PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
AIM DISTRIBUTORS, INC.
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.),
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
CLARENDON INSURANCE AGENCY, INC.
TABLE OF CONTENTS
DESCRIPTION PAGE
----------- ----
Section 1. Available Funds..............................................2
1.1 Availability.............................................2
1.2 Addition, Deletion or Modification of Funds..............2
1.3 No Sales to the General Public...........................2
Section 2. Processing Transactions......................................2
2.1 Timely Pricing and Orders................................2
2.2 Timely Payments..........................................3
2.3 Applicable Price.........................................3
2.4 Dividends and Distributions..............................4
2.5 Book Entry...............................................4
Section 3. Costs and Expenses...........................................4
3.1 General..................................................4
3.2 Parties To Cooperate.....................................4
Section 4. Legal Compliance.............................................4
4.1 Tax Laws.................................................4
4.2 Insurance and Certain Other Laws.........................7
4.3 Securities Laws..........................................7
4.4 Notice of Certain Proceedings and Other Circumstances....9
4.5 Sun Life To Provide Documents; Information About AVIF....9
4.6 AVIF To Provide Documents; Information About Sun Life...10
Section 5. Mixed and Shared Funding....................................11
5.1 General.................................................11
5.2 Disinterested Directors.................................12
5.3 Monitoring for Material Irreconcilable Conflicts........12
5.4 Conflict Remedies.......................................13
5.5 Notice to Sun Life......................................14
5.6 Information Requested by Board of Directors.............14
5.7 Compliance with SEC Rules...............................14
5.8 Other Requirements......................................14
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DESCRIPTION PAGE
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Section 6. Termination.................................................15
6.1 Events of Termination...................................15
6.2 Notice Requirement for Termination......................16
6.3 Funds To Remain Available...............................17
6.4 Survival of Warranties and Indemnifications.............17
6.5 Continuance of Agreement for Certain Purposes...........17
Section 7. Parties To Cooperate Respecting Termination.................17
Section 8. Assignment..................................................17
Section 9. Notices.....................................................18
Section 10. Voting Procedures..........................................18
Section 11. Foreign Tax Credits........................................19
Section 12. Indemnification............................................19
12.1 Of AVIF and AIM by Sun Life and Clarendon...............19
12.2 Of Sun Life and Clarendon by AVIF and AIM...............21
12.3 Effect of Notice........................................23
12.4 Successors..............................................24
Section 13. Applicable Law.............................................24
Section 14. Execution in Counterparts..................................24
Section 15. Severability...............................................24
Section 16. Rights Cumulative..........................................24
Section 17. Headings...................................................24
Section 18. Confidentiality............................................24
Section 19. Trademarks and Fund Names..................................25
Section 20. Parties to Cooperate.......................................26
Section 21. Access to Information by Sun Life..........................26
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PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 17th day of February,
1998 ("Agreement"), by and among AIM Variable Insurance Funds, Inc., a
Maryland corporation ("AVIF"); AIM Distributors, Inc., a Delaware corporation
("AIM"); Sun Life Assurance Company of Canada (U.S.), a Delaware life
insurance company ("Sun Life"), on behalf of itself and each of its
segregated asset accounts listed in Schedule A hereto, as the parties hereto
may amend from time to time (each, an "Account," and collectively, the
"Accounts"); and Clarendon Insurance Agency, Inc. ("Clarendon"), a
Massachusetts corporation, a subsidiary of Sun Life and the principal
underwriter of the Contracts (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, AVIF currently consists of nine separate series ("Series"),
shares ("Shares") of each of which are registered under the Securities Act of
1933, as amended (the "1933 Act") and are currently sold to one or more
separate accounts of life insurance companies to fund benefits under variable
annuity contracts and variable life insurance contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A
hereto as the Parties hereto may amend from time to time (each a "Fund";
reference herein to "AVIF" includes reference to each Fund, to the extent the
context requires) available for purchase by the Accounts; and
WHEREAS, Sun Life will be the issuer of certain variable annuity
contracts ("Contracts") as set forth on Schedule A hereto, as the Parties
hereto may amend from time to time, which Contracts (hereinafter collectively,
the "Contracts"), if required by applicable law, will be registered under the
1933 Act; and
WHEREAS, Sun Life will fund the Contracts through the Accounts, each of
which may be divided into two or more subaccounts ("Subaccounts"; reference
herein to an "Account" includes reference to each Subaccount thereof to the
extent the context requires); and
WHEREAS, Sun Life will serve as the depositor of the Accounts, each of
which is registered as a unit investment trust investment company under the
1940 Act (or exempt therefrom), and the security interests deemed to be
issued by the Accounts under the Contracts will be registered as securities
under the 1933 Act (or exempt therefrom); and
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WHEREAS, to the extent permitted by applicable insurance laws and
regulations, Sun Life intends to purchase Shares of one or more of the Funds
on behalf of the Accounts to fund the Contracts; and
WHEREAS, Clarendon is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD");
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE FUNDS
1.1 AVAILABILITY.
AVIF will make Shares of each Fund available to Sun Life for purchase
and redemption at net asset value and with no sales charges, subject to the
terms and conditions of this Agreement. The Board of Directors of AVIF may
refuse to sell Shares of any Fund to any person, or suspend or terminate the
offering of Shares of any Fund if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole discretion of
the Directors acting in good faith and in light of their fiduciary duties
under federal and any applicable state laws, such action is deemed in the
best interests of the shareholders of such Fund.
1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS.
The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Contracts, or to delete, combine, or
modify existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund, AVIF, or its Shares herein
shall include a reference to any such additional Fund. Schedule A, as amended
from time to time, is incorporated herein by reference and is a part hereof.
1.3 NO SALES TO THE GENERAL PUBLIC.
AVIF represents and warrants that no Shares of any Fund have been or
will be sold to the general public.
SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS.
(a) AVIF or its designated agent will use its best efforts to provide Sun
Life with the net asset value per Share for each Fund by 5:30 p.m. Central
Time on each Business Day. As used herein, "Business Day" shall mean any day
on which (i) the New York Stock Exchange is open for
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regular trading, (ii) AVIF calculates the Fund's net asset value, and (iii)
Sun Life is open for business.
(b) Sun Life will use the data provided by AVIF each Business Day
pursuant to paragraph (a) immediately above to calculate Account unit values
and to process transactions that receive that same Business Day's Account
unit values. Sun Life will perform such Account processing the same Business
Day, and will place corresponding orders to purchase or redeem Shares with
AVIF by 9:00 a.m. Central Time the following Business Day; PROVIDED, however,
that AVIF shall provide additional time to Sun Life in the event that AVIF is
unable to meet the 5:30 p.m. Central Time stated in paragraph (a) immediately
above. Such additional time shall be equal to the additional time that AVIF
takes to make the net asset values available to Sun Life.
(c) With respect to payment of the purchase price by Sun Life and of
redemption proceeds by AVIF, Sun Life and AVIF shall net purchase and
redemption orders with respect to each Fund and shall transmit one net
payment per Fund in accordance with Section 2.2, below.
(d) If AVIF provides materially incorrect Share net asset value
information (as determined under SEC guidelines), Sun Life shall be entitled
to an adjustment to the number of Shares purchased or redeemed to reflect the
correct net asset value per Share. Any material error in the calculation of
reporting of net asset value per Share, dividend or capital gain information
shall be reported promptly upon discovery to Sun Life.
2.2 TIMELY PAYMENTS.
Sun Life will wire payment for net purchases to a custodial account
designated by AVIF by 1:00 p.m. Central Time on the same day as the order
for Shares is placed, to the extent practicable. AVIF will wire payment for
net redemptions to an account designated by Sun Life by 1:00 p.m Central Time
on the same day as the Order is placed, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed in
order to enable Sun Life to pay redemption proceeds within the time specified
in Section 22(e) of the 1940 Act or such shorter period of time as may be
required by law.
