PARTICIPATION AGREEMENT
By and Among
XXXXXX ADVISORS TRUST
And
COLUMBIA FUNDS DISTRIBUTOR, INC.
And
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
And
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of December 1, 2004, by and
among XXXXXX ADVISORS TRUST, an open-end management investment company organized
under the laws of the Commonwealth of Massachusetts (the "Fund"), COLUMBIA FUNDS
DISTRIBUTOR, INC., a Massachusetts corporation (the "Distributor"), SUN LIFE
ASSURANCE COMPANY OF CANADA (U.S.), a Delaware corporation, and SUN LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, a New York corporation (with Sun Life
Assurance Company of Canada, (the "Company")), on its own behalf and on behalf
of each separate account of the Company named in Schedule 1 to this Agreement,
as may be amended from time to time, (each account referred to as the
"Account").
WHEREAS, the Fund was established for the purpose of serving as the investment
vehicle for insurance company separate accounts supporting variable annuity
contracts and variable life insurance policies to be offered by insurance
companies that have entered into participation agreements with the Fund (the
"Participating Insurance Companies") and certain retirement plans; and
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WHEREAS, beneficial interests in the Fund are divided into several series of
shares, each representing the interest in a particular managed portfolio of
securities and other assets (each a "Portfolio" and collectively, the
"Portfolios"); and
WHEREAS, the Fund has received an order (No. 812-10198 dated December 18, 1996)
from the Securities & Exchange Commission (the "SEC") granting Participating
Insurance Companies and their separate accounts relief from the provisions of
Sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940
(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 and each Portfolio thereof to be
sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated Participating Insurance Companies
(the "Exemptive Order"); and
WHEREAS, the Company has registered or, prior to offering for sale will
register, certain variable annuity contracts and/or variable life insurance
polices (the "Contracts") under the Securities Act of 1933 (the "1933 Act"); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the Portfolios named in Schedule 2 to
this Agreement, as may be amended from time to time, on behalf of the Account to
fund the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the parties agree as
follows:
ARTICLE I. SALE AND REDEMPTION OF FUND SHARES
1.1. The Fund will sell to the Company those shares of the Portfolios that
each Account orders, executing such orders on a daily basis at the net
asset value next computed after receipt and acceptance by the Fund (or
its agent). Shares of a particular Portfolio of the Fund will be ordered
in such quantities and at such times as determined by the Company
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to be necessary to meet the requirements of the Contracts. The Board of
Trustees of the Fund (the "Fund Board") 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 is, in the sole discretion of the Fund
Board, acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, necessary in the best interests of
the shareholders of such Portfolio, including, but not limited to, if the
Fund determines that trading activity represents market timing or trading
activity is disruptive and may potentially harm the Fund(s).
1.2. The Fund will redeem any full or fractional shares of any Portfolio when
requested by the Company on behalf of an Account at the net asset value
next computed after receipt by the Fund (or its agent) of the request for
redemption, as established in accordance with the provisions of the then
current prospectus of a Portfolio. Notwithstanding the foregoing, (i) the
Company shall not redeem Fund shares attributable to Contract owners
except in the circumstances permitted in Section 1.12, and (ii) the Fund
may delay redemption of Fund shares of any Portfolio to the extent
permitted by the 1940 Act and any rules thereunder, or as described in a
Portfolio's prospectus.
1.3. For purposes of Sections 1.1 and 1.2, the Fund hereby appoints the
Company as its agent for the limited purpose of receiving purchase and
redemption orders resulting from investment in and payments under the
Contracts. Receipt by the Company will constitute receipt by the Fund
provided that: (a) such orders are received by the Company in good order
by 4:00 p.m. Eastern Time; (b) such orders are received by the Company
prior to the time the net asset value of each Portfolio is priced in
accordance with its prospectus (such time referred to as the "Close of
Trading"); and (c) the Fund receives notice of such orders no later than
9:30 a.m. Eastern Time (and shall use best efforts to provide such notice
by 9:00 a.m. Eastern Time) on the next following Business Day. "Business
Day" will mean any day on which the New York Stock Exchange is open for
trading and on which the Fund calculates its net asset value pursuant to
the rules of the SEC.
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1.4. The Company will pay for a purchase order on the same Business Day as the
Fund receives notice of the purchase order in accordance with Section
1.3(c). Payment for such purchase order will be made in Federal funds
transmitted by wire to the Fund. Such wire transfer will be initiated by
the Company's bank by 1:00 p.m. Eastern Time. The Fund will pay for a
redemption order on the same Business Day as the Fund receives notice of
the redemption order in accordance with Section 1.3. Payment for such
redemption order will be made in Federal funds transmitted by wire to the
Company or any other person properly designated in writing by the
Company. The Fund reserves the right to suspend payment consistent with
Section 22(e) of the Investment Company Act of 1940, as amended (the
"1940 Act") and any rules thereunder. If payment for a redemption order
would require a Portfolio to dispose of portfolio securities or otherwise
incur additional costs, payment will be made within five days and the
Fund will promptly notify the Company of such delay. The Fund will not
bear any responsibility whatsoever for the proper disbursement or
crediting of redemption proceeds by the Company; the Company alone will
be responsible for such action.
1.5. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate subaccount of each
Account.
1.6. The Fund will furnish same-day notice (by wire or telephone, followed by
written confirmation) to the Company of the declaration of any income,
dividends or capital gain distributions payable on each Portfolio's
shares. The Company hereby elects to receive all such dividends and
distributions as are payable on the Portfolio shares in the form of
additional shares of that Portfolio. The Company reserves the right to
revoke this election and to receive all such dividends and distributions
in cash. The Fund will notify the Company of the number of shares so
issued as payment of such dividends and distributions.
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1.7. The Fund will make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical
after the net asset value per share is calculated. The Fund will use its
reasonable best efforts to make such net asset value per share available
by 5:30 p.m. Eastern Time, and will use its best efforts to make such net
asset value per share available by 6:00 p.m. Eastern Time each Business
Day. The Fund will notify the Company as soon as possible if it is
determined that the net asset value per share will be available after
6:00 p.m. Eastern Time on any Business Day, and the Fund and the Company
will mutually agree upon a final deadline for timely receipt of the net
asset value on such Business Day.
1.8. Any material errors in the calculation of net asset value, dividends or
capital gain information will be reported promptly upon discovery to the
Company. An error will be deemed "material" based on the Fund's
interpretation of the SEC's position and policy with regard to
materiality, as it may be modified from time to time. If the Company is
provided with materially incorrect net asset value information, the
Company will be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct net asset value per share.
Neither the Fund, the Adviser, nor any of their affiliates will be liable
for any information provided to the Company pursuant to this Agreement
which information is based on incorrect information supplied by or on
behalf of the Company to the Fund or the Adviser.
1.9. The Fund agrees that its shares will be sold only to Participating
Insurance Companies and certain retirement plans and their separate
accounts to the extent permitted by the Exemptive Order. No shares of any
Portfolio will be sold directly to the general public. The Company agrees
that Fund shares will be used only for the purposes of funding the
Accounts listed in Schedule 1, as amended from time to time.
1.10. The Company and the Fund acknowledge that the arrangement contemplated by
this Agreement is not exclusive; and the cash value of the Contracts may
be invested in other investment companies.
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1.11. The Fund agrees that all Participating Insurance Companies will have the
obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 3.4 and
Article IV of this Agreement.
