PARTICIPATION AGREEMENT
as of May 1, 2000
Franklin Xxxxxxxxx Variable Insurance Products Trust
Franklin Xxxxxxxxx Distributors, Inc.
Sun Life Assurance Company of Cananda (U.S.)
CONTENTS
PARAGRAPH 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;
Investment Advisers
D. Contracts of the Company
E. Other Portfolios Available under the Contracts
F. Rule 12b-1 Plans of the Trust
G. Addresses for Notices
H. Shared Funding Order
1. PARTIES AND PURPOSE
This agreement (the "Agreement") is between Franklin Xxxxxxxxx
Variable Insurance Products Trust, an open-end management investment company
organized as a business trust under Massachusetts law (the "Trust"), Franklin
Xxxxxxxxx Distributors, Inc., a California 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 each 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
(a) REPRESENTATIONS AND WARRANTIES BY YOU
You represent and warrant that:
1. You are an insurance company duly organized and in
good standing under the laws of your state of incorporation.
2. All of your directors, officers, employees, 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 for the benefit of the Trust, in an amount not less than $5 million.
Such bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. 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.
3. Each Account is a duly organized, validly existing
segregated asset account under applicable 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.
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"); 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 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.
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"); 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
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reasonable basis for believing that such exemption no longer applies or might
not apply in the future.
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"); (ii) will be issued and
sold in compliance in all material respects with all applicable federal and
state laws; and (iii) will be sold in compliance in all material respects with
state insurance suitability requirements and NASD suitability guidelines.
7. The Contracts currently are and will be treated as
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.
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.
9. You will use shares of the Trust only for the purpose
of funding benefits of the Contracts through the Accounts.
10. Contracts will not be sold outside of the United
States.
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:
a. the principal underwriter for each such
Account and any subaccounts thereof is a
registered broker-dealer with the SEC under
the 1934 Act;
b. the shares of the Portfolios of the Trust
are and will continue to be the only
investment securities held by the
corresponding subaccounts; and
c. with regard to each Portfolio, you, on
behalf of the corresponding subaccount,
will:
(i) vote such shares held by it in the
same proportion as the vote of all
other holders of such shares; and
(ii) 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.
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(b) REPRESENTATIONS AND WARRANTIES BY THE TRUST
The Trust represents and warrants that:
1. It is duly organized and in good standing under the
laws of the State of Massachusetts.
2. All of its directors, officers, employees and others
dealing with the money and/or securities of a Portfolio are and shall be at all
times covered by a blanket 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 and be issued by a reputable bonding company.
3. It is registered as an open-end management investment
company under the 1940 Act.
4. Each class of shares of the Portfolios of the Trust
is registered under the 1933 Act.
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.
6. It will comply, in all material respects, with the
1933 and 1940 Acts and the rules and regulations thereunder.
7. It is currently qualified as a "regulated investment
company" under Subchapter M of the Code, it will make every effort to maintain
such qualification, 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.
8. The Investments of each Portfolio 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 and will not be able to comply within the grace period afforded by
Regulation 1.817-5, the Trust will notify you immediately and will take all
reasonable steps to adequately diversify the Portfolio to achieve compliance.
9. It currently intends for one or more classes of
shares (each, a "Class") to make payments to finance its distribution expenses,
including service fees, pursuant to a plan ("Plan") adopted under rule 12b-1
under the 1940 Act ("Rule 12b-1"), although it may determine to discontinue such
practice in the future. 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.
(c) REPRESENTATIONS AND WARRANTIES BY THE UNDERWRITER
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The Underwriter represents and warrants that:
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.
2. Each investment adviser listed on Schedule C (each,
an "Adviser") is duly registered as an investment adviser under the Investment
Advisers Act of 1940, as amended, and any applicable state securities law.
(d) WARRANTY AND AGREEMENT BY BOTH YOU AND US
We received an order from the SEC dated November 16, 1993 (file no.
812-8546), which was amended by a notice and an order we received on September
17, 1999 and October 13, 1999, respectively (file no. 812-11698) (collectively,
the "Shared Funding Order," attached to this Agreement as Schedule H). The
Shared Funding Order 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
"Applicants' Conditions" prescribed in 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.
