<PAGE>
As filed with the Securities and Exchange Commission on March 6, 1998
1933 Act File No. 2-79141
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM N-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 23
MONEY MARKET VARIABLE ACCOUNT
(Exact Name of Registrant)
Sun Life Assurance Company of Canada (U.S.)
(Name of Insurance Company)
One Sun Life Executive Park, Wellesley Hills, Massachusetts 02181 (617)
237-6030
(Address of Insurance Company's Principal Executive Offices)
Stephen E. Cavan, Massachusetts Financial Services Company,
500 Boylston Street, Boston, Massachusetts 02116
(Name and Address of Agent for Service)
With Copies of Communications to:
Bonnie S. Angus, Sun Life Assurance Company of Canada (U.S.)
One Copley Place, Boston, Massachusetts 02117
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
It is proposed that this filing will become effective (check appropriate box)
|_| immediately upon filing pursuant to paragraph (b)
|X| on March 6, 1998 pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(i)
|_| on [date] pursuant to paragraph (a)(i)
|_| 75 days after filing pursuant to paragraph (a)(ii)
|_| on [date] pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
|_| this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
================================================================================
PART C
Other Information
Item 28. Financial Statements and Exhibits
(b) The following Exhibits are Incorporated in this Registration
Statement by Reference unless otherwise Indicated:
1 Resolution of the Board of Directors of the Insurance
Company dated July 21, 1982 authorizing the establishment
of Money Market Variable Account ("MMVA"), High Yield
Variable Account ("HYVA"), Capital Appreciation Variable
Account ("CAVA"), Government Guaranteed Variable Account
("GGVA"), Government Markets Variable Account ("GMVA"),
Total Return Variable Account ("TRVA") and Managed Sectors
Variable Account ("MSVA"). MMVA, HYVA, CAVA and GGVA
are referred to herein collectively as the "Previous
Registrants."
2 (a) Rules and Regulations of the Previous Registrants; filed
herewith.
(b) Rules and Regulations of GMVA; filed herewith.
(c) Rules and Regulations of TRVA; filed herewith.
(d) Rules and Regulations of MSVA; filed herewith.
3 (a) Custodian Agreements between State Street Bank and Trust
Company and the Previous Registrants; filed herewith.
(b) Custodian Agreement between State Street Bank and Trust
Company and GMVA; filed herewith.
(c) Custodian Agreement between State Street Bank and Trust
Company and TRVA; filed herewith.
(d) Custodian Agreement between State Street Bank and Trust
Company and MSVA; filed herewith.
4 (a) Investment Management Agreements between Massachusetts
Financial Services Company and the Previous Registrants;
filed herewith.
(b) Investment Management Agreement between Massachusetts
Financial Services Company and GMVA; filed herewith.
(c) Investment Management Agreement between Massachusetts
Financial Services Company and TRVA; filed herewith.
<PAGE>
(d) Investment Management Agreement between Massachusetts
Financial Services Company and MSVA; filed herewith.
5 Marketing Coordination and Administrative Services
Agreement between the Insurance Company, Massachusetts
Financial Services Company and Clarendon Insurance Agency,
Inc. dated July 22, 1982; filed herewith.
6 Compass 2 Flexible Payment Deferred Combination Variable and
Fixed Annuity Contract; filed herewith.
7 Form of Application used with the Compass 2 Variable Annuity
Contract filed as Exhibit 6; filed herewith.
8 Certificate of Incorporation and By-Laws of the Insurance
Company; filed herewith.
9 Not Applicable.
10 Not Applicable.
11 (a) Service Agreement between Sun Life Assurance Company of
Canada and the Insurance Company dated January 18, 1971;
filed herewith.
(b) Master Administrative Services Agreement dated March 1,
1997 (incorporated by reference to MFS/Sun Life Series Trust
(File Nos. 2-83616 and 811-3732) Post-Effective Amendment
No. 19 filed with the SEC via EDGAR on March 18, 1997).
12 Opinion of David D. Horn, Esq. and Consent to its
use as to the legality of the securities being registered.
(Not Applicable. )
13 Consent of Deloitte & Touche, LLP. (Not Applicable.)
14 None.
15 Not Applicable.
16 Not Applicable.
17 Financial Data Schedule meeting the requirements of Rule
483 under the Securities Act of 1933. (Not Applicable.)
Power of Attorney; filed herewith.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrants certify that they meet all of the requirements for
effectiveness of this Amendment to the Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and have caused this Amendment to the
Registration Statement to be signed on their behalf in the City of Boston and
The Commonwealth of Massachusetts on the 6th day of March, 1998.
MONEY MARKET VARIABLE ACCOUNT
HIGH YIELD VARIABLE ACCOUNT
CAPITAL APPRECIATION VARIABLE ACCOUNT
GOVERNMENT SECURITIES VARIABLE ACCOUNT
WORLD GOVERNMENTS VARIABLE ACCOUNT
TOTAL RETURN VARIABLE ACCOUNT
MANAGED SECTORS VARIABLE ACCOUNT
(Registrants)
By: JAMES R. BORDEWICK, JR.
Name: James R. Bordewick, Jr.
Title: Assistant Secretary
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, Sun Life Assurance Company of Canada (U.S.) has caused this
Amendment to the Registration Statement to be signed on its behalf in the City
of Boston and The Commonwealth of Massachusetts on the 6th day of March, 1998.
SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
By:* JOHN D. MCNEIL
Name: John D. McNeil
Title: Chairman
*Executed by Bonnie S. Angus on behalf
of those indicated pursuant to Power of
Attorney filed with Post-Effective
Amendment No. 7 to the Registration
Statement on Form N-3 of the Capital
Appreciation Variable Account (File
No. 33-19632).
<PAGE>
As required by the Securities Act of 1933, this Amendment to the
Registration Statement has been signed below by the following persons in the
capacities with the Registrants and on the dates indicated.
SIGNATURE TITLE
JOHN D. MCNEIL* Chairman and Member of the Boards of Managers
John D. McNeil
SAMUEL ADAMS* Member of the Boards of Managers
Samuel Adams
DAVID D. HORN* Member of the Boards of Managers
David D. Horn
J. KERMIT BIRCHFIELD* Member of the Boards of Managers
J. Kermit Birchfield
WILLIAM R. GUTOW* Member of the Boards of Managers
William R. Gutow
DERWYN F. PHILLIPS* Member of the Boards of Managers
Derwyn F. Phillips
*By: JAMES R. BORDEWICK, JR.
Name: James R. Bordewick, Jr.
as Attorney-in-fact
Executed by James R. Bordewick, Jr. on behalf
of those indicated pursuant to Power of
Attorney filed herewith.
<PAGE>
As required by the Securities Act of 1933, this Amendment to the
Registration Statement has been signed below by the following persons in the
capacities with the Registrants and on the dates indicated.
SIGNATURE TITLE
JOHN D. MCNEIL* Chairman and Director (Principal Executive Officer)
John D. McNeil
________________ President and Director
Donald A. Stewart
ROBERT P. VROLYK* Vice President and Actuary (Principal Financial &
Robert P. Vrolyk Accounting Officer)
RICHARD B. BAILEY* Director
Richard B. Bailey
M. COLYER CRUM* Director
M. Colyer Crum
DAVID D. HORN* Director
David D. Horn
JOHN S. LANE* Director
John S. Lane
ANGUS A. MACNAUGHTON* Director
Angus A. MacNaughton
____________________ Director
C. James Prieur
____________________ Director
S. Ceaser Raboy
*By: BONNIE S. ANGUS
Name: Bonnie S. Angus
Executed by Bonnie S. Angus on behalf of
those indicated pursuant to Power of
Attorney filed with Post-Effective
Amendment No. 7 to the Registration
Statement on Form N-3 of the Capital
Appreciation Variable Account (File
No. 33-19632).
<PAGE>
POWER OF ATTORNEY
Capital Appreciation Variable Account
Government Securities Variable Account
High Yield Variable Account
Managed Sectors Variable Account
Money Market Variable Account
Total Return Variable Account
World Governments Variable Account
The undersigned, Managers and officers of each of Capital Appreciation
Variable Account, Government Securities Variable Account, High Yield Variable
Account, Managed Sectors Variable Account, Money Market Variable Account, Total
Return Variable Account and World Governments Variable Account (each, the
"Registrant"), hereby severally constitute and appoint Bonnie S. Angus, James R.
Bordewick, Jr., Stephen E. Cavan, David D. Horn, W. Thomas London and John D.
McNeil, and each of them singly, as true and lawful attorneys, with full power
to them and each of them to sign for each of the undersigned, in the names of,
and in the capacities indicated below, any Registration Statement and any and
all amendments thereto and to file the same with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission
for the purpose of registering the Registrant as an investment company under the
Investment Company Act of 1940 and/or the securities issued by the Registrant
under the Securities Act of 1933, granting unto our said attorneys, and each of
them, acting alone, full power and authority to do and perform each and every
act and thing requisite or necessary or desirable to be done in the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys or any of them may lawfully do
or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hand on
this 24th day of July, 1997.
Signatures Title(s)
SAMUEL ADAMS
Samuel Adams Manager
J. KERMIT BIRCHFIELD
J. Kermit Birchfield Manager
WILLIAM R. GUTOW
William R. Gutow Manager
DAVID D. HORN
David D. Horn Manager
GARTH MARSTON
Garth Marston Manager
JOHN D. MCNEIL
John D. McNeil Chairman of the Board; Manager; and
Principal Executive Officer
Derwyn Phillips Manager
W. THOMAS LONDON
W. Thomas London Principal Financial and Accounting
Officer
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE NO.
2 (a) Rules and Regulations of the Previous
Registrants.
(b) Rules and Regulations of GMVA.
(c) Rules and Regulations of TRVA.
(d) Rules and Regulations of MSVA.
3 (a) Custodian Agreements between State Street
Bank and Trust Company and the Previous
Registrants.
(b) Custodian Agreement between State Street
Bank and Trust Company and GMVA.
(c) Custodian Agreement between State Street
Bank and Trust Company and TRVA.
(d) Custodian Agreement between State Street
Bank and Trust Company and MSVA.
4 (a) Investment Management Agreements between
Massachusetts Financial Services Company
and the Previous Registrants.
(b) Investment Management Agreement between
Massachusetts Financial Services Company
and GMVA.
(c) Investment Management Agreement between
Massachusetts Financial Services Company
and TRVA.
(d) Investment Management Agreement between
Massachusetts Financial Services Company
and MSVA.
5 Marketing Coordination and Administrative
Services Agreement between the Insurance
Company, Massachusetts Financial Services
Company and Clarendon Insurance Agency,
Inc. dated July 22, 1982.
6 Compass 2 Flexible Payment Deferred Combination
Variable and Fixed Annuity Contract.
7 Form of Application used with the
Compass 2 Variable Annuity Contract
filed as Exhibit 6.
<PAGE>
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE NO.
8 Certificate of Incorporation and By-Laws
of the Insurance Company.
11 (a) Service Agreement between Sun Life
Assurance Company of Canada and the
Insurance Company dated January 18, 1971.
Power of Attorney; filed herewith.
<PAGE>
EXHIBIT NO. 99.1
SUN LIFE SERIES TRUST
Certified Copy of Resolution of Board of Directors
I, Bonnie S. Angus, Secretary of Sun Life Assurance Company of Canada
(U.S.), a Delaware corporation, do hereby certify that at a special meeting of
the board of directors of the said corporation, duly held and convened at
Wellesley Hills, Massachusetts on the 21st day of July, 1982, at which a quorum
was present and voting throughout, the following resolution was duly adopted,
and has not since been modified or rescinded.
RESOLVED, that any two officers of the corporation be and hereby are
authorized to establish and maintain one or more separate accounts and exercise
every power and right enumerated or implied under Section 2932 of the Delaware
Insurance Code, including without limitation, the power and right to (a)
establish different separate accounts, (b) make such rules and regulations as
may be necessary or appropriate for the proper administration of such separate
accounts in accordance with the applicable laws and regulations governing the
establishment of such separate accounts, (c) allocate to such separate accounts
such amounts as may be necessary or desirable, (d) provide for special voting
rights and procedures for participants in such separate accounts relating to
investment policy, investment advisory services, and selection of a certified
public accountant, provided that such special voting rights and procedures be
established only when deemed necessary by the officers of the corporation, (e)
issue appropriate contracts and policies to the participants in such accounts
providing for benefits in fixed or variable amounts, or both, (f) enter into any
agreements which are necessary or appropriate to the establishment and
maintenance of such accounts; and (g) establish for each such account a board of
managers to manage the account and the investment of its assets.
FURTHER RESOLVED, that such separate accounts be registered as investment
companies under the Investment Company Act of 1940, as amended, and that
application be made for such exemptions from that Act as may be necessary or
desirable;
FURTHER RESOLVED, that there be filed with the Securities and Exchange
Commission in accordance with the provisions of the Securities Act of 1933, as
amended, registration statements and any amendments thereto, relating to
variable annuity contracts which are to be registered pursuant to the Act;
FURTHER RESOLVED, that the officers of the corporation be and they are hereby
authorized to take such further action as may in their judgment be necessary or
desirable to implement the foregoing resolutions and as may be appropriate to
enable the
<PAGE>
corporation to transact the business of issuing and selling variable
annuity contracts participating in these separate accounts.
WITNESS my hand and seal of the said corporation this 20th day of April, 1984.
BONNIE S. ANGUS
Bonnie S. Angus, Secretary
<PAGE>
EXHIBIT NO. 99.2(a)
Rules And Regulations
Money Market Variable Account
General
1.1 The name of MMVA is Money Market Variable Account ("MMVA"). Sun
Life Assurance Company of Canada (U.S.) ("Sun Life (U.S.)") may assign an
additional name to MMVA for marketing purposes including "Compass", "Beacon" or
otherwise in connection with certain contracts which participate in the
investment experience of MMVA. Sun Life (U.S.) will notify the Board of Managers
of any such assignment of name(s). Sun Life (U.S.) also has the right to
withdraw permission to use any such names from MMVA at any time upon notice to
the Board of Managers.
1.2 The Rules and Regulations for MMVA may be amended from time to time
by the corporation action of Sun Life (U.S.), either by its Board of Directors
or by its duly authorized officers.
Board Of Managers
2.1 A Board of Managers of not less than three (3) nor more than nine
(9) members shall be initially appointed by Sun Life (U.S.). Thereafter the
Board of Managers shall be elected by ballot at a special meeting of the owners
of and payees under contracts participating in MMVA. Each member shall hold
office until a successor is elected and qualified or until earlier resignation
or removal.
2.2 The initial Board of Managers shall consist of five (5) members.
Thereafter, the Board of Managers shall determine from time to time the number
of members to be elected, subject to 2.1 above.
2.3 At least a majority of the members of the Board of Managers shall
be persons who are not officers or employees or other interested persons of MMVA
or of Sun Life (U.S.) or any affiliate of Sun Life (U.S.).
2.4 If any vacancies shall occur in the Board of Managers by reason of
resignation, removal or otherwise, or if the authorized number of members shall
be increased, the members then in office shall continue to act, and such
vacancies or newly created managerships may be filled by a majority of the
members then in office, although less than a quorum, provided that immediately
after filling such vacancy at least two-thirds of the members then holding
office shall have been elected to such office by the owners of and payees under
contracts participating in MMVA. In the event that at any time, other than the
time preceding the first special meeting of the owners of and payees under
contracts participating in MMVA, less than a majority of the members holding
<PAGE>
office at that time were so elected by the owners and payees, a meeting of the
owners and payees shall be held promptly and in any event within ninety (90)
days for the purpose of electing members to fill any existing vacancies in the
Board of Managers unless the Securities and Exchange Commission shall by order
extend such period.
2.5 The Board of Managers may provide for the holding of regular or
special meetings and fix their time and place.
2.6 At all meetings of the Board of Managers, the presence of a
majority of the members then in office shall constitute a quorum for the
transaction of business, provided that there shall be present no less than
one-third of the total number of members authorized. In the absence of a quorum,
a majority of the members present may adjourn the meeting until a quorum shall
be present. When a quorum is present, a majority of the members present shall
decide any questions brought before such meeting except as otherwise provided by
applicable law or by these Rules and Regulations.
2.7 Any action required or permitted to be taken at any meeting of the
Board of Managers may be taken without a meeting if all members of the Board of
Managers consent thereof in writing and such consent is filed with the minutes
of the proceedings of the Board of Managers.
2.8 Members of the Board of Managers may participate in a meeting of
such Board by means of conference, telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participating in a meeting pursuant to this section shall constitute
presence in person at such a meeting.
2.9 The Board of Managers has the following duties, responsibilities
and powers:
(a) To approve an agreement or agreements with respect to
investment management, supervision and custody of the assets
of MMVA.
(b) To recommend any changes deemed appropriate in the fundamental
investment policy and investment objectives of MMVA.
(c) To approve an agreement or agreements for the offering and
sale of contracts participating in the investment experience
of MMVA.
(d) To annually select and approve independent auditors whose
initial selection shall be submitted for ratification or
rejection by the contract owners.
(e) To supervise the investment of the assets of MMVA in
accordance with the investment objectives, policies and
restrictions of MMVA.
<PAGE>
(f) To enter into such other agreements and to take all actions
necessary or proper in connection with the operation or
management of MMVA.
2.10 The Board of Managers may designate, by resolution adopted by a
majority of the Board of Managers, including a majority of the members who are
not affiliated with Sun Life (U.S.), or two or more of its members to constitute
a subcommittee or subcommittees which, when the Board of Managers is not in
session, shall have all the powers of the Board of Managers except as otherwise
provided by the Board of Managers or by law.
2.11 The Board of Managers may designate, by resolution adopted by a
majority of the Board of Managers, including a majority of the members who are
not affiliated with Sun Life (U.S.), the fees to be paid to members of the Board
of Managers and authorize their expenses, except that members of the Board of
Managers who are also directors, officers or employees of Sun Life (U.S.) or any
affiliated person thereof shall not be paid any fee. In no event shall the fees
payable to a member of the Board of Managers exceed three thousand dollars
($3,000) per annum.
Meetings of Owners/Payees
3.1 No annual meeting of owners of and payees under contracts
participating in the investment experience of MMVA shall be held. It shall be
the policy of MMVA to hold only such special meetings of owners of and payees
under contracts participating in the investment experience of MMVA as shall be
necessary under applicable law, rules and regulations. To the extent that action
by the Board of Managers can satisfy applicable law, rules and regulations, it
shall be taken in lieu of action by owners and payees at special meetings.
3.2 Special meetings of the owners and payees may be called at any time
by the Chairman of the Board of Managers or by a majority of the Board of
Managers then in office.
3.3 All meetings of the owners and payees shall be held in Wellesley,
Massachusetts, except that the Board of Managers may fix a different place of
meeting which shall be specified in each notice or waiver of notice of the
meeting.
3.4 A written notice stating the place, date and hour of each meeting
of the owners and payees and the purpose or purposes for which the meeting is
called, shall be given by mail not less than ten (10) nor more than forty (40)
days before the date of the meeting to each owner and payee entitled to vote at
the meeting. Such notice shall be directed to each owner and payee at the
address appearing on the records of Sun Life (U.S.).
<PAGE>
3.5 The Board of Managers shall fix a record date for the determination
of the owner and payees entitled to vote provided that such record date shall
not be more than sixty (60) days nor less than twenty (20) days before the date
of any meeting. Only owners of record of and payees under contracts
participating in the investment experience of MMVA on the record date shall be
entitled to notice of the meeting, and only owners of and payees under contracts
outstanding on the date of such meeting shall be entitled to vote. The person
shown in the records of Sun Life (U.S.) as the owner of a contract participating
in the investment experience of MMVA shall be regarded as the owner of such
contract.
3.6 At all meetings of owners and payees, there shall be present,
either in person or by proxy, owners and payees entitled to case twenty-five
percent (25%) of the total number o votes entitled to be cast as the meeting in
order to constitute a quorum for the transaction business. However, if the vote
of a majority of the outstanding voting securities, as defined in the Investment
Company Act of 1940, is required for action to be taken on any matter to be
brought before the meeting, there shall be present, either in person or by
proxy, owners and payees entitled to cast more than fifty percent (50%) of such
total number of votes in order to constitute the quorum. If a quorum is not
present, owners and payees present in person or by proxy and entitled to vote at
such meeting or if no such owner or payee is present, any person entitled to
preside at such meeting may adjourn the meeting and, at any such adjourned
meeting, if a quorum is present, any business may be transacted that might have
been transacted at the meeting originally called.
3.7 Except as otherwise provided, a majority of the votes cast at a
meeting by the owners and payees entitled to vote shall decide any question to
be brought before such meeting, except that elections of the members of the
Board of Managers shall be by a plurality of the votes cast at a meeting by the
owners and payees entitled to vote.
3.8 Each owner and payee entitled to vote may vote either in person or
by proxy executed in writing by the owner or payee or by the owner's or payee's
attorney-in-fact. A proxy for any meeting shall be valid for the adjournment of
that meeting.
Officers
4.1 The Board of Managers may elect the Chairman and Secretary and may
also from time to time elect one or more Vice Presidents and Assistant
Secretaries as it deems expedient.
4.2 The Chairman shall be the Chief Executive Officer of MMVA and shall
have general charge and direction of the business of MMVA, subject to control of
the Board of Managers.
<PAGE>
4.3 The Secretary shall keep the minutes of the meetings of the
contract owners and the Board of Managers and shall give notice of all such
meetings required in these Rules and Regulations.
4.4 Each officer shall serve in term for which he or she is elected
until his or her successor is duly elected and qualified, or until his or her
death or until he or she shall have resigned or have been removed. Any officer
may be removed by the Board at any time with or without cause and with or
without notice of hearing. Vacancies among officers shall be filled by the Board
of Managers.
Fiscal Year
5.0 The fiscal year for MMVA shall be the calendar year.
<PAGE>
Rules And Regulations
High Yield Variable Account
General
1.1 The name of the Account is High Yield Variable Account ("HYVA").
Sun Life Assurance Company of Canada (U.S.) ("Sun Life (U.S.)") may assign an
additional name to HYVA for marketing purposes including "Compass", "Beacon" or
otherwise in connection with certain contracts which participate in the
investment experience of HYVA. Sun Life (U.S.) will notify the Board of Managers
of any such assignment of name(s). Sun Life (U.S.) also has the right to
withdraw permission to use any such names from HYVA at any time upon notice to
the Board of Managers.
1.2 The Rules and Regulations for HYVA may be amended from time to time
by the corporation action of Sun Life (U.S.), either by its Board of Directors
or by its duly authorized officers.
Board Of Managers
2.1 A Board of Managers of not less than three (3) nor more than nine
(9) members shall be initially appointed by Sun Life (U.S.). Thereafter the
Board of Managers shall be elected by ballot at a special meeting of the owners
of and payees under contracts participating in HYVA. Each member shall hold
office until a successor is elected and qualified or until earlier resignation
or removal.
2.2 The initial Board of Managers shall consist of five (5) members.
Thereafter, the Board of Managers shall determine from time to time the number
of members to be elected, subject to 2.1 above.
2.3 At least a majority of the members of the Board of Managers shall
be persons who are not officers or employees or other interested persons of HYVA
or of Sun Life (U.S.) or any affiliate of Sun Life (U.S.).
2.4 If any vacancies shall occur in the Board of Managers by reason of
resignation, removal or otherwise, or if the authorized number of members shall
be increased, the members then in office shall continue to act, and such
vacancies or newly created managerships may be filled by a majority of the
members then in office, although less than a quorum, provided that immediately
after filling such vacancy at least two-thirds of the members then holding
office shall have been elected to such office by the owners of and payees under
contracts participating in HYVA. In the event that at any time, other than the
time preceding the first special meeting of the owners of and payees under
contracts participating in HYVA, less than a majority of the members holding
office at that time were so elected by the owners and payees, a meeting of the
owners and payees shall be held promptly and in any event within ninety (90)
days for the purpose of
<PAGE>
electing members to fill any existing vacancies in the Board of Managers unless
the Securities and Exchange Commission shall by order extend such period.
2.5 The Board of Managers may provide for the holding of regular or
special meetings and fix their time and place.
2.6 At all meetings of the Board of Managers, the presence of a
majority of the members then in office shall constitute a quorum for the
transaction of business, provided that there shall be present no less than
one-third of the total number of members authorized. In the absence of a quorum,
a majority of the members present may adjourn the meeting until a quorum shall
be present. When a quorum is present, a majority of the members present shall
decide any questions brought before such meeting except as otherwise provided by
applicable law or by these Rules and Regulations.
2.7 Any action required or permitted to be taken at any meeting of the
Board of Managers may be taken without a meeting if all members of the Board of
Managers consent thereof in writing and such consent is filed with the minutes
of the proceedings of the Board of Managers.
2.8 Members of the Board of Managers may participate in a meeting of
such Board by means of conference, telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participating in a meeting pursuant to this section shall constitute
presence in person at such a meeting.
2.9 The Board of Managers has the following duties, responsibilities
and powers:
(a) To approve an agreement or agreements with respect to
investment management, supervision and custody of the assets
of HYVA.
(b) To recommend any changes deemed appropriate in the fundamental
investment policy and investment objectives of HYVA.
(c) To approve an agreement or agreements for the offering and
sale of contracts participating in the investment experience
of HYVA.
(d) To annually select and approve independent auditors whose
initial selection shall be submitted for ratification or
rejection by the contract owners.
(e) To supervise the investment of the assets of HYVA in
accordance with the investment objectives, policies and
restrictions of HYVA.
<PAGE>
(f) To enter into such other agreements and to take all actions
necessary or proper in connection with the operation or
management of HYVA.
2.10 The Board of Managers may designate, by resolution adopted by a
majority of the Board of Managers, including a majority of the members who are
not affiliated with Sun Life (U.S.), or two or more of its members to constitute
a subcommittee or subcommittees which, when the Board of Managers is not in
session, shall have all the powers of the Board of Managers except as otherwise
provided by the Board of Managers or by law.
2.11 The Board of Managers may designate, by resolution adopted by a
majority of the Board of Managers, including a majority of the members who are
not affiliated with Sun Life (U.S.), the fees to be paid to members of the Board
of Managers and authorize their expenses, except that members of the Board of
Managers who are also directors, officers or employees of Sun Life (U.S.) or any
affiliated person thereof shall not be paid any fee. In no event shall the fees
payable to a member of the Board of Managers exceed three thousand dollars
($3,000) per annum.
Meetings of Owners/Payees
3.1 No annual meeting of owners of and payees under contracts
participating in the investment experience of HYVA shall be held. It shall be
the policy of HYVA to hold only such special meetings of owners of and payees
under contracts participating in the investment experience of HYVA as shall be
necessary under applicable law, rules and regulations. To the extent that action
by the Board of Managers can satisfy applicable law, rules and regulations, it
shall be taken in lieu of action by owners and payees at special meetings.
3.2 Special meetings of the owners and payees may be called at any time
by the Chairman of the Board of Managers or by a majority of the Board of
Managers then in office.
3.3 All meetings of the owners and payees shall be held in Wellesley,
Massachusetts, except that the Board of Managers may fix a different place of
meeting which shall be specified in each notice or waiver of notice of the
meeting.
3.4 A written notice stating the place, date and hour of each meeting
of the owners and payees and the purpose or purposes for which the meeting is
called, shall be given by mail not less than ten (10) nor more than forty (40)
days before the date of the meeting to each owner and payee entitled to vote at
the meeting. Such notice shall be directed to each owner and payee at the
address appearing on the records of Sun Life (U.S.).
3.5 The Board of Managers shall fix a record date for the determination
of the owner and payees entitled to vote provided that such record date shall
not be more than
<PAGE>
sixty (60) days nor less than twenty (20) days before the date of any meeting.
Only owners of record of and payees under contracts participating in the
investment experience of HYVA on the record date shall be entitled to notice of
the meeting, and only owners of and payees under contracts outstanding on the
date of such meeting shall be entitled to vote. The person shown in the records
of Sun Life (U.S.) as the owner of a contract participating in the investment
experience of HYVA shall be regarded as the owner of such contract.
3.6 At all meetings of owners and payees, there shall be present,
either in person or by proxy, owners and payees entitled to case twenty-five
percent (25%) of the total number o votes entitled to be cast as the meeting in
order to constitute a quorum for the transaction business. However, if the vote
of a majority of the outstanding voting securities, as defined in the Investment
Company Act of 1940, is required for action to be taken on any matter to be
brought before the meeting, there shall be present, either in person or by
proxy, owners and payees entitled to cast more than fifty percent (50%) of such
total number of votes in order to constitute the quorum. If a quorum is not
present, owners and payees present in person or by proxy and entitled to vote at
such meeting or if no such owner or payee is present, any person entitled to
preside at such meeting may adjourn the meeting and, at any such adjourned
meeting, if a quorum is present, any business may be transacted that might have
been transacted at the meeting originally called.
3.7 Except as otherwise provided, a majority of the votes cast at a
meeting by the owners and payees entitled to vote shall decide any question to
be brought before such meeting, except that elections of the members of the
Board of Managers shall be by a plurality of the votes cast at a meeting by the
owners and payees entitled to vote.
3.8 Each owner and payee entitled to vote may vote either in person or
by proxy executed in writing by the owner or payee or by the owner's or payee's
attorney-in-fact. A proxy for any meeting shall be valid for the adjournment of
that meeting.
Officers
4.1 The Board of Managers may elect the Chairman and Secretary and may
also from time to time elect one or more Vice Presidents and Assistant
Secretaries as it deems expedient.
4.2 The Chairman shall be the Chief Executive Officer of HYVA and shall
have general charge and direction of the business of HYVA, subject to control of
the Board of Managers.
4.3 The Secretary shall keep the minutes of the meetings of the
contract owners and the Board of Managers and shall give notice of all such
meetings required in these Rules and Regulations.
<PAGE>
4.4 Each officer shall serve in term for which he or she is elected
until his or her successor is duly elected and qualified, or until his or her
death or until he or she shall have resigned or have been removed. Any officer
may be removed by the Board at any time with or without cause and with or
without notice of hearing. Vacancies among officers shall be filled by the Board
of Managers.
Fiscal Year
5.0 The fiscal year for HYVA shall be the calendar year.
<PAGE>
Rules And Regulations
Capital Appreciation Variable Account
General
1.1 The name of the Account is Capital Appreciation Variable Account
("CAVA"). Sun Life Assurance Company of Canada (U.S.) ("Sun Life (U.S.)") may
assign an additional name to CAVA for marketing purposes including "Compass",
"Beacon" or otherwise in connection with certain contracts which participate in
the investment experience of CAVA. Sun Life (U.S.) will notify the Board of
Managers of any such assignment of name(s). Sun Life (U.S.) also has the right
to withdraw permission to use any such names from the Account at any time upon
notice to the Board of Managers.
1.2 The Rules and Regulations for CAVA may be amended from time to time
by the corporation action of Sun Life (U.S.), either by its Board of Directors
or by its duly authorized officers.
Board Of Managers
2.1 A Board of Managers of not less than three (3) nor more than nine
(9) members shall be initially appointed by Sun Life (U.S.). Thereafter the
Board of Managers shall be elected by ballot at a special meeting of the owners
of and payees under contracts participating in CAVA. Each member shall hold
office until a successor is elected and qualified or until earlier resignation
or removal.
2.2 The initial Board of Managers shall consist of five (5) members.
Thereafter, the Board of Managers shall determine from time to time the number
of members to be elected, subject to 2.1 above.
