the Finance Committee; shall issue notices of meetings; shall
have custody of the Company's seal and corporate books and records; shall have
charge of the issuance, transfer and cancellation of stock certificates; shall
have authority to attest and affix the corporate seal to any instruments
executed on behalf of the Company; and shall perform such other duties as are
incident to his office and as are required by the board of directors, the
Chairman of the Board or the President.
SECTION 8. Treasurer. The Treasurer shall perform the duties
incident to his office and such other duties as are required of him by the board
of directors, the Chairman of the Board or the President.
SECTION 9. Other Officers. Other officers who may from time to time be
elected by the board of directors shall have such powers and perform such duties
as may be assigned to them by the board of directors, the Chairman of the Board
or the President.
SECTION 10. Compensation. The compensation of the officers shall be
fixed by the board of directors.
ARTICLE VII
CAPITAL STOCK
SECTION 1. Certificates. Every stockholder shall be entitled to a
certificate signed by the Chairman of the Board, the President or the Vice
President and by the Secretary or Assistant Secretary or the Treasurer or
Assistant Treasurer and under the seal of the Company, certifying the number of
shares and class of stock to which he is entitled. When any such certificate is
signed by a transfer agent or by a transfer clerk and by a registrar, the
signature of the Company's officers and the Company's seal upon the certificate
may be facsimiles, engraved or printed.
SECTION 2. Transfer. Transfers of stock may be made on the books of the
Company only by the holder thereof in person or by his attorney duly authorized
thereto in writing and upon surrender and cancellation of the certificate
therefor duly endorsed or accompanied by a duly executed stock power.
SECTION 3. Lost or Destroyed Certificates. The board of directors may
order a new certificate to be issued in place of a certificate lost or destroyed
upon proof of such loss or destruction and upon tender to the Company by the
stockholder of a bond in such amount and in such form and with or without surety
as may be ordered, indemnifying the Company against any liability, claim, loss,
cost or damage by reason of such loss or destruction and the issuance of a new
certificate.
ARTICLE VIII
DIVIDENDS
Dividends may be declared from the legally available surplus of the
Company at such times and in such amounts as the board of directors may
determine.
ARTICLE IX
CORPORATE FUNDS AND SECURITIES
SECTION 1. Deposits of Funds. Bills, notes, checks, negotiable
instruments or any other evidence of indebtedness payable to and received by the
Company may be endorsed for deposit to the credit of the Company by such
officers or agents of the Company as the board of directors or Executive
Committee may determine and, when authorized by the board of directors or
Executive Committee may be endorsed for deposit to the credit of agents of the
Company in such manner as the board of directors or Executive Committee may
direct.
SECTION 2. Withdrawals of Funds. All disbursements of the funds of the
Company shall be made by check, draft or other order signed by such officers or
agents of the Company as the board of directors or the Executive Committee may
from time to time authorize to sign the same.
SECTION 3. Sale and Transfer of Securities. All sales and transfers of
securities shall be made by any member of the Executive Committee or Finance
Committee or by any officer of the Company under authority granted by a
resolution of the board of directors, the Executive Committee or the Finance
Committee.
<PAGE> 6
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 1. Voting Stock of Other Corporations. The Chairman of the
Board, the President, any Vice President or any other officer designated by the
board of directors of the Company may execute in the name of the Company and
affix the corporate seal to any proxy or power of attorney authorizing the proxy
or proxies or attorney or attorneys named therein to vote the stock of any
corporation held by this Company on any matter on which such stock may be voted.
If any stock owned by this Company is held in any name other than the name of
this Company, instructions as to the manner in which such stock is to be voted
on behalf of this Company may be given to the holder of record by the Chairman
of the Board, the President, any Vice President, or any other officer designated
by the board of directors.
