PARTICIPATION AGREEMENT
as of April 1, 2002
among
▇▇▇▇▇▇ Advisors Trust
Liberty Funds Distributor, Inc.
and
Sun Life Assurance Company of Canada (U.S.)
CONTENTS
Section Subject Matter
1. Parties and Purpose
2. Representations and Warranties
3. Purchase and Redemption of Trust Portfolio Shares
4. Fees, Expenses, Prospectuses, Proxy Materials and Reports
5. Voting
6. Sales Material, Information and Trademarks
7. Indemnification
8. Notices
9. Termination
10. Miscellaneous
SCHEDULES TO THIS AGREEMENT
A. The Company
B. Accounts of the Company
C. Available Portfolios and Classes of Shares of the Trust
D. Contracts of the Company
E. Addresses for Notices
1. PARTIES AND PURPOSE
This agreement (the "Agreement") made and entered into this 1st day of April,
2002, is between certain portfolios, specified in Schedule C, of ▇▇▇▇▇▇ Advisors
Trust, an open-end management investment company organized as a business trust
under Massachusetts law (the "Trust"), Liberty Funds Distributor, Inc., a
Massachusetts corporation which is the principal underwriter for the Trust (the
"Underwriter," and together with the Trust, "we" or "us") and the insurance
company identified on Schedule A ("you"), on your own behalf and on behalf of
its Separate Accounts, each of which is a segregated asset account maintained by
you that is listed on Schedule B, as that schedule may be amended from time to
time ("Account" or "Accounts").
The purpose of this Agreement is to entitle you, on behalf of the Accounts, to
purchase the shares, and classes of shares, of portfolios of the Trust
("Portfolios") that are identified on Schedule C, solely for the purpose of
funding benefits of your variable life insurance policies or variable annuity
contracts ("Contracts") that are identified on Schedule D. This Agreement does
not authorize any other purchases or redemptions of shares of the Trust.
2. REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES BY YOU
You represent and warrant that:
2.1.1 You are an insurance company duly organized and in good standing
under the laws of your state of incorporation.
2.1.2 All of your directors, officers, employees, investment advisors,
and other individuals or entities dealing with the money and/or
securities of the Trust are and shall be at all times covered by
a blanket fidelity bond or similar coverage in an amount not less
than $5 million. Such bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable fidelity
insurance company. You agree that any amounts received under such
bond or coverage in connection with claims that arise from the
arrangements described in this Agreement will be held by you for
the benefit of the Trust. You agree to make all reasonable
efforts to see that this bond or another bond containing such
provisions is always in effect, and you agree to notify us in the
event that such coverage no longer applies.
2.1.3 Each Account is a duly organized, validly existing segregated
asset account under applicable state insurance law and interests
in each Account are offered exclusively through the purchase of
or transfer into a "variable contract" within the meaning of such
terms under Section 817 of the Internal Revenue Code of 1986, as
amended ("Code") and the regulations thereunder. You will use
your best efforts to continue to meet such definitional
requirements, and will notify us 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.
2.1.4 Each Account either: (i) has been registered or, prior to any
issuance or sale of the Contracts, will be registered as a unit
investment trust under the Investment Company Act of 1940 ("1940
Act") to serve as a segregated investment account for Contracts,
to the extent required by the 1940 Act; or (ii) has not been so
registered in proper reliance upon an exemption from registration
under Section 3(c) of the 1940 Act; if the Account is exempt from
registration as an investment company under Section 3(c) of the
1940 Act, you will use your best efforts to maintain such
exemption and will notify us immediately upon having a reasonable
basis for believing that such exemption no longer applies or
might not apply in the future.
2.1.5 The Contracts or interests in the Accounts: (i) are or, prior to
any issuance or sale will be, registered as securities under the
Securities Act of 1933, as amended (the "1933 Act"), to the
extent required by the 1933 Act; or (ii) are not registered
because they are properly exempt from registration under Section
3(a)(2) of the 1933 Act or will be offered exclusively in
transactions that are properly exempt from registration under
Section 4(2) or Regulation D of the 1933 Act, in which case you
will make every effort to maintain such exemption and will notify
us immediately upon having a reasonable basis for believing that
such exemption no longer applies or might not apply in the
future.
2.1.6 The Contracts: (i) will be sold by broker-dealers, or their
registered representatives, who are registered with the
Securities and Exchange Commission ("SEC") under the Securities
and Exchange Act of 1934, as amended (the "1934 Act") and who are
members in good standing of the National Association of
Securities Dealers, Inc. (the "NASD"); and (ii) will be issued in
compliance in all material respects with all applicable federal
and state laws including without limitation the 1933 Act and the
1940 Act.
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2.1.7 The Contracts currently are and will be treated as endowment
contracts, annuity contracts or life insurance contracts under
applicable provisions of the Code and you will use your best
efforts to maintain such treatment; you will notify us
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.