3. PURCHASE AND REDEMPTION OF TRUST PORTFOLIO SHARES
(a) 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, they deem
such action to be in the best interests of the shareholders of such Portfolio.
Without limiting the foregoing, the Trustees have determined that there is a
significant risk that the Trust and its shareholders may be adversely affected
by investors whose purchase and redemption activity follows a market timing
pattern, and have authorized the Trust, the Underwriter and the Trust's transfer
agent to adopt procedures and take other action (including, without limitation,
rejecting specific purchase orders) as they deem necessary to reduce, discourage
or eliminate market timing activity. You agree to cooperate with us to assist us
in implementing the Trust's restrictions on purchase and redemption activity
that follows a market timing pattern.
(b) 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
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accordance with the terms of the Shared Funding Order. No shares of any
Portfolio will be sold to the general public.
(c) You agree that all net amounts available under the Contracts
shall be invested in the Trust or in your general account. Net amounts available
under the Contracts may also be invested in an investment company other than the
Trust if: (i) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the investment
objectives and policies of the Portfolios; or (ii) you five us forty-five (45)
days written notice of your intention to make such other investment company
available as a funding vehicle for the Contracts; or (iii) such other investment
company is available as a funding vehicle for the Contracts at the date of the
Agreement and you so inform us prior to our signing this Agreement (a list of
such invest companies appears on Schedule E to this Agreement); or (iv) we
consent in writing to the use of such other investment company.
(d) 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 and time stamped 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. Instructions received
in proper form by you and time stamped after the close of trading on any given
Business Day will have been received on the next following Business Day. You
warrant that all orders, Instructions and confirmations received by you which
will be transmitted to us for processing on a Business Day will have been
received and time stamped prior to the Close of Trading on that Business Day.
Instructions we receive after 9 a.m. Eastern Standard 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.
(e) 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).
(f) You shall submit payment for the purchase of shares of a
Portfolio on behalf of an Account no later than the close of business 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.
(g) 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, as
established in accordance with the provisions of the then current prospectus of
the Trust. We shall make payment for such shares in the manner we establish from
time to time, but 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.
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(h) 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.
(i) 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
(a) We shall pay no fee or other compensation to you under this
Agreement except as provided on Schedule F, if attached.
(b) 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.
(c) We shall use reasonable efforts 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.
(d) At your request, we shall provide you with camera ready copy,
in a form suitable for printing, of portions of the Trust's current prospectus,
annual report, semi-annual report and other shareholder communications,
including any amendments of supplements to any of the foregoing, pertaining
specifically to the Portfolios. We shall delete information relating to series
of the Trust other than the Portfolios to the extent practicable. We shall
provide you with a copy of the Trust's current statement of additional
information, including any amendments or supplements, in a form suitable for you
to duplicate. The expenses of furnishing such documents shall be borne by you.
You shall bear the costs of distributing prospectuses and statements of
additional information to Contract owners.
(e) We shall provide you, at our expense, with copies of any
Trust-sponsored proxy materials in such quantity as you shall reasonable require
for distribution to Contract owners who are invested in a designated subaccount.
You shall bear the costs of distributing proxy materials (or similar materials
such as voting solicitation instructions) to Contract owners.
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(f) You assume sole responsibility for ensuring that the Trust's
prospectuses, shareholder reports and communications, and proxy materials are
delivered to Contract owners in accordance with applicable federal and state
securities laws.
5. VOTING
(a) 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.
(b) 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.
(c) So long as, and to the extent that, the SEC interprets the
1940 Act to require pass-through voting privileges for Contract owners, you
shall provide pass-through voting privileges to Contract owners whose Contract
values are invested, through the Accounts, in shares of one or more Portfolios
of the Trust. We shall require all Participating Insurance Companies to
calculate voting privileges in the same manner and you shall be responsible for
assuring that the Accounts calculate voting privileges in the manner established
by us. With respect to each Account, you will vote shares of each Portfolio of
the Trust held by an Account and for which no timely voting instructions from
Contract owners are received in the same proportion as those shares held by that
Account for which voting instructions are received. 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
(a) For purposes of this Section 6, "Sales literature or other
Promotional material" includes, but it not limited to, portions of the following
that use any logo or other trademark related to the Trust or Underwriter or
refer to the Trust or affiliates of 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 disclosure documents, shareholder reports and proxy materials.