1.12. The Company may withdraw the Account's investment in the Fund or a series
thereof only: (i) as necessary to facilitate Contract owner requests; (ii)
upon a determination by a majority of the Fund Board, or a majority of
disinterested Fund Board members, that an irreconcilable material conflict
exists among the interests of (x) some or all Contract owners or owners of
other variable annuity contracts and variable life insurance policies
supported by accounts investing assets attributable thereto in the Fund or
(y) some or all of the Participating Insurance Companies and/or a person or
plan that qualifies to purchase shares of the Fund that is investing in the
Fund; or (iii) in the event that shares of another investment company are
substituted for Portfolio shares in accordance with the terms of the
Contracts upon the (x) requisite vote of the Contract owners having an
interest in the affected Portfolio and the requisite written consent of the
Fund (unless otherwise required by applicable law); (y) upon issuance of an
SEC exemptive order pursuant to Section 26(b) of the 1940 Act permitting
such substitution; or (z) as may otherwise be permitted under applicable
law.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that:
(a) it is an insurance company duly organized and in good standing
under applicable law;
(b) it has legally and validly established or, prior to offering the
Contracts for sale will legally and validly establish, each
Account as a separate account under applicable state law;
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(c) it has registered or, prior to offering the Contracts for sale
will register, to the extent necessary each Account as a unit
investment trust in accordance with the provisions of the 1940 Act
to serve as a segregated investment account for the Contracts;
(d) it has filed or will file to the extent necessary the Contracts'
registration statements under the 1933 Act and these registration
statements will be declared effective by the SEC prior to offering
the Contracts;
(e) the Contracts will be filed and qualified and/or approved for
sale, as applicable, under the insurance laws and regulations of
the states in which the Contracts will be offered prior to the
sale of Contracts in such states;
(f) it will amend the registration statement under the 1933 Act for
the Contracts and the registration statement under the 1940 Act
for the Account from time to time as required in order to effect
the continuous offering of the Contracts or as may otherwise be
required by applicable law, but in any event it will maintain a
current effective Contracts' and Account's registration statement
for so long as the Contracts are outstanding unless the Company
has supplied the Fund with an SEC no-action letter, opinion of
counsel or other evidence satisfactory to the Fund's counsel to
the effect that maintaining such registration statement on a
current basis is no longer required;
(g) it has adopted and implemented internal controls reasonably
designed to prevent purchase and redemption orders received after
the Close of Trading on any given Business Day from being
aggregated with orders received before the Close of Trading on
that Business Day; and
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(h) all orders that the Company transmits to the Fund or its agent for
processing as of a particular Business Day will relate only to
instructions received by the Company prior to the Close of Trading
on that Business Day.
2.2. The Company represents and warrants that the Contracts are intended to be
treated as annuity or life insurance contracts under applicable
provisions of the Internal Revenue Code, and that it will make every
effort to maintain such treatment and that it will notify the Fund and
the Adviser immediately upon having a reasonable basis for believing that
the Contracts have ceased to be so treated or that they might not be so
treated in the future.
2.3. The Fund represents and warrants that:
(a) it is duly organized and validly existing under applicable state
law;
(b) it has registered with the SEC as an open-end management
investment company under the 1940 Act;
(c) Fund shares of the Portfolios offered and sold pursuant to this
Agreement will be registered under the 1933 Act and duly
authorized for issuance in accordance with applicable law;
(d) it is registered under the 1940 Act;
(e) it will amend the registration statement for its shares under the
1933 Act and the 1940 Act from time to time as required in order
to effect the continuous offering of its shares;
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(f) it believes that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue
Code, it will make every effort to maintain such qualification
(under Subchapter M or any successor or similar provision) and it
will notify the Company 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; and
(g) it will qualify the shares of the Portfolios for sale in
accordance with the laws of the various states to the extent
deemed advisable by the Fund. The Fund makes no representation as
to whether any aspect of its operations (including, but not
limited to, fees and expenses and investment policies, objectives
and restrictions) complies with the insurance laws and regulations
of any state. The Fund agrees that it will furnish the information
required by state insurance laws so that the Company can obtain
the authority needed to issue the Contracts in the various states.
2.4. To the extent that the Fund decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have its Fund Board, a
majority of whom are not "interested" persons of the Fund and have no
direct or indirect financial interest in the operation of the plan or in
any agreement related to the plan, formulate and approve any plan under
Rule 12b-1 to finance distribution expenses.
2.5. The Fund represents and warrants that it believes that the Fund's
investment policies are in material compliance with any investment
restriction set forth in Schedule 3, including restrictions relating to
the diversification requirements for variable annuity, endowment, or life
insurance contracts as set forth in Section 817(h) of the Internal
Revenue Code and Treasury Regulation 1.817-5, as amended from time to
time. Without limiting the scope of the foregoing, the Fund further
represents and warrants that it believes that it currently
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complies with Section 817(h) of the Internal Revenue Code and Treasury
Regulation 1.817-5, as amended from time to time, and any amendments or
other modifications to such Section or Regulation. In the event of a
breach of this representation and warranty, the Fund will take all
reasonable steps:
(a) to notify the Company of such breach; and
(b) to adequately diversify the Fund so as to achieve compliance
within the grace period afforded by Treasury Regulation 1.817-5.
2.6. Each party represents and warrants that, as applicable, all of its
directors, officers, employees, investment advisers, and other
individuals/entities each having access to the funds and/or securities of
the Fund are and will continue to be at all times covered by a blanket
fidelity bond or similar coverage in an amount not less than the minimal
coverage as required currently by Rule 17g-(1) of the 1940 Act or related
provisions 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.
ARTICLE III. OBLIGATIONS OF THE PARTIES
3.1. The Fund will 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 Fund. The Fund will bear the costs of
registration and qualification of its shares, preparation and filing of
documents listed in this Section 3.1 and all taxes to which an issuer
is subject on the issuance and transfer of its shares.
3.2. At the option of the Company, the Fund will either: (a) provide the
Company with as many copies of the Fund's current prospectus, statement
of additional information,
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annual report, semi-annual report and other shareholder communications,
including any amendments or supplements to any of the foregoing, as the
Company will reasonably request; or (b) provide the Company with a
camera-ready copy, computer disk or other medium agreed to by the parties
of such documents in a form suitable for printing. The Fund will bear the
cost of typesetting and printing such documents and of distributing such
documents to existing Contract owners. The Company will bear the cost of
distributing such documents to prospective Contract owners and applicants
as required.
3.3. The Fund, at its expense, either will:
(a) distribute its proxy materials directly to the appropriate
Contract owners; or
(b) provide the Company or its mailing agent with copies of its proxy
materials in such quantity as the Company will reasonably require
and the Company will distribute the materials to existing Contract
owners and will xxxx the Fund for the reasonable cost of such
distribution. The Fund will bear the cost of tabulation of proxy
votes.
3.4. With respect to any matter put to vote of the holders bf Fund shares or
Portfolio shares ("Voting Shares"), if and to the extent required by law,
the Company will:
(a) provide for the solicitation of voting instructions from Contract
owners;
(b) vote Voting Shares of each Portfolio held in the Account in
accordance with instructions or proxies timely received from
Contract owners; and
(c) vote Voting Shares of the Portfolios held in the Account for which
no timely instructions have been received, in the same proportion
as Voting Shares of such Portfolio for which instructions have
been received from the Company's Contract owners;
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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. The Company reserves the right to vote
Fund shares held in any segregated asset account in its own right,
to the extent permitted by law. The Company will be responsible
for assuring that voting privileges for the Account are determined
in a manner consistent with the provisions set forth above.
3.5. The Company will prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports,
notices, prospectuses and statements of additional information of the
Contracts. The Company will bear the cost of registration and
qualification of the Contracts and preparation and filing of documents
listed in this Section 3.5. The Company also will bear the cost of
typesetting, printing and distributing the documents listed in this
Section 3.5 to existing and prospective Contract owners.
3.6. The Company will furnish, or will cause to be furnished, to the Fund or
the Adviser, each piece of sales literature or other promotional material
in which the Fund or the Adviser is named, at least ten (10) Business
Days prior to its use. No such material will be used if the Fund or the
Adviser reasonably objects to such use within five (5) Business Days
after receipt of such material.