2.3 At least a majority of the members of the Board of Managers shall
be persons who are not officers or employees or other interested persons of CAVA
or of Sun Life (U.S.) or any affiliate of Sun Life (U.S.).
2.4 If any vacancies shall occur in the Board of Managers by reason of
resignation, removal or otherwise, or if the authorized number of members shall
be increased, the members then in office shall continue to act, and such
vacancies or newly created managerships may be filled by a majority of the
members then in office, although less than a quorum, provided that immediately
after filling such vacancy at least two-thirds of the members then holding
office shall have been elected to such office by the owners of and payees under
contracts participating in CAVA. In the event that at any time, other than the
time preceding the first special meeting of the owners of and
<PAGE>
payees under contracts participating in CAVA, less than a majority of the
members holding office at that time were so elected by the owners and payees, a
meeting of the owners and payees shall be held promptly and in any event within
ninety (90) days for the purpose of electing members to fill any existing
vacancies in the Board of Managers unless the Securities and Exchange Commission
shall by order extend such period.
2.5 The Board of Managers may provide for the holding of regular or
special meetings and fix their time and place.
2.6 At all meetings of the Board of Managers, the presence of a
majority of the members then in office shall constitute a quorum for the
transaction of business, provided that there shall be present no less than
one-third of the total number of members authorized. In the absence of a quorum,
a majority of the members present may adjourn the meeting until a quorum shall
be present. When a quorum is present, a majority of the members present shall
decide any questions brought before such meeting except as otherwise provided by
applicable law or by these Rules and Regulations.
2.7 Any action required or permitted to be taken at any meeting of the
Board of Managers may be taken without a meeting if all members of the Board of
Managers consent thereof in writing and such consent is filed with the minutes
of the proceedings of the Board of Managers.
2.8 Members of the Board of Managers may participate in a meeting of
such Board by means of conference, telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participating in a meeting pursuant to this section shall constitute
presence in person at such a meeting.
2.9 The Board of Managers has the following duties, responsibilities
and powers:
(a) To approve an agreement or agreements with respect to
investment management, supervision and custody of the assets
of CAVA.
(b) To recommend any changes deemed appropriate in the fundamental
investment policy and investment objectives of CAVA.
(c) To approve an agreement or agreements for the offering and
sale of contracts participating in the investment experience
of CAVA.
(d) To annually select and approve independent auditors whose
initial selection shall be submitted for ratification or
rejection by the contract owners.
(e) To supervise the investment of the assets of CAVA in
accordance with the investment objectives, policies and
restrictions of CAVA.
<PAGE>
(f) To enter into such other agreements and to take all actions
necessary or proper in connection with the operation or
management of CAVA.
2.10 The Board of Managers may designate, by resolution adopted by a
majority of the Board of Managers, including a majority of the members who are
not affiliated with Sun Life (U.S.), or two or more of its members to constitute
a subcommittee or subcommittees which, when the Board of Managers is not in
session, shall have all the powers of the Board of Managers except as otherwise
provided by the Board of Managers or by law.
2.11 The Board of Managers may designate, by resolution adopted by a
majority of the Board of Managers, including a majority of the members who are
not affiliated with Sun Life (U.S.), the fees to be paid to members of the Board
of Managers and authorize their expenses, except that members of the Board of
Managers who are also directors, officers or employees of Sun Life (U.S.) or any
affiliated person thereof shall not be paid any fee. In no event shall the fees
payable to a member of the Board of Managers exceed three thousand dollars
($3,000) per annum.
Meetings of Owners/Payees
3.1 No annual meeting of owners of and payees under contracts
participating in the investment experience of CAVA shall be held. It shall be
the policy of CAVA to hold only such special meetings of owners of and payees
under contracts participating in the investment experience of CAVA as shall be
necessary under applicable law, rules and regulations. To the extent that action
by the Board of Managers can satisfy applicable law, rules and regulations, it
shall be taken in lieu of action by owners and payees at special meetings.
3.2 Special meetings of the owners and payees may be called at any time
by the Chairman of the Board of Managers or by a majority of the Board of
Managers then in office.
3.3 All meetings of the owners and payees shall be held in Wellesley,
Massachusetts, except that the Board of Managers may fix a different place of
meeting which shall be specified in each notice or waiver of notice of the
meeting.
3.4 A written notice stating the place, date and hour of each meeting
of the owners and payees and the purpose or purposes for which the meeting is
called, shall be given by mail not less than ten (10) nor more than forty (40)
days before the date of the meeting to each owner and payee entitled to vote at
the meeting. Such notice shall be directed to each owner and payee at the
address appearing on the records of Sun Life (U.S.).
3.5 The Board of Managers shall fix a record date for the determination
of the owner and payees entitled to vote provided that such record date shall
not be more than
<PAGE>
sixty (60) days nor less than twenty (20) days before the date of any meeting.
Only owners of record of and payees under contracts participating in the
investment experience of CAVA on the record date shall be entitled to notice of
the meeting, and only owners of and payees under contracts outstanding on the
date of such meeting shall be entitled to vote. The person shown in the records
of Sun Life (U.S.) as the owner of a contract participating in the investment
experience of CAVA shall be regarded as the owner of such contract.
3.6 At all meetings of owners and payees, there shall be present,
either in person or by proxy, owners and payees entitled to case twenty-five
percent (25%) of the total number o votes entitled to be cast as the meeting in
order to constitute a quorum for the transaction business. However, if the vote
of a majority of the outstanding voting securities, as defined in the Investment
Company Act of 1940, is required for action to be taken on any matter to be
brought before the meeting, there shall be present, either in person or by
proxy, owners and payees entitled to cast more than fifty percent (50%) of such
total number of votes in order to constitute the quorum. If a quorum is not
present, owners and payees present in person or by proxy and entitled to vote at
such meeting or if no such owner or payee is present, any person entitled to
preside at such meeting may adjourn the meeting and, at any such adjourned
meeting, if a quorum is present, any business may be transacted that might have
been transacted at the meeting originally called.
3.7 Except as otherwise provided, a majority of the votes cast at a
meeting by the owners and payees entitled to vote shall decide any question to
be brought before such meeting, except that elections of the members of the
Board of Managers shall be by a plurality of the votes cast at a meeting by the
owners and payees entitled to vote.
3.8 Each owner and payee entitled to vote may vote either in person or
by proxy executed in writing by the owner or payee or by the owner's or payee's
attorney-in-fact. A proxy for any meeting shall be valid for the adjournment of
that meeting.
Officers
4.1 The Board of Managers may elect the Chairman and Secretary and may
also from time to time elect one or more Vice Presidents and Assistant
Secretaries as it deems expedient.
4.2 The Chairman shall be the Chief Executive Officer of CAVA and shall
have general charge and direction of the business of CAVA, subject to control of
the Board of Managers.
4.3 The Secretary shall keep the minutes of the meetings of the
contract owners and the Board of Managers and shall give notice of all such
meetings required in these Rules and Regulations.
<PAGE>
4.4 Each officer shall serve in term for which he or she is elected
until his or her successor is duly elected and qualified, or until his or her
death or until he or she shall have resigned or have been removed. Any officer
may be removed by the Board at any time with or without cause and with or
without notice of hearing. Vacancies among officers shall be filled by the Board
of Managers.
Fiscal Year
5.0 The fiscal year for CAVA shall be the calendar year.
<PAGE>
Rules And Regulations
Government Guaranteed Variable Account
General
1.1 The name of the Account is Government Guaranteed Variable Account
("GGVA"). Sun Life Assurance Company of Canada (U.S.) ("Sun Life (U.S.)") may
assign an additional name to GGVA for marketing purposes including "Compass",
"Beacon" or otherwise in connection with certain contracts which participate in
the investment experience of GGVA. Sun Life (U.S.) will notify the Board of
Managers of any such assignment of name(s). Sun Life (U.S.) also has the right
to withdraw permission to use any such names from GGVA at any time upon notice
to the Board of Managers.
1.2 The Rules and Regulations for GGVA may be amended from time to time
by the corporation action of Sun Life (U.S.), either by its Board of Directors
or by its duly authorized officers.
Board Of Managers
2.1 A Board of Managers of not less than three (3) nor more than nine
(9) members shall be initially appointed by Sun Life (U.S.). Thereafter the
Board of Managers shall be elected by ballot at a special meeting of the owners
of and payees under contracts participating in GGVA. Each member shall hold
office until a successor is elected and qualified or until earlier resignation
or removal.
2.2 The initial Board of Managers shall consist of five (5) members.
Thereafter, the Board of Managers shall determine from time to time the number
of members to be elected, subject to 2.1 above.
2.3 At least a majority of the members of the Board of Managers shall
be persons who are not officers or employees or other interested persons of GGVA
or of Sun Life (U.S.) or any affiliate of Sun Life (U.S.).
2.4 If any vacancies shall occur in the Board of Managers by reason of
resignation, removal or otherwise, or if the authorized number of members shall
be increased, the members then in office shall continue to act, and such
vacancies or newly created managerships may be filled by a majority of the
members then in office, although less than a quorum, provided that immediately
after filling such vacancy at least two-thirds of the members then holding
office shall have been elected to such office by the owners of and payees under
contracts participating in GGVA. In the event that at any time, other than the
time preceding the first special meeting of the owners of and
<PAGE>
payees under contracts participating in GGVA, less than a majority of the
members holding office at that time were so elected by the owners and payees, a
meeting of the owners and payees shall be held promptly and in any event within
ninety (90) days for the purpose of electing members to fill any existing
vacancies in the Board of Managers unless the Securities and Exchange Commission
shall by order extend such period.
2.5 The Board of Managers may provide for the holding of regular or
special meetings and fix their time and place.
2.6 At all meetings of the Board of Managers, the presence of a
majority of the members then in office shall constitute a quorum for the
transaction of business, provided that there shall be present no less than
one-third of the total number of members authorized. In the absence of a quorum,
a majority of the members present may adjourn the meeting until a quorum shall
be present. When a quorum is present, a majority of the members present shall
decide any questions brought before such meeting except as otherwise provided by
applicable law or by these Rules and Regulations.
2.7 Any action required or permitted to be taken at any meeting of the
Board of Managers may be taken without a meeting if all members of the Board of
Managers consent thereof in writing and such consent is filed with the minutes
of the proceedings of the Board of Managers.
2.8 Members of the Board of Managers may participate in a meeting of
such Board by means of conference, telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participating in a meeting pursuant to this section shall constitute
presence in person at such a meeting.
2.9 The Board of Managers has the following duties, responsibilities
and powers:
(a) To approve an agreement or agreements with respect to
investment management, supervision and custody of the assets
of GGVA.
(b) To recommend any changes deemed appropriate in the fundamental
investment policy and investment objectives of GGVA.
(c) To approve an agreement or agreements for the offering and
sale of contracts participating in the investment experience
of GGVA.
(d) To annually select and approve independent auditors whose
initial selection shall be submitted for ratification or
rejection by the contract owners.
(e) To supervise the investment of the assets of GGVA in
accordance with the investment objectives, policies and
restrictions of GGVA.
<PAGE>
(f) To enter into such other agreements and to take all actions
necessary or proper in connection with the operation or
management of GGVA.
2.10 The Board of Managers may designate, by resolution adopted by a
majority of the Board of Managers, including a majority of the members who are
not affiliated with Sun Life (U.S.), or two or more of its members to constitute
a subcommittee or subcommittees which, when the Board of Managers is not in
session, shall have all the powers of the Board of Managers except as otherwise
provided by the Board of Managers or by law.
2.11 The Board of Managers may designate, by resolution adopted by a
majority of the Board of Managers, including a majority of the members who are
not affiliated with Sun Life (U.S.), the fees to be paid to members of the Board
of Managers and authorize their expenses, except that members of the Board of
Managers who are also directors, officers or employees of Sun Life (U.S.) or any
affiliated person thereof shall not be paid any fee. In no event shall the fees
payable to a member of the Board of Managers exceed three thousand dollars
($3,000) per annum.
Meetings of Owners/Payees
3.1 No annual meeting of owners of and payees under contracts
participating in the investment experience of GGVA shall be held. It shall be
the policy of GGVA to hold only such special meetings of owners of and payees
under contracts participating in the investment experience of GGVA as shall be
necessary under applicable law, rules and regulations. To the extent that action
by the Board of Managers can satisfy applicable law, rules and regulations, it
shall be taken in lieu of action by owners and payees at special meetings.
3.2 Special meetings of the owners and payees may be called at any time
by the Chairman of the Board of Managers or by a majority of the Board of
Managers then in office.
3.3 All meetings of the owners and payees shall be held in Wellesley,
Massachusetts, except that the Board of Managers may fix a different place of
meeting which shall be specified in each notice or waiver of notice of the
meeting.
3.4 A written notice stating the place, date and hour of each meeting
of the owners and payees and the purpose or purposes for which the meeting is
called, shall be given by mail not less than ten (10) nor more than forty (40)
days before the date of the meeting to each owner and payee entitled to vote at
the meeting. Such notice shall be directed to each owner and payee at the
address appearing on the records of Sun Life (U.S.).
3.5 The Board of Managers shall fix a record date for the determination
of the owner and payees entitled to vote provided that such record date shall
not be more than
<PAGE>
sixty (60) days nor less than twenty (20) days before the date of any meeting.
Only owners of record of and payees under contracts participating in the
investment experience of GGVA on the record date shall be entitled to notice of
the meeting, and only owners of and payees under contracts outstanding on the
date of such meeting shall be entitled to vote. The person shown in the records
of Sun Life (U.S.) as the owner of a contract participating in the investment
experience of GGVA shall be regarded as the owner of such contract.
3.6 At all meetings of owners and payees, there shall be present,
either in person or by proxy, owners and payees entitled to case twenty-five
percent (25%) of the total number o votes entitled to be cast as the meeting in
order to constitute a quorum for the transaction business. However, if the vote
of a majority of the outstanding voting securities, as defined in the Investment
Company Act of 1940, is required for action to be taken on any matter to be
brought before the meeting, there shall be present, either in person or by
proxy, owners and payees entitled to cast more than fifty percent (50%) of such
total number of votes in order to constitute the quorum. If a quorum is not
present, owners and payees present in person or by proxy and entitled to vote at
such meeting or if no such owner or payee is present, any person entitled to
preside at such meeting may adjourn the meeting and, at any such adjourned
meeting, if a quorum is present, any business may be transacted that might have
been transacted at the meeting originally called.
3.7 Except as otherwise provided, a majority of the votes cast at a
meeting by the owners and payees entitled to vote shall decide any question to
be brought before such meeting, except that elections of the members of the
Board of Managers shall be by a plurality of the votes cast at a meeting by the
owners and payees entitled to vote.
3.8 Each owner and payee entitled to vote may vote either in person or
by proxy executed in writing by the owner or payee or by the owner's or payee's
attorney-in-fact. A proxy for any meeting shall be valid for the adjournment of
that meeting.
Officers
4.1 The Board of Managers may elect the Chairman and Secretary and may
also from time to time elect one or more Vice Presidents and Assistant
Secretaries as it deems expedient.
4.2 The Chairman shall be the Chief Executive Officer of GGVA and shall
have general charge and direction of the business of GGVA, subject to control of
the Board of Managers.
4.3 The Secretary shall keep the minutes of the meetings of the
contract owners and the Board of Managers and shall give notice of all such
meetings required in these Rules and Regulations.
<PAGE>
4.4 Each officer shall serve in term for which he or she is elected
until his or her successor is duly elected and qualified, or until his or her
death or until he or she shall have resigned or have been removed. Any officer
may be removed by the Board at any time with or without cause and with or
without notice of hearing. Vacancies among officers shall be filled by the Board
of Managers.
Fiscal Year
5.0 The fiscal year for GGVA shall be the calendar year.
<PAGE>
EXHIBIT NO. 99.2(b)
Rules And Regulations
Government Markets Variable Account
General
1.1 The name of the Account is Government Markets Variable Account (the
"Account"). Sun Life Assurance Company of Canada (U.S.) ("Sun Life (U.S.)") may
assign an additional name to the Account for marketing purposes including
"Compass", "Beacon" or otherwise in connection with certain contracts which
participate in the investment experience of the Account. Sun Life (U.S.) will
notify the Board of Managers of any such assignment of name(s). Sun Life (U.S.)
also has the right to withdraw permission to use any such names from the Account
at any time upon notice to the Board of Managers.
1.2 The Rules and Regulations for the Account may be amended from time
to time by the corporation action of Sun Life (U.S.), either by its Board of
Directors or by its duly authorized officers.
Board Of Managers
2.1 A Board of Managers of not less than three (3) nor more than nine
(9) members shall be initially appointed by Sun Life (U.S.). Thereafter the
Board of Managers shall be elected by ballot at a special meeting of the owners
of and payees under contracts participating in the Account. Each member shall
hold office until a successor is elected and qualified or until earlier
resignation or removal.
2.2 The initial Board of Managers shall consist of five (5) members.
Thereafter, the Board of Managers shall determine from time to time the number
of members to be elected, subject to 2.1 above.
2.3 At least a majority of the members of the Board of Managers shall
be persons who are not officers or employees or other interested persons of the
Account or of Sun Life (U.S.) or any affiliate of Sun Life (U.S.).
2.4 If any vacancies shall occur in the Board of Managers by reason of
resignation, removal or otherwise, or if the authorized number of members shall
be increased, the members then in office shall continue to act, and such
vacancies or newly created managerships may be filled by a majority of the
members then in office, although less than a quorum, provided that immediately
after filling such vacancy at least two-thirds of the members then holding
office shall have been elected to such office by the owners of and payees under
contracts participating in the Account. In the event that at any time, other
than the time preceding the first special meeting of the owners of and payees
under contracts participating in the Account, less than a majority of the
members
<PAGE>
holding office at that time were so elected by the owners and payees, a meeting
of the owners and payees shall be held promptly and in any event within ninety
(90) days for the purpose of electing members to fill any existing vacancies in
the Board of Managers unless the Securities and Exchange Commission shall by
order extend such period.
2.5 The Board of Managers may provide for the holding of regular or
special meetings and fix their time and place.
2.6 At all meetings of the Board of Managers, the presence of a
majority of the members then in office shall constitute a quorum for the
transaction of business, provided that there shall be present no less than
one-third of the total number of members authorized. In the absence of a quorum,
a majority of the members present may adjourn the meeting until a quorum shall
be present. When a quorum is present, a majority of the members present shall
decide any questions brought before such meeting except as otherwise provided by
applicable law or by these Rules and Regulations.
2.7 Any action required or permitted to be taken at any meeting of the
Board of Managers may be taken without a meeting if all members of the Board of
Managers consent thereof in writing and such consent is filed with the minutes
of the proceedings of the Board of Managers.
2.8 Members of the Board of Managers may participate in a meeting of
such Board by means of conference, telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participating in a meeting pursuant to this section shall constitute
presence in person at such a meeting.
2.9 The Board of Managers has the following duties, responsibilities
and powers:
(a) To approve an agreement or agreements with respect to
investment management, supervision and custody of the assets
of the Account.
(b) To recommend any changes deemed appropriate in the fundamental
investment policy and investment objectives of the Account.
(c) To approve an agreement or agreements for the offering and
sale of contracts participating in the investment experience
of the Account.
(d) To annually select and approve independent auditors whose
initial selection shall be submitted for ratification or
rejection by the contract owners.
(e) To supervise the investment of the assets of the Account in
accordance with the investment objectives, policies and
restrictions of the Account.
<PAGE>
(f) To enter into such other agreements and to take all actions
necessary or proper in connection with the operation or
management of the Account.
2.10 The Board of Managers may designate, by resolution adopted by a
majority of the Board of Managers, including a majority of the members who are
not affiliated with Sun Life (U.S.), or two or more of its members to constitute
a subcommittee or subcommittees which, when the Board of Managers is not in
session, shall have all the powers of the Board of Managers except as otherwise
provided by the Board of Managers or by law.
2.11 The Board of Managers may designate, by resolution adopted by a
majority of the Board of Managers, including a majority of the members who are
not affiliated with Sun Life (U.S.), the fees to be paid to members of the Board
of Managers and authorize their expenses, except that members of the Board of
Managers who are also directors, officers or employees of Sun Life (U.S.) or any
affiliated person thereof shall not be paid any fee. In no event shall the fees
payable to a member of the Board of Managers exceed three thousand dollars
($3,000) per annum.
Meetings of Owners/Payees
3.1 No annual meeting of owners of and payees under contracts
participating in the investment experience of the Account shall be held. It
shall be the policy of the Account to hold only such special meetings of owners
of and payees under contracts participating in the investment experience of the
Account as shall be necessary under applicable law, rules and regulations. To
the extent that action by the Board of Managers can satisfy applicable law,
rules and regulations, it shall be taken in lieu of action by owners and payees
at special meetings.
3.2 Special meetings of the owners and payees may be called at any time
by the Chairman of the Board of Managers or by a majority of the Board of
Managers then in office.
3.3 All meetings of the owners and payees shall be held in Wellesley,
Massachusetts, except that the Board of Managers may fix a different place of
meeting which shall be specified in each notice or waiver of notice of the
meeting.
3.4 A written notice stating the place, date and hour of each meeting
of the owners and payees and the purpose or purposes for which the meeting is
called, shall be given by mail not less than ten (10) nor more than forty (40)
days before the date of the meeting to each owner and payee entitled to vote at
the meeting. Such notice shall be directed to each owner and payee at the
address appearing on the records of Sun Life (U.S.).
<PAGE>
3.5 The Board of Managers shall fix a record date for the determination
of the owner and payees entitled to vote provided that such record date shall
not be more than sixty (60) days nor less than twenty (20) days before the date
of any meeting. Only owners of record of and payees under contracts
participating in the investment experience of the Account on the record date
shall be entitled to notice of the meeting, and only owners of and payees under
contracts outstanding on the date of such meeting shall be entitled to vote. The
person shown in the records of Sun Life (U.S.) as the owner of a contract
participating in the investment experience of the Account shall be regarded as
the owner of such contract.
3.6 At all meetings of owners and payees, there shall be present,
either in person or by proxy, owners and payees entitled to case twenty-five
percent (25%) of the total number o votes entitled to be cast as the meeting in
order to constitute a quorum for the transaction business. However, if the vote
of a majority of the outstanding voting securities, as defined in the Investment
Company Act of 1940, is required for action to be taken on any matter to be
brought before the meeting, there shall be present, either in person or by
proxy, owners and payees entitled to cast more than fifty percent (50%) of such
total number of votes in order to constitute the quorum. If a quorum is not
present, owners and payees present in person or by proxy and entitled to vote at
such meeting or if no such owner or payee is present, any person entitled to
preside at such meeting may adjourn the meeting and, at any such adjourned
meeting, if a quorum is present, any business may be transacted that might have
been transacted at the meeting originally called.
3.7 Except as otherwise provided, a majority of the votes cast at a
meeting by the owners and payees entitled to vote shall decide any question to
be brought before such meeting, except that elections of the members of the
Board of Managers shall be by a plurality of the votes cast at a meeting by the
owners and payees entitled to vote.
3.8 Each owner and payee entitled to vote may vote either in person or
by proxy executed in writing by the owner or payee or by the owner's or payee's
attorney-in-fact. A proxy for any meeting shall be valid for the adjournment of
that meeting.
Officers
4.1 The Board of Managers may elect the Chairman and Secretary and may
also from time to time elect one or more Vice Presidents and Assistant
Secretaries as it deems expedient.
4.2 The Chairman shall be the Chief Executive Officer of the Account
and shall have general charge and direction of the business of the Account,
subject to control of the Board of Managers.
<PAGE>
4.3 The Secretary shall keep the minutes of the meetings of the
contract owners and the Board of Managers and shall give notice of all such
meetings required in these Rules and Regulations.
4.4 Each officer shall serve in term for which he or she is elected
until his or her successor is duly elected and qualified, or until his or her
death or until he or she shall have resigned or have been removed. Any officer
may be removed by the Board at any time with or without cause and with or
without notice of hearing. Vacancies among officers shall be filled by the Board
of Managers.
Fiscal Year
5.0 The fiscal year for the Account shall be the calendar year.
<PAGE>
EXHIBIT NO. 99.2(c)
Rules And Regulations
Total Return Variable Account
General
1.1 The name of the Account is Total Return Variable Account (the
"Account"). Sun Life Assurance Company of Canada (U.S.) ("Sun Life (U.S.)") may
assign an additional name to the Account for marketing purposes including
"Compass", "Beacon" or otherwise in connection with certain contracts which
participate in the investment experience of the Account. Sun Life (U.S.) will
notify the Board of Managers of any such assignment of name(s). Sun Life (U.S.)
also has the right to withdraw permission to use any such names from the Account
at any time upon notice to the Board of Managers.
1.2 The Rules and Regulations for the Account may be amended from time
to time by the corporation action of Sun Life (U.S.), either by its Board of
Directors or by its duly authorized officers.
Board Of Managers
2.1 A Board of Managers of not less than three (3) nor more than nine
(9) members shall be initially appointed by Sun Life (U.S.). Thereafter the
Board of Managers shall be elected by ballot at a special meeting of the owners
of and payees under contracts participating in the Account. Each member shall
hold office until a successor is elected and qualified or until earlier
resignation or removal.
2.2 The initial Board of Managers shall consist of five (5) members.
Thereafter, the Board of Managers shall determine from time to time the number
of members to be elected, subject to 2.1 above.
2.3 At least a majority of the members of the Board of Managers shall
be persons who are not officers or employees or other interested persons of the
Account or of Sun Life (U.S.) or any affiliate of Sun Life (U.S.).
2.4 If any vacancies shall occur in the Board of Managers by reason of
resignation, removal or otherwise, or if the authorized number of members shall
be increased, the members then in office shall continue to act, and such
vacancies or newly created managerships may be filled by a majority of the
members then in office, although less than a quorum, provided that immediately
after filling such vacancy at least two-thirds of the members then holding
office shall have been elected to such office by the owners of and payees under
contracts participating in the Account. In the event that at any time, other
than the time preceding the first special meeting of the owners of and payees
under contracts participating in the Account, less than a majority of the
members
<PAGE>
holding office at that time were so elected by the owners and payees, a meeting
of the owners and payees shall be held promptly and in any event within ninety
(90) days for the purpose of electing members to fill any existing vacancies in
the Board of Managers unless the Securities and Exchange Commission shall by
order extend such period.
2.5 The Board of Managers may provide for the holding of regular or
special meetings and fix their time and place.
2.6 At all meetings of the Board of Managers, the presence of a
majority of the members then in office shall constitute a quorum for the
transaction of business, provided that there shall be present no less than
one-third of the total number of members authorized. In the absence of a quorum,
a majority of the members present may adjourn the meeting until a quorum shall
be present. When a quorum is present, a majority of the members present shall
decide any questions brought before such meeting except as otherwise provided by
applicable law or by these Rules and Regulations.
2.7 Any action required or permitted to be taken at any meeting of the
Board of Managers may be taken without a meeting if all members of the Board of
Managers consent thereof in writing and such consent is filed with the minutes
of the proceedings of the Board of Managers.
2.8 Members of the Board of Managers may participate in a meeting of
such Board by means of conference, telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participating in a meeting pursuant to this section shall constitute
presence in person at such a meeting.
2.9 The Board of Managers has the following duties, responsibilities
and powers:
(a) To approve an agreement or agreements with respect to
investment management, supervision and custody of the assets
of the Account.
(b) To recommend any changes deemed appropriate in the fundamental
investment policy and investment objectives of the Account.
(c) To approve an agreement or agreements for the offering and
sale of contracts participating in the investment experience
of the Account.
(d) To annually select and approve independent auditors whose
initial selection shall be submitted for ratification or
rejection by the contract owners.
(e) To supervise the investment of the assets of the Account in
accordance with the investment objectives, policies and
restrictions of the Account.
<PAGE>
(f) To enter into such other agreements and to take all actions
necessary or proper in connection with the operation or
management of the Account.
2.10 The Board of Managers may designate, by resolution adopted by a
majority of the Board of Managers, including a majority of the members who are
not affiliated with Sun Life (U.S.), or two or more of its members to constitute
a subcommittee or subcommittees which, when the Board of Managers is not in
session, shall have all the powers of the Board of Managers except as otherwise
provided by the Board of Managers or by law.
2.11 The Board of Managers may designate, by resolution adopted by a
majority of the Board of Managers, including a majority of the members who are
not affiliated with Sun Life (U.S.), the fees to be paid to members of the Board
of Managers and authorize their expenses, except that members of the Board of
Managers who are also directors, officers or employees of Sun Life (U.S.) or any
affiliated person thereof shall not be paid any fee. In no event shall the fees
payable to a member of the Board of Managers exceed three thousand dollars
($3,000) per annum.
Meetings of Owners/Payees
3.1 No annual meeting of owners of and payees under contracts
participating in the investment experience of the Account shall be held. It
shall be the policy of the Account to hold only such special meetings of owners
of and payees under contracts participating in the investment experience of the
Account as shall be necessary under applicable law, rules and regulations. To
the extent that action by the Board of Managers can satisfy applicable law,
rules and regulations, it shall be taken in lieu of action by owners and payees
at special meetings.
3.2 Special meetings of the owners and payees may be called at any time
by the Chairman of the Board of Managers or by a majority of the Board of
Managers then in office.
3.3 All meetings of the owners and payees shall be held in Wellesley,
Massachusetts, except that the Board of Managers may fix a different place of
meeting which shall be specified in each notice or waiver of notice of the
meeting.
3.4 A written notice stating the place, date and hour of each meeting
of the owners and payees and the purpose or purposes for which the meeting is
called, shall be given by mail not less than ten (10) nor more than forty (40)
days before the date of the meeting to each owner and payee entitled to vote at
the meeting. Such notice shall be directed to each owner and payee at the
address appearing on the records of Sun Life (U.S.).
<PAGE>
3.5 The Board of Managers shall fix a record date for the determination
of the owner and payees entitled to vote provided that such record date shall
not be more than sixty (60) days nor less than twenty (20) days before the date
of any meeting. Only owners of record of and payees under contracts
participating in the investment experience of the Account on the record date
shall be entitled to notice of the meeting, and only owners of and payees under
contracts outstanding on the date of such meeting shall be entitled to vote. The
person shown in the records of Sun Life (U.S.) as the owner of a contract
participating in the investment experience of the Account shall be regarded as
the owner of such contract.
3.6 At all meetings of owners and payees, there shall be present,
either in person or by proxy, owners and payees entitled to case twenty-five
percent (25%) of the total number o votes entitled to be cast as the meeting in
order to constitute a quorum for the transaction business. However, if the vote
of a majority of the outstanding voting securities, as defined in the Investment
Company Act of 1940, is required for action to be taken on any matter to be
brought before the meeting, there shall be present, either in person or by
proxy, owners and payees entitled to cast more than fifty percent (50%) of such
total number of votes in order to constitute the quorum. If a quorum is not
present, owners and payees present in person or by proxy and entitled to vote at
such meeting or if no such owner or payee is present, any person entitled to
preside at such meeting may adjourn the meeting and, at any such adjourned
meeting, if a quorum is present, any business may be transacted that might have
been transacted at the meeting originally called.
3.7 Except as otherwise provided, a majority of the votes cast at a
meeting by the owners and payees entitled to vote shall decide any question to
be brought before such meeting, except that elections of the members of the
Board of Managers shall be by a plurality of the votes cast at a meeting by the
owners and payees entitled to vote.
3.8 Each owner and payee entitled to vote may vote either in person or
by proxy executed in writing by the owner or payee or by the owner's or payee's
attorney-in-fact. A proxy for any meeting shall be valid for the adjournment of
that meeting.