2.3 APPLICABLE PRICE.
(a) Share purchase payments and redemption orders that result from
purchase payments, premium payments, surrenders and other transactions under
Contracts (collectively, "Contract transactions") and that Sun Life receives
prior to the close of regular trading on the New York Stock Exchange on a
Business Day will be executed at the net asset values of the appropriate
Funds next computed after receipt by AVIF or its designated agent of the
orders. For purposes of this Section 2.3(a), Sun Life shall be the designated
agent of AVIF for receipt of orders relating to Contract transactions on each
Business Day and receipt by such designated agent shall constitute receipt by
AVIF; PROVIDED that AVIF receives notice of such orders by 9:00 a.m. Central
Time on the next following Business Day or such later time as computed in
accordance with Section 2.1(b) hereof. AVIF will acknowledge and verify
receipt of such orders by 12:00 p.m. Central Time on each business day on
which orders are received.
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(b) All other Share purchases and redemptions by Sun Life will be
effected at the net asset values of the appropriate Funds next computed after
receipt by AVIF or its designated agent of the order therefor, and such
orders will be irrevocable.
2.4 DIVIDENDS AND DISTRIBUTIONS.
AVIF will furnish notice by wire or telephone (followed by written
confirmation) on or prior to the payment date to Sun Life of any income
dividends or capital gain distributions payable on the shares of any Fund.
Sun Life hereby elects to reinvest all dividends and capital gains
distributions in additional Shares of the corresponding Fund at the
ex-dividend date net asset values until Sun Life otherwise notifies
AVIF in writing, it being agreed by the Parties that the ex-dividend date and
the payment date with respect to any dividend or distribution will be the
same Business Day. Sun Life reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash.
2.5 BOOK ENTRY.
Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to Sun Life. Shares ordered from AVIF will be
recorded in an appropriate title for Sun Life, on behalf of its Account, as
directed by Sun Life.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached hereto
and made a part hereof, each Party will bear all expenses incident to its
performance under this Agreement.
3.2 PARTIES TO COOPERATE.
Each party agrees to cooperate with the others, as applicable, in
arranging to print, mail and/or deliver, in a timely manner, combined or
coordinated prospectuses or other materials of AVIF and the Accounts. Except
as otherwise specifically provided herein, each Party will bear all expenses
incident to its performance under this Agreement.
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) AVIF represents and warrants that each Fund currently qualified as a
regulated investment company ("RIC") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and represents that it will
qualify and maintain qualification of each Fund as a RIC.
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AVIF will notify Sun Life immediately upon having a reasonable basis for
believing that a Fund has ceased to so qualify or that it might not so
qualify in the future.
(b) AVIF represents that it will comply and maintain each Fund's
compliance with the diversification requirements set forth in Section 817(h)
of the Code and Section 1.817-5(b) of the regulations under the Code. AVIF
will notify Sun Life immediately upon having a reasonable basis for believing
that a Fund has ceased to so comply or that a Fund might not so comply in the
future. In the event of a breach of this Section 4.1(b) by AVIF, it will
take all reasonable steps to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Section 1.817-5 of the
regulations under the Code.
(c) Notwithstanding Section 12.2 of this Agreement, Sun Life agrees that
if the Internal Revenue Service ("IRS") asserts in writing in connection
with any governmental audit or review of Sun Life or, to Sun Life's
knowledge, of any Participant, that any Fund has failed to comply with the
diversification requirements of Subchapter M or Section 817(h) of the Code or
Sun Life otherwise becomes aware of any facts that could give rise to any
claim against AVIF or its affiliates as a result of such a failure or alleged
failure:
(i) Sun Life shall promptly notify AVIF of such assertion or
potential claim (subject to the confidentiality provisions of
Section 18 as to any Participant);
(ii) Sun Life shall consult with AVIF as to how minimize any
liability that may arise as a result of such failure or
alleged failure;
(iii) Sun Life shall, in good faith and to the extent not
inconsistent with its fiduciary duties to its Contract
owners, use its best efforts to minimize any liability of AVIF
or its affiliates resulting from such failure, including,
without limitation, demonstrating, pursuant to Treasury
Regulations Section 1.817-5(a)(2), to the Commissioner of the
IRS that such failure was inadvertent;
(iv) Sun Life shall permit AVIF, its affiliates and their legal
and accounting advisors to participate, at their sole
expense, in any conferences, settlement discussions or other
administrative or judicial proceeding or contests (including
judicial appeals thereof) with the IRS, any Participant or
any other claimant regarding any claims that could give rise
to liability to AVIF or its affiliates as a result of such a
failure or alleged failure; PROVIDED, however, that Sun Life
will retain control of the conduct of such conferences,
discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by Sun Life to the IRS,
any Participant or any other claimant in connection with any
of the foregoing proceedings or contests (including, without
limitation, any such materials to be submitted to the IRS
pursuant to Treasury Regulations Section 1.817-5(a)(2), (a)
shall be provided by Sun Life to AVIF (together with any
supporting information or analysis); subject to the
confidentiality provisions of Section 18, at least ten
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(10) business days or such shorter period to which the
Parties hereto agree prior to the day on which such proposed
materials are to be submitted, and (b) shall not be submitted
by Sun Life to any such person without the express written
consent of AVIF which shall not be unreasonably withheld;
PROVIDED, that in any event, each Party shall use its best
efforts to make, as promptly as possible, the submissions to
the Commissioner of the IRS contemplated by paragraph
(c)(iii) above;
(vi) Sun Life shall provide AVIF or its affiliates and their
accounting and legal advisors with such cooperation as AVIF
shall reasonably request (including, without limitation, by
permitting AVIF and its accounting and legal advisors to
review the relevant books and records of Sun Life) in order to
facilitate review by AVIF or its advisors of any written
submissions provided to it pursuant to the preceding clause
or its assessment of the validity or amount of any claim
against its arising from such a failure or alleged failure.
(vii) Sun Life shall not with respect to any claim of the IRS or
any Participant that would give rise to a claim against
AVIF or its affiliates (a) compromise or settle any claim,
(b) accept any adjustment on audit, or (c) forego any
allowable administrative or judicial appeals, without the
express written consent of AVIF or its affiliates, which
shall not be unreasonably withheld, PROVIDED, that after
exhausting all administrative remedies, in the event of an
adverse judicial decision, Sun Life shall either (a) appeal
such decision, PROVIDED, that to the extent requested by Sun
Life, AVIF or its affiliates provides an opinion of
independent counsel to the effect that a reasonable basis
exists for taking such appeal, in which case the costs of
such appeal shall be borne equally by the Parties hereto,
or (b) permit AVIF and its affiliates to act in the name of
Sun Life and to control the conduct of such appeal pursuant
to the last paragraph of this Section 4.1(c), in which case
the costs of such appeal shall be borne by AVIF or its
affiliates pursuant to that paragraph; and
(viii) AVIF and its affiliates shall have no liability as a result
of such failure or alleged failure if Sun Life fails to
comply with any of the foregoing clauses (i) through (vii),
and such failure could be shown to have materially
contributed to the liability.
Should AVIF or any of its affiliates refuse to give its written consent
to any compromise or settlement of any claim or liability hereunder, Sun life
may, in its discretion, authorize AVIF or its affiliates to act in the name
of Sun Life in, and to control the conduct of, such conferences, discussions,
proceedings, contests or appeals and all administrative or judicial appeals
thereof, and in that event AVIF or its affiliates shall bear the fees and
expenses associated with the conduct of the proceedings that it is so
authorized to control; PROVIDED, that in no event shall Sun life have any
liability resulting from AVIF's refusal to accept the proposed settlement or
compromise with respect to any failure to comply with the requirements of
Subchapter M or Section 817(h) of the Code
6
caused by AVIF. As used in this Agreement, the term "affiliates" shall have
the same meaning as "affiliated person" as defined in Section 2(a)(3) of the
1940 Act.
(d) AVIF agrees to cooperate with Sun Life with respect to the matters
described in paragraphs (c)(i) through (vii) above. AVIF further agrees that
it shall provide or cause to be provided to Sun Life, on a quarterly basis,
written confirmation of each Fund's compliance with the diversification
requirements of Subchapter M and Section 817(h) of the Code.
