PARTICIPATION AGREEMENT
AMONG
ANCHOR NATIONAL LIFE INSURANCE COMPANY,
WM VARIABLE TRUST
AND
WM FUNDS DISTRIBUTOR, INC.
DATED AS OF
_____________ __, 2001
TABLE OF CONTENTS
Section 1. Introduction......................................................2
1.1 Availability of Separate Account Divisions..................2
1.2 Broker-Dealer Registration..................................2
Section 2. Processing Transactions...........................................3
2.1 Timely Pricing and Orders...................................3
2.2 Timely Payments.............................................3
2.3 Redemption in Kind..........................................4
2.4 Applicable Price............................................4
Section 3. Costs and Expenses................................................5
3.1 General.....................................................5
3.2 Registration................................................5
3.3 Other (Non-Sales-Related)...................................5
3.4 Sales-Related...............................................6
3.5 Parties to Cooperate........................................6
Section 4. Legal Compliance..................................................6
4.1 Tax Laws....................................................7
4.2 Insurance and Certain Other Laws............................9
4.3 Securities Laws............................................10
4.4 Notice of Certain Proceedings and Other Circumstances......11
4.5 ANLIC to Provide Documents.................................12
4.6 Trust to Provide Documents.................................12
Section 5. Mixed and Shared Funding.........................................12
5.1 General....................................................12
5.2 Disinterested Trustees.....................................13
5.3 Monitoring for Material Irreconcilable Conflicts...........13
5.4 Conflict Remedies..........................................14
5.5 Notice to ANLIC............................................16
5.6 Information Requested by Board of Trustees.................17
5.7 Compliance with SEC Rules..................................17
5.8 Requirements for Other Insurance Companies.................17
Section 6. Termination......................................................18
6.1 Events of Termination......................................18
6.2 Funds to Remain Available..................................20
6.3 Survival of Warranties and Indemnifications................20
6.4 Continuance of Agreement for Certain Purposes..............20
Section 7. Parties to Cooperate Respecting Termination......................21
Section 8. Assignment.......................................................21
Section 9. Notices..........................................................21
Section 10. Voting Procedures...............................................22
Section 11. Foreign Tax Credits.............................................23
Section 12. Indemnification.................................................23
12.1 Indemnification of Trust and Distributor by ANLIC..........23
12.2 Indemnification of ANLIC by Distributor....................26
12.3 Effect of Notice...........................................29
Section 13. Applicable Law..................................................30
Section 14. Execution in Counterparts.......................................30
Section 15. Severability....................................................30
Section 16. Rights Cumulative...............................................30
Section 17. Scope of Liability...............................................31
Section 18. Headings........................................................31
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the ___ day of __________,
2001 ("Agreement"), by and among Anchor National Life Insurance Company, a
_______ life insurance company ("ANLIC") (on behalf of itself and its "Separate
Account," defined below), , WM Variable Trust, a Massachusetts business trust
(the "Trust"), and WM Funds Distributor, Inc., a Washington corporation (the
"Distributor"), the Trust's principal underwriter and the principal underwriter
with respect to the Contracts as defined in the Recital below (collectively, the
"Parties"),
RECITAL
WHEREAS the Distributor and the Trust desire that shares of the investment funds
of the Trust set forth in EXHIBIT A to the Agreement (the "Funds");be made
available by the Distributor to serve as underlying investment media for those
variable annuity contracts of ANLIC that are the subject of ANLIC's Form N-4
registration statements filed with the Securities and Exchange Commission (the
"SEC"), File Nos. ___-_____ and ___-_____ and marketed under the name "WM
Diversified Strategies Variable Annuity (the "Contracts"). Reference herein to
the "Trust" shall include each Fund to the extent the context requires.
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Trust and the Distributor will make shares in the Funds
available to ANLIC for this purpose at net asset value and with no sales
charges, all subject to the following provisions:
SECTION 1. INTRODUCTION
1.1 AVAILABILITY OF SEPARATE ACCOUNT DIVISIONS.
ANLIC represents that Anchor National Life Insurance Company Separate
Account [name of separate account] (the "Separate Account") is and will continue
to be available to serve as an investment vehicle for the Contracts. The
Contracts provide for the allocation of net amounts received by ANLIC to
separate series (the "Divisions") of the Separate Account for investment in the
shares of corresponding Funds of the Trust that are made available through the
Separate Account to act as underlying investment media. Reference herein to the
"Separate Account" shall include reference to each Division to the extent the
context requires. The Trust may from time to time add additional Funds, which
will become subject to this Agreement by mutual agreement of the parties. ANLIC
will not unreasonably deny any request by the Distributor to create new
Divisions corresponding to such new Funds and EXHIBIT A shall be amended from
time to time as necessary to identify all investment funds offered under this
Agreement.