2.1.8 The fees and charges deducted under each Contract, in the
aggregate, are reasonable in relation to the services rendered,
the expenses expected to be incurred, and the risks assumed by
you.
2.1.9 You will use shares of the Trust only for the purpose of funding
benefits of the Contracts through the Accounts.
2.1.10 Contracts will not be sold outside of the United States.
2.1.11 With respect to any Accounts which are exempt from registration
under the 1940 Act in reliance on 3(c)(1) or Section 3(c)(7)
thereof:
2.1.11.1 the principal underwriter for each such Account and
any subaccounts thereof is a registered broker-dealer
with the SEC under the 1934 Act and a member in good
standing of the NASD; and
2.1.11.2 with regard to each Portfolio, you, on behalf of the
corresponding subaccount, will:
(a) vote such shares held by it in the same
proportion as the vote of all other holders of
such shares; and
(b) refrain from substituting shares of another
security for such shares unless the SEC has
approved such substitution in the manner
provided in Section 26 of the 1940 Act.
2.2 REPRESENTATIONS AND WARRANTIES BY THE TRUST
The Trust represents and warrants that:
2.2.1 It is duly organized and in good standing under the laws of the
Commonwealth of Massachusetts and the shares of the Portfolios of
the Trust are duly authorized for issuance and sold in compliance
with the laws of the Commonwealth of Massachusetts and all
applicable federal and any state securities laws.
2.2.2 All of its trustees, officers, employees and other
individuals/entities dealing with the money and/or securities of
a Portfolio are and shall be at all times covered by a joint
fidelity bond or similar coverage for the benefit of the Trust in
an amount not less that the minimum coverage required by Rule
17g-1 or other regulations under the 1940 Act. Such bond shall
include coverage for larceny and embezzlement with no deductible
and be issued by a reputable fidelity insurance company. The
Trust agrees to make all reasonable efforts to see that this bond
or another bond containing such provisions is always in effect,
and agrees to notify you in the event that such coverage no
longer applies.
2.2.3 It is registered as an open-end management investment company
under the 1940 Act.
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2.2.4 Each class of shares of the Portfolios of the Trust is registered
under the ▇▇▇▇ ▇▇▇.
2.2.5 It will amend its registration statement under the 1933 Act and
the 1940 Act from time to time as required in order to effect the
continuous offering of its shares.
2.2.6 It will comply, in all material respects, with the 1933 and 1940
Acts and the rules and regulations thereunder.
2.2.7 It is currently qualified as a "regulated investment company"
under Subchapter M of the Code, it will maintain such
qualification under Subchapter M (or any successor or similar
provision), and will notify you immediately upon having a
reasonable basis for believing that it has ceased to so qualify
or that it might not so qualify in the future.
2.2.8 The Trust will comply with the diversification requirements for
variable annuity, endowment or life insurance contracts set forth
in Section 817(h) of the Code, and the rules and regulations
thereunder, including without limitation Treasury Regulation
1.817-5. Upon having a reasonable basis for believing any
Portfolio has ceased to comply with Regulation 1.817-5, the Trust
will notify you immediately and will take all reasonable steps to
adequately diversify the Portfolio to achieve compliance.
2.2.9 (a) With respect to Class A shares, the Trust currently does not
intend to make any payments to finance distribution expenses
pursuant to Rule 12b-1 under the 1940 Act or otherwise.
(b) With respect to Class B shares, the Trust has adopted a Rule
12b-1 Plan under which it makes payments to finance distribution
expenses. The Trust represents and warrants that it has a Board
of Trustees, a majority of whom are not interested persons of the
Trust, which has formulated and approved its Rule 12b-1 Plans to
finance distribution expenses of the Trust and that any changes
to the Trust's Rule 12b-1 Plans will be approved by a similarly
constituted Board of Trustees. To the extent that any Class of
the Trust finances its distribution expenses pursuant to a Plan
adopted under rule 12b-1, the Trust undertakes to comply with any
then current SEC interpretations concerning rule 12b-1 or any
successor provisions.
2.2.10 Each investment adviser or subadviser to any Portfolio of the
Trust is and shall remain duly registered as an investment
adviser under the Investment Advisers Act of 1940, as amended,
and any applicable federal and state securities law and that they
shall perform their obligations for the Trust in compliance with
the applicable Laws of the Commonwealth of Massachusetts any
applicable federal and state securities laws.