SECTION 2. Notices. Any notice under these by-laws may be given by mail
by depositing the same in a post office or postal letter box or postal mail
chute in a sealed post-paid wrapper addressed to the person entitled thereto at
his address as the same appears upon the books or records of the Company or at
such other address as may be designated by such person in a written instrument
filed with the Secretary of the Company prior to the sending of such notice,
except that notices which may be given by telegram or personal delivery may be
telegraphed or delivered, as the case may be, to such person at such address;
and such notice shall be deemed to be given at the time such notice is mailed,
telegraphed, or delivered personally.
SECTION 3. Waiver of Notice. Any stockholder, director or member of the
Executive Committee of the board of directors may at any time waive any notice
required to be given in writing or by telegram either before, at or after the
meeting to which it relates. Presence at a meeting shall also constitute a
waiver of such notice thereof unless the person entitled to such notice objects
to the failure to give such notice.
SECTION 4. Action Without a Meeting. Unless otherwise restricted by the
Charter or these Bylaws, any action required or permitted to be taken at any
meeting of the board of directors or any committee thereof, may be taken without
a meeting, if all members of the board or committee, as the case may be, consent
thereto in writing and the writing or writings are filed with the minutes of the
proceedings of the board or committee.
SECTION 5. Participation in Meeting by Telephone. Any one or more
members of the board of directors or any committee thereof may participate in a
meeting of the board or of such committee by means of a conference telephone or
similar communications equipment allowing all persons participating in the
meeting to hear each other at the same time. Participation by such means shall
constitute presence in person at such meeting.
ARTICLE XI
AMENDMENTS
The Bylaws may be amended in whole or in part by the vote of a majority
of all of the stockholders or the vote of all the members of the board of
directors.
The undersigned certifies that the foregoing is a true and complete copy
of the Bylaws of First SunAmerica Life Insurance Company with all amendments to
the date of this certificate.
Dated: January 1, 1996
/s/ Lorin M. Fife
---------------------------------------
Lorin M. Fife
Assistant Secretary
First SunAmerica Life Insurance Companys
<PAGE> 1
EXHIBIT (8)
FUND PARTICIPATION AGREEMENT
AGREEMENT, made on this l8th day of January, 1990, between
FIRST SUNAMERICA LIFE INSURANCE COMPANY ("First SunAmerica"), a life
insurance company organized under the laws of the State of New York,
on behalf of itself and on behalf of VARIABLE ANNUITY ACCOUNT ONE
("Variable Account"), a separate account of First SunAmerica
existing pursuant to the laws of the State of New York, and ANCHOR
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 August 26, 1983 and
amended as of September 1, 1988, and January 19, 1990, and
which is composed of multiple investment series ("Portfolios").
WITNESSETH:
WHEREAS, First SunAmerica, by resolution, has established the
Variable Account on its books of account for the purpose of funding
certain variable annuity contracts issued by it (collectively with
other contracts and policies that may be funded through the Fund,
"Contracts"); and
WHEREAS, the Variable Account is divided into Sub-accounts,
under which the income, gain and losses, whether or not realized,
from assets allocated to each such Sub-account are, in accordance
with the applicable Contracts, credited to or charged against such
Sub-account without regard to any income, gains or losses of other
Sub-accounts or separate accounts or of First SunAmerica; and
WHEREAS, the Variable Account and its Sub-accounts are divided
into various "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 Contracts, credited to or
charged against such Division without regard to any income, gains or
losses of other Divisions or separate accounts or of First
SunAmerica; 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 such Portfolio; and
<PAGE> 2
WHEREAS, the Variable Account desires to purchase shares of the Fund;
and
WHEREAS, the Fund agrees to make its shares available to serve as
underlying investment media for the various Divisions of the Variable Account
with each Portfolio of the Fund serving as the underlying investment medium for
the corresponding Division of the Variable Account; and
WHEREAS, Royal Alliance Associates, Inc. ("Distributor"), which serves
as the distributor for the Contracts funded in the Variable Account pursuant to
an agreement with First SunAmerica on behalf of itself and the Variable Account
is a broker-dealer registered as such under the Securities Exchange Act of 1934
and are members of the National Association of Securities Dealers, Inc.; and
WHEREAS, the Fund's shares are 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 First SunAmerica; and
WHEREAS, the Fund has undertaken 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 separate accounts of insurance
companies that invest in the Fund, for the purpose of identifying and remedying
any such conflict;
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 (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 the various Divisions of the Variable Account
for investment in the shares of the particular portfolio of the Fund underlying
each 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 of amount of such
Contracts to be sold. First SunAmerica, pursuant to its agreement with
Distributors, 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, will accept payments and otherwise service
existing Contracts funded in the Variable Account.