1.2 BROKER-DEALER REGISTRATION.
Distributor represents and warrants that it is registered as a broker
dealer with the SEC under the Securities Exchange Act of 1934, as amended, and
is a member in good standing of the National Association of Securities Dealers,
Inc. (the "NASD").
SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS.
The Trust or its designated agent will provide closing net asset value,
dividend and capital gain information for each Fund to ANLIC at the close of
trading on each day (a "Business Day") on which (a) the New York Stock Exchange
is open for regular trading, (b) the Trust calculates its net asset value and
(c) ANLIC is open for business. The Trust or its designated agent will use its
best efforts to provide this information by __:00 p.m., ________time. ANLIC will
use these data to calculate unit values, which in turn will be used to process
transactions that receive that same Business Day's Separate Account unit value.
The Separate Account processing will be done the same evening, and corresponding
orders with respect to Trust shares will be placed the morning of the following
Business Day. ANLIC will use its best efforts to place such orders with the
Trust by __:00 a.m., ________ time.
2.2 TIMELY PAYMENTS.
ANLIC will transmit orders for purchases and redemptions of Trust
shares to the Distributor, and will wire payment for net purchases to a
custodial account designated by the Trust on the same day as the order for Trust
shares is placed, to the extent practicable. Payment for net redemptions will be
wired by the Trust to an account designated by ANLIC on the same day as the
order is placed, to the extent practicable, and in any event be made within six
calendar days after the date the order is placed in order to enable ANLIC to pay
redemption proceeds
within the time specified in Section 22(e) of the Investment Company Act of
1940, as amended (the "1940 Act").
2.3 REDEMPTION IN KIND.
The Trust reserves the right to pay any portion of a redemption in kind
of portfolio securities, if the Trust's board of trustees (the "Board of
Trustees") determines that it would be detrimental to the best interests of
shareholders to make a redemption wholly in cash.
2.4 APPLICABLE PRICE.
The Parties agree that orders resulting from purchase payments,
surrenders, partial withdrawals, routine withdrawals of charges, or other
transactions under Contracts will be executed at the net asset values as
determined as of the close of regular trading on the New York Stock Exchange on
the Business Day that ANLIC processes such transactions, which will be the
Business Day prior to the Distributor's receipt of such orders. All other
purchases and redemptions will be effected at the net asset values next computed
after receipt by the Trust of the order therefor, and such orders will be
irrevocable. ANLIC hereby elects to reinvest all dividends and capital gains
distributions in additional shares of the corresponding Fund at the record-date
net asset values until ANLIC otherwise notifies the Trust in writing, it being
agreed by the Parties that the record date and the payment date with respect to
any dividend or distribution will be the same Business Day.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided herein, each Party will bear
all expenses incident to its performance under this Agreement.
3.2 REGISTRATION.
The Trust will pay the cost of its registering as a management
investment company under the 1940 Act and registering its shares under the
Securities Act of 1933, as amended (the "1933 Act"), and keeping such
registrations current and effective. ANLIC will pay the cost of registering the
Separate Account as a unit investment trust under the 1940 Act and registering
units of interest under the Contracts under the 1933 Act and keeping such
registrations current and effective.
3.3 OTHER (NON-SALES-RELATED).
As among the Parties, the Trust will bear the costs of preparing,
filing with the SEC and setting for printing the Trust's prospectus, statement
of additional information and any supplements thereto (collectively, the "Trust
Prospectus"), periodic reports to shareholders, Trust proxy material and other
shareholder communications. ANLIC will bear the costs of preparing, filing with
the SEC and setting for printing, the Separate Account's prospectus, statement
of additional information and any supplements thereto (collectively, the
"Separate Account Prospectus"), periodic reports to owners, annuitants or
participants under the Contracts (collectively, "Participants"), voting
instruction solicitation material, and other Participant communications. As
among the Parties, the Trust and ANLIC each will bear the costs of
printing and delivering to existing Participants the documents as to which it
bears the cost of preparation as set forth above in this Section 3.3, it being
understood that reasonable cost allocations will be made in cases where any such
Trust and ANLIC documents are printed or mailed on a combined or coordinated
basis.
3.4 SALES-RELATED.
Except as may otherwise be agreed to by the Parties , ANLIC will bear
the cost of (a) preparing, printing and distributing all Trust and Separate
Account sales literature and advertising; (b), printing and delivering to
offerees Trust and Separate Account Prospectuses, Trust and Separate Account
periodic reports and Trust and ANLIC sales literature, and placing any
advertisements; and (c) filing any Trust or ANLIC sales materials with, and
obtaining approval from, any state insurance regulatory authorities, to the
extent required. Distributor shall be responsible for, and bear the cost of,
filing all Trust sales literature and advertising and all Separate Account sales
literature and advertising relating to the Contracts with the NASD, as required.