2.2.11 The Trust makes no representations as to whether any aspect of
its operations (including, but not limited to, fees and expenses
and investment policies) complies with the insurance laws or
regulations of any state.
2.3 REPRESENTATIONS AND WARRANTIES BY THE UNDERWRITER
The Underwriter represents and warrants that:
2.3.1 It is registered as a broker dealer with the SEC under the 1934
Act, and is a member in good standing of the NASD.
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2.4 WARRANTY AND AGREEMENT BY BOTH YOU AND US
We received an order from the SEC dated _______ (file no. _________), which
grants exemptions from certain provisions of the 1940 Act and the regulations
thereunder to the extent necessary to permit shares of the Trust to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies and qualified pension
and retirement plans outside the separate account context. You and we both
warrant and agree that both you and we will comply with the Shared Funding Order
as though such conditions were set forth verbatim in this Agreement, including,
without limitation, the provisions regarding potential conflicts of interest
between the separate accounts which invest in the Trust and regarding contract
owner voting privileges. In order for the Trust's Board of Trustees to perform
its duty to monitor for conflicts of interest, you agree to inform us of the
occurrence of any of the events specified in the Shared Funding Order to the
extent that such event may or does result in a material conflict of interest as
defined in that order.
3. PURCHASE AND REDEMPTION OF TRUST PORTFOLIO SHARES
3.1 We will make shares of the Portfolios available to the Accounts
for the benefit of the Contracts. The shares will be available
for purchase at the net asset value per share next computed after
we (or our agent) receive a purchase order, as established in
accordance with the provisions of the then current prospectus of
the Trust. Notwithstanding the foregoing, the Trust's Board of
Trustees ("Trustees") may refuse to sell shares of any Portfolio
to any person, or may suspend or terminate the offering of shares
of any Portfolio if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole
discretion of the Trustees, acting in good faith and in light of
their fiduciary duties under federal and any applicable state
laws, they deem such action to be in the best interests of the
shareholders of such Portfolio.
3.2 We agree that shares of the Trust will be sold only to life
insurance companies which have entered into fund participation
agreements with the Trust ("Participating Insurance Companies")
and their separate accounts or to qualified pension and
retirement plans in accordance with the terms of the Shared
Funding Order. No shares of any Portfolio will be sold to the
general public.
3.3 You shall be the designee for us for receipt of purchase orders
and requests for redemption resulting from investment in and
payments under the Contracts ("Instructions"). The Business Day
on which such Instructions are received in proper form by you by
the close of trading will be the date as of which Portfolio
shares shall be deemed purchased, exchanged, or redeemed as a
result of such Instructions, provided you transmit such
instructions to us no later than 9:30 a.m. Eastern Time on the
next Business Day. Instructions received in proper form by you
after the close of trading on any given Business Day shall be
treated as if received on the next following Business Day.
Instructions we receive from you after 9:30 a.m. Eastern Time
shall be processed on the next Business Day. "Business Day" shall
mean any day on which the New York Stock Exchange is open for
trading and on which the Trust calculates its net asset value
pursuant to the rules of the SEC and its current prospectus.
3.4 We shall calculate the net asset value per share of each
Portfolio on each Business Day, and shall communicate these net
asset values to you or your designated agent on a daily basis as
soon as reasonably practical after the calculation is completed
(normally by 6:30 p.m. Eastern time).
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3.5 You shall submit payment for the purchase of shares of a
Portfolio on behalf of an Account no later than 2 p.m. Eastern
time on the next Business Day after we receive the purchase
order. Payment shall be made in federal funds transmitted by wire
to the Trust or to its designated custodian.
3.6 We will redeem any full or fractional shares of any Portfolio,
when requested by you on behalf of an Account, at the net asset
value next computed after receipt by us (or our agent) of the
request for redemption, in accordance with Section 3.3 above. I
Payment will be made in federal funds transmitted by wire to you
or your agent by 2 p.m. Eastern time on the next Business Day
after we receive the redemption order. Payment shall not be
delayed except in accordance with the 1940 Act, and in no event
shall payment be delayed for a greater period than is permitted
by the 1940 Act. Payments for the purchase or redemption of
shares by you may be netted against one another on any Business
Day for the purpose of determining the amount of any wire
transfer on that Business Day.
3.7 Issuance and transfer of the Portfolio shares will be by book
entry only. Stock certificates will not be issued to you or the
Accounts. Portfolio shares purchased from the Trust will be
recorded in the appropriate title for each Account or the
appropriate subaccount of each Account.