3.7. The Company will not give any information or make any representations or
statements on behalf of the Fund or concerning the Fund in connection
with the sale of the Contracts other than the information or
representations contained in the registration statement, prospectus or
statement of additional information for Fund shares, as such registration
statement, prospectus and statement of additional information may be
amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in published reports for the Fund which are
in the public domain or approved by the Fund or the Adviser for
distribution, or in sales literature or other material provided by the
Fund or by the Adviser, except with the written permission of the Fund or
the Adviser. The
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Fund and the Adviser agree to respond to any request for approval on a
prompt and timely basis. Nothing in this Section 3.7 will be construed as
preventing the Company or its employees or agents from giving advice on
investment in the Fund.
3.8. The Distributor will furnish, or will cause to be furnished, to the
Company or its designee, each piece of sales literature or other
promotional material in which the Company or its separate account is
named, at least ten (10) Business Days prior to its use. No such material
will be used if the Company reasonably objects to such use within five
(5) Business Days after receipt of such material.
3.9. The Fund and the Distributor will not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, each Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus or
statement of additional information for the Contracts, as such
registration statement, prospectus and statement of additional
information may be amended or supplemented from time to time, or in
published reports for each Account or the Contracts which are in the
public domain or approved by the Company for distribution to Contract
owners, or in sales literature or other material provided by the Company,
except with the written permission of the Company. The Company agrees to
respond to any request for approval on a prompt and timely basis.
3.10. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional
information, reports, proxy statements, and all amendments to any of the
above, that relate to the Fund or its shares, promptly after the filing
of such document with the SEC.
3.11. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional
information, reports, solicitations for voting instructions, and all
amendments to any of the above, that relate to the Contracts or each
Account, promptly after the filing of such document with the SEC.
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3.12. For purposes of this Article III, 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 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 rules of the National Association of Securities
Dealers, Inc. (the "NASD"), the 1933 Act or the 0000 Xxx.
3.13. The Fund and the Distributor hereby consent to the Company's use of the
name Nations Separate Account Trust and the names of the Portfolios
listed on Schedule 2, as may be amended from time to time, in connection
with marketing the Contracts, subject to the terms of Sections 3.6 and
3.7 of this Agreement. Such consent will terminate with the termination
of this Agreement.
3.14. The Distributor will be responsible for arranging for the calculation of
the performance information for the Fund. The Company will be responsible
for calculating the performance information for the Contracts. As between
the Company and the Distributor, the Distributor will be liable to the
Company for any material mistakes it makes in calculating the performance
information for the Fund which cause losses to the Company. The Company
will be liable to the Distributor for any material mistakes it makes in
calculating the performance information for the Contracts that cause
losses to
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the Distributor. Each party will be liable for any material mistakes it
makes in reproducing the performance information for Contracts or the
Fund, as appropriate. The Fund and the Distributor agree to provide the
Company with performance information for the Fund on a timely basis to
enable the Company to calculate performance information for the Contracts
in accordance with applicable state and federal law.
ARTICLE IV. POTENTIAL CONFLICTS
4.1. The Fund Board will monitor the Fund for the existence of any
irreconcilable material conflict among the interests of the contract
owners of all separate accounts investing in the Fund. An irreconcilable
material conflict may arise for a variety of reasons, including: (a) an
action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or
securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in
voting instructions given by Participating Insurance Companies or by
variable annuity and variable life insurance contract owners; (f) a
decision by an insurer to disregard the voting instructions of contract
owners; or (g) if applicable, a decision by a Qualified Entity to
disregard the voting instructions of a person participating in such
entity. The Fund Board will promptly inform the Company if it determines
that an irreconcilable material conflict exists and the implications
thereof. A majority of the Fund Board will consist of persons who are not
"interested" persons of the Fund.
4.2. The Company will report any potential or existing conflicts of which it
is aware to the Fund Board. The Company agrees to assist the Fund Board
in carrying out its responsibilities, as delineated in the Exemptive
Order, by providing the Fund Board with all information reasonably
necessary for the Fund Board to consider any issues raised. This
includes, but is not limited to, an obligation by the Company to inform
the Fund
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Board whenever Contract owner voting instructions are to be disregarded.
The Fund Board will record in its minutes, or other appropriate records,
all reports received by it and all action with regard to a conflict.
4.3. If it is determined by a majority of the Fund Board, or a majority of its
disinterested trustees, that an irreconcilable material conflict exists,
the Company and other Participating Insurance Companies will, at their
expense and to the extent reasonably practicable (as determined by a
majority of the disinterested directors), take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict, up
to and including: (a) withdrawing the assets allocable to some or all of
the Accounts from the Fund or any Portfolio and reinvesting such assets
in a different investment medium, including (but not limited to) another
portfolio of the Fund, or submitting the question whether such
segregation should be implemented to a vote of all affected Contract
owners and, as appropriate, segregating the assets of any appropriate
group (i.e., variable annuity Contract owners or variable life insurance
contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected Contract
owners the option of making such a change; and (b) establishing a new
registered management investment company or managed separate account.
4.4. If a material irreconcilable conflict arises because of a decision by the
Company to disregard Contract owner voting instructions, and such
disregard of voting instructions could conflict with the majority of
contract owner voting instructions, and the Company's judgment represents
a minority position or would preclude a majority vote, the Company may be
required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such
Account; provided, however, that such withdrawal and termination will be
limited to the extent required by the foregoing irreconcilable material
conflict as determined by a majority of the disinterested directors of
the Fund Board. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal and termination must take place within
six (6) months after the Fund gives written notice to the Company that
this provision is being
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implemented. Until the end of such six-month period the Adviser and Fund
will, to the extent permitted by law and any exemptive relief previously
granted to the Fund, continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund.
4.5. If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with
the majority of other state insurance regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account; provided, however, that such
withdrawal and termination will be limited to the extent required by the
foregoing irreconcilable material conflict as determined by a majority of
the disinterested directors of the Fund Board. No charge or penalty will
be imposed as a result of such withdrawal. Any such withdrawal and
termination must take place within six (6) months after the Fund gives
written notice to the Company that this provision is being implemented.
Until the end of such six-month period the Adviser and Fund will, to the
extent permitted by law and any exemptive relief previously granted to
the Fund, continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
4.6. For purposes of Sections 4.3 through 4.6 of this Agreement, a majority of
the disinterested members of the Fund Board will determine whether any
proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Fund or the Adviser be required to
establish a new funding medium for the Contracts. The Company will not
be required by this Article IV to establish a new funding medium for the
Contracts if an offer to do so has been declined by vote of a majority
of Contract owners affected by the irreconcilable material conflict.
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4.7. The Company will at least annually submit to the Fund Board such reports,
materials or data as the Fund Board may reasonably request so that the
Fund Board may fully carry out the duties imposed upon it as delineated
in the Exemptive Order, and said reports, materials and data will be
submitted more frequently if deemed appropriate by the Fund Board.
4.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or
shared funding (as defined in the Exemptive Order) on terms and
conditions materially different from those contained in the Exemptive
Order, then: (a) the Fund and/or the Company, as appropriate, will take
such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as
amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable; and (b) Sections 3.4, 4.1, 4.2, 4.3, 4.4, and 4.5 of this
Agreement will continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
4.9. The Company, or any affiliate, will maintain at its home office,
available to the SEC (a) a list of its officers, directors and employees
who participate directly in the management or administration of any
Accounts and/or (b) a list of its agents who, as registered
representatives, offer and sell Contracts.