3.5 PARTIES TO COOPERATE.
The Trust, ANLIC, and Distributor each agrees to cooperate with the
others, as applicable, in arranging to print, mail and/or deliver combined or
coordinated prospectuses or other materials of the Trust and Separate Account.
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) The Trust represents that it will make every effort to qualify and
to maintain qualification of each Fund as a regulated investment company ("RIC")
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Trust or the Distributor will notify ANLIC immediately upon
having a reasonable basis for believing that a Fund has ceased to so qualify or
that it might not so qualify in the future.
(b) ANLIC represents that the Contracts will be treated as annuity
contracts under applicable provisions of the Code and that it will make every
effort to maintain such treatment; ANLIC will notify the Trust and the
Distributor immediately upon having a reasonable basis for believing that any of
the Contracts have ceased to be so treated or that they might not be so treated
in the future.
(c) The Trust represents that it will make every effort to comply and
to maintain each Fund's compliance with the diversification requirements set
forth in Section 817(h) of the Code and Section 1.817- 5(b) of the regulations
under the Code, and the Trust or the Distributor will notify ANLIC immediately
upon having a reasonable basis for believing that a Fund has ceased to so comply
or that a Fund might not so comply in the future.
(d) ANLIC represents that the Separate Account is a "segregated asset
account" and that interests in the Separate Account are offered exclusively
through the purchase of or transfer into a "variable contract," within the
meaning of such terms under Section 817(h) of the Code and the regulations
thereunder. ANLIC will make every effort to continue to meet such definitional
requirements, and it will notify the Trust and the Distributor immediately upon
having a reasonable basis for believing that such requirements have ceased to be
met or that they might not be met in the future.
(e) The Trust represents that, under the terms of its investment
advisory agreements with WM Advisors, Inc. (the "Adviser"), the Adviser is and
will be responsible for managing the Trust in compliance with the Trust's
investment objectives, policies and restrictions as set forth in the Trust
Prospectus. The Trust represents that these objectives, policies and
restrictions do and will include operating as a RIC in compliance with
Subchapter M of the Code and Section 817(h) of the Code and regulations
thereunder. The Trust has adopted and will maintain procedures for ensuring that
the Trust is managed in compliance with Subchapter M and Section 817(h) and
regulations thereunder. On request, the Trust shall also provide ANLIC with such
materials, cooperation and assistance as may be reasonably necessary for ANLIC
or any person designated by ANLIC to review from time to time the procedures and
practices of the Adviser, each sub-adviser or other provider of services to the
Trust for ensuring that the Trust is managed in compliance with Subchapter M and
Section 817(h) and regulations thereunder.
(f) Whenever any matter (a "Matter") comes to the attention of the
Trust that causes it to believe that any of the Funds was not a RIC in
compliance with Subchapter M of the Code and/or was not in compliance with
Section 817(h) of the Code and the regulations thereunder as of the last day of
a calendar quarter, the Trust shall furnish a report of such Matter immediately
to ANLIC. The Trust will then take such action as is necessary or appropriate to
cure any noncompliance during a grace period of 30 calendar days after the end
of the calendar quarter covered by the report. If the Trust does not so cure the
noncompliance regarding each affected
Fund's status as a RIC, the Trust will pursue those efforts necessary to enable
each affected Fund to qualify once again for treatment as a RIC in compliance
with Subchapter M, including cooperation in good faith with ANLIC. If the Trust
does not so cure the noncompliance regarding a Fund's status under Section
817(h), the Trust will cooperate in good faith with ANLIC's efforts to obtain a
ruling and closing agreement, as provided in Revenue Procedure 92-95 issued by
the Internal Revenue Service (or any applicable ruling or procedure subsequently
issued by the Internal Revenue Service), that the affected Fund satisfies
Section 817(h) for the period or periods covered by the report.
4.2 INSURANCE AND CERTAIN OTHER LAWS.
(a) The Trust will use its best efforts to comply with any applicable
state insurance laws or regulations, to the extent specifically requested in
writing by ANLIC.
(b) ANLIC represents and warrants that (i) it is an insurance company
duly organized, validly existing and in good standing under the laws of the
State of _______ and has full corporate power, authority and legal right to
execute, deliver and perform its duties and comply with its obligations under
this Agreement, (ii) it has legally and validly established and maintains the
Separate Account as a segregated asset account under Article_____ of the _______
Insurance Code, and (iii) the Contracts comply in all material respects with all
other applicable federal and state laws and regulations.
(c) The Distributor represents and warrants that it is a business
corporation duly organized, validly existing, and in good standing under the
laws of the State of Washington and
has full corporate power, authority and legal right to execute, deliver, and
perform its duties and comply with its obligations under this Agreement.
