PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of February 17, 1998
("Agreement"), by and among Salomon Brothers Variable Series Funds Inc, a
Maryland corporation (the "Fund"), Salomon Brothers Asset Management Inc, a
Delaware Corporation (the "Adviser") and Sun Life Assurance Company of Canada
(U.S.), a Delaware life insurance company ("LIFE COMPANY"), on behalf of itself
and each of its segregated asset accounts listed in Schedule A hereto, as the
parties hereto may amend from time to time (each, an "Account," and
collectively, the "Accounts").
WITNESSETH THAT:
WHEREAS, the Fund is registered with the Securities and Exchange
Commission ("SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Fund is available to the extent set forth herein to act as
the investment vehicle for separate accounts established for variable life
insurance polices and variable annuity contracts to be offered by insurance
companies which have entered into participation agreements with the Fund
("Participating Insurance Companies");
WHEREAS, the Fund currently consists of seven separate investment
portfolios, shares ("Shares") of each of which are registered under the
Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, the Fund will make Shares of each investment portfolio of the
Fund listed on Schedule A hereto (each, a "Portfolio" and collectively, the
"Portfolios") as the Parties hereto may amend from time to time available for
purchase by the Accounts;
WHEREAS, the Fund has applied for an order (the "Order") from the SEC
to permit Participating Insurance Companies and variable annuity and variable
life insurance separate accounts exemptions from the provisions of sections
9(a), 13(a), 15(a), and 15(b) of the 1940 Act and Rules 6e-2(b) (15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Fund
to be sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated life insurance companies;
WHEREAS, LIFE COMPANY will be the issuer of certain variable annuity
contracts and variable life insurance policies (collectively, the "Contracts")
as set forth on Schedule A hereto, as the Parties hereto may amend from time to
time, which Contracts, if required by applicable law, will be registered under
the 1933 Act;
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WHEREAS, LIFE COMPANY will, to the extent set forth herein, fund
variable life insurance policies and variable annuity contracts through the
Accounts, each of which may be divided into two or more subaccounts
("Subaccounts"; reference herein to an "Account" includes reference to each
Subaccount thereof to the extent the context requires);
WHEREAS, LIFE COMPANY will serve as the depositor of the Accounts, each
of which is registered as a unit investment trust under the 1940 Act (or exempt
therefrom), and the security interests deemed to be issued by the Accounts under
the Contracts will be registered as securities under the 1933 Act (or exempt
therefrom);
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase Shares in one or more of the
Portfolios on behalf of the Accounts to fund the Contracts; and
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE PORTFOLIOS
1.1 AVAILABLE PORTFOLIOS.
The Fund will make Shares of each Portfolio listed on Schedule A
available to LIFE COMPANY for purchase and redemption at net asset value next
computed after the Fund's receipt of a purchase or redemption order and with no
sales charges, in accordance with the Fund's then current prospectus and subject
to the terms and conditions of this Agreement. The Board of Directors of the
Fund may refuse to sell Shares of any Portfolio to any person, or 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 Directors acting in good faith and in light of their fiduciary
duties under federal and any applicable state laws, such action is deemed in the
best interests of the shareholders of such Portfolio.
1.2 ADDITION, DELETION OR MODIFICATION OF PORTFOLIOS.
The Parties hereto may agree, from time to time, to add other
Portfolios to provide additional funding alternatives for the Contracts, or to
delete or modify existing Portfolios, by amending Schedule A hereto. Upon such
amendment to Schedule A, any applicable reference to a Portfolio, the Fund, or
its Shares herein shall include a reference to all Portfolios set forth on
Schedule A as then amended. Schedule A, as amended from time to time, is
incorporated herein by reference and is a part hereof.
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1.3 NO SALES TO THE GENERAL PUBLIC.
The Fund represents that shares of the Portfolios will be sold only to
Participating Insurance Companies, their separate accounts and qualified pension
and retirement plans ("Plans") and that no Shares of any Portfolio have been or
will be sold to the general public.
SECTION 2. PROCESSING TRANSACTIONS
2.1 PLACING ORDERS.
(a) The Fund or its designated agent will use its best effort to
provide LIFE COMPANY with the net asset value per Share for each Portfolio by
6:30 p.m. Eastern Time on each Business Day. As used herein, "Business Day"
shall mean any day on which (i) the New York Stock Exchange is open for regular
trading, and (ii) the Fund calculates the Portfolios' net asset value.
(b) LIFE COMPANY will use the data provided by the Fund each Business
Day pursuant to paragraph (a) immediately above to calculate Account unit values
and to process transactions that receive that same Business Day's Account unit
values. LIFE COMPANY will perform such Account processing the same Business Day,
and will place corresponding orders to purchase or redeem Shares from the Fund
by 9:00 a.m. Eastern Time the following Business Day. The Fund will provide LIFE
COMPANY with verbal confirmation of such orders by 11:00 a.m. on such Business
Day.
(c) With respect to payment of the purchase price by LIFE COMPANY and
of redemption proceeds by the Fund, LIFE COMPANY and the Fund shall net purchase
and redemption orders with respect to each Portfolio and shall transmit one net
payment per Portfolio in accordance with Section 2.2, below.
(d) If the Fund provides materially incorrect Share net asset value
information (as determined under SEC guidelines), LIFE COMPANY shall be entitled
to an adjustment to the number of Shares purchased or redeemed to reflect the
correct net asset value per Share. Any material error in the calculation or
reporting of net asset value per Share, dividend or capital gain information
shall be reported promptly upon discovery to LIFE COMPANY.
2.2 PAYMENTS.
(a) LIFE COMPANY shall pay for Shares of each Portfolio on the same day
that it notifies the Fund of a purchase request for such Shares. Payment for
Shares shall be made in federal funds transmitted to the Fund by wire to be
received by the Fund by 1:00 P.M. Eastern Time on the day the Fund is notified
of the purchase request for Shares. If payment in federal funds for any purchase
is not received, or is received by
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the Fund after 1:00 p.m. Eastern Time on such Business Day, LIFE COMPANY shall
promptly, upon the Fund's request in writing, reimburse the Fund for any
charges, costs, fees, interest or other expenses incurred by the Fund in
connection with any advances to, or borrowings or overdrafts by, the Fund, or
any similar expenses incurred by the Fund, as a result of non-payment or late
payment.