-2-
<PAGE> 3
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 First SunAmerica 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 First SunAmerica 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
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 First SunAmerica 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 First SunAmerica of any
dividend or distribution payable on its shares. 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 First SunAmerica 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 are registered and authorized for issue in accordance with applicable
federal and state laws prior to their purchase by the Variable Account. First
SunAmerica 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
-3-
<PAGE> 4
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. First SunAmerica, either directly or through Distributors, shall make
no representations concerning the Fund's shares 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. First SunAmerica 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. First SunAmerica shall be responsible for assuring
that the Variable Account calculates voting privilege in a manner consistent
with separate accounts of other insurance companies that are invested in the
Fund, which other insurance companies may or may not be affiliated with First
SunAmerica (collectively with First SunAmerica, "Participating Insurers"), as
determined by the Board. First SunAmerica 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.
10. First SunAmerica 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. First SunAmerica 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 First SunAmerica to disregard voting instructions of its Contract owners.
11. The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly by it to
First SunAmerica 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.
-4-
<PAGE> 5
12. If it is determined by a majority of the Board or a majority of its
disinterested Trustees that a material irreconcilable to conflict exists that
affects the interests of First SunAmerica Contract owners, First SunAmerica
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. First SunAmerica
shall take such steps at its expense if the conflict affects solely the
interests of the owners of First SunAmerica 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 First
SunAmerica, 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 First SunAmerica's decision to disregard Contract owner voting
instructions and that decision represents a minority position or would preclude
a majority vote, First SunAmerica 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.
First SunAmerica agrees to take such remedial action as may be required under
this paragraph 12 with a view only to the interests of its Contract owners. For
purposes of this paragraph 12, 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. First SunAmerica shall not be
required by this paragraph 12 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.
13. In discharging its responsibilities under paragraphs 9, 10 and 12
hereinabove, First SunAmerica will cooperate and coordinate, to the extent
necessary, with the Board and with other participating Insurers. 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 First SunAmerica
pursuant to such paragraphs 9, 10 and 12 and pursuant to this paragraph 13.
-5-
<PAGE> 6
14. This Agreement shall terminate:
(a) at the option of First SunAmerica or the Fund upon 60 days'
advance written notice to all other parties to this Agreement;
or
(b) at the option of First SunAmerica 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 First
SunAmerica. Prompt notice of election to terminate shall be
furnished by First SunAmerica; or
(c) at the option of First SunAmerica 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. First SunAmerica 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.
-6-
<PAGE> 7
16. This Agreement shall be construed in accordance with the laws of the
State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
FIRST SUNAMERICA LIFE INSURANCE COMPANY
By: ROBERT P. SALTZMAN
---------------------------------------
Robert P. Saltzman
President and Chief Executive Officer
VARIABLE ANNUITY ACCOUNT ONE
BY: FIRST SUNAMERICA LIFE INSURANCE
COMPANY
By: ROBERT P. SALTZMAN
-----------------------------------
Robert P. Saltzman
ANCHOR SERIES TRUST
By: GARY GARDNER
----------------------------------------
Gary Gardner
Vice President
Acknowledged and Agreed:
ROYAL ALLIANCE ASSOCIATES, INC.