(e) Sun Life represents and warrants that the Contracts currently are
and will be treated as annuity contracts or life insurance contracts under
applicable provisions of the Code and that it will maintain such treatment;
Sun Life will notify AVIF immediately upon having a reasonable basis for
believing that any of the Contracts have ceased to be so treated or that they
might not be so treated in the future.
(f) Sun Life represents and warrants that each Account is a "segregated
asset account" and that interests in each Account are offered exclusively
through the purchase of or transfer into a "variable contract," within the
meaning or such terms under Section 817 of the Code and the regulations
thereunder. Sun Life will continue to meet such definitional requirements,
and it will notify AVIF immediately upon having a reasonable basis for
believing that such requirements have ceased to be met or that they might not
be met in the future.
4.2 INSURANCE AND CERTAIN OTHER LAWS.
(a) AVIF will use its best efforts to comply with any applicable state
insurance laws or regulations, to the extent specifically requested by Sun
Life, including, the furnishing of information not otherwise available to Sun
Life which is required by state insurance law to enable Sun Life to obtain
the authority needed to issue the Contracts in any applicable state.
(b) Sun Life represents and warrants that (i) it is an insurance company
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power, authority and legal right to
execute, deliver and perform its duties and comply with its obligations under
this Agreement, (ii) it has legally and validly established and maintains
each Account as a segregated asset account under Delaware law and the
regulations thereunder, and (iii) the Contracts comply in all material
respects with all other applicable federal and state laws and regulations.
(c) AVIF represents and warrants that it is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Maryland and has full power, authority, and legal right to execute,
deliver, and perform its duties and comply with its obligations under this
Agreement.
4.3 SECURITIES LAWS.
(a) Sun Life represents and warrants that (i) interests in each Account
pursuant to the Contracts will be registered under the 1933 Act to the extent
required by the 1933 Act, (ii) the
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Contracts will be duly authorized for issuance and sold in compliance with
all applicable federal and state laws, including, without limitation, the
1933 Act, the 1934 Act, the 1940 Act and Delaware law, (iii) each Account is
and will remain registered under the 1940 Act, to the extent required by the
1940 act, (iv) each Account does and will comply in all material respects
with the requirements of the 1940 Act and the rules thereunder, to the extent
required, (v) each Account's 1933 Act registration statement relating to the
Contracts, together with any amendments thereto, will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder, (vi) Sun Life will amend the registration statement for its
Contracts under the 1933 Act and for its Accounts under the 1940 Act from
time to time as required in order to effect the continuous offering of its
Contracts or as may otherwise be required by applicable law, and (vii) each
Account Prospectus will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder.
(b) AVIF represents and warrants that (i) Shares sold pursuant to this
Agreement will be registered under the 1933 Act to the extent required by the
1933 Act and duly authorized for issuance and sold in compliance with
Maryland law, (ii) AVIF is and will remain registered under the 1940 Act to
the extent required by the 1940 Act, (iii) AVIF will amend the registration
statement for its Shares under the 1933 Act and itself under the 1940 Act
from time to time as required in order to effect the continuous offering of
its Shares, (iv) AVIF does and will comply in all material respects with the
requirements of the 1940 Act and the rules thereunder, (v) AVIF's 1933 Act
registration statement, together with any amendments thereto, will at all
times comply in all material respects with the requirements of the 1933 Act
and rules thereunder, and (vi) AVIF's Prospectus will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder.
(c) AVIF will at its expense register and qualify its Shares for sale in
accordance with the laws of any state or other jurisdiction if and to the
extent reasonably deemed advisable by AVIF.
(d) AVIF currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it reserves the right to make such payments in the future. To the
extent that it decides to finance distribution expenses pursuant to Rule
12b-1, AVIF undertakes to have its Board of Directors, a majority of whom are
not "interested" persons of the Fund, formulate and approve any plan under
Rule 12b-1 to finance distribution expenses.
(e) AVIF represents and warrants that all of its trustees, officers,
employees, investment advisers, and other individuals/entities having access
to the funds and/or securities of the Fund are and continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit
of the Fund in an amount not less than the minimal coverage as required
currently by Rule 17g-(1) of the 1940 Act or related provisions as may be
promulgated from time to time. The aforesaid bond includes coverage for
larceny and embezzlement and is issued by a reputable bonding company.
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4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) AFIF will immediately notify Sun Life of (i) the issuance by any
court or regulatory body of any stop order, cease and desist order, or other
similar order with respect to AVIF's registration statement under the 1933
Act or AVIF Prospectus, (ii) any request by the SEC for any amendment to such
registration statement or AVIF Prospectus that may affect the offering of
Shares of AVIF, (iii) the initiation of any proceedings for that purpose or
for any other purpose relating to the registration or offering of AVIF's
Shares, or (iv) any other action or circumstances that may prevent the lawful
offer or sale of Shares of any Fund in any state or jurisdiction, including,
without limitation, any circumstances in which (a) such Shares are not
registered and, in all material respects, issued and sold in accordance with
applicable state and federal law, or (b) such law precludes the use of such
Shares as an underlying investment medium of the Contracts issued or to be
issued by Sun Life. AVIF will make every reasonable effort to prevent the
issuance, with respect to any Fund, of any such stop order, cease and desist
order or similar order and, if any such order is issued, to obtain the
lifting thereof at the earliest possible time.
(b) Sun Life will immediately notify AVIF of (i) the issuance by any
court or regulatory body of any stop order, cease and desist order, or other
similar order with respect to each Account's registration statement under the
1933 Act relating to the Contracts or each Account Prospectus, (ii) any
request by the SEC for any amendment to such registration statement or
Account Prospectus that may affect the offering of Shares of AVIF, (iii) the
initiation of any proceedings for that purpose or for any other purpose
relating to the registration or offering of each Account's interests pursuant
to the Contracts, or (iv) any other action or circumstances that may prevent
the lawful offer or sale of said interests in any state or jurisdiction,
including, without limitation, any circumstances in which said interests
are not registered and, in all material respects, issued and sold in
accordance with applicable state and federal law. Sun Life will make every
reasonable effort to prevent the issuance of any such stop order, cease and
desist or similar order and, if any such order is issued, to obtain the
lifting thereof at the earliest possible time.
4.5 SUN LIFE TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) Sun Life will provide to AVIF or its designated agent at least one
(1) complete copy of all SEC registration statements, Account Prospectuses,
reports, any preliminary and final voting instruction solicitation material,
applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to each Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(b) Sun Life will provide to AVIF or its designated agent at least one
(1) complete copy of each piece of sales literature or other promotional
material in which AVIF or any of its affiliates is named, at least ten (10)
Business Days prior to its use or such shorter period as the Parties hereto
may, from time to time, agree upon. No such material shall be used if AVIF or
its designated agent objects to such use within ten (10) Business Days after
receipt of such material or such shorter period as the Parties hereto may,
from time to time, agree upon. AVIF hereby designates AIM as the entity to
receive such sales literature, until such time as AVIF appoints another
designated agent by giving notice to Sun Life in the manner required by
Section 9 hereof.