(b) The Fund will wire payment in federal funds for net redemptions to
an account designated by LIFE COMPANY by 1:00 p.m. Eastern Time on the business
day succeeding the day the order is placed, to the extent practicable, but in
any event within five (5) calendar days after the date the order is placed in
order to enable LIFE COMPANY to pay redemption proceeds within the time
specified in Section 22(e) of the ▇▇▇▇ ▇▇▇. The Fund shall not bear any
responsibility whatsoever for the proper disbursement or crediting of redemption
proceeds by LIFE COMPANY.
2.3 APPLICABLE PRICE.
(a) Share purchase payments and redemption orders that result from
purchase payments, premium payments, surrenders and other transactions under
Contracts (collectively, "Contract transactions") and that LIFE COMPANY receives
prior to the close of regular trading on the New York Stock Exchange on a
Business Day will be executed at the net asset values of the appropriate
Portfolios next computed after receipt by the Fund or its designated agent of
the orders. For purposes of this Section 2.3(a), LIFE COMPANY shall be the
designated agent of the Fund for receipt of orders relating to Contract
transactions on each Business Day and receipt by such designated agent shall
constitute receipt by the Fund; PROVIDED that the Fund receives notice of such
orders by 9:00 a.m. Eastern Time on the following Business Day.
(b) All other Share purchases and redemptions by LIFE COMPANY will be
effected at the net asset values of the appropriate Portfolios next computed
after receipt by the Fund or its designated agent of the order therefor, and
such orders will be irrevocable.
2.4 DIVIDENDS AND DISTRIBUTIONS.
The Fund will furnish notice by wire or telephone (followed by written
confirmation) on or prior to the payment date to LIFE COMPANY of any income
dividends or capital gain distributions payable on the Shares of any Portfolio.
LIFE COMPANY hereby elects to reinvest all dividends and capital gains
distributions in additional Shares of the corresponding Portfolio at the
ex-dividend date net asset values until LIFE COMPANY otherwise notifies the Fund
in writing, it being agreed by the Parties that the ex-dividend date and the
payment date with respect to any dividend or distribution will be the same
Business Day. LIFE COMPANY reserves the right to revoke this election and
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to receive all such income dividends and capital gain distributions in cash. Any
such revocation will take effect with respect to the next income dividend or
capital gain distribution following receipt by the Fund of such notification
from LIFE COMPANY.
2.5 BOOK ENTRY.
Issuance and transfer of Portfolio Shares will be by book entry only.
Stock certificates will not be issued to LIFE COMPANY. Shares ordered from the
Fund will be recorded in an appropriate title for LIFE COMPANY, on behalf of its
Accounts.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
(a) Except as otherwise specifically provided herein, each party will
bear all expenses incident to its performance under this Agreement.
(b) The Fund shall pay no fee or other compensation to the LIFE COMPANY
under this agreement, except that if the Fund or any Portfolio adopts and
implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then
the Fund may make payments to the LIFE COMPANY or to the underwriter for the
Contracts if and in amounts agreed to by the Fund in writing. Presently, no such
payments are contemplated.
3.2 REGISTRATION.
(a) The Fund will bear the cost of its registering as a management
investment company under the 1940 Act and registering its Shares under the 1933
Act, and keeping such registrations current and effective; including, without
limitation, the preparation of and filing with the SEC of Forms N-SAR and Rule
24f-2 Notices with respect to the Fund and its Shares and payment of all
applicable registration or filing fees with respect to any of the foregoing.
(b) LIFE COMPANY will bear the cost of registering, to the extent
required, each 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; including, without limitation, the
preparation and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices with
respect to each Account and its units of interest and payment of all applicable
registration or filing fees with respect to any of the foregoing.
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3.3 DISTRIBUTION EXPENSES.
Except as specifically provided herein, LIFE COMPANY will bear the
expenses of distribution. These expenses would include by way of illustration,
but are not limited to, the costs of distributing to Contract owners,
annuitants, insureds or participants (as appropriate) under the Contracts
(collectively, "Participants") the following documents, whether they relate to
the Account or the Fund: prospectuses, statements of additional information,
proxy materials (other than with respect to those proxy solicitations initiated
by the Fund) and periodic reports. The Fund will bear the expense of
distributing supplements to the Fund prospectus. LIFE COMPANY will also bear the
costs of preparing, printing, and distributing sales literature and advertising
relating to the Portfolios (all of which require the prior written consent of
the Fund) to the extent such materials are distributed in connection with the
Contracts, as well as filing such materials with, and obtaining any necessary
approvals from, the SEC, NASD, any state insurance regulatory authority, and any
other appropriate regulatory authority, to the extent required by law.
3.4 OTHER EXPENSES.
(a) The Fund will bear, or arrange for others to bear, the costs of
preparing, filing with the SEC and setting for printing the Fund's prospectus,
statement of additional information and any amendments or supplements thereto
(collectively, the "Fund Prospectus"), periodic reports to shareholders, the
Fund proxy material and other shareholder communications to the extent required
by law or as deemed appropriate by the Fund.
(b) LIFE COMPANY will bear the costs of preparing, filing with the SEC
and setting for printing each Account's prospectus, statement of additional
information and any amendments or supplements thereto (collectively, the
"Account Prospectus"), any periodic reports to Participants, voting instruction
solicitation material (other than with respect to those proxy solicitations
initiated by the Fund), and other Participant communications to the extent
required by law or as deemed appropriate by LIFE COMPANY.