3.8 We shall furnish, on or before the ex-dividend date, notice to
you of any income dividends or capital gain distributions payable
on the shares of any Portfolio. You hereby elect to receive all
such income dividends and capital gain distributions as are
payable on shares of a Portfolio in additional shares of that
Portfolio, and you reserve the right to change this election in
the future. We will notify you of the number of shares so issued
as payment of such dividends and distributions.
4. FEES, EXPENSES, PROSPECTUSES, PROXY MATERIALS AND REPORTS
4.1 We shall pay no fee or other compensation to you under this
Agreement except as provided on Schedule F, if attached.
4.2 We shall prepare and be responsible for filing with the SEC, and
any state regulators requiring such filing, all shareholder
reports, notices, proxy materials (or similar materials such as
voting instruction solicitation materials), prospectuses and
statements of additional information of the Trust. We shall bear
the costs of preparation and filing of the documents listed in
the preceding sentence, registration and qualification of the
Trust's shares of the Portfolios.
4.3 We shall to provide you, on a timely basis, with such information
about the Trust, the Portfolios and each Adviser, in such form as
you may reasonably require, as you shall reasonably request in
connection with the preparation of disclosure documents and
annual and semi-annual reports pertaining to the Contracts.
4.4 At your option, we shall provide you, at our expense, with
either, (i) for each Contract owner, one copy of each of the
following documents on each occasion that such document is
required by law or regulation to be delivered to such Contract
owner: the Trust's current prospectus, annual report, semi-annual
report and other shareholder communications, including any
amendments or supplements to any of the foregoing, pertaining
specifically to the Portfolios ("Designated Portfolio
Documents"); or (ii) a camera ready copy of such
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Designated Portfolio Documents, in a form suitable for printing
and from which information relating to series of the Trust other
than the Portfolios had been deleted to the extent practicable.
In connection with clause (ii) of this paragraph, we will pay for
proportional printing costs for such Designated Portfolio
documents in order to provide one copy for each Contract owner on
each occasion that such document is required by law or regulation
to be delivered to Contract owners. We shall provide you with a
copy of the Trust's current statement of additional information
(the "SAI"), including any amendments or supplements, in a form
suitable for you to duplicate. We shall bear the expense of
duplicating the SAI for distribution to Contract owners. The
expenses of furnishing, including mailing, the documents referred
to in this paragraph shall be borne by you, except that we shall
bear the expenses of furnishing such documents to Contract
owners. For each of the documents provided to you in accordance
with clause (i) of this paragraph 4.4, we shall provide you, upon
your request and at your expense, additional copies. In no event
shall we be responsible for the costs of printing or delivery of
Designated Portfolio Documents to potential Contract owners.
4.5 We shall provide you, at our expense, with copies of any
Trust-sponsored proxy materials in such quantity as you shall
reasonably require for distribution to Contract owners who are
invested in a designated subaccount. We shall bear the costs of
distributing proxy materials (or similar materials such as voting
solicitation instructions) to Contract owners.
5. VOTING
5.1 All Participating Insurance Companies shall have the obligations
and responsibilities regarding pass-through voting and conflicts
of interest corresponding to those contained in the Shared
Funding Order.
5.2 If and to the extent required by law, you shall: (i) solicit
voting instructions from Contract owners; (ii) vote the Trust
shares in accordance with the instructions received from Contract
owners; and (iii) vote Trust shares for which no instructions
have been received in the same proportion as Trust shares of such
Portfolio for which instructions have been received; so long as
and to the extent that the SEC continues to interpret the 1940
Act to require pass-through voting privileges for variable
contract owners. You reserve the right to vote Trust shares held
in any Account in your own right, to the extent permitted by law.
You and your agents will in no way recommend or oppose or
interfere with the solicitation of proxies for Portfolio shares
held to fund the Contracts without our prior written consent,
which consent may be withheld in our sole discretion.
6. SALES MATERIAL, INFORMATION AND TRADEMARKS
6.1 For purposes of this Section 6, "Sales literature or other
Promotional material" includes, but is not limited to, portions
of the following that use any logo or other trademark related to
the Trust, or Underwriter or its affiliates, or refer to the
Trust: advertisements (such as material published or designed for
use in a newspaper, magazine or other periodical, radio,
television, telephone or tape recording, videotape display, signs
or billboards, motion pictures, electronic communication or other
public media), sales literature (i.e., any written communication
distributed or made generally available to customers or the
public, including brochures, circulars, research reports, market
letters, form letters, seminar texts, reprints or excerpts or any
other advertisement, sales literature or published article or
electronic communication), educational or training materials or
other communications distributed or made generally available to
some or all agents or employees in any media, and prospectuses,
statements of additional information, shareholder reports and
proxy materials.