Officers
4.1 The Board of Managers may elect the Chairman and Secretary and may
also from time to time elect one or more Vice Presidents and Assistant
Secretaries as it deems expedient.
4.2 The Chairman shall be the Chief Executive Officer of the Account
and shall have general charge and direction of the business of the Account,
subject to control of the Board of Managers.
<PAGE>
4.3 The Secretary shall keep the minutes of the meetings of the
contract owners and the Board of Managers and shall give notice of all such
meetings required in these Rules and Regulations.
4.4 Each officer shall serve in term for which he or she is elected
until his or her successor is duly elected and qualified, or until his or her
death or until he or she shall have resigned or have been removed. Any officer
may be removed by the Board at any time with or without cause and with or
without notice of hearing. Vacancies among officers shall be filled by the Board
of Managers.
Fiscal Year
5.0 The fiscal year for the Account shall be the calendar year.
<PAGE>
EXHIBIT NO. 99.2(d)
Rules And Regulations
Managed Sectors Variable Account
General
1.1 The name of the Account is Managed Sectors Variable Account (the
"Account"). Sun Life Assurance Company of Canada (U.S.) ("Sun Life (U.S.)") may
assign an additional name to the Account for marketing purposes including
"Compass", "Beacon" or otherwise in connection with certain contracts which
participate in the investment experience of the Account. Sun Life (U.S.) will
notify the Board of Managers of any such assignment of name(s). Sun Life (U.S.)
also has the right to withdraw permission to use any such names from the Account
at any time upon notice to the Board of Managers.
1.2 The Rules and Regulations for the Account may be amended from time
to time by the corporation action of Sun Life (U.S.), either by its Board of
Directors or by its duly authorized officers.
Board Of Managers
2.1 A Board of Managers of not less than three (3) nor more than nine
(9) members shall be initially appointed by Sun Life (U.S.). Thereafter the
Board of Managers shall be elected by ballot at a special meeting of the owners
of and payees under contracts participating in the Account. Each member shall
hold office until a successor is elected and qualified or until earlier
resignation or removal.
2.2 The initial Board of Managers shall consist of five (5) members.
Thereafter, the Board of Managers shall determine from time to time the number
of members to be elected, subject to 2.1 above.
2.3 At least a majority of the members of the Board of Managers shall
be persons who are not officers or employees or other interested persons of the
Account or of Sun Life (U.S.) or any affiliate of Sun Life (U.S.).
2.4 If any vacancies shall occur in the Board of Managers by reason of
resignation, removal or otherwise, or if the authorized number of members shall
be increased, the members then in office shall continue to act, and such
vacancies or newly created managerships may be filled by a majority of the
members then in office, although less than a quorum, provided that immediately
after filling such vacancy at least two-thirds of the members then holding
office shall have been elected to such office by the owners of and payees under
contracts participating in the Account. In the event that at any time, other
than the time preceding the first special meeting of the owners of and payees
under contracts participating in the Account, less than a majority of the
members
<PAGE>
holding office at that time were so elected by the owners and payees, a meeting
of the owners and payees shall be held promptly and in any event within ninety
(90) days for the purpose of electing members to fill any existing vacancies in
the Board of Managers unless the Securities and Exchange Commission shall by
order extend such period.
2.5 The Board of Managers may provide for the holding of regular or
special meetings and fix their time and place.
2.6 At all meetings of the Board of Managers, the presence of a
majority of the members then in office shall constitute a quorum for the
transaction of business, provided that there shall be present no less than
one-third of the total number of members authorized. In the absence of a quorum,
a majority of the members present may adjourn the meeting until a quorum shall
be present. When a quorum is present, a majority of the members present shall
decide any questions brought before such meeting except as otherwise provided by
applicable law or by these Rules and Regulations.
2.7 Any action required or permitted to be taken at any meeting of the
Board of Managers may be taken without a meeting if all members of the Board of
Managers consent thereof in writing and such consent is filed with the minutes
of the proceedings of the Board of Managers.
2.8 Members of the Board of Managers may participate in a meeting of
such Board by means of conference, telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participating in a meeting pursuant to this section shall constitute
presence in person at such a meeting.
2.9 The Board of Managers has the following duties, responsibilities
and powers:
(a) To approve an agreement or agreements with respect to
investment management, supervision and custody of the assets
of the Account.
(b) To recommend any changes deemed appropriate in the fundamental
investment policy and investment objectives of the Account.
(c) To approve an agreement or agreements for the offering and
sale of contracts participating in the investment experience
of the Account.
(d) To annually select and approve independent auditors whose
initial selection shall be submitted for ratification or
rejection by the contract owners.
(e) To supervise the investment of the assets of the Account in
accordance with the investment objectives, policies and
restrictions of the Account.
<PAGE>
(f) To enter into such other agreements and to take all actions
necessary or proper in connection with the operation or
management of the Account.
2.10 The Board of Managers may designate, by resolution adopted by a
majority of the Board of Managers, including a majority of the members who are
not affiliated with Sun Life (U.S.), or two or more of its members to constitute
a subcommittee or subcommittees which, when the Board of Managers is not in
session, shall have all the powers of the Board of Managers except as otherwise
provided by the Board of Managers or by law.
2.11 The Board of Managers may designate, by resolution adopted by a
majority of the Board of Managers, including a majority of the members who are
not affiliated with Sun Life (U.S.), the fees to be paid to members of the Board
of Managers and authorize their expenses, except that members of the Board of
Managers who are also directors, officers or employees of Sun Life (U.S.) or any
affiliated person thereof shall not be paid any fee. In no event shall the fees
payable to a member of the Board of Managers exceed three thousand dollars
($3,000) per annum.
Meetings of Owners/Payees
3.1 No annual meeting of owners of and payees under contracts
participating in the investment experience of the Account shall be held. It
shall be the policy of the Account to hold only such special meetings of owners
of and payees under contracts participating int he investment experience of the
Account as shall be necessary under applicable law, rules and regulations. To
the extent that action by the Board of Managers can satisfy applicable law,
rules and regulations, it shall be taken in lieu of action by owners and payees
at special meetings.
3.2 Special meetings of the owners and payees may be called at any time
by the Chairman of the Board of Managers or by a majority of the Board of
Managers then in office.
3.3 All meetings of the owners and payees shall be held in Wellesley,
Massachusetts, except that the Board of Managers may fix a different place of
meeting which shall be specified in each notice or waiver of notice of the
meeting.
3.4 A written notice stating the place, date and hour of each meeting
of the owners and payees and the purpose or purposes for which the meeting is
called, shall be given by mail not less than ten (10) nor more than forty (40)
days before the date of the meeting to each owner and payee entitled to vote at
the meeting. Such notice shall be directed to each owner and payee at the
address appearing on the records of Sun Life (U.S.).
<PAGE>
3.5 The Board of Managers shall fix a record date for the determination
of the owner and payees entitled to vote provided that such record date shall
not be more than sixty (60) days nor less than twenty (20) days before the date
of any meeting. Only owners of record of and payees under contracts
participating in the investment experience of the Account on the record date
shall be entitled to notice of the meeting, and only owners of and payees under
contracts outstanding on the date of such meeting shall be entitled to vote. The
person shown in the records of Sun Life (U.S.) as the owner of a contract
participating in the investment experience of the Account shall be regarded as
the owner of such contract.
3.6 At all meetings of owners and payees, there shall be present,
either in person or by proxy, owners and payees entitled to case twenty-five
percent (25%) of the total number o votes entitled to be cast as the meeting in
order to constitute a quorum for the transaction business. However, if the vote
of a majority of the outstanding voting securities, as defined in the Investment
Company Act of 1940, is required for action to be taken on any matter to be
brought before the meeting, there shall be present, either in person or by
proxy, owners and payees entitled to cast more than fifty percent (50%) of such
total number of votes in order to constitute the quorum. If a quorum is not
present, owners and payees present in person or by proxy and entitled to vote at
such meeting or if no such owner or payee is present, any person entitled to
preside at such meeting may adjourn the meeting and, at any such adjourned
meeting, if a quorum is present, any business may be transacted that might have
been transacted at the meeting originally called.
3.7 Except as otherwise provided, a majority of the votes cast at a
meeting by the owners and payees entitled to vote shall decide any question to
be brought before such meeting, except that elections of the members of the
Board of Managers shall be by a plurality of the votes cast at a meeting by the
owners and payees entitled to vote.
3.8 Each owner and payee entitled to vote may vote either in person or
by proxy executed in writing by the owner or payee or by the owner's or payee's
attorney-in-fact. A proxy for any meeting shall be valid for the adjournment of
that meeting.
Officers
4.1 The Board of Managers may elect the Chairman and Secretary and may
also from time to time elect one or more Vice Presidents and Assistant
Secretaries as it deems expedient.
4.2 The Chairman shall be the Chief Executive Officer of the Account
and shall have general charge and direction of the business of the Account,
subject to control of the Board of Managers.
<PAGE>
4.3 The Secretary shall keep the minutes of the meetings of the
contract owners and the Board of Managers and shall give notice of all such
meetings required in these Rules and Regulations.
4.4 Each officer shall serve in term for which he or she is elected
until his or her successor is duly elected and qualified, or until his or her
death or until he or she shall have resigned or have been removed. Any officer
may be removed by the Board at any time with or without cause and with or
without notice of hearing. Vacancies among officers shall be filled by the Board
of Managers.
Fiscal Year
5.0 The fiscal year for the Account shall be the calendar year.
<PAGE>
EXHIBIT NO. 99.3(a)
CUSTODIAN CONTRACT
between
MONEY MARKET VARIABLE ACCOUNT
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
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
<PAGE>
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 Executive Park, Wellesley
Hills, Massachusetts 02181, 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 225 Franklin Street, Boston, Massachusetts,
02110, 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
3
<PAGE>
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;
4
<PAGE>
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
5
<PAGE>
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
6
<PAGE>
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
7
<PAGE>
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
8
<PAGE>
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
9
<PAGE>
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.
10
<PAGE>
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;
11
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
12
<PAGE>
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:
13
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
14
<PAGE>
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
<PAGE>
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
<PAGE>
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;
17
<PAGE>
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
<PAGE>
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)
19
<PAGE>
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
20
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
21
<PAGE>
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
<PAGE>
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.
23
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.)
BONNIE S. ANGUS By: DAVID D. HORN
Bonnie S. Angus, Secretary David D. Horn, Senior Vice President
and General Manager
ATTEST: STATE STREET BANK AND TRUST COMPANY
NOT LEGIBLE By: NOT LEGIBLE
Assistant Secretary Vice President
29
<PAGE>
CUSTODIAN CONTRACT
between
HIGH YIELD VARIABLE ACCOUNT
and
STATE STREET BANK AND TRUST COMPANY
30
<PAGE>
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
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12. Effective Period, Termination and Amendment................... 28
13. Successor Custodian........................................... 29
14. Interpretive and Additional Provisions........................ 31
15. Massachusetts Law to Apply.................................... 31
32
<PAGE>
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 Executive Park, Wellesley
Hills, Massachusetts 02181, 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 225 Franklin Street, Boston, Massachusetts,
02110, 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.
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<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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;
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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;
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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
<PAGE>
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
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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.
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<PAGE>
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
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<PAGE>
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
<PAGE>
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
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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
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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
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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.
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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
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<PAGE>
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
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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.
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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.
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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.
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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.)
BONNIE S. ANGUS By: DAVID D. HORN
Bonnie S. Angus, Secretary David D. Horn, 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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CUSTODIAN CONTRACT
between
CAPITAL APPRECIATION VARIABLE ACCOUNT
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
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
<PAGE>
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 Executive Park, Wellesley
Hills, Massachusetts 02181, 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 225 Franklin Street, Boston, Massachusetts,
02110, 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
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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;
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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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<PAGE>
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 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
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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
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.
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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 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;
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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
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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 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
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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
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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
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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)
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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 reasonably 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
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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 taken or omitted by it in the proper execution of instructions from
the Fund. It shall be
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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.
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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
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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
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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
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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.)
BONNIE S. ANGUS By: DAVID D. HORN
Bonnie S. Angus, Secretary David D. Horn, 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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CUSTODIAN CONTRACT
between
GOVERNMENT SECURITIES VARIABLE ACCOUNT
and
STATE STREET BANK AND TRUST COMPANY
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<PAGE>
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
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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 Executive Park, Wellesley
Hills, Massachusetts 02181, 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 225 Franklin Street, Boston, Massachusetts,
02110, 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 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
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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
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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
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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
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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
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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
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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
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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.)
BONNIE S. ANGUS By: DAVID D. HORN
Bonnie S. Angus, Secretary David D. Horn, 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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EXHIBIT NO. 99.3(b)
CUSTODIAN CONTRACT
between
GOVERNMENT MARKETS VARIABLE ACCOUNT
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
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
2
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12. Effective Period, Termination and Amendment................... 28
13. Successor Custodian........................................... 29
14. Interpretive and Additional Provisions........................ 31
15. Massachusetts Law to Apply.................................... 31
3
<PAGE>
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 Executive Park, Wellesley
Hills, Massachusetts 02181, acting on behalf of Government Markets Variable
Account, a segregated investment account of Sun Life (U.S.), hereinafter called
the "Fund" and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, 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.
4
<PAGE>
Upon receipt of "Proper Instructions" (within the meaning of Article
5), 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 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,
5
<PAGE>
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;
6
<PAGE>
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
7
<PAGE>
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 to
8
<PAGE>
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.
9
<PAGE>
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.
10
<PAGE>
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
11
<PAGE>
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,
12
<PAGE>
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;
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.
13
<PAGE>
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
14
<PAGE>
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 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
15
<PAGE>
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;
16
<PAGE>
5) The Custodian shall have received the
initial or annual certificate, as the case
may be, required by Article 10 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;
17
<PAGE>
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 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 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
19
<PAGE>
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;
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
19
<PAGE>
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 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.
20
<PAGE>
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
22
<PAGE>
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,
22
<PAGE>
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 bee 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 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 instructions with respect
to the transaction involved. The Fund shall cause all oral
23
<PAGE>
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.
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
24
<PAGE>
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 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
so,
25
<PAGE>
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-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.
26
<PAGE>
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
27
<PAGE>
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 Securities"). Should the Fund fail to repay
promptly any advances of cash or securities,
28
<PAGE>
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 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
29
<PAGE>
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.
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
30
<PAGE>
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.
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
31
<PAGE>
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.
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 30th day of
January, 1989.
GOVERNMENT MARKETS VARIABLE ACCOUNT
ATTEST: By: SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
CHERYL L. LAMIE By: NOT LEGIBLE
Cheryl L. Lamie Not Legible
ATTEST: STATE STREET BANK AND TRUST COMPANY
JOE KINNALLY By: NOT LEGIBLE
Joe Kinnally Not Legible
Assistant Secretary Vice President
32
<PAGE>
EXHIBIT NO. 99.3(c)
CUSTODIAN CONTRACT
between
TOTAL RETURN VARIABLE ACCOUNT
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
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
2
<PAGE>
12. Effective Period, Termination and Amendment.................... 28
13. Successor Custodian............................................ 29
14. Interpretive and Additional Provisions......................... 31
15. Massachusetts Law to Apply..................................... 31
3
<PAGE>
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 Executive Park, Wellesley
Hills, Massachusetts 02181, acting on behalf of Total Return Variable Account, a
segregated investment account of Sun Life (U.S.), hereinafter called the "Fund"
and State Street Bank and Trust Company, a Massachusetts trust company, having
its principal place of business at 225 Franklin Street, Boston, Massachusetts,
02110, 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.
4
<PAGE>
Upon receipt of "Proper Instructions" (within the meaning of Article
5), 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 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,
5
<PAGE>
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;
6
<PAGE>
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
7
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 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.
9
<PAGE>
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.
10
<PAGE>
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
11
<PAGE>
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,
12
<PAGE>
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;
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.
13
<PAGE>
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
14
<PAGE>
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 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
15
<PAGE>
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;
16
<PAGE>
5) The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 10
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;
17
<PAGE>
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 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 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
18
<PAGE>
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;
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
19
<PAGE>
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 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.
20
<PAGE>
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
21
<PAGE>
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,
22
<PAGE>
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 bee 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 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 instructions with respect
to the transaction involved. The Fund shall cause all oral
23
<PAGE>
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.
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
24
<PAGE>
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 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
25
<PAGE>
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-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.
26
<PAGE>
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
27
<PAGE>
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 Securities"). Should the Fund fail to repay
promptly any advances of cash or securities,
28
<PAGE>
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 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
29
<PAGE>
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.
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
30
<PAGE>
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.
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
31
<PAGE>
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.
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 30th day of
January, 1989.
TOTAL RETURN VARIABLE ACCOUNT
ATTEST: By: SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
CHERYL L. LAMIE By: NOT LEGIBLE
Cheryl L. Lamie Not Legible
ATTEST: STATE STREET BANK AND TRUST COMPANY
JOE KINNALLY By: NOT LEGIBLE
Joe Kinnally Not Legible
Assistant Secretary Vice President
32
<PAGE>
EXHIBIT NO. 99.3(d)
CUSTODIAN CONTRACT
between
MANAGED SECTORS VARIABLE ACCOUNT
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
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
2
<PAGE>
12. Effective Period, Termination and Amendment.................... 28
13. Successor Custodian............................................ 29
14. Interpretive and Additional Provisions......................... 31
15. Massachusetts Law to Apply..................................... 31
3
<PAGE>
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 Executive Park, Wellesley
Hills, Massachusetts 02181, acting on behalf of Managed Sectors Variable
Account, a segregated investment account of Sun Life (U.S.), hereinafter called
the "Fund" and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, 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.
4
<PAGE>
Upon receipt of "Proper Instructions" (within the meaning of Article
5), 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 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,
5
<PAGE>
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;
6
<PAGE>
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
7
<PAGE>
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 to
8
<PAGE>
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.
9
<PAGE>
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.
10
<PAGE>
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
11
<PAGE>
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,
12
<PAGE>
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;
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.
13
<PAGE>
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
14
<PAGE>
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 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
15
<PAGE>
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;
16
<PAGE>
5) The Custodian shall have received the
initial or annual certificate, as the case
may be, required by Article 10 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;
17
<PAGE>
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 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 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
18
<PAGE>
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;
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
19
<PAGE>
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 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.
20
<PAGE>
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
21
<PAGE>
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,
22
<PAGE>
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 bee 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 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 instructions with respect
to the transaction involved. The Fund shall cause all oral
23
<PAGE>
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.
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
24
<PAGE>
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 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
25
<PAGE>
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-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.
26
<PAGE>
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
27
<PAGE>
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 Securities"). Should the Fund fail to repay
promptly any advances of cash or securities,
28
<PAGE>
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 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
29
<PAGE>
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.
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
30
<PAGE>
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.
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
31
<PAGE>
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.
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 30th day of
January, 1989.
MANAGED SECTORS VARIABLE ACCOUNT
ATTEST: By: SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
CHERYL L. LAMIE By: NOT LEGIBLE
Cheryl L. Lamie Not Legible
ATTEST: STATE STREET BANK AND TRUST COMPANY
JOE KINNALLY By: NOT LEGIBLE
Joe Kinnally Not Legible
Assistant Secretary Vice President
32
<PAGE>
EXHIBIT NO. 99.4(a)
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT, made on the 1ST day of November, 1982, by and between
MONEY MARKET VARIABLE ACCOUNT ("MMVA"), a segregated investment account of Sun
Life Assurance Company of Canada (U.S.) ("Sun Life (U.S.)") and MASSACHUSETTS
FINANCIAL SERVICES COMPANY, a Delaware corporation ("MFS")
WITNESSETH:
WHEREAS, the MMVA and MFS wish to enter into an agreement setting forth
the terms upon which MFS will perform certain services for the MMVA.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
1. MFS shall act as the investment adviser for MMVA and as such will
manage the assets of MMVA and perform the other services herein set forth,
subject to the supervision of the Board of Managers of MMVA, for the period and
on the terms herein set forth.
2. MFS, in performing its undertaking to manage the assets of MMVA,
shall:
(a) regularly furnish MMVA with investment research, investment advice,
and portfolio supervision;
(b) regularly furnish to the Board of Managers of MMVA recommendations
with respect to an investment program for approval, modification, or
rejection by the Board of Managers; any such recommended investment
program shall be consistent with MMVA's investment objectives, policies
and restrictions set forth in its organizational documents, rules and
regulations and such registration statements and exhibits as from time
to time may be on file with the Securities and Exchange Commission;
(c) take such steps as are necessary to implement the investment
program approved by the Board of Managers of MMVA by purchase and/or
sale of securities, including the placing of orders of such purchase
and/or sale; and
(d) regularly report to the Board of Managers of MMVA with respect to
the implementation of the approved investment program; such report
shall include a schedule of the investments and cash held by MMVA and
shall include therein a
<PAGE>
2
statement of all purchases and sales made on behalf of MMVA during
the period since the preceding report.
3. MFS shall at all times be subject to any directives of the Board of
Managers of MMVA, any duly constituted committee thereof or any officer of MMVA
acting pursuant to like authority with respect to the implementation of any
approved investment program for MMVA and any other activities undertaken by MFS
on behalf of MMVA.
4. MFS, in addition to performing at its own expense the undertaking to
manage the assets of MMVA, shall permit any of its officers or employees to
serve without compensation as members of the Board of Managers or officers of
MMVA if elected to such positions and shall furnish at its own expense or pay
the expenses of MMVA for the following:
(a) office space in the offices of MFS or in such other place as may be
agreed upon from time to time, and all necessary office facilities and
equipment; and
(b) necessary executive and other personnel for managing the affairs of
MMVA, including personnel to perform clerical, bookkeeping, accounting
and other office functions (exclusive of those related to and to be
performed under contract for custodial, transfer, paying and plan
agency services by the bank selected to perform such services); and
(c) all information required in connection with the registration
statements and prospectuses including amendments thereto.
5. Unless otherwise provided in any other Agreement between MFS, MMVA
or Sun Life (U.S.), MFS shall not be required to bear or to reimburse MMVA for:
(a) any of the cost of preparing, printing and mailing all annual,
semi-annual and other periodic reports as well as all notices and proxy
solicitation material furnished to contract holders participating in
the investment experience of MMVA or regulatory authorities;
(b) the costs of preparation, printing and mailing of sales literature
and prospectuses;
(c) compensation and expenses of members of the Board of Managers of
MMVA who are not directors, officers or employees of Sun Life Assurance
Company of Canada or any company affiliated with Sun Life Assurance
Company of Canada;
(d) registration, filing and other fees in connection with requirements
of regulatory authorities;
<PAGE>
3
(e) the charges and expenses of the custodian appointed by MMVA for
custodial, paying agent, transfer agent and plan agent services;
(f) the charges and expenses of the independent accountants and any
counsel retained by MMVA;
(g) broker's commissions and issue and transfer taxes chargeable to
MMVA in connection with securities transactions to which MMVA is a
party;
(h) taxes and corporate fees payable by MMVA and/or Sun Life (U.S.) to
federal, state or other governmental agencies;
(i) legal fees and expenses in connection with the affairs of MMVA,
including registering and qualifying its shares with federal and state
regulatory authorities;
(j) the cost of preparing and distributing reports and notices to
contract holders participating in the investment experience of MMVA;
(k) expenses of contract holders and Board of Managers meetings; and
(l) expenses other than those specifically assumed by MFS pursuant to
the terms of this Agreement.
6. MMVA will pay MFS, as full compensation for all services rendered,
all expense payments made, and all facilities furnished, a monthly investment
management fee computed at an annual rate of one-half of one percent (0.50%) of
the average of the daily net asset values of MMVA during each month.
The daily net asset value of MMVA shall be determined pursuant to the applicable
provisions of MMVA's registration statements filed with the Securities and
Exchange Commission and the fee for each month shall be payable to MFS not later
than the tenth day of the following month.
7. If in any calendar year the total of all expenses of MMVA (including
investment advisory fees but excluding taxes, portfolio brokerage commissions
and interest) and to the extent permitted, extraordinary expenses exceed one and
one-quarter percent (1.25%) of the average daily net assets for the calendar
year, MFS shall reduce its fees or reimburse MMVA for any such excess. The daily
net asset value of MMVA shall be determined pursuant to the applicable
provisions of the registration statements of MMVA filed with the Securities and
Exchange Commission and this value will be used to determine the average net
assets of MMVA for a particular calendar year. For the purposes of this
paragraph the term "calendar year" shall include the portion of a calendar year
for which compensation shall be payable, which shall have elapsed prior to
<PAGE>
4
December 31, 1982, and the portion of a calendar year which shall have elapsed
prior to the date of termination of this Agreement.
8. The services of MFS to MMVA hereunder are not to be deemed exclusive
and MFS shall be free to render similar services to others and engage in other
activities.
9. It is understood that members of the Board of Managers of MMVA are
or may be interested in MFS as directors, officers or otherwise and that
directors, officers, agents and stockholders of MFS are or may be interested in
MMVA otherwise than as a member of the Board of Managers of MMVA, and that the
existence of any such dual interest shall not affect the validity hereof or of
any transactions hereunder except as otherwise provided in the governing
documents of MMVA and MFS, respectively, or by specific provision of applicable
law.
10. (a) This Agreement shall remain in full force until November 1,
1983 unless sooner terminated. This Agreement shall continue in force from year
to year thereafter, but only so long as such continuance is specifically
approved at least annually in the manner required by the Investment Company Act
of 1940.
(b) This Agreement shall automatically terminate in the event
of its assignment, and may be terminated at any time without the payment of any
penalty by MMVA or by MFS on sixty (60) days' written notice to the other party.
MMVA may effect termination by action of the Board of Managers of MMVA or by
majority vote of those having a right to vote.
(c) This Agreement may be terminated at any time without the
payment of any penalty by the Board of Managers of MMVA or by majority vote of
those having a right to vote in the event that it shall have been established by
a court of competent jurisdiction that MFS or any officer or director of MFS has
taken any action which results in a material breach of the covenants of MFS set
forth herein.
<PAGE>
11. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage prepaid to the other party at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party it is agreed that the address of MMVA for this purpose shall
be One Sun Life Executive Park, Wellesley Hills, Massachusetts 02181, and the
address for MFS for this purpose shall be 200 Berkeley Street, Boston,
Massachusetts 02116.
MONEY MARKET VARIABLE ACCOUNT
By: BONNIE S. ANGUS
Bonnie S. Angus
Secretary to Board of Managers
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: RICHARD B. BAILEY
Richard B. Bailey
Chairman
<PAGE>
6
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT, made on this 1st day of November, 1982, by and between
HIGH YIELD VARIABLE ACCOUNT ("HYVA"), a segregated investment account of Sun
Life Assurance Company of Canada (U.S.) ("Sun Life (U.S.)") and MASSACHUSETTS
FINANCIAL SERVICES COMPANY, a Delaware corporation ("MFS")
WITNESSETH:
WHEREAS, the HYVA and MFS wish to enter into an agreement setting forth
the terms upon which MFS will perform certain services for the HYVA.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
1. MFS shall act as the investment adviser for HYVA and as such will
manage the assets of HYVA and perform the other services herein set forth,
subject to the supervision of the Board of Managers of HYVA, for the period and
on the terms herein set forth.
2. MFS, in performing its undertaking to manage the assets of HYVA,
shall:
(a) regularly furnish HYVA with investment research, investment advice,
and portfolio supervision;
(b) regularly furnish to the Board of Managers of HYVA recommendations
with respect to an investment program for approval, modification, or
rejection by the Board of Managers; any such recommended investment
program shall be consistent with HYVA's investment objectives, policies
and restrictions set forth in its organizational documents, rules and
regulations and such registration statements and exhibits as from time
to time may be on file with the Securities and Exchange Commission;
(c) take such steps as are necessary to implement the investment
program approved by the Board of Managers of HYVA by purchase and/or
sale of securities, including the placing of orders of such purchase
and/or sale; and
(d) regularly report to the Board of Managers of HYVA with respect to
the implementation of the approved investment program; such report
shall include a schedule of the investments and cash held by HYVA and
shall include therein a statement of all purchases and sales made on
behalf of HYVA during the period since the preceding report.
<PAGE>
7
3. MFS shall at all times be subject to any directives of the Board of
Managers of HYVA, any duly constituted committee thereof or any officer of HYVA
acting pursuant to like authority with respect to the implementation of any
approved investment program for HYVA and any other activities undertaken by MFS
on behalf of HYVA.
4. MFS, in addition to performing at its own expense the undertaking to
manage the assets of HYVA, shall permit any of its officers or employees to
serve without compensation as members of the Board of Managers or officers of
HYVA if elected to such positions and shall furnish at its own expense or pay
the expenses of HYVA for the following:
(a) office space in the offices of MFS or in such other place as may be
agreed upon from time to time, and all necessary office facilities and
equipment; and
(b) necessary executive and other personnel for managing the affairs of
HYVA, including personnel to perform clerical, bookkeeping, accounting
and other office functions (exclusive of those related to and to be
performed under contract for custodial, transfer, paying and plan
agency services by the bank selected to perform such services); and
(c) all information required in connection with the registration
statements and prospectuses including amendments thereto.
5. Unless otherwise provided in any other Agreement between MFS, HYVA
or Sun Life (U.S.), MFS shall not be required to bear or to reimburse HYVA for:
(a) any of the cost of preparing, printing and mailing all annual,
semi-annual and other periodic reports as well as all notices and proxy
solicitation material furnished to contract holders participating in
the investment experience of HYVA or regulatory authorities;
(b) the costs of preparation, printing and mailing of sales literature
and prospectuses;
(c) compensation and expenses of members of the Board of Managers of
HYVA who are not directors, officers or employees of Sun Life Assurance
Company of Canada or any company affiliated with Sun Life Assurance
Company of Canada;
(d) registration, filing and other fees in connection with requirements
of regulatory authorities;
(e) the charges and expenses of the custodian appointed by HYVA for
custodial, paying agent, transfer agent and plan agent services;
<PAGE>
8
(f) the charges and expenses of the independent accountants and any
counsel retained by HYVA;
(g) broker's commissions and issue and transfer taxes chargeable to
HYVA in connection with securities transactions to which HYVA is a
party;
(h) taxes and corporate fees payable by HYVA and/or Sun Life (U.S.) to
federal, state or other governmental agencies;
(i) legal fees and expenses in connection with the affairs of HYVA,
including registering and qualifying its shares with federal and state
regulatory authorities;
(j) the cost of preparing and distributing reports and notices to
contract holders participating in the investment experience of HYVA;
(k) expenses of contract holders and Board of Managers meetings; and
(l) expenses other than those specifically assumed by MFS pursuant to
the terms of this Agreement.
6. HYVA will pay MFS, as full compensation for all services rendered,
all expense payments made, and all facilities furnished, a monthly investment
management fee computed at an annual rate of three quarters of one percent
(0.75%) of the average of the daily net asset values of HYVA during each month.
The daily net asset value of HYVA shall be determined pursuant to the applicable
provisions of HYVA's registration statements filed with the Securities and
Exchange Commission and the fee for each month shall be payable to MFS not later
than the tenth day of the following month.
7. If in any calendar year the total of all expenses of HYVA (including
investment advisory fees but excluding taxes, portfolio brokerage commissions
and interest) and to the extent permitted, extraordinary expenses exceed one and
one-quarter percent (1.25%) of the average daily net assets for the calendar
year, MFS shall reduce its fees or reimburse HYVA for any such excess. The daily
net asset value of HYVA shall be determined pursuant to the applicable
provisions of the registration statements of HYVA filed with the Securities and
Exchange Commission and this value will be used to determine the average net
assets of HYVA for a particular calendar year. For the purposes of this
paragraph the term "calendar year" shall include the portion of a calendar year
for which compensation shall be payable, which shall have elapsed prior to
December 31, 1982, and the portion of a calendar year which shall have elapsed
prior to the date of termination of this Agreement.
