EXHIBIT NO. 99.3(a)
CUSTODIAN CONTRACT
between
MONEY MARKET VARIABLE ACCOUNT
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It.......... 1
2. Duties of the Custodian with Respect to Property
of the Fund held by the Custodian in the United States......... 2
2.1 Holding Securities.................................... 2
2.2 Delivery of Securities................................ 2
2.3 Registration of Securities............................ 7
2.4 Bank Accounts......................................... 7
2.5 Payment for Shares.................................... 8
2.6 Investment and Availability of Federal Funds.......... 8
2.7 Collection of Income.................................. 9
2.8 Payment of Fund Monies................................ 10
2.9 Liability for Payment in Advance of Receipt of
Securities Purchased.................................. 12
2.10 Appointment of Agents................................. 13
2.11 Deposit of Fund Assets in Securities Systems.......... 13
2.11A Fund Assets Held in the Custodian's Direct Paper
System................................................ 16
2.12 Segregated Account.................................... 18
2.13 Ownership Certificates for Tax Purposes............... 19
2.14 Proxies............................................... 19
2.15 Communications Relating to Fund Portfolio Securities.. 19
2.16 Reports to Fund by Independent Public Accountants..... 20
3. Proper Instructions............................................ 21
4. Actions Permitted Without Express Authority.................... 21
5. Evidence of Authority.......................................... 22
6. Duties of Custodian with Respect to the Books of Account
and Calculation of Net Asset Value and Net Income.............. 22
7. Records........................................................ 23
8. Opinion of Fund Independent Accountants........................ 24
9. Compensation of Custodian...................................... 24
10. Responsibility of Custodian.................................... 24
11. Effective Period, Termination and Amendment.................... 26
12. Successor Custodian............................................ 27
13. Interpretive and Additional Provisions......................... 28
14. Massachusetts Law to Apply..................................... 29
CUSTODIAN CONTRACT
This Contract between Sun Life Assurance Company of Canada (U.S.) ("Sun
Life (U.S.)"), a corporation organized and existing under the laws of Delaware,
having its principal place of business at One Sun Life Xxxxxxxxx Xxxx, Xxxxxxxxx
Xxxxx, Xxxxxxxxxxxxx 00000, acting on behalf of Government Securities Variable
Account, a segregated investment account of Sun Life (U.S.), hereinafter called
the "Fund" and the units issued by the Fund being hereinafter called "Shares",
and State Street Bank and Trust Company, a Massachusetts trust company, having
its principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx,
00000, hereinafter called the "Custodian".
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of its assets.
The Fund agrees to deliver to the Custodian all securities and cash owned by it,
and all payments of income, payments of principal or capital distributions
received by it with respect to all securities owned by the Fund from time to
time. The Custodian shall not be responsible for any property of the Fund held
or received by the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
3), the Custodian shall from time to time employ one or more subcustodians, but
only in accordance with an applicable vote by the Board of Managers of the Fund,
and provided that, the Custodian shall have no more or less responsibility or
liability to the Fund on
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account of any actions or omissions of any subcustodian so employed than any
such subcustodian has to the Custodian.
2. Duties of the Custodian with Respect to Property of the Fund Held By
the Custodian in the United States.
The provisions of this Article 2 shall apply to the duties of the
Custodian as they relate to securities held in the United States. 2.1 Holding
Securities. The Custodian shall hold and physically segregate for the account of
the Fund all non-cash property, including all securities owned by the Fund to be
held in the United States, other than (a) securities which are maintained
pursuant to Section 2.11 in a clearing agency which acts as a securities
depository or in a book-entry system authorized by the U.S. Department of the
Treasury, collectively referred to herein as a "Securities System"; and (b)
commercial paper of an issuer for which State Street Bank and Trust Company acts
as issuing and paying agent ("Direct Paper") which is deposited and/or
maintained in State Street Bank and Trust Company's Direct Paper Book-Entry
System ("Direct Paper System") pursuant to Section 2.11.A.
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by the Fund held by the Custodian or in a Securities System
account of the Custodian or in the Direct Paper System only upon receipt of
Proper Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
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2) Upon the receipt of payment in connection with any repurchased
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.11 hereof;
4) To the depository agent in connection with tender or other similar
offers for portfolio securities of the Fund;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided that, in
any such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of
the Fund or into the name of any nominee or nominees of the Custodian or into
the name or nominee name of any agent appointed pursuant to Section 2.10 or into
the name or nominee name of any subcustodian appointed pursuant to Article 1; or
for exchange for a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units; provided that,
in any such case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Fund, to
the broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such case, the
Custodian shall have no responsibility or liability for
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any loss arising from the delivery of such securities prior to receiving payment
for such securities except as may arise from the Custodian's own negligence or
willful misconduct;
8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions for
conversion contained in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for definitive
securities, provided that, in any such case, the new securities and cash, if
any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities
made by the Fund, but only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and the Fund, which may be in the form of
cash or obligations issued by the United States government, its agencies or
instrumentalities, except that in connection with any loans for which collateral
is to be credited to the Custodian's account in the book-entry system authorized
by the U.S. Department of the Treasury, the Custodian will not be held
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liable or responsible for the delivery of securities owned by the Fund prior to
the receipt of such collateral;
11) For delivery as security in connection with any borrowings
by the Fund requiring a pledge of assets by the Fund, but only against receipt
of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in connection with
transactions by the Fund; and
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14) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the Board
of Managers signed by an officer of the fund, setting forth the purpose for
which such delivery is to be made, declaring such purposes to be proper and
naming the person or persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other
than bearer securities) in the United States shall be registered in the
name of the Fund or in the name of any nominee of the Fund or of any
nominee of the Custodian which nominee shall be assigned exclusively to
the Fund, unless the Fund has authorized in writing the appointment of
a nominee to be used in common with other registered investment
companies having the same investment adviser as the Fund, or in the
name or nominee name of any agent appointed pursuant to Section 2.10 or
in the name or nominee name of any subcustodian appointed pursuant to
Article 1. All securities accepted by the Custodian on behalf of the
Fund under the terms of this Contract shall be in "street name" or
other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts (the "Fund's Account or Accounts") in the name of
the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such Account
or Accounts, subject to the provisions hereof, all cash received by it
from or for the Account of the Fund, other than cash maintained by the
Fund in a bank Account established and used in accordance
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with Rule 17f-3 under the Investment Company Act of 1940. Funds
held by the Custodian for the Fund may be deposited by it to its
credit as Custodian in the Banking Department of the Custodian or in
such other banks or trust companies as it may in its discretion deem
necessary or desirable; provided, however, that every such bank or
trust company shall be qualified to act as a custodian under the
Investment Company Act of 1940 and that each such bank or trust
company and the funds to be deposited with each such bank or trust
company shall be approved by vote of a majority of the Board of
Managers of the Fund. Such funds shall be deposited by the Custodian
in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from Sun Life (U.S.)
and deposit into the Fund's account such payments as are received by
Sun Life (U.S.) for investment in the Fund. The Custodian will provide
timely notification to the Fund and Sun Life (U.S.) of any receipt by
it of such payments.
2.6 Investment and Availability of Federal Funds. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall, upon the
receipt of Proper Instructions,
1) invest in such instruments as may be set forth in such
instruments on the same day as received all federal funds
received after a time agreed upon between the Custodian and
the Fund; and
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2) make federal funds available to the Fund as of
specified times agreed upon from time to time to time
by the Fund and the Custodian in the amount of checks
received in payment for Shares of the Fund which are
deposited into the Fund's account.
2.7 Collection of Income. The Custodian shall collect on a timely basis
all income and other payments with respect to registered securities
held hereunder to which the Fund shall be entitled either by law or
pursuant to custom in the securities business, and shall collect on a
timely basis all income and other payments with respect to bearer
securities if, on the date of payment by the issuer, such securities
are held by the Custodian or agent thereof and shall credit such
income, as collected, to the Fund's custodian Account. Without
limiting the generality of the foregoing, the Custodian shall detach
and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest
when due on securities held hereunder. Income due the Fund on
securities loaned pursuant to the provisions of Section 2.2 (10) shall
be the responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund
with such information or data as may be necessary to assist the Fund
in arranging for the timely delivery to the Custodian of the income to
which the Fund is properly entitled.
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2.8 Payment of Fund Monies. Upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases
only:
1 Upon the purchase of securities for the account of
the Fund but only (a) against the delivery of such
securities to the Custodian (or any bank, banking
firm or trust company doing business in the United
States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as
a custodian and has been designated by the Custodian
as its agent for this purpose) registered in the name
of the Fund or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in
accordance with the conditions set forth in Section
2.11 hereof; (c) in the case of a purchase involving
the Direct Paper System, in accordance with the
conditions set forth in Section 2.11A; or (d) in the
case of repurchase agreements entered into between
the Fund and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against
delivery of the securities either in certificate form
or through an entry crediting the Custodian's account
at the Federal Reserve Bank with such securities
owned by the Custodian along with written evidence of
the agreement by the Custodian to repurchased such
securities from the Fund;
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2) In connection with conversion, exchange or surrender
of securities owned by the Fund as set forth in
Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by
the Fund as set forth in Article 3 hereof;
4) For the payment of any expense or liability
incurred by the Fund, including but not limited to
the following payments for the account of the Fund:
interest, taxes, management, accounting, and legal
fees, and operating expenses are to be in whole or
part capitalized or treated as deferred expenses;
5) For payment of the amount of dividends received
in respect of securities sold short;
6) For any other proper purpose, but only upon receipt
of, in addition to Proper Instructions, a certified
copy of a resolution of the Board of Managers of the
Fund signed by an officer of the Fund, setting forth
the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment
is to be made.
2.9. Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for purchase of securities for the
account of the Fund is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written
instructions from the Fund to so pay in advance, the Custodian shall
be absolutely liable to the Fund, for such securities to the same
extent as if the securities had been received by the Custodian, except
that in
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the case of repurchase agreements entered into by the Fund with a bank
which is a member of the Federal Reserve System, the Custodian may
transfer funds to the account of such bank prior to the receipt of
written evidence that the securities subject to such repurchase
agreement have been transferred by book-entry into a segregated
non-proprietary account of the Custodian maintained with the Federal
Reserve Bank of Boston or of the safekeeping receipt, provided that
such securities have in fact been so transferred by book-entry.
2.10 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the Investment Company
Act of 1940, as amended, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the Custodian may from
time to time direct; provided, however, that the appointment of any
agent shall not relieve the Custodian of its responsibilities or
liabilities hereunder.
2.11 Deposit of Fund Assets in Securities Systems. The Custodian may
deposit and/or maintain domestic securities owned by the Fund in a
clearing agency registered with the Securities and Exchange Commission
under Section 17A of the Securities Exchange Act of 1934, which acts
as a securities depository, or in the book-entry system authorized by
the U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System: in accordance
with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
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1) The Custodian may keep securities of the Fund in a
Securities System provided that such securities are represented
in an account ("Custodian Account") of the Custodian in the
Securities System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
2) The records of the Custodian with respect to securities of
the Fund which are maintained in a Securities System shall
identify by book-entry those securities belonging to the Fund;
3) The Custodian shall pay for securities purchased for the account
of the Fund upon (i) receipt of advice from the Securities System
that such securities have been transferred to the Custodian's
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for the account of
the Fund. The Custodian shall transfer securities sold for the
account of the Fund upon (i) receipt of advice from the
Securities System that payment for such securities has been
transferred to the Custodian's Account, and (ii) the making of an
entry on the records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies of all advices
from the Securities System of transfers of securities for the
account
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of the Fund shall identify the Fund, be maintained for the fund
by the Custodian and be provided to the Fund at its request. Upon
request, the Custodian shall furnish the Fund confirmation of
each transfer to or from the account of the Fund in the form of a
written advice or notice and shall furnish to the Fund copies of
daily transaction sheets reflecting each day's transactions in
the Securities System for the account of the Fund.