ARTICLE V. INDEMNIFICATION
5.1. Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the Fund and
each person, if any, who controls or is associated with the Fund
within the meaning of such terms under the federal securities laws
(but not any Participating Insurance Companies
18
or Qualified Entities) and any director, trustee, officer,
partner, employee or agent of the foregoing (collectively, the
"Indemnified Parties" for purposes of this Section 5.1) against
any and all losses, claims, expenses, damages, liabilities, joint
or several (including amounts paid in settlement with the written
consent of the Company) or litigation (including reasonable legal
and other expenses), to which the Indemnified Parties may become
subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) or settlements:
(1) arise out of or are based on any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement, prospectus or statement of
additional information for the Contracts or contained in
the Contracts or sales literature or other promotional
material 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 or necessary to make
such statements not misleading in light of the
circumstances in which they were made; provided that this
agreement to indemnify will not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to the Company in
writing by or on behalf of the Fund for use in the
registration statement, prospectus or statement of
additional information for the Contracts or in the
Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(2) arise out of or are based on any untrue statement or
alleged untrue statement of a material fact contained in
the Fund registration statement, prospectus, statement of
additional information or sales literature or other
promotional material of the Fund (or any amendment or
supplement to any of the
19
foregoing), or the omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made, if such statement or
omission was made in reliance upon and in conformity with
information furnished to the Fund in writing by or on
behalf of the Company or persons under its control; or
(3) arise out of or are based on any wrongful conduct of, or
violation of applicable federal or state law by, the
Company or persons under its control or subject to its
authorization or supervision with respect to the purchase
of Fund shares or the sale, marketing or distribution of
the Contracts; or
(4) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of
this Agreement; (including but not limited to a failure,
whether unintentional or in good faith or otherwise, to
comply with the provisions of Section 2.2 of the Agreement,
unless such failure is a result of the Fund's material
breach of the Agreement);
(5) arise out of any material breach of any representation
and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of
this Agreement by the Company or persons under its control
or subject to its authorization or supervision;
(6) arise out of any failure by the Company to prevent orders
received after the Close of Trading on a Business Day from
being aggregated and communicated to the Fund or its agent
with orders received before the Close of Trading on that
Business Day; or
(7) arise out of any errors within the reasonable control of
the Company that result in late transmission of orders to
the Fund or its agent;
20
except to the extent provided in Sections 5.1(b) and 5,3
hereof. This indemnification will be in addition to any
liability that the Company otherwise may have.
(b) No party will be entitled to indemnification under Section 5.1(a)
if such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, or gross negligence in the
performance of such party's duties under this Agreement, or by
reason of such party's reckless disregard of its obligations or
duties under this Agreement by the party seeking indemnification.
(c) The Indemnified Parties promptly will notify the Company of the
commencement of any litigation, proceedings, complaints or actions
by regulatory authorities against them in connection with the
issuance or sale of the Fund shares or the Contracts or the
operation of the Fund.
5.2. Indemnification By The Fund and the Distributor
(a) The Fund and Distributor agree to indemnify and hold harmless the
Company and each person, if any, who controls or is associated
with the Company within the meaning of such terms under the
federal securities laws and any director, trustee, officer,
partner, employee or agent of the foregoing (collectively, the
"Indemnified Parties" for purposes of this Section 5.2) against
any and all losses, claims, expenses, damages, liabilities, joint
or several (including amounts paid in settlement with the written
consent of the Fund) or litigation (including reasonable legal and
other expenses), to which the Indemnified Parties may become
subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) or settlements:
21
(1) arise out of or are based on any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement, prospectus or statement of
additional information for the Fund or other information on
the Fund or Distributor provided in writing to the Company
(or any amendment or supplement to any of the foregoing),
or arise out of or are based on the omission or alleged
omission to state therein a material fact required to be
stated or necessary to make such statements not misleading
in light of the circumstances in which they were made;
provided that this agreement to indemnify will not apply as
to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the
Fund or Distributor in writing by or on behalf of the
Company for use in the registration statement, prospectus
or statement of additional information for the Fund or in
sales literature of the Fund (or any amendment or
supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(2) arise out of or are based on any untrue statement or
alleged untrue statement of a material fact contained in
the Contract registration statement, prospectus or
statement of additional information or sales literature or
other promotional material for 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 in light of the
circumstances in which they were made, if such statement or
omission was made in reliance upon and in conformity with
information furnished to the Company in writing by or on
behalf of the Fund, the Distributor or persons under their
control; or
(3) arise out of or are based on any wrongful conduct of, or
violation of applicable federal and state law by, the Fund,
the Distributor or persons under their control or subject
to their authorization with respect to the sale of Fund
shares; or
22
(4) arise as a result of any failure by the Fund, the
Distributor or persons under its control or subject to its
authorization to provide the services and furnish the
materials under the terms of this Agreement including, but
not limited to, a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification
requirements and procedures related thereto specified in
Section 2.5 of this Agreement or any material errors in or
untimely calculation or reporting of the daily net asset
value per share or dividend or capital gain distribution
rate (referred to in this Section 5.2(a)(4) as an "error");
provided, that the foregoing will not apply where such
error is the result of incorrect information supplied by or
on behalf of the Company to the Fund, and will be limited
to (i) reasonable administrative costs necessary to correct
such error, provided that the Fund and Distributor have
approved such costs and the method in which the error is to
be corrected, which approval will not be unreasonably
withheld, and (ii) amounts which the Company has paid out
of its own resources to make Contract owners whole as a
result of such error; or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or the
Distributor in this Agreement, or arise out of or result
from any other material breach of this Agreement by the
Fund, the Distributor or persons under their respective
control or subject to their authorization or supervision;
except to the extent provided in Sections 5.2(b) and 5.3 hereof.
(b) No party will be entitled to indemnification under Section 5.2(a)
if such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, or gross negligence in the
performance of such party's duties under this Agreement, or by
reason of such party's reckless disregard of its obligations or
duties under this Agreement by the party seeking indemnification.
23
(c) The Indemnified Parties will promptly notify the Fund and
Distributor of the commencement of any litigation, proceedings,
complaints or actions by regulatory authorities against them in
connection with the issuance or sale of the Contracts or the
operation of the Account.
5.3. Indemnification Procedure
Any person obligated to provide indemnification under this Article V
("Indemnifying Party" for the purpose of this Section 5.3) will not be
liable under the indemnification provisions of this Article V with
respect to any claim made against a party entitled to indemnification
under this Article V ("Indemnified Party" for the purpose of this Section
5.3) unless such Indemnified Party will have notified the Indemnifying
Party in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claim will
have been served upon such Indemnified Party (or after such party will
have received notice of such service on any designated agent), but
failure to notify the Indemnifying Party of any such claim will not
relieve the Indemnifying Party from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than
on account of the indemnification provision of this Article V, except to
the extent that the failure to notify results in the failure of actual
notice to the Indemnifying Party and such Indemnifying Party is damaged
solely as a result of failure to give such notice. In case any such
action is brought against the Indemnified Party, the Indemnifying Party
will be entitled to participate, at its own expense, in the defense
thereof. The Indemnifying Party also will be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Indemnifying Party to the Indemnified Party
of the Indemnifying Party's election to assume the defense thereof, the
Indemnified Party will bear the fees and expenses of any additional
counsel retained by it, and the Indemnifying Party will not be liable to
such party under this Agreement for any legal or other expenses
subsequently
24
incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation, unless: (a) the
Indemnifying Party and the Indemnified Party will have mutually agreed to
the retention of such counsel; or (b) the named parties to any such
proceeding (including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The Indemnifying Party will
not be liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there is a final
judgment for the plaintiff, the Indemnifying Party agrees to indemnify
the Indemnified Party from and against any loss or liability by reason of
such settlement or judgment. A successor by law of the parties to this
Agreement will be entitled to the benefits of the indemnification
contained in this Article V. The indemnification provisions contained in
this Article V will survive any termination of this Agreement.