(c) The Fund will bear, or arrange for others to bear, the costs of
printing the Fund statement of additional information and any amendments or
supplements thereto, any supplements or amendments to the Fund prospectus,
periodic reports to shareholders, the Fund proxy material and other shareholder
communications to the extent required by law or as deemed appropriate by the
Fund. With respect to distributions to existing Participants, the Fund will
bear, or arrange for others to bear, the costs of printing the Fund prospectus
and any supplements or amendments thereto. With respect to distributions
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to prospective Participants, LIFE COMPANY will bear, or arrange for others to
bear, the costs of printing the Fund prospectus.
(d) LIFE COMPANY will, to the extent required by law, print in quantity
and deliver to existing Participants the documents described in Section 3.4(b)
above and will deliver to such Participants the Fund Prospectuses as provided by
the Fund. LIFE COMPANY will elect to receive such prospectuses in camera ready
or computer diskette format. The Fund will print the Fund statement of
additional information, proxy materials relating to the Fund and periodic
reports of the Fund.
3.5 PARTIES TO COOPERATE.
Each party agrees to cooperate with the other, in arranging to print,
mail and/or deliver, in a timely manner, combined or coordinated prospectuses or
other materials of the Fund and the Accounts.
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) The Fund represents and warrants that it will elect to be qualified
as a regulated investment company ("RIC") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and represents that it will
qualify and maintain its qualification as a RIC and to comply with the
diversification requirements set forth in Section 817(h) of the Code and the
regulations thereunder. The Fund will notify LIFE COMPANY immediately upon
having a reasonable basis for believing that it has ceased to so qualify or so
comply, or that it might not so qualify or so comply in the future.
(b) LIFE COMPANY represents and warrants that the Contracts currently
are and will be treated as annuity contracts or life insurance contracts under
applicable provisions of the Code and that it will maintain such treatment; LIFE
COMPANY will notify the Fund 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) LIFE COMPANY represents and warrants that each Account is a
"segregated asset account" and that 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 Code and the
regulations thereunder. LIFE COMPANY will continue to meet such definitional
requirements, and it will notify the Fund 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.
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4.2 INSURANCE AND CERTAIN OTHER LAWS.
(a) LIFE COMPANY represents and warrants that (i) it is an insurance
company duly organized, validly existing and in good standing under all
applicable laws 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 each
Account as a segregated asset account under all applicable laws and regulations,
and (iii) the Contracts comply in all material respects with all applicable
federal and state laws and regulations.
(b) The Fund represents and warrants that it is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Maryland and has full corporate power, authority, and legal right to execute,
deliver, and perform its duties and comply with its obligations under this
Agreement. Notwithstanding the foregoing, the Fund, makes no representations as
to whether any aspect of its operations (including, but not limited to, fees and
expenses and investment policies) otherwise complies with the insurance laws or
regulations of any state.
(c) The Adviser represents that it is and warrants that it shall remain
duly registered as an investment adviser under all applicable federal and state
securities laws and agrees that it shall perform its obligations to the Fund in
accordance in all material respects with such laws.
(d) LIFE COMPANY acknowledges and agrees that it is the responsibility
of LIFE COMPANY and other Participating Insurance Companies to determine
investment restrictions under state insurance law applicable to any Portfolio,
and that the Fund shall bear no responsibility to LIFE COMPANY, for any such
determination or the correctness of such determination. LIFE COMPANY has
determined that the investment restrictions set forth in the current Fund
Prospectus are sufficient to comply with all investment restrictions under state
insurance laws that are currently applicable to the Portfolios as a result of
the Accounts' investment therein. LIFE COMPANY shall inform the Fund of any
additional investment restrictions imposed by state insurance law after the date
of this agreement that may become applicable to the Fund or any Portfolio from
time to time as a result of the Accounts' investment therein. Upon receipt of
any such information from LIFE COMPANY or any other Participating Insurance
Company, the Fund shall determine whether it is in the best interests of
shareholders to comply with any such restrictions. If the Fund determines that
it not is the best interests of shareholders to comply with a restriction
determined to be applicable by the LIFE COMPANY, the Fund shall so inform LIFE
COMPANY, and the Fund and LIFE COMPANY shall discuss alternative accommodations
in the circumstances.
4.2 SECURITIES LAWS.
(a) LIFE COMPANY represents and warrants that (i) interests in each
Account pursuant to the Contracts will be registered under the 1933 Act to the
extent required by the 1933 Act, (ii) the Contracts will be duly authorized for
issuance and sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and
applicable state law, (iii) each Account is and will remain registered under the
1940 Act, to the extent required by the 1940 Act, (iv) each Account does and
will comply in all material respects with the requirements of the 1940 Act and
the rules thereunder, to the extent required, (v) each 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, (vi) LIFE COMPANY will amend the
registration statement for its Contracts under the 1933 Act and for its Accounts
under the 1940 Act from time to time as required in order to effect the
continuous offering of its Contracts or as may otherwise be required by
applicable law, (vii) each Account Prospectus will at all times comply in all
material respects with the requirements of the 1933 Act and the rules
thereunder, (viii) all of its directors, officers, employees, investment
advisers, and other individuals/entities having access to the funds and/or
securities of any Portfolio are and continue to be at all times covered by a
blanket fidelity bond or similar coverage covering such risks and in such amount
as is customary for companies engaged in similar businesses in similar
industries. The aforesaid bond includes coverage for larceny and embezzlement
and is issued by a reputable bonding company.
(b) The Fund represents and warrants that (i) Shares sold pursuant to
this Agreement will be registered under the 1933 Act to the extent required by
the 1933 Act and will by duly authorized for issuance and sold in compliance
with Maryland law, (ii) the Fund is and will remain registered under the 1940
Act to the extent required by the 1940 Act, (iii) the Fund will amend the
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, (iv) the Fund
does and will comply in all material respects with the requirements of the 1940
Act and the rules thereunder, (v) the Fund's 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, (vi) the
Fund's Prospectus will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder and (vii) all of its
directors, officers, employees, investment advisers, and other
individuals/entities having access to the funds and/or securities of any
Portfolio are and continue to be at all times covered by a blanket fidelity bond
or similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions
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as may be promulgated from time to time. The aforesaid bond includes coverage
for larceny and embezzlement and is issued by a reputable bonding company.