4) The Custodian shall provide the Fund with any report obtained by
the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System;
5) The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 11 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to
the Fund resulting from use of the Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from failure
of the Custodian or
15
any such agent to enforce effectively such rights as it may have
against the Securities System; at the election of the Fund, it
shall be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the Securities System or any
other person which the Custodian may have as a consequence of any
such loss or damage if and to the extent that the Fund has not
been made whole for any such loss or damage.
2.11A Fund Assets Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by the Fund in
the Direct Paper System subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions;
2) The Custodian may keep securities of the Fund in the Direct
Paper System only if such securities are represented in an
account of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as
a fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Fund which are maintained in the Direct Paper System
16
shall identify by book-entry those securities belonging to the
Fund;
4) The Custodian shall furnish the Fund confirmation of
each transfer of Direct Paper to or form the account of the Fund,
in the form of a written advice or notice on the next business
day following such transfer and shall furnish to the Fund copies
of daily transaction sheets reflecting each day's transaction in
the Direct Paper System for the account of the Fund;
5) The Custodian shall pay for securities purchased for the
account of the Fund upon the making of an entry on the records of
the Custodian to reflect such payment and transfer of securities
to the account of the Fund. The Custodian shall transfer
securities sold for the account of the Fund upon the making of an
entry on the records of the Custodian to reflect such transfer
and receipt of payment for the account of the Fund;
6) The Custodian shall provide the Fund with any report on the
system of internal accounting control for the Direct Paper System
that the Custodian receives and as the Fund may reasonable
request from time to time;
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2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of the Fund, into which account or accounts for and
on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.11 hereof, (i) in
accordance with the provisions of any agreement among the Fund, the
Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Fund, (ii) for purposes of segregating cash or
government securities in connection with options purchased, sold or
written by the Fund or commodity futures contracts or options thereon
purchased or sold by the Fund, (iii) for the purpose of compliance by
the Fund with the procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts
by registered investment companies and (iv) for other proper purposed,
but only, in the case of clause (iv), upon receipt of, in addition to
Proper Instructions, a certified copy of a resolution of the Board of
Managers signed by an officer of the Fund, setting forth the purpose or
purposes
`8
of such segregated account and declaring such purposes to be proper
corporate purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of the Fund held by it and in
connection with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in the
name of the Fund or a nominee of the Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Fund such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Fund Portfolio Securities. The Custodian
shall transmit promptly to the Fund all written information (including,
without limitation, pendency of calls and maturities of securities and
expirations of rights in connection therewith and notices of exercise
of call and put options written by the Fund and the maturity of futures
contracts purchased or sold by the Fund) received by the Custodian from
issuers of the securities being held for the Fund. With respect to
tender or exchange offers, the Custodian shall transmit promptly to the
Fund all written information received by the Custodian from issuers of
the securities whose tender or exchange is sought and from the party or
his agents)
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making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or any other
similar transaction, the Fund shall notify the Custodian at least
three business days prior to the date on which the Custodian is to
take such action.
2.16 Reports to Fund by Independent Public Accountants. The Custodian shall
provide the fund, at such times as the Fund may reasonably require,
with reports by independent public accountants on the accounting
system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts,
including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this
Contract; such reports, which shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed
by such examination, and, if there are no such inadequacies, shall so
state.
3. Proper Instructions.
Proper instructions as sued throughout this Contract means a writing
signed or initialed by one or more person or persons as the Board of Managers
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonable believes them
to have been given by a person authorized to give such
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instructions with respect to the transaction involved. The Fund shall cause all
oral instructions to be confirmed in writing. Upon receipt of a certificate of
the Secretary as to the authorized by the Board of Managers of the Fund
accompanied by a detailed description of procedures approved by the Board of
Managers, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Managers and the Custodian are satisfied that such procedures afford adequate
safeguards for the Fund's assets.
4. Actions Permitted without Express Authority.
The Custodian may in its discretion, without express authority from the
Fund:
1) make payments to itself or others for minor
expenses of handling securities or other
similar items relating to its duties under
this Contract, provided that all such
payments shall be accounted for to the Fund;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the
Fund, checks, drafts and other negotiable
instruments; and
4) in general, attend to all non-discretionary
details in connection with the sale,
exchange, substitution, purchase, transfer
and other dealings with the securities and
property
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of the Fund except as otherwise directed
by the Board of Managers of the Fund.
5. Evidence of Authority.
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the Fund.
The Custodian may receive and accept a certified copy of a vote of the Board of
Managers of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Managers as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of written
notice to the contrary.
6. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity of entities appointed by the Board of Managers of the Fund to keep
the books of account of the Fund and/or compute the net asset value per share of
the outstanding shares of the Fund or, if directed in writing to do so by the
Fund, shall itself keep such books of account and/or compute such net asset
value per share. If so directed, the Custodian shall also calculate daily the
net income of the Fund as described in the Fund's currently effective prospectus
and shall advise the Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of the Fund to do
22
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value per
share and the daily income of the Fund shall be made at the time or times
described from time to time in the Fund's currently effective prospectus.
7. Records.
The Custodian shall create and maintain all records relating
to its activities and obligations under this Contract in such manner as will
meet the obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-2 thereunder,
applicable federal and state tax and insurance laws and any other law or
administrative rules or procedures which may be applicable to the Fund. All such
records shall be the property of Sun Life (U.S.) and the Fund and shall at all
times during the regular business hours of the Custodian be open for inspection
by duly authorized officers, employees or agents of the Fund and Sun Life (U.S.)
and employees and agents of the Securities and Exchange Commission. Such records
will be surrendered promptly by the Custodian upon request. The Custodian shall,
at the Fund's request, supply the Fund with a tabulation of securities owned by
the Fund and held by the Custodian and shall, when requested to do so by the
Fund and for such compensation as shall be agreed upon between the Fund and the
Custodian, include certificate numbers in such tabulations.
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8. Opinion of Fund's Independent Accountant.
The Custodian shall take all reasonable action, as the Fund
may from time to time request, to obtain from year to year favorable opinions
from the Fund's independent accountants with respect to its activities hereunder
in connection with the preparation of the Fund's Form N-3, and Form N-SAR or
other registration statements and annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
9. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation for its
services and expenses and Custodian, as agreed upon from time to time
between the Fund and the Custodian.
10. Responsibility of Custodian.
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract, but shall be kept indemnified by the Fund for
any action
24
taken or omitted by it in the proper execution of instructions from the Fund. It
shall be entitled to rely on and may act upon advice of counsel for the Fund on
all matters and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. Notwithstanding the foregoing, the
responsibility of the Custodian with respect to redemptions effected by check
shall be in accordance with a separate agreement entered into between the
Custodian and the Fund.
The Custodian shall be liable for the acts and omissions of
Chase appointed as its subcustodian pursuant to the provision of Article 3 to
the extent set forth in Sections 3.2 and 3.3 hereof.
The Fund agrees to indemnify and hold harmless the Custodian
and its nominee from and against all taxes, charges, expenses, assessments,
claims and liabilities (including counsel fees) incurred or assessed against it
or its nominee in connection with the performance of this Contract, except such
as may arise from it or its nominee's own negligent action, negligent failure to
act or willful misconduct. The Custodian is authorized to charge any account of
the fund for such items and its fees. To secure any such authorized charges and
any advances of cash or securities made by the Custodian to or for the benefit
of the Fund for any purpose which results in the Fund incurring and overdraft at
the end of any business day or for extraordinary or emergency purposes during
any business day, the Fund hereby grants to the Custodian a security interest in
and pledges to the Custodian securities held for it by the Custodian, in an
amount not to exceed five percent of the Fund's gross assets, the specific
securities to be designated in writing from time to time by the Fund or its
investment adviser (the "Pledged
25
Securities"). Should the Fund fail to repay promptly any advances of cash or
securities, the Custodian shall be entitled to use available cash and to dispose
of the Pledged Securities as is necessary to repay any such advances.
11. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the parties hereto
and may be terminated by either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such termination to take effect not
sooner than thirty (30) days after the date of such deliver or mailing;
provided, however, that the Custodian shall not act under Section 2.11 hereof in
the absence of receipt of an initial certificate of the Secretary that the Board
of Managers of the Fund has approved the initial use of a particular Securities
System and the receipt of an annual certificate of the Secretary that the Board
of Managers has reviewed the use by the Fund of such Securities System, as
required in each case by Rule 17f-4 under the Investment Company Act of 1940, as
amended and that the Custodian shall not act under Section 2.11.A hereof in the
absence of receipt of an initial certificate of the Secretary that the Board of
Managers has approved the initial use of the Direct Paper System and the receipt
of an annual certificate of the Secretary that the Board of Managers has
reviewed the used by the Fund of the Direct Paper System; provided further,
however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, and (b) that the
Fund may at any time by action of its Board of Managers (i) substitute another
bank or trust company for the Custodian by
26
giving notice as described above to the Custodian, or (ii) immediately terminate
this Contract in the event of the appointment of a conservator or receiver for
the Custodian or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the
Custodian such compensation as may be due as of the date of such termination and
shall likewise reimburse the Custodian for its costs, expenses and
disbursements.
12. Successor Custodian.
If a successor custodian shall be appointed by the Board of
Managers of the Fund, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed and in the
form for transfer, all securities then held by it hereunder and shall transfer
to an account of the successor custodian all of the Fund's securities held in a
Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy of a vote of
the Board of Managers of the Fund, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance with such
vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of Managers shall have been
delivered to the Custodian on or before the date when such termination shall
become effective, then the
27
Custodian shall have the right to deliver to a bank or trust company, which is a
"bank" as defined in the Investment Company Act of 1940, of its own selection,
having an aggregate capital, surplus, and undivided profits, as shown by its
last published report, of not less than $25,000,000, all securities, funds and
other properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of the Fund's securities
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of termination hereof
owing to failure of the Fund to procure the certified copy of the vote referred
to or of the Board of Managers to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services during such period as
the Custodian retains possession of such securities, funds and other properties
and the provisions of this Contract relating to the duties and obligations of
the Custodian shall remain in full force and effect.
13. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the
Custodian and the Fund may from time to time agree on such provisions
interpretive of or in addition to the provisions of this Contract as may in
their joint opinion be consistent with the general tenor of this Contract. Any
such interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Articles of Incorporation of the Fund. No
interpretive or
28
additional provisions made as provided in the preceding sentence shall be deemed
to be an amendment of this Contract.