<PAGE>
9
8. The services of MFS to HYVA hereunder are not to be deemed exclusive
and MFS shall be free to render similar services to others and engage in other
activities.
9. It is understood that members of the Board of Managers of HYVA are
or may be interested in MFS as directors, officers or otherwise and that
directors, officers, agents and stockholders of MFS are or may be interested in
HYVA otherwise than as a member of the Board of Managers of HYVA, and that the
existence of any such dual interest shall not affect the validity hereof or of
any transactions hereunder except as otherwise provided in the governing
documents of HYVA and MFS, respectively, or by specific provision of applicable
law.
10. (a) This Agreement shall remain in full force until November 1,
1983 unless sooner terminated. This Agreement shall continue in force from year
to year thereafter, but only so long as such continuance is specifically
approved at least annually in the manner required by the Investment Company Act
of 1940.
(b) This Agreement shall automatically terminate in the event
of its assignment, and may be terminated at any time without the payment of any
penalty by HYVA or by MFS on sixty (60) days' written notice to the other party.
HYVA may effect termination by action of the Board of Managers of HYVA or by
majority vote of those having a right to vote.
(c) This Agreement may be terminated at any time without the
payment of any penalty by the Board of Managers of HYVA or by majority vote of
those having a right to vote in the event that it shall have been established by
a court of competent jurisdiction that MFS or any officer or director of MFS has
taken any action which results in a material breach of the covenants of MFS set
forth herein.
<PAGE>
10
11. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage prepaid to the other party at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party it is agreed that the address of HYVA for this purpose shall
be One Sun Life Executive Park, Wellesley Hills, Massachusetts 02181, and the
address for MFS for this purpose shall be 200 Berkeley Street, Boston,
Massachusetts 02116.
HIGH YIELD VARIABLE ACCOUNT
By: BONNIE S. ANGUS
Bonnie S. Angus
Secretary to Board of Managers
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: RICHARD B. BAILEY
Richard B. Bailey
Chairman
<PAGE>
11
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT, made on this 1st day of November, 1982, by and between
CAPITAL APPRECIATION VARIABLE ACCOUNT ("CAVA"), a segregated investment account
of Sun Life Assurance Company of Canada (U.S.) ("Sun Life (U.S.)") and
MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation ("MFS")
WITNESSETH:
WHEREAS, the CAVA and MFS wish to enter into an agreement setting forth
the terms upon which MFS will perform certain services for the CAVA.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
1. MFS shall act as the investment adviser for CAVA and as such will
manage the assets of CAVA and perform the other services herein set forth,
subject to the supervision of the Board of Managers of CAVA, for the period and
on the terms herein set forth.
2. MFS, in performing its undertaking to manage the assets of CAVA,
shall:
(a) regularly furnish CAVA with investment research, investment advice,
and portfolio supervision;
(b) regularly furnish to the Board of Managers of CAVA recommendations
with respect to an investment program for approval, modification, or
rejection by the Board of Managers; any such recommended investment
program shall be consistent with CAVA's investment objectives, policies
and restrictions set forth in its organizational documents, rules and
regulations and such registration statements and exhibits as from time
to time may be on file with the Securities and Exchange Commission;
(c) take such steps as are necessary to implement the investment
program approved by the Board of Managers of CAVA by purchase and/or
sale of securities, including the placing of orders of such purchase
and/or sale; and
(d) regularly report to the Board of Managers of CAVA with respect to
the implementation of the approved investment program; such report
shall include a schedule of the investments and cash held by CAVA and
shall include therein a statement of all purchases and sales made on
behalf of CAVA during the period since the preceding report.
<PAGE>
12
3. MFS shall at all times be subject to any directives of the Board of
Managers of CAVA, any duly constituted committee thereof or any officer of CAVA
acting pursuant to like authority with respect to the implementation of any
approved investment program for CAVA and any other activities undertaken by MFS
on behalf of CAVA.
4. MFS, in addition to performing at its own expense the undertaking to
manage the assets of CAVA, shall permit any of its officers or employees to
serve without compensation as members of the Board of Managers or officers of
CAVA if elected to such positions and shall furnish at its own expense or pay
the expenses of CAVA for the following:
(a) office space in the offices of MFS or in such other place as may be
agreed upon from time to time, and all necessary office facilities and
equipment; and
(b) necessary executive and other personnel for managing the affairs of
CAVA, including personnel to perform clerical, bookkeeping, accounting
and other office functions (exclusive of those related to and to be
performed under contract for custodial, transfer, paying and plan
agency services by the bank selected to perform such services); and
(c) all information required in connection with the registration
statements and prospectuses including amendments thereto.
5. Unless otherwise provided in any other Agreement between MFS, CAVA
or Sun Life (U.S.), MFS shall not be required to bear or to reimburse CAVA for:
(a) any of the cost of preparing, printing and mailing all annual,
semi-annual and other periodic reports as well as all notices and proxy
solicitation material furnished to contract holders participating in
the investment experience of CAVA or regulatory authorities;
(b) the costs of preparation, printing and mailing of sales literature
and prospectuses;
(c) compensation and expenses of members of the Board of Managers of
CAVA who are not directors, officers or employees of Sun Life Assurance
Company of Canada or any company affiliated with Sun Life Assurance
Company of Canada;
(d) registration, filing and other fees in connection with requirements
of regulatory authorities;
(e) the charges and expenses of the custodian appointed by CAVA for
custodial, paying agent, transfer agent and plan agent services;
<PAGE>
13
(f) the charges and expenses of the independent accountants and any
counsel retained by CAVA;
(g) broker's commissions and issue and transfer taxes chargeable to
CAVA in connection with securities transactions to which CAVA is a
party;
(h) taxes and corporate fees payable by CAVA and/or Sun Life (U.S.) to
federal, state or other governmental agencies;
(i) legal fees and expenses in connection with the affairs of CAVA,
including registering and qualifying its shares with federal and state
regulatory authorities;
(j) the cost of preparing and distributing reports and notices to
contract holders participating in the investment experience of CAVA;
(k) expenses of contract holders and Board of Managers meetings; and
(l) expenses other than those specifically assumed by MFS pursuant to
the terms of this Agreement.
6. CAVA will pay MFS, as full compensation for all services rendered,
all expense payments made, and all facilities furnished, a monthly investment
management fee computed at an annual rate of three quarters of one percent
(0.75%) of the average of the daily net asset values of CAVA during each month.
The daily net asset value of CAVA shall be determined pursuant to the applicable
provisions of CAVA's registration statements filed with the Securities and
Exchange Commission and the fee for each month shall be payable to MFS not later
than the tenth day of the following month.
7. If in any calendar year the total of all expenses of CAVA (including
investment advisory fees but excluding taxes, portfolio brokerage commissions
and interest) and to the extent permitted, extraordinary expenses exceed one and
one-quarter percent (1.25%) of the average daily net assets for the calendar
year, MFS shall reduce its fees or reimburse CAVA for any such excess. The daily
net asset value of CAVA shall be determined pursuant to the applicable
provisions of the registration statements of CAVA filed with the Securities and
Exchange Commission and this value will be used to determine the average net
assets of CAVA for a particular calendar year. For the purposes of this
paragraph the term "calendar year" shall include the portion of a calendar year
for which compensation shall be payable, which shall have elapsed prior to
December 31, 1982, and the portion of a calendar year which shall have elapsed
prior to the date of termination of this Agreement.
<PAGE>
14
8. The services of MFS to CAVA hereunder are not to be deemed exclusive
and MFS shall be free to render similar services to others and engage in other
activities.
9. It is understood that members of the Board of Managers of CAVA are
or may be interested in MFS as directors, officers or otherwise and that
directors, officers, agents and stockholders of MFS are or may be interested in
CAVA otherwise than as a member of the Board of Managers of CAVA, and that the
existence of any such dual interest shall not affect the validity hereof or of
any transactions hereunder except as otherwise provided in the governing
documents of CAVA and MFS, respectively, or by specific provision of applicable
law.
10. (a) This Agreement shall remain in full force until November 1,
1983 unless sooner terminated. This Agreement shall continue in force from year
to year thereafter, but only so long as such continuance is specifically
approved at least annually in the manner required by the Investment Company Act
of 1940.
(b) This Agreement shall automatically terminate in the event
of its assignment, and may be terminated at any time without the payment of any
penalty by CAVA or by MFS on sixty (60) days' written notice to the other party.
CAVA may effect termination by action of the Board of Managers of CAVA or by
majority vote of those having a right to vote.
(c) This Agreement may be terminated at any time without the
payment of any penalty by the Board of Managers of CAVA or by majority vote of
those having a right to vote in the event that it shall have been established by
a court of competent jurisdiction that MFS or any officer or director of MFS has
taken any action which results in a material breach of the covenants of MFS set
forth herein.
<PAGE>
15
11. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage prepaid to the other party at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party it is agreed that the address of CAVA for this purpose shall
be One Sun Life Executive Park, Wellesley Hills, Massachusetts 02181, and the
address for MFS for this purpose shall be 200 Berkeley Street, Boston,
Massachusetts 02116.
CAPITAL APPRECIATION VARIABLE ACCOUNT
By: BONNIE S. ANGUS
Bonnie S. Angus
Secretary to Board of Managers
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: RICHARD B. BAILEY
Richard B. Bailey
Chairman
<PAGE>
16
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT, made on the 20th day of April, 1984, by and between
GOVERNMENT GUARANTEED VARIABLE ACCOUNT ("GGVA"), a segregated investment account
of Sun Life Assurance Company of Canada (U.S.) ("Sun Life (U.S.)") and
MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation ("MFS")
WITNESSETH:
WHEREAS, the GGVA and MFS wish to enter into an agreement setting forth
the terms upon which MFS will perform certain services for the GGVA.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
1. MFS shall act as the investment adviser for GGVA and as such will
manage the assets of GGVA and perform the other services herein set forth,
subject to the supervision of the Board of Managers of GGVA, for the period and
on the terms herein set forth.
2. MFS, in performing its undertaking to manage the assets of GGVA,
shall:
(a) regularly furnish GGVA with investment research, investment advice,
and portfolio supervision;
(b) regularly furnish to the Board of Managers of GGVA recommendations
with respect to an investment program for approval, modification, or
rejection by the Board of Managers; any such recommended investment
program shall be consistent with GGVA's investment objectives, policies
and restrictions set forth in its organizational documents, rules and
regulations and such registration statements and exhibits as from time
to time may be on file with the Securities and Exchange Commission;
(c) take such steps as are necessary to implement the investment
program approved by the Board of Managers of GGVA by purchase and/or
sale of securities, including the placing of orders of such purchase
and/or sale; and
(d) regularly report to the Board of Managers of GGVA with respect to
the implementation of the approved investment program; such report
shall include a schedule of the investments and cash held by GGVA and
shall include therein a statement of all purchases and sales made on
behalf of GGVA during the period since the preceding report.
<PAGE>
17
3. MFS shall at all times be subject to any directives of the Board of
Managers of GGVA, any duly constituted committee thereof or any officer of GGVA
acting pursuant to like authority with respect to the implementation of any
approved investment program for GGVA and any other activities undertaken by MFS
on behalf of GGVA.
4. MFS, in addition to performing at its own expense the undertaking to
manage the assets of GGVA, shall permit any of its officers or employees to
serve without compensation as members of the Board of Managers or officers of
GGVA if elected to such positions and shall furnish at its own expense or pay
the expenses of GGVA for the following:
(a) office space in the offices of MFS or in such other place as may be
agreed upon from time to time, and all necessary office facilities and
equipment; and
(b) necessary executive and other personnel for managing the affairs of
GGVA, including personnel to perform clerical, bookkeeping, accounting
and other office functions (exclusive of those related to and to be
performed under contract for custodial, transfer, paying and plan
agency services by the bank selected to perform such services); and
(c) all information required in connection with the registration
statements and prospectuses including amendments thereto.
5. Unless otherwise provided in any other Agreement between MFS, GGVA
or Sun Life (U.S.), MFS shall not be required to bear or to reimburse GGVA for:
(a) any of the cost of preparing, printing and mailing all annual,
semi-annual and other periodic reports as well as all notices and proxy
solicitation material furnished to contract holders participating in
the investment experience of GGVA or regulatory authorities;
(b) the costs of preparation, printing and mailing of sales literature
and prospectuses;
(c) compensation and expenses of members of the Board of Managers of
GGVA who are not directors, officers or employees of Sun Life Assurance
Company of Canada or any company affiliated with Sun Life Assurance
Company of Canada;
(d) registration, filing and other fees in connection with requirements
of regulatory authorities;
(e) the charges and expenses of the custodian appointed by GGVA for
custodial, paying agent, transfer agent and plan agent services;
<PAGE>
18
(f) the charges and expenses of the independent accountants and any
counsel retained by GGVA;
(g) broker's commissions and issue and transfer taxes chargeable to
GGVA in connection with securities transactions to which GGVA is a
party;
(h) taxes and corporate fees payable by GGVA and/or Sun Life (U.S.) to
federal, state or other governmental agencies;
(i) legal fees and expenses in connection with the affairs of GGVA,
including registering and qualifying its shares with federal and state
regulatory authorities;
(j) the cost of preparing and distributing reports and notices to
contract holders participating in the investment experience of GGVA;
(k) expenses of contract holders and Board of Managers meetings; and
(l) expenses other than those specifically assumed by MFS pursuant to
the terms of this Agreement.
6. GGVA will pay MFS, as full compensation for all services rendered,
all expense payments made, and all facilities furnished, a monthly investment
management fee computed at an annual rate of fifty-five one hundredths of one
percent (0.55%) of the average of the daily net asset values of GGVA during each
month.
The daily net asset value of GGVA shall be determined pursuant to the applicable
provisions of GGVA's registration statements filed with the Securities and
Exchange Commission and the fee for each month shall be payable to MFS not later
than the tenth day of the following month.
7. If in any calendar year the total of all expenses of GGVA (including
investment advisory fees but excluding taxes, portfolio brokerage commissions
and interest) and to the extent permitted, extraordinary expenses exceed one and
one-quarter percent (1.25%) of the average daily net assets for the calendar
year, MFS shall reduce its fees or reimburse GGVA for any such excess. The daily
net asset value of GGVA shall be determined pursuant to the applicable
provisions of the registration statements of GGVA filed with the Securities and
Exchange Commission and this value will be used to determine the average net
assets of GGVA for a particular calendar year. For the purposes of this
paragraph the term "calendar year" shall include the portion of a calendar year
for which compensation shall be payable, which shall have elapsed prior to
December 31, 1984, and the portion of a calendar year which shall have elapsed
prior to the date of termination of this Agreement.
<PAGE>
19
8. The services of MFS to GGVA hereunder are not to be deemed exclusive
and MFS shall be free to render similar services to others and engage in other
activities.
9. It is understood that members of the Board of Managers of GGVA are
or may be interested in MFS as directors, officers or otherwise and that
directors, officers, agents and stockholders of MFS are or may be interested in
GGVA otherwise than as a member of the Board of Managers of GGVA, and that the
existence of any such dual interest shall not affect the validity hereof or of
any transactions hereunder except as otherwise provided in the governing
documents of GGVA and MFS, respectively, or by specific provision of applicable
law.
10. (a) This Agreement shall remain in full force until November 1,
1983 unless sooner terminated. This Agreement shall continue in force from year
to year thereafter, but only so long as such continuance is specifically
approved at least annually in the manner required by the Investment Company Act
of 1940.
(b) This Agreement shall automatically terminate in the event
of its assignment, and may be terminated at any time without the payment of any
penalty by GGVA or by MFS on sixty (60) days' written notice to the other party.
GGVA may effect termination by action of the Board of Managers of GGVA or by
majority vote of those having a right to vote.
(c) This Agreement may be terminated at any time without the
payment of any penalty by the Board of Managers of GGVA or by majority vote of
those having a right to vote in the event that it shall have been established by
a court of competent jurisdiction that MFS or any officer or director of MFS has
taken any action which results in a material breach of the covenants of MFS set
forth herein.
<PAGE>
20
11. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage prepaid to the other party at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party it is agreed that the address of GGVA for this purpose shall
be One Sun Life Executive Park, Wellesley Hills, Massachusetts 02181, and the
address for MFS for this purpose shall be 200 Berkeley Street, Boston,
Massachusetts 02116.
GOVERNMENT GUARANTEED VARIABLE ACCOUNT
By: BONNIE S. ANGUS
Bonnie S. Angus
Secretary to Board of Managers
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: RICHARD B. BAILEY
Richard B. Bailey
Chairman
<PAGE>
EXHIBIT NO. 99.4(b)
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT, made on the 26th day of January, 1988, by and between
GOVERNMENT MARKETS VARIABLE ACCOUNT (the "Account"), a segregated investment
account of Sun Life Assurance Company of Canada (U.S.) ("Sun Life (U.S.)") and
MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation ("MFS").
WITNESSETH:
WHEREAS, the Account and MFS wish to enter into an agreement setting
forth the terms upon which MFS will perform certain services for the Account.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
1. MFS shall act as the investment adviser for the Account and as such
will manage the assets of the Account and perform the other services herein set
forth, subject to the supervision of the Board of Managers of the Account, for
the period and on the terms herein set forth.
2. MFS, in performing its undertaking to manage the assets of the
Account, shall:
(a) regularly furnish the Account with investment research,
investment advice, and portfolio supervision;
(b) regularly furnish to the Board of Managers of the Account
recommendations with respect to an investment program for approval,
modification, or rejection by the Board of Managers; any such
recommended investment program shall be consistent with the Account's
investment objectives, policies and restrictions set forth in its
organizational documents, rules and regulations and such registration
statements and exhibits as from time to time may be on file with the
Securities and Exchange Commission;
(c) take such steps as are necessary to implement the investment
program approved by the Board of Managers of the Account by purchase
and/or sale of securities, including the placing of orders of such
purchase and/or sale; and
(d) regularly report to the Board of Managers of the Account with
respect to the implementation of the approved investment program; such
report shall include a schedule of the investments and cash held by the
Account and shall include
<PAGE>
2
therein a statement of all purchases and sales made on behalf of
the Account during the period since the preceding report.
3. MFS shall at all times be subject to any directives of the Board of
Managers of the Account, any duly constituted committee thereof or any officer
of the Account acting pursuant to like authority with respect to the
implementation of any approved investment program for the Account and any other
activities undertaken by MFS on behalf of the Account.
4. MFS, in addition to performing at its own expense the undertaking to
manage the assets of the Account, shall permit any of its officers or employees
to serve without compensation as members of the Board of Managers or officers of
the Account if elected to such positions and shall furnish at its own expense or
pay the expenses of the Account for the following:
(a) office space in the offices of MFS or in such other place as may be
agreed upon from time to time, and all necessary office facilities and
equipment; and
(b) necessary executive and other personnel for managing the affairs of
the Account, including personnel to perform clerical, bookkeeping,
accounting and other office functions (exclusive of those related to
and to be performed under contract for custodial, transfer, paying and
plan agency services by the bank selected to perform such services);
and
(c) all information required in connection with the registration
statements and prospectuses including amendments thereto.
5. Unless otherwise provided in any other Agreement between MFS, the
Account or Sun Life (U.S.), MFS shall not be required to bear or to reimburse
the Account for:
(a) any of the cost of preparing, printing and mailing all annual,
semi-annual and other periodic reports as well as all notices and proxy
solicitation material furnished to contract holders participating in
the investment experience of the Account or regulatory authorities;
(b) the costs of preparation, printing and mailing of sales literature
and prospectuses;
(c) compensation and expenses of members of the Board of Managers of
the Account who are not directors, officers or employees of Sun Life
Assurance Company of Canada or any company affiliated with Sun Life
Assurance Company of Canada;
<PAGE>
3
(d) registration, filing and other fees in connection with requirements
of regulatory authorities;
(e) the charges and expenses of the custodian appointed by the Account
for custodial, paying agent, transfer agent and plan agent services;
(f) the charges and expenses of the independent accountants and any
counsel retained by the Account;
(g) broker's commissions and issue and transfer taxes chargeable to the
Account in connection with securities transactions to which the Account
is a party;
(h) taxes and corporate fees payable by the Account and/or Sun Life
(U.S.) to federal, state or other governmental agencies;
(i) legal fees and expenses in connection with the affairs of the
Account, including registering and qualifying its shares with federal
and state regulatory authorities;
(j) the cost of preparing and distributing reports and notices to
contract holders participating in the investment experience of the
Account;
(k) expenses of contract holders and Board of Managers meetings;
and
(l) expenses other than those specifically assumed by MFS pursuant to
the terms of this Agreement.
6. The Account will pay MFS, as full compensation for all services
rendered, all expense payments made, and all facilities furnished, a monthly
investment management fee computed at an annual rate of 0.75% of the first $300
million of average daily net assets of the Account and 0.675% of the average
daily net assets of the Account in excess of $300 million.
The daily net asset value of the Account shall be determined pursuant to the
applicable provisions of the Account's registration statements filed with the
Securities and Exchange Commission and the fee for each month shall be payable
to MFS not later than the tenth day of the following month.
7. If in any calendar year the total of all expenses of the Account
(including investment advisory fees but excluding taxes, portfolio brokerage
commissions and interest) and to the extent permitted, extraordinary expenses
exceed 1.25% of the average daily net assets of the Account for the calendar
year, MFS shall reduce its fees or reimburse the Account for any such excess.
The daily net asset value of the Account shall be determined pursuant to the
applicable provisions of the registration statements of
<PAGE>
4
the Account filed with the Securities and Exchange Commission and this value
will be used to determine the average net assets of the Account for a particular
calendar year. For the purposes of this paragraph the term "calendar year" shall
include the portion of a calendar year for which compensation shall be payable,
which shall have elapsed prior to December 31, 1988, and the portion of a
calendar year which shall have elapsed prior to the date of termination of this
Agreement.
8. The services of MFS to the Account hereunder are not to be deemed
exclusive and MFS shall be free to render similar services to others and engage
in other activities.
9. It is understood that members of the Board of Managers of the
Account are or may be interested in MFS as directors, officers or otherwise and
that directors, officers, agents and stockholders of MFS are or may be
interested in the Account otherwise than as a member of the Board of Managers of
the Account, and that the existence of any such dual interest shall not affect
the validity hereof or of any transactions hereunder except as otherwise
provided in the governing documents of the Account and MFS, respectively, or by
specific provision of applicable law.
10. (a) This Agreement shall remain in full force until October 30,
1988 unless sooner terminated. This Agreement shall continue in force from year
to year thereafter, but only so long as such continuance is specifically
approved at least annually in the manner required by the Investment Company Act
of 1940.
(b) This Agreement shall automatically terminate in the event
of its assignment, and may be terminated at any time without the payment of any
penalty by the Account or by MFS on sixty (60) days' written notice to the other
party. The Account may effect termination by action of the Board of Managers of
the Account or by majority vote of those having a right to vote.
(c) This Agreement may be terminated at any time without the
payment of any penalty by the Board of Managers of the Account or by majority
vote of those having a right to vote in the event that it shall have been
established by a court of competent jurisdiction that MFS or any officer or
director of MFS has taken any action which results in a material breach of the
covenants of MFS set forth herein.
<PAGE>
5
11. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage prepaid to the other party at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party it is agreed that the address of the Account for this purpose
shall be One Sun Life Executive Park, Wellesley Hills, Massachusetts 02181, and
the address for MFS for this purpose shall be 200 Berkeley Street, Boston,
Massachusetts 02116.
GOVERNMENT MARKETS VARIABLE ACCOUNT
By: JOHN D. MCNEIL
John D. McNeil
Chairman, Board of Managers
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: RICHARD B. BAILEY
Richard B. Bailey
Chairman
<PAGE>
EXHIBIT NO. 99.4(c)
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT, made on the 26th day of January, 1988, by and between
TOTAL RETURN VARIABLE ACCOUNT (the "Account"), a segregated investment account
of Sun Life Assurance Company of Canada (U.S.) ("Sun Life (U.S.)") and
MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation ("MFS").
WITNESSETH:
WHEREAS, the Account and MFS wish to enter into an agreement setting
forth the terms upon which MFS will perform certain services for the Account.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
1. MFS shall act as the investment adviser for the Account and as such
will manage the assets of the Account and perform the other services herein set
forth, subject to the supervision of the Board of Managers of the Account, for
the period and on the terms herein set forth.
2. MFS, in performing its undertaking to manage the assets of the
Account, shall:
(a) regularly furnish the Account with investment research,
investment advice, and portfolio supervision;
(b) regularly furnish to the Board of Managers of the Account
recommendations with respect to an investment program for approval,
modification, or rejection by the Board of Managers; any such
recommended investment program shall be consistent with the Account's
investment objectives, policies and restrictions set forth in its
organizational documents, rules and regulations and such registration
statements and exhibits as from time to time may be on file with the
Securities and Exchange Commission;
(c) take such steps as are necessary to implement the investment
program approved by the Board of Managers of the Account by purchase
and/or sale of securities, including the placing of orders of such
purchase and/or sale; and
(d) regularly report to the Board of Managers of the Account with
respect to the implementation of the approved investment program; such
report shall include a schedule of the investments and cash held by the
Account and shall include
<PAGE>
2
therein a statement of all purchases and sales made on behalf of
the Account during the period since the preceding report.
3. MFS shall at all times be subject to any directives of the Board of
Managers of the Account, any duly constituted committee thereof or any officer
of the Account acting pursuant to like authority with respect to the
implementation of any approved investment program for the Account and any other
activities undertaken by MFS on behalf of the Account.
4. MFS, in addition to performing at its own expense the undertaking to
manage the assets of the Account, shall permit any of its officers or employees
to serve without compensation as members of the Board of Managers or officers of
the Account if elected to such positions and shall furnish at its own expense or
pay the expenses of the Account for the following:
(a) office space in the offices of MFS or in such other place as may be
agreed upon from time to time, and all necessary office facilities and
equipment; and
(b) necessary executive and other personnel for managing the affairs of
the Account, including personnel to perform clerical, bookkeeping,
accounting and other office functions (exclusive of those related to
and to be performed under contract for custodial, transfer, paying and
plan agency services by the bank selected to perform such services);
and
(c) all information required in connection with the registration
statements and prospectuses including amendments thereto.
5. Unless otherwise provided in any other Agreement between MFS, the
Account or Sun Life (U.S.), MFS shall not be required to bear or to reimburse
the Account for:
(a) any of the cost of preparing, printing and mailing all annual,
semi-annual and other periodic reports as well as all notices and proxy
solicitation material furnished to contract holders participating in
the investment experience of the Account or regulatory authorities;
(b) the costs of preparation, printing and mailing of sales literature
and prospectuses;
(c) compensation and expenses of members of the Board of Managers of
the Account who are not directors, officers or employees of Sun Life
Assurance Company of Canada or any company affiliated with Sun Life
Assurance Company of Canada;
<PAGE>
3
(d) registration, filing and other fees in connection with requirements
of regulatory authorities;
(e) the charges and expenses of the custodian appointed by the Account
for custodial, paying agent, transfer agent and plan agent services;
(f) the charges and expenses of the independent accountants and any
counsel retained by the Account;
(g) broker's commissions and issue and transfer taxes chargeable to the
Account in connection with securities transactions to which the Account
is a party;
(h) taxes and corporate fees payable by the Account and/or Sun Life
(U.S.) to federal, state or other governmental agencies;
(i) legal fees and expenses in connection with the affairs of the
Account, including registering and qualifying its shares with federal
and state regulatory authorities;
(j) the cost of preparing and distributing reports and notices to
contract holders participating in the investment experience of the
Account;
(k) expenses of contract holders and Board of Managers meetings; and
(l) expenses other than those specifically assumed by MFS pursuant to
the terms of this Agreement.
6. the Account will pay MFS, as full compensation for all services
rendered, all expense payments made, and all facilities furnished, a monthly
investment management fee computed at an annual rate of 0.75% of the first $300
million of average daily net assets of the Account and 0.675% of the average
daily net assets of the Account in excess of $300 million.
The daily net asset value of the Account shall be determined pursuant to the
applicable provisions of the Account's registration statements filed with the
Securities and Exchange Commission and the fee for each month shall be payable
to MFS not later than the tenth day of the following month.
7. If in any calendar year the total of all expenses of the Account
(including investment advisory fees but excluding taxes, portfolio brokerage
commissions and interest) and to the extent permitted, extraordinary expenses
exceed 1.25% of the average daily net assets of the Account for the calendar
year, MFS shall reduce its fees or reimburse the Account for any such excess.
The daily net asset value of the Account shall be determined pursuant to the
applicable provisions of the registration statements
<PAGE>
4
of the Account filed with the Securities and Exchange Commission and this value
will be used to determine the average net assets of the Account for a particular
calendar year. For the purposes of this paragraph the term "calendar year" shall
include the portion of a calendar year for which compensation shall be payable,
which shall have elapsed prior to December 31, 1988, and the portion of a
calendar year which shall have elapsed prior to the date of termination of this
Agreement.
8. The services of MFS to the Account hereunder are not to be deemed
exclusive and MFS shall be free to render similar services to others and engage
in other activities.
9. It is understood that members of the Board of Managers of the
Account are or may be interested in MFS as directors, officers or otherwise and
that directors, officers, agents and stockholders of MFS are or may be
interested in the Account otherwise than as a member of the Board of Managers of
the Account, and that the existence of any such dual interest shall not affect
the validity hereof or of any transactions hereunder except as otherwise
provided in the governing documents of the Account and MFS, respectively, or by
specific provision of applicable law.
10. (a) This Agreement shall remain in full force until October 30,
1988 unless sooner terminated. This Agreement shall continue in force from year
to year thereafter, but only so long as such continuance is specifically
approved at least annually in the manner required by the Investment Company Act
of 1940.
(b) This Agreement shall automatically terminate in the event
of its assignment, and may be terminated at any time without the payment of any
penalty by the Account or by MFS on sixty (60) days' written notice to the other
party. The Account may effect termination by action of the Board of Managers of
the Account or by majority vote of those having a right to vote.
(c) This Agreement may be terminated at any time without the
payment of any penalty by the Board of Managers of the Account or by majority
vote of those having a right to vote in the event that it shall have been
established by a court of competent jurisdiction that MFS or any officer or
director of MFS has taken any action which results in a material breach of the
covenants of MFS set forth herein.
<PAGE>
5
11. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage prepaid to the other party at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party it is agreed that the address of the Account for this purpose
shall be One Sun Life Executive Park, Wellesley Hills, Massachusetts 02181, and
the address for MFS for this purpose shall be 200 Berkeley Street, Boston,
Massachusetts 02116.
TOTAL RETURN VARIABLE ACCOUNT
By: JOHN D. MCNEIL
John D. McNeil
Chairman, Board of Managers
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: RICHARD B. BAILEY
Richard B. Bailey
Chairman
<PAGE>
EXHIBIT NO. 99.4(d)
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT, made on the 26th day of January, 1988, by and between
MANAGED SECTORS VARIABLE ACCOUNT (the "Account"), a segregated investment
account of Sun Life Assurance Company of Canada (U.S.) ("Sun Life (U.S.)") and
MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation ("MFS").