(d) The Distributor and the Trust represent and warrant that the Trust
is a business trust duly organized, validly existing, and in good standing under
the laws of the Commonwealth of Massachusetts and has full power, authority, and
legal right to execute, deliver, and perform its duties and comply with its
obligations under this Agreement.
4.3 SECURITIES LAWS.
(a) ANLIC represents and warrants that (i) it has registered the
Separate Account as a unit investment trust in accordance with the provisions of
the 1940 Act to serve as a segregated investment account for its variable
annuity contracts, including the Contracts, (ii) the Separate Account does and
will comply in all material respects with the requirements of the 1940 Act and
the rules thereunder, (iii) the Separate Account's 1933 Act registration
statement relating to the Contracts, together with any amendments thereto, will
at all times comply in all material respects with the requirements of the 1933
Act and the rules thereunder, and (iv) the Separate Account Prospectus will at
all times comply in all material respects with the requirements of the 1933 Act
and the rules thereunder.
(b) The Trust and the Distributor represent and warrant that (i) Trust
shares sold pursuant to this Agreement will be registered under the 1933 Act to
the extent required by the 1933 Act and duly authorized for issuance and sold in
compliance with Massachusetts law, (ii) the Trust is and will remain registered
under the 1940 Act to the extent required by the 1940 Act, and (iii) the Trust
will amend the registration statement for its shares under the 1933 Act and
itself under the 1940 Act from time to time as required in order to effect the
continuous offering of its shares.
(c) The Trust represents and warrants that (i) the Trust does and will
comply in all material respects with the requirements of the 1940 Act and the
rules thereunder, including the exemptive order issued by the Commission as
Release No. IC-22047, which the Trust further represents and warrants is
applicable to the Trust, (ii) its 1933 Act registration statement, together with
any amendments thereto, will at all times comply in all material respects with
the requirements of the 1933 Act and rules thereunder, and (iii) the Trust
Prospectus will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder.
(d) The Trust will register and qualify its shares for sale in
accordance with the laws of any state or other jurisdiction only if and to the
extent reasonably deemed advisable by the Trust, ANLIC or any other life
insurance company utilizing the Trust.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
The Distributor or the Trust shall immediately notify ANLIC of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to the Trust's registration statement
under the 1933 Act or the Trust Prospectus, (ii) any request by the SEC for any
amendment to such registration statement or Trust Prospectus, (iii) the
initiation of any proceedings for that purpose or for any other purpose relating
to the registration or offering of the Trust's shares, or (iv) any other action
or circumstances that may prevent the lawful offer or sale of Trust shares in
any state or jurisdiction, including, without limitation, any circumstances in
which (x) the Trust's shares are not registered and, in all
material respects, issued and sold in accordance with applicable state and
federal law or (y) such law precludes the use of such shares as an underlying
investment medium of the Contracts issued or to be issued by ANLIC. The
Distributor and the Trust will make every reasonable effort to prevent the
issuance of any stop order, cease and desist order or similar order and, if any
such order is issued, to obtain the lifting thereof at the earliest possible
time.
4.5 ANLIC TO PROVIDE DOCUMENTS.
ANLIC will provide to the Trust one complete copy of all SEC
registration statements, Separate Account Prospectuses, reports, any preliminary
and final voting instruction solicitation material, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Separate Account or the Contracts, contemporaneously with the
filing of such document with the SEC or other regulatory authorities.
4.6 TRUST TO PROVIDE DOCUMENTS.
The Trust will provide to ANLIC one complete copy of all SEC
registration statements, Trust Prospectuses, reports, any preliminary and final
proxy material, applications for exemptions, requests for no-action letters, and
all amendments to any of the above, that relate to the Trust or its shares,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
ANLIC acknowledges that the Trust has applied for, and received, an
order exempting it from certain provisions of the 1940 Act and rules thereunder
so thatthe Trust is available for
investment by certain other entities, including, without limitation, separate
accounts funding variable life insurance policies, separate accounts of
insurance companies unaffiliated with ANLIC and trustees of qualified pension
and retirement plans ("Mixed and Shared Funding").
5.2 DISINTERESTED TRUSTEES.
The Trust agrees that the Board of Trustees shall at all times consist
of trustees a majority of whom (the "Disinterested Trustees") are not interested
persons of the Adviser or the Distributor within the meaning of Section 2(a)(19)
of the 1940 Act.
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
The Trust agrees that the Board of Trustees will monitor for the
existence of any material irreconcilable conflict between the interests of the
Participants of all separate accounts of life insurance companies utilizing the
Trust, including the Separate Account. ANLIC agrees to inform the Board of
Trustees of the Trust of the existence of or any potential for any such material
irreconcilable conflict of which it is aware. The concept of a "material
irreconcilable conflict" is not defined by the 1940 Act or the rules thereunder,
but the Parties recognize that such a conflict may arise for a variety of
reasons, including, without limitation:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, 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 Fund are being managed;
(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract participants or by participants of
different life insurance companies utilizing the Trust; or
(f) a decision by a life insurance company utilizing the Trust to
disregard the voting instructions of participants.