5.4. Limitation of Liability
Except as expressly stated herein, as between the parties, in no event
will any party to this Agreement be responsible to any other party for
any incidental, indirect, consequential, punitive or exemplary damages of
any kind arising from this Agreement, including without limitation, lost
revenues, loss of profits or loss of business.
5.5. Arbitration
Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, will be settled by arbitration administered by the
American Arbitration Association in accordance with its Commercial
Arbitration Rules and Title 9 of the U.S. Code. Judgment on the award
rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The number of arbitrators will be three, one of
whom will be appointed by the Company or an affiliate; one of whom will
be appointed by the Fund
25
and/or the Adviser or an affiliate; and the third of whom will be
selected by mutual agreement, if possible, within 30 days of the
selection of the second arbitrator and thereafter by the administering
authority. The place of arbitration will be agreed to by the parties. The
arbitrators will have no authority to award punitive damages or any other
damages not measured by the prevailing party's actual damages, and may
not, in any event, make any ruling, finding or award that does not
conform to the terms and conditions of this Agreement. Any party may make
an application to the arbitrators seeking injunctive relief to maintain
the status quo until such time as the arbitration award is rendered or
the controversy is otherwise resolved. Any party may apply to any court
having jurisdiction hereof and seek injunctive relief in order to
maintain the status quo until such time as the arbitration award is
rendered or the controversy is otherwise resolved. The arbitrators will
issue their decision in writing and each party will bear its own costs
unless determined otherwise by the arbitrators.
ARTICLE VI. APPLICABLE LAW
6.1. This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Massachusetts.
6.2. This Agreement will be subject to the provisions of the 1933 Act, the
Securities Exchange Act of 1934 and the 1940 Act, 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 Exemptive Order) and the terms hereof will be interpreted
and construed in accordance therewith.
ARTICLE VII. TERMINATION
26
7.1. This Agreement will terminate:
(a) at the option of any party, with or without cause, with respect to
some or all of the Portfolios, upon sixty (60) days' advance
written notice to the other party or, if the Company is required
to obtain exemptive relief from the SEC to effect a substitution
of some or all of the Portfolios, such later date as such
exemptive order is received by the Company, unless otherwise
agreed to in writing by the parties;
(b) upon 30 days' notice by the Company to the Fund if shares of the
Portfolio are not reasonably available to meet the requirements of
the Contracts as determined in good faith by the Company, and the
Fund, after receiving written notice from the Company of such
non-availability, fails to make available a sufficient number of
Fund shares to meet the requirements of the Contracts within five
days after receipt thereof; or
(c) at the option of the Company, upon receipt of the Company's
written notice by the Fund, with respect to any Portfolio in the
event any of the Portfolio's shares are not registered, issued or
sold in accordance with applicable state and/or federal law or
such law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
Company; or
(d) upon 30 days' notice by the Fund to the Company upon institution
of formal proceedings against the Company by the NASD, the SEC,
the insurance commission of any state or any other regulatory body
regarding the Company's duties under this Agreement or related to
the sale of the Contracts, the administration of the Contracts,
the operation of the Account, or the purchase of the Fund shares,
provided that the Fund determines in its sole judgment, exercised
in good faith, that any such proceeding would have a material
adverse effect on the Company's ability to perform its obligations
under this Agreement; or
27
(e) upon 30 days' notice by the Company to the Fund, upon institution
of formal proceedings against the Fund or the Adviser by the NASD,
the SEC, or any state securities or insurance department or any
other regulatory body, regarding the Fund's or the Adviser's
duties under this Agreement or related to the sale of Fund shares
or the administration of the Fund, provided that the Company
determines in its sole judgment, exercised in good faith, that any
such proceeding would have a material adverse effect on the Fund's
ability to perform its obligations under this Agreement; or
(f) upon 30 days' notice by the Company if the Fund ceases to qualify
as a Regulated Investment Company under Subchapter M of the
Internal Revenue Code, or under any successor or similar
provision, or if the Company reasonably and in good faith
believes, based on an opinion of counsel reasonably satisfactory
to the Fund, that the Fund may fail to so qualify and the Fund,
upon written request, fails to provide reasonable assurance that
it will take action to cure or correct such failure; or
(g) upon 30 days' notice by the Company to the Fund if the Fund fails
to meet the diversification requirements specified in Article II
hereof and the Fund fails to provide reasonable assurance that it
will take action to cure or correct such failure; or
(h) upon 30 days' written notice by one party to another upon the
other party's material breach of any provision of this Agreement;
or
(i) upon 60 days' written notice by the Company, if the Company
determines in its sole judgment exercised in good faith, that the
Fund has suffered a material adverse change in its business,
operations or financial condition since the date of this Agreement
or is the subject of material adverse publicity which is likely to
have a material adverse impact upon the business and operations of
the Company; or
28
(j) upon 60 days' written notice by the Fund to the Company, if the
Fund determines in its sole judgment exercised in good faith, that
the Company has suffered a material adverse change in its
business, operations or financial condition since the date of this
Agreement or is the subject of material adverse publicity which is
likely to have a material adverse impact upon the business and
operations of the Fund; or
(k) at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals and/or the vote of the Contract
owners having an interest in the Account (or any subaccount) to
substitute the shares of another investment company for the
corresponding Portfolio shares of the Fund in accordance with the
terms of the Contracts for which those Portfolio shares had been
selected to serve as the underlying investment media. The Company
will give sixty (60) days' prior written notice to the Fund of the
date of any proposed vote or other action taken to replace the
Fund's shares; or
(l) at the option of the Company or the Fund upon a determination by a
majority of the Fund Board, or a majority of the disinterested
Fund Board members, that an irreconcilable material conflict
exists among the interests of: (i) all contract owners of variable
insurance products of all separate accounts; or (ii) the interests
of the Participating Insurance Companies investing in the Fund as
set forth in Article IV of this Agreement; or
(m) at the option of the Fund in the event any of the Contracts are
not issued or sold in accordance with applicable federal and/or
state law. Termination will be effective immediately upon such
occurrence without notice.
(n) upon 30 day's notice by the Fund to the Company if the Contracts
cease to qualify as annuity or life insurance contracts under the
Internal Revenue Code, or the Fund reasonably and in good faith
believes, based on an opinion of counsel reasonably satisfactory
to the Company, that the Contracts may fail to so qualify.
29
7.2. Notwithstanding any termination of this Agreement, the Fund and the
Adviser will, at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of
this Agreement, for all Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts will be permitted to reallocate investments in the Portfolios
(as in effect on such date), redeem investments in the Portfolios and/or
invest in the Portfolios upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 7.2
will not apply to any terminations under Article IV and the effect of
such Article IV terminations will be governed by Article IV of this
Agreement.
7.3. The provisions of Article V will survive the termination of this
Agreement and as long as shares of the Fund are held under Existing
Contracts in accordance with Section 7.2, the provisions of this
Agreement will survive the termination of this Agreement with respect to
those Existing Contracts.
ARTICLE VIII. NOTICES
Any notice will be deemed duly given when sent by registered or certified mail
(or other method agreed to by the parties) to each other party at the address of
such party set forth below or at such other address as such party may from time
to time specify in writing to the other parties.
If to SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.):
One Sun Life Executive Park
Xxxxxxxxx Xxxxx, XX 00000
ATTN: Xxxx Xxxxxxxx
30
With a copy to:
Xxxxx Xxxxx
ATTN: General Counsel's Office
If to SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
One Sun Life Executive Park
Xxxxxxxxx Xxxxx, XX 00000
ATTN: Xxxx Xxxxxxxx
With a copy to:
Xxxxx Xxxxx
ATTN: General Counsel's Office
If to the Fund or the Adviser:
Columbia Funds Distributor, Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Co-President
With a copy to: Counsel/Columbia Funds Distributor, Inc.