WITNESSETH:
WHEREAS, the Account and MFS wish to enter into an agreement setting
forth the terms upon which MFS will perform certain services for the Account.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
1. MFS shall act as the investment adviser for the Account and as such
will manage the assets of the Account and perform the other services herein set
forth, subject to the supervision of the Board of Managers of the Account, for
the period and on the terms herein set forth.
2. MFS, in performing its undertaking to manage the assets of the
Account, shall:
(a) regularly furnish the Account with investment research,
investment advice, and portfolio supervision;
(b) regularly furnish to the Board of Managers of the Account
recommendations with respect to an investment program for approval,
modification, or rejection by the Board of Managers; any such
recommended investment program shall be consistent with the Account's
investment objectives, policies and restrictions set forth in its
organizational documents, rules and regulations and such registration
statements and exhibits as from time to time may be on file with the
Securities and Exchange Commission;
(c) take such steps as are necessary to implement the investment
program approved by the Board of Managers of the Account by purchase
and/or sale of securities, including the placing of orders of such
purchase and/or sale; and
(d) regularly report to the Board of Managers of the Account with
respect to the implementation of the approved investment program; such
report shall include a schedule of the investments and cash held by the
Account and shall include
<PAGE>
2
therein a statement of all purchases and sales made on behalf of
the Account during the period since the preceding report.
3. MFS shall at all times be subject to any directives of the Board of
Managers of the Account, any duly constituted committee thereof or any officer
of the Account acting pursuant to like authority with respect to the
implementation of any approved investment program for the Account and any other
activities undertaken by MFS on behalf of the Account.
4. MFS, in addition to performing at its own expense the undertaking to
manage the assets of the Account, shall permit any of its officers or employees
to serve without compensation as members of the Board of Managers or officers of
the Account if elected to such positions and shall furnish at its own expense or
pay the expenses of the Account for the following:
(a) office space in the offices of MFS or in such other place as may be
agreed upon from time to time, and all necessary office facilities and
equipment; and
(b) necessary executive and other personnel for managing the affairs of
the Account, including personnel to perform clerical, bookkeeping,
accounting and other office functions (exclusive of those related to
and to be performed under contract for custodial, transfer, paying and
plan agency services by the bank selected to perform such services);
and
(c) all information required in connection with the registration
statements and prospectuses including amendments thereto.
5. Unless otherwise provided in any other Agreement between MFS, the
Account or Sun Life (U.S.), MFS shall not be required to bear or to reimburse
the Account for:
(a) any of the cost of preparing, printing and mailing all annual,
semi-annual and other periodic reports as well as all notices and proxy
solicitation material furnished to contract holders participating in
the investment experience of the Account or regulatory authorities;
(b) the costs of preparation, printing and mailing of sales literature
and prospectuses;
(c) compensation and expenses of members of the Board of Managers of
the Account who are not directors, officers or employees of Sun Life
Assurance Company of Canada or any company affiliated with Sun Life
Assurance Company of Canada;
<PAGE>
3
(d) registration, filing and other fees in connection with requirements
of regulatory authorities;
(e) the charges and expenses of the custodian appointed by the Account
for custodial, paying agent, transfer agent and plan agent services;
(f) the charges and expenses of the independent accountants and any
counsel retained by the Account;
(g) broker's commissions and issue and transfer taxes chargeable to the
Account in connection with securities transactions to which the Account
is a party;
(h) taxes and corporate fees payable by the Account and/or Sun Life
(U.S.) to federal, state or other governmental agencies;
(i) legal fees and expenses in connection with the affairs of the
Account, including registering and qualifying its shares with federal
and state regulatory authorities;
(j) the cost of preparing and distributing reports and notices to
contract holders participating in the investment experience of the
Account;
(k) expenses of contract holders and Board of Managers meetings; and
(l) expenses other than those specifically assumed by MFS pursuant to
the terms of this Agreement.
6. The Account will pay MFS, as full compensation for all services
rendered, all expense payments made, and all facilities furnished, a monthly
investment management fee computed at an annual rate of 0.75% of the first $300
million of average daily net assets of the Account and 0.675% of the average
daily net assets of the Account in excess of $300 million.
The daily net asset value of the Account shall be determined pursuant to the
applicable provisions of the Account's registration statements filed with the
Securities and Exchange Commission and the fee for each month shall be payable
to MFS not later than the tenth day of the following month.
7. If in any calendar year the total of all expenses of the Account
(including investment advisory fees but excluding taxes, portfolio brokerage
commissions and interest) and to the extent permitted, extraordinary expenses
exceed 1.25% of the average daily net assets of the Account for the calendar
year, MFS shall reduce its fees or reimburse the Account for any such excess.
The daily net asset value of the Account shall be determined pursuant to the
applicable provisions of the registration statements of
<PAGE>
4
the Account filed with the Securities and Exchange Commission and this value
will be used to determine the average net assets of the Account for a particular
calendar year. For the purposes of this paragraph the term "calendar year" shall
include the portion of a calendar year for which compensation shall be payable,
which shall have elapsed prior to December 31, 1988, and the portion of a
calendar year which shall have elapsed prior to the date of termination of this
Agreement.
8. The services of MFS to the Account hereunder are not to be deemed
exclusive and MFS shall be free to render similar services to others and engage
in other activities.
9. It is understood that members of the Board of Managers of the
Account are or may be interested in MFS as directors, officers or otherwise and
that directors, officers, agents and stockholders of MFS are or may be
interested in the Account otherwise than as a member of the Board of Managers of
the Account, and that the existence of any such dual interest shall not affect
the validity hereof or of any transactions hereunder except as otherwise
provided in the governing documents of the Account and MFS, respectively, or by
specific provision of applicable law.
10. (a) This Agreement shall remain in full force until October 30,
1988 unless sooner terminated. This Agreement shall continue in force from year
to year thereafter, but only so long as such continuance is specifically
approved at least annually in the manner required by the Investment Company Act
of 1940.
(b) This Agreement shall automatically terminate in the event
of its assignment, and may be terminated at any time without the payment of any
penalty by the Account or by MFS on sixty (60) days' written notice to the other
party. The Account may effect termination by action of the Board of Managers of
the Account or by majority vote of those having a right to vote.
(c) This Agreement may be terminated at any time without the
payment of any penalty by the Board of Managers of the Account or by majority
vote of those having a right to vote in the event that it shall have been
established by a court of competent jurisdiction that MFS or any officer or
director of MFS has taken any action which results in a material breach of the
covenants of MFS set forth herein.
<PAGE>
5
11. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage prepaid to the other party at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party it is agreed that the address of the Account for this purpose
shall be One Sun Life Executive Park, Wellesley Hills, Massachusetts 02181, and
the address for MFS for this purpose shall be 200 Berkeley Street, Boston,
Massachusetts 02116.
MANAGED SECTORS VARIABLE ACCOUNT
By: JOHN D. MCNEIL
John D. McNeil,
Chairman, Board of Managers
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: RICHARD B. BAILEY
Richard B. Bailey
Chairman
<PAGE>
EXHIBIT NO. 99.5
MARKETING COORDINATION AND ADMINISTRATIVE
SERVICES AGREEMENT
THIS AGREEMENT entered into by and between Sun Life Assurance Company
of Canada (U.S.) ("Sun Life (U.S.)"), a Delaware corporation; Massachusetts
Financial Services Company ("MFS"),a Delaware corporation; and Clarendon
Insurance Agency, Inc. ("Clarendon"), a Massachusetts corporation.
WITNESSETH
WHEREAS Sun Life (U.S.) proposes to issue and offer for sale certain
life insurance and annuity contracts (the "Plans") which are deemed to be
securities under the Securities Act of 1933 ("33 Act"); and
WHEREAS Clarendon is registered as a broker-dealer with the Securities
and Exchange Commission ("SEC") under the Securities Exchange Act of 1934 ("34
Act") and is a member of the National Association of Securities Dealers, Inc.
("NASD"); and
WHEREAS Clarendon proposes to coordinate the marketing of the Plans;
and
WHEREAS MFS is registered as a broker-dealer with the SEC under the
34 Act and is a member of the NASD; and
WHEREAS MFS proposes to assist Clarendon in coordinating the marketing
of the Plans and to perform certain administrative services in conjunction with
the Plans.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
I
THE PLANS
A. Type of Plans
The Plans issued by Sun Life (U.S.) to which this Agreement applies are
listed in Exhibit A. Exhibit A may be amended from time to time as agreed upon
by Sun Life (U.S.), MFS and Clarendon.
B. Suspension/Restriction
Sun Life (U.S.) may, at its option and at its sole discretion, suspend
or restrict in any manner the sale or method of distribution of all or any of
the Plans, including sales by all or any individuals licensed to sell Sun Life
(U.S.)'s products. If any suspension or
<PAGE>
restriction is required by any regulatory authority having jurisdiction, written
notice shall be given to MFS and Clarendon immediately upon receipt by Sun Life
(U.S.) of notice of such required suspension or restriction. In all other cases,
Sun Life (U.S.) will provide thirty (30) days' prior written notice to MFS and
Clarendon of any such suspension or restriction.
C. Plan Changes
Sun Life (U.S.) may, at its option and at its sole discretion, amend,
add or delete features of all or any of the Plans. In the event of any such
amendment, addition or deletion, Sun Life (U.S.) will provide written notice of
such change to MFS and Clarendon. If the change is required by any regulatory
authority having jurisdiction, written notice shall be given to MFS and
Clarendon immediately upon receipt by Sun Life (U.S.) of notice of such required
change. In all other cases, Sun Life (U.S.) will provide to MFS and Clarendon at
least thirty (30) days' prior to the effective date of such change.
II
MARKETING COORDINATION AND SALE ADMINISTRATION
A. General Distributor
Clarendon is hereby appointed by Sun Life (U.S.) as the General
Distributor of the Plans. Clarendon shall, at all times, when performing its
functions under this Agreement, be registered as a securities broker-dealer with
the SEC and the NASD and shall be licensed or registered as a securities
broker-dealer in those jurisdictions where the performance of the duties
contemplated by this Agreement would require such licensing or registration.
B. Distribution Agreements
Clarendon will distribute the Plans pursuant to either a Sales
Operations and General Agents Agreement or a Broker-Dealer Supervisory and
Service Agreement and Registered Representative's Agent Agreement ("Distribution
Agreements"). Copies of the Distribution Agreements are attached as Exhibits B,
C and D, respectively. Clarendon shall negotiate all Distribution Agreements on
behalf of Sun Life (U.S.) and all such Distribution Agreements shall be
substantially in the form of the Distribution Agreements attached as Exhibits B,
C and D, respectively, unless otherwise agreed to by Sun Life (U.S.). No
Commission Schedule attached to any Distribution Agreement may provide for
commission payments in excess of specified maximums established by Sun Life
(U.S.) from time to time. Clarendon shall retain copies of all executed
Distribution Agreements and all correspondence, memoranda and other documents
relating to the Distribution Agreements.
<PAGE>
<PAGE>
C. Agents/Registered Representatives
1. Appointment and Termination of Agents
(a) Sun Life (U.S.) hereby designates Clarendon as its agent
to appoint and dismiss individuals as agents of Sun Life (U.S.) in those
jurisdictions in which Sun Life (U.S.) transacts an insurance business. Sun Life
(U.S.) reserves the right to terminate any and all such designations by
Clarendon as its agent and will provide written notice of any such termination
to Clarendon concurrently with notice to the particular regulatory authority.
(b) Appointments and/or dismissals of individuals as agents of
Sun Life (U.S.) shall be made on forms supplied by regulatory authorities having
jurisdiction or by Sun Life (U.S.), as the case may be. All such appointments
and dismissals shall be subject to all applicable laws, rules and regulations
and to such written instructions and rules as Sun Life (U.S.) may establish from
time to time and provide to Clarendon. Clarendon shall retain copies of all
completed forms appointing and/or dismissing agents and all related
correspondence, memoranda and other documents.
(c) Clarendon shall prepare a Licensing and Appointment Guide
which will set forth the then current requirements for licensing and appointment
of agents in those jurisdictions where Sun Life (U.S.) transacts an insurance
business. Sun Life (U.S.) shall approve the Guide and also prepare periodic
updates of the Guide.
(d) Clarendon shall maintain current lists of agents of Sun
Life (U.S.) which it has appointed.
(e) Sun Life (U.S.) shall pay all necessary licensing and
appointment fees (initial and renewal) and other expenses of any type incurred
by MFS or Clarendon with respect to Clarendon's licensing and appointment of
individuals as general agents or agents of Sun Life (U.S.)
(f) Clarendon shall be responsible for determining that any
individual soliciting applications for Plans is: (i) properly licensed with
state insurance regulatory authorities; (ii) appointed as an agent of Sun Life
(U.S.); (iii) properly licensed under all applicable securities laws; (iv)
associated as a registered representative with a broker/dealer registered under
the 34 Act and a NASD member and which has executed a Distribution Agreement;
and (v) covered by a fidelity board which provides for claim payments to be made
to Sun Life (U.S.).
2. Training of Agents/Registered Representatives
Clarendon shall train agents of Sun Life (U.S.) which it
has appointed to properly solicit applications for the Plans.
3. Supervision of Agents/Registered Representatives
Clarendon shall coordinate the supervision of the Agents of
Sun Life (U.S.) associated with broker-dealers in connection with the offering
and sale of the
<PAGE>
Plans. Clarendon will establish such rules and procedures as may be necessary to
insure proper supervision of the agents/registered representatives.
4. Sales Assistance to Agents/Registered Representatives
Clarendon shall provide sales assistance to agents of Sun Life
(U.S.) which it has appointed. This sales assistance shall include, but not be
limited to, assistance from Clarendon's field representatives as well as from
Clarendon's home office personnel through its telecommunications systems.
Clarendon shall also prepare a sale promotional program for the Plans and assist
the agents in utilizing the program. In addition, Clarendon shall provide
broker/dealers and agents with sufficient quantities of sales promotional
materials, prospectuses, sample Plans, applications and any necessary service
forms.
5. Payment of Commission to Agents/Registered Representatives
All commission payments required to be made pursuant to the
Distribution Agreements shall be made by Clarendon or MFS as agent for Sun Life
(U.S.). Sun Life (U.S.) will fund a commission account which Clarendon or MFS
may draw on to make these payments. Sun Life (U.S.) acknowledges that Bradford
Trust Company of Boston may perform this function on behalf of Clarendon or MFS.
D. Sales Material and Other Documents
1. Clarendon's Responsibilities
Clarendon shall be responsible for:
(a) the design, preparation and printing of all promotional
material to be used in the distribution of the Plans, and
(b) the approval of promotional material by the Securities and
Exchange Commission and the National Association of Securities
Dealers, Inc., where required.
2. Sun Life (U.S.)'s Responsibilities
(a) Sun Life (U.S.) shall provide Clarendon with sufficient
quantities of prospectuses regarding Plans and separate
accounts, Plans (including endorsements0, applications and
sample Plans for sales training purposes.
(b) Sun Life (U.S.) shall be responsible for the approval of
promotional material by state and other insurance regulatory
authorities.
3. MFS's Responsibilities
(a) MFS shall provide Clarendon with sufficient quantities of
prospectuses of the underlying mutual funds for distribution
to broker/dealers, agents and Plan purchasers.
<PAGE>
4. Sun Life (U.S.)'s Right to Approve
Sun Life (U.S.) shall have the right to review and approve or
disapprove sales promotional material proposed by Clarendon or
in use and reserves the right to require modification of any
such material to comply with applicable laws, rules and
regulations.
E. Advertising
Clarendon shall not print, publish or distribute any advertisement,
circular or any document relating to the Plans or relating to Sun Life (U.S.)
unless such advertisement, circular or document shall have been approved in
writing by Sun Life (U.S.). Neither Sun Life (U.S.) nor any of its agents or
affiliates shall print, publish or distribute any advertisement, circular or any
document relating to the Plans or relating to Clarendon unless such
advertisement, circular or document shall have been approved in writing by
Clarendon. However, nothing herein shall prohibit any person from advertising
annuities in general or on a generic basis.
F. Sales Records - Production Reports
Clarendon shall maintain sales records in a form and content agreeable
to Sun Life (U.S.). Clarendon shall provide production data and production
reports as required by Sun Life (U.S.). Clarendon shall also provide Sun Life
(U.S.) with such other reports and materials relative to the marketing and
distribution of Plans as may reasonably be required by Sun Life (U.S.), in the
furtherance of its insurance business.
G. Books, Records and Supervision
1. Books and Records
Clarendon may request that all or some of the books and
records required to be maintained by it as a registered broker/dealer
in connection with the offer and sale of the Plans be prepared and
maintained by either Sun Life (U.S.) and/or MFS. Sun Life (U.S.) and
MFS agree to prepare and maintain such books and records at their
respective costs upon request, and agree that such books and records
are the property of Clarendon, that they will be made and preserved in
accordance with Rules 17a-3 and 17a-4 under the 34 Act and that they
will be subject to examination by the SEC in accordance with Section
17(a) of the 34 Act.
2. Supervision
Clarendon has and assumes full responsibility for the
securities activities of all persons associated with Sun Life (U.S.)
and MFS who maintain books and records on behalf of Clarendon. Sun Life
(U.S.) and MFS acknowledge that Clarendon has full responsibility for
all such persons in connection with their training, supervision and
control as contemplated by the 34 Act.
H. Assignment of Duties
Sun Life (U.S.) acknowledges that Clarendon may assign all or
any part of its duties under this Agreement to MFS or Bradford Trust
Company of Boston. No other assignment of Clarendon's duties under this
Agreement is permitted.
<PAGE>
III
ADMINISTRATION OF THE PLANS
A. Appointment of Plan Administrator
MFS is hereby appointed by Sun Life (U.S.) as Plan Administrator
with respect to the issuance and servicing of Plans.
B. Duties of MFS
MFS shall be responsible as Plan Administrator for performing in a
timely and proper manner those functions allocated to it in the Analysis of
Administration Functions which is attached as Exhibit E, and forms a part
hereof. As part of these functions MFS shall, on behalf of Clarendon, provide a
written confirmation of Plan transactions as required by applicable law, rules
and regulations. Sun Life (U.S.) reserves the right to make changes in or modify
the Analysis of Administrative Functions but will not do so unless MFS has been
given sixty (60) days' prior written notice of its intent to do same. MFS shall
also be responsible for supervising the activities of Clarendon under Section II
of this Agreement.
C. Duties of Sun Life (U.S.)
Sun Life (U.S.) will perform in a timely and proper manner whose
functions allocated to it in the "Analysis of Administrative Functions", which
is attached hereto as Exhibit E and forms a part hereof.
D. Administrative Standards, Practices and Procedures
Sun Life (U.S.) and MFS have developed an Administration Manual which
describes the administrative standards, practices and procedures to be utilized
in the administration of the Plans. The Administration Manual and the
administrative standards, practices and procedures enumerated therein shall not
be substantially changed without the prior written agreement of Sun Life (U.S.)
and MFS.
IV
COMPENSATION
A. General
For performing administrative and marketing coordination services under
this Agreement, MFS and Clarendon will be compensated by Sun Life (U.S.)
pursuant to Exhibit F - Schedule of Fees.
B. Time of Payment
Sun Life (U.S.) will pay all compensation due MFS and Clarendon
hereunder on a monthly basis, in accordance with the Schedule of Fees.
<PAGE>
C. Changes in Compensation
Compensation payable under this Agreement may be increased or decreased
to reflect any change in administrative or marketing coordination
responsibilities. The Schedule of Fees may be amended or changed only upon
mutual agreement of the parties as to amount and effective date.
D. Indebtedness
Nothing in this Agreement shall be construed as giving MFS or Clarendon
the right to incur any indebtedness on behalf of Sun Life (U.S.). However, Sun
Life (U.S.) may offset amounts owed it by MFS or Clarendon under this Agreement
against amounts payable to MFS or Clarendon for any reason; and MFS and
Clarendon may offset amounts owed them by Sun Life (U.S.) under this Agreement
against any amounts payable to Sun Life (U.S.) for any reason, provided that no
such offset is permitted in connection with Plan premiums or purchase payments
and Plan payments.
V
OTHER PROVISIONS
A. Product Development
MFS and Clarendon shall assist Sun Life (U.S.) in the design and
development of life insurance and annuity products for distribution pursuant to
the Distribution Agreements. This assistance shall include conducting market
research studies as reasonably requested by Sun Life (U.S.), providing
consulting services with respect to product design, and assisting in the
development of sales training, sales promotional and advertising material
relating to new insurance and annuity products. MFS and Clarendon acknowledge
that all such studies and materials are the property of Sun Life (U.S.).
B. Ownership of Business Records
Sun Life (U.S.) shall own all business records, including but not
limited to Plan records, tax records, payment records, plan descriptions,
appointment records, agents lists, files, memoranda and other records maintained
by Clarendon and/or MFS either on paper or in machine-readable form pertaining
to the duties and responsibilities of Clarendon and MFS under this Agreement.
Such records shall be delivered to Sun Life (U.S.) promptly upon reasonable
request. Clarendon and FMS will maintain all records and accounts in accordance
with Sun Life (U.S.)'s standards or requirements, or otherwise, with generally
accepted procedures as they apply to the accounting and insurance industry.
Clarendon and MFS will also at Sun Life (U.S.)'s request make any such records
available to Sun Life (U.S.)'s auditors or to any governmental authority having
jurisdiction over Sun Life (U.S.).
C. Approval of Practices and Procedures
Sun Life (U.S.) shall have the right to review and approve the
standards, practices and procedures utilized by Clarendon and MFS in fulfilling
its obligations under the
<PAGE>
Agreement. Sun Life (U.S.) reserves the right, from time to time, to prescribe
rules and regulations respecting the conduct of the business covered hereby.
D. Complaints
1. Clarendon shall immediately forward to Sun Life (U.S.) any
material received by Clarendon relating to any complaint relating
to Sun Life (U.S.) or the Plans.
2. In the case of complaints or inquiries relating to the Plans
distributed pursuant to the Distribution Agreements, Sun Life (U.S.)
may, at its option, request Clarendon to investigate and/or respond to
such complaints or inquiries. In such instances, Clarendon shall
promptly forward to Sun Life (U.S.) copies of all material relating to
such investigations and/or responses.
E. Limitations on Authority
MFS and Clarendon shall have authority only as expressly granted in
this Agreement. No party to this Agreement shall enter into any proceeding in a
court of law or before a regulatory agency in the name of any other party,
without the express written consent of that party. Further, if any legal or
administrative proceedings are commenced against any party arising out of the
obligations, duties or services performed under this Agreement by any third
party or any federal, state or other governmental or regulatory authority, that
party, as the case may be, shall immediately notify the other parties of this
fact.
VI
GENERAL PROVISIONS
A. Waiver
Failure of any party to insist upon strict compliance with any
of the conditions of this Agreement shall not be construed as a waiver of any of
the conditions, but the same shall remain in full force and effect. No waiver of
any of the provisions of this Agreement shall be deemed, or shall constitute a
waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver.
B. Bond
MFS and Clarendon will maintain whatever bond may be required
by Sun Life (U.S.), and such bond shall be of a type and amount and issued by a
reputable company, all as approved by Sun Life (U.S.).
C. Binding Effect
This Agreement shall be binding on and shall inure to the
benefit of the parties to it and their respective successors and assigns.
D. Indemnification
<PAGE>
Each party hereby agrees to release, indemnify and hold
harmless the other party, its officers, directors, employees, agents, servants,
predecessors or successors from any claims or liability to third parties arising
out of the breach of this Agreement or arising out of the acts or omissions of a
party to this Agreement not authorized by this Agreement.
E. Notices
All notices, requests, demands and other communication under
this Agreement shall be in writing, and shall be deemed to have been given on
the date of service if served personally on the party to whom notice is to be
given, or on the date of mailing, if sent by First Class Mail, Registered or
Certified, postage prepaid and properly addressed as follows:
TO SUN LIFE (U.S.)
Sun Life Assurance Company of Canada (U.S.)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
Attention: Secretary
TO MFS
Massachusetts Financial Services Company
200 Berkeley Street
Boston, Massachusetts 02116
Attention: Secretary's Department
TO CLARENDON
Clarendon Insurance Agency, Inc.
200 Berkeley Street
Boston, Massachusetts 92116
Attention: Secretary's Department
F. Governing Law
This Agreement shall be construed in accordance with and
governed by the laws of the Commonwealth of Massachusetts.
G. Compliance
All parties agree to observe and comply with the existing laws
and rules or regulations of applicable local, state or federal regulatory
authorities, and with those which may be enacted or adopted during the term of
this Agreement regulating the business contemplated hereby in any jurisdiction
in which business described herein is to be transacted.
H. Termination
This Agreement may be terminated by any of the parties
upon six (6) months' prior written notice to the other party.
<PAGE>
Executed this 22nd day of July, 1982.
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
By BONNIE S. ANGUS
Bonnie S. Angus, Secretary
CLARENDON INSURANCE AGENCY, INC.
By: ARNOLD D. SCOTT
Arnold D. Scott, Secretary
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: ARNOLD D. SCOTT
Arnold D. Scott, Secretary
<PAGE>
Exhibit A
Compass I Variable Annuity Contracts
Compass II Variable Annuity Contracts
Compass G. Group Variable Annuity Contracts*
Compass Life Single Premium Variable Life Insurance Contracts**
Compass 2 Variable Annuity Contracts***
Compass 3 Variable Annuity Contracts***
Regatta Variable Annuity Contracts****
Regatta Gold Variable Annuity Contracts*****
Regatta Classic Variable Annuity Contracts******
* Added July 26, 1975
** Added July 25, 1986
*** Added April 19, 1988
**** Added October 1, 1989
***** Added November 1, 1991
****** Added November 1, 1996
<PAGE>
TYPE 1 EXHIBIT B
- -------------------------------------------------------------------------------
Two copies of this agreement should be
returned to: Sun Life Annuity Service Center
P.O. Box 1024
Boston, MA 02103
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
A Wholly-Owned Subsidiary of Sun Life Assurance Company of Canada
<TABLE>
<S> <C> <C>
Executive Office: Home Office: Annuity Service Mailing Address
One Sun Life Executive Park Wilmington, Delaware Sun Life Annuity
Wellesley Hills, Massachusetts 02181 Service Center
P.O. Box 1024
Boston, Massachusetts 02103
</TABLE>
- -------------------------------------------------------------------------------
SALES OPERATIONS AND GENERAL AGENT AGREEMENT
- -------------------------------------------------------------------------------
<PAGE>
AGREEMENT by and between Sun Life Assurance Company of Canada (U.S.)
(hereinafter referred to as Sun Life of Canada (U.S.), a Delaware Corporation;
Clarendon Insurance Agency, Inc. (hereinafter referred to as Clarendon), a
registered broker-dealer with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc.; and ______________________ (hereinafter referred to as
Broker-dealer), also a registered broker-dealer with the Securities and Exchange
Commission under the Securities Act of 1934 and a member of the National
Association of Securities Dealers Inc.; and ______________________ (hereinafter
referred to as the General Agent), as follows:
- -------------------------------------------------------------------------------
I WITNESSETH
- -------------------------------------------------------------------------------
WHEREAS, Sun Life of Canada (U.S.) has agreed with General Agent to
have General Agent's insurance agents (hereinafter-after referred to as
sub-agents) solicit and sell those certain Insurance and Annuity Plans, more
particularly described in this Agreement; and, because certain of said Plans may
be deemed to be securities under the Securities Act of 1933 and applicable state
laws, Sun Life of Canada (U.S.) desires that the sub-agents be associated with
Broker-dealer and Broker-dealer hereby covenants that each such sub-agent is
registered as its registered representative with the National Association of
Securities Dealers, Inc. (hereinafter referred to as NASD and may engage in the
offer or sale of such of the Plans which constitute a security under federal or
state law; and
WHEREAS, Sun Life of Canada (U.S.) has agreed with Clarendon that
<PAGE>
Clarendon shall be responsible for the training and supervision of such
sub-agents, with respect to the solicitation and offer or sale of any of said
Plans which constitute a security under federal and state law, and also for the
training and supervision of any other "persons associated" with Broker-dealer
who are engaged directly or indirectly therewith; and Clarendon wishes to, and
hereby does, delegate, to the extent legally permitted, said supervisory duties
to Broker-dealer, who hereby agrees to accept such delegation; and
WHEREAS, Sun Life of Canada (U.S.) has agreed with General Agent that
General Agent will limit solicitations to those jurisdictions where it has been
duly licensed to solicit sales of life insurance policies, fixed annuity, and
variable annuity contracts and General Agent agrees to provide Sun Life of
Canada (U.S.) with a list of such jurisdictions and agrees that General Agent
shall be responsible for the training and supervision of such sub-agents with
respect to the solicitation and sale of any of said Plans which are regulated by
the jurisdiction's insurance department or similar regulatory agency; and
WHEREAS, Sun Life of Canada (U.S.) has established life insurance and
annuity plans for use with groups and for individuals and Sun Life of Canada
(U.S.) agrees to furnish to General Agent and to keep current a list of the
types of plans, (hereinafter referred to as the "Plans") which Sun Life of
Canada (U.S.) has available for offering by the General Agent.
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
II APPOINTMENT OF GENERAL AGENT FOR INSURANCE AND ANNUITY PLANS
- -------------------------------------------------------------------------------
A. APPOINTMENT
Sun Life of Canada (U.S.) hereby appoints General Agents as a
general agent of Sun Life of Canada (U.S. for the solicitation of sales of the
Plans.
- -------------------------------------------------------------------------------
III AUTHORITY OF GENERAL AGENT
- -------------------------------------------------------------------------------
A. DISTRIBUTION AUTHORITY
General Agent is authorized to procure, through the sub-agents
appointed by it, applications for the Plans. Sun Life of Canada (U.S.), in its
sole discretion and without notice to General Agent, may suspend sales of any
Plans hereunder or may amend any
<PAGE>
policies or contracts evidencing such plans.
B. APPOINTMENT OF SUB-AGENTS
General Agent is authorized to appoint sub-agents to solicit
sales of the Plans hereunder. All sub-agents appointed by General Agent pursuant
to this Agreement shall be duly licensed under the applicable insurance laws to
sell the said Plans by the proper authorities within the applicable
jurisdictions where General Agent proposes to offer the Plans and where Sun Life
of Canada (U.S.) is duly authorized to conduct business. Sun Life of Canada
(U.S.) will provide General Agent with a list which shows: (1) the jurisdictions
where Sun Life of Canada (U.S.) is authorized to do business; and (2) any
limitations on the availability of the Plans in any of such jurisdictions.
General Agent agrees to fulfill all requirements set forth in the General Letter
of Recommendation attached as Exhibit A in conjunction with the submission of
licensing/appointment papers for all applicants set sub-agents submitted by
General Agent.
C. SECURING APPLICATIONS
All applications for the Plans covered hereby shall be made on
application forms supplied by Sun Life of Canada (U.S.), and all payments
collected by General Agent or any sub-agent of General Agent shall be remitted
promptly in full, together with such application forms and any other required
documentation, directly to Sun Life of Canada (U.S.) at the address indicated on
such application or to such other address as Sun Life of Canada (U.S.) may, from
time to time designate in writing. Checks or money orders in payment on any such
Plan shall be drawn to the other of "Sun Life Assurance Company of Canada
(U.S.)". All applications are subject to acceptance or rejection by Sun Life of
Canada (U.S.) at its sole discretion.