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(c) Neither Sun Life nor any of its affiliates, will give any
information or make any representations or statements on behalf of or
concerning AVIF or its affiliates in connection with the sale of the
Contracts other than (i) the information or representations contained in the
registration statement, including the AVIF Prospectus contained therein,
relating to Shares, as such registration statement and AVIF Prospectus may be
amended from time to time; or (ii) in reports or proxy materials for AVIF; or
(iii) in published reports for AVIF that are in the public domain and
approved by AVIF for distribution; or (iv) in sales literature or other
promotional material approved by AVIF, except with the express written
permission of AVIF.
(d) Sun Life shall adopt and implement procedures reasonably designed
to ensure that information concerning AVIF and its affiliates that is intended
for use only by brokers or agents selling the Contracts (I.E., information
that is not intended for distribution to Participants) ("broker only
materials") is so used, and neither AVIF nor any of its affiliates shall be
liable for any losses, damages or expenses relating to the improper use of
such broker only materials.
(e) For the purposes of this Section 4.5, the phrase "sales literature
or other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or other
public media, (E.G., on-line networks such as the Internet or other
electronic messages), sales literature (I.E., any written communication
distributed or made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form letters,
seminar texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or other
communications distributed or made generally available to some or all agents
or employees, registration statements, prospectuses, statements of additional
information, shareholder reports, and proxy materials and any other material
constituting sales literature or advertising under the NASD rules, the 1933
Act or the 0000 Xxx.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT SUN LIFE.
(a) AVIF will provide to Sun Life at least one (1) complete copy of all
SEC registration statements, AVIF Prospectuses, statements of additional
information reports, any preliminary and final proxy material, applications
for exemptions, exemptive orders, requests for no-action letters, and all
amendments to any of the above, that relate to AVIF or the Shares of a Fund,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(b) AVIF will provide to Sun Life or its designated agent at least one
(1) complete copy of each piece of sales literature or other promotional
material in which Sun Life, or any of its respective affiliates is named, or
that refers to the Contracts, at least ten (10) Business Days prior to its
use or such shorter period as the Parties hereto may, from time to time,
agree upon. No such material shall be used if Sun Life or its designated
agent objects to such use within ten (10) Business Days after receipt of such
material or such shorter period as the Parties hereto may, from time to time,
agree upon. Sun Life shall receive all such sales literature until such time
as it appoints a designated agent by giving notice to AVIF in the manner
required by Section 9 hereof.
10
(c) Neither AVIF nor any of its affiliates will give any information or
make any representations or statements on behalf of or concerning Sun Life,
each Account, or the Contracts other than (i) the information or
representations contained in the registration statement, including each
Account Prospectus contained therein, relating to the Contracts, as such
registration statement and Account Prospectus may be amended from time to
time; or (ii) in published reports for the Account or the Contracts that are
in the public domain and approved by Sun Life for distribution; or (iii) in
sales literature or other promotional material approved by Sun Life or its
Affiliates, except with the express written permission of Sun Life.
(d) AVIF shall cause its principal underwriter to adopt and implement
procedures reasonably designed to ensure that information concerning Sun
Life, and its respective affiliates that is intended for use only by brokers
or agents selling the Contracts (I.E., information that is not intended for
distribution to Participants) ("broker only materials") is so used, and
neither Sun Life, nor any of its respective affiliates shall be liable for
any losses, damages or expenses relating to the improper use of such broker
only materials.
(e) For purposes of this Section 4.6, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine,
or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public
media, (E.G., on-line networks such as the Internet or other electronic
messages), sales literature (I.E., any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or
published article)), educational or training materials or other
communications distributed or made generally available to some or all agents
or employees, registration statements, prospectuses, statements of additional
information, shareholder reports, and proxy materials and any other material
constituting sales literature or advertising under the NASD rules, the 1933
Act or the 1940 Act.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
The SEC has granted an order to AVIF exempting it from certain
provisions of the 1940 Act and rules thereunder so that AVIF may be available
for investment by certain other entities, including, without limitation,
separate accounts funding variable annuity contracts or variable life
insurance contracts, separate accounts of insurance companies unaffiliated
with Sun Life, and trustees of qualified pension and retirement plans
(collectively, "Mixed and Shared Funding"). The Parties recognize that the
SEC has imposed terms and conditions for such orders that are substantially
identical to many of the provisions of this Section 5. Sections 5.2 through
5.8 below shall apply pursuant to such an exemptive order granted to AVIF.
AVIF hereby notifies Sun Life that, in the event that AVIF implements Mixed
and Shared Funding, it may be appropriate to include in the prospectus
pursuant to which a Contract is offered disclosure regarding the potential
risks of Mixed and Shared Funding.
11
5.2 DISINTERESTED DIRECTORS.
AVIF agrees that its Board of Directors shall at all times consist of
directors a majority of whom (the "Disinterested Directors") are not
interested persons of AVIF within the meaning of Section 2(a)(19) of the 1940
Act and the Rules thereunder and as modified by any applicable orders of the
SEC, except that if this condition is not met by reason of the death,
disqualification, or bona fide resignation of any director, then the
operation of this condition shall be suspended (a) for a period of forty-five
(45) days if the vacancy or vacancies may be filled by the Board; (b) for a
period of sixty (60) days if a vote of shareholders is required to fill the
vacancy or vacancies; or (c) for such longer period as the SEC may prescribe
by order upon application.
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
AVIF agrees that its Board of Directors will monitor for the existence of
any material irreconcilable conflict between the interests of the
Participants in all separate accounts of life insurance companies utilizing
AVIF ("Participating Insurance Companies"), including each Account, and
participants in all qualified retirement and pension plans investing in AVIF
("Participating Plans"). Sun Life agrees to inform the Board of Directors of
AVIF of the existence of or any potential for any such material
irreconcilable conflict of which it is aware. The concept of a "material
irreconcilable conflict" is not defined by the 1940 Act or the rules
thereunder, but the Parties recognize that such a conflict may arise for a
variety of reasons, including, without limitation:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax
or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Fund are being managed;
(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract Participants or by Participants
of different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard the
voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting
instructions of Plan participants.
Consistent with the SEC's requirements in connection with exemptive
orders of the type referred to in Section 5.1 hereof, Sun Life will assist
the Board of Directors in carrying out its responsibilities by providing the
Board of Directors with all information reasonably necessary for the Board of
Directors to consider any issue raised, including information as to a
decision by Sun
12
Life to disregard voting instructions of Participants. Sun Life's
responsibilities in connection with the foregoing shall be carried out with a
view only to the interests of Participants.
5.4 CONFLICT REMEDIES.
(a) It is agreed that if it is determined by a majority of the members
of the Board of Directors or a majority of the Disinterested Directors that a
material irreconcilable conflict exists, Sun Life will, if it is a
Participating Insurance Company for which a material irreconcilable conflict
is relevant, at its own expense and to the extent reasonably practicable (as
determined by a majority of the Disinterested Directors), take whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict,
which steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of the
Accounts from AVIF or any Fund and reinvesting such assets in
a different investment medium, including another Fund of AVIF,
or submitting the question whether such segregation should be
implemented to a vote of all affected Participants and, as
appropriate, segregating the assets of any particular group
(E.G., annuity Participants, life insurance Participants or all
Participants) that votes in favor of such segregation, or
offering to the affected Participants the option of making
such a change; and
(ii) establishing a new registered investment company of the type
defined as a "management company" in Section 4(3) of the 1940
Act or a new separate account that is operated as a management
company.
(b) If the material irreconcilable conflict arises because of Sun
Life's decision to disregard Participant voting instructions and that
decision represents a minority position or would preclude a majority vote,
Sun Life may be required, at AVIF's election, to withdraw each Account's
investment in AVIF or any Fund. No charge or penalty will be imposed as a
result of such withdrawal. Any such withdrawal must take place within six (6)
months after AVIF gives notice to Sun Life that this provision is being
implemented, and until such withdrawal AVIF shall continue to accept and
implement orders by Sun Life for the purchase and redemption of Shares of
AVIF.