6.2 You shall furnish, or cause to be furnished to us or our
designee, at least one complete copy of each registration
statement, prospectus, statement of additional information,
private
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placement memorandum, retirement plan disclosure information or
other disclosure documents or similar information, as applicable
(collectively "Disclosure Documents"), as well as any report,
solicitation for voting instructions, Sales literature or other
Promotional materials, and all amendments to any of the above
that relate to the Contracts or the Accounts prior to its first
use. You shall furnish, or shall cause to be furnished, to us or
our designee each piece of Sales literature or other Promotional
material in which the Trust or an Adviser is named, at least
three (3) Business Days prior to its proposed use. No such
material shall be used unless we or our designee approve such
material and its proposed use.
6.3 We shall promptly inform you of the results of any examination by
the SEC or other regulatory authority that relates to the Trust
or its Shares, and shall provide you with a copy of the relevant
portions of any deficiency letter or other correspondence or
written report regarding any such examination. You and your
agents shall not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust, the
Underwriter or an Adviser, other than information or
representations contained in and accurately derived from the
registration statement or prospectus for the Trust shares (as
such registration statement and prospectus may be amended or
supplemented from time to time), annual and semi-annual reports
of the Trust, Trust-sponsored proxy statements, or in Sales
literature or other Promotional material approved by the Trust or
its designee, except as required by legal process or regulatory
authorities or with the written permission of the Trust or its
designee.
6.4 We shall not give any information or make any representations or
statements on behalf of you or concerning you, the Accounts or
the Contracts other than information or representations contained
in and accurately derived from Disclosure Documents for the
Contracts (as such Disclosure Documents may be amended or
supplemented from time to time), or in materials approved by you
for distribution, including Sales literature or other Promotional
materials, except as required by legal process or regulatory
authorities or with your written permission.
6.5 Except as provided in Section 6.2, you shall not use any
designation comprised in whole or part of the name or ▇▇▇▇ "▇▇▇▇▇
▇▇▇" or any logo or other trademark relating to the Trust or the
Underwriter without prior written consent, and upon termination
of this Agreement for any reason, you shall cease all use of any
such name or ▇▇▇▇ as soon as reasonably practicable.
7. INDEMNIFICATION
7.1 INDEMNIFICATION BY YOU
7.1.1 You agree to indemnify and hold harmless the Underwriter, the
Trust and each of its Trustees, officers, employees and agents
and each person, if any, who controls the Trust within the
meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" and individually the "Indemnified Party"
for purposes of this Section 7.1) against any and all losses,
claims, damages, liabilities (including amounts paid in
settlement with your written consent, which consent shall not be
unreasonably withheld) or expenses (including the reasonable
costs of investigating or defending any alleged loss, claim,
damage, liability or expense and reasonable legal counsel fees
incurred in connection therewith) (collectively, "Losses") to
which the Indemnified Parties may become subject under any
statute or regulation, at common law or otherwise, insofar as
such Losses are related to the sale or acquisition of shares of
the Trust or the Contracts and
7.1.1.1 arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained
in a Disclosure Document for the Contracts or in the
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Contracts themselves or in sales literature generated or
approved by you on behalf of the Contracts or Accounts
(or any amendment or supplement to any of the foregoing)
(collectively, "Company Documents" for the purposes of
this Section 7), or arise out of or are based upon the
omission or the alleged omission to state therein a
material fact required to be stated therein or necessary
to make the statements therein not misleading, provided
that this indemnity shall not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon
and was accurately derived from written information
furnished to you by or on behalf of us for use in
Company Documents or otherwise for use in connection
with the sale of the Contracts or Trust shares; or
7.1.1.2 arise out of or result from statements or
representations (other than statements or
representations contained in and accurately derived from
Trust Documents as defined below in Section 7.2) or
wrongful conduct of you or persons under your control,
with respect to the sale or acquisition of the Contracts
or Trust shares; or
7.1.1.3 arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in
Trust Documents as defined below in Section 7.2 or the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make
the statements therein not misleading if such statement
or omission was made in reliance upon and accurately
derived from written information furnished to the Trust
by or on behalf of you; or
7.1.1.4 arise out of or result from any failure by you to
provide the services or furnish the materials required
under the terms of this Agreement;
7.1.1.5 arise out of or result from any material breach of any
representation and/or warranty made by you in this
Agreement or arise out of or result from any other
material breach of this Agreement by you, as limited by
and in accordance with the provisions of Sections 7.1.2
and 7.1.3 hereof; or
7.1.1.6 arise out of or result from a Contract failing to be
considered a life insurance policy or an annuity
Contract, whichever is appropriate, under applicable
provisions of the Code thereby depriving the Trust of
its compliance with Section 817(h) of the Code.