D SUPERVISION OF SUB-AGENTS
1. General Agent shall supervise any sub-agents appointed by it to
solicit sales of the Plans hereunder and General Agent shall be responsible,
without regard to any technical distinction between this relationship and that
which exists in law between principal and agent, for all acts and omissions of
each sub-agent within the scope of his agency appointment at all times. General
Agent shall exercise all responsibilities required by the applicable federal and
state law and regulations other than those responsibilities which under
applicable securities laws are the responsibilities of Broker-dealer; provided
however, Broker-dealer shall continue to have full responsibility under
applicable securities laws for such sub-agents in their capacity as registered
representatives including by example, but without limitation, training and
supervisory duties over such sub-agents. Nothing contained in this Agreement or
otherwise shall be deemed to make any sub-agents appointed by General Agent an
employee or agent of Sun Life of Canada (U.S.). Sun Life of Canada (U.S.) shall
not have any responsibility for the
<PAGE>
supervision of any sub-agents of General Agent and if the act or omission of a
sub-agent or any other employee of General Agent is the proximate cause of any
claim, damage or liability to Sun Life of Canada (U.S.) (including reasonable
attorneys' fees). General Agent shall be responsible and liable therefore.
2. Sun Life of Canada (U.S.) may, by written notice to General Agent,
refuse to permit any sub-agent to solicit applications for the sale of any of
the Plans hereunder and may, by such notice, require General Agent to cause any
such sub-agent to cease any such solicitation or sales, and, Sun Life of Canada
(U.S.)
may require General Agent to cancel the appointment of any sub-agent.
3. General Agent is responsible for the selection or appointment of
sub-agents for the sales of the Plans hereunder. General Agent is responsible
for preparation and transmission of the proper appointment and licensing forms
and to insure that all sales personnel are appropriately licensed.
4. General Agent will pay all fees to state insurance regulatory
authorities in connection with obtaining necessary licenses and appointments for
sub-agent appointed hereunder. All fees payable to such regulatory authorities
in connection with the initial appointments of sub-agents who already possess
necessary licenses will be paid by Sun Life of Canada (U.S.). Any renewal
license fees due after the initial appointment of a sub-agent hereunder will be
paid by General Agent.
5. Before a sub-agent is permitted to sell the Plans, General Agent,
Broker-Dealer and the sub-agent shall have entered into an agreement pursuant to
which the sub-agent will be appointed a sub-agent of General Agent and a
registered representative of Broker-dealer and in which the sub-agent will agree
that his selling activities relating to the securities-regulated Plans will be
under the supervision and control of Broker-dealer and his selling activities
relating to the insurance-regulated Plans will be under the supervision and
control of General Agent; and that the sub-agent's right to continue to sell
such Plans is subject to his continued compliance with such agreement.
E. MONEY RECEIVED BY GENERAL AGENT
All money payable in connection with any of the Plans, whether as
premium, purchase payment or otherwise paid by or on behalf of any policyholder,
contract owner or certificate holder or anyone else having an interest in the
Plans is the property of Sun Life of Canada (U.S.), and shall be transmitted
immediately in accordance with the administrative procedures of Sun Life of
Canada (U.S.) without any deduction or offset for any reason, including by
example but not limitation, any deduction or offset for compensation by General
Agent.
<PAGE>
- -------------------------------------------------------------------------------
IV COMPENSATION
- -------------------------------------------------------------------------------
A. COMMISSIONS
Commissions payable to General Agent or any sub-agent in connection
with the Plans shall be paid by Sun Life of Canada (U.S.) to the person(s)
entitled thereto through General Agent or as otherwise required by law. Sun Life
of Canada (U.S.) will provide General Agent with a copy of its current
Commission Schedule. Commissions will be paid as a percentage of premiums or
purchase payments (Premiums and Purchase Payments are hereinafter referred to
collectively as "Payments") received in cash or other legal tender and accepted
by Sun Life of Canada (U.S.) on applications obtained by the various sub-agents
appointed by General Agent hereunder. Upon termination of this Agreement, all
compensation to the General Agent hereunder shall cease, however, General Agent
shall continue to be liable for any chargebacks pursuant to the provisions of
said Commission Schedule or for any other amounts advanced by or otherwise due
SUN LIFE OF CANADA (U.S.) hereunder.
B. TIME OF PAYMENT
Sun Life of Canada (U.S.) will pay any compensation due General Agent
hereunder within fifteen (15) days after the end of the calendar months in which
Payments upon which such compensation is based are accepted by Sun Life of
Canada (U.S.).
C. AMENDMENT OF SCHEDULES
Sun Life of Canada (U.S.) may, upon at least ten (10) days prior
written notice to General Agent change the commission schedule. Any such change
shall be by written amendment of the commission schedule and shall apply to
compensation due on applications received by Sun Life of Canada (U.S.,) after
the effective date of such notice.
D. PROHIBITION AGAINST REBATES
If General Agent or any sub-agent of General Agent shall rebate or
offer to rebate all or any part of a Payment on a policy or contract or
certificate issued hereunder, of if General Agent or any sub-agent of General
Agent shall withhold any Payment on any policy or contract or certificate issued
hereunder, the same may be grounds for termination of this Agreement by Sun Life
of Canada (U.S.). If General Agent or any sub-agent of General Agent shall at
any time induce or endeavor to induce any owner of any policy or contract issued
hereunder or any certificate holder to discontinue Payments or to relinquish any
such policy or contract or certificate except under circumstances where there is
reasonable grounds for believing the policy, contract or certificate is not
suitable for such person, any and all
<PAGE>
compensation due General Agent hereunder shall cease and terminate.
E. INDEBTEDNESS
Nothing in this Agreement shall be construed as giving General Agent
the right to incur any indebtedness on behalf of Sun Life of Canada (U.S.).
General Agent hereby authorizes Sun Life of Canada (U.S.) to set off liabilities
of General Agent to Sun Life of Canada (U.S.) against any and all amounts
otherwise payable to General Agent by Sun Life of Canada (U.S.).
- -----------------------------------------------------------------------------
V DUTIES OF BROKER DEALER
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
A. SUPERVISION OF REGISTERED REPRESENTATIVES
Broker-dealer agrees that it has full responsibility for the training
and supervision of all persons, including sub-agents of General Agent,
associated with Broker-dealer who are engaged directly or indirectly in the
offer or sale of such of the Plans as are subject to the federal securities laws
and that all such persons shall be subject to the control of Broker-dealer with
respect to such persons' securities-regulated activities in connection with such
Plans. Broker-dealer will cause the sub-agents, in their capacity as registered
representatives to be trained in the sale of such of the Plans as are subject to
the federal securities laws; will use its best efforts to cause such sub-agents
to qualify under applicable federal and written amendment of the commission
schedule and shall apply to compensation due on applications received by Sun
Life of Canada (U.S.) after the effective date of such notice.
D. PROHIBITION AGAINST REBATES
If General Agent or any sub-agent of General Agent shall rebate or
offer to rebate all or any part of a Payment on a policy or contract or
certificate issued hereunder, or if General Agent or any sub-agent of General
Agent shall withhold any payment on any policy or contract or certificate issued
hereunder, the same may be grounds for termination of this Agreement by Sun Life
of Canada (U.S.). If General Agent or any sub-agent of General Agent shall at
any time induce or endeavor to induce any owner of any policy or contract issued
hereunder or any certificate holder to discontinue Payments or to relinquish any
such policy or contract or certificate except under circumstances where there is
reasonable grounds for believing the policy, contract or certificate is not
suitable for such person, any and all compensation due General Agent hereunder
shall cease and terminate.
<PAGE>
E. INDEBTEDNESS
Nothing in this Agreement shall be construed as giving General Agent
the right to incur any indebtedness on behalf of Sun Life of Canada (U.S.).
General Agent hereby authorizes Sun Life of Canada (U.S.) to set off liabilities
of General Agent to Sun Life of Canada (U.S.) against any and all amounts
otherwise payable to General Agent by Sun Life of Canada (U.S.).
- -------------------------------------------------------------------------------
V DUTIES OF BROKER DEALER
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
A. SUPERVISION OF REGISTERED REPRESENTATIVES
Broker-dealer agrees that it has full responsibility for the training
and supervision of all persons, including sub-agents of General Agent,
associated with Broker-dealer who are engaged directly or indirectly in the
offer or sale of such of the Plans as are subject to the federal securities laws
and that all such persons shall be subject to the control of Broker-dealer with
respect to such persons' securities-regulated activities in connection with such
Plans. Broker-dealer will cause the sub-agents, in their capacity as registered
representatives to be trained in the sale of such of the Plans as are subject to
the federal securities laws; will use its best efforts to cause such sub-agents
to qualify under applicable federal and written amendment of the commission
schedule and shall apply to compensation due on applications received by Sun
Life of Canada (U.S.)
after the effective date of such notice.
B. REGISTERED REPRESENTATIVES AGREEMENT
Broker-dealer agrees that it shall train and supervise the General
Agent's sub-agents in connection with such of the Plans as are subject to the
federal securities law and agrees that, before a sub-agent shall be permitted to
sell such Plans, such sub-agent will be appointed a registered representative of
Broker-dealer and, along with Broker-dealer and General Agent, such sub-agent
will have entered into the agreement more particularly described in Section III,
Paragraph D5.
C. COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITIES LAW
Broker-dealer will fully comply with the requirements of the National
Association of Securities Dealers, Inc. And of the Securities Exchange Act of
1934 and all other applicable federal or state laws and will establish such
rules and procedures as may be necessary to cause diligent supervision of the
securities activities of the sub-agents. Upon request by Clarendon,
Broker-
<PAGE>
dealer shall furnish such appropriate records as may be necessary to
establish such diligent supervision.
D. NOTICE OF SUB-AGENT NONCOMPLIANCE
In the event a sub-agent fails or refuses to submit to supervision of
Broker-dealer in accordance with this Agreement, or otherwise fails to meet the
rules and standards imposed by Broker-dealer on its registered representatives,
Broker-dealer shall certify such fact to Sun Life of Canada (U.S.) and General
Agent and shall immediately notify such sub-agent that he is no longer
authorized to sell the Plans, and Broker-dealer and General Agent shall take
whatever additional action may be necessary to terminate the sales activities of
such sub-agent relating to the Plans.
E. PROSPECTUSES, SALE PROMOTION MATERIAL AND ADVERTISING
Broker-dealer shall be provided, without any expense to Broker-dealer,
with prospectuses relating to those of the Plans which are subject to federal
securities laws and such other material as Clarendon determines to be necessary
or desirable for use in connection with sales of those Plans. No sales promotion
materials or any advertising relating to any of the securities-regulated Plans
shall be used by Broker-dealer unless the specific item has been approved in
writing by Clarendon.
- -------------------------------------------------------------------------------
VI GENERAL PROVISIONS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
A. WAIVER
Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of the
conditions, but the same shall remain in full force and effect. No waiver of any
of the provisions of this Agreement shall be deemed, or shall constitute a
waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver.
B. INDEPENDENT CONTRACTORS
Both Sun Life of Canada (U.S.) and Clarendon are independent
contractors with respect both to Broker-dealer and to General Agent.
C. LIMITATIONS
No party other than Sun Life of Canada (U.S.) shall have the authority
on behalf of Sun Life of Canada (U.S.) to make, alter, or discharge any policy
or contract or certificate issued by Sun Life of Canada (U.S.), to waive any
forfeiture or to grant, permit, nor to extend the time of making any Payments,
nor to guarantee dividends, nor to alter the forms which Sun Life of Canada
(U.S.); may prescribe or substitute other forms in place of those prescribed by
Sun Life of Canada (U.S.); nor to enter into any proceeding in a court of law or
before a regulatory agency in the name of or on behalf of Sun Life of Canada
(U.S.).
<PAGE>
D. FIDELITY BOND
General Agent represents that all directors, officers, employees and
sub-agents of General Agent who are licensed pursuant to this agreement as Sun
Life of Canada (U.S.) agents for state insurance law purposes or who have access
to funds of Sun Life of Canada (U.S.), including but not limited to funds
submitted with applications for the Plans or funds being returned to owner or
certificate holders, are and shall be covered by a blanket fidelity fond,
including coverage for larceny and embezzlement, issued by a reputable bonding
company. This bond shall be maintained by General Agent at General Agent's
expense. Such bond shall be, at least, of the form, type, and amount required
under the NASD Rules of Fair Practice, endorsed to extend coverage to General
Agent's life insurance and fixed annuity transactions. Sun Life of Canada (U.S.)
may require evidence, satisfactory to it, that such coverage is in force and
General Agent shall give prompt written notice to Sun Life of Canada (U.S.) of
any notice of cancellation or change of coverage.
E. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of
the parties to it and their respective successors and assigns provided that
neither Broker-dealer nor General Agent may assign this Agreement or any rights
or obligations hereunder without the prior written consent of Sun Life of Canada
(U.S.).
F. REGULATIONS
All parties agree to observe and comply with the existing laws and
rules or regulations of applicable local, state, or federal regulatory
authorities and with those which may be enacted or adopted during the term of
this Agreement regulating the business contemplated hereby in any jurisdiction
in which the business described herein is to be transacted.
G. NOTICES
All notices or communications shall be sent to the address shown in sub
paragraph VI M of this Agreement or to such other address as the party may
request by giving written notice to the other parties.
H. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by
the laws of the Commonwealth of Massachusetts.
I. AMENDMENT OF AGREEMENT
Sun Life of Canada (U.S.) reserves the right to amend this Agreement at
any time and the General Agent's submission of an application after notice of
any such amendment has been sent to the other parties shall constitute the other
parties' agreement to any such amendment.
<PAGE>
J. SALES PROMOTION MATERIALS AND ADVERTISING
Neither Broker-dealer, General Agent nor any of its sub-agents shall
print, publish or distributed any advertisement, circular or any document
relating to the Plans distributed pursuant to this Agreement or relating to Sun
Life of Canada (U.S.) unless such advertisement, circular or document shall have
been approved in writing by Sun Life of Canada (U.S.) or by Clarendon, and in
the case of items within the scope of Section V, Paragraph E approved in writing
by Clarendon. Provided, however, that nothing herein shall prohibit
Broker-dealer, General Agent or any sub-agent from advertising life insurance
and annuities in general or on a generic basis.
K. GENERAL AGENT AS BROKER DEALER
If Broker-dealer and General Agent are the same person or legal entity,
such person or legal entity shall have the rights and obligations hereunder of
both Broker-dealer and General Agent and this Agreement shall be binding and
enforceable by and against such person or legal entity in both capacities.
L. TERMINATION
This Agreement may be terminated, without cause, by any party upon
thirty (30) days prior written notice; and may be terminated, for cause, by any
party immediately; and shall be terminated if Clarendon or Broker-dealer shall
cease to be a registered Broker-dealer under the Securities Exchange Act of 1934
and a member of the NASD.
<PAGE>
M. ADDRESS FOR NOTICES
GENERAL AGENT
- -----------------------------------
Licensed General Agent or Agency Names:
Address:____________________________ Clarendon Insurance Agency, Inc.
Attn: Arnold D. Scott
___________________________________ 500 Boylston Street
Boston, MA 02116
Tax ID No.:_________________________
CLARENDON INSURANCE AGENCY, INC.
- ----------------------------------------------
Print Name and Title of Authorized Dealer Date ARNOLD D. SCOTT
By: Arnold D. Scott
By:________________________________ Arnold D. Scott, Secretary
Signature and Title of Authorized Officer Date
- -----------------------------------
BROKER/DEALER
NASD Registered Name:_______________ Sun Life of Canada (U.S.)
Attn: Bonnie S. Angus
Home Address________________________ One Sun Life Executive Park
Wellesley Hills, MA -02181
- ------------------------------------
Tax ID No.:___________________________ SUN LIFE ASSURANCE COMPANY OF
CANADA, (U.S.)
- -------------------------------------
Print Name and Title of Authorized Officer
By:___________________________________ By: BONNIE S. ANGUS
Signature and Title of Authorized Officer Date
Bonnie S. Angus, Secretary
<PAGE>
EXHIBIT A
General Letter of Recommendation
GENERAL AGENT hereby certifies to Sun Life of Canada (U.S.) that all the
following requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as sub-agents submitted by
GENERAL AGENT. GENERAL AGENT will, upon request, forward proof of compliance
with same to Sun Life of Canada (U.S.) in a timely manner.
1. We have made a thorough and diligent inquiry and investigation relative
to each applicant's identity, residence and business reputation and
declare that each applicant is personally known to us, has been
examined by us, is known to be of good moral character, has a good
business reputation, is reliable, is financially responsible and is
wroth of a license. Each individual is trustworthy, competent and
qualified to act as an agent for Sun Life of Canada (U.S.) to hold
himself out in good faith to the general public. We vouch for each
applicant.
2. We have on file a B-300, B-301, or U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative
requirements for the registration of each applicant as a registered
representative through our NASD member firm, and each applicant is
presently registered as an NASD registered representative.
The above information in our files indicates no fact or condition which
would disqualify the applicant from receiving a license and all the
findings of all investigative information as favorable.
3. We certify that all educational requirements have been met for the
specific state each applicant is requesting a license in, and that, all
such persons have fulfilled the appropriate examination, education and
training requirements.
4. If the applicant is required to submit his picture, his signature, and
securities registration in the state in which he is applying for a
license, we certify that those items forwarded to Sun Life of Canada
(U.S.) are those of the applicant and the securities registration is a
true copy of the original.
5. We hereby warrant that the applicant is not applying for a license with
Sun Life of Canada (U.S.) in order to place insurance chiefly and
solely on his life or property, lives or property of his relatives, or
property or liability of his associates.
6. We certify that each applicant will receive close and adequate
supervision, and that we will make inspection when needed of any or all
risks written by these applicants, to the end that the insurance
interest of the public will be properly protected.
7. We will not permit any applicant to transact insurance as an agent
until duly licensed therefore, No applicants have been given a contract
or furnished supplies; nor have any applicants been permitted to write,
solicit business, or act as an agent in any capacity, and they will not
be so permitted until the certificate of authority or license applied
for is received.
<PAGE>
TYPE 2 EXHIBIT C
- -------------------------------------------------------------------------------
Two copies of this agreement should
be returned to: Sun Life Annuity Service Center
P.O. Box 1024
Boston, MA 02103
- -------------------------------------------------------------------------------
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
A Wholly-Owned Subsidiary of Sun Life Assurance Company of Canada
<TABLE>
<S> <C> <C>
Executive Office: Home Office: Annuity Service Mailing Address
One Sun Life Executive Park Wilmington, Delaware Sun Life Annuity
Wellesley Hills, Massachusetts 02181 Service Center
P.O. Box 1024
Boston, Massachusetts 02103
</TABLE>
- -------------------------------------------------------------------------------
BROKER-DEALER SUPERVISORY AND SERVICE AGREEMENT
- -------------------------------------------------------------------------------
AGREEMENT by and between Sun Life Assurance Company of Canada (U.S.)
("Sun Life of Canada (U.S.)"), a Delaware Corporation, Clarendon Insurance
Agency, Inc., ("Clarendon"), a registered broker-dealer with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 and a member of
the National Association of Securities Dealers, Inc. And
____________________________________ (Broker-Dealer), also a registered
broker-dealer with the Securities and Exchange Commission under the Security
Exchange Act of 1934 and a member of the National Association of Securities
Dealers, Inc.
- -------------------------------------------------------------------------------
I WITNESSETH
- -------------------------------------------------------------------------------
WHEREAS, Sun Life of Canada (U.S.) proposes to have Broker-Dealer's
registered representatives ("Representatives") who are also insurance agents
solicit and sell certain Insurance and Annuity Plans (the "Plans") more
particularly described in this Agreement and which are deemed to be securities
under the Securities Act of 1933; and
WHEREAS, Sun Life of Canada (U.S.) has appointed Clarendon as the
General Distributor of the Plans and has agreed with Clarendon that Clarendon
shall be responsible for the training and supervision of such Representatives,
with respect to the solicitation and offer or sale of any of the Plans, and also
for the training and supervision of any other "persons associated" with
Broker-Dealer who are engaged directly or indirectly therewith; and Clarendon
proposes to
<PAGE>
delegate, to the extent legally permitted, said supervisory duties to
Broker-Dealer; and
WHEREAS, Sun Life of Canada (U.S.) and Clarendon propose to have
Broker-Dealer provide certain administrative services to facilitate
solicitations for and sales of the Plans.
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
- -----------------------------------------------------------------------------
II APPOINTMENT OF BROKER-DEALER
- -----------------------------------------------------------------------------
A. APPOINTMENT
Sun Life of Canada (U.S.) and Clarendon hereby appoint Broker-Dealer to
supervise solicitations for and sales of the Plans and to provide certain
administrative services to facilitate solicitations for and sales of the Plans.
- -------------------------------------------------------------------------------
III AUTHORITIES AND DUTIES OF BROKER-DEALER
- -------------------------------------------------------------------------------
A. PLANS
The Plans issued by Sun Life of Canada (U.S.) to which this Agreement
applies are listed in Exhibit A. Exhibit A may be amended from time to time by
Sun Life of Canada (U.S.). Sun Life of Canada (U.S.), in its sole discretion and
without notice to Broker-dealer, may suspend sales of any Plans or may amend any
policies or contracts evidencing such Plans.
B. LICENSING REPRESENTATIVES
Broker-Dealer shall assist Clarendon in the appointment of
Representatives under the applicable insurance laws to sell the Plans.
Broker-Dealer shall fulfill all requirements set forth in the General Letter of
Recommendation attached as Exhibit B in conjunction with the submission of
licensing/appointment papers for all applicants as insurance agents of Sun Life
of Canada (U.S.). All such licensing/appointment papers should be submitted to
Clarendon by Broker-Dealer.
C. SECURING APPLICATIONS
All applications for Plans shall be made on applications forms supplied
by Sun Life of Canada (U.S.) and all payments collected by Broker-Dealer or any
Representative of Broker-Dealer shall be remitted promptly in full, together
with such application forms and any other required documentation, directly to
Sun Life of Canada (U.S.) at the address indicated on such application or to
such other address as Sun Life of Canada (U.S.) may, from time to time,
designate in writing. Broker-Dealer
<PAGE>
shall review all such applications for completeness. Checks or money orders in
payment on any such Plan shall be drawn to the order of "Sun Life Assurance //
Company of Canada (U.S.)". All applications are subject to acceptance or
rejection by Sun Life of Canada (U.S.) at its sole discretion.
D. MONEY RECEIVED BY BROKER-DEALER
All money payable in connection with any of the Plans, whether as
premium, purchase payment or otherwise and whether paid by or on behalf of any
policyholder, contract owner or certificate holder or anyone else having an
interest in the Plans is the property of Sun Life of Canada (U.S.), and shall be
transmitted immediately in accordance with the administrative procedures of Sun
Life of Canada (U.S.) without any deduction or offset for any reason, including
by example but not limitation, any deduction or offset for compensation claimed
by Broker-Dealer.
E. SUPERVISION OF REPRESENTATIVES
Broker-Dealer shall have full responsibility for the training and
supervision of all Representatives associated with Broker-Dealer who are engaged
directly or indirectly in the offer or sale of the Plans and all such persons
shall be subject to the control of Broker-Dealer with respect to such persons'
securities-regulated activities in connection with the Plans. Broker-Dealer will
cause the Representatives to be trained in the sale of the Plans; will use its
best efforts to cause such Representatives to qualify under applicable federal
and state laws to engage in the sale of the Plans; and will cause such
Representatives to be registered representatives of Broker-Dealer before such
Representatives engage in the solicitation of applications for the Plans and
will cause such Representatives to limit solicitation of applications for the
Plans to jurisdictions where Sun Life of Canada (U.S.) has authorized such
solicitation. Broker-Dealer shall cause such Representatives' qualifications to
be certified to the satisfaction of Clarendon and shall notify Clarendon if any
Representative ceases to be a registered representative of Broker-Dealer.
F. REPRESENTATIVES AGREEMENT
Broker-Dealer shall cause each such Representative to execute a
Registered Representative's Agent Agreement with Sun Life of Canada (U.S.)
before a Representative shall be permitted to solicit applications for the sale
of the Plans. Clarendon shall furnish Broker-Dealer with copies of Registered
Representative's Agent Agreements for execution by the Representatives.
G. COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITY LAWS
Broker-Dealer shall fully comply with the requirements of the National
Association of Securities Dealers, Inc. And of the Securities Exchange Act of
1934 and all other applicable federal or state laws and will establish such
rules and procedures as may be necessary to
<PAGE>
cause diligent supervision of the securities activities of the Representatives.
Upon request by Clarendon, Broker-Dealer shall furnish such appropriate records
as may be necessary to establish such diligent supervision.
H. NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE
In the event a Representative fails or refuses to submit to supervision
of Broker-Dealer or otherwise fails to meet the rules and standards imposed by
Broker-Dealer on its Representatives, Broker-Dealer shall certify such fact to
Sun Life of Canada (U.S.) and shall immediately notify such Representative that
he or she is no longer authorized to sell the Plans, and Broker-Dealer shall
take whatever additional action may be necessary to terminate the sales
activities of such Representative relating to the Plans.
I. PROSPECTUSES, SALE PROMOTION MATERIAL AND ADVERTISING
Broker-Dealer shall be provided, without any expense to Broker-Dealer,
with prospectuses relating to the Plans and such other material as Clarendon
determines to be necessary or desirable for use in connection with sales of the
Plans. No sales promotion materials or any advertising relating to the Plans
shall be used by Broker-Dealer unless the specific item has been approved in
writing by Clarendon.
- ------------------------------------------------------------------------------
IV COMPENSTION
- ------------------------------------------------------------------------------
A. SUPERVISORY FEES, SERVICE FEES AND COMMISSIONS
Supervisory and Service Fees payable to Broker-Dealer and commissions
payable to Representatives in connection with the Plans shall be paid by Sun
Life of Canada (U.S.) to the person(s) entitled thereto through Broker-Dealer or
as otherwise required by law. Clarendon will provide Broker-Dealer with a copy
of Sun Life of Canada (U.S.)'s current Supervisory and Service Fee Schedule.
These fees and commissions will be paid as a percentage of premiums or purchase
payments (Premiums and Purchase Payments are hereinafter referred to
collectively as "Payments") received in cash or other legal tender and accepted
by Sun Life of Canada (U.S.) on applications obtained by the various
Representatives of the Broker-Dealer. Upon termination of this Agreement, all
compensation to the Broker-Dealer hereunder shall cease; however, Broker-Dealer
shall continue to be liable for any chargebacks pursuant to the provisions of
said Supervisory and Service Fee Schedule and Commission Schedule or for any
other amounts advanced by or otherwise due Sun Life of Canada (U.S.) hereunder.
<PAGE>
B. TIME OF PAYMENT
Sun Life of Canada (U.S.) may, upon at least ten (10) days prior
written notice to Broker-Dealer change the Supervisory and Service Fee Schedule
and the Commission Schedule. Any such change shall be by written amendment of
the particular schedule or schedules and shall apply to compensation due on
applications received by Sun Life of Canada (U.S.) after the effective date of
such notice.
D. PROHIBITION AGAINST REBATES
If Broker-Dealer or any Representative of Broker-Dealer shall rebate or
offer to rebate all or any part of a Payment on a policy or contract or
certificate issued by Sun Life of Canada (U.S.), or if Broker-dealer of any
Representative of Broker-Dealer shall withhold any Payment on any policy or
contract or certificate issued by Sun Life of Canada (U.S.), the same may be
grounds for termination of this Agreement by Sun Life of Canada (U.S.). If
Broker-Dealer or any Representative of Broker-Dealer shall at any time induce or
endeavor to induce any owner of any policy or contract issued hereunder or any
certificate holder to discontinue Payments or to relinquish any such policy or
contract or certificate except under circumstances where there is reasonable
grounds for believing the policy, contract or certificate is not suitable for
such person, any and all compensation due Broker-Dealer hereunder shall cease
and terminate.
E. INDEBTEDNESS
Nothing in this Agreement shall be construed as giving Broker-Dealer
the right to incur any indebtedness on behalf of Sun Life of Canada (U.S.).
Broker-Dealer hereby authorizes Sun Life of Canada (U.S.) to set off liabilities
of Broker-Dealer to Sun Life of Canada (U.S.) against any and all amounts
otherwise payable to Broker-Dealer by Sun Life of Canada (U.S.).
- -------------------------------------------------------------------------------
V GENERAL PROVISIONS
- -------------------------------------------------------------------------------
A. WAIVER
Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of the
conditions, but the same shall remain in full force and effect. No waiver of any
of the provisions of this Agreement shall be deemed, or shall constitute a
waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver.
<PAGE>
B. INDEPENDENT CONTRACTORS
Sun Life of Canada (U.S.) and Clarendon are independent contractors
with respect to Broker-Dealer and to Representatives.
C. LIMITATIONS
No party other than Sun Life of Canada (U.S.) shall have the authority
on behalf of Sun Life of Canada (U.S.) to make, alter, or discharge any policy
or contract or certificate issued by Sun Life of Canada (U.S.), to waive any
forfeiture or to grant, permit, nor to extend the time of making any payments
nor to guarantee dividends, nor to alter the forms which Sun Life of Canada
(U.S.) may prescribe or substitute other forms in place of those prescribed by
Sun Life of Canada (U.S.); nor to enter to any proceeding in a court of law or
before a regulatory agency in the name of or on behalf of Sun Life of Canada
(U.S.).
D. FIDELITY BOND
Broker-Dealer represents that all directors, officers, employees and
Representatives of Broker-Dealer who are licensed pursuant to this Agreement as
Sun Life of Canada (U.S.) agents for state insurance law purposes or who have
access to funds of Sun Life of Canada (U.S.), including but not limited to funds
submitted with applications for the Plans or funds being returned to owners or
certificate holders, are and shall be covered by a blanket fidelity bond,
including coverage for larceny and embezzlement, issued by a reputable bonding
company. This bond shall be maintained by Broker-Dealer at Broker-Dealer's
expense. Such bond shall be, at least, of the form, type and amount required
under the NASD Rules of Fair Practice. Sun Life of Canada (U.S.) may require
evidence, satisfactory to it, that such coverage is in force and Broker-Dealer
shall give prompt written notice to Sun Life of Canada (U.S.) of any notice of
cancellation or change of coverage.
Broker-Dealer assigns any proceeds received from the fidelity bonding
company to Sun Life of Canada (U.S.) to the extent of Sun Life of Canada
(U.S.)'s loss due to activities covered by the bond. If there is any deficiency
amount, whether due to a deductible or otherwise, Broker-Dealer shall promptly
pay Sun Life of Canada (U.S.) such amount on demand and Broker-Dealer hereby
indemnifies and holds harmless Sun Life of Canada (U.S.) from any such
deficiency and from the costs of collection thereof (including reasonable
attorney's fees).
E. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of
the parties to it and their respective successors and assigns provided that
Broker-Dealer may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of Sun Life of Canada (U.S.).
F. REGULATIONS
All parties agree to observe and comply with the existing laws and
rules or regulations of applicable local, state, or federal regulatory
authorities and with
<PAGE>
those which may be enacted Or adopted during the term of this Agreement
regulating the business contemplated hereby in any jurisdiction in which the
business described herein is to be transacted.
G. NOTICES
All notices or communications shall be sent to the address shown in sub
paragraph L of Section V of this Agreement or to such other address as the party
may request by giving written notice to the other parties.
H. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by
the laws of the Commonwealth of Massachusetts.
I AMENDMENT OF AGREEMENT
Sun Life of Canada (U.S.) reserves the right to amend this Agreement at
any time and the submission of an application by a Representative of a
Broker-Dealer after notice of any such amendment has been sent to the other
parties shall constitute the other parties' agreement to any such amendment.