Consistent with the SEC's requirements in connection with exemptive
proceedings of the type referred to in Section 5.1 hereof, ANLIC will assist the
Board of Trustees in carrying out its responsibilities by providing the Board of
Trustees with all information reasonably necessary for the Board of Trustees to
consider any issue raised, including information as to a decision by ANLIC to
disregard voting instructions of Participants.
5.4 CONFLICT REMEDIES.
(a) It is agreed that if it is determined by a majority of the members
of the Board of Trustees or a majority of the Disinterested Trustees
that a material irreconcilable conflict exists, ANLIC and the other
life insurance companies utilizing the Trust will, at their own
expense and to the extent reasonably practicable (as determined by a
majority of the Disinterested Trustees), take whatever steps are
necessary to remedy or eliminate the material irreconcilable conflict,
which steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of the
separate accounts from the Trust or any Fund and reinvesting such
assets in a different investment medium, including another Fund
of the Trust, or submitting the question whether
such segregation should be implemented to a vote of all affected
participants and, as appropriate, segregating the assets of any
particular group (e.g., annuity contract owners or participants,
life insurance contract owners or all contract owners and
participants of one or more life insurance companies utilizing
the Trust) that votes in favor of such segregation, or offering
to the affected contract owners or participants the option of
making such a change; and
(ii) establishing a new registered investment company of the
type defined as a "Management Company" in Section 4(3) of the
1940 Act or a new separate account that is operated as a
Management Company.
(b) If the material irreconcilable conflict arises because of ANLIC's
decision to disregard Participant voting instructions and that decision
represents a minority position or would preclude a majority vote, ANLIC may be
required, at the Trust's election, to withdraw the Separate Account's investment
in the Trust. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal must take place within six months after the
Trust gives notice to ANLIC that this provision is being implemented, and until
such withdrawal the Distributor and Trust shall continue to accept and implement
orders by ANLIC for the purchase and redemption of shares of the Trust.
(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to ANLIC conflicts with the
majority of other state regulators, then ANLIC will withdraw the Separate
Account's investment in the Trust within six months after the Trust's Board of
Trustees informs ANLIC that it has determined that such decision has
created a material irreconcilable conflict, and until such withdrawal the
Distributor and Trust shall continue to accept and implement orders by ANLIC for
the purchase and redemption of shares of the Trust.
(d) ANLIC agrees that any remedial action taken by it in resolving any
material irreconcilable conflict will be carried out at its expense and with a
view only to the interests of Participants.
For purposes hereof, a majority of the Disinterested Trustees will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will the Trust or the Distributor
be required to establish a new funding medium for any of the Contracts. ANLIC
will not be required by the terms hereof to establish a new funding medium for
any of the Contracts if an offer to do so has been declined by vote of a
majority of Participants materially adversely affected by the material
irreconcilable conflict.
5.5 NOTICE TO ANLIC.
The Trust will promptly make known in writing to ANLIC the Board of
Trustees' determination of the existence of a material irreconcilable conflict,
a description of the facts that give rise to such conflict and the implications
of such conflict.
5.5 INFORMATION REQUESTED BY BOARD OF TRUSTEES.
ANLIC and the Trust will at least annually submit to the Board of
Trustees of the Trust such reports, materials or data as the Board of Trustees
may reasonably request so that the Board of Trustees may fully carry out the
obligations imposed upon them by the provisions hereof, and said reports,
materials and data will be submitted at any reasonable time deemed appropriate
by
the Board of Trustees. All reports received by the Board of Trustees of
potential or existing conflicts, and all Board of Trustees actions with regard
to determining the existence of a conflict, notifying life insurance companies
utilizing the Trust of a conflict, and determining whether any proposed action
adequately remedies a conflict, will be properly recorded in the minutes of the
Board of Trustees or other appropriate records, and such minutes or other
records will be made available to the SEC upon request.
5.6 COMPLIANCE WITH SEC RULES.
If, at any time during which the Trust is serving an investment medium
for variable life insurance policies, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to mixed and shared funding, the Parties agree that they will comply
with the terms and conditions thereof and that the terms of this Section 5 shall
be deemed modified if and only to the extent required in order also to comply
with the terms and conditions of such exemptive relief that is afforded by any
of said rules that are applicable
5.7 REQUIREMENTS FOR OTHER INSURANCE COMPANIES.
The Trust will require that each insurance company utilizing the Trust
enter into an agreement with the Trust that contains in substance the same
provisions as are set forth in Sections4. 1 (b), 4. 1 (d), 4.4, 4.3 (a), 4.5, 5,
10 and 18 of this Agreement.