(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to Sun Life conflicts with
the majority of other state regulators, then Sun Life will withdraw each
Account's investment in AVIF within six (6) months after AVIF's Board of
Directors informs Sun Life that it has determined that such decision has
created a material irreconcilable conflict, and until such withdrawal AVIF
shall continue to accept and implement orders by Sun Life for the purchase
and redemption of Shares of AVIF. No charge or penalty will be imposed as a
result of such withdrawal.
(d) Sun Life agrees that any remedial action taken by it in resolving
any material irreconcilable conflict will be carried out at its expense and
with a view only to the interests of Participants.
13
(e) For purposes hereof, a majority of the Disinterested Directors
will determine whether or not any proposed action adequately remedies any
material irreconcilable conflict. In no event, however, will AVIF or any of
its affiliates be required to establish a new funding medium for any
Contracts. Sun Life will not be required by the terms hereof to establish a
new funding medium for any Contracts if an offer to do so has been declined
by vote of a majority of Participants materially adversely affected by the
material irreconcilable conflict.
5.5 NOTICE TO SUN LIFE.
AVIF will promptly make known in writing to Sun Life the Board of
Directors' determination of the existence of material irreconcilable
conflict, a description of the facts that give rise to such conflict and the
implications of such conflict.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
Sun Life and AVIF (or its investment adviser) will at least annually
submit to the Board of Directors of AVIF such reports, materials or data as
the Board of Directors may reasonably request so that the Board of Directors
may fully carry out the obligations imposed upon it by the provisions hereof
or any exemptive order granted by the SEC to permit Mixed and Shared Funding,
and said reports, materials and data will be submitted at any reasonable time
deemed appropriate by the Board of Directors. All reports received by the
Board of Directors of potential or existing conflicts, and all Board of
Directors actions with regard to determining the existence of a conflict,
notifying Participating Insurance Companies and Participating Plans of a
conflict, and determining whether any proposed action adequately remedies a
conflict, will be properly recorded in the minutes of the Board of Directors
or other appropriate records, and such minutes or other records will be made
available to the SEC upon request.
5.7 COMPLIANCE WITH SEC RULES.
If, at any time during which AVIF is serving as an investment medium for
variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to Mixed and Shared Funding, AVIF agrees that it will comply with the
terms and conditions thereof and that the terms of this Section 5 shall be
deemed modified if and only to the extent required in order also to comply
with the terms and conditions of such exemptive relief that is afforded by
any of said rules that are applicable.
5.8 OTHER REQUIREMENTS.
AVIF will require that each Participating Insurance Company and
Participating Plan enter into an agreement with AVIF that contains in
substance the same provisions as are set forth in Sections 4.1(b), 4.1(d),
4.3(a), 4.4(b), 4.5(a), 5, and 10 of this Agreement.
14
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.4 below, this Agreement will terminate as to a Fund:
(a) at the option of any party, with or without cause with respect to
the Fund, upon one (1) year's advance written notice to the other parties,
or, if later, upon receipt of any required exemptive relief from the SEC,
unless otherwise agreed to in writing by the parties; or
(b) at the option of AVIF upon institution of formal proceedings
against Sun Life or its affiliates by the NASD, the SEC, any state insurance
regulator or any other regulatory body regarding Sun Life's obligations under
this Agreement or related to the sale of the Contracts, the operation of each
Account, or the purchase of Shares, if, in each case, AVIF reasonably
determines that such proceedings, or the facts on which such proceedings
would be based, have a material likelihood of imposing material adverse
consequences on the Fund with respect to which the Agreement is to be
terminated; or
(c) at the option of Sun Life upon institution of formal proceedings
against AVIF, its principal underwriter, or its investment adviser by the
NASD, the SEC, or any state insurance regulator or any other regulatory body
regarding AVIF's obligations under this Agreement or related to the operation
or management of AVIF or the purchase of AVIF Shares, if in each case, Sun
Life reasonably determines that such proceedings, or the facts on which such
proceedings would be based, have a material likelihood of imposing material
adverse consequences on Sun Life, or the Subaccount corresponding to the Fund
with respect to which the Agreement is to be terminated; or
(d) at the option of any Party in the event that (i) the Fund's Shares
are not registered and, in all material respects, issued and sold in
accordance with any applicable federal or state law, or (ii) such law
precludes the use of such Shares as an underlying investment medium of the
Contracts issued or to be issued by Sun Life; or
(e) upon termination of the corresponding Subaccount's investment in
the Fund pursuant to Section 5 hereof; or
(f) at the option of Sun Life if the Fund ceases to qualify as a RIC
under Subchapter M of the Code or under successor or similar provisions, or
if Sun Life reasonably believes that the Fund may fail to so qualify; or
(g) at the option of Sun Life if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, or if Sun
Life reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by Sun Life cease to
qualify as annuity contracts or life insurance contracts under the Code
(other than by reason of the Fund's noncompliance with Section 817(h) or
Subchapter M of the Code) or if interests in an Account under
15
the Contracts are not registered, where required, and, in all material
respects, are not issued or sold in accordance with any applicable federal or
state law; or
(i) upon another Party's material breach of any provision of this
Agreement; or
(j) at the option of Sun Life or AVIF upon receipt of any necessary
regulatory approvals and/or the vote of the Contract owners having an
interest in the account (or any Subaccount) to substitute the shares of
another investment for the corresponding AVIF Shares in accordance with the
terms of the Contracts for which those Shares had been selected to serve as
the underlying investment media. Sun Life will give thirty (30) days' prior
written notice to AVIF of the date of any proposed vote or other action taken
to replace the AVIF Shares; or
(k) at the option of Sun Life, if Sun Life determines in its sole
judgment exercised in good faith, that either AVIF or AVIF's investment
adviser has suffered a material adverse change in its business, operations or
financial condition since the date of this Agreement or is the subject of
material adverse publicity which is likely to have a material adverse impact
upon the business and operations of Sun Life; or
(l) at the option of AVIF, if AVIF determines in its sole judgment
exercised in good faith, that Sun Life has suffered a material adverse change
in its business, operations or financial condition since the date of this
Agreement or is the subject of material adverse publicity which is likely to
have a material adverse impact upon the business and operations of AVIF.
6.2 NOTICE REQUIREMENT FOR TERMINATION.
No termination of this Agreement will be effective unless and until the
Party terminating this Agreement gives prior written notice to the other
Party to this Agreement of its intent to terminate, and such notice shall set
forth the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of
Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be given at
least six (6) months in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions of
Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall be given at
least ninety (90) days in advance of the effective date of termination unless
a shorter time is agreed to by the Parties hereto; and
(c) in the event that any termination is based upon the provisions of
Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior written
notice shall be given as soon as possible within twenty-four (24) hours after
the terminating Party learns of the event causing termination to be required.
16
6.3 FUNDS TO REMAIN AVAILABLE.
Notwithstanding any termination of this Agreement, AVIF will, at the
option of Sun Life, continue to make available additional shares of the Fund
pursuant to the terms and conditions of this Agreement, for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, without limitation, the
owners of the Existing Contracts will be permitted to reallocate investments
in the Fund (as in effect on such date), redeem investments in the Fund
and/or invest in the Fund upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 6.3 will
not apply to any terminations under Section 5 and the effect of such
terminations will be governed by Section 5 of this Agreement.
6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
All warranties and indemnifications will survive the termination of this
Agreement.
6.5 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES.
If any Party terminates this Agreement with respect to any Fund pursuant
to Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof,
this Agreement shall nevertheless continue in effect as to any Shares of that
Fund that are outstanding as of the date of such termination (the "Initial
Termination Date"). This continuation shall extend to the earlier of the date
as of which an Account owns no Shares of the affected Fund or a date (the
"Final Termination Date") six (6) months following the Initial Termination
Date, except that Sun Life may, by written notice shorten said six (6) month
period in the case of a termination pursuant to Sections 6.1(d), 6.1(f),
6.1(g), 6.1(h) or 6.1(i).