J. SALES PROMOTION MATERIALS AND ADVERTISING
Broker-Dealer shall not print, publish or distribute any advertisement,
circular or any document relating to the Plans or relating to Sun Life of Canada
(U.S.) unless such advertisement, circular or document shall have been approved
in writing by Sun Life of Canada (U.S.) or by Clarendon; and in the case of
items within the scope of Section III, sub paragraph I approved in writing by
Clarendon. Provided, however, that nothing herein shall prohibit Broker-Dealer
from advertising life insurance and annuities in general or on a generic basis.
K. TERMINATION
This Agreement may be terminated, without cause, by any party upon
thirty (30) days prior written notice; and may be terminated, for cause, by any
party immediately; and shall be terminated if Clarendon or Broker-Dealer shall
cease to be registered Broker-Dealers under the Securities Exchange Act of 1934
and members of the NASD.
<PAGE>
L. ADDRESS FOR NOTICES
NASD Registered Name:__________________ Clarendon Insurance Agency, Inc.
Attn: Arnold D. Scott
______________________________________ 500 Boylston Street
Boston, MA 02116
- --------------------------------------
CLARENDON INSURANCE AGENCY, INC.
By: ARNOLD D. SCOTT
Arnold D. Scott, Secretary
Home Office Address:_____________________
Sun Life of Canada (U.S.)
_______________________________________ Attn: Bonnie S. Angus
One Sun Life Executive Park
_______________________________________ Wellesley Hills, MA -02181
Tax ID Number:__________________________
Date:___________________________________ SUN LIFE ASSURANCE COMPANY OF
CANADA, (U.S.)
- ---------------------------------------
Print Name and Title of Authorized Officer
______________________________________ By: BONNIE S. ANGUS
Signature and Title of Authorized Officer
Date Bonnie S. Angus, Secretary
<PAGE>
EXHIBIT B
General Letter of Recommendation
BROKER-DEALER hereby certifies to Sun Life of Canada (U.S.) that all
the following requirements will be fulfilled in conjunction with the submission
of licensing/appointment papers for all applicants as agents of Sun Life of
Canada (U.S.) submitted by BROKER-DEALER, BROKER-DEALER will, upon request,
forward proof of compliance with same to Sun Life of Canada (U.S.) in a timely
manner.
1. We have made a thorough and diligent inquiry and investigation
relative to each applicant's identity, residence and business
reputation and declare that each applicant is personally known
to us, has been examined by us, is known to be of good moral
character, has a good business reputation, is reliable, is
financially responsible and is worthy of a license. Each
individual is trustworthy, competent and qualified to act as
an agent for Sun Life of Canada (U.S.) to hold himself out in
good faith to the general public. We vouch for each applicant.
2. We have on a file a B-300, B-301, or U-4 form which was
completed by each applicant. We have fulfilled all the
necessary investigative requirements for the registration of
each applicant as a registered representative through our NASD
member firm, and each applicant is presently registered as an
NASD registered representative.
The above information in our files indicates no fact or
condition which would disqualify the applicant from receiving
a license and all the findings of all investigative
information is favorable.
3. We certify that all educational requirements have been met for
the specific state each applicant is requesting a license in,
and that, all such persons have fulfilled the appropriate
examination, education and training requirements.
4. If the applicant is required to submit his picture, his
signature, and securities registration in the state in which
he is applying for a license, we certify that those items
forwarded to Sun Life of Canada (U.S.) are those of the
applicant and the securities registration is a true copy of
the original.
5. We hereby warrant that the applicant is not applying for a
license with Sun Life of Canada (U.S.) in order to place
insurance chiefly and solely on his life or property, lives or
property of his relatives, or property or liability of his
associates.
6. We certify that each applicant will receive close and adequate
supervision, and that we will make inspection when needed of
any or all risk written by these applicants, to the end that
the insurance interest of the public will be properly
protected.
7. We will not permit any applicant to transact insurance as an
agent until duly licensed therefore. No applicants have been
given a contract or furnished supplies, nor have any
applicants been permitted to write, solicit business, or act
as an agent in any capacity, and they will not be so permitted
until the certificate of authority or license applied for is
received.
<PAGE>
TYPE 4 EXHIBIT D
- --------------------------------------------------------------------------------
Two copies of this agreement should be
returned to: Sun Life Annuity Service Center
P.O. Box 1024
Boston, MA 02103
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
A Wholly-Owned Subsidiary of Sun Life Assurance Company of Canada
Executive Office: Home Office: Annuity Service Mailing Address
One Sun Life Executive Park Wilmington, Delaware Sun Life Annuity
Wellesley Hills, Massachusetts 02181 Service Center
P.O. Box 1024
Boston, Massachusetts 02103
- -----------------------------------------------------------------------------
BROKER-DEALER SUPERVISORY AND SERVICE AGREEMENT
- ------------------------------------------------------------------------------
AGREEMENT by and between Sun Life Assurance Company of Canada (U.S.)
("Sun Life of Canada (U.S.)"), a Delaware Corporation, Clarendon Insurance
Agency, Inc.("Clarendon"), a registered broker-dealer with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 and a member of
the National Association of Securities Dealers, Inc. And
___________________________ (Broker-Dealer), also a registered broker-dealer
with the Securities and Exchange Commission under the Security Exchange Act of
1934 and a member of the National Association of Securities Dealers, Inc.
- -----------------------------------------------------------------------------
I WITNESSETH
- ------------------------------------------------------------------------------
WHEREAS, Sun Life of Canada (U.S.) proposes to have Broker-Dealer's
registered representatives ("Representatives") who are also insurance agents
solicit and sell certain Insurance and Annuity Plans (the "Plans") more
particularly described in this Agreement and which are deemed to be securities
under the Securities Acts of 1933; and
WHEREAS, Sun Life of Canada (U.S.) has appointed Clarendon as the
General Distributor of the Plans and has agreed with Clarendon that Clarendon
shall be responsible for the training and supervision of such Representatives,
with respect to the solicitation and offer or sale of any of the Plans, and also
for the training and supervision of any other "persons associated" with
Broker-Dealer who are engaged directly or indirectly therewith; and Clarendon
proposes to delegate, to the extent legally permitted, said supervisory duties
to Broker-Dealer; and
<PAGE>
WHEREAS, Sun Life of Canada (U.S. and Clarendon propose to have
Broker-Dealer provide certain administrative services to facilitate
solicitations for and sales of the Plans.
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
- -----------------------------------------------------------------------------
II APPOINTMENT OF BROKER-DEALER
- ------------------------------------------------------------------------------
A. APPOINTMENT
Sun Life of Canada (U.S.) and Clarendon hereby appoint Broker-Dealer to
supervise solicitations for and sales of the Plans and to provide certain
administrative services to facilitate solicitations for and sales of the Plans.
- ------------------------------------------------------------------------------
III AUTHORITIES AND DUTIES OF BROKER-DEALER
- -----------------------------------------------------------------------------
A. PLANS
The Plans issued by Sun Life of Canada (U.S.) to which this Agreement
applies are listed in Exhibit A. Exhibit A may be amended from time to time by
Sun Life of Canada (U.S.). Sun Life of Canada (U.S.), in its sole discretion and
without notice to Broker-Dealer, may suspend sales of any Plans or may amend any
policies or contracts evidencing such Plans.
B. LICENSING REPRESENTATIVES
Broker-Dealer shall assist Clarendon in the appointment of
Representatives under the applicable insurance laws to sell the Plans.
Broker-Dealer shall fulfill all requirements set forth in the General Letter of
Recommendation attached as Exhibit B in conjunction with the submission of
licensing/appointment papers for all applicants as insurance agents of Sun Life
of Canada (U.S.). All such licensing/appointment papers should be submitted to
Clarendon by Broker-Dealer.
C. SECURING APPLICATIONS
All applications for Plans shall be made on application forms supplied
by Sun Life of Canada (U.S.) and all payments collected by Broker-Dealer or any
Representative of Broker-Dealer or any Representative of Broker-Dealer shall be
remitted promptly in full, together with such application forms and any other
required documentation, directly to Sun Life of Canada (U.S.) at the address
indicated on such application or to such other address as Sun Life of Canada
(U.S.) may, from time to time, designate in writing. Broker-Dealer shall review
all such applications for completeness. Checks or money orders
<PAGE>
in payment on any such Plan shall be drawn to the order of "Sun Life Assurance
Company of Canada (U.S.)". All applications are subject to acceptance or
rejected by Sun Life of Canada (U.S.) at its sole discretion.
D. MONEY RECEIVED BY BROKER-DEALER
All money payable in connection with any of the Plans, whether as
premium, purchase payment or otherwise and whether paid by or on behalf of any
policyholder, contract owner or certificate holder of anyone else having an
interest in the Plans is the property of Sun Life of Canada (U.S.), and shall be
transmitted immediately in accordance with the administrative procedures of Sun
Life of Canada (U.S.) without any deduction or offset for any reason, including
by example but not limitation, any deduction or offset for compensation claimed
by Broker-Dealer.
E. SUPERVISION OF REPRESENTATIVES
Broker-Dealer shall have full responsibility for the training and
supervision of all Representatives associated with Broker-Dealer who are engaged
directly or indirectly in the offer or sale of the Plans and all such persons
shall be subject to the control of Broker-Dealer with respect to such persons'
securities-regulated activities in connection with the Plans. Broker-Dealer will
cause the Representatives to be trained in the sale of the Plans; will use its
best efforts to cause such Representatives to qualify under applicable federal
and state laws to engage in the sales of the Plans; and will cause such
Representatives to be registered representatives of Broker-Dealer before such
Representatives engage in the solicitation of applications for the Plans and
will cause such Representatives to limit solicitation of applications for the
Plans to jurisdictions where Sun Life of Canada (U.S.) has authorized such
solicitation. Broker-Dealer shall cause such Representatives' qualifications to
be certified to the satisfaction of Clarendon and shall notify Clarendon if any
Representative ceases to be a registered representative of Broker-Dealer.
F. REPRESENTATIVES AGREEMENT
Broker-Dealer shall cause each such Representative to execute a
Registered Representative's Agent Agreement with Sun Life of Canada (U.S.)
before a Representative shall be permitted to solicit applications for the sale
of the Plans. Clarendon shall furnish Broker-Dealer with copies of Registered
Representative's Agent Agreements for execution by the Representatives.
G. COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITY LAWS
Broker-Dealer shall fully comply with the requirements of the National
Association of Securities Dealers, Inc. And of the Securities Exchange Act of
1934 and all other applicable federal or state laws and will establish such
rules and procedures as may be necessary to cause diligent supervision of the
securities activities of the
<PAGE>
Representatives. Upon request by Clarendon, Broker-Dealer shall furnish such
appropriate records as may be necessary to establish such diligent supervision.
H. NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE
In the event a Representative fails or refuses to submit to supervision
of Broker-Dealer or otherwise fails to meet the rules and standards imposed by
Broker-Dealer on its Representatives, Broker-Dealer shall certify such fact to
Sun Life of Canada (U.S.) and shall immediately notify such Representative that
he or she is no longer authorized to sell the Plans, and Broker-Dealer shall
take whatever additional action may be necessary to terminate the sales
activities of such Representative relating to the Plans.
I. PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING
Broker-Dealer shall be provided, without any expense to Broker-Dealer,
with prospectuses relating to the Plans and such other material as Clarendon
determines to be necessary or desirable for use in connection with sales of the
Plans. No sales promotion materials or any advertising relating to the Plans
shall be used by Broker-Dealer unless the specific item has been approved in
writing by Clarendon.
- -------------------------------------------------------------------------------
IV COMPENSATION
- -------------------------------------------------------------------------------
A. SUPERVISORY FEES, SERVICE FEES AND COMMISSIONS
Supervisory and Service Fees payable to Broker-Dealer and commissions
payable to Representatives in connection with the Plans shall be paid by Sun
Life of Canada (U.S.) to the person(s) entitled thereto through Broker-Dealer or
as otherwise required by law. Clarendon will provide Broker-Dealer with a copy
of Sun Life of Canada (U.S.)'s current Supervisory and Service Fee Schedule.
These fees and commissions will be paid as a percentage of premiums or purchase
payments (Premiums and Purchase Payments) are hereinafter referred to
collectively as "Payments") received in cash or other legal tender and accepted
by Sun Life of Canada (U.S.) on applications obtained by the various
Representatives of the Broker-Dealer. Upon termination of this Agreement, all
compensation to the Broker-Dealer hereunder shall cease; however, Broker-Dealer
shall continue to be liable for any chargebacks pursuant to the provisions of
said Supervisory and Service Fee Schedule and Commission Schedule or for any
other amounts advanced by or otherwise due Sun Life of Canada (U.S.) hereunder.
<PAGE>
B. TIME OF PAYMENT
Sun Life of Canada (U.S.) shall pay any compensation due Broker-Dealer
and Representatives of Broker-Dealer within fifteen (15) days after the end of
the calendar month in which Payments upon which such compensation is based are
accepted by Sun Life of Canada (U.S.).
C. AMENDMENT OF SCHEDULES
Sun Life of Canada (U.S.) may, upon at least ten (10) days prior
written notice to Broker-Dealer change the Supervisory and Service Fee Schedule
and the Commission Schedule. Any such change shall be by written amendment of
the particular schedule or schedules and shall apply to compensation due on
applications received by Sun Life of Canada (U.S.) after the effective date of
such notice.
D. PROHIBITION AGAINST REBATES
If Broker-Dealer or any Representative of Broker-Dealer shall rebate or
offer to rebate all or any part of a Payment on a policy or contract or
certificate issued by Sun Life of Canada (U.S.), or if Broker-Dealer or any
Representative of Broker-Dealer shall withhold any Payment on any policy or
contract or certificate issued by Sun Life of Canada (U.S.), the same may be
grounds for termination of this Agreement by Sun Life of Canada (U.S.). If
Broker-Dealer or any Representative of Broker-Dealer shall at any time induce or
endeavor to induce any owner of any policy or contract issued hereunder or any
certificate holder to discontinue Payments or to relinquish any such policy or
contract or certificate except under circumstances where there is reasonable
grounds for believing the policy, contract or certificate is not suitable for
such person, any and all compensation due Broker-Dealer hereunder shall cease
and terminate.
E. INDEBTEDNESS
Nothing in this Agreement shall be construed as giving Broker-Dealer
the right to incur any indebtedness on behalf of Sun Life of Canada (U.S.).
Broker-Dealer hereby authorizes Sun Life of Canada (U.S.) to set off liabilities
of Broker-Dealer to Sun Life of Canada (U.S.) against any and all amounts
otherwise payable to Broker-Dealer by Sun Life of Canada (U.S.).
- ------------------------------------------------------------------------------
V GENERAL PROVISIONS
- ------------------------------------------------------------------------------
A. WAIVER
Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of the
conditions, but the same shall remain in full force and effect. No waiver of any
<PAGE>
of the provisions of this Agreement shall be deemed, or shall constitute a
waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver.
B. INDEPENDENT CONTRACTORS
Sun Life of Canada (U.S.) and Clarendon are independent contractors
with respect to Broker-Dealer and to Representatives.
C. LIMITATIONS
No party other than Sun Life of Canada (U.S.) shall have the authority
on behalf of Sun Life of Canada (U.S.) to make, alter, or discharge any policy
or contract or certificate issued by Sun Life of Canada (U.S.)., to waive any
forfeiture or to grant, permit, nor to extend the time of making any Payments
nor to guarantee dividends, nor to alter the forms which Sun Life of Canada
(U.S.) may prescribe or substitute other forms in place of those prescribed by
Sun Life of Canada (U.S.); nor to enter into any proceeding in a court of law or
before a regulatory agency in the name of or on behalf of Sun Life of Canada
(U.S.).
D FIDELITY BOND
Broker-Dealer represents that all directors, officers, employees and
Representatives of Broker-Dealer who are licensed pursuant to this Agreement as
Sun Life of Canada (U.S.) agents for state insurance law purposes or who have
access to funds of Sun Life of Canada (U.S.), including but not limited to funds
submitted with applications for the Plans or funds being returned to owners or
certificate holders, are and shall be covered by a blanket fidelity bond,
including coverage for larceny and embezzlement, issued by a reputable bonding
company. This bond shall be maintained by Broker-Dealer at Broker-Dealer's
expense. Such bond shall be, at least, of the form, type and amount required
under the NASD Rules of Fair Practice. Sun Life of Canada (U.S.) may require
evidence, satisfactory to it, that such coverage is in force and Broker-Dealer
shall give prompt written notice to Sun Life of Canada (U.S.) of any notice of
cancellation or change of coverage.
Broker-Dealer assigns any proceeds received from the fidelity bonding
company to Sun Life of Canada (U.S.) to the extent of Sun Life of Canada
(U.S.)'s loss due to activities covered by the bond. If there is any deficiency
amount, whether due to a deductible or otherwise, Broker-Dealer shall promptly
pay Sun Life of Canada (U.S.) such amount on demand and Broker-Dealer hereby
indemnifies and holds harmless Sun Life of Canada (U.S.) from any such
deficiency and from the costs of collection thereof (including reasonable
attorney's fees).
E. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of
the parties to it and their respective successors and assigns provided that
Broker-Dealer may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of Sun Life of Canada (U.S.)
<PAGE>
F. REGULATIONS
All parties agree to observe and comply with the existing laws and
rules or regulations of applicable local, state, or federal regulatory
authorities and with those which may be enacted Or adopted during the term of
this Agreement regulating the business contemplated hereby in any jurisdiction
in which the business described herein is to be transacted.
G. NOTICES
All notices or communications shall be sent to the address shown in sub
paragraph L of Section V of this Agreement or to such other address as the party
may request by giving written notice to the other parties.
H. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by
the laws of the Commonwealth of Massachusetts.
I. AMENDMENT OF AGREEMENT
Sun Life of Canada (U.S.) reserves the right to amend this Agreement at
any time and the submission of an application by a Representative of a
Broker-Dealer after notice of any such amendment has been sent to the other
parties shall constitute the other parties' agreement to any such amendment.
J. SALES PROMOTION MATERIALS AND ADVERTISING
Broker-Dealer shall not print, publish or distribute any advertisement,
circular or any document relating to the Plans or relating to Sun Life of Canada
(U.S.) unless such advertisement, circular or document shall have been approved
in writing by Sun Life of Canada (U.S.) or by Clarendon; and in the case of
items within the scope of Section III, sub paragraph I approved in writing by
Clarendon. Provided, however, that nothing herein shall prohibit Broker-Dealer
from advertising life insurance and annuities in general or on a general basis.
K. TERMINATION
This Agreement may be terminated, without cause, by any party upon
thirty (30) days prior written notice; and may be terminated, for cause, by any
party immediately; and shall terminated, if Clarendon or Broker-Dealer shall
cease to be registered Broker-Dealers under the Securities Exchange Act of 1934
and members of the NASD.
<PAGE>
L. ADDRESS FOR NOTICES
NASD Registered Name:__________________ Clarendon Insurance Agency, Inc.
Attn: Arnold D. Scott
______________________________________ 500 Boylston Street
Boston, MA 02116
- --------------------------------------
CLARENDON INSURANCE AGENCY, INC.
By: ARNOLD D. SCOTT
Arnold D. Scott, Secretary
Home Office Address:_____________________
Sun Life of Canada (U.S.)
_______________________________________ Attn: Bonnie S. Angus
One Sun Life Executive Park
_______________________________________ Wellesley Hills, MA -02181
Tax ID Number:__________________________ SUN LIFE ASSURANCE COMPANY OF
CANADA, (U.S.)
Date:___________________________________ By: BONNIE S. ANGUS
Bonnie S. Angus, Secretary
- ---------------------------------------
Print Name and Title of Authorized Officer
- ---------------------------------------
Signature and Title of Authorized Officer Date
<PAGE>
EXHIBIT B
General Letter of Recommendation
BROKER-DEALER hereby certifies to Sun Life of Canada (U.S.) that all
the following requirements will be fulfilled in conjunction with the submission
of licensing/appointment papers for all applicants as agents of Sun Life of
Canada (U.S.) submitted by BROKER-DEALER, BROKER-DEALER will, upon request,
forward proof of compliance with same to Sun Life of Canada (U.S.) in a timely
manner.
1. We have made a thorough and diligent inquiry and investigation
relative to each applicant's identity, residence and business
reputation and declare that each applicant is personally known
to us, has been examined by us, is known to be of good moral
character, has a good business reputation, is reliable, is
financially responsible and is worthy of a license. Each
individual is trustworthy, competent and qualified to act as
an agent for Sun Life of Canada (U.S.) to hold himself out in
good faith to the general public. We vouch for each applicant.
2. We have on a file a B-300, B-301, or U-4 form which was
completed by each applicant. We have fulfilled all the
necessary investigative requirements for the registration of
each applicant as a registered representative through our NASD
member firm, and each applicant is presently registered as an
NASD registered representative.
The above information in our files indicates no fact or
condition which would disqualify the applicant from receiving
a license and all the findings of all investigative
information is favorable.
3. We certify that all educational requirements have been met for
the specific state each applicant is requesting a license in,
and that, all such persons have fulfilled the appropriate
examination, education and training requirements.
4. If the applicant is required to submit his picture, his
signature, and securities registration in the state in which
he is applying for a license, we certify that those items
forwarded to Sun Life of Canada (U.S.) are those of the
applicant and the securities registration is a true copy of
the original.
5. We hereby warrant that the applicant is not applying for a
license with Sun Life of Canada (U.S.) in order to place
insurance chiefly and solely on his life or property, lives or
property of his relatives, or property or liability of his
associates.
6. We certify that each applicant will receive close and adequate
supervision, and that we will make inspection when needed of
any or all risk written by these applicants, to the end that
the insurance interest of the public will be properly
protected.
7. We will not permit any applicant to transact insurance as an
agent until duly licensed therefore. No applicants have been
given a contract or furnished supplies, nor have any
applicants been permitted to write, solicit business, or act
as an agent in any capacity, and they will not be so permitted
until the certificate of authority or license applied for is
received.
<PAGE>
EXHIBIT E
ANALYSIS OF ADMINISTRATIVE FUNCTIONS
FOR
SUN LIFE (U.S.) AND MFS ANNUITY PRODUCTS
MFS - PROCESSING AGENT SUN LIFE (U.S) OR DESIGNATED AGENT
A) UNDERWRITING/POLICY ISSUE
Reviews form of applications, Provides application forms and criteria
underwrites application for Annuity for underwriting.
Contract.
Prepares Contract Specifications Supplies Contract, V.A. Prospectus
Page, State of Account, State Specificiation Page
Endorsements when applicable,
I.R.S. plan Adoption Agreements
when applicable, Prospectuses and
Contract. Mails to Contract
Owner of Selling Agent
Establishes and maintains all records, Provides requirements for processing and
including current and historical retention of Participant, Annuitant and
contract information and applicable records and Correspondence. Contract
correspondence for each Participants, Owner
Annuitant and Contract Owner
Prepares and mails Statement of Approves form of Statement of Account.
Account for purchases to Contract
Owners with copies to Applicable
Agents + Broker/Dealers in accordance
with NASD Regulations.
Deposits monies received with Establishes bank accounts and issues
Applications. appropriate authorizations.
<PAGE>
<TABLE>
<S> <C>
MFS - PROCESSING AGENT SUN LIFE (U.S) OR DESIGNATED AGENT
---------------------- ------------------------
B BILLING + COLLECTION
Receives periodic purchase payments and reconciles amounts received with Establishes minimum and maximum annuity
returned billing statements or other remittance media. contribution limits, increase/decrease
guidelines and flexible payment rules.
Prepares and mails statement of account reflecting purchase payments to contract
Approves form of Statement of Account. owners with copies to Agent/Broker-Dealer
in accordance with NASD Regulations.
Prepares pre-authorized checks or group Billing Statements for all periodic
Approves form of pre-authorized check authorization. payment contracts.
Deposits pre-authorized checks on an appropriate schedule. Approves schedule of pre-authorized checks.
Updates the contracts owner Master Record and all related records to reflect
payments received and performs accounting distribution for each payments
received.
Deposits all cash received under the contracts into designated Bank account.
Opens and maintains bank account.
Transmits daily accounting and bank transfer authorization summaries prepared
for eProvidesarequirements for reporting on Accounting and Bank Transfer
Authorization.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
MFS - PROCESSING AGENT SUN LIFE (U.S) OR DESIGNATED AGENT
---------------------- ----------------------------------
C. BANKING
All checks and remittance documents are microfilmed and assigned a control
Provides an endorsement stamp. number. Checks are balanced, edited, endorsed and
prepared for daily deposit.
Pre-authorized checks are generated.
Receipts are deposited into the operating account. Opens and maintain operating account.
Funds are transferred from the operating account to one of the following: Opens and maintains appropriate accounts.
A) General Account - Sun Life (U.S.)
B) Applicable Mutual Fund Custodian Account
Prepares Daily Cash Journals Receives bank statements and reconciles.
Checks are prepared for annuitants in pay out phase, partial and full
withdrawals Arranges for authorization for checks to be drawn against the
accounts. and death claims.
Checks are prepared for commission payments and fees.
Transfers funds from the appropriate accounts in the event checks are to be
drawn Provides authorization and guidelines as to minimum and maximum balances.
on an account with insufficient funds.
Reprocesses all dishonored items. Reverses all transactions, prepares reports Reverses all Ledger entries as appropriate.
and (illegible)
</TABLE>
<TABLE>
<S> <C>
MFS - PROCESSING AGENT SUN LIFE (U.S) OR DESIGNATED AGENT
---------------------- ----------------------------------
D. ACCOUNTING/AUDITING
Prepares all daily accounting reports for all contracts. Approves form and content of daily accounting reports.
Provides information necessary to post accounting entries to separate account Reviews all Variable Account Ledger entries.
general ledger. Receives any non-systems generated
Accounting. Journalizes and posts both systems
related and non-systems related
accounting entries to Variable Account General
Ledger.
Retains systems generated reports in accordance with a retention schedule
Establishes a retention schedule for accounting reports. mutually established.
Provides access to such reports for internal and external auditing.
Provides information necessary to post accounting entries to the General Account Prepares General Account Ledger entries.
general ledger. Maintains General Account Ledger.
Determines the "Net Amount Available for Investment" in Fund Shares and places
Receives confirmation of fund investment activity. Fund Share
purchase/redemption orders with the Fund.
Maintains an inventory of
all Fund Shares owned, including
the date purchased and
sold, cost, book value,
gain, loss and other
relevant information.
Provides data necessary to calculate minimum Death Benefit and Annuity Reserves.
Prepares daily trail balance of Variable Account General Ledger.
</TABLE>
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<TABLE>
<S> <C>
MFS - PROCESSING AGENT SUN LIFE (U.S) OR DESIGNATED AGENT
---------------------- ----------------------------------
Values and maintains Annuity Reserves for Fixed Annuities.
Calculates Minimum Death Benefit Reserves and
Annuity Reserves. Maintains
reserves for Liability on Variable Account Ledger.
E. VALUATION
Collects information needed in
determining Variable Account Unit
Values from the Funds.
This information includes the
daily net asset value of
the underlying Mutual Fund,
any capital gains or
dividend distribution made
by the Funds and
the number of Fund Shares
acquired during the
immediately preceding valuation date.
Performs unit valuation procedure for
accumulation and annuity unit values
for the Variable Account based upon
daily valuation of information from
the Fund. Transmits information
to Servicing Agent.
Prepares Daily Trail Balances for Variable
Account General Ledger and compares
(balances) to contract owner Trial Balance.
</TABLE>
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<TABLE>
<S> <C>
MFS - PROCESSING AGENT SUN LIFE (U.S) OR DESIGNATED AGENT
---------------------- ----------------------
F. CONTRACT OWNER SERVICE/RECORD MAINTENANCE
Receives and implements all Contract owner service requests, including
informational requests, beneficiary changes, changes of name or address, or
changes of any other information maintained on the system.
Researches all inquiries using both data stored on the system and hard copy
Reserves the right to review Contract Owner correspondence and to set guideline
records. Responds directly to any questions or inquiries as mutually defined.
for responses.
Prepares a daily Quality Control Report confirming all changes made to Reserves
the right to review such files. Participant, Annuitant or Contract Owner
accounts. Maintains all copies of communications from Participants, Annuitants
and Contract Owners.
Receives any misdirected requests
for Contract Owner Service and forwards
to MFS Service Center.
Approves forms and maintains adequate supply for field use. Prepares forms for use in Contract Owner
Service Functions.
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<TABLE>
<S> <C>
MFS - PROCESSING AGENT SUN LIFE (U.S) OR DESIGNATED AGENT
---------------------- ----------------------------------
G DISBURSEMENTS
Receives requests for partial or full surrenders and death claims from Contract
Owners and Beneficiaries.
Requests acknowledgement, where appropriate, of the effects of partial or full
Approves form of requests for acknowledgement concerning tax effects. surrender
from the Contract Owner of certain tax qualified plans where the original
request does not contain an indication of this understanding.
Reviews and processes all surrender requests and death claims against the
Provides guidelines for processing of surrender and death claims. Performs all
Participant Master Files. If review determines that request is not in proper
form necessary Variable Account Ledger accounting.
contacts contract owner or beneficiary.
Prepares checks for surrenders and death claims and forwards to Contract Owner
or Beneficiary (including confirmation).
Prepares Report on Surrenders and Death Claims. Provides information needed to
Makes General Account ledger entries resulting from surrenders and death claims.
make General Account ledger entries resulting from surrenders and death claims.
Receives misdirected requests for
surrenders and death claims and
and forwards to Service Agent.
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<TABLE>
<S> <C>
MFS - PROCESSING AGENT SUN LIFE (U.S) OR DESIGNATED AGENT
---------------------- -----------------------------
Approves forms and maintains adequate supply. Prepares forms for use with surrenders and
death claims.
H. LICENSING & APPOINTMENT
Licensing and Appointment is administered by
M.F.S. as agent for Sun Life (U.S.)
M.F.S. as agent for Sun Life (U.S.) receives
and reviews all state appointment and
licensing applications for Individuals and
Corporations based upon Guidelines
approved by Sun Life (U.S.).
Verification is made to assure that the
appropriate General Agent Agreement has
been executed.
Applications are reviewed, endorsed and
the apropriate checks are drawn payable
to the State Department of Insurance.
</TABLE>
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MFS - PROCESSING AGENT SUN LIFE (U.S) OR DESIGNATED AGENT
---------------------- ----------------------------------
Daily Licensing and Appointment Journals are produces for MFS - Agent. The Computer System is updated and the papers
are mailed to the State.
System is accessed on a monthly basis for State Renewals. Prepares appropriate reports and checks
to renew Agents and applicable
Corporations.
Bills General Agents for Renewal fees.
I COMMISIONS
Receives annuity applications from field. Determines validity of application.
Establishes guidelines for processing applications. Ascertains of there was an
appropriate Agent/Dealer license.
Establishes and maintains commission information. Receives commission record Provides all required input for commission
records.
changes.
Prepares Statements of Commissions/Compensation and checks. Posts all ledger entries.
Effects all adjustments, reversals or chargebacks which result from a return of
Posts ledger entries. annuity contributions or lapse of Contract. Prepares
reports on Adjustment to Commissions and provides reports from which ledger
entries can be made.
Maintains and provides reports on Agent/Dealer license renewal.
</TABLE>
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<S> <C>
MFS - PROCESSING AGENT SUN LIFE (U.S) OR DESIGNATED AGENT
---------------------- ----------------------------------
J. ANNUITY BENEFIT PROCESSING
Receives information for Annuitants going into the annuity phase from the
fields. Establishes guidelines for annuity payout.