(c) The Fund will at its expense register and qualify its Shares for
sale in accordance with the laws of any state or other jurisdiction if and to
the extent reasonably deemed advisable by the Fund.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) The Fund will immediately notify LIFE COMPANY 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 Fund's registration statement under the
1933 Act or the Fund Prospectus, (ii) any request by the SEC for any amendment
to such registration statement or the Fund Prospectus that may affect the
offering of Shares of any Portfolio, (iii) the initiation of any proceedings for
that purpose or for any other purpose relating to the registration or offering
of Shares of any Portfolio, or (iv) any other action or circumstances that may
prevent the lawful offering or sale of Shares of any Portfolio in any state or
jurisdiction, including, without limitation, any circumstances in which such
Shares are not registered and are not, in all material respects, issued and sold
in accordance with applicable state and federal law. The Fund will make every
reasonable effort to prevent the issuance of any such 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.
(b) LIFE COMPANY will immediately notify the Fund 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 each Account's registration statement under
the 1933 Act relating to the Contracts or each Account Prospectus, (ii) any
request by the SEC for any amendment to such registration statement or Account
Prospectus that may affect the offering of Shares of any Portfolio, (iii) the
initiation of any proceedings for that purpose or for any other purpose relating
to the registration or offering of each Account's interests pursuant to the
Contracts, or (iv) any other action or circumstances that may prevent the lawful
offering or sale of said interests in any state or jurisdiction, including,
without limitation, any circumstances in which said interests are not registered
and are not, in all material respects, issued and sold in accordance with
applicable state and federal law. LIFE COMPANY will make every reasonable effort
to prevent the issuance of any such 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.
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4.5 DOCUMENTS PROVIDED BY LIFE COMPANY; INFORMATION
ABOUT THE FUND.
(a) LIFE COMPANY will provide to the Fund or its designated agent at
least one (1) complete copy of all SEC registration statements, 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 each Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(b) LIFE COMPANY will provide to the Fund or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which any Portfolio, the Fund or any of its affiliates
is named, at least ten (10) Business Days prior to its use or such shorter
period as the Parties hereto may, from time to time, agree upon. No such
material shall be used if the Fund or its designated agent objects to such use
within ten (10) Business Days after receipt of such material or such shorter
period as the Parties hereto may, from time to time, agree upon.
(c) Neither LIFE COMPANY nor any of its affiliates, will give any
information or make any representations or statements on behalf of or concerning
any Portfolio, the Fund or its affiliates in connection with the sale of the
Contracts other than (i) the information or representations contained in the
then current registration statement, including the Fund Prospectus contained
therein, relating to Shares, as such registration statement and the Fund
Prospectus may be amended from time to time; (ii) in reports or proxy materials
for the Fund; (iii) in published reports for the Fund that are in the public
domain and approved by the Fund for distribution by LIFE COMPANY; or (iv) in
sales literature or other promotional material approved by the Fund for use by
LIFE COMPANY, except with the express written permission of the Fund.
(d) LIFE COMPANY shall adopt and implement procedures reasonably
designed to ensure that information concerning the Fund and its affiliates that
is intended for use only by brokers or agents selling the Contracts (I.E.,
information that is not intended for distribution to Participants) ("broker only
materials") is so used, and neither the Fund nor any of its affiliates shall be
liable for any losses, damages or expenses relating to the improper use of such
broker only materials.
(e) For the purposes of this Section 4.5, the phrase "sales literature
or other promotional material" includes, but is not limited to, 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, or other public media (E.G.,
on-line networks such as the Internet or other
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electronic messages)), 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 of any other advertisement, sales literature, or
published article), educational or training materials or other communications
distributed or made generally available to some or all agents or employees,
registration statements, prospectuses, statements of additional information,
shareholder reports, and proxy materials and any other material constituting
sales literature or advertising under the NASD rules, the 1933 Act or the 1940
Act.
4.6 DOCUMENTS PROVIDED BY FUND; INFORMATION ABOUT LIFE
COMPANY.
(a) The Fund will provide to LIFE COMPANY at least one (1) complete
copy of all SEC registration statements, Fund 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
Fund or the Shares of a Portfolio, contemporaneously with the filing of such
document with the SEC or other regulatory authorities.
(b) The Fund will provide to LIFE COMPANY printed copies of all Fund
prospectuses, and printed copies of all statements of additional information,
proxy materials, periodic reports to shareholders and other materials required
by law to be sent to Participants. The Fund will provide such copies to LIFE
COMPANY in a timely manner so as to enable LIFE COMPANY to distribute such
materials within the time required by law to be furnished to Participants.
(c) The Fund will provide to LIFE COMPANY or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which LIFE COMPANY, or any of its respective affiliates
is named, or that refers to the Contracts, at least ten (10) Business Days prior
to its use or such shorter period as the Parties hereto may, from time to time,
agree upon. No such material shall be used if LIFE COMPANY or its designated
agent reasonably objects to such use within ten (10) Business Days after receipt
of such material or such shorter period as the Parties hereto may, from time to
time, agree upon.
(d) Neither the Fund nor any of its affiliates will give any
information or make any representations or statements on behalf of or concerning
LIFE COMPANY, each Account, or the Contracts other than (i) the information or
representations contained in the registration statement, including each Account
Prospectus contained therein, relating to the Contracts, as such registration
statement and Account Prospectus may be amended from time to time; (ii) in
published reports for the Account or the Contracts that are in the public domain
and approved by LIFE
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COMPANY for distribution; or (iii) in sales literature or other promotional
material approved by LIFE COMPANY or its affiliates, except with the express
written permission of LIFE COMPANY.
(e) The Fund shall cause its principal underwriter to adopt and
implement procedures reasonably designed to ensure that information concerning
LIFE COMPANY, and its respective affiliates that is intended for use only by
brokers or agents selling the Contracts (I.E., information that is not intended
for distribution to Participants) ("broker only materials") is so used, and
neither LIFE COMPANY, nor any of its respective affiliates shall be liable for
any losses, damages or expenses relating to the improper use of such broker only
materials.