Xxx Xxxxxxxxx Xxxxxx Xxxxxx, XX 00000
ARTICLE IX. MISCELLANEOUS
9.1. All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither
the directors, trustees, officers, partners, employees, agents or
shareholders assume any personal liability for obligations entered into
on behalf of the Fund.
9.2. Notwithstanding anything to the contrary contained in this Agreement, in
addition to and not in lieu of other provisions in this Agreement:
31
(a) "Confidential Information" includes but is not limited to all
proprietary and confidential information of the Company and its
subsidiaries, affiliates and licensees (collectively the
"Protected Parties" for purposes of this Section 9.2), including
without limitation all information regarding the customers of the
Protected Parties; or the accounts, account numbers, names,
addresses, social security numbers or any other personal
identifier of such customers; or any information derived
therefrom.
(b) Neither the Fund nor the Adviser may use or disclose Confidential
Information for any purpose other than to carry out the purpose
for which Confidential Information was provided to Fund and/or
Adviser as set forth in the Agreement; and the Fund and the
Adviser agree to cause all their employees, agents and
representatives, or any other party to whom the Fund and/or the
Adviser may provide access to or disclose Confidential Information
to limit the use and disclosure of Confidential Information to
that purpose.
(c) The Fund and the Adviser acknowledge that all computer programs
and procedures or other information developed or used by the
Protected Parties or any of their employees or agents in
connection with the Company's performance of its duties under this
Agreement are the valuable property of the Protected Parties.
(d) The Fund and the Adviser agree to implement appropriate measures
designed to ensure the security and confidentiality of
Confidential Information, to protect such information against any
anticipated threats or hazards to the security or integrity of
such information, and to protect against unauthorized access to,
or use of, Confidential Information that could result in
substantial harm or inconvenience to any customer of the Protected
Parties; the Fund and the Adviser
32
further agree to cause all their agents, representatives or
subcontractors of, or any other party to whom the Fund and/or the
Adviser may provide access to or disclose Confidential Information
to implement appropriate measures designed to meet the objectives
set forth in this Section 9.2.
(e) The Fund and the Adviser acknowledge that any breach of the
agreements in this Section 9.2 would result in immediate and
irreparable harm to the Protected Parties for which there would be
no adequate remedy at law and agree that in the event of such a
breach, the Protected Parties will be entitled to equitable relief
by way of temporary and permanent injunctions, as well as such
other relief as any court of competent jurisdiction deems
appropriate.
9.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
9.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the
same instrument.
9.5. If any provision of this Agreement will be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement will not be affected thereby.
9.6. This Agreement will not be assigned by any party hereto without the prior
written consent of all the parties.
9.7. 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
in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
33
9.8. Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or board action, as
applicable, by such party and when so executed and delivered this
Agreement will be the valid and binding obligation of such party
enforceable in accordance with its terms.
9.9. The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts,
the Accounts or the Portfolios of the Fund or other applicable terms of
this Agreement.
9.10. A copy of the Declaration of Trust of the Fund is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Fund by officers
of the Fund as officers and not individually and that the obligations of
or arising out of this instrument are not binding upon any of the
trustees, officers or shareholders individually but are binding only upon
the assets of and property of the Fund or the Portfolios, as series of
the Fund.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and behalf by its duly authorized representative as of the
date specified above.
XXXXXX ADVISORS TRUST COLUMBIA FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxx
-------------------------------- -----------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxxx X. Xxxxxx
Title: Treasurer Title: Treasurer
SUN LIFE ASSURANCE COMPANY OF SUN LIFE INSURANCE AND ANNUITY
CANADA (U.S.) COMPANY OF NEW YORK
For the President For the President
By: /s/ Xxxx X. Xxx By: /s/ Xxxx X. Xxx
-------------------------------- -----------------------------------
Name: Xxxx X. Xxx Name: Xxxx X. Xxx
Title: Vice President Title: Vice President
For the Secretary For the Secretary
By: /s/ Xxxxx Xxxxx By: /s/ Xxxxx Xxxxx
-------------------------------- -----------------------------------
Name: Xxxxx Xxxxx Name: Xxxxx Xxxxx
Title: Senior Counsel Title: Senior Counsel
34
SCHEDULE 1
PARTICIPATION AGREEMENT
By and Among
XXXXXX ADVISORS TRUST
And
COLUMBIA FUNDS DISTRIBUTOR, INC.
And
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
And
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
The following Accounts of LIFE INSURANCE COMPANY are permitted in accordance
with the provisions of this Agreement to invest in Portfolios of the Fund shown
in Schedule 2:
Sun Life of Canada (U.S.) Separate Account F
Sun Life (N.Y.) Separate Account C
S-1
SCHEDULE 2
PARTICIPATION AGREEMENT
By and Among
XXXXXX ADVISORS TRUST
And
COLUMBIA FUNDS DISTRIBUTION, INC.
And
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
And
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
The Accounts shown on Schedule 1 may invest in the following Portfolios:
Xxxxxx Select Fund
Xxxxxx US Smaller Companies Fund
S-2
SCHEDULE 3
PARTICIPATION AGREEMENT
By and Among
XXXXXX ADVISORS TRUST
And
COLUMBIA FUNDS DISTRIBUTOR, INC.
And
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
And
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
The following investment restrictions apply to the Fund's investment policies:
XXXXXX SELECT FUND
Investment Restrictions
Excerpts from the Prospectus and Statement of Additional Information
dated May 1, 2004
Prospectus - Xxxxxx Select Fund
INVESTMENT GOAL-XXXXXX SELECT
Xxxxxx Select seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGY
Xxxxxx Select invests primarily in the stocks of medium- to larger-size U.S.
companies. Xxxxxx Select is a non-diversified fund that takes advantage of its
adviser's research and stock-picking capabilities to invest in a limited number
of companies (between 20-40) with market capitalizations under $15 billion at
the time of investment, offering the potential to provide above-average growth
over time. Xxxxxx Select believes that companies within this capitalization
range, which are not as well known by financial analysts, may offer higher
return potential than the stocks of companies with capitalizations above $15
billion.
S-3
Xxxxxx Select typically looks for companies with:
o A strong business franchise that offers growth potential.
o Products and services that give the company a competitive advantage.
o A stock price that the Fund's adviser believes is reasonable relative to
the assets and earning power of the company.
The portfolio manager may sell a portfolio holding if the security reaches the
portfolio manager's price target or if the company has a deterioration of
fundamentals such as failing to meet key operating benchmarks. The portfolio
manager may also sell a portfolio holding to fund redemptions.
TEMPORARY DEFENSIVE POSITIONS
At times, CWAM may determine that adverse market conditions make it desirable to
temporarily suspend the Fund's normal investment activities. During such times,
the Fund may, but is not required to, invest in cash or high-quality, short-term
debt securities, without limit. Taking a temporary defensive position may
prevent the Fund from achieving its investment goal.
HEDGING STRATEGIES
The Fund may enter into a number of hedging strategies, including those that
employ futures and options, to gain or reduce exposure to particular securities
or markets. These strategies, commonly referred to as derivatives, involve the
use of financial instruments whose values depend on, or are derived from, the
value of an underlying security, index or currency. The Fund may use these
strategies to adjust the Fund's sensitivity to changes in interest rates or for
other hedging purposes (i.e. attempting to offset a potential loss in one
position by establishing an interest in an opposite position). Derivative
strategies involve the risk that they may exaggerate a loss, potentially losing
more money than the actual cost of the underlying security, or limit a potential
gain. Also, with some derivative strategies there is the risk that the other
party to the transaction may fail to honor its contract terms, causing a loss to
the Fund.