14. Massachusetts Law to Apply.
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed as of the 25th day of July,
1990
MONEY MARKET VARIABLE ACCOUNT
ATTEST: By: SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
XXXXXX X. XXXXX By: XXXXX X. XXXX
Xxxxxx X. Xxxxx, Secretary Xxxxx X. Xxxx, Senior Vice President
and General Manager
ATTEST: STATE STREET BANK AND TRUST COMPANY
NOT LEGIBLE By: NOT LEGIBLE
Assistant Secretary Vice President
29
CUSTODIAN CONTRACT
between
HIGH YIELD VARIABLE ACCOUNT
and
STATE STREET BANK AND TRUST COMPANY
30
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It......... 1
2. Duties of the Custodian with Respect to Property of
the Fund held by the Custodian in the United States........... 2
2.1 Holding Securities................................... 2
2.2 Delivery of Securities............................... 3
2.3 Registration of Securities........................... 7
2.4 Bank Accounts........................................ 8
2.5 Payment for Shares................................... 8
2.6 Investment and Availability of Federal Funds......... 9
2.7 Collection of Income................................. 9
2.8 Payment of Fund Monies............................... 10
2.9 Liability for Payment in Advance of Receipt of
Securities Purchased................................. 12
2.10 Appointment of Agents................................ 13
2.11 Deposit of Fund Assets in Securities Systems......... 13
2.11A Fund Assets Held in the Custodian's Direct Paper
System............................................... 16
2.12 Segregated Account................................... 18
2.13 Ownership Certificates for Tax Purposes.............. 19
2.14 Proxies.............................................. 19
2.15 Communications Relating to Fund Portfolio Securities. 20
2.16 Reports to Fund by Independent Public Accountants.... 21
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States.................... 21
3.1 Appointment of Chase as Subcustodian................. 21
3.2 Standard of Care; Liability.......................... 21
3.3 Fund's Responsibility for Rules and Regulations...... 22
4. Proper Instructions........................................... 23
5. Actions Permitted Without Express Authority................... 23
6. Evidence of Authority......................................... 24
7. Duties of Custodian with Respect to the Books of Account
and Calculation of Net Asset Value and Net Income............. 25
8. Records....................................................... 25
9. Opinion of Fund Independent Accountants....................... 26
10. Compensation of Custodian..................................... 26
11. Responsibility of Custodian................................... 26
31
12. Effective Period, Termination and Amendment................... 28
13. Successor Custodian........................................... 29
14. Interpretive and Additional Provisions........................ 31
15. Massachusetts Law to Apply.................................... 31
32
CUSTODIAN CONTRACT
This Contract between Sun Life Assurance Company of Canada (U.S.) ("Sun
Life (U.S.)"), a corporation organized and existing under the laws of Delaware,
having its principal place of business at One Sun Life Xxxxxxxxx Xxxx, Xxxxxxxxx
Xxxxx, Xxxxxxxxxxxxx 00000, acting on behalf of High Yield Variable Account, a
segregated investment account of Sun Life (U.S.), hereinafter called the "Fund"
and the units issued by the Fund being hereinafter called "Shares", and State
Street Bank and Trust Company, a Massachusetts trust company, having its
principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx,
00000, hereinafter called the "Custodian".
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of its assets
including securities and cash it desires to be held within the United States
(collectively "domestic securities") and securities and cash it desires to be
held outside the United States (collectively "foreign securities"), subject to
the terms of Article 3 hereof. The Fund agrees to deliver to the Custodian all
securities and cash owned by it, and all payments of income, payments of
principal or capital distributions received by it with respect to all securities
owned by the Fund from time to time. The Custodian shall not be responsible for
any property of the Fund held or received by the Fund and not delivered to the
Custodian.
33
Upon receipt of "Proper Instructions" (within the meaning of Article
4), the Custodian shall from time to time employ one or more subcustodians, but
only in accordance with an applicable vote by the Board of Managers of the Fund,
and provided that, except as expressly provided in Article 3 hereof, the
Custodian shall have no more or less responsibility or liability to the Fund on
account of any actions or omissions of any subcustodian so employed than any
such subcustodian has to the Custodian.
2. Duties of the Custodian with Respectto Property of the Fund Held By the
Custodian in the United States.
The provisions of this Article 2 shall apply to the duties of the
Custodian as they relate to domestic securities, held in the United States.
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of the Fund all non-cash property, including all
domestic securities owned by the Fund to be held in the United States,
other than (a) securities which are maintained pursuant to Section
2.11 in a clearing agency which acts as a securities depository or in
a book-entry system authorized by the U.S. Department of the Treasury,
collectively referred to herein as a "Securities System"; and (b)
commercial paper of an issuer for which State Street Bank and Trust
Company acts as issuing and paying agent ("Direct Paper") which is
deposited and/or maintained in State Street Bank and Trust Company's
Direct Paper Book-Entry System ("Direct Paper System") pursuant to
Section 2.11.A.
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by the Fund held by the Custodian or in a Securities
System account of the Custodian or in the Direct Paper System only
upon receipt of Proper Instructions,
34
which may be continuing instructions when deemed appropriate by the
parties, and only in the following cases:
1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchased
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.11 hereof;
4) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Fund or into the name of any nominee or nominees of
the Custodian or into the name or nominee name of any agent
appointed pursuant to Section 2.10 or into the name or nominee
name of any subcustodian appointed pursuant to Article 1; or for
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities are to
be delivered to the Custodian;
35
7) Upon the sale of such securities for the account of the Fund,
to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom; provided
that in any such case, the Custodian shall have no responsibility
or liability for any loss arising from the delivery of such
securities prior to receiving payment for such securities except
as may arise from the Custodian's own negligence or willful
misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities, provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Fund, but only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Fund,
which may be in the form of cash or obligations issued by the
United States
36
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be credited
to the Custodian's account in the book-entry system authorized by
the U.S. Department of the Treasury, the Custodian will not be
held liable or responsible for the delivery of securities owned
by the Fund prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Fund, but only
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian, and a Futures Commission
Merchant registered under the Commodity Exchange Act, relating
37
to compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Fund; and
14) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Managers signed by an officer of the fund,
setting forth the purpose for which such delivery is to be made,
declaring such purposes to be proper and naming the person or
persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) in the United States shall be registered
in the name of the Fund or in the name of any nominee of the Fund or of
any nominee of the Custodian which nominee shall be assigned
exclusively to the Fund, unless the Fund has authorized in writing the
appointment of a nominee to be used in common with other registered
investment companies having the same investment adviser as the Fund, or
in the name or nominee name of any agent appointed pursuant to Section
2.10 or in the name or nominee name of any subcustodian appointed
pursuant to Article 1. All domestic securities accepted by the
Custodian on behalf of the Fund under the terms of this Contract shall
be in "street name" or other good delivery form.
38
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts (the "Fund's Account or Accounts") in the name of
the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such Account
or Accounts, subject to the provisions hereof, all cash received by it
from or for the Account of the Fund, other than cash maintained by the
Fund in a bank Account established and used in accordance with Rule
17f-3 under the Investment Company Act of 1940. Funds held by the
Custodian for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment Company
Act of 1940 and that each such bank or trust company and the funds to
be deposited with each such bank or trust company shall be approved by
vote of a majority of the Board of Managers of the Fund. Such funds
shall be deposited by the Custodian in its capacity as Custodian and
shall be withdrawable by the Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from Sun Life (U.S.)
and deposit into the Fund's account such payments as are received by
Sun Life (U.S.) for investment in the Fund. The Custodian will provide
timely notification to the Fund and Sun Life (U.S.) of any receipt by
it of such payments.
39
2.6 Investment and Availability of Federal Funds. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall, upon the
receipt of Proper Instructions,
1) invest in such instruments as may be set forth in such
instruments as may be set forth in such instructions on the same
day as received all federal funds received after a time agreed
upon between the Custodian and the Fund; and
2) make federal funds available to the Fund as of specified times
agreed upon from time to time to time by the Fund and the
Custodian in the amount of checks received in payment for Shares
of the Fund which are deposited into the Fund's account.
2.7 Collection of Income. The Custodian shall collect on a timely basis
all income and other payments with respect to registered domestic
securities held hereunder to which the Fund shall be entitled either
by law or pursuant to custom in the securities business, and shall
collect on a timely basis all income and other payments with respect
to bearer domestic securities if, on the date of payment by the
issuer, such domestic securities are held by the Custodian or agent
thereof and shall credit such income, as collected, to the Fund's
custodian Account. Without limiting the generality of the foregoing,
the Custodian shall detach and present for payment all coupons and
other income items requiring presentation as and when they become due
and shall collect interest when due on domestic securities held
hereunder. Income due the Fund on domestic securities loaned
40
pursuant to the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund
with such information or data as may be necessary to assist the Fund
in arranging for the timely delivery to the Custodian of the income to
which the Fund is properly entitled.
2.8 Payment of Fund Monies. Upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases
only:
1) Upon the purchase of domestic securities for the
account of the Fund but only (a) against the delivery
of such securities to the Custodian (or any bank,
banking firm or trust company doing business in the
United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as
a custodian and has been designated by the Custodian
as its agent for this purpose) registered in the name
of the Fund or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in
accordance with the conditions set forth in Section
2.11 hereof; (c) in the case of a purchase involving
the Direct Paper System, in accordance with the
conditions set forth in Section 2.11A; or (d) in the
case of repurchase agreements entered into between
the Fund and the Custodian, or another bank,
41
or a broker-dealer which is a member of NASD, (i)
against delivery of the securities either in
certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank
with such securities owned by the Custodian
along with written evidence of the agreement
by the Custodian to repurchase such securities
from the Fund;
2) In connection with conversion, exchange or surrender
of domestic securities owned by the Fund as set forth
in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by
the Fund as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred
by the Fund, including but not limited to the
following payments for the account of the Fund:
interest, taxes, management, accounting, and legal
fees, and operating expenses are to be in whole or
part capitalized or treated as deferred expenses;
5) For payment of the amount of dividends received in
respect of domestic securities sold short;
6) For any other proper purpose, but only upon receipt
of, in addition to Proper Instructions, a certified
copy of a resolution of the Board of Managers of the
Fund signed by an officer of the Fund, setting forth
the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is
to be made.
42
2.9. Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for purchase of domestic
securities for the account of the Fund is made by the Custodian in
advance of receipt of the securities purchased in the absence of
specific written instructions from the Fund to so pay in advance, the
Custodian shall be absolutely liable to the Fund, for such securities
to the same extent as if the securities had been received by the
Custodian, except that in the case of repurchase agreements
entered into by the Fund with a bank which is a member of the Federal
Reserve System, the Custodian may transfer funds to the account of
such bank prior to the receipt of written evidence that the securities
subject to such repurchase agreement have been transferred by
book-entry into a segregated non-proprietary account of the Custodian
maintained with the Federal Reserve Bank of Boston or of the
safekeeping receipt, provided that such securities have in fact been
so transferred by book-entry.
2.10 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the Investment Company
Act of 1940, as amended, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the Custodian may from
time to time direct; provided, however, that the appointment of any
agent shall not relieve the Custodian of its responsibilities or
liabilities hereunder.
2.11 Deposit of Fund Assets in Securities Systems. The Custodian may
deposit and/or maintain domestic securities owned by the Fund in a
clearing agency
43
registered with the Securities and Exchange Commission under Section
17A of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "Securities System: in accordance with
applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
1) The Custodian may keep domestic securities of the Fund in
a Securities System provided that such securities are
represented in an account ("Custodian's Account") of the
Custodian in the Securities System which shall not include
any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to domestic
securities of the Fund which are maintained in a Securities
System shall identify by book-entry those securities
belonging to the Fund;
3) The Custodian shall pay for domestic securities purchased
for the account of the Fund upon (i) receipt of advice from
the Securities System that such securities have been
transferred to the Custodian's Account, and (ii) the making
of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The
Custodian shall transfer domestic securities sold for the
44
account of the Fund upon (i) receipt of advice from the
Securities System that payment for such securities has been
transferred to the Custodian's Account, and (ii) the making
of an entry on the records of the Custodian to reflect such
transfer and payment for the account of the Fund. Copies of
all advices from the Securities System of transfers of
domestic securities for the account of the Fund shall
identify the Fund, be maintained for the fund by the
Custodian and be provided to the Fund at its request. Upon
request, the Custodian shall furnish the Fund confirmation
of each transfer to or from the account of the Fund in the
form of a written advice or notice and shall furnish to the
Fund copies of daily transaction sheets reflecting each
day's transactions in the Securities System for the account
of the Fund.
4) The Custodian shall provide the Fund with any report
obtained by the Custodian on the Securities System's
accounting system, internal accounting control and
procedures for safeguarding domestic securities deposited in
the Securities System;
45
5) The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 12
hereof;
6 Anything to the contrary in this Contract notwithstanding,
the Custodian shall be liable to the Fund for any loss or
damage to the Fund resulting from use of the Securities
System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any
of its or their employees or from failure of the Custodian
or any such agent to enforce effectively such rights as it
may have against the Securities System; at the election of
the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claim against
the Securities System or any other person which the
Custodian may have as a consequence of any such loss or
damage if and to the extent that the Fund has not been made
whole for any such loss or damage.