(f) For purposes of this Section 4.6, the phrase "sales literature or
other promotional material" includes, but is not limited to, 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, or other public media (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 of any other advertisement,
sales literature, or published article), educational or training materials or
other communications distributed or made generally available to some or all
agents or employees, registration statements, prospectuses, statements of
additional information, shareholder reports, and proxy materials and any other
material constituting sales literature or advertising under the NASD rules, the
1933 Act or the 1940 Act.
SECTION 5. MIXED AND SHARED FUNDING
LIFE COMPANY acknowledges that the Fund has filed an application with
the SEC to request an order granting relief from various provisions of the 1940
Act and the rules thereunder to the extent necessary to permit Fund shares to be
sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated Participating Insurance Companies,
as well as by Plans. Any conditions or undertakings that may be imposed on LIFE
COMPANY and the Fund by virtue of such order shall be incorporated herein by
reference, as of the date such order is granted, as though set forth herein in
full, and the parties to this Agreement shall comply with such conditions and
undertakings to the extent applicable to each such party.
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SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.4 below, this Agreement will terminate as to a
Portfolio:
(a) at the option of any party, with or without cause, upon one (1)
year advance written notice to the other parties; or
(b) at the option of LIFE Company if shares of a Portfolio are not
reasonably available to meet the requirements of the Contracts as determined by
LIFE Company PROVIDED, however, that such a termination shall apply only to the
Portfolio(s) not available. Prompt written notice of the election to terminate
for such cause shall be furnished by LIFE Company to the Fund;
(c) at the option of the Fund upon institution of formal processing
against LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance
regulator or any other regulatory body regarding LIFE COMPANY's obligations
under this Agreement or related to the sale of the Contracts, the operation of
each Account, or the purchase of Shares, if, in each case, the Fund reasonably
determines that such proceedings, or the facts on which such proceedings would
be based, have a material likelihood of imposing material adverse consequences
on the Portfolio with respect to which the Agreement is to be terminated; or
(d) at the option of LIFE COMPANY upon institution of formal
proceedings against the Fund, its principal underwriter, or its investment
adviser by the NASD, the SEC, or any state insurance regulator or any other
regulatory body regarding the Fund's obligations under this Agreement or related
to the operation or management of the applicable Portfolio or the purchase of
the applicable Portfolios, if, in each case, LIFE COMPANY reasonably determines
that such proceedings, or the facts on which such proceedings would be based,
have a material likelihood of imposing material adverse consequences on LIFE
COMPANY, or the Subaccount corresponding to the Portfolio with respect to which
the Agreement is to be terminated; or
(e) at the option of any party in the event that (i) a Portfolio's
Shares are not registered and, in all material respects, issued and sold in
accordance with any applicable federal or state 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 LIFE COMPANY; or
(f) at the option of LIFE COMPANY if the applicable Portfolio ceases to
qualify as a RIC under Subchapter M of the Code or under successor or similar
provisions or fails to comply with the diversification requirements of Section
817(h) of the Code or such requirements under successor or similar provisions or
if Life Company reasonably believes the applicable Portfolio
15
may so cease to qualify or comply and, in each case, the Fund upon written
request fails to provide reasonable assurance that it will take action to cure
or correct such failure; or
(g) at the option of the Fund if the Contracts issued by LIFE COMPANY
cease to qualify as annuity contracts or life insurance contracts under the Code
or if Fund reasonably believes the applicable Contracts may so cease to qualify,
or if interests in an Account under the Contracts are not registered, where
required, and, in all material respects, are not issued or sold in accordance
with any applicable federal or state law and, in each case, LIFE COMPANY upon
written request fails to provide reasonable assurance that it will take action
to cure or correct such failure; or
(h) at the option of the Fund by written notice to LIFE COMPANY, if the
Fund shall determine in its sole judgment exercised in good faith, that LIFE
COMPANY and/or its affiliated companies has suffered a material adverse change
in its business, operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse publicity; or
(i) at the option of LIFE COMPANY by written notice to the Fund, if
LIFE COMPANY shall determine in its sole judgment exercised in good faith, that
the Fund and/or its affiliated companies has suffered a material adverse change
in its business, operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse publicity; or
(j) at the option of LIFE COMPANY by written notice to the Fund, if
LIFE COMPANY shall determine in its sole judgment exercised in good faith, that
the Adviser and/or its affiliated companies has suffered a material adverse
change in its business, operations, financial condition or prospects since the
date of this Agreement or is the subject of material adverse publicity; or
(k) at the option of either party upon a determination by a majority of
the Fund's Board of Directors, or a majority of the Fund's disinterested
directors, that an irreconcilable material conflict exists among the interests
of: (1) all contract owners of variable insurance products of all separate
accounts; or (2) the interests of the Participating Insurance Companies
investing in the Fund; or
(l) at the option of any party upon another party's material breach of
any provision of this Agreement; or
(m) with respect to any Account, upon requisite vote of the Contract
owners having an interest in that Account (or any subaccount) or upon the
receipt of a substitution order by the SEC to substitute the shares of another
investment company for
16
the corresponding Fund shares in accordance with the terms of the Contracts for
which those Fund shares had been selected to serve as the underlying investment
media. LIFE Company will gave at least 30 days' prior written notice to the Fund
of the date of any proposed vote to replace the Fund's shares; or
(n) at the option of the Fund if it suspends or terminates the offering
of Shares of the applicable Portfolio to all Participating Insurance Companies
or only designated Participating Insurance Companies, if such action is required
by law or by regulatory authorities having jurisdiction or if, in the sole
discretion of the Fund acting in good faith, suspension or termination is
necessary in the best interests of the shareholders of the applicable Portfolio
(it being understood that "shareholders" for this purpose shall mean
Participants), such notice effective immediately upon receipt of written notice,
it being understood that a lack Participating Insurance Companies interest in
the applicable Portfolio may be grounds for a suspension or termination as to
such Portfolio.