5.8 INDIVIDUALS SUBJECT TO AUTOMATIC DISQUALIFICATION.
ANLIC will maintain at its home office available to the SEC a list of
its officers, directors, and employees who participate in the management and
administration of any separate
account organized as a unit investment trust or of any Fund, which individuals
will continue to be subject to the automatic disqualification provisions of
Section 9(a) of the 1940 Act.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.4 below, this Agreement will terminate as to a
Fund:
(a) at the option of ANLIC, the Distributor or the Trust upon (i) at
least six months' advance written notice to the other Parties, and (ii) the
approval by (x) a majority of the Disinterested Trustees or (y) a majority vote
of the shares of the affected Fund that are held in the corresponding Divisions
of the Separate Account (pursuant to the procedures set forth in Section 10 of
this Agreement for voting Trust shares in accordance with Participant
instructions); provided, however, that the approvals described in clauses (x)
and (y) above shall not be required if (1) the aggregate account value under the
Contracts is less than $300 million at the date the notice of termination is
delivered, (2) the aggregate month-end account value under the Contracts has
averaged less than $300 million for the 24 full calendar months immediately
preceding the date the notice of termination is delivered and (3) the notice of
termination is delivered no earlier than the end of the 60th full calendar month
following the date the first Contract is issued; or
(b) at the option of the Trust upon institution of formal proceedings
against ANLIC by the SEC, any state insurance regulator or any other regulatory
body regarding ANLIC's duties under this Agreement or related to the sale of the
Contracts, the operation of the Separate Account, or the purchase of the Trust
shares, if, in each case, the Trust reasonably determines
that such proceedings, or the facts on which such proceedings may be based, have
a material likelihood of imposing material adverse consequences on the Fund to
be terminated; or
(c) at the option of ANLIC upon institution of formal proceedings
against the Trust, the Adviser or any sub-adviser to the Trust, or the
Distributor by the NASD, the SEC, or any state securities or insurance
department or any other regulatory body, if, in each case, ANLIC reasonably
determines that such proceedings, or the facts on which such proceedings may be
based, have a material likelihood of imposing material adverse consequences on
ANLICor the Division corresponding to the Fund to be terminated; or
(d) at the option of any Party in the event that (i) the Fund's shares
are not registered and, in all material respects, issued and sold in accordance
with applicable state and federal law or (ii) such law precludes the use of such
shares as an underlying investment medium of the Contracts issued or to be
issued by ANLIC; or
(e) upon termination of the corresponding Division's investment in the
Fund pursuant to Section 5 hereof; or
(f) at the option of ANLIC if the Fund ceases to qualify as a RIC under
Subchapter M of the Code or under successor or similar provisions, or if ANLIC
reasonably believes that the Fund may fail to so qualify; or
(g) at the option of ANLIC if the Fund fails to comply with Section
817(h) of the Code or with successor or similar provisions, or if ANLIC
reasonably believes that the Fund may fail to so comply.
6.2 FUNDS TO REMAIN AVAILABLE.
Except (i) as necessary to implement Participant initiated
transactions, (ii) as required by state insurance laws or regulations, (iii) as
required pursuant to Section 5 of this Agreement, or (iv) with respect to any
Fund as to which this Agreement has terminated, ANLIC shall not (x) redeem Trust
shares attributable to the Contracts (as opposed to Trust shares attributable to
ANLIC's assets held in the Separate Account), (y) prevent Participants from
allocating payments to or transferring amounts from a Fund that was otherwise
available under the Contracts, or (z) apply for an order of the Securities and
Exchange Commission pursuant to Section 26(b) of the 1940 Act.
6.3 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
All warranties and indemnifications will survive the termination of
this Agreement.
6.4 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES.
If any Party terminates this Agreement with respect to any Fund
pursuant to Sections 6.1 (b), 6.1 (c), 6.1 (d), 6.1 (f), or 6.1 (g) hereof, this
Agreement shall nevertheless continue in effect as to any shares of that Fund
that are outstanding as of the date of such termination (the "Initial
Termination Date"). This continuation shall extend to the earlier of the date as
of which the Separate Account owns no shares of the affected Fund or a date (the
"Final Termination Date") six months following the Initial Termination Date,
except that ANLIC may, by written notice to the other Parties, shorten said six
month period in the case of a termination pursuant to Sections 6.1 (d), 6.1 (f)
or 6.1 (g).
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
The Parties agree to cooperate and give reasonable assistance to one
another in taking all necessary and appropriate steps for the purpose of
ensuring that the Separate Account owns no shares of a Fund after the Final
Termination Date with respect thereto, or, in the case of a termination pursuant
to Section 6. 1 (a), the termination date specified in the notice of
termination.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned, except with the written consent of
each other Party.