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
The Parties hereto agree to cooperate and give reasonable assistance to
one another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to
Section 6.1(a), the termination date specified in the notice of termination.
Such steps may include combining the affected Account with another Account,
substituting other mutual fund shares for those of the affected Fund, or
otherwise terminating participation by the Contracts in such Fund.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the written
consent of each other Party.
17
SECTION 9. NOTICES
Notices and communications required or permitted by Section 9 hereof
will be given by means mutually acceptable to the Parties concerned. Each
other notice or communication required or permitted by this Agreement will be
given to the following persons at the following addresses and facsimile
numbers, or such other persons, addresses or facsimile numbers as the Party
receiving such notices or communications may subsequently direct in writing:
AIM VARIABLE INSURANCE FUNDS, INC.
A I M DISTRIBUTORS, INC.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
CLARENDON INSURANCE AGENCY, INC.
Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxxx Xxxxxxx, Esq.
Senior Associate Counsel
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof,
Sun Life will distribute all proxy material furnished by AVIF to
Participants to whom pass-through voting privileges are required to be
extended and will solicit voting instructions from Participants. Sun Life
will vote Shares in accordance with timely instructions received from
Participants. Sun Life will vote Shares that are (a) not attributable to
Participants to whom pass-through voting privileges are extended, or
(b) attributable to Participants, but for which no timely instructions have
been received, in the same proportion as Shares for which said instructions
have been received from Participants, so long as and to the extent that the
SEC continues to interpret the 1940 Act to require pass through voting
privileges for Participants. Neither Sun Life nor any of its affiliates will
in any way recommend action in connection with or oppose or interfere with
the solicitation of proxies for the Shares held for such Participants. Sun
Life reserves the right to vote shares held in any Account in its own right,
to the extent permitted by law. Sun Life shall be responsible for assuring
that each of its Accounts holding Shares calculates voting privileges in a
manner consistent with that of other Participating Insurance Companies in the
manner required by the Mixed and Shared Funding exemptive order obtained by
AVIF. AVIF will notify Sun Life of any changes of interpretations or
amendments to Mixed and Shared Funding exemptive order it has obtained. AVIF
will comply with all provisions
18
of the 1940 Act requiring voting by shareholders, and in particular, AVIF
either will provide for annual meetings (except insofar as the SEC may
interpret Section 16 of the 1940 Act not to require such meetings) or will
comply with Section 16(c) of the 1940 Act (although AVIF is not one of the
trusts described in Section 16(c) of that Act) as well as with Sections 16(a)
and, if and when applicable, 16(b). Further, AVIF will act in accordance with
the SEC's interpretation of the requirements of Section 16(a) with respect to
periodic elections of directors and with whatever rules the SEC may
promulgate with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with Sun Life concerning any decision
to elect or not to elect pursuant to Section 853 of the Code to pass through
the benefit of any foreign tax credits to its shareholders.
SECTION 12. INDEMNIFICATION
12.1 OF AVIF AND AIM BY SUN LIFE AND CLARENDON.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, Sun Life and Clarendon agree to indemnify and hold harmless AVIF, its
affiliates, and each person, if any, who controls AVIF or its affiliates
within the meaning of Section 15 of the 1933 Act and each of their respective
directors and officers, (collectively, the "Indemnified Parties" for purposes
of this Section 12.1) against any and all losses, costs, expenses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of Sun Life and Clarendon) or actions in respect thereof (including,
to the extent reasonable, legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at common law or
otherwise; PROVIDED, the Account owns shares of the Fund and insofar as such
losses, costs, expenses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's
1933 Act registration statement, any Account Prospectus, the
Contracts, or sales literature or advertising for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading; PROVIDED, that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to Sun Life or
Clarendon by or on behalf of AVIF or AIM for use in any Account's
1933 Act registration statement, any Account Prospectus, the
Contracts, or sales literature or advertising or otherwise for
use in connection with the sale of Contracts or Shares (or any
amendment or supplement to any of the foregoing); or
19
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in AVIF's 1933 Act registration statement, AVIF
Prospectus, sales literature or advertising of AVIF, or any
amendment or supplement to any of the foregoing, not supplied for
use therein by or on behalf of Sun Life, Clarendon or their
respective affiliates and on which such persons have reasonably
relied) or the negligent, illegal or fraudulent conduct of Sun
Life, Clarendon or their respective affiliates or persons under
their control (including, without limitation, their employees and
"Associated Persons," as that term is defined in paragraph (m) of
Article I of the NASD's By-Laws), in connection with the sale or
distribution of the Contracts or Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statement, AVIF Prospectus, sales literature or
advertising of AVIF, or any amendment or supplement to any of the
foregoing, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with
information furnished to AVIF or its affiliates by or on behalf
of Sun Life, Clarendon or their respective affiliates for use in
AVIF's 1933 Act registration statement, AVIF Prospectus, sales
literature or advertising of AVIF, or any amendment or supplement
to any of the foregoing; or
(iv) arise as a result of any failure by Sun Life or Clarendon to
perform the obligations, provide the services and furnish the
materials required of them under the terms of this Agreement, or
any material breach of any representation and/or warranty made by
Sun Life or Clarendon in this Agreement or arise out of or result
from any other material breach of this Agreement by Sun Life or
Clarendon; or
(v) arise as a result of failure by the Contracts issued by Sun Life
to qualify as annuity contracts or life insurance contracts under
the Code, otherwise than by reason of any Fund's failure to
comply with Subchapter M or Section 817(h) of the Code.
(b) Neither Sun Life nor Clarendon shall be liable under this
Section 12.1 with respect to any losses, costs, expenses, claims, damages,
liabilities or actions to which an Indemnified Party would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence in
the performance by that Indemnified Party of its duties or by reason of that
Indemnified Party's reckless disregard of obligations or duties (i) under
this Agreement, or (ii) to AVIF.
(c) Neither Sun Life nor Clarendon shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless
AVIF or AIM shall have notified Sun Life and Clarendon in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the action shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but
20
failure to notify Sun Life and Clarendon of any such action shall not relieve
Sun Life and Clarendon from any liability which they may have to the
Indemnified Party against whom such action is brought otherwise than on
account of this Section 12.1. Except as otherwise provided herein, in case
any such action is brought against an Indemnified Party, Sun Life and
Clarendon shall be entitled to participate, at their own expense, in the
defense of such action and also shall be entitled to assume the defense
thereof, with counsel approved by the Indemnified Party named in the action,
which approval shall not be unreasonably withheld. After notice from Sun Life
or Clarendon to such Indemnified Party of Sun Life's or Clarendon's election
to assume the defense thereof, the Indemnified Party will cooperate fully
with Sun Life and Clarendon and shall bear the fees and expenses of any
additional counsel retained by it, and neither Sun Life nor Clarendon will be
liable to such Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof, other than reasonable costs of
investigation.