2.11A Fund Assets Held in the Custodian's Direct Paper System.
The Custodian may deposit and/or maintain domestic securities owned by
the Fund in the Direct Paper System subject to the following
provisions:
1) No transaction relating to domestic securities in the
Direct Paper System will be effected in the absence of
Proper Instructions;
46
2) The Custodian may keep domestic securities of the Fund in
the Direct Paper System only if such securities are
represented in an account of the Custodian in the Direct
Paper System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian
or otherwise for customers;
3) The records of the Custodian with respect to domestic
securities of the Fund which are maintained in the Direct
Paper System shall identify by book-entry those securities
belonging to the Fund;
4) The Custodian shall furnish the Fund confirmation of each
transfer of Direct Paper to or from the account of the Fund,
in the form of a written advice or notice on the next
business day following such transfer and shall furnish to
the Fund copies of daily transaction sheets reflecting each
day's transaction in the Direct Paper System for the account
of the Fund;
5) The Custodian shall pay for domestic securities purchased
for the account of the Fund upon the making of an entry on
the records of the Custodian to reflect such payment and
transfer of securities to the account of the Fund. The
Custodian shall transfer securities sold for the account of
47
the Fund upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment
for the account of the Fund;
6) The Custodian shall provide the Fund with any report on
the system of internal accounting control for the Direct
Paper System that the Custodian receives and as the Fund may
reasonably request from time to time;
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of the Fund, into which account or accounts for and
on behalf of the Fund, into which account or accounts may be
transferred cash and/or domestic securities, including securities
maintained in an account by the Custodian pursuant to Section 2.11
hereof, (i) in accordance with the provisions of any agreement among
the Fund, the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund, (ii) for
purposes of segregating cash or government securities in connection
with options purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold by
48
the Fund, (iii) for the purpose of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or
any subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper purposes,
but only, in the case of clause (iv), upon receipt of, in addition to
Proper Instructions, a certified copy of a resolution of the Board of
Managers signed by an officer of the Fund, setting forth the purpose
or purposes of such segregated account and declaring such purposes to
be proper corporate purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of the Fund held by it and
in connection with transfers of domestic securities.
2.14 Proxies. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the domestic securities are registered otherwise
than in the name of the Fund or a nominee of the Fund, all proxies,
without indication of the manner in which such proxies are to be voted,
and shall promptly deliver to the Fund such proxies, all proxy
soliciting materials and all notices relating to such securities.
49
2.15 Communications Relating to Fund Portfolio Securities. The Custodian
shall transmit promptly to the Fund all written information (including,
without limitation, pendency of calls and maturities of domestic
securities and expirations of rights in connection therewith and
notices of exercise of call and put options written by the Fund and the
maturity of futures contracts purchased or sold by the Fund) received
by the Custodian from issuers of the domestic securities being held for
the Fund. With respect to tender or exchange offers, the Custodian
shall transmit promptly to the Fund all written information received by
the Custodian from issuers of the domestic securities whose tender or
exchange is sought and from the party (or his agents) making the tender
or exchange offer. If the Fund desires to take action with respect to
any tender offer, exchange offer or any other similar transaction, the
Fund shall notify the Custodian at least three business days prior to
the date on which the Custodian is to take such action.
2.16 Reports to Fund by Independent Public Accountants. The Custodian shall
provide the fund, at such times as the Fund may reasonably require,
with reports by independent public accountants on the accounting
system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts,
including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this
Contract; such reports, which shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that
50
any material inadequacies would be disclosed by such examination, and,
if there are no such inadequacies, shall so state.
3. Duties of the Custodian with Respect to Property of the Fund Held Outside of
the United States.
The provisions of this Article 3 shall apply to the duties of
the Custodian as they relate to foreign securities held outside the United
States.
3.1 Appointment of Chase as Subcustodian. The Custodian is authorized and
instructed by the Fund to employ Chase Manhattan Bank N.A. ("Chase") as
subcustodian for the Fund's foreign securities (including cash
incidental to transactions in such securities) on the terms and
conditions set forth in the Subcustody Contract between the Custodian
and Chase which is attached hereto as Exhibit A (the "Subcustody
Contract"). The Custodian acknowledges that it has entered into the
Subcustody Contract and hereby agrees to provide such services to the
Fund and in accordance with such Subcustody Contract as necessary for
foreign custody services to be provided pursuant thereto.
3.2 Standard of Care; Liability. Notwithstanding anything to the contrary
in this Contract, the Custodian shall not be liable to the Fund for any
loss, damage, cost, expense, liability or claim arising out of or in
connection with the maintenance of custody of the Fund's foreign
securities by Chase or by any other banking institution or securities
depository employed pursuant to the terms of the Subcustody Contract,
except that the Custodian shall be liable for any such loss,
51
damage, cost, expense, liability or claim directly resulting from the
failure of the Custodian to exercise reasonable care in the
performance of its duties hereunder. At the election of the Fund, the
Fund shall be entitled to be subrogated to the rights of the Custodian
under the Subcustody Contract with respect to any claim arising
hereunder against Chase or any other banking institution or securities
depository employed by Chase if and to the extent that the Fund has
not been made whole therefor.
3.3 Fund's Responsibility for Rules and Regulations. As between the
Custodian and the Fund, the Fund shall be solely responsible to assure
that the maintenance of foreign securities and cash pursuant to the
terms of the Subcustody Contract comply with all applicable rules,
regulations, interpretations and orders of the Securities and Exchange
Commission, and the Custodian assumes no responsibility and makes no
representations as to such compliance.
4. Proper Instructions.
Proper instructions as used throughout this Contract means a writing
signed or initialed by one or more person or persons as the Board of Managers
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonable believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral
52
instructions to be confirmed in writing. Upon receipt of a certificate of the
Secretary as to the authorization by the Board of Managers of the Fund
accompanied by a detailed description of procedures approved by the Board of
Managers, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Managers and the Custodian are satisfied that such procedures afford adequate
safeguards for the Fund's assets.
5. Actions Permitted without Express Authority.
The Custodian may in its discretion, without express authority from the
Fund:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Fund;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
53
of the Fund except as otherwise directed by the Board of
Managers of the Fund.
6. Evidence of Authority.
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the Fund.
The Custodian may receive and accept a certified copy of a vote of the Board of
Managers of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Managers as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of written
notice to the contrary.
7. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Managers of the Fund to keep
the books of account of the Fund and/or compute the net asset value per share of
the outstanding shares of the Fund or, if directed in writing to do so by the
Fund, shall itself keep such books of account and/or compute such net asset
value per share. If so directed, the Custodian shall also calculate daily the
net income of the Fund as described in the Fund's currently effective prospectus
and shall advise the Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of the Fund to do
53
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value per
share and the daily income of the Fund shall be made at the time or times
described from time to time in the Fund's currently effective prospectus.
8. Records.
The Custodian shall create and maintain all records relating
to its activities and obligations under this Contract in such manner as will
meet the obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax and insurance laws and any other law or
administrative rules or procedures which may be applicable to the Fund. All such
records shall be the property of Sun Life (U.S.) and the Fund and shall at all
times during the regular business hours of the Custodian be open for inspection
by duly authorized officers, employees or agents of the Fund and Sun Life (U.S.)
and employees and agents of the Securities and Exchange Commission. Such records
will be surrendered promptly by the Custodian upon request. The Custodian shall,
at the Fund's request, supply the Fund with a tabulation of securities owned by
the Fund and held by the Custodian and shall, when requested to do so by the
Fund and for such compensation as shall be agreed upon between the Fund and the
Custodian, include certificate numbers in such tabulations.
55
9. Opinion of Fund's Independent Accountant.
The Custodian shall take all reasonable action, as the Fund
may from time to time request, to obtain from year to year favorable opinions
from the Fund's independent accountants with respect to its activities hereunder
in connection with the preparation of the Fund's Form N-3, and Form N-SAR or
other registration statements and annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
10. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation for its
services and expenses and Custodian, as agreed upon from time to time between
the Fund and the Custodian.
11. Responsibility of Custodian.
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract, but shall be kept indemnified by the Fund for
any action taken or omitted by it in the proper execution of instructions from
the Fund. It shall be entitled to rely on and may act upon advice of counsel for
the Fund on all matters and shall be without liability for any action reasonably
taken or omitted pursuant to such advice. Notwithstanding the foregoing, the
responsibility of the Custodian with respect
56
to redemptions effected by check shall be in accordance with a separate
agreement entered into between the Custodian and the Fund.
The Custodian shall be liable for the acts and omissions of
Chase appointed as its subcustodian pursuant to the provision of Article 3 to
the extent set forth in Sections 3.2 and 3.3 hereof.
The Fund agrees to indemnify and hold harmless the Custodian
and its nominee from and against all taxes, charges, expenses, assessments,
claims and liabilities (including counsel fees) incurred or assessed against it
or its nominee in connection with the performance of this Contract, except such
as may arise from it or its nominee's own negligent action, negligent failure to
act or willful misconduct. The Custodian is authorized to charge any account of
the fund for such items and its fees. To secure any such authorized charges and
any advances of cash or securities made by the Custodian to or for the benefit
of the Fund for any purpose which results in the Fund incurring and overdraft at
the end of any business day or for extraordinary or emergency purposes during
any business day, the Fund hereby grants to the Custodian a security interest in
and pledges to the Custodian securities held for it by the Custodian, in an
amount not to exceed five percent of the Fund's gross assets, the specific
securities to be designated in writing from time to time by the Fund or its
investment adviser (the "Pledged Securities"). Should the Fund fail to repay
promptly any advances of cash or securities, the Custodian shall be entitled to
use available cash and to dispose of the Pledged Securities as is necessary to
repay any such advances.
12. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the parties hereto
and may be terminated by either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such
57
termination to take effect not sooner than thirty (30) days after the date of
such delivery or mailing; provided, however, that the Custodian shall not act
under Section 2.11 hereof in the absence of receipt of an initial certificate of
the Secretary that the Board of Managers of the Fund has approved the initial
use of a particular Securities System and the receipt of an annual certificate
of the Secretary that the Board of Managers has reviewed the use by the Fund of
such Securities System, as required in each case by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian shall not act
under Section 2.11.A hereof in the absence of receipt of an initial certificate
of the Secretary that the Board of Managers has approved the initial use of the
Direct Paper System and the receipt of an annual certificate of the Secretary
that the Board of Managers has reviewed the use by the Fund of the Direct Paper
System; provided further, however, that the Fund shall not amend or terminate
this Contract in contravention of any applicable federal or state regulations,
and (b) that the Fund may at any time by action of its Board of Managers (i)
substitute another bank or trust company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate this Contract in
the event of the appointment of a conservator or receiver for the Custodian or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the
Custodian such compensation as may be due as of the date of such termination and
shall likewise reimburse the Custodian for its costs, expenses and
disbursements.
58
13. Successor Custodian.
If a successor custodian shall be appointed by the Board of
Managers of the Fund, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed and in the
form for transfer, all securities then held by it hereunder and shall transfer
to an account of the successor custodian all of the Fund's securities held in a
Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy of a vote of
the Board of Managers of the Fund, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance with such
vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of Managers shall have been
delivered to the Custodian on or before the date when such termination shall
become effective, then the Custodian shall have the right to deliver to a bank
or trust company, which is a "bank" as defined in the Investment Company Act of
1940, of its own selection, having an aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not less than $25,000,000,
all securities, funds and other properties held by the Custodian and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract and to transfer to an account of such successor
custodian all of the Fund's securities held in any Securities System.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Contract.