SECTION 9. NOTICES
Notices and communications required or permitted by Section 2 hereof
will be given by means mutually acceptable to the Parties concerned. Each other
notice or communication required or permitted by this Agreement will be given to
the following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
Anchor National Life Insurance Company
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Attn:
---------------------------
FAX:
------------------------
WM Variable Trust
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
FAX: ▇▇▇-▇▇▇-▇▇▇▇
WM Funds Distributor, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
FAX: ▇▇▇-▇▇▇-▇▇▇▇
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3
hereof, ANLIC will distribute all proxy material furnished by the Trust to
Participants and will vote Trust shares in accordance with instructions received
from Participants. ANLIC, will vote Trust shares that are (a) not attributable
to Participants or (b) attributable to Participants, but for which no
instructions have been received, in the same proportion as Trust shares for
which said instructions have been received from Participants. ANLIC agrees that
it will disregard Participant voting instructions only to the extent it would be
permitted to do so pursuant to Rule 6e-3(T)(b)(15)(iii) under the
1940 Act if the Contracts were variable life insurance policies subject to that
rule. Other participating life insurance companies utilizing the Trust will be
responsible for calculating voting privileges in a manner consistent with that
of ANLIC, as prescribed by this Section 10.
SECTION 11. FOREIGN TAX CREDITS
The Trust agrees to consult in advance with ANLIC concerning any
decision to elect or not to elect pursuant to Section 853 of the Code to pass
through the benefit of any foreign tax credits to its shareholders.
SECTION 12. INDEMNIFICATION
12.1 INDEMNIFICATION OF TRUST AND DISTRIBUTOR BY ANLIC.
(a) Except to the extent provided in Sections 12.l(b) and 12.l(c),
below, ANLIC agrees to indemnify and hold harmless the Trust and the
Distributor, each of their trustees, directors and officers, and each person, if
any, who controls the Trust or the Distributor within the meaning of Section 15
of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 12.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of ANLIC) or
actions in respect thereof (including, to the extent reasonable, legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or actions are related to the sale or acquisition of the
Trust's shares and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Separate
Account's 1933 Act registration statement, the Separate Account
Prospectus, the Contracts or, to the
extent prepared by ANLIC, sales literature or advertising for
the Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to ANLIC by or on
behalf of the Trust, the Distributor or the Adviser for use in
the Separate Account's 1933 Act registration statement, the
Separate Account Prospectus, the Contracts, or sales literature
or advertising (or any amendment or supplement to any of the
foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in the Trust's 1933 Act registration statement, Trust
Prospectus, sales literature or advertising of the Trust, or any
amendment or supplement to any of the foregoing, not supplied for
use therein by or on behalf of ANLIC) or wrongful conduct of
ANLIC or persons under its control (including, without
limitation, their employees and "Associated Persons," as that
term is defined in paragraph (m) of Article I of the NASD's
By-Laws), in connection with the sale or distribution of the
Contracts or Trust shares; or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Trust's 1933 Act registration statement, Trust Prospectus, sales
literature or advertising of the Trust, or any
amendment or supplement to any of the foregoing, or the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon and in conformity with information furnished to the Trust by
or on behalf of ANLIC for use in the Trust's 1933 Act registration
statement, Trust Prospectus, sales literature or advertising of
the Trust, or any amendment or supplement to any of the foregoing;
or
(iv) arise as a result of any failure by ANLIC to perform the
obligations, provide the services and furnish the materials
required of them under the terms of this Agreement.
(b) ANLIC shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that Indemnified Party of
its duties or by reason of its reckless disregard of obligations or duties under
this Agreement or to the Distributor or to the Trust.
(c) ANLIC shall not be liable under this indemnification provision with
respect to any action against an Indemnified Party unless the Trust or the
Distributor shall have notified ANLIC in writing within a reasonable time after
the summons or other first legal process giving information of the nature of the
action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify ANLIC of any such action shall not relieve ANLIC
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, ANLIC shall be entitled to participate, at its own
expense, in the defense of such action. ANLIC also shall be entitled to assume
the defense thereof, with counsel approved by the Indemnified Party named in the
action, which approval shall not be unreasonably withheld. After notice from
ANLIC to such Indemnified Party of ANLIC's election to assume the defense
thereof, the Indemnified Party will cooperate fully with ANLIC and shall bear
the fees and expenses of any additional counsel retained by it, and ANLIC will
not be liable to such Indemnified Party under this Agreement for any legal or
other expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof, other than reasonable costs of
investigation.