PORTFOLIO TURNOVER
The Fund does not have limits on portfolio turnover. Turnover may vary
significantly from year to year. CWAM does not expect the Fund's turnover to
exceed 125% under normal conditions. Portfolio turnover increases transaction
expenses, which reduce the Fund's return.
Statement of Additional Information - Xxxxxx Select Fund
Xxxxxx Select operates under the investment restrictions listed below.
Restrictions numbered 1 through 11 are fundamental policies which may not be
changed for a Fund without approval of a majority of the outstanding voting
shares of a Fund, defined as the lesser of the vote of (a) 67% of the shares of
a Fund at a meeting where more than 50% of the outstanding shares are present in
person or by proxy or (b) more than 50% of the outstanding shares of a Fund.
Other restrictions are not fundamental policies and may be changed with respect
to a Fund by the Trustees without shareholder approval.
S-3A
Xxxxxx Select may not:
1. Acquire securities of any one issuer, which at the time of investment (a)
represent more than 10% of the voting securities of the issuer or (b) have a
value greater than 10% of the value of the outstanding securities of the issuer;
2. With respect to 50% of its total assets, purchase the securities of any
issuer (other than cash items and U.S. government securities and securities of
other investment companies) if such purchase would cause the Fund's holdings of
that issuer to exceed more than 5% of the Fund's total assets;
3. Invest more than 25% of its total assets in a single issuer (other than U.S.
government securities);
4. Invest more than 25% of its total assets in the securities of companies in a
single industry (excluding U.S. government securities);
5. Make loans, but this restriction shall not prevent the Fund from (a)
investing in debt securities, (b) investing in repurchase agreements, or (c)
lending its portfolio securities, provided that it may not lend securities if,
as a result, the aggregate value of all securities loaned would exceed 33% of
its total assets (taken at market value at the time of such loan);
6. Borrow money except (a) from banks for temporary or emergency purposes in
amounts not exceeding 33% of the value of the Fund's total assets at the time of
borrowing, and (b) in connection with transactions in options, futures, and
options on futures;
7. Underwrite the distribution of securities of other issuers; however, the Fund
may acquire "restricted" securities which, in the event of a resale, might be
required to be registered under the Securities Act of 1933 on the ground that
the Fund could be regarded as an underwriter as defined by that act with respect
to such resale;
8. Purchase and sell real estate or interests in real estate, although it may
invest in marketable securities of enterprises which invest in real estate or
interests in real estate;
9. Purchase and sell commodities or commodity contracts, except that it may
enter into (a) futures and options on futures and (b) foreign currency
contracts;
10. Make margin purchases of securities, except for use of such short-term
credits as are needed for clearance of transactions and except in connection
with transactions in options, futures, and options on futures;
11. Issue any senior security except to the extent permitted under the
Investment Company Act of 1940.
Xxxxxx Select is also subject to the following restrictions and policies, which
are not fundamental and may be changed by the Trustees without shareholder
approval. Xxxxxx Select may not:
(a) Invest in companies for the purpose of management or the exercise of
control;
(b) Acquire securities of other registered investment companies except in
compliance with the Investment Company Act of 1940;
(c) Invest more than 15% of its net assets (valued at time of investment) in
illiquid securities, including repurchase agreements maturing in more than seven
days;
S-3B
(d) Pledge, mortgage or hypothecate its assets, except as may be necessary in
connection with permitted borrowings or in connection with short sales, options,
futures, and options on futures;
(e) Make short sales of securities unless the Fund owns at least an equal amount
of such securities, or owns securities that are convertible or exchangeable,
without payment of further consideration, into at least an equal amount of such
securities;
(f) Invest more than 15% of its total assets in the securities of foreign
issuers.
Notwithstanding the foregoing investment restrictions, the Fund may purchase
securities pursuant to the exercise of subscription rights, provided that such
purchase will not result in the Fund's ceasing to be a diversified investment
company. Japanese and European corporations frequently issue additional capital
stock by means of subscription rights offerings to existing shareholders at a
price substantially below the market price of the shares. The failure to
exercise such rights would result in a Fund's interest in the issuing company
being diluted. The market for such rights is not well developed in all cases
and, accordingly, the Fund may not always realize full value on the sale of
rights. The exception applies in cases where the limits set forth in the
investment restrictions would otherwise be exceeded by exercising rights or
would have already been exceeded as a result of fluctuations in the market value
of the Fund's portfolio securities with the result that the Fund would be forced
either to sell securities at a time when it might not otherwise have done so, or
to forego exercising the rights.
The Fund is also subject to the following additional restrictions and policies
under certain applicable insurance laws pertaining to variable annuity contract
separate accounts. These policies and restrictions are not fundamental and may
be changed by the Trustees without shareholder approval:
(a) The Fund will be invested in a minimum of five different foreign countries
at all times, except that this minimum is reduced to four when foreign country
investments comprise less than 80% of the value of the Fund's net assets; to
three when less than 60% of such value; to two when less than 40%; and to one
when less than 20%.
(b) The Fund will have no more than 20% of its net assets invested in securities
of issuers located in any one country; except that a Fund may have an additional
15% of its net assets invested in securities of issuers located in any one of
the following countries: Australia; Canada; France; Japan; the United Kingdom;
or Germany.
(c) The Fund may not acquire the securities of any issuer if, as a result of
such investment, more than 10% of the Fund's total assets would be invested in
the securities of any one issuer, except that this restriction shall not apply
to U.S. Government securities or foreign government securities; and the Fund
will not invest in a security if, as a result of such investment, it would hold
more than 10% of the outstanding voting securities of any one issuer.
(d) The Fund may borrow no more than 10% of the value of its net assets when
borrowing for any general purpose and 25% of net assets when borrowing as a
temporary measure to facilitate redemptions.
S-3C
If a percentage limit with respect to any of the foregoing fundamental and
non-fundamental policies is satisfied at the time of investment or borrowing, a
later increase or decrease in a Fund's assets will not constitute a violation of
the limit.
XXXXXX U.S. SMALLER COMPANIES FUND
Investment Restrictions
Excerpts from the Prospectus and Statement of Additional Information
dated May 1, 2004
Prospectus- Xxxxxx U.S. Smaller Companies Fund
INVESTMENT GOAL-XXXXXX U.S. SMALLER COMPANIES
Xxxxxx U.S. Smaller Companies seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGY
The Fund invests primarily in the stocks of small- and medium-size U.S.
companies. Xxxxxx U.S. Smaller Companies generally invests in stocks of
companies with market capitalizations of less than $5 billion at the time of
purchase. As long as a stock continues to meet the Fund's other investment
criteria, the Fund may choose to hold the stock even if it grows beyond an
arbitrary capitalization limit. Xxxxxx U.S. Smaller Companies believes that
these smaller companies, which are not as well known by financial analysts, may
offer higher return potential than the stocks of larger companies. Xxxxxx U.S.
Smaller Companies typically looks for companies with:
o A strong business franchise that offers growth potential.
o Products and services that give the company a competitive advantage.
o A stock price that the Fund's adviser believes is reasonable relative to
the assets and earning power of the company.
Under normal circumstances, Xxxxxx U.S. Smaller Companies invests at least 80%
of its net assets (plus any borrowings for investment purposes), at market value
at the time of investment, in companies with total stock market capitalizations
of $5 billion or less. Likewise, under normal market conditions, Xxxxxx U.S.
Smaller Companies invests at least 80% of its net assets (plus any borrowings
for investment purposes) in domestic securities. The portfolio manager may sell
a portfolio holding if the security reaches the portfolio manager's price target
or if the company has a deterioration of fundamentals such as failing to meet
key operating benchmarks. The portfolio manager may also sell a portfolio
holding to fund redemptions.