7.1.2 You shall not be liable under this indemnification provision with
respect to any Losses to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Trust or Underwriter,
whichever is applicable.
7.1.3 You shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified you in writing within
a reasonable time after the summons or other first legal process
giving information of the nature of the claim 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 you of any such claim
shall not relieve you from any liability which youmay 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 the Indemnified Parties, you shall
be entitled to participate, at your own expense, in the defense
of such action. Unless the Indemnified Party releases you from
any further obligations under this Section 7.1, you also shall be
entitled to assume the defense thereof, with counsel satisfactory
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to the party named in the action. After notice from you to such
party of your election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and you will not be liable to
such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of
investigation.
7.1.4 The Indemnified Parties will promptly notify you of the
commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Trust shares or the
Contracts or the operation of the Trust.
7.2 INDEMNIFICATION BY THE UNDERWRITER
7.2.1 The Underwriter agrees to indemnify and hold harmless you, and
each of your directors and officers and each person, if any, who
controls you within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" and individually the
"Indemnified Party" for purposes of this Section 7.2) against any
and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter,
which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable
legal counsel fees incurred in connection therewith)
(collectively, "Losses") to which the Indemnified Parties may
become subject under any statute or regulation, at common law or
otherwise, insofar as such Losses are related to the sale or
acquisition of the shares of the Trust or the Contracts and:
7.2.1.1 arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact
contained in the registration statement, prospectus or
sales literature of the Trust (or any amendment or
supplement to any of the foregoing) (collectively, the
"Trust Documents" for purposes of this Section 7) or
arise out of or are based upon the omission or the
alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
indemnity shall not apply as to any Indemnified Party
if such statement or omission or such alleged statement
or omission was made in reliance upon and was
accurately derived from written information furnished
to us by or on behalf of you for use in Trust Documents
or otherwise for use in connection with the sale of the
Contracts or Trust shares; or
7.2.1.2 arise out of or result from statements or
representations (other than statements or
representations contained in and accurately derived
from Company Documents or wrongful conduct of the
Trust, Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of
the Contracts or Trust shares; or
7.2.1.3 arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained
in Company Documents, or the omission or alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statement or
statements therein not misleading, if such statement or
omission was made in reliance upon and accurately
derived from written information furnished to you by or
on behalf of the Trust; or
7.2.1.4 arise out of or result from any failure by us to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise, to
comply with the qualification representation specified
above in Section 2.2.7 and the diversification
requirements specified above in Section 2.2.8; or
10
7.2.1.5 arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter
in this Agreement or arise out of or result from any
other material breach of this Agreement by the
Underwriter; as limited by and in accordance with the
provisions of Sections 7.2.2 and 7.2.3 hereof.
7.2.2 The Underwriter shall not be liable under this indemnification
provision with respect to any Losses to which an Indemnified
Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in
the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to you or the Accounts, whichever
is applicable.
7.2.3 The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the
Underwriter in writing within a reasonable time after the summons
or other first legal process giving information of the nature of
the claim 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
Underwriter of any such claim shall not relieve the Underwriter
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 the Indemnified Parties, the Underwriter shall be
entitled to participate, at its own expense, in the defense of
such action. Unless the Indemnified Party releases the
Underwriter from any further obligations under this Section 7.2,
the Underwriter also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the
action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Underwriter will not
be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently
in connection with the defense thereof other than reasonable
costs of investigation.
7.2.4 You agree promptly to notify the Underwriter of the commencement
of any litigation or proceedings against you or the Indemnified
Parties in connection with the issuance or sale of the Contracts
or the operation of each Account.
7.3 INDEMNIFICATION BY THE TRUST
7.3.1 The Trust agrees to indemnify and hold harmless you, and each of
your directors and officers and each person, if any, who controls
you within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" and individually the
"Indemnified Party" for purposes of this Section 7.3) against any
and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Trust, which
consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable
legal counsel fees incurred in connection therewith)
(collectively, "Losses") to which the Indemnified Parties may
become subject under any statute or regulation, at common law or
otherwise, insofar as such Losses result from the gross
negligence, bad faith or willful misconduct of the Board of
Trustees or any member thereof, are related to the operations of
the Trust, and arise out of or result from any material breach of
any representation and/or warranty made by the Trust in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Trust; as limited by and in
accordance with the provisions of Sections 7.3.2 and 7.3.3
hereof. It is understood and expressly stipulated that neither
the holders of shares
11
of the Trust nor any Trustee, officer, agent or employee of the
Trust shall be personally liable hereunder, nor shall any resort
be had to other private property for the satisfaction of any
claim or obligation hereunder, but the Trust only shall be
liable.