59
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of termination hereof
owing to failure of the Fund to procure the certified copy of the vote referred
to or of the Board of Managers to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services during such period as
the Custodian retains possession of such securities, funds and other properties
and the provisions of this Contract relating to the duties and obligations of
the Custodian shall remain in full force and effect.
14. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the
Custodian and the Fund may from time to time agree on such provisions
interpretive of or in addition to the provisions of this Contract as may in
their joint opinion be consistent with the general tenor of this Contract. Any
such interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Articles of Incorporation of the Fund. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.
15. Massachusetts Law to Apply.
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of the Commonwealth of
Massachusetts.
60
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed as of the 25th day of July,
1990.
HIGH YIELD VARIABLE ACCOUNT
ATTEST: By: SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
XXXXXX X. XXXXX By: XXXXX X. XXXX
Xxxxxx X. Xxxxx, Secretary Xxxxx X. Xxxx, Senior Vice President
and General Manager
ATTEST: STATE STREET BANK AND TRUST COMPANY
NOT LEGIBLE By: NOT LEGIBLE
Assistant Secretary Vice President
61
CUSTODIAN CONTRACT
between
CAPITAL APPRECIATION VARIABLE ACCOUNT
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It.......... 1
2. Duties of the Custodian with Respect to Property of
the Fund held by the Custodian in the United States............ 2
2.1 Holding Securities.................................... 2
2.2 Delivery of Securities................................ 3
2.3 Registration of Securities............................ 7
2.4 Bank Accounts......................................... 7
2.5 Payment for Shares.................................... 8
2.6 Investment and Availability of Federal Funds.......... 8
2.7 Collection of Income.................................. 9
2.8 Payment of Fund Monies................................ 10
2.9 Liability for Payment in Advance of Receipt of
Securities Purchased.................................. 12
2.10 Appointment of Agents................................. 13
2.11 Deposit of Fund Assets in Securities Systems.......... 13
2.11A Fund Assets Held in the Custodian's Direct Paper
System................................................ 16
2.12 Segregated Account.................................... 18
2.13 Ownership Certificates for Tax Purposes............... 19
2.14 Proxies............................................... 19
2.15 Communications Relating to Fund Portfolio Securities.. 19
2.16 Reports to Fund by Independent Public Accountants..... 20
3. Proper Instructions............................................ 21
4. Actions Permitted Without Express Authority.................... 21
5. Evidence of Authority.......................................... 22
6. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income................ 22
7. Records........................................................ 23
8. Opinion of Fund Independent Accountants........................ 24
9. Compensation of Custodian...................................... 24
10. Responsibility of Custodian.................................... 24
11. Effective Period, Termination and Amendment.................... 26
12. Successor Custodian............................................ 27
13. Interpretive and Additional Provisions......................... 28
14. Massachusetts Law to Apply..................................... 29
CUSTODIAN CONTRACT
This Contract between Sun Life Assurance Company of Canada (U.S.) ("Sun
Life (U.S.)"), a corporation organized and existing under the laws of Delaware,
having its principal place of business at One Sun Life Xxxxxxxxx Xxxx, Xxxxxxxxx
Xxxxx, Xxxxxxxxxxxxx 00000, acting on behalf of Capital Appreciation Variable
Account, a segregated investment account of Sun Life (U.S.), hereinafter called
the "Fund" and the units issued by the Fund being hereinafter called "Shares",
and State Street Bank and Trust Company, a Massachusetts trust company, having
its principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx,
00000, hereinafter called the "Custodian".
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of its assets.
The Fund agrees to deliver to the Custodian all securities and cash owned by it,
and all payments of income, payments of principal or capital distributions
received by it with respect to all securities owned by the Fund from time to
time. The Custodian shall not be responsible for any property of the Fund held
or received by the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
3), the Custodian shall from time to time employ one or more subcustodians, but
only in accordance with an applicable vote by the Board of Managers of the Fund,
and provided that, except as expressly provided in Article 3 hereof, the
Custodian shall have no more
64
or less responsibility or liability to the Fund on account of any actions or
omissions of any subcustodian so employed than any such subcustodian has to the
Custodian.
2. Duties of the Custodian with Respect to Property of the Fund Held
By the Custodian in the United States.
The provisions of this Article 2 shall apply to the duties of the
Custodian as they relate to domestic securities, held in the United States.
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of the Fund all non-cash property, including all
domestic securities owned by the Fund to be held in the United States,
other than (a) securities which are maintained pursuant to Section
2.11 in a clearing agency which acts as a securities depository or in
a book-entry system authorized by the U.S. Department of the Treasury,
collectively referred to herein as a "Securities System"; and (b)
commercial paper of an issuer for which State Street Bank and Trust
Company acts as issuing and paying agent ("Direct Paper") which is
deposited and/or maintained in State Street Bank and Trust Company's
Direct Paper Book-Entry System ("Direct Paper System") pursuant to
Section 2.11.A.
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by the Fund held by the Custodian or in a Securities
System account of the Custodian or in the Direct Paper System only
upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, and only in the
following cases:
1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
65
2) Upon the receipt of payment in connection with any repurchased
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.11 hereof;
4) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Fund or into the name of any nominee or nominees of
the Custodian or into the name or nominee name of any agent
appointed pursuant to Section 2.10 or into the name or nominee
name of any subcustodian appointed pursuant to Article 1; or for
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities are to
be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Fund,
to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom; provided
that in any such case, the Custodian shall have no responsibility
or liability for
66
any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from
the Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities, provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Fund, but only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Fund,
which may be in the form of cash or obligations issued by the
United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is
to be credited to the Custodian's account in the book-entry
system authorized by the U.S. Department of the Treasury, the
Custodian will not be held
67
liable or responsible for the delivery of securities owned by the
Fund prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Fund, but only
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian, and a Futures Commission
Merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Fund; and
68
14) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Managers signed by an officer of the fund,
setting forth the purpose for which such delivery is to be made,
declaring such purposes to be proper and naming the person or
persons to whom delivery of such securities shall be made.
2.3 Registration of Securities Securities held by the Custodian (other than
bearer securities) in the United States shall be registered in the name
of the Fund or in the name of any nominee of the Fund or of any nominee
of the Custodian which nominee shall be assigned exclusively to the
Fund, unless the Fund has authorized in writing the appointment of a
nominee to be used in common with other registered investment companies
having the same investment adviser as the Fund, or in the name or
nominee name of any agent appointed pursuant to Section 2.10 or in the
name or nominee name of any subcustodian appointed pursuant to Article
1. All securities accepted by the Custodian on behalf of the Fund under
the terms of this Contract shall be in "street name" or other good
delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts (the "Fund's Account or Accounts") in the name of
the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such Account
or Accounts, subject to the provisions hereof, all cash received by it
from or for the Account of the Fund, other than cash maintained by the
Fund in a bank Account established and used in accordance
70
with Rule 17f-3 under the Investment Company Act of 1940. Funds held
by the Custodian for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment Company
Act of 1940 and that each such bank or trust company and the funds to
be deposited with each such bank or trust company shall be approved by
vote of a majority of the Board of Managers of the Fund. Such funds
shall be deposited by the Custodian in its capacity as Custodian and
shall be withdrawable by the Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from Sun Life (U.S.)
and deposit into the Fund's account such payments as are received by
Sun Life (U.S.) for investment in the Fund. The Custodian will provide
timely notification to the Fund and Sun Life (U.S.) of any receipt by
it of such payments.
2.6 Investment and Availability of Federal Funds. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall, upon the
receipt of Proper Instructions,
1) invest in such instruments as may be set forth in
such instruments as may be set forth in such
instructions on the same day as received all federal
funds received after a time agreed upon between the
Custodian and the Fund; and
70
2) make federal funds available to the Fund as of
specified times agreed upon from time to time to time
by the Fund and the Custodian in the amount of checks
received in payment for Shares of the Fund which are
deposited into the Fund's account.
2.7 Collection of Income. The Custodian shall collect on a timely basis
all income and other payments with respect to registered securities
held hereunder to which the Fund shall be entitled either by law or
pursuant to custom in the securities business, and shall collect on a
timely basis all income and other payments with respect to bearer
domestic securities if, on the date of payment by the issuer, such
securities are held by the Custodian or agent thereof and shall credit
such income, as collected, to the Fund's custodian Account. Without
limiting the generality of the foregoing, the Custodian shall detach
and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest
when due on domestic securities held hereunder. Income due the Fund on
securities loaned pursuant to the provisions of Section 2.2 (10) shall
be the responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund
with such information or data as may be necessary to assist the Fund
in arranging for the timely delivery to the Custodian of the income to
which the Fund is properly entitled.
71
2.8 Payment of Fund Monies. Upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases
only:
1 Upon the purchase of domestic securities for the
account of the Fund but only (a) against the delivery
of such securities to the Custodian (or any bank,
banking firm or trust company doing business in the
United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as
a custodian and has been designated by the Custodian
as its agent for this purpose) registered in the name
of the Fund or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in
accordance with the conditions set forth in Section
2.11 hereof; (c) in the case of a purchase involving
the Direct Paper System, in accordance with the
conditions set forth in Section 2.11A; or (d) in the
case of repurchase agreements entered into between
the Fund and the Custodian, or another bank, or a
broker-dearer which is a member of NASD, (i) against
delivery of the securities either in certificate form
or through an entry crediting the Custodian's account
at the Federal Reserve Bank with such securities
owned by the Custodian along with written evidence of
the agreement by the Custodian to repurchased such
securities from the Fund;
72
2) In connection with conversion, exchange or surrender
of domestic securities owned by the Fund as set forth
in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by
the Fund as set forth in Article 3 hereof;
4) For the payment of any expense or liability incurred
by the Fund, including but not limited to the
following payments for the account of the Fund:
interest, taxes, management, accounting, and legal
fees, and operating expenses are to be in whole or
part capitalized or treated as deferred expenses;
5) For payment of the amount of dividends received in
respect of securities sold short;
6) For any other proper purpose, but only upon receipt
of, in addition to Proper Instructions, a certified
copy of a resolution of the Board of Managers of the
Fund signed by an officer of the Fund, setting
forth the purpose for which such payment is to be
made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment
is to be made.
2.9. Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for purchase of securities for the
account of the Fund is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written
instructions from the Fund to so pay in advance, the Custodian shall
be absolutely liable to the Fund, for such securities to the same
extent as if the securities had been received by the Custodian, except
that in
73
the case of repurchase agreements entered into by the Fund with a bank
which is a member of the Federal Reserve System, the Custodian may
transfer funds to the account of such bank prior to the receipt of
written evidence that the securities subject to such repurchase
agreement have been transferred by book-entry into a segregated
non-proprietary account of the Custodian maintained with the Federal
Reserve Bank of Boston or of the safekeeping receipt, provided that
such securities have in fact been so transferred by book-entry.
2.10 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the Investment Company
Act of 1940, as amended, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the Custodian may from
time to time direct; provided, however, that the appointment of any
agent shall not relieve the Custodian of its responsibilities or
liabilities hereunder.
2.11 Deposit of Fund Assets in Securities Systems. The Custodian may
deposit and/or maintain securities owned by the Fund in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System: in accordance
with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
74
1) The Custodian may keep securities of the Fund in a
Securities System provided that such securities are
represented in an account ("Custodian Account") of the
Custodian in the Securities System which shall not include
any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities
of the Fund which are maintained in a Securities System
shall identify by book-entry those securities belonging to
the Fund;
3) The Custodian shall pay for securities purchased for the
account of the Fund upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Custodian's Account, and (ii) the making of an entry
on the records of the Custodian to reflect such payment and
transfer for the account of the Fund. The Custodian shall
transfer securities sold for the account of the Fund upon
(i) receipt of advice from the Securities System that
payment for such securities has been transferred to the
Custodian's Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer and
payment for the account of the Fund. Copies of all advices
from the Securities System of transfers of securities for
the account
75
of the Fund shall identify the Fund, be maintained for the
fund by the Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall furnish the Fund
confirmation of each transfer to or from the account of the
Fund in the form of a written advice or notice and shall
furnish to the Fund copies of daily transaction sheets
reflecting each day's transactions in the Securities System
for the account of the Fund.