By: SUSAN L. HARRIS Dated: January 18, 1990
---------------------------------
Susan L. Harris
Secretary
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<PAGE> 1
EXHIBIT (9)
[BROAD INC. LETTERHEAD]
August 23, 1991
First SunAmerica Life Insurance Company
11601 Wilshire Blvd.
Los Angeles, CA 90025-1748
Gentlemen:
This Opinion of Counsel is given in connection with the filing to the Securities
and Exchange Commission of Pre-Effective Amendment No. 1 to a Registration
Statement on Form N-4 for the Flexible Payment Variable Annuity Contracts (the
"Contracts") to be issued by First SunAmerica Life Insurance Company and its
separate account, Variable Annuity Account One.
I have made such examination of the law and have examined such records and
documents as in my judgment are necessary or appropriate to enable me to render
the opinion expressed below.
I am of the opinion that:
1. First SunAmerica Life Insurance Company is a valid and existing stock
life insurance company of the State of New York.
2. Variable Annuity Account One is a separate account of First
SunAmerica Life Insurance Company created and validly existing
pursuant to New York Insurance Laws.
3. All of the prescribed corporate procedures for the issuance of the
Contracts being registered have been followed, and, when such
Contracts are issued in accordance with the Prospectus contained in
the Registration Statement, all state requirements relating to such
Contracts will have been complied with.
<PAGE> 2
First SunAmerica Life Insurance Company
August 23, 1991
Page 2
4. Upon the acceptance of Purchase Payments made by a Contract Owner
pursuant to a Contract issued in accordance with the Prospectus
contained in the Registration Statement and upon compliance with
applicable law, such a Contract Owner will have a legally-issued,
fully paid, non-assessable contractual interest under such
Contract.
I consent to the use of this opinion in the Registration Statement referenced
above.
Very truly yours,
/s/ SUSAN L. HARRIS
Susan L. Harris
SLH:dp
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the use in the Prospectus and Statement of Additional
Information constituting part of this Registration Statement on Form N-4 for
Variable Annuity Account One of First SunAmerica Life Insurance Company, of our
report dated November 7, 1997 relating to the financial statements of First
SunAmerica Life Insurance Company, and of our report dated February 14, 1997
relating to the financial statements of Variable Annuity Account One of First
SunAmerica Life Insurance Company, which appear in such Statement of Additional
Information. We also consent to the reference to us under the heading
"Independent Accountants" in such Statement of Additional Information.
PRICE WATERHOUSE LLP
Los Angeles, California
January 26, 1998
<PAGE> 1
EXHIBIT 14
SunAmerica Inc. (a Maryland corporation) owns 100% of SunAmerica Financial, Inc.
(a Georgia corporation); Resources Trust Company (a Colorado corporation, which
owns 100% of Resources Consolidated Inc. (a Colorado corporation); SunAmerica
Life Insurance Company (an Arizona corporation); Imperial Premium Finance, Inc.
(a Delaware corporation); SA Investment Group, Inc. (a California corporation);
SunAmerica Capital Trust I (a Delaware business trust); SunAmerica Capital Trust
II (a Delaware business trust); SunAmerica Capital Trust III (a Delaware
business trust); SunAmerica Capital Trust IV (a Delaware business trust);
SunAmerica Capital Trust V (a Delaware business trust); SunAmerica Capital Trust
VI (a Delaware business trust); SunAmerica Affordable Housing Finance Corp. (a
Delaware corporation); Stanford Ranch, Inc. (a Delaware corporation) which owns
100% of Stanford Ranch, Inc. (a Califoria corporation); Arrowhead SAHP Corp. (a
New Mexico corporation); Bear Run SAHP Corp. (a Delaware corporation); Chelsea
SAHP Corp. (a Florida corporation); Tierra Vista SAHP Corp. (a Florida
corporation); Westwood SAHP Corp. (a New Mexico corporation); Bryton SAHP Corp.