8
(b) 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 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
fifteen (15) 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.
(c) 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.
(d) 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. We may use the names of you, the Accounts and the Contracts in our
sales literature and disclosure documents.
(e) Except as provided in Section 6(b), you shall not use any
designation comprised in whole or part of the names or marks "Franklin" or
"Xxxxxxxxx" 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 xxxx as
soon as reasonably practicable.
7. INDEMNIFICATION
(a) INDEMNIFICATION BY YOU
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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) 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, or 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
a. 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 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 the Trust for
use in Company Documents or otherwise for use in connection with the
sale of the Contracts or Trust shares; or
b. 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 (b)) or
wrongful conduct of you or persons under your control, with respect to
the sale or acquisition of the Contracts or Trust shares; or
c. 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(b) 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
d. 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;
e. 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; or
f. 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
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provisions of the Code thereby depriving the Trust of its compliance
with Section 817(h) of the Code.
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. You shall also 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 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,
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(a), you also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from you to such party of the 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.
3. 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.
(b) INDEMNIFICATION BY THE UNDERWRITER
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 an "Indemnified Party" for purposes of
this Section 7(b)) 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, 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:
a. arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement, prospectus
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or sales literature of the Trust (or any amendment or supplement to any
of the foregoing) (collectively, the "Trust Documents") 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 of such alleged statement or omission was made in reliance
upon and in conformity with information furnished to us by or on behalf
of you for use in the Registration Statement or prospectus for the
Trust or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Trust
shares; or
b. arise out of or as a result of statements or representations
(other than statements or representations contained in the disclosure
documents or sales literature for the Contracts not supplied by the
Underwriter or persons under its control) 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
c. arise out of any untrue statement or alleged untrue
statement of a material fact contained in a disclosure document or
sales literature covering the Contracts, or any amendment thereof or
supplement thereto, 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 information furnished
to you by or on behalf of the Trust; or
d. arise as a result of 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(b)(7) and the diversification requirements specified
above in Section 2(b)(8); or
e. 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(b)(2) and 7(b)(3) hereof.
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.
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
12
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 will be entitled to participate, at its
own expense, in the defense thereof. Unless the Indemnified Party releases the
Underwriter from any further obligations under this Section 7(b), 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 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.
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.
13
(c) INDEMNIFICATION BY THE TRUST
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" for purposes of this Section 7(c)) 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 litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements result from the gross negligence, bad
faith or willful misconduct of the Board 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(c)(2)
and 7(c)(3) hereof. It is understood and expressly stipulated that neither the
holders of shares 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.
2. The Trust shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against any Indemnified Party as
such may arise from 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.
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 will be entitled to participate, at
its own expense, in the defense thereof. Unless the Indemnified Party releases
the Trust from any further obligations under this Section 7(c), 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.
4. You agree promptly to notify the Trust of the
commencement of any litigation or proceedings against you or the Indemnified
Parties in connection with this
14
Agreement, the issuance or sale of the Contracts, with respect to the operation
of the Account, or the sale or acquisition of shares 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 G below or
at such other address as such party may from time to time specify in writing to
the other party.
9. TERMINATION
(a) 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, and shall terminate
immediately in the event of its assignment, as that term is used in the 1940
Act.
(b) This Agreement may be terminated immediately by us upon
written notice to you if:
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 the future, to interests under the unregistered Contracts;
or
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
3. you give us the written notice specified above in
Section 3(c) and at the same time you give us such notice there was no
notice of termination outstanding under any other provision of this
Agreement; provided, however, that any termination under this Section
9(b)(3) shall be effective forty-five (45) days after the notice
specified in Section 3(c) was given; or
4. upon your assignment of this Agreement without our
prior written approval.