6.2 NOTICE REQUIREMENT FOR TERMINATION.
No termination of this Agreement will be effective unless and until the
party terminating this Agreement gives prior written notice to the other party
to this Agreement of its intent to terminate, and such notice shall set forth
the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of
Section 6.1(a) hereof, such prior written notice shall be given at least one (1)
year in advance of the effective date of termination unless a shorter time is
agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions of
Section 6.1(b), 6.1(c), 6.1(d), 6.1(e), 6.1(f), 6.1(g), 6.1(h), 6.1(i), 6.1(j),
6.1(k), 6.1(l), 6.1(m), or 6.1(n) hereof, such prior written notice shall be
given at least 15 days in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto; and
6.3 FUND TO REMAIN AVAILABLE.
Notwithstanding any termination of this Agreement, the Fund will, at
the option of LIFE COMPANY, continue to make available additional shares of a
Portfolio pursuant to the terms and conditions of this Agreement, for all
Contracts in effect on the effective date of termination in this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, the owners of the Existing Contracts will be permitted to reallocate
investments in Portfolios of the Fund (as in effect on such date), redeem
investments in Portfolios of the Fund and/or invest in Portfolios of the Fund
upon the making of
17
additional purchase payments under the Existing Contracts. Notwithstanding any
termination of this Agreement, LIFE COMPANY agrees to distribute to holders of
Existing Contracts all materials required by law to be distributed to such
holders (including, without limitation, prospectuses, statements of additional
information, proxy materials and periodic reports). The parties agree that this
Section 6.3 will not apply to any terminations under the conditions of the Order
and the effect of such terminations will be governed by the Order.
6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
All warranties and indemnifications will survive the termination of
this Agreement.
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
Subject to the provisions of Section 6.3 hereof, the Parties hereto
agree to cooperate and give reasonable assistance to one another in taking all
necessary and appropriate steps for the purpose of ensuring that an Account owns
no Shares of the applicable Portfolio 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. Such steps may
include combining the affected Account with another Account, substituting other
mutual fund shares for those of the affected Portfolio, or otherwise terminating
participation by the Contracts in such Portfolio.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any party, except with the prior
written consent of all the Parties.
SECTION 9. NOTICES
Notices and communications required or permitted by Section 9 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:
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
18
SALOMON BROTHERS VARIABLE SERIES INC.
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SECTION 10. VOTING PROCEDURES
LIFE COMPANY will distribute all proxy material furnished by the Fund
to Participants to whom pass-though voting privileges are required to be
extended and will solicit voting instructions from Participants. LIFE COMPANY
will vote Shares in accordance with timely instructions received from
Participants. LIFE COMPANY will vote Shares that are (a) not attributable to
Participants to whom pass-through voting privileges are extended, or (b)
attributable to Participants, but for which no timely instructions have been
received, in the same proportion as Shares for which said instructions have been
received from Participants, so long as and to the extent that the SEC continues
to interpret the 1940 Act to require pass through voting privileges for
Participants. Neither LIFE COMPANY nor any of its affiliates will in any way
recommend action in connection with or oppose or interfere with the solicitation
of proxies for the Shares held for such Participants. LIFE COMPANY reserves the
right to vote shares held in any Account in its own right, to the extent
permitted by law. LIFE COMPANY shall be responsible for assuring that each of
its Accounts holding Shares calculates voting privileges in the manner required
by the Order obtained by the Fund. The Fund will notify LIFE COMPANY of any
amendments to the Order it has obtained.
SECTION 11. INDEMNIFICATION
11.1 OF THE FUND BY LIFE COMPANY.
(a) Except to the extent provided in Sections 11.1(b) and 11.1(c),
below, LIFE COMPANY agrees to indemnify and hold harmless the Fund, its
affiliates, and each person, if any, who controls the Fund or its affiliates
within the meaning of Section 15 of the 1933 Act and each of their respective
directors and officers (collectively, the "Indemnified Parties" for purposes of
this Section 11.1) against any and all losses, claims, damages, costs, expenses,
liabilities (including amounts paid in settlement with the written consent of
LIFE COMPANY) 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, costs, expenses, liabilities or actions:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in any Account's 1933
19
Act registration statement, any Account Prospectus, the
Contracts, or 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 written information furnished to LIFE COMPANY by
or on behalf of the Fund for use in any Account's 1933
Act registration statement, any 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 Fund's 1933 Act
registration statement, the Fund Prospectus, sales
literature or advertising of the Fund, or any amendment
or supplement to any of the foregoing, not supplied for
use therein by or on behalf of LIFE COMPANY, or its
affiliates and on which such persons have reasonably
relied) or the negligent, illegal or fraudulent conduct
of LIFE COMPANY,or its respective affiliates or persons
under their 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) or subject to its authorization, including
without limitation, broker-dealers or agents authorized
to sell the Contracts, in connection with the sale,
marketing or distribution of the Contracts or Shares;
or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the Fund's 1933 Act registration statement, the Fund
Prospectus, sales literature or advertising of the
Fund, 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
20
was made in reliance upon and in conformity with
information furnished to the Fund or its affiliates by
or on behalf of LIFE COMPANY or its affiliates for use
in the Fund's 1933 Act registration statement, the Fund
Prospectus, sales literature or advertising of the
Fund, or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by LIFE COMPANY or
persons under its control (or subject to its
authorization) to perform the obligations, provide the
services and ▇▇▇▇▇▇▇ the materials required under the
terms of this Agreement, or any material breach of any
representation and/or warranty made by LIFE COMPANY in
this Agreement or arise out of or result from any other
material breach of this Agreement by LIFE COMPANY or
persons under its control (or subject to its
authorization); or
(v) arise as a result of failure to transmit a request for
purchase or redemption of Shares or payment therefor
within the time period specified herein and otherwise
in accordance with the procedures set forth in this
Agreement; or
(vi) arise as a result of any unauthorized use of the trade
names of the Fund to the extent such use is not
required by applicable law or regulation.
