FUND PARTICIPATION AGREEMENT
AGREEMENT, made on this 2nd day of January, 1997, between ANCHOR NATIONAL
LIFE INSURANCE COMPANY ("Anchor National"), a life insurance company organized
under the laws of the State of Arizona, on behalf of itself and on behalf of
VARIABLE ANNUITY ACCOUNT FIVE ("Variable Account"), a separate account of Anchor
National existing pursuant to the laws of the State of Arizona, and SEASONS
SERIES TRUST ("Fund"), an open-end management investment company established
pursuant to the laws of the Commonwealth of Massachusetts under a Declaration of
Fund dated October 11, 1995 which is composed of multiple investment series
("Portfolios").
WITNESSETH:
WHEREAS, Anchor National, by resolution, has established the Variable
Account on its books of account for the purpose of funding certain variable
annuity contracts issued by it; and
WHEREAS, the Variable Account is divided into various portfolios
("Divisions") under which the income, gains and losses, whether or not realized,
from assets allocated to each such Division are, in accordance with the
applicable variable annuity contracts, credited to or charged against such
Division without regard to any income, gains or losses of other Divisions or
separate accounts of Anchor National; and
WHEREAS, the Variable Account is registered with the Securities and
Exchange Commission as a unit investment trust under the Investment Company Act
of 1940 ("Act"); and
WHEREAS, the Fund, a registered, open-end, diversified management
investment company, is divided into various Portfolios, each Portfolio being
subject to separate investment objectives and restrictions which may not be
changed without a majority vote of the shareholders of each such Portfolio; and
WHEREAS, the Variable Account desires to purchase shares of the Fund in
connection with the issuance of certain variable annuity contracts to be
marketed under the name Seasons (collectively with other contracts and policies
that may be funded through the Fund, "Contracts"); and
WHEREAS, the Fund agrees to make shares of certain of its Portfolios
available to serve as underlying investment media for the corresponding
Divisions of the Variable Account; and
WHEREAS, SUNAMERICA CAPITAL SERVICES, INC. ("Distributor"), which serves as
the distributor for the Contracts funded in the Variable Account pursuant to an
agreement with Anchor National on behalf of itself and the Variable Account is a
broker-dealer registered as such under the Securities Exchange Act of 1934 and a
member of the National Association of Securities Dealers, Inc.;
NOW, THEREFORE, in consideration of the foregoing and of mutual covenants
and conditions set forth herein and for other good and valuable consideration,
Anchor National (on behalf of itself and the Variable Account) and the Fund
hereby agree as follows:
1. The Contracts funded by the Variable Account will provide for the
allocation of net amounts among certain Divisions of the Variable Account for
investment in the shares of the portfolios of the Fund underlying each such
Division. The selection of a particular Division is to be made (and such
selection may be changed) in accordance with the terms of the applicable
Contract.
2. No representation is made as to the number or amount of such Contracts
to be sold. Anchor National, pursuant to its agreement with Distributor, will
make reasonable efforts to market those Contracts it determines from time to
time to offer for sale and, although it is not required to offer for sale new
Contracts, Anchor National will accept payments and otherwise service existing
Contracts funded in the Variable Account.
3. Fund shares to be made available to the respective Divisions of the
Variable Account shall be sold by each of the respective Portfolios of the Fund
and purchased by Anchor National 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 Anchor National to be necessary to meet the requirements of those
Contracts having amounts allocated to the Division for which the Fund Portfolio
shares serve as the underlying investment medium. Orders and payments for
shares purchased will be sent promptly to the Fund and will be made payable in
the manner established from time to time by the Fund for the receipt of such
payments. The Fund reserves the right to delay transfer of its shares until the
payment check has cleared. The Fund has the obligation to insure that its
shares to be made available to the appropriate Division(s) under the Contracts
are registered at all times under the Securities Act of 1933 ("1933 Act").
4. The Fund will redeem the shares of the various Portfolios when
requested by Anchor National 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 Anchor National of any
dividend or distribution payable on its shares which are subject to this
Agreement. All of such dividends and distributions as are payable on each of
the Portfolio shares in the title for the corresponding Division of
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the Variable Account shall be automatically reinvested in additional shares of
that Portfolio of the Fund. The Fund shall notify Anchor National of the number
of shares so issued.
7. All expenses incident to the performance of the Fund under this
Agreement shall be paid by the Fund. The Fund shall ensure that all of its
shares which are subject to this Agreement are registered and authorized for
issue in accordance with applicable federal and state laws prior to their
purchase by the Variable Account. Anchor National shall bear none of the
expenses for the cost of registration of the Fund's shares, preparation of the
Fund's prospectuses, proxy materials and reports, the distribution of such items
to shareholders, the preparation of all statements and notices required by any
federal or state law or any taxes on the issue or transfer of the Fund's shares
subject to this Agreement.
8. Anchor National, either directly or through Distributor, shall make no
representations concerning the Fund's shares which are subject to this Agreement
other than those contained in the then current prospectus of the Fund and in
printed information subsequently issued by the Fund as supplemental to such
prospects.