4) The Custodian shall provide the Fund with any report
obtained by the Custodian on the Securities System's
accounting system, internal accounting control and
procedures for safeguarding securities deposited in the
Securities System;
5) The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 11
hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to the Fund
for any loss or damage to the Fund resulting from use of the
Securities System by reason of any negligence, misfeasance
or misconduct of the Custodian or any of its agents or of
any of its or their employees or from failure of the
Custodian or
76
any such agent to enforce effectively such rights as it may
have against the Securities System; at the election of the
Fund, it shall be entitled to be subrogated to the rights of
the Custodian with respect to any claim against the
Securities System or any other person which the Custodian
may have as a consequence of any such loss or damage if and
to the extent that the Fund has not been made whole for any
such loss or damage.
2.11A Fund Assets Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by the Fund in
the Direct Paper System subject to the following provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper
Instructions;
2) The Custodian may keep securities of the Fund in the
Direct Paper System only if such securities are represented
in an account of the Custodian in the Direct Paper System
which shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for
customers;
3) The records of the Custodian with respect to securities
of the Fund which are maintained in the Direct Paper System
77
shall identify by book-entry those securities belonging to
the Fund;
4) The Custodian shall furnish the Fund confirmation of each
transfer of Direct Paper to or form the account of the Fund,
in the form of a written advice or notice on the next
business day following such transfer and shall furnish to
the Fund copies of daily transaction sheets reflecting each
day's transaction in the Direct Paper System for the account
of the Fund;
5) The Custodian shall pay for securities purchased for the
account of the Fund upon the making of an entry on the
records of the Custodian to reflect such payment and
transfer of securities to the account of the Fund. The
Custodian shall transfer securities sold for the account of
the Fund upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment
for the account of the Fund;
6) The Custodian shall provide the Fund with any report on
the system of internal accounting control for the Direct
Paper System that the Custodian receives and as the Fund may
reasonable request from time to time;
78
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of the Fund, into which account or accounts for and
on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.11 hereof, (i) in
accordance with the provisions of any agreement among the Fund, the
Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Fund, (ii) for purposes of segregating cash or
government securities in connection with options purchased, sold or
written by the Fund or commodity futures contracts or options thereon
purchased or sold by the Fund, (iii) for the purpose of compliance by
the Fund with the procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts
by registered investment companies and (iv) for other proper purposed,
but only, in the case of clause (iv), upon receipt of, in addition to
Proper Instructions, a certified copy of a resolution of the Board of
Managers signed by an officer of the Fund, setting forth the purpose or
purposes
80
of such segregated account and declaring such purposes to be proper
corporate purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of the Fund held by it and in
connection with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in the
name of the Fund or a nominee of the Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Fund such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Fund Portfolio Securities. The Custodian
shall transmit promptly to the Fund all written information (including,
without limitation, pendency of calls and maturities of domestic and
expirations of rights in connection therewith and notices of exercise
of call and put options written by the Fund and the maturity of futures
contracts purchased or sold by the Fund) received by the Custodian from
issuers of the securities being held for the Fund. With respect to
tender or exchange offers, the Custodian shall transmit promptly to the
Fund all written information received by the Custodian from issuers of
the securities whose tender or exchange is sought and from the party or
his agents)
80
making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or any other
similar transaction, the Fund shall notify the Custodian at least
three business days prior to the date on which the Custodian is to
take such action.
2.16 Reports to Fund by Independent Public Accountants. The Custodian shall
provide the Fund, at such times as the Fund may reasonably require,
with reports by independent public accountants on the accounting
system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts,
including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this
Contract; such reports, which shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed
by such examination, and, if there are no such inadequacies, shall so
state.
3. Proper Instructions.
Proper instructions as sued throughout this Contract means a writing
signed or initialed by one or more person or persons as the Board of Managers
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such
81
instructions with respect to the transaction involved. The Fund shall cause all
oral instructions to be confirmed in writing. Upon receipt of a certificate of
the Secretary as to the authorized by the Board of Managers of the Fund
accompanied by a detailed description of procedures approved by the Board of
Managers, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Managers and the Custodian are satisfied that such procedures afford adequate
safeguards for the Fund's assets.
4. Actions Permitted without Express Authority.
The Custodian may in its discretion, without express authority from the
Fund:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Fund;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
82
of the Fund except as otherwise directed by the Board of
Managers of the Fund.
5. Evidence of Authority.
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the Fund.
The Custodian may receive and accept a certified copy of a vote of the Board of
Managers of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Managers as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of written
notice to the contrary.
6. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity of entities appointed by the Board of Managers of the Fund to keep
the books of account of the Fund and/or compute the net asset value per share of
the outstanding shares of the Fund or, if directed in writing to do so by the
Fund, shall itself keep such books of account and/or compute such net asset
value per share. If so directed, the Custodian shall also calculate daily the
net income of the Fund as described in the Fund's currently effective prospectus
and shall advise the Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of the Fund to do
83
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value per
share and the daily income of the Fund shall be made at the time or times
described from time to time in the Fund's currently effective prospectus.
7. Records.
The Custodian shall create and maintain all records relating
to its activities and obligations under this Contract in such manner as will
meet the obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-2 thereunder,
applicable federal and state tax and insurance laws and any other law or
administrative rules or procedures which may be applicable to the Fund. All such
records shall be the property of Sun Life (U.S.) and the Fund and shall at all
times during the regular business hours of the Custodian be open for inspection
by duly authorized officers, employees or agents of the Fund and Sun Life (U.S.)
and employees and agents of the Securities and Exchange Commission. Such records
will be surrendered promptly by the Custodian upon request. The Custodian shall,
at the Fund's request, supply the Fund with a tabulation of securities owned by
the Fund and held by the Custodian and shall, when requested to do so by the
Fund and for such compensation as shall be agreed upon between the Fund and the
Custodian, include certificate numbers in such tabulations.
84
8. Opinion of Fund's Independent Accountant.
The Custodian shall take all reasonable action, as the Fund
may from time to time request, to obtain from year to year favorable opinions
from the Fund's independent accountants with respect to its activities hereunder
in connection with the preparation of the Fund's Form N-3, and Form N-SAR or
other registration statements and annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
9. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation for its
services and expenses and Custodian, as agreed upon from time to time
between the Fund and the Custodian.
10. Responsibility of Custodian.
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract, but shall be kept indemnified by the Fund for
any action taken or omitted by it in the proper execution of instructions from
the Fund. It shall be
85
entitled to rely on and may act upon advice of counsel for the Fund on all
matters and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. Notwithstanding the foregoing, the
responsibility of the Custodian with respect to redemptions effected by check
shall be in accordance with a separate agreement entered into between the
Custodian and the Fund.
The Fund agrees to indemnify and hold harmless the Custodian
and its nominee from and against all taxes, charges, expenses, assessments,
claims and liabilities (including counsel fees) incurred or assessed against it
or its nominee in connection with the performance of this Contract, except such
as may arise from it or its nominee's own negligent action, negligent failure to
act or willful misconduct. The Custodian is authorized to charge any account of
the fund for such items and its fees. To secure any such authorized charges and
any advances of cash or securities made by the Custodian to or for the benefit
of the Fund for any purpose which results in the Fund incurring and overdraft at
the end of any business day or for extraordinary or emergency purposes during
any business day, the Fund hereby grants to the Custodian a security interest in
and pledges to the Custodian securities held for it by the Custodian, in an
amount not to exceed five percent of the Fund's gross assets, the specific
securities to be designated in writing from time to time by the Fund or its
investment adviser (the "Pledged Securities"). Should the Fund fail to repay
promptly any advances of cash or securities, the Custodian shall be entitled to
use available cash and to dispose of the Pledged Securities as is necessary to
repay any such advances.
86
11. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the parties hereto
and may be terminated by either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such termination to take effect not
sooner than thirty (30) days after the date of such deliver or mailing;
provided, however, that the Custodian shall not act under Section 2.11 hereof in
the absence of receipt of an initial certificate of the Secretary that the Board
of Managers of the Fund has approved the initial use of a particular Securities
System and the receipt of an annual certificate of the Secretary that the Board
of Managers has reviewed the use by the Fund of such Securities System, as
required in each case by Rule 17f-4 under the Investment Company Act of 1940, as
amended and that the Custodian shall not act under Section 2.11.A hereof in the
absence of receipt of an initial certificate of the Secretary that the Board of
Managers has approved the initial use of the Direct Paper System and the receipt
of an annual certificate of the Secretary that the Board of Managers has
reviewed the used by the Fund of the Direct Paper System; provided further,
however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, and (b) that the
Fund may at any time by action of its Board of Managers (i) substitute another
bank or trust company for the Custodian by giving notice as described above to
the Custodian, or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian or
87
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the
Custodian such compensation as may be due as of the date of such termination and
shall likewise reimburse the Custodian for its costs, expenses and
disbursements.
12. Successor Custodian.
If a successor custodian shall be appointed by the Board of
Managers of the Fund, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed and in the
form for transfer, all securities then held by it hereunder and shall transfer
to an account of the successor custodian all of the Fund's securities held in a
Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy of a vote of
the Board of Managers of the Fund, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance with such
vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of Managers shall have been
delivered to the Custodian on or before the date when such termination shall
become effective, then the Custodian shall have the right to deliver to a bank
or trust company, which is a "bank" as defined in the Investment Company Act of
1940, of its own selection, having an
88
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of the Fund's securities
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of termination hereof
owing to failure of the Fund to procure the certified copy of the vote referred
to or of the Board of Managers to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services during such period as
the Custodian retains possession of such securities, funds and other properties
and the provisions of this Contract relating to the duties and obligations of
the Custodian shall remain in full force and effect.
13. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the
Custodian and the Fund may from time to time agree on such provisions
interpretive of or in addition to the provisions of this Contract as may in
their joint opinion be consistent with the general tenor of this Contract. Any
such interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Articles of Incorporation of the Fund. No
interpretive or additional
89
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Contract.
14. Massachusetts Law to Apply.
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed as of the 25th day of July,
1990.