(b) This indemnification is in addition to any liability that LIFE
COMPANY may otherwise have. LIFE COMPANY shall not be liable under this Section
11.1 with respect to any losses, claims, damages, costs, expenses, 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 that Indemnified Party's
reckless disregard of obligations or duties (i) under this Agreement, or (ii) to
the Fund.
(c) LIFE COMPANY shall not be liable under this Section 11.1 with
respect to any action against any Indemnified Party unless the Fund shall have
notified LIFE COMPANY in writing promptly 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 LIFE COMPANY shall be
relieved of liability under
21
this Section 11.1 only to the extent the indemnifying party is damaged solely by
reason of such party's failure to so notify and failure to notify LIFE COMPANY
of any such action shall not relieve LIFE COMPANY from any liability which they
may have to the Indemnified Party against whom such action is brought otherwise
than on account of this Section 11.1. Except as otherwise provided herein, in
case any such action is brought against an Indemnified Party, LIFE COMPANY shall
be entitled to participate, at its own expense, in the defense of such action
and 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 LIFE COMPANY to such Indemnified Party
of LIFE COMPANY's election to assume the defense thereof, the Indemnified Party
will cooperate fully with LIFE COMPANY and shall bear the fees and expenses of
any additional counsel retained by it, and LIFE COMPANY 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.
11.2 OF LIFE COMPANY BY THE FUND.
(a) Except to the extent provided in Sections 11.2(b), 11.2(c) and
11.2(d), below, the Fund agrees to indemnify and hold harmless LIFE COMPANY, its
affiliates, and each person, if any, who controls LIFE COMPANY or its affiliates
within the meaning of Section 15 of the 1933 Act and each of their respective
directors and officers (collectively, the "Indemnified Parties" for purposes of
this Section 11.2) against any and all losses, claims, damages, costs, expenses,
liabilities (including amounts paid in settlement with the written consent of
the Fund) 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, costs, expenses, liabilities or actions:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the Fund's 1933 Act registration statement,
Prospectus, or sales literature or advertising of the
Fund (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 to any Indemnified Party if such
statement or omission or such alleged statement or
omission was made in reliance upon and in conformity
with written information
22
furnished to the Fund or its affiliates by or on behalf
of LIFE COMPANY or its affiliates for use in the Fund's
1933 Act registration statement, the Fund Prospectus,
or in sales literature or advertising or otherwise for
use in connection with the sale of Contracts or Shares
(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 any Account's 1933 Act
registration statement, any 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 Fund or
its affiliates and on which such persons have
reasonably relied) or the negligent, illegal or
fraudulent conduct of the Fund or its affiliates or
persons under its control (including, without
limitation, their employees and "Associated Persons,"
as that Term is defined in Section (n) of Article I of
the NASD BY-Laws), in connection with the sale,
marketing or distribution of Fund Shares; or
(iii) arise our of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in any Account's 1933 Act registration statement, any
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
written information furnished to LIFE COMPANY, or its
affiliates by or on behalf of the Fund for use in any
Account's 1933 Act registration statement, any 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 Fund to perform
the obligations, provide the services and furnish the
materials required of it under the terms of this
Agreement, including, without limitation, any failure
of the Fund or its designated agent to inform
23
LIFE COMPANY of the correct net asset values per share
for each Portfolio on a timely basis sufficient to
ensure the timely execution of all purchase and
redemption orders at the correct net asset value per
share, or any material breach of any representation
and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach
of this Agreement by the Fund.
(b) This indemnification is in addition to any liability that the Fund
may otherwise have. The Fund shall not be liable under this Section 11.2 with
respect to any losses, claims, damages, costs, expenses, 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 such Indemnified Party's
reckless disregard of its obligations and duties (i) under this Agreement, or
(ii) to LIFE COMPANY, each Account or Participants.
(c) The Fund shall not be liable under this Section 11.2 with respect
to any action against an Indemnified Party unless the Indemnified Party shall
have notified the Fund in writing promptly 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 the Fund shall be
relieved of liability under this Section 11.2 only to the extent the
indemnifying party is damaged solely by reason of such party's failure to so
notify and failure to notify the Fund of any such action shall not relieve the
Fund from any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this Section 11.2. Except as
otherwise provided herein, in case any such action is brought against an
Indemnified Party, the Fund will be entitled to participate, at its own expense,
in the defense of such action and also shall be entitled to assume the defense
thereof (which shall include, without limitation, the conduct of any ruling
request and closing agreement or other settlement proceeding with the IRS), with
counsel approved by the Indemnified Party named in the action, which approval
shall not be unreasonably withheld. After notice from the Fund to such
Indemnified Party of the Fund's election to assume the defense thereof, the
Indemnified Party will cooperate fully with the Fund and shall bear the fees and
expenses of any additional counsel retained by it, and the Fund 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.
24
11.3 OF LIFE COMPANY BY THE ADVISER.
(a) Except to the extent provided in Sections 11.3(b), 11.3(c) and
11.3(d), below, the Adviser agrees to indemnify and hold harmless LIFE COMPANY,
its affiliates, and each person, if any, who controls LIFE COMPANY or its
affiliates within the meaning of Section 15 of the 1933 Act and each of their
respective directors and officers (collectively, the "Indemnified Parties" for
purposes of this Section 11.2) against any and all losses, claims, damages,
costs, expenses, liabilities (including amounts paid in settlement with the
written consent of the Fund) 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, costs, expenses, liabilities or
actions:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the Fund's 1933 Act registration statement,
Prospectus or sales literature or advertising of the
Fund (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 written information furnished to the Adviser, the
Fund or their affiliates by or on behalf of LIFE
COMPANY or its affiliates for use in the Fund's 1933
Act registration statement, the Fund Prospectus, or in
sales literature or advertising or otherwise for use in
connection with the sale of Contracts or Shares (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 any Account's 1933 Act
registration statement, any 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
Adviser, the Fund or their affiliates and on which such
persons have reasonably relied) or the negligent,
illegal or fraudulent conduct of the Adviser, the
25
Fund or their affiliates or persons under their control
(including, without limitation, their employees and
"Associated Persons," as that Term is defined in
Section (n) of Article 1 of the NASD BY-Laws), in
connection with the sale, marketing or distribution of
Fund Shares; or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in any Account's 1933 Act registration statement, any
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 LIFE COMPANY, or its
affiliates by or on behalf of the Adviser or the Fund
for use in any Account's 1933 Act registration
statement, any 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 Adviser or the
Fund to perform the obligations, provide the services
and furnish the materials required of it under the
terms of this Agreement, including, without limitation,
any failure of the Fund or its designated agent to
inform LIFE COMPANY of the correct net asset values per
share for each Portfolio on a timely basis sufficient
to ensure the timely execution of all purchase and
redemption orders at the correct net asset value per
share, or any material breach of any representation
and/or warranty made by the Adviser or the Fund in this
Agreement or arise out of or result from any other
material breach of this Agreement by the Adviser.