(a Delaware close corporation); Crossings SAHP Corp. (a Delaware close
corporation); Emerald SAHP Corp. (a Delaware close corporation); Forest SAHP
Corp. (a Delaware close corporation); Pleasant SAHP Corp. (a Delaware close
corporation); Westlake SAHP Corp. (a Delaware close corporation); Williamsburg
SAHP Corp. (a Delaware close corporation); and Willow SAHP Corp. (a Delaware
close corporation). In addition, SunAmerica Inc. owns 80% of AMSUN Realty
Holdings (a California corporation); and 33% of New California Life Holdings,
Inc. (a Delaware corporation) which owns 100% of Aurora National Life Assurance
Company (a California corporation).
SunAmerica Financial, Inc. owns 100% of SunAmerica Marketing, Inc. (a Maryland
corporation); SunAmerica Advertising, Inc. (a Georgia corporation); SunAmerica
Investments, Inc. (a Delaware corporation) which owns 100% of Accelerated
Capital Corp. (a Florida corporation); 1401 Sepulveda Corp. (a California
corporation); SunAmerica Louisiana Properties, Inc. (a California corporation);
SunAmerica Real Estate and Office Administration, Inc. (a Delaware corporation);
SunAmerica Affordable Housing Partners, Inc. (a California corporation); Hampden
I & II Corp. (a California corporation); Sunport Holdings, Inc. (a California
corporation) which owns 100% of Sunport Property Co. (a Florida corporation);
SunAmerica Mortgages, Inc. (a Delaware corporation); Sun Princeton II, Inc. (a
California corporation) which owns 100% of Sun Princeton I (a California
corporation); Advantage Capital Corporation (a New York corporation); SunAmerica
Planning, Inc. (a Maryland corporation which owns 100% of SunAmerica Securities,
Inc. (a Delaware corporation) and 100% of Anchor Insurance Services, Inc. (a
Hawaii corporation) which owns 50% of Royal Alliance Associates Inc. (a Delaware
corporation); SunAmerica Insurance Company (Cayman), Ltd. (a Cayman Islands
corporation); Sun Mexico Holdings, Inc. (a Delaware corporation) which owns 100%
of Sun Cancun I, Inc. (a Delaware corporation), Sun Cancun II, Inc. (a Delaware
corporation), Sun Ixtapa I, Inc. (a Delaware corporation) and Sun Ixtapa II,
Inc. (a Delaware corporation); Sun Hechs, Inc. (a California corporation); and
SunAmerica Travel Services, Inc. (a California corporation); SAI Investment
Adviser, Inc. (a Delaware corporation); Sun GP Corp. (a California corporation);
The Financial Group, Inc. (a Georgia Corporation) which owns 100% of Keogler,
Morgan Co., Keogler Investment Advisory, Inc., and Keogler, Morgan investment
Inc. (all Georgia Corporations); Sun CRC, Inc. (a California corporation);
Sun-Dollar, Inc. (a California close corporation); and 70% of Home Systems
Partners (a California limited partnership) which owns 100% of Extraneous
Holdings Corp. (a Delaware corporation).
SunAmerica Life Insurance Company owns 100% of First SunAmerica Life Insurance
Company (a New York corporation); SunAmerica National Life Insurance Company (an
Arizona corporation); John Alden Life Insurance Company of New York (a New York
corporation); CalAmerica Life Insurance Company (a California corporation);
Anchor National Life Insurance Company (a California corporation) which owns
100% of Anchor Pathway Fund, Anchor Series Trust, SunAmerica Series Trust, and
Seasons Series Trust, (all Massachusetts business trusts); UG Corporation (a
Georgia corporation); Export Leasing FSC, Inc. (a U.S. Virgin Islands
corporation); SunAmerica Virginia Properties, Inc. (a California corporation);
SAL Investment Group (a California corporation); and Saamsun Holding Corporation
(a Delaware corporation) which owns 100% of SAM Holdings Corporation (a
California corporation) which owns 100% of SunAmerica Asset Management Corp. (a
Delaware corporation), SunAmerica Capital Services, Inc. (a Delaware
corporation), SunAmerica Fund Services, Inc. (a Delaware corporation), ANF
Property Holdings, Inc. (a California corporation), Capitol Life Mortgage Corp.