12.2 OF SUN LIFE AND CLARENDON BY AVIF AND AIM.
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e), below, AVIF and AIM agree to indemnify and hold harmless Sun Life,
Clarendon, their respective affiliates, and each person, if any, who controls
Sun Life, Clarendon or their respective affiliates within the meaning of
Section 15 of the 1933 Act and each of their respective directors and
officers, (collectively, the "Indemnified Parties" for purposes of this
Section 12.2) against any and all losses, costs, expenses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
AVIF and/or AIM) or actions in respect thereof (including, to the extent
reasonable, legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law, or otherwise;
PROVIDED, the Account owns shares of the Fund and insofar as such losses,
costs, expenses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statement, AVIF Prospectus or sales literature
or advertising of AVIF (or any amendment or supplement to any
of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading; PROVIDED, that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to AVIF or its affiliates by or on behalf
of Sun Life, Clarendon or their respective affiliates for use
in AVIF's 1933 Act registration statement, AVIF Prospectus, or
in sales literature or advertising or otherwise for use in
connection with the sale of Contracts or Shares (or any
amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in any Account's 1933 Act registration statement,
any Account Prospectus, sales literature or advertising for the
Contracts, or any amendment or supplement to any of the
foregoing, not
21
supplied for use therein by or on behalf of AVIF or AIM or
their affiliates and on which such persons have reasonably
relied) or the negligent, illegal or fraudulent conduct of AVIF
or AIM or their affiliates or persons under its control
(including, without limitation, their employees and "Associated
Persons" as that term is defined in Section (n) of Article I
of the NASD By-Laws), in connection with the sale or
distribution of AVIF Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any
Account's 1933 Act registration statement, any Account
Prospectus, sales literature or advertising covering the
Contracts, or any amendment or supplement to any of the
foregoing, or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, if such statement or
omission was made in reliance upon and in conformity with
information furnished to Sun Life, Clarendon or their
respective affiliates by or on behalf of AVIF or AIM for use in
any Account's 1933 Act registration statement, any Account
Prospectus, sales literature or advertising covering the
Contracts, or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by AVIF to perform the
obligations, provide the services and furnish the materials
required of it under the terms of this Agreement, or any
material breach of any representation and/or warranty made by
AVIF in this Agreement or arise out of or result from any other
material breach of this Agreement by AVIF.
(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e) hereof, AVIF and AIM agree to indemnify and hold harmless the
Indemnified Parties from and against any and all losses, claims, damages,
liabilities (including amounts paid in settlement thereof with, the written
consent of AVIF and/or AIM) or actions in respect thereof (including, to the
extent reasonable, legal and other expenses) to which the Indemnified Parties
may become subject directly or indirectly under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or actions
directly or indirectly result from or arise out of the failure of any Fund to
operate as a regulated investment company in compliance with (i) Subchapter M
of the Code and regulations thereunder, or (ii) Section 817(h) of the Code
and regulations thereunder, including, without limitation, any income taxes
and related interest and penalties, rescission charges, liability under state
law to Participants asserting liability against Sun Life pursuant to the
Contracts, the costs of any ruling and closing agreement or other settlement
with the IRS, and the cost of any substitution by Sun Life of Shares of
another investment company or portfolio for those of any adversely affected
Fund as a funding medium for each Account that Sun Life reasonably deems
necessary or appropriate as a result of the noncompliance.
(c) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any losses, costs, expenses, claims, damages, liabilities or
actions to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance by
that Indemnified Party of its duties or by reason of such Indemnified Party's
reckless
22
disregard of its obligations or duties (i) under this Agreement, or (ii) to
Sun Life, Clarendon, each Account or Participants.
(d) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any action against an Indemnified Party unless the Indemnified
Party shall have notified AVIF and/or AIM in writing within a reasonable time
after the summons or other first legal process giving information of the
nature of the action shall have been served upon such Indemnified Party (or
after such Indemnified Party shall have received notice of such service on
any designated agent), but failure to notify AVIF or AIM of any such action
shall not relieve AVIF or AIM from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on
account of this Section 12.2. Except as otherwise provided herein, in case
any such action is brought against an Indemnified Party, AVIF and/or AIM will
be entitled to participate, at its own expense, in the defense of such action
and also shall be entitled to assume the defense thereof (which shall
include, without limitation, the conduct of any ruling request and closing
agreement or other settlement proceeding with the IRS), with counsel approved
by the Indemnified Party named in the action, which approval shall not be
unreasonably withheld. After notice from AVIF and/or AIM to such Indemnified
Party of AVIF's or AIM's election to assume the defense thereof, the
Indemnified Party will cooperate fully with AVIF and AIM and shall bear the
fees and expenses of any additional counsel retained by it, and AVIF will not
be liable to such Indemnified Party under this Agreement for any legal or
other expenses subsequently incurred by such Indemnified Party independently
in connection with the defense thereof, other than reasonable costs of
investigation.
(e) In no event shall either AVIF or AIM be liable under the
indemnification provisions contained in this Agreement to any individual or
entity, including, without limitation, Sun Life, Clarendon or any other
Participating Insurance Company or any Participant, with respect to any
losses, claims, damages, liabilities or expenses that arise out of or result
from (i) a breach of any representation, warranty, and/or covenant made by
Sun Life or Clarendon hereunder or by any Participating Insurance Company
under an agreement containing substantially similar representations,
warranties and covenants; (ii) the failure by Sun Life or any Participating
Insurance Company to maintain its segregated asset account (which invests in
any Fund) as a legally and validly established segregated asset account under
applicable state law and as a duly registered unit investment trust under the
provisions of the 1940 Act (unless exempt therefrom); or (iii) the failure by
Sun Life or any Participating Insurance Company to maintain its variable
annuity or life insurance contracts (with respect to which any Fund serves as
an underlying funding vehicle) as annuity contracts or life insurance
contracts under applicable provisions of the Code.
12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Sections 12.1(c) or 12.2(d) above of participation in or
control of any action by the indemnifying Party will in no event be deemed to
be an admission by the indemnifying Party of liability, culpability or
responsibility, and the indemnifying Party will remain free to contest
liability with respect to the claim among the Parties or otherwise.
23
12.4 SUCCESSORS.
A successor by law of any Party shall be entitled to the benefits of the
indemnification contained in this Section 12.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Maryland law, without regard for that state's
principles of conflict of laws.
SECTION 14. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
SECTION 15. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will
not be affected thereby.
SECTION 16. RIGHTS CUMULATIVE
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, that the Parties are entitled to under
federal and state laws.
SECTION 17. HEADINGS
The Table of Contents and headings used in this Agreement are for
purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.
SECTION 18. CONFIDENTIALITY
AVIF acknowledges that the identities of the customers of Sun Life or
any of its affiliates (collectively, the "Sun Life Protected Parties" for
purposes of this Section 18), information maintained regarding those
customers, and all computer programs and procedures or other information
developed by the Sun Life Protected Parties or any of their employees or
agents in connection with Sun Life's performance of its duties under this
Agreement are the valuable property of the Sun Life Protected Parties. AVIF
agrees that if it comes into possession of any list or compilation of the
identities of or other information about the Sun Life Protected Parties'
customers,
24
or any other information or property of the Sun Life Protected Parties, other
than such information as may be independently developed or compiled by AVIF
from information supplied to it by the Sun Life Protected Parties' customers
who also maintain accounts directly with AVIF, AVIF will hold such
information or property in confidence and refrain from using, disclosing or
distributing any of such information or other property except: (a) with Sun
Life's prior written consent; or (b) as required by law or judicial process.
Sun Life acknowledges that the identities of the customers of AVIF or any of
its affiliates (collectively, the "AVIF Protected Parties" for purposes of
this Section 18), information maintained regarding those customers, and all
computer programs and procedures or other information developed by the AVIF
Protected Parties or any of their employees or agents in connection with
AVIF's performance of its duties under this Agreement are the valuable
property of the AVIF Protected Parties. Sun Life agrees that if it comes into
possession of any list or compilation of the identities of or other
information about the AVIF Protected Parties' customers or any other
information or property of the AVIF Protected Parties, other than such
information as may be independently developed or compiled by Sun Life from
information supplied to it by the AVIF Protected Parties' customers who also
maintain accounts directly with Sun Life, Sun Life will hold such information
or property in confidence and refrain from using, disclosing or distributing
any of such information or other property except: (a) with AVIF's prior
written consent; or (b) as required by law or judicial process. Each party
acknowledges that any breach of the agreements in this Section 18 would
result in immediate and irreparable harm to the other parties for which there
would be no adequate remedy at law and agree that in the event of such a
breach, the other parties will be entitled to equitable relief by way of
temporary and permanent injunctions, as well as such other relief as any
court of competent jurisdiction deems appropriate.