(c) If this Agreement is terminated for any reason, except as
required by the Shared Funding Order or pursuant to Section 9(b)(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.
15
(d) 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(c), except that we shall have no further
obligation to sell Trust shares with respect to Contracts issued after
termination.
(e) 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.
Furthermore, except in cases where permitted under the terms of the Contracts,
you shall not prevent Contract owners from allocating payments to a Portfolio
that was otherwise available under the Contracts without first giving us ninety
(90) days notice of your intention to do so.
10. MISCELLANEOUS
(a) 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.
(b) This Agreement may be executed simultaneously in two or more
counterparts, all of which taken together shall constitute one and the same
instrument.
(c) 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.
(d) This Agreement shall be construed and its provisions
interpreted under and in accordance with the laws of the State of California. 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 such orders. We
shall promptly forward copies of any such orders to you.
(e) The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer, agent or holder of shares of
beneficial interest of the Trust shall be personally liable for any such
liabilities.
(f) Each party to this Agreement shall cooperate with each other
party and all appropriate governmental authorities (including without limitation
the SEC, the NASD, and state insurance regulators) and shall permit such
authorities reasonable access to its books and records
16
in connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.
(g) 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. 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).
(h) 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.
(i) The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect, except as provided above in
Section 3(c).
(j) 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.
(k) 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.
17
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:
-----------------------------------------------
The Trust: FRANKLIN XXXXXXXXX VARIABLE INSURANCE PRODUCTS TRUST
By:
--------------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President, Assistant
Secretary
The Underwriter: FRANKLIN XXXXXXXXX DISTRIBUTORS, INC.
By:
--------------------------------------------------
Name: [ ]
Title: [ ]
18
SCHEDULE A
THE COMPANY
Sun Life Assurance Company of Canada (U.S.)
[address]
A life insurance company organized as a corporation under Delaware law.
19
SCHEDULE B
ACCOUNTS OF THE COMPANY
1. Name: Separate Account G
Date Established July 1996
SEC Registration Number: 811-____
20
SCHEDULE C
AVAILABLE PORTFOLIOS AND CLASSES OF SHARES OF THE TRUST; INVESTMENT ADVISERS
Franklin Xxxxxxxxx Variable Insurance Products Trust Investment Adviser
---------------------------------------------------- ------------------
Templeton Growth Securities Fund Xxxxxxxxx Global Advisors Limited
21
SCHEDULE D
CONTRACTS OF THE COMPANY
-------------------------------------------------------------------------------------------
CONTRACT 1 CONTRACT 2 CONTRACT 3
-------------------------------------------------------------------------------------------
CONTRACT/PRODUCT Sun Life Corporate VUL
NAME
-------------------------------------------------------------------------------------------
REGISTERED(Y/N)
-------------------------------------------------------------------------------------------
SEC REGISTRATION
NUMBER
-------------------------------------------------------------------------------------------
REPRESENTATIVE FORM VUL-COLI-97
NUMBERS
-------------------------------------------------------------------------------------------
SEPARATE ACCOUNT Separate Account G/
NAME/DATE July 1996
ESTABLISHED
-------------------------------------------------------------------------------------------
SEC REGISTRATION
NUMBER
-------------------------------------------------------------------------------------------
PORTFOLIOS AND Templeton Growth
CLASSES-ADVISER Securities Fund Class 1-
Xxxxxxxxx Global
Advisors Limited
-------------------------------------------------------------------------------------------
22
SCHEDULE E
OTHER PORTFOLIOS AVAILABLE UNDER THE CONTRACTS
[names of other portfolios]
23
SCHEDULE F
RULE 12b-1 PLANS
24
SCHEDULE G
ADDRESSES FOR NOTICES
To the Company: Sun Life Assurance Company of Canada (U.S.)
[address]
[address]
Attention: [name, title]
To the Trust: Franklin Xxxxxxxxx Variable Insurance Products Trust
000 Xxxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
[title]
To the Underwriter: Franklin Xxxxxxxxx Distributors, Inc.
000 Xxxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: [name, title]
25
SCHEDULE H
SHARED FUNDING ORDER
26