CAPITAL APPRECIATION VARIABLE ACCOUNT
ATTEST: By: SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
XXXXXX X. XXXXX By: XXXXX X. XXXX
Xxxxxx X. Xxxxx, Secretary Xxxxx X. Xxxx, Senior Vice President
and General Manager
ATTEST: STATE STREET BANK AND TRUST COMPANY
NOT LEGIBLE By: NOT LEGIBLE
Assistant Secretary Vice President
90
CUSTODIAN CONTRACT
between
GOVERNMENT SECURITIES VARIABLE ACCOUNT
and
STATE STREET BANK AND TRUST COMPANY
91
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It........ 1
2. Duties of the Custodian with Respect to Property of the
Fund held by the Custodian in the United States.............. 2
2.1 Holding Securities.................................. 2
2.2 Delivery of Securities.............................. 2
2.3 Registration of Securities.......................... 7
2.4 Bank Accounts....................................... 7
2.5 Payment for Shares.................................. 8
2.6 Investment and Availability of Federal Funds........ 8
2.7 Collection of Income................................ 9
2.8 Payment of Fund Monies.............................. 10
2.9 Liability for Payment in Advance of Receipt of
Securities Purchased................................ 12
2.10 Appointment of Agents............................... 13
2.11 Deposit of Fund Assets in Securities Systems........ 13
2.11A Fund Assets Held in the Custodian's Direct Paper
System.............................................. 16
2.12 Segregated Account.................................. 18
2.13 Ownership Certificates for Tax Purposes............. 19
2.14 Proxies............................................. 19
2.15 Communications Relating to Fund Portfolio Securities. 19
2.16 Reports to Fund by Independent Public Accountants... 20
3. Proper Instructions........................................... 21
4. Actions Permitted Without Express Authority................... 21
5. Evidence of Authority......................................... 22
6. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income................. 22
7. Records....................................................... 23
8. Opinion of Fund Independent Accountants....................... 24
9. Compensation of Custodian..................................... 24
10. Responsibility of Custodian................................... 24
11. Effective Period, Termination and Amendment................... 26
12. Successor Custodian........................................... 27
13. Interpretive and Additional Provisions........................ 28
14. Massachusetts Law to Apply.................................... 29
92
CUSTODIAN CONTRACT
This Contract between Sun Life Assurance Company of Canada (U.S.) ("Sun
Life (U.S.)"), a corporation organized and existing under the laws of Delaware,
having its principal place of business at One Sun Life Xxxxxxxxx Xxxx, Xxxxxxxxx
Xxxxx, Xxxxxxxxxxxxx 00000, acting on behalf of Government Securities Variable
Account, a segregated investment account of Sun Life (U.S.), hereinafter called
the "Fund" and the units issued by the Fund being hereinafter called "Shares",
and State Street Bank and Trust Company, a Massachusetts trust company, having
its principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx,
00000, hereinafter called the "Custodian".
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of its assets.
The Fund agrees to deliver to the Custodian all securities and cash owned by it,
and all payments of income, payments of principal or capital distributions
received by it with respect to all securities owned by the Fund from time to
time. The Custodian shall not be responsible for any property of the Fund held
or received by the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
3), the Custodian shall from time to time employ one or more subcustodians, but
only in accordance with an applicable vote by the Board of Managers of the Fund,
and provided that, the Custodian shall have no more or less responsibility or
liability to the Fund on
93
account of any actions or omissions of any subcustodian so employed than any
such subcustodian has to the Custodian.
2. Duties of the Custodian with Respect to Property of the Fund Held By
the Custodian in the United States.
The provisions of this Article 2 shall apply to the duties of the
Custodian as they relate to securities held in the United States.
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of the Fund all non-cash property, including all
securities owned by the Fund to be held in the United States, other
than (a) securities which are maintained pursuant to Section 2.11 in a
clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the Treasury,
collectively referred to herein as a "Securities System"; and (b)
commercial paper of an issuer for which State Street Bank and Trust
Company acts as issuing and paying agent ("Direct Paper") which is
deposited and/or maintained in State Street Bank and Trust Company's
Direct Paper Book-Entry System ("Direct Paper System") pursuant to
Section 2.11.A.
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by the Fund held by the Custodian or in a Securities
System account of the Custodian or in the Direct Paper System only upon
receipt of Proper Instructions, which may be continuing instructions
when deemed appropriate by the parties, and only in the following
cases:
1) Upon sale of such securities for the account of the
Fund and receipt of payment therefor;
94
2) Upon the receipt of payment in connection with any
repurchased agreement related to such securities
entered into by the Fund;
3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section
2.11 hereof;
4) To the depository agent in connection with tender or
other similar offers for portfolio securities of the
Fund;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise
become payable; provided that, in any such case, the
cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer
into the name of the Fund or into the name of any
nominee or nominees of the Custodian or into the name
or nominee name of any agent appointed pursuant to
Section 2.10 or into the name or nominee name of any
subcustodian appointed pursuant to Article 1; or for
exchange for a different number of bonds,
certificates or other evidence representing the same
aggregate face amount or number of units; provided
that, in any such case, the new securities are to be
delivered to the Custodian;
7) Upon the sale of such securities for the account of
the Fund, to the broker or its clearing agent,
against a receipt, for examination in accordance with
"street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or
liability for
95
any loss arising from the delivery of
such securities prior to receiving payment for such
securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization,
reorganization or readjustment of the securities of
the issuer of such securities, or pursuant to
provisions for conversion contained in such
securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities
and cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof in the exercise of
such warrants, rights or similar securities or the
surrender of interim receipts or temporary securities
for definitive securities, provided that, in any such
case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of
securities made by the Fund, but only against receipt
of adequate collateral as agreed upon from time to
time by the Custodian and the Fund, which may be in
the form of cash or obligations issued by the United
States government, its agencies or instrumentalities,
except that in connection with any loans for which
collateral is to be credited to the Custodian's
account in the book-entry system authorized by the
U.S. Department of the Treasury, the Custodian will
not be held
96
liable or responsible for the delivery of
securities owned by the Fund prior to the receipt of
such collateral;
11) For delivery as security in connection with any
borrowings by the Fund requiring a pledge of assets
by the Fund, but only against receipt of amounts
borrowed;
12) For delivery in ac cordance with the provisions of
any agreement among the Fund, the Custodian
and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a
member of The National Association of Securities
Dealers, Inc. ("NASD"), relating to compliance
with the rules of The Options Clearing Corporation
and of any registered national securities
exchange, or of any similar organization or
organizations, regarding escrow or other
arrangements in connection with transactions by
the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian, and a
Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with
the rules of the Commodity Futures Trading Commission
and/or any Contract Market, or any similar
organization or organizations, regarding account
deposits in connection with transactions by the Fund;
and
97
14) For any other proper purpose, but only upon receipt
of, in addition to Proper Instructions, a certified
copy of a resolution of the Board of Managers signed
by an officer of the fund, setting forth the purpose
for which such delivery is to be made, declaring such
purposes to be proper and naming the person or
persons to whom delivery of such securities shall be
made.
2.3 Registration of Securities. Securities held by the Custodian (other
than bearer securities) in the United States shall be registered in the
name of the Fund or in the name of any nominee of the Fund or of any
nominee of the Custodian which nominee shall be assigned exclusively to
the Fund, unless the Fund has authorized in writing the appointment of
a nominee to be used in common with other registered investment
companies having the same investment adviser as the Fund, or in the
name or nominee name of any agent appointed pursuant to Section 2.10 or
in the name or nominee name of any subcustodian appointed pursuant to
Article 1. All securities accepted by the Custodian on behalf of the
Fund under the terms of this Contract shall be in "street name" or
other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts (the "Fund's Account or Accounts") in the name of
the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such Account
or Accounts, subject to the provisions hereof, all cash received by it
from or for the Account of the Fund, other than cash maintained by the
Fund in a bank Account established and used in accordance
98
with Rule 17f-3 under the Investment Company Act of 1940. Funds held
by the Custodian for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment Company
Act of 1940 and that each such bank or trust company and the funds to
be deposited with each such bank or trust company shall be approved by
vote of a majority of the Board of Managers of the Fund. Such funds
shall be deposited by the Custodian in its capacity as Custodian and
shall be withdrawable by the Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from Sun Life (U.S.)
and deposit into the Fund's account such payments as are received by
Sun Life (U.S.) for investment in the Fund. The Custodian will provide
timely notification to the Fund and Sun Life (U.S.) of any receipt by
it of such payments.
2.6 Investment and Availability of Federal Funds. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall, upon the
receipt of Proper Instructions,
1) invest in such instruments as may be set forth in
such instruments on the same day as received all
federal funds received after a time agreed upon
between the Custodian and the Fund; and
99
2) make federal funds available to the Fund as of
specified times agreed upon from time to time to time
by the Fund and the Custodian in the amount of checks
received in payment for Shares of the Fund which are
deposited into the Fund's account.
2.7 Collection of Income. The Custodian shall collect on a timely basis
all income and other payments with respect to registered securities
held hereunder to which the Fund shall be entitled either by law or
pursuant to custom in the securities business, and shall collect on a
timely basis all income and other payments with respect to bearer
securities if, on the date of payment by the issuer, such securities
are held by the Custodian or agent thereof and shall credit such
income, as collected, to the Fund's custodian Account. Without
limiting the generality of the foregoing, the Custodian shall detach
and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest
when due on securities held hereunder. Income due the Fund on
securities loaned pursuant to the provisions of Section 2.2 (10) shall
be the responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund
with such information or data as may be necessary to assist the Fund
in arranging for the timely delivery to the Custodian of the income to
which the Fund is properly entitled.
99
2.8 Payment of Fund Monies. Upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases
only:
1 Upon the purchase of securities for the account of
the Fund but only (a) against the delivery of such
securities to the Custodian (or any bank, banking
firm or trust company doing business in the United
States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as
a custodian and has been designated by the Custodian
as its agent for this purpose) registered in the name
of the Fund or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in
accordance with the conditions set forth in Section
2.11 hereof; (c) in the case of a purchase involving
the Direct Paper System, in accordance with the
conditions set forth in Section 2.11A; or (d) in the
case of repurchase agreements entered into between
the Fund and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against
delivery of the securities either in certificate form
or through an entry crediting the Custodian's account
at the Federal Reserve Bank with such securities
owned by the Custodian along with written evidence of
the agreement by the Custodian to repurchased such
securities from the Fund;
101
2) In connection with conversion, exchange or surrender
of securities owned by the Fund as set forth in
Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by
the Fund as set forth in Article 3 hereof;
4) For the payment of any expense or liability incurred
by the Fund, including but not limited to the
following payments for the account of the Fund:
interest, taxes, management, accounting, and legal
fees, and operating expenses are to be in whole or
part capitalized or treated as deferred expenses;
5) For payment of the amount of dividends received in
respect of securities sold short;
6) For any other proper purpose, but only upon receipt
of, in addition to Proper Instructions, a certified
copy of a resolution of the Board of Managers of the
Fund signed by an officer of the Fund, setting forth
the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is
to be made.
2.9. Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for purchase of securities for the
account of the Fund is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written
instructions from the Fund to so pay in advance, the Custodian shall
be absolutely liable to the Fund, for such securities to the same
extent as if the securities had been received by the Custodian, except
that in
102
the case of repurchase agreements entered into by the Fund with
a bank which is a member of the Federal Reserve System, the Custodian
may transfer funds to the account of such bank prior to the receipt of
written evidence that the securities subject to such repurchase
agreement have been transferred by book-entry into a segregated
non-proprietary account of the Custodian maintained with the Federal
Reserve Bank of Boston or of the safekeeping receipt, provided that
such securities have in fact been so transferred by book-entry.
2.10 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the Investment Company
Act of 1940, as amended, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the Custodian may from
time to time direct; provided, however, that the appointment of any
agent shall not relieve the Custodian of its responsibilities or
liabilities hereunder.
2.11 Deposit of Fund Assets in Securities Systems. The Custodian may
deposit and/or maintain domestic securities owned by the Fund in a
clearing agency registered with the Securities and Exchange Commission
under Section 17A of the Securities Exchange Act of 1934, which acts
as a securities depository, or in the book-entry system authorized by
the U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System: in accordance
with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
103
1) The Custodian may keep securities of the Fund in a
Securities System provided that such securities are
represented in an account ("Custodian Account") of the
Custodian in the Securities System which shall not include
any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of
the Fund which are maintained in a Securities System shall
identify by book-entry those securities belonging to the
Fund;
3) The Custodian shall pay for securities purchased for the
account of the Fund upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Custodian's Account, and (ii) the making of an entry
on the records of the Custodian to reflect such payment and
transfer for the account
104
of the Fund. The Custodian shall transfer securities sold
for the account of the Fund upon (i) receipt of advice
from the Securities System that payment for such
securities has been transferred to the Custodian's
Account, and (ii) the making of an entry on the records
of the Custodian to reflect such transfer and payment
for the account of the Fund. Copies of all advices from
the Securities System of transfers of securities for
the account of the Fund shall identify the Fund, be
maintained for the fund by the Custodian and be
provided to the Fund at its request. Upon request, the
Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund in the form
of a written advice or notice and shall furnish to the
Fund copies of daily transaction sheets reflecting each
day's transactions in the Securities System for the
account of the Fund.