7.3.2 The Trust shall not be liable under this indemnification
provision with respect to any Losses to which an Indemnified
Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in
the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to you, the Trust, the Underwriter
or each Account, whichever is applicable.
7.3.3 The Trust shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Trust
in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the
claims 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 Trust
of any such claim shall not relieve the Trust 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 the Indemnified Parties, the Trust shall be entitled to
participate, at its own expense, in the defense of such action.
Unless the Indemnified Party releases the Trust from any further
obligations under this Section 7.3, the Trust also shall be
entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action. After notice from the Trust to
such party of the Trust's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Trust will not be
liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs
of investigation.
7.3.4 You and the Underwriter agree promptly to notify the Trust of the
commencement of any litigation or proceedings against the
Indemnified Parties in connection with this Agreement, the
issuance or sale of the Contracts, the operation of each Account,
or the issuance or sale or acquisition of the Trust shares or the
operation of the Trust.
8. NOTICES
Any notice shall be sufficiently given when sent by registered or certified mail
to the other party at the address of such party set forth in Schedule E below or
at such other address as such party may from time to time specify in writing to
the other party.
9. TERMINATION
9.1 This Agreement may be terminated by any party in its entirety or
with respect to one, some or all Portfolios for any reason by
sixty (60) days advance written notice delivered to the other
parties. This Agreement shall terminate immediately in the event
of its assignment by any party without the prior written approval
of the other parties, or as otherwise required by law.
9.2 This Agreement may be terminated immediately by us upon written
notice to you if:
9.2.1 you notify the Trust or the Underwriter that the exemption
from registration under Section 3(c) of the 1940 Act no
longer applies, or might not apply in the future, to the
unregistered Accounts, or that the exemption from
registration under Section 4(2) or Regulation D
promulgated under the 1933 Act no longer applies or might
not apply in
12
the future, to interests under the unregistered Contracts;
or
9.2.2 either one or both of the Trust or the Underwriter
respectively, shall determine, in their sole judgment
exercised in good faith, that you have suffered a material
adverse change in your business, operations, financial
condition or prospects since the date of this Agreement or
are the subject of material adverse publicity; or
9.3 This Agreement may be terminated immediately by you upon written
notice to us if you shall determine, in your sole judgment
exercised in good faith, that either one or both of the Trust or
the Underwriter have suffered a material adverse change in their
business, operations, financial condition or prospects since the
date of this Agreement or are the subject of material adverse
publicity.
9.4 If this Agreement is terminated for any reason, except as
required by the Shared Funding Order or pursuant to Section
9.2.1, above, we shall, at your option, continue to make
available additional shares of any Portfolio and redeem shares of
any Portfolio pursuant to all of the terms and conditions of this
Agreement for all Contracts in effect on the effective date of
termination of this Agreement. If this Agreement is terminated as
required by the Shared Funding Order, its provisions shall
govern.
9.5 The provisions of Sections 2 (Representations and Warranties) and
7 (Indemnification) shall survive the termination of this
Agreement. All other applicable provisions of this Agreement
shall survive the termination of this Agreement, as long as
shares of the Trust are held on behalf of Contract owners in
accordance with Section 9.3, except that we shall have no further
obligation to sell Trust shares with respect to Contracts issued
after termination.
9.6 You shall not redeem Trust shares attributable to the Contracts
(as opposed to Trust shares attributable to your assets held in
the Account) except: (i) as necessary to implement Contract owner
initiated or approved transactions; (ii) as required by state
and/or federal laws or regulations or judicial or other legal
precedent of general application (hereinafter referred to as a
"Legally Required Redemption"); or (iii) as permitted by an order
of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, you shall promptly furnish to us the opinion of your
counsel (which counsel shall be reasonably satisfactory to us) to
the effect that any redemption pursuant to clause (ii) above is a
Legally Required Redemption.
10. MISCELLANEOUS
10.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the
provisions of this Agreement or otherwise affect their
construction or effect.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, all of which taken together shall constitute one
and the same instrument.
10.3 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of
the Agreement shall not be affected thereby.