(a Delaware corporation) and Sun Royal Holdings Corporation (a California
corporation) which owns 50% of Royal Alliance Associates, Inc. In addition,
SunAmerica Life Insurance Company owns 80% of SunAmerica Realty Partners (a
California corporation) and 33% of New California Life Holdings, Inc. (a
Delaware corporation) which owns 100% of Aurora National Life Assurance Company
(a California corporation; and 88.75% of Sun Quorum L.L.C. (a Delaware limited
liability company).
Imperial Premium Finance, Inc. (Delaware) owns 100% of Imperial Premium Finance,
Inc. (a California corporation); Imperial Premium Funding, Inc. (a Delaware
corporation); and SunAmerica Financial Resources, Inc. (a Delaware corporation).
Updated As of 10/21/97
<PAGE> 1
EXHIBIT 15
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert P. Saltzman, Norman J. Metcalfe and Susan
L. Harris and each any one of them, his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him and his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to a Registration Statement on Form N-4,
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their or his substitutes or
substitute may lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ Eli Broad Director April 8, 1991
- ----------------------------------
ELI BROAD
/s/ ROBERT P. SALTZMAN Director April 8, 1991
- ----------------------------------
Robert P. Saltzman
/s/ SCOTT L. ROBINSON Director April 8, 1991
- ----------------------------------
Scott L. Robinson
/s/ ANDREW D. CHUA Director April 8, 1991
- ----------------------------------
Andrew D. Chua
/s/ DAVID W. FERGUSON Director April 8, 1991
- -----------------------------------
David W. Ferguson
/s/ LORIN M. FIFE Director April 8, 1991
- -----------------------------------
Lorin M. Fife
/s/ JANA W. GREER Director April 8, 1991
- -----------------------------------
Jana W. Greer
/s/ THOMAS A. HARNETT Director April 8, 1991
- -----------------------------------
Thomas A. Harnett
/s/ SUSAN L. HARRIS Director April 8, 1991
- -----------------------------------
Susan L. Harris
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ NORMAN J. METCALFE Director April 8, 1991
- ------------------------------------
Norman J. Metcalfe
/s/ LESTER POLLACK Director April 8, 1991
- ------------------------------------
Lester Pollack
/s/ RICHARD D. ROHR Director April 8, 1991
- ------------------------------------
Richard D. Rohr
/s/ JAY S. WINTROB Director April 8, 1991
- ------------------------------------
Jay S. Wintrob
</TABLE>
<PAGE> 3
EXHIBIT 15
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of FIRST
SUNAMERICA LIFE INSURANCE COMPANY ("Company"), a stock life insurance company
organized under the laws of the State of New York, hereby constitutes and
appoints ROBERT P. SALTZMAN, SUSAN L. HARRIS and LORIN M. FIFE, or any of them,
his true and lawful attorneys and agents, to do any and all acts and things and
to execute any and all instruments that said attorneys and agents may deem
necessary or advisable to enable VARIABLE ANNUITY ACCOUNT ONE ("Separate
Account") to comply with any rules, regulations and requirements of the
Securities and Exchange Commission, and in connection with any variable annuity
contracts that may be registered under the Securities Act of 1933, as amended
("1933 Act") and offered in connection with the Separate Account to comply with
any rules, regulations and requirements of the Securities and Exchange
Commission under that Act or under any other federal securities laws, including
specifically, but without limiting the generality of the foregoing, power and
authority to sign the name of the undersigned director to any instrument or
document filed as a part of or in connection with or in any way related to (i)
any action taken to comply with any rules, regulations or requirements of the
Securities and Exchange Commission under the federal securities laws; (ii) any
application for and the securing of any exemptions from the federal securities
laws; (iii) the registration of additional variable annuity contracts under the
1933 Act, if registration is deemed necessary; and (iv) any and all amendments
to any registration statement that may be filed in connection with the variable
annuity contracts. The undersigned hereby ratifies and confirms all that said
attorneys and agents shall do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney
on the date indicated.