12.2 INDEMNIFICATION OF ANLIC BY DISTRIBUTOR.
(a) Except to the extent provided in Sections 12.2(b) and 12.2(c)
hereof, the Distributor agrees to indemnify and hold harmless
ANLIC, and the Trust, each of their trustees, directors and
officers, and each person, if any, who controls ANLICor the Trust
within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 12.2) against
any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Distributor) or
actions in respect thereof (including, to the extent reasonable,
legal and other expenses) to which the Indemnified Parties may
become subject under any statute, at common law or otherwise,
insofar as such losses, claims,
damages, liabilities or actions are related to the sale or
acquisition of the Trust's shares and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Trust's 1933 Act registration statement, Trust Prospectus, sales
literature or advertising of the Trust or, to the extent not
prepared by ANLIC , sales literature or advertising for the
Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Distributor
or Trust by or on behalf of ANLIC for use in the Trust's 1933 Act
registration statement, Trust Prospectus, or in sales literature
or advertising (or any amendment or supplement to any of the
foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in the Separate Account's 1933 Act registration
statement, Separate Account Prospectus, sales literature or
advertising for the Contracts, or any amendment or supplement to
any of the foregoing, not supplied for use therein by or on
behalf of the Distributor, Trust or Adviser) or wrongful conduct
of the Trust or Distributor or persons under their control
(including, without limitation, their employees and Associated
Persons), in connection with the sale or distribution of the
Contracts or Trust shares; or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Separate Account's 1933 Act registration statement, Separate
Account Prospectus, sales literature or advertising covering the
Contracts, or any amendment or supplement to any of the
foregoing, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, if such statement or
omission was made in reliance upon and in conformity with
information furnished to ANLIC by or on behalf of the Trust, the
Adviser or the Distributor for use in the Separate Account's 1933
Act registration statement, Separate Account Prospectus, sales
literature or advertising covering the Contracts, or any
amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by the Trust or the
Distributor to perform the obligations, provide the services and
furnish the materials required of them under the terms of this
Agreement;
(b) The Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or actions to
which an Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance by that
Indemnified Party of its duties or by reason of its reckless disregard of
obligations and duties under this Agreement or to ANLIC, or the Separate
Account.
(c) The Distributor shall not be liable under this indemnification
provision with respect to any action against an Indemnified Party unless ANLIC
shall have notified the Distributor in writing within a reasonable time after
the summons or other first legal process giving information of the nature of the
action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the Distributor of any such action shall not
relieve the Distributor from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against an
Indemnified Party, the Distributor will be entitled to participate, at its own
expense, in the defense of such action. The Distributor also shall be entitled
to assume the defense thereof, with counsel approved by the Indemnified Party
named in the action, which approval shall not be unreasonably withheld. After
notice from the Distributor to such Indemnified Party of the Distributor's
election to assume the defense thereof, the Indemnified Party will cooperate
fully with the Distributor and shall bear the fees and expenses of any
additional counsel retained by it, and the Distributor will not be liable to
such Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such Indemnified Party independently in connection with
the defense thereof, other than reasonable costs of investigation.
12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Section 12.1 or 12.2 above of participation in or control of any
action by the indemnifying Party
will in no event be deemed to be an admission by the indemnifying Party of
liability, culpability or responsibility, and the indemnifying Party will remain
free to contest liability with respect to the claim among the Parties or
otherwise.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Washington law, without regard for that state's
principles of conflict of laws.
SECTION 14. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
SECTION 15. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
SECTION 16. RIGHTS CUMULATIVE
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, that the Parties are entitled to under federal and state
laws.
SECTION 17. SCOPE OF LIABILITY
It is understood and expressly agreed that the obligations and
liabilities of the Trust hereunder will not be binding upon any of the trustees,
shareholders, nominees, officers, agents or employees of the Trust, as provided
in the Declaration of Trust. The execution and delivery of this Agreement have
been authorized by the Board of Trustees and this Agreement has been signed by
an authorized officer of the Trust, acting as such, and neither such
authorization by the Board of Trustees nor such execution and delivery by such
officer will be deemed to have been made by any of the Trustees individually or
to impose any liability on any of them personally, but will bind only the assets
and property of thethe relevant Fund, as provided in its Declaration of Trust.
SECTION 18. HEADINGS
The Table of Contents and headings used in this Agreement are for
purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers signing below.
ANCHOR NATIONAL LIFE INSURANCE COMPANY
By:
---------------------------------
Title:
WM VARIABLE TRUST
By:
---------------------------------
Title:
WM FUNDS DISTRIBUTOR, INC.
By:
---------------------------------
Title:
EXHIBIT A
INVESTMENT FUNDS OF THE TRUST
AS OF __________ __, 2001
X Money Market Fund
X Short-Term Income Fund
X U.S. Government Securities Fund
X Income Fund
X Bond & Stock Fund
X Growth & Income Fund
X Growth Fund
X Growth Fund of the Northwest
X Small Cap Stock Fund
X International Growth Fund
X Strategic Growth Portfolio
X Conservative Growth Portfolio
X Balanced Portfolio
X Flexible Income Portfolio
X Income Portfolio