10.4 This Agreement shall be construed and its provisions interpreted
under and in accordance with the laws of the Commonwealth of
Massachusetts. It shall also be subject to the provisions of the
federal securities laws and the rules and regulations thereunder,
to any orders of the SEC on behalf of the Trust granting it
exemptive relief, and to the conditions of
13
such orders. We shall promptly forward copies of any such orders
to you.
10.5 The parties to this Agreement agree that the assets and
liabilities of each Portfolio of the Trust are separate and
distinct from the assets and liabilities of each other Portfolio.
No Portfolio shall be liable or shall be charged for any debt,
obligation or liability of any other Portfolio.
10.6 Each party to this Agreement shall cooperate with each other
party and all appropriate governmental authorities (including
without limitation the SEC, the NASD, the Internal Revenue
Service, and state insurance regulators) and shall permit such
authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
10.7 Each party to this Agreement shall treat as confidential all
information reasonably identified as confidential in writing by
any other party to this Agreement, and, except as permitted by
this Agreement or as required by legal process or regulatory
authorities, shall not disclose, disseminate, or use such names
and addresses and other confidential information until such time
as they may come into the public domain, without the express
written consent of the affected party to this Agreement. Without
limiting the foregoing, no party to this Agreement shall disclose
any information that such party has been advised is proprietary,
except such information that such party is required to disclose
by any appropriate governmental authority (including, without
limitation, the SEC, the NASD, and state securities and insurance
regulators).
10.8 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, which the parties
to this Agreement are entitled to under state and federal laws.
10.9 Neither this Agreement nor any rights or obligations created by
it may be assigned by any party without the prior written
approval of the other parties.
10.10 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and
executed by both parties.
14
IN WITNESS WHEREOF, each of the parties have caused their duly authorized
officers to execute this Agreement.
The Company: Sun Life Assurance Company of Canada (U.S.)
-------------------------------------------
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
The Trust: ▇▇▇▇▇▇ Advisors Trust
ONLY ON BEHALF OF EACH
PORTFOLIO LISTED ON
SCHEDULE C HEREOF.
By:
------------------------------
Name:
Title:
The Underwriter: Liberty Funds Distributor, Inc.
-------------------------------
By:
------------------------------
Name:
Title:
15
SCHEDULE A
THE COMPANY
Sun Life Assurance Company of Canada (U.S.)
One Sun Life Executive Park
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Organized as a corporation under Delaware law
16
SCHEDULE B
ACCOUNTS OF THE COMPANY
---------- ---------------------------------------- ---------------------------------------------
1. Name: Sun Life of Canada U.S. Variable Account F
---------- ---------------------------------------- ---------------------------------------------
Date Established: July 13, 1989
---------- ---------------------------------------- ---------------------------------------------
SEC Registration Number: 811-05846
---------- ---------------------------------------- ---------------------------------------------
17
SCHEDULE C
AVAILABLE PORTFOLIOS AND CLASSES OF SHARES OF THE TRUST
▇▇▇▇▇▇ Advisors Trust
▇▇▇▇▇▇ U.S. Small Cap
▇▇▇▇▇▇ International Small Cap
▇▇▇▇▇▇ Twenty
▇▇▇▇▇▇ Foreign Forty
18
SCHEDULE D
Contracts of the Company
------------------------- ------------------------------ ------------------------------- --------------------------------
CONTRACT 1 CONTRACT 2 CONTRACT 3
------------------------- ------------------------------ ------------------------------- --------------------------------
CONTRACT/PRODUCT NAME All-Star
------------------------- ------------------------------ ------------------------------- --------------------------------
REGISTERED (Y/N) Yes
------------------------- ------------------------------ ------------------------------- --------------------------------
SEC REGISTRATION NUMBER 811-05846
------------------------- ------------------------------ ------------------------------- --------------------------------
REPRESENTATIVE FORM
NUMBERS
------------------------- ------------------------------ ------------------------------- --------------------------------
SEPARATE ACCOUNT Sun Life of Canada U.S.
NAME/DATE ESTABLISHED Variable Account F/
July 13, 1989
------------------------- ------------------------------ ------------------------------- --------------------------------
SEC REGISTRATION NUMBER 333-74844
------------------------- ------------------------------ ------------------------------- --------------------------------
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SCHEDULE E
ADDRESSES FOR NOTICES
To the Company:
Sun Life Assurance Company of Canada (U.S.)
One Sun Life Executive Park
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
To the Trust: ▇▇▇▇▇▇ Advisors Trust
▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Attention:
To the Underwriter: Liberty Funds Distributors, Inc.
One Financial Center
Boston, Massachusetts
Attention:
20