4) The Custodian shall provide the Fund with any report
obtained by the Custodian on the Securities System's
accounting system, internal accounting control and
procedures for safeguarding securities deposited in the
Securities System;
5) The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 11
hereof;
6) Anything to the contrary in this Contract notwithstanding,
the Custodian shall be liable to the Fund for any loss or
damage to the Fund resulting from use of the Securities
System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any
of its or their employees or from failure of the Custodian
or
105
any such agent to enforce effectively such rights as it may
have against the Securities System; at the election of
the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claim
against the Securities System or any other person which
the Custodian may have as a consequence of any such
loss or damage if and to the extent that the Fund has
not been made whole for any such loss or damage.
2.11A Fund Assets Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by the Fund in
the Direct Paper System subject to the following provisions:
1) No transaction relating to securities in the Direct
Paper System will be effected in the absence of Proper
Instructions;
2) The Custodian may keep securities of the Fund in the
Direct Paper System only if such securities are
represented in an account of the Custodian in the
Direct Paper System which shall not include any assets
of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
3) The records of the Custodian with respect to securities
of the Fund which are maintained in the Direct Paper
System
106
shall identify by book-entry those securities
belonging to the Fund;
4) The Custodian shall furnish the Fund confirmation of
each transfer of Direct Paper to or form the account of
the Fund, in the form of a written advice or notice on
the next business day following such transfer and shall
furnish to the Fund copies of daily transaction sheets
reflecting each day's transaction in the Direct Paper
System for the account of the Fund;
5) The Custodian shall pay for securities purchased for
the account of the Fund upon the making of an entry on
the records of the Custodian to reflect such payment
and transfer of securities to the account of the Fund.
The Custodian shall transfer securities sold for the
account of the Fund upon the making of an entry on the
records of the Custodian to reflect such transfer and
receipt of payment for the account of the Fund;
6) The Custodian shall provide the Fund with any report on
the system of internal accounting control for the
Direct Paper System that the Custodian receives and as
the Fund may reasonable request from time to time;
107
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of the Fund, into which account or accounts for and
on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.11 hereof, (i) in
accordance with the provisions of any agreement among the Fund, the
Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Fund, (ii) for purposes of segregating cash or
government securities in connection with options purchased, sold or
written by the Fund or commodity futures contracts or options thereon
purchased or sold by the Fund, (iii) for the purpose of compliance by
the Fund with the procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts
by registered investment companies and (iv) for other proper purposed,
but only, in the case of clause (iv), upon receipt of, in addition to
Proper Instructions, a certified copy of a resolution of the Board of
Managers signed by an officer of the Fund, setting forth the purpose or
purposes
109
of such segregated account and declaring such purposes to be
proper corporate purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of the Fund held by it and in
connection with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in the
name of the Fund or a nominee of the Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Fund such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Fund Portfolio Securities. The Custodian
shall transmit promptly to the Fund all written information (including,
without limitation, pendency of calls and maturities of securities and
expirations of rights in connection therewith and notices of exercise
of call and put options written by the Fund and the maturity of futures
contracts purchased or sold by the Fund) received by the Custodian from
issuers of the securities being held for the Fund. With respect to
tender or exchange offers, the Custodian shall transmit promptly to the
Fund all written information received by the Custodian from issuers of
the securities whose tender or exchange is sought and from the party or
his agents)
109
making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or any other
similar transaction, the Fund shall notify the Custodian at least
three business days prior to the date on which the Custodian is to
take such action.
2.16 Reports to Fund by Independent Public Accountants. The Custodian shall
provide the fund, at such times as the Fund may reasonably require,
with reports by independent public accountants on the accounting
system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts,
including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this
Contract; such reports, which shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed
by such examination, and, if there are no such inadequacies, shall so
state.
3. Proper Instructions.
Proper instructions as sued throughout this Contract means a writing
signed or initialed by one or more person or persons as the Board of Managers
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonable believes them
to have been given by a person authorized to give such
110
instructions with respect to the transaction involved. The Fund shall cause all
oral instructions to be confirmed in writing. Upon receipt of a certificate of
the Secretary as to the authorized by the Board of Managers of the Fund
accompanied by a detailed description of procedures approved by the Board of
Managers, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Managers and the Custodian are satisfied that such procedures afford adequate
safeguards for the Fund's assets.
4. Actions Permitted without Express Authority.
The Custodian may in its discretion, without express authority from the
Fund:
1) make payments to itself or others for minor
expenses of handling securities or other
similar items relating to its duties under
this Contract, provided that all such
payments shall be accounted for to the Fund;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the
Fund, checks, drafts and other negotiable
instruments; and
4) in general, attend to all non-discretionary
details in connection with the sale,
exchange, substitution, purchase, transfer
and other dealings with the securities and
property
111
of the Fund except as otherwise
directed by the Board of Managers of the
Fund.
5. Evidence of Authority.
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the Fund.
The Custodian may receive and accept a certified copy of a vote of the Board of
Managers of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Managers as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of written
notice to the contrary.
6. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity of entities appointed by the Board of Managers of the Fund to keep
the books of account of the Fund and/or compute the net asset value per share of
the outstanding shares of the Fund or, if directed in writing to do so by the
Fund, shall itself keep such books of account and/or compute such net asset
value per share. If so directed, the Custodian shall also calculate daily the
net income of the Fund as described in the Fund's currently effective prospectus
and shall advise the Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of the Fund to do
112
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value per
share and the daily income of the Fund shall be made at the time or times
described from time to time in the Fund's currently effective prospectus.
7. Records.
The Custodian shall create and maintain all records relating
to its activities and obligations under this Contract in such manner as will
meet the obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-2 thereunder,
applicable federal and state tax and insurance laws and any other law or
administrative rules or procedures which may be applicable to the Fund. All such
records shall be the property of Sun Life (U.S.) and the Fund and shall at all
times during the regular business hours of the Custodian be open for inspection
by duly authorized officers, employees or agents of the Fund and Sun Life (U.S.)
and employees and agents of the Securities and Exchange Commission. Such records
will be surrendered promptly by the Custodian upon request. The Custodian shall,
at the Fund's request, supply the Fund with a tabulation of securities owned by
the Fund and held by the Custodian and shall, when requested to do so by the
Fund and for such compensation as shall be agreed upon between the Fund and the
Custodian, include certificate numbers in such tabulations.
113
8. Opinion of Fund's Independent Accountant.
The Custodian shall take all reasonable action, as the Fund
may from time to time request, to obtain from year to year favorable opinions
from the Fund's independent accountants with respect to its activities hereunder
in connection with the preparation of the Fund's Form N-3, and Form N-SAR or
other registration statements and annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
9. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation for its
services and expenses and Custodian, as agreed upon from time to time
between the Fund and the Custodian.
10. Responsibility of Custodian.
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract, but shall be kept indemnified by the Fund for
any action
114
taken or omitted by it in the proper execution of instructions from the Fund. It
shall be entitled to rely on and may act upon advice of counsel for the Fund on
all matters and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. Notwithstanding the foregoing, the
responsibility of the Custodian with respect to redemptions effected by check
shall be in accordance with a separate agreement entered into between the
Custodian and the Fund.
The Custodian shall be liable for the acts and omissions of
Chase appointed as its subcustodian pursuant to the provision of Article 3 to
the extent set forth in Sections 3.2 and 3.3 hereof.
The Fund agrees to indemnify and hold harmless the Custodian
and its nominee from and against all taxes, charges, expenses, assessments,
claims and liabilities (including counsel fees) incurred or assessed against it
or its nominee in connection with the performance of this Contract, except such
as may arise from it or its nominee's own negligent action, negligent failure to
act or willful misconduct. The Custodian is authorized to charge any account of
the fund for such items and its fees. To secure any such authorized charges and
any advances of cash or securities made by the Custodian to or for the benefit
of the Fund for any purpose which results in the Fund incurring and overdraft at
the end of any business day or for extraordinary or emergency purposes during
any business day, the Fund hereby grants to the Custodian a security interest in
and pledges to the Custodian securities held for it by the Custodian, in an
amount not to exceed five percent of the Fund's gross assets, the specific
securities to be designated in writing from time to time by the Fund or its
investment adviser (the "Pledged
115
Securities"). Should the Fund fail to repay promptly any advances of cash or
securities, the Custodian shall be entitled to use available cash and to dispose
of the Pledged Securities as is necessary to repay any such advances.
11. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the parties hereto
and may be terminated by either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such termination to take effect not
sooner than thirty (30) days after the date of such deliver or mailing;
provided, however, that the Custodian shall not act under Section 2.11 hereof in
the absence of receipt of an initial certificate of the Secretary that the Board
of Managers of the Fund has approved the initial use of a particular Securities
System and the receipt of an annual certificate of the Secretary that the Board
of Managers has reviewed the use by the Fund of such Securities System, as
required in each case by Rule 17f-4 under the Investment Company Act of 1940, as
amended and that the Custodian shall not act under Section 2.11.A hereof in the
absence of receipt of an initial certificate of the Secretary that the Board of
Managers has approved the initial use of the Direct Paper System and the receipt
of an annual certificate of the Secretary that the Board of Managers has
reviewed the used by the Fund of the Direct Paper System; provided further,
however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, and (b) that the
Fund may at any time by action of its Board of Managers (i) substitute another
bank or trust company for the Custodian by
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giving notice as described above to the Custodian, or (ii) immediately terminate
this Contract in the event of the appointment of a conservator or receiver for
the Custodian or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the
Custodian such compensation as may be due as of the date of such termination and
shall likewise reimburse the Custodian for its costs, expenses and
disbursements.
12. Successor Custodian.
If a successor custodian shall be appointed by the Board of
Managers of the Fund, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed and in the
form for transfer, all securities then held by it hereunder and shall transfer
to an account of the successor custodian all of the Fund's securities held in a
Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy of a vote of
the Board of Managers of the Fund, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance with such
vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of Managers shall have been
delivered to the Custodian on or before the date when such termination shall
become effective, then the
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Custodian shall have the right to deliver to a bank or trust company, which is a
"bank" as defined in the Investment Company Act of 1940, of its own selection,
having an aggregate capital, surplus, and undivided profits, as shown by its
last published report, of not less than $25,000,000, all securities, funds and
other properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of the Fund's securities
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of termination hereof
owing to failure of the Fund to procure the certified copy of the vote referred
to or of the Board of Managers to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services during such period as
the Custodian retains possession of such securities, funds and other properties
and the provisions of this Contract relating to the duties and obligations of
the Custodian shall remain in full force and effect.
13. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the
Custodian and the Fund may from time to time agree on such provisions
interpretive of or in addition to the provisions of this Contract as may in
their joint opinion be consistent with the general tenor of this Contract. Any
such interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Articles of Incorporation of the Fund. No
interpretive or
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additional provisions made as provided in the preceding sentence shall be deemed
to be an amendment of this Contract.
14. Massachusetts Law to Apply.
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed as of the 25th day of July,
1990
GOVERNMENT SECURITIES VARIABLE ACCOUNT
ATTEST: By: SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
XXXXXX X. XXXXX By: XXXXX X. XXXX
Xxxxxx X. Xxxxx, Secretary Xxxxx X. Xxxx, Senior Vice President
and General Manager
ATTEST: STATE STREET BANK AND TRUST COMPANY
NOT LEGIBLE By: NOT LEGIBLE
Assistant Secretary Vice President
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