SECTION 19. TRADEMARKS AND FUND NAMES
(a) A I M Management Group Inc. ("AIM" or "licensor"), an affiliate of
AVIF, owns all right, title and interest in and to the name, trademark and
service xxxx "AIM" and such other tradenames, trademarks and service marks as
may be set forth on Schedule B, as amended from time to time by written
notice from AIM to Sun Life (the "AIM licensed marks" or the "licensor's
licensed marks") and is authorized to use and to license other persons to use
such marks. Sun Life and its affiliates are hereby granted a non-exclusive
license to use the AIM licensed marks in connection with Sun Life's
performance of the services contemplated under this Agreement, subject to the
terms and conditions set forth in this Section 19.
(b) The grant of license to Sun Life and its affiliates (the
"licensee") shall terminate automatically upon termination of this Agreement.
Upon automatic termination, the licensee shall cease to use the licensor's
licensed marks, except that Sun Life shall have the right to continue to
service any outstanding Contracts bearing any of the AIM licensed marks. Upon
AIM's elective termination of this license, Sun Life and its affiliates shall
immediately cease to issue any new annuity or life insurance contracts
bearing any of the AIM licensed marks and shall likewise cease any activity
which suggests that it has any right under any of the AIM licensed marks or
that it has any association with AIM, except that Sun Life shall have the
right to continue to service outstanding Contracts bearing any of the AIM
licensed marks and to use AIM licensed marks in such materials as may be
necessary for filing with any regulatory authority where required by law or
regulation or to enable Sun Life to quote performance to existing Contract
owners.
25
(c) The licensee shall obtain the prior written approval of the
licensor for the public release by such licensee of any materials bearing the
licensor's licensed marks. The licensor's approvals shall not be unreasonably
withheld and may be obtained in connection with approval of sales materials
as provided in Section 4.5(b) hereof (i.e., approvals obtained under
Section 4.5 hereof shall be deemed approval pursuant to this Section 19).
(d) During the term of this grant of license, a licensor may request
that a licensee submit samples of any materials bearing any of the licensor's
licensed marks which were previously approved by the licensor but, due to
changed circumstances, the licensor may wish to reconsider. If, on
reconsideration, or on initial review, respectively, any such samples fail to
meet with the written approval of the licensor, then the licensee shall
immediately cease distributing such disapproved materials, upon receiving
notice of such failure by the licensor. The licensor's approval shall not be
unreasonably withheld, and the licensor, when requesting reconsideration of a
prior approval, shall assume the reasonable expenses of withdrawing and
replacing such disapproved materials. The licensee shall obtain the prior
written approval of the licensor for the use of any new materials developed
to replace the disapproved materials, in the manner set forth above.
(e) The licensee hereunder: (i) acknowledges and stipulates, based
upon the representations of the licensor set forth herein and without making
any independent inquiry thereof, that, to the best of the knowledge of the
licensee, the licensor's licensed marks are valid and enforceable trademarks
and/or service marks; (ii) acknowledges and stipulates that such licensee
does not own the licensor's licensed marks and claims no rights therein other
than as a licensee under this Agreement; (iii) agrees never to contend
otherwise in legal proceedings or in other circumstances; and (iv)
acknowledges and agrees that the use of the licensor's licensed marks
pursuant to this grant of license shall inure to the benefit of the licensor.
SECTION 20. PARTIES TO COOPERATE
Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including, without limitation, the
SEC, the NASD and state insurance regulators) and will permit each other and
such authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
SECTION 21. ACCESS TO INFORMATION BY SUN LIFE
During ordinary business hours, AVIF shall afford Sun Life, directly or
through its authorized representatives, reasonable access to all files,
books, records and other materials of AVIF (except for confidential or
proprietary materials) which directly relate to transactions arising in
connection with this Agreement and to make available appropriate personnel
familiar with such items for the purpose of explaining the form and content
of such items. This Section 21 shall survive the termination of this
Agreement.
----------------------------------------------------------------
26
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers signing below.
AIM VARIABLE INSURANCE FUNDS, INC.
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------ ---------------------------
Xxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
Assistant Secretary -----------------------
Title: President
-----------------------
A I M DISTRIBUTORS, INC.
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxx
------------------------ ---------------------------
Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxx
Assistant Secretary -----------------------
Title: President
-----------------------
SUN LIFE ASSURANCE COMPANY OF CANADA
(U.S.), on behalf of itself and its
separate accounts
Attest: /s/ Xxxxxxxx Xxxxx Xxxx By: /s/ Xxxxxx X. Xxxxx
------------------------ ---------------------------
Name: Xxxxxxxx Xxxxx Xxxx Name: Xxxxxx X. Xxxxx
------------------------ -------------------------
Title: Assistant Vice President Title: Vice President
and Secretary ------------------------
------------------------
CLARENDON INSURANCE AGENCY, INC.
Attest: /s/ Xxx X. Xxxxxxx By: /s/ Xxxx Xxxxxxx
------------------------ ---------------------------
Name: Xxx X. Xxxxxxx Name: Xxxx Xxxxxxx
------------------------ -------------------------
Title: Secretary Title: President
------------------------ ------------------------
27
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
- AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. CAPITAL APPRECIATION FUND
AIM V.I. GROWTH FUND
AIM V.I. GROWTH AND INCOME FUND
AIM V.I. INTERNATIONAL
SEPARATE ACCOUNTS UTILIZING THE FUNDS
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
FUTURITY VARIABLE ANNUITY CONTRACT
28
SCHEDULE B
- AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International
- AIM and Design
[AIM LOGO]
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SCHEDULE C
EXPENSE ALLOCATIONS
---------------------------------------------------------------------------------------------------
SUN LIFE AVIF/AIM
---------------------------------------------------------------------------------------------------
preparing and filing the Account's registration preparing and filing the Fund's registration
statement statement
---------------------------------------------------------------------------------------------------
text composition for Account prospectuses and text composition for Fund prospectuses and
supplements supplements
---------------------------------------------------------------------------------------------------
text alterations of prospectuses (Account) and text alterations of prospectuses (Fund) and
supplements (Account) supplements (Fund)
---------------------------------------------------------------------------------------------------
printing Account and Fund prospectuses and a camera ready Fund prospectus
supplements
---------------------------------------------------------------------------------------------------
text composition and printing Account SAIs (if text composition and printing Fund SAIs
any)
---------------------------------------------------------------------------------------------------
mailing and distributing Account SAIs (if any) to mailing and distributing Fund SAIs to policy
policy owners upon request by policy owners owners upon request by policy owners
---------------------------------------------------------------------------------------------------
mailing and distributing prospectuses (Account and
Fund) and supplements (Account and Fund) to policy
owners of record as required by or appropriate
under the Federal Securities Laws and to
prospective purchasers
---------------------------------------------------------------------------------------------------
text composition (Account), printing, mailing, text composition and printing of annual and
and distributing annual and semi-annual reports semi-annual reports (Fund)
for Account
---------------------------------------------------------------------------------------------------
text composition, printing, mailing, distributing, text composition, printing, mailing,
and tabulation of proxy statements and voting distributing and tabulation of proxy statements
instruction solicitation materials to policy and voting instruction solicitation materials
owners with respect to proxies related to the to policy owners with respect to proxies
Account related to the Fund
---------------------------------------------------------------------------------------------------
preparation, printing and distributing sales
material and advertising relating to the Funds,
insofar as such materials relate to the Contracts
and filing such materials with and obtaining
approval from, the SEC, the NASD, any state
insurance regulatory authority, and any other
appropriate regulatory authority, to the extent
required
---------------------------------------------------------------------------------------------------
30