(b) This indemnification is in addition to any liability that the
Adviser may otherwise have. The Adviser shall not be liable under this Section
11.3 with respect to any losses, claims, damages, costs, expenses, liabilities
or actions to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the
26
performance by that Indemnified Party of its duties or by reason of such
Indemnified Party's reckless disregard of its obligations and duties (i) under
this Agreement, or (ii) to LIFE COMPANY, each Account or Participants.
(c) The Adviser shall not be liable under this Section 11.3 with
respect to any action against an Indemnified Party unless the Indemnified Party
shall have notified the Adviser in writing promptly 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 the Adviser
shall be relieved of liability under this Section 11.3 only to the extent the
indemnifying party is damaged solely by reason of such party's failure to so
notify and failure to notify the Adviser of any such action shall not relieve
the Adviser from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this Section
11.3. Except as otherwise provided herein, in case any such action is brought
against an Indemnified Party, the Adviser will be entitled to participate, at
its own expense, in the defense of such action and also shall be entitled to
assume the defense thereof (which shall include, without limitation, the conduct
of any ruling request and closing agreement or other settlement proceeding with
the IRS), with counsel approved by the Indemnified Party named in the action,
which approval shall not be unreasonably withheld. After notice from the Adviser
to such Indemnified Party of the Adviser's election to assume the defense
thereof, the Indemnified Party will cooperate fully with the Fund and shall bear
the fees and expenses of any additional counsel retained by it, and the Adviser
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.
11.4 EFFECT OF NOTICE.
Any notice given by the indemnifying party to an Indemnified Party
referred to in Section 11.1 (c), 11.2 (c) or 11.3(c) 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.
11.5 SUCCESSORS.
A successor by law of any party shall be entitled to the benefits of
indemnification contained in this Section 11.
27
11.6 OBLIGATIONS OF THE FUND.
All persons dealing with the Fund must look solely to the property of
the applicable Portfolio for the enforcement of any claims against the Fund as
neither the Board, Officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
SECTION 12. APPLICABLE LAW
(a) This Agreement will be construed and the provisions hereof
interpreted under and in accordance with New York law, without regard for that
state's principles of conflict of laws.
(b) This Agreement shall be subject to the provisions of the 1933 Act,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant (including, but not limited to, the Order) and the terms hereof shall
be interpreted and construed in accordance therewith.
SECTION 13. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together with constitute one and the same
instrument.
SECTION 14. 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 15. 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 16. 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.
SECTION 17. CONFIDENTIALITY
Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of
customers of the other party and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
28
this Agreement, shall not, without the express written consent of the affected
party, disclose, disseminate or utilize such names and addresses and other
confidential information until such time as it may come into the public domain.
SECTION 18. TRADEMARKS AND FUND NAMES
(a) Salomon Brothers Asset Management Inc, the adviser to the Fund and
its affiliates, own all rights, title and interest in and to the names,
trademarks and service marks "Salomon" and "Salomon Brothers" and such other
tradenames, trademarks and service marks as may be identified to LIFE COMPANY
from time to time (the "Salomon licensed marks"). Upon termination of this
Agreement LIFE COMPANY and its affiliates shall cease to use the Salomon
licensed marks, except to the extent required by law or regulation.
(b) Sun Life Assurance Company of Canada (U.S.) and its affiliates, own
all right, title and interest in and to the names, trademarks and service marks
"Sun Life" and such other tradenames, trademarks and service marks as may be
identified to the Adviser and/or the Fund from time to time (the "Sun Life"
licensed marks). Upon termination of this Agreement, the Fund, the Adviser and
their affiliates shall cease to use the Sun Life licensed marks, except to the
extent required by law or regulation.
SECTION 19. PARTIES TO COOPERATE
Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including, without limitation, the
SEC, the NASD and state insurance regulators) and will permit each other and
such authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
SECTION 20. ACCESS TO INFORMATION BY COMPANY
During ordinary business hours, the Fund and the Adviser shall afford
LIFE COMPANY, directly or through its authorized representatives, reasonable
access to all files books, records and other materials of the Fund or the
Adviser, as applicable, which relate, directly or indirectly to transactions
arising in connection with this Agreement and to make available appropriate
personnel familiar with such items for the purpose of explaining the form and
content of such items. This Section 20 shall survive the termination of this
Agreement.
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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.
SALOMON BROTHERS VARIABLE
SERIES FUNDS INC
Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ __ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary Title: President
SALOMON BROTHERS ASSET
MANAGEMENT INC
Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President Title: President
SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.), on behalf of
itself and its separate
accounts
Attest: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Associate Counsel Title: Vice President,
Retirement Products
and Services Division
SCHEDULE A
PORTFOLIOS AVAILABLE UNDER THE CONTRACT
Salomon Brothers Variable Investors Fund
Salomon Brothers Variable Capital Fund
Salomon Brothers Variable Total Return Fund
Salomon Brothers Variable Strategic Bond Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Sun Life of Canada (U.S.) Variable Account F
CONTRACTS FUNDED BY THE SEPARATE ACCOUNT
Futurity Variable Annuity Contract