Granting of Power of Attorney
DIRECTOR OF FIRST SUNAMERICA LIFE INSURANCE COMPANY
<TABLE>
<S> <C>
/s/ CLARK P. MANNING, JR. February 11, 1992
- --------------------------------
Clark P. Manning, Jr.
ATT0RNEY-IN-FACT
/s/ ROBERT P. SALTZMAN February 11, 1992
- --------------------------------
Robert P. Saltzman
/s/ SUSAN L. HARRIS February 11, 1992
- --------------------------------
Susan L. Harris
/s/ LORIN M. FIFE February 11, 1992
- --------------------------------
Lorin M. Fife
</TABLE>
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned hereby constitutes
and appoints JAY S. WINTROB, SUSAN L. HARRIS and LORIN M. FIFE or any of them,
his true and lawful attorneys and agents, to do any and all acts and things and
to execute any and all instruments that said attorneys and agents may deem
necessary or advisable to enable VARIABLE ANNUITY ACCOUNT ONE ("Separate
Account") of FIRST SUNAMERICA LIFE INSURANCE COMPANY ("Company"), and the
Company, to comply with any rules, regulations and requirements of the
Securities and Exchange Commission, and in connection with any variable annuity
contracts that may be registered under the Securities Act of 1933, as amended
("1933 Act") and/or the Investment Company Act of 1940, as amended ("1940 Act")
and offered in connection with the Separate Account, to comply with any rules,
regulations and requirements of the Securities and Exchange Commission under the
1933 Act or the 1940 Act or under any other federal securities laws, including
specifically, but without limiting the generality of the foregoing, power and
authority to sign the name of the undersigned director to any instrument or
document filed as a part of or in connection with or in any way related to (i)
any action taken to comply with any rules, regulations or requirements of the
Securities and Exchange Commission under the federal securities laws; (ii) any
application for and the securing of any exemptions from the federal securities
laws; (iii) the registration of additional variable annuity contracts under the
1933 Act or the 1940 Act, if registration is deemed necessary; and (iv) any and
all amendments to any registration statement that may be filed in connection
with the variable annuity contracts. The undersigned hereby ratifies and
confirms all that said attorneys and agents shall do or cause to be done by
virtue thereof.
As required by the Securities Act of 1933, this Amendment to the
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ELI BROAD President, Chief Executive Officer
- ---------------------------- and Chairman of the Board August 5, 1994
Eli Broad (Principal Executive Officer)
/s/SCOTT L ROBINSON Senior Vice President and Director
- ---------------------------- (Principal Financial Officer) August 5, 1994
Scott L. Robinson
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/JAMES R. BELARDI Director August 5, 1994
- ----------------------------
James R. Belardi
- ---------------------------- Director ________, 1994
David W. Ferguson
/s/LORIN M. FIFE Director August 5, 1994
- ----------------------------
Lorin M. Fife
/s/ Director ________, 1994
- ----------------------------
Marc Gamsin
Director ________, 1994
- -----------------------------
Jana W. Greer
Director ________, 1994
- -----------------------------
Thomas A. Harnett
/s/SUSAN L. HARRIS Director August 5, 1994
- -----------------------------
Susan L. Harris
/s/KAREN J. HEDLUND Director August 5, 1994
- -----------------------------
Karen J. Hedlund
/s/GARY W. KRAT Director August 5, 1994
- -----------------------------
Gary W. Krat
/s/PETER MCMILLAN Director August 5, 1994
- -----------------------------
Peter McMillan
/s/LESTER POLLACK Director August 5, 1994
- -----------------------------
Lester Pollack
/s/RICHARD D. ROHR Director August 5, 1994
- -----------------------------
Richard D. Rohr
/s/JAY S. WINTROB Director August 5, 1994
- -----------------------------
Jay S. Wintrob
</TABLE>