S-3D
TEMPORARY DEFENSIVE POSITIONS
At times, CWAM may determine that adverse market conditions make it desirable to
temporarily suspend the Fund's normal investment activities. During such times,
the Fund may, but is not required to, invest in cash or high-quality, short-term
debt securities, without limit. Taking a temporary defensive position may
prevent the Fund from achieving its investment goal.
HEDGING STRATEGIES
The Fund may enter into a number of hedging strategies, including those that
employ futures and options, to gain or reduce exposure to particular securities
or markets. These strategies, commonly referred to as derivatives, involve the
use of financial instruments whose values depend on, or are derived from, the
value of an underlying security, index or currency. The Fund may use these
strategies to adjust the Fund's sensitivity to changes in interest rates or for
other hedging purposes (i.e. attempting to offset a potential loss in one
position by establishing an interest in an opposite position). Derivative
strategies involve the risk that they may exaggerate a loss, potentially losing
more money than the actual cost of the underlying security, or limit a potential
gain. Also, with some derivative strategies there is the risk that the other
party to the transaction may fail to honor its contract terms, causing a loss to
the Fund.
PORTFOLIO TURNOVER
The Fund does not have limits on portfolio turnover. Turnover may vary
significantly from year to year. CWAM does not expect the Fund's turnover to
exceed 65% under normal conditions. Portfolio turnover increases transaction
expenses, which reduce the Fund's return.
Statement of Additional Information - Xxxxxx U.S. Smaller Companies Fund
INVESTMENT RESTRICTIONS
U.S. Smaller Companies operates under the investment restrictions listed below.
Restrictions numbered I through 10 are fundamental policies which may not be
changed for a Fund without approval of a majority of the outstanding voting
shares of a Fund, defined as the lesser of the vote of (a) 67% of the shares of
a Fund at a meeting where more than 50% of the outstanding shares are present in
person or by proxy or (b) more than 50% of the outstanding shares of a Fund.
Other restrictions are not fundamental policies and may be changed with respect
to a Fund by the Trustees without shareholder approval.
U.S. Smaller Companies may not:
1. With respect to 75% of the value of the Fund's total assets, invest more than
5% of its total assets (valued at the time of investment) in securities of a
single issuer, except securities issued or guaranteed by the government of the
U.S., or any of its agencies or instrumentalities;
2. Acquire securities of any one issuer that at the time of investment (a)
represent more than 10% of the voting securities of the issuer or (b) have a
value greater than 10% of the value of the outstanding securities of the issuer;
S-3E
3. Invest more than 25% of its assets (valued at the time of investment) in
securities of companies in any one industry;
4. Make loans, but this restriction shall not prevent the Fund from (a) buying a
part of an issue of bonds, debentures, or other obligations that are publicly
distributed, or from investing up to an aggregate of 15% of its total assets
(taken at market value at the time of each purchase) in parts of issues of
bonds, debentures or other obligations of a type privately placed with financial
institutions, (b) investing in repurchase agreements, or (c) lending portfolio
securities, provided that it may not lend securities if, as a result, the
aggregate value of all securities loaned would exceed 33% of its total assets
(taken at market value at the time of such loan); [Note: The Fund has no present
intention of lending its portfolio securities.]
5. Borrow money except (a) from banks for temporary or emergency purposes in
amounts not exceeding 33% of the value of the Fund's total assets at the time of
borrowing, and (b) in connection with transactions in options, futures and
options on futures; [State insurance laws currently restrict a Fund's borrowings
to facilitate redemptions to no more than 25% of the Fund's net assets.]
6. Underwrite the distribution of securities of other issuers; however, the Fund
may acquire "restricted" securities which, in the event of a resale, might be
required to be registered under the Securities Act of 1933 on the ground that
the Fund could be regarded as an underwriter as defined by that act with respect
to such resale; but the Fund will limit its total investment in restricted
securities and in other securities for which there is no ready market, including
repurchase agreements maturing in more than seven days, to not more than 15% of
its net assets at the time of acquisition;
7. Purchase and sell real estate or interests in real estate, although it may
invest in marketable securities of enterprises which invest in real estate or
interests in real estate;
8. Purchase and sell commodities or commodity contracts, except that it may
enter into (a) futures and options on futures and (b) forward contracts;
9. Make margin purchases of securities, except for use of such short-term
credits as are needed for clearance of transactions and except in connection
with transactions in options, futures and options on futures;
10. Issue any senior security except to the extent permitted under the
Investment Company Act of 1940.
U.S. Smaller Companies is also subject to the following restrictions and
policies, which are not fundamental and may be changed by the Trustees without
shareholder approval. U.S. Smaller Companies may not:
S-3F
(a) under normal circumstances, invest less than 80% of its net assets (plus any
borrowings for investment purposes), at market value at the time of investment,
in companies with total stock market capitalizations of $5 billion or less. U.S.
Smaller Companies will notify shareholders at least 60 days prior to any change
in its 80% policy;
(b) under normal circumstances, invest less than 80% of its net assets (plus any
borrowings for investment purposes) in domestic securities. U.S. Smaller
Companies will notify shareholders at least 60 days prior to any change in its
80% policy;
(c) Invest in companies for the purpose of management or the exercise of
control;
(d) Acquire securities of other registered investment companies except in
compliance with the Investment Company Act of 1940 and applicable state law;
(e) Pledge, mortgage or hypothecate its assets, except as may be necessary in
connection with permitted borrowings or in connection with short sales, options,
futures and options on futures;
(f) Sell securities short or maintain a short position.
Notwithstanding the foregoing investment restrictions, the Fund may purchase
securities pursuant to the exercise of subscription rights, provided that such
purchase will not result in the Fund's ceasing to be a diversified investment
company. Japanese and European corporations frequently issue additional capital
stock by means of subscription rights offerings to existing shareholders at a
price substantially below the market price of the shares. The failure to
exercise such rights would result in a Fund's interest in the issuing company
being diluted. The market for such rights is not well developed in all cases
and, accordingly, the Fund may not always realize full value on the sale of
rights. The exception applies in cases where the limits set forth in the
investment restrictions would otherwise be exceeded by exercising rights or
would have already been exceeded as a result of fluctuations in the market value
of the Fund's portfolio securities with the result that the Fund would be forced
either to sell securities at a time when it might not otherwise have done so, or
to forego exercising the rights.
The Fund is also subject to the following additional restrictions and policies
under certain applicable insurance laws pertaining to variable annuity contract
separate accounts. These policies and restrictions are not fundamental and may
be changed by the Trustees without shareholder approval:
(a) The Fund will be invested in a minimum of five different foreign countries
at all times, except that this minimum is reduced to four when foreign country
investments comprise less than 80% of the value of the Fund's net assets; to
three when less than 60% of such value; to two when less than 40%; and to one
when less than 20%.
S-3G
(b) The Fund will have no more than 20% of its net assets invested in securities
of issuers located in any one country; except that a Fund may have an additional
15% of its net assets invested in securities of issuers located in any one of
the following countries: Australia; Canada; France; Japan; the United Kingdom;
or Germany.
(c) The Fund may not acquire the securities of any issuer if, as a result of
such investment, more than 10% of the Fund's total assets would be invested in
the securities of any one issuer, except that this restriction shall not apply
to U.S. Government securities or foreign government securities; and the Fund
will not invest in a security if, as a result of such investment, it would hold
more than 10% of the outstanding voting securities of any one issuer.
(d) The Fund may borrow no more than 10% of the value of its net assets when
borrowing for any general purpose and 25% of net assets when borrowing as a
temporary measure to facilitate redemptions.
If a percentage limit with respect to any of the foregoing fundamental and
non-fundamental policies is satisfied at the time of investment or borrowing, a
later increase or decrease in a Fund's assets will not constitute a violation of
the limit.
S-3H