9. Anchor National and the Fund acknowledge that in the future, the
Fund's shares may become available for investment by separate accounts of other
insurance companies, which may or may not be affiliated persons (as that term is
defined in the Act) of Anchor National (collectively with Anchor National,
"Participating Insurers"). In such event, (a) the Fund shall undertake that its
Board of Trustees ("Board") will monitor the Fund for the existence of material
irreconcilable conflicts that may arise between the Contract owners of
Participating Insurers, for the purpose of identifying and remedying any such
conflict and (b) paragraphs 10, 11 and 12 shall apply. In discharging its
responsibilities under paragraphs 10, 11 and 12 hereinafter, Anchor National
will cooperate and coordinate, to the extent necessary, with the Board and with
other Participating Insurers. The Fund agrees that it will require, as a
condition to participation, that all Participating Insurers shall have
obligations and responsibilities regarding conflicts of interest corresponding
to those that are agreed to herein by Anchor National pursuant to such
paragraphs 10, 11 and 12 and pursuant to this paragraph 9.
10. Anchor National 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. Anchor National shall be responsible for assuring
that the Variable Account calculates voting privilege in a manner consistent
with separate accounts of other Participating Insurers, as determined by the
Board. Anchor National will vote shares for which it has not received voting
instructions in the same proportion as it votes shares for which it has received
instructions.
11. Anchor National 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. Anchor National will be responsible for assisting the Board in
carrying out its responsibilities to identify material conflicts by providing
the Board with all
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information available to it that is reasonably necessary for the Board to
consider any issues raised, including information as to a decision by Anchor
National to disregard voting instructions of its Contract owners.
12. The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly by it to
Anchor National and other Participating Insurers. An irreconcilable material
conflict may arise for a variety of reasons, including: (a) an action by any
state insurance regulatory authority; (b) a change in applicable federal or
state insurance tax, or securities laws or regulations, or a public ruling,
private letter ruling, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Portfolio
are being managed; (e) a difference in voting instructions given by variable
annuity Contract owners and variable life insurance Contract owners or by
Contract owners of different Participating Insurers; or (f) a decision by a
Participating Insurer to disregard the voting instructions of variable Contract
owners.
13. If it is determined by a majority of the Board or a majority of its
disinterested Trustees that a material irreconcilable conflict exists that
affects the interests of Anchor National Contract owners, Anchor National 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. Anchor National
shall take such steps at its expense if the conflict affects solely the
interests of the owners of Anchor National 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 Anchor
National, 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 Anchor National's decision to disregard Contract owner voting
instructions and that decision represents a minority position or would preclude
a majority vote, Anchor National 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.
Anchor National agrees to take such remedial action as may be required under
this paragraph 13 with a view only to the interests of its Contract owners. For
purposes of this paragraph 13, a majority of the disinterested members of the
Board shall determine whether or not any proposed action adequately remedies any
irreconcilable conflict, but in no event will Fund be required to establish a
new funding medium for any variable Contracts. Anchor National shall not be
required by this paragraph 13 to establish a new funding medium for any variable
Contract if an offer to do so has been declined by vote of a majority of
affected Contract owners.
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14. This Agreement shall terminate:
(a) at the option of Anchor National or the Fund upon 60 days'
advance written notice to all other parties to this Agreement; or
(b) at the option of Anchor National 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 Anchor
National. Prompt notice of election to terminate shall be
furnished by Anchor National; or
(c) at the option of Anchor National 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. Anchor National will give 30 days'
prior written notice to the Fund of the date of any proposed
action to replace the Fund's shares; or
(e) in the event the Fund's shares are not registered, issued or sold
in accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying investment
medium of the Contracts funded in the Variable Account. Prompt
notice shall be given by each party to all other parties in the
event that the conditions stated in subsections (b), (c) or (d)
of this paragraph 14 should occur.
15. Notwithstanding any other provisions of this Agreement, the
obligations of the Fund hereunder are not personally binding upon any of the
trustees, shareholders, officers, employees or agents of the Fund; resort in
satisfaction of such obligations shall be had only to the assets and property of
the Fund and not to the private property of any of such Fund's trustees,
shareholders, officers, employees or agents.
16. This Agreement shall be construed in accordance with the laws of the
State of California.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ANCHOR NATIONAL LIFE INSURANCE COMPANY
By: /s/ Xxxx Xxxxxx Xxxxx
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Xxxx Xxxxxx Xxxxx
Senior Vice President
VARIABLE ANNUITY ACCOUNT FIVE
BY: ANCHOR NATIONAL LIFE INSURANCE
COMPANY
By: /s/ Xxxx Xxxxxx Xxxxx
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Xxxx Xxxxxx Xxxxx
Senior Vice President
SEASONS SERIES TRUST
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
Assistant Secretary
Acknowledged and Agreed:
SUNAMERICA CAPITAL SERVICES, INC.
By: /s/ J. Xxxxxx Xxxxxx Dated: January 2, 1997
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J. Xxxxxx Xxxxxx
President
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