Calculates the amount of the initial annuity payment for fixed and variable Establishes minimum annuity payments.
payout.
Deducts applicable premium taxes, and calculates annuity reserves. Maintains
annuity reserves for Fixed Account.
Establishes and maintains Annuitant records.
Schedules all annuity payments. Prepares annuity payment checks and mails to
Annuitant. Prepares Annuity Check Register.
Provides information for General Account and Variable Account Ledger maintenance. Post all General Account Ledger entries.
Posts all Variable Account Ledger entries.
Maintains inventory of Variable Annuity units on Annuitant Master files.
Evaluates Variable Annuity reserves and determines if adjustments are necessary.
Processes all variable Annuity reserve adjustments.
</TABLE>
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<TABLE>
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MFS - PROCESSING AGENT SUN LIFE (U.S) OR DESIGNATED AGENT
---------------------- ----------------------------------
K. PROXY PROCESSING
Prepares proxy cards, and all other necessary proxy materials. Prepares a letter of explanation to be included
with proxy material if appropriate.
Receives record date information from Funds. Prepares individual proxy
solicitations as of that date. Mails solicitations and resolicitations.
Receives returned proxies and prepares proxy register and proxy register for
Votes all Fund Shares in accordance with Company and prospectus requirements.
resolicitations.
Maintains all proxy registers and other required proxy material. Performs any Reserves the right to inspect proxy records.
internal audit that may be necessary.
L. PERIODIC REPORTS
Collates all information necessary to prepare semi-annual reports. Establishes dates for preparation of
reports. Prepares information in its
control. Prepares and files semi-annual
reports.
Prepares statement of accounts for each Participants, Annuitant or Contract
Owner. Mails annually.
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C> <C>
MFS - PROCESSING AGENT SUN LIFE (U.S) OR DESIGNATED AGENT
---------------------- ----------------------------------
Collates, inserts and mails all semi-annual reports to Contract Owners. Prints sufficient supply for all Contract Owners.
Prepares Million Dollar Round Table reports as requested. Reviews and submits to appropriate authority.
M. REGULATORY/STATUTORY REPORTS
Collates relevant information for the preparation of Convention Blanks. Prepares in final form all Convention Blanks.
Prepares all IRS reports (e.g., W2P-1099R) for Contract Owners who received
Assists in the determination of appropriate reports to IRS for Contract Owners.
annuity payments or full and partial surrenders. Mails to Contract Owners and
IRS.
Responds to any request from Plan administrators or trustees for information
affecting the Plan or Participants for qualified Plans.
Responds to request for calculations applicable to annuity payments as may be
necessary to tax calculations.
Provides relevant data for preparation of N30-A2 and Schedule Q. Prepares in final form, N30-A2 and Schedule Q
reports.
Prepares 1099's for Agents where applicable. Establishes guidelines for preparation and forms.
</TABLE>
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<TABLE>
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MFS - PROCESSING AGENT SUN LIFE (U.S) OR DESIGNATED AGENT
--------------------- ----------------------------------
N. PREMIUM TAXES
Collects premium taxes as appropriate. Determines requirements for the deduction of
premium taxes.
Prepares and maintains all premium tax records by Contract Owner and by State. Maintains liabilities in the General Account
ledger for accrual of premium taxes
collected.
Pays all premium taxes due and performs all related accounting.
O. FINANCIAL AND MANAGEMENT REPORTS
Provides, on the time schedule indicated, all reports listed on the Schedule or Ascertains the reports and the form of the
report required.
Reports.
</TABLE>
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EXHIBIT F
SCHEDULE OF FEES
MFS shall be compensated for the reasonable value of services performed
pursuant to this Agreement.
MFS shall render statements to Sun Life on a monthly basis covering its
services hereunder. Such compensation shall not exceed 1.11% of the total
Compass premium for the period plus reimbursement for sub-contractor's expenses
as agreed to from time to time.
<PAGE>
EXHIBIT NO. 99.6
SunLife Sun Life Assurance Company of Canada (U.S.)
OF CANADA (U S) A Wholly-Owned Subsidiary of Sun Life Assurance
Company of Canada
Executive Office Home Office: Annuity Service Mailing
Address:
One Sun Life Executive Park Wilmington, SunLife Annuity Service Center
Wellesley Hills, Massachusetts Delaware
02181 P.O. Box 1024
Boston, Massachusetts 02103
Sun Life Assurance Company of Canada (U.S.) (the "Company") will pay an
annuity commencing on the Annuity Commencement Date to the Annuitant if then
living, by applying the adjusted value of the Accumulation Account of the
Contract in accordance with the Settlement Provisions. If the Annuitant dies
while the Contract is in effect and before the Annuity Commencement Date, the
Company will pay a death benefit to the Beneficiary upon receipt of due proof of
death of the Annuitant. Under certain circumstances, if the Owner dies prior to
the Annuitant and before the Annuity Commencement Date, a distribution is
required by law.
All payments will be made to the persons and in the manner set forth in
this Contract. Provisions and endorsements printed or written by the Company on
the following pages form part of the Contract. Signed by the Company at its
Executive Office, Wellesley Hills, Massachusetts on the Issue Date.
Donald A Stewart Margaret Sears Mead
President Secretary
Flexible Payment Deferred Combination Variable and Fixed Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE INVESTMENT
EXPERIENCE OF A VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT
USE OF CONTRACT. This Contract is available for retirement and deferred
compensation plans some of which may qualify for special tax treatment under
Internal Revenue Code Sections 401, 403, 408 or 457.
RIGHT TO RETURN CONTRACT. Please read this Contract. If not satisfied with it,
the Owner may, within 10 days after its receipt, return it by delivering or
mailing it to the Annuity Service Mailing Address indicated above. Immediately
upon receipt of the Contract by the Company, the Contract will be deemed void as
though it had never been applied for, and the Contract's Accumulation Account
Value at the end of the Valuation Period during which the Contract is received
by the Company will be refunded to the Owner.
IMPORTANT NOTICE
It is not necessary to employ any person to collect any payment or benefit
provided by this Contract. When you require help or advice, write directly to
the Company at its Annuity Service Mailing Address. This Contract contains many
benefits. In your own best interest you should consult the Company if anyone
advises you to surrender this Contract or to replace it with a new contract.
1
<PAGE>
TABLE OF CONTENTS
Page
Contract Specifications Page 4
Application
Definitions 5
Fixed and Variable Accounts 8
Fixed Account 6
Variable Accounts 6
Ownership of Assets 7
Investments of the Variable Accounts 7
Valuation of Assets of the Variable Accounts 7
Purchase Payments 7
Payments 7
Amount 8
Contract Continuation 8
Net Purchase Payments and Their Allocation 8
Limitations on Allocations to Fixed Account 8
Contract Values During Accumulation Period 8
Accumulation Account 8
Crediting Variable Accumulation Units 8
Variable Accumulation Unit Value 8
Variable Accumulation Value 9
Net Investment Factor 9
Crediting Fixed Accumulation Units 9
Fixed Accumulation Unit Value 10
Fixed Accumulation Value 10
Conversion of Accumulation Units 10
Contract Maintenance Charge 10
Cash Withdrawals and Withdrawal Charges 11
Cash Withdrawals 11
Withdrawal Charges 11
Death Benefit 12
Death Benefit Provided by the Contract 12
Election and Effective Date of Election 12
Payment of Death Benefit 13
Amount of Death Benefit 13
Settlement Provisions 14
General 14
Election and Effective Date of Election 14
Determination of Amount 14
Effect of Annuity Commencement Date on Accumulation Account 14
Annuity Commencement Date 14
2
<PAGE>
TABLE OF CONTENTS (Continued)
Page
Settlement Provisions (cont.)
Fixed Annuity Payments
Variable Annuity Payments 15
Annuity Unit Value 15
Exchange of Variable Annuity Units 15
Contract Maintenance Charge 16
Description of Annuity Options 16
Amounts Payable on Death of Payee 16
Annuity Payment Rates 17
Ownership Provisions 19
Owner 19
Change of Ownership 19
Voting Rights 20
Periodic Reports 20
Beneficiary Provision 20
Designation and Change of Beneficiary 20
General Provisions 20
Age and Sex 20
Contract 20
Currency 21
Determination of Values 21
Guarantees 21
Incontestability 21
Modification 21
Nonparticipating 21
Payments by the Company 21
Proof of Age 21
Proof of Survival 21
Splitting Units 22
Special Provisions 22
3
<PAGE>
DEFINITIONS
ACCUMULATION ACCOUNT: An account established for the Contract to which Net
Purchase Payments are credited in the form of Accumulation Units.
ACCUMULATION PERIOD: The period before the Annuity Commencement Date and
during the lifetime of the Annuitant.
ACCUMULATION UNIT: A unit of measure used in the calculation of the value
of the Accumulation Account. There are two types of Accumulation Units: Variable
Accumulation Units and Fixed Accumulation Units.
ANNUITANT: The person or persons named in the Application and on whose life
the first annuity payment is to be made. The Owner may not designate a
"Co-Annuitant" unless the Owner and Annuitant are different persons. If more
than one person is so named, all provisions of the Contract which are based on
the death of the `Annuitant" will be based on the date of death of the last
survivor of the persons so named. By example, the death benefit of the Contract
will become due only upon the death, prior to the Annuity Commencement Date, of
the last survivor of the persons so named. Collectively, these persons are
referred to in this Contract as "Annuitants." Each Annuitant is as specified in
the Application, unless changed. The Owner is not permitted to name a
"Co-Annuitant" under a Qualified Contract.
ANNUITY COMMENCEMENT DATE: The date on which the first annuity payment is
to b# made. It is the date specified in the Application, unless changed.
ANNUITY OPTION: The method for making annuity payments. The Annuity Option
is specified in the Application, unless changed.
ANNUITY UNIT: A unit of measure used in the calculation of the amount of
the second and each subsequent variable annuity payment from the Variable
Accounts.
BENEFICIARY: The person who has the right to the death benefit set forth in
the Contract. The Beneficiary is specified in the Application, unless changed.
CONTRACT YEARS AND CONTRACT ANNIVERSARIES: The first Contract Year shall be
the period of twelve (12) months plus a part of a month as measured from the
Issue Date to the first day of the calendar month which follows the calendar
month of issue. All Contract Years and Anniversaries thereafter shall be twelve
(12) month periods based upon such first day of the calendar month which follows
the calendar month of issue. If, by example, the Issue Date of this Contract is
in March, the first Contract Year will be determined from the Issue Date but
will end on the last day of March in the following year; 311 other Contract
Years and all Contract Anniversaries will be measured from April 1.
DUE PROOF OF DEATH: An original certified copy of an official death
certificate, an original certified copy of a decree of a Court of competent
jurisdiction as to the finding of death, or any other proof satisfactory to the
Company.
FIXED ACCOUNT: The Fixed Account consists of all assets of the Company
other than those allocated to a separate account of the Company.
FIXED ANNUITY: An annuity with payments which do not vary as to dollar
amount.
INITIAL ANNUAL INTEREST RATE PERCENTAGE The annual rate of increase, during
the first Contract Year, of Fixed Accumulation Unit Values.
4
<PAGE>
ISSUE DATE: The date on which the Contract becomes effective.
NON-QUALIFIED CONTRACT: A contract used in connection with a retirement
plan which does not receive favorable federal income tax treatment under
Sections 401, 403, 408 or 457 of the Internal Revenue Code. Such Contract must
be owned by a natural person or agent for a natural person for the Contract to
receive favorable income tax treatment, as an annuity.
OWNER: The person, persons or entity entitled to the ownership rights
stated in the Contract and in whose name or names the Contract is issued. The
Owner is specified in the Application, unless changed.
PAYEE: The recipient of payments under the Contract. The term includes an
Annuitant or a Beneficiary who becomes entitled to benefits upon the death of
the Annuitant.
PURCHASE PAYMENT (PAYMENT): An amount paid to the Company by the Owner or
on the Owner's behalf as consideration for the benefits provided by the
Contract.
QUALIFIED CONTRACT: A Contract used in connection with a retirement plan
which receives favorable federal income tax treatment under Sections 401,
403,408 or 457 of the Internal Revenue Code of 1986, as amended.
SUCCESSOR BENEFICIARY: The person or persons named to become the
Beneficiary if the Beneficiary is not alive. The Successor Beneficiary is
specified in the Application, unless changed.
SUCCESSOR OWNER: The person, persons or entity named to become the Owner if
the Owner dies prior to the Annuity Commencement Date. The Owner's right to name
a Successor Owner may be restricted under the provisions of the retirement or
deferred compensation plan for which this Contract is issued. The Successor
Owner is specified in the Application, unless changed.
VALUATION PERIOD: The period of time from one determination of Accumulation
Unit and Annuity Unit values to the next subsequent determination of these
values. Such determination shall be made as of the close of the New York Stock
Exchange on each day the Exchange is open for trading and on such other days on
which there is a sufficient degree of trading in the Variable Account's
portfolio securities so that the values of the Variable Account's Accumulation
Units and Annuity Units might be materially affected.
VARIABLE ACCOUNT: One of several separate accounts established by the
Company and registered as management investment companies under the Investment
Company Act of 1940. The investment performance of the assets of the Variable
Accounts is kept separate from that of the general assets of the Company.
VARIABLE ANNUITY: An annuity with payments which vary as to dollar amount
in relation to the investment performance of specified Sub-Accounts of the
Variable Account.
FIXED AND VARIABLE ACCOUNTS
Fixed Account
The Fixed Account consists of all assets of the Company other than
those allocated to any separate account of the Company.
Variable Accounts
The Variable Accounts to which the variable accumulation values and
Variable Annuity payments, if any, under this Contract relate are specified on
the Contract Specifications Page. They were established by the Company pursuant
to a resolution of its Board of Directors and are registered as investment
companies under the Investment Company Act of 1940. That portion of the assets
of the Variable Accounts equal to the reserves and other contract liabilities
with respect to the Variable Accounts shall not be chargeable with liabilities
arising out of any other business the Company may conduct.
The values of the Variable Accumulation Units and the Annuity Units
described in this Contract reflect the investment performance of the Variable
Accounts.
At the Company's election and subject to any necessary vote by persons
having the right to vote, the Variable Accounts may be operated as unit
investment trusts under the Investment Company Act of 1940 or they may be
deregistered under the Investment Company Act of 1940 in the event registration
is no longer required. Deregistration of the Variable Accounts requires an order
by the Securities and Exchange Commission. In the event of any change in the
operation of the Variable Accounts pursuant to this provision, the Company may
make appropriate endorsement to the Contract to reflect the change and take such
other action as may be necessary and appropriate to effect the change.
At the Company's election, and subject to such conditions as the
Company may impose, additional separate accounts, to which the variable
accumulation values and Variable Annuity payments, if any, under this Contract
could relate, may be made available.
Ownership of Assets
The Company shall have exclusive and absolute ownership and control of
its assets, including all assets of the Variable Accounts.
Investments of the Variable Accounts
Any amounts allocated to a Variable Account will become assets of the
particular Variable Account and will be invested consistent with the investment
objectives, policies and restrictions of the particular Variable Account as set
forth in its organizational documents, Rules and Regulations and such
registration statements and exhibits as may from time to time be on file with
the Securities and Exchange Commission.
Valuation of Assets of the Variable Accounts
The assets of the Variable Accounts will normally be composed primarily
of investment securities. The assets of each Variable Account are valued as of
the close of trading on the New York Stock Exchange on each day the Exchange is
open for trading and on such other days on which there is a sufficient degree of
trading in the Variable Account's portfolio securities so that the values of the
Variable Account's Accumulation Units and Annuity Units might be materially
affected, as follows:
(a) Equity securities are normally valued at the last sale price on
the exchange on which they are primarily traded or on the NASDAQ system
for unlisted national market Issues or at the last quoted bid price for
unlisted securities not reported on the NASDAQ system or listed
securities in which there were no sales during the day.
(b) Debt securities (other than short-term obligations, but
including listed issues) and forward foreign currency exchange
contracts are normally valued on the basis of valuations provided by a
pricing service since such prices are believed to reflect the fair
value of such securities.
6
<PAGE>
(c) Short-term debt securities are valued on the basis of amortized
cost.
(d) Options, futures contracts and options on futures contracts are
normally valued at the settlement price on the exchange on which they
are primarily traded.
PURCHASE PAYMENTS
Payments
All Purchase Payments are to be paid to the Company at its Annuity
Service Mailing Address. Unless the Owner has surrendered the Contract, Purchase
Payments may be made at any time during the life of the Annuitant and before the
Annuity Commencement Date.
Amount
The Initial Purchase Payment is shown on the Contract Specifications
Page. Subsequent Payments may vary. Each Purchase Payment must be at least $25.
The Company will not accept Purchase Payment which, on an annualized basis, are
less than $300 for the first Contract Year. In addition, the prior approval of
the Company is required before the Company will accept a Purchase Payment which
would cause the value of the Accumulation Account to exceed $1,000,000; if the
value of an Accumulation Account exceeds $1,000,000, no additional Purchase
Payments will be accepted without the prior approval of the Company.
Contract Continuation
The Contract shall automatically be continued in full force during the
lifetime of the Annuitant until the Annuity Commencement Date or until it is
surrendered. The Contract will not be in default, even if no additional Purchase
Payments are made.
Net Purchase Payments and Their Allocation
The Net Purchase Payment is that portion of a Purchase Payment which
remains after deduction of any applicable premium or similar tax. Each Net
Purchase Payment will be allocated, upon receipt by the Company at its Annuity
Service Mailing Address, either to the Variable Account(s) or to the Fixed
Account or to both the Variable Account(s) and the Fixed Account in accordance
with the allocation factors specified in the Application or as subsequently
changed.
The allocation factors for Net Purchase Payments between the Fixed
Account and the Variable Account(s) may be changed by the Owner at any time by
giving written notice of the change to the Company at its Annuity Service
Mailing Address. Any change will take effect with the first Purchase Payment
received with or after the receipt of the notice of the change b# the Company
and will continue in effect until subsequently changed.
Limitation on Allocations to Fixed Account
The amount of Net Purchase Payments which can be allocated to the Fixed
Account in any Contract Year may not exceed $50,000. This limit will be reduced
by the amount of all conversions (as described below in the section entitled
"Conversion of Accumulation Units") from the Variable Accounts to the Fixed
Account in the same Contract Year. In addition, the amount of Net Purchase
Payments allocated to the Fixed Account in any Contract Year may not exceed
seven (7) times the total of Net Purchase Payments which were allocated to the
Fixed Account during the first sixty (60) days of that Contract Year.
7
<PAGE>
If the limits described in the previous paragraph are reached during a
Contract Year then no additional allocations or conversions to the Fixed Account
will be accepted in that contract Year and, unless instructions to the contrary
are received from the Owner, the Company will, temporarily for the balance of
the Contract Year, allocate any Net Purchase Payments which would otherwise have
been allocated to the Fixed Account to a Variable Account which invests only in
money market instruments.
CONTRACT VALUES DURING ACCUMULATION PERIOD
Accumulation Account
The Company will establish an Accumulation Account for the Contract and
will maintain the Accumulation Account during the Accumulation Period. The
Accumulation Account Value for any Valuation Period is equal to the Variable
Accumulation Value, if any, plus the Fixed Accumulation Value, if any, for that
Valuation Period.
Crediting Variable Accumulation Units
Upon receipt of a Purchase Payment by the Company at its Annuity
Service Mailing Address, all or that portion, if any, of the Net Purchase
Payment to be allocated to any Variable Account(s) will be credited to the
Accumulation Account in the form of Variable Accumulation Units. The number of
particular Variable Accumulation Units to be credited is determined by dividing
the dollar amount allocated to the particular Variable Account by the Variable
Accumulation Unit Value for the particular Variable Account for the Valuation
Period during which the Purchase Payment is received by the Company at its
Annuity Service Mailing Address.
Variable Accumulation Unit Value
The Variable Accumulation Unit Value for each Variable Account was
established at $10.00 for the first Valuation Period of the particular Variable
Account. The Variable Accumulation Unit Value for the particular Variable
Account for any subsequent Valuation Period is determined by methodology which
is the mathematical equivalent of multiplying the Variable Accumulation Unit
Value for the Particular Variable Account for the immediately preceding
Valuation Period by the Net Investment Factor for the particular Variable
Account for such subsequent Valuation Period. The Variable Accumulation Unit
Value for each Variable Account for any Valuation Period is the value determined
as of the end of the particular Valuation Period and may increase, decrease or
remain constant from Valuation Period to Valuation Period.
Variable Accumulation Value
The Variable Accumulation Value of the Contract, if any, for any
Valuation Period is equal to the sum of the value of all Variable Accumulation
Units credited to the Accumulation Account for such Valuation Period.
Net Investment Factor
The Net Investment Factor is an index applied to measure the investment
performance of a Variable Account from one Valuation Period to the next. The Net
Investment Factor may be greater or less than or equal to one; therefore, the
value of a Variable Accumulation Unit may increase, decrease or remain the same.
The Net Investment Factor for any Variable Account for any Valuation
Period is determined by adding (a) and (b), subtracting the sum of (c) and (d),
and dividing the result of the subtraction by (a). For the purposes of this
calculation:
8
<PAGE>
(a) is the value of the Variable Account's net assets attributable
to the Contracts at the end of the preceding Valuation Period;
(b) is the investment income and capital gains, realized or unrealized,
that are credited to such assets of the Variable Account during the Valuation
Period for which the net investment factor is being calculated;
(c) is the capital losses, realized or unrealized, charged against such
assets of the Variable Account in the Valuation Period plus any amount charged
against the Variable Account or set aside as a reserve to maintain or operate
the Account for the Valuation Period;
(d) is the expenses of the Variable Account attributable to the
Contracts incurred during the Valuation Period including the mortality and
expense risk charge, the distribution expense risk charge and the investment
management fee (which together constitute the asset charge described below) and
the other expenses of the Variable Account, subject to any applicable expense
limitation.
The asset charge factor for a particular Variable Account for any
Valuation Period is equal to the daily asset charge factor for that Variable
Account multiplied by the number of twenty-four (24) hour periods in the
Valuation Period; the asset charge for that Variable Account in that Valuation
Period will be equal to the product of its asset charge factor and its assets at
the end of the Valuation Period. The daily asset charge factors will be
determined by the Company annually, but in no event may they exceed the maximum
daily asset charge factors specified on the Contract Specifications Page. The
asset charge is made for investment management and annuity rate guarantees and
expenses and expense risks assumed by the Company under the Contract.
Crediting Fixed Accumulation Units
Upon receipt of a Purchase Payment by the Company at its Annuity
Service Mailing Address. all or that portion, if any, of the Net Purchase
Payment which is allocated to the Fixed Account will be credited to the
Accumulation Account in the form of Fixed Accumulation Units The number of Fixed
Accumulation Units to be credited is determined by dividing the dollar amount
allocated to the Fixed Account by the Fixed Accumulation Unit Value for the
Contract for the Valuation Period during which the Purchase Payment is received
by the Company at its Annuity Service Mailing Address.
Fixed Accumulation Unit Value
A Fixed Accumulation Unit Value is established at $10.00 for the first
Valuation Period or the calendar month in which the Issue Date occurs, and will
increase for each successive Valuation Period is accrued All contracts whose
Issue Dates occur in the same calendar month and which are issued at a
particular rate of interest, as specified in advance by the Company from time to
rime, will use the same series of Fixed Accumulation Unit Values throughout
their first Contract Year
At the first Contract Anniversary, the Fixed Accumulation Units
credited to the Accumulation Account will be exchanged for a second type of
Fixed Accumulation Unit with an equal aggregate value. The value of this second
type of Fixed Accumulation Unit will increase for each Valuation Period during
each Contract Year as interest is accrued at a rate which shall have been
determined by the Company prior to the first day of each contract Year.
The rate at which interest accrues to the Fixed Accumulation Value of
the Contract will be determined by the Company, at its discretion, before the
beginning of each Contract Year; however, this rate will not be less than 4% per
annum compounded annually. Once set, the rate applicable to the Contract may not
be changed by the Company for the balance of the Contract Year. Additional
Payments made during the Contract Year will be credited with interest for the
balance of the Contract Year at the rate
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applicable at the beginning of that Contract Year. The Fixed Accumulation Unit
Value for the Contract for any Valuation Period is the value determined as of
the end of such Valuation Period.
Fixed Accumulation Value
The Fixed Accumulation Value of the Contract, if any, for any Valuation
Period is equal to the value of the Fixed Accumulation Units credited to the
Accumulation Account for such Valuation Period.
Conversion of Accumulation Units
During the Accumulation Period the Owner may, upon written request
received by the Company at its Annuity Service Mailing Address, convert the
value of a designated number of Fixed Accumulation Units then credited to the
Accumulation Account into Variable Accumulation Units of particular Variable
Accounts having an equal aggregate value, or convert the value of a designated
number of Variable Accumulation Units then credited to the Accumulation Account
into other Variable Accumulation Units and/or Fixed Accumulation Units having an
equal aggregate value. These conversions shall, however, be subject to the
following conditions: (1) conversions involving Fixed Accumulation Units may be
made only during the forty-five (45) day period before and the forty-five (45)
day period after each Contract Anniversary: (2) not more than twelve (12)
conversions may be made in any Contract Year; and (3) the value of Accumulation
Units converted may not be less than $1,000 unless all of the Fixed Accumulation
Units or all of the Variable Accumulation Units of a particular Variable Account
credited to the Accumulation Account are being converted. Any conversion shall
be made using the Accumulation Unit Values for the Valuation Period during which
the request for conversion is received by the Company at its Annuity Service
Mailing Address
Contract Maintenance Charge
Prior to the Annuity Commencement Date, at the end of each Contract
Year, the Company will deduct from the value of the Accumulation Account a
contract maintenance charge of $30 to reimburse it for administrative expenses
relating to the Contract, the Fixed Account and the Variable Accounts. The
Account in which the owner has Accumulation Units on the Contract Anniversary.
If the Contract is surrendered for the full value of the Accumulation Account on
other than the Contract Anniversary, the contract maintenance charge will be
deducted in full at the time of such surrender.
CASH WITHDRAWALS AND WITHDRAWAL CHARGES
Cash Withdrawals
At any time before the Annuity Commencement Date and during the
lifetime of the Annuitant, the Owner may elect to receive a cash withdrawal
payment from the Company by filing with the Company a written election in such
form as the Company may require. Any such election shall specify the amount of
the cash withdrawal payment and will be effective on the date that it is
received by the Company at its Annuity Service Mailing Address. For withdrawals
in excess of $5,000, the signature(s) of the Owner(s) must be guaranteed by a
member firm of the New York, American, Boston, Midwest, Philadelphia, or Pacific
Stock Exchange, or by a commercial bank (not a savings bank), which is a member
of the Federal Deposit Insurance Corporation or, in certain cases, by a member
firm of the National Association of Securities Dealers, Inc. which has entered
into an appropriate agreement with the Company. In some cases (for example,
requests by a corporation, partnership, agent, fiduciary, or surviving joint
owner), the Company will require additional documentation of a customary nature.
The amount of the cash withdrawal payment may be equal to the total
value of the Accumulation Account at the end of the Valuation Period during
which the election becomes effective less the contract maintenance charge and
any withdrawal charge which applies (a "full surrender"), or it may be for a
lesser amount (a "partial withdrawal"). If a partial withdrawal is requested
which would leave an Accumulation
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Account value of less than the contract maintenance charge, then such partial
withdrawal will be treated as a full surrender.
The cash withdrawal payment will result in the cancellation of
Accumulation Units with an aggregate value equal to the dollar amount of the
cash withdrawal payment plus, if applicable, the contract maintenance charge and
any withdrawal charge. Unless instructed to the contrary, the Company will
cancel Fixed Accumulation Units and Variable Accumulation Units in the same
proportion that the total value of Fixed Accumulation Units and Variable
Accumulation Units then credited to the Accumulation Account bear to the value
of the Accumulation Account at the end of the Valuation Period during which the
election becomes effective. Any cash withdrawal payment will be paid within
seven (7) days from the date the election becomes effective, except as the
Company may be permitted to defer such payment in accordance with the Investment
Company Act of 1940.
Withdrawal Charges
If a cash withdrawal payment is made, a withdrawal charge may be
assessed by the Company. The amount of any withdrawal charge is determined as
follows:
Old Payments, new Payments and accumulated value: With respect
to a particular Contract Year, "new Payments" are those Payments made
in that Contract Year or in the six immediately preceding Contract
Years; "old Payments" are those Payments not defined as new Payments:
and" accumulated value" is the value of the Accumulation Account less
the sum of old and new Payments.
Order of liquidation: For purposes of a full surrender or
partial withdrawal, the oldest previously unliquidated Payment will be
deemed to have been liquidated first, then the next oldest, and so
forth. Once all old and new Payments have been withdrawn, additional
amounts withdrawn will be attributed to accumulated value.
Maximum free withdrawal amount: The maximum amount that can be
withdrawn without a withdrawal charge in a Contract Year is equal to
the sum of: (a) any old Payments not already liquidated; and (b) 10% of
any new Payments, irrespective of whether these new Payments have been
liquidated.
Amount subject to withdrawal charge: On a particular partial
withdrawal or full surrender, the amount subject to a withdrawal charge
will be the excess, if any, of (a) amounts liquidated from old and new
Payments (as specified in the "order of liquidation" section above)
over (b) the remaining maximum withdrawal amount without a withdrawal
charge at the time of the partial withdrawal or surrender
Amount of withdrawal charge: The amount of the withdrawal
charge is equal to (a) minus (b) where (a) is the amount subject to
withdrawal charge, if any, divided by 0.95, and (b) is the amount
subject to withdrawal charge, if any.
Amount of withdrawal charge: The amount of the withdrawal
charge is determined by multiplying the amount subject to the
withdrawal charge by the withdrawal charge percentage(s) according to
the following table.
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DEATH BENEFIT
Death Benefit Provided by the Contract
If the Annuitant dies while this Contract is in effect and before the
Annuity Commencement Date, the Company, upon receipt of due proof of death of
the Annuitant, will pay a death benefit to the Beneficiary in accordance with
this "Death Benefit" provision. If there is no designated Beneficiary living on
the date of death of the Annuitant, the Company will pay the death benefit upon
receipt of due proof of the death of both the Annuitant and the designated
Beneficiary in one sum to the Owner, or, if the Annuitant was the Owner, to the
estate of the Owner/Annuitant. If the death of the Annuitant occurs on or after
the Annuity Commencement Date, no death benefit will be payable under the
Contract except as may be provided under the form of annuity elected.
Election and Effective Date of Election
During the lifetime of the Annuitant and prior to the Annuity
Commencement Date, the Owner may elect to have the value of the Accumulation
Account applied under one or more of the Annuity Options in accordance with the
Settlement Provisions to effect a Variable Annuity or a Fixed Annuity or a
combination of both for the Beneficiary as Payee after the death of the
Annuitant. This election may be made or subsequently revoked by filing with the
Company a written election or revocation of an election in such form as the
Company may require. Any written election or revocation of an election of a
method of settlement of the death benefit by the Owner will become effective on
the date it is received by the Company at its Annuity Service Mailing Address.
If no election of a method of settlement of the death benefit by the Owner is in
effect on the date of death of the Annuitant, the Beneficiary may elect (a) to
receive the death benefit in the form of a cash payment in which event the
Accumulation Account will be cancelled, or (b) to have the value of the
Accumulation Account applied under one or more of the Annuity Options in
accordance with the Settlement Provisions to effect, on the Annuity Commencement
Date determined in the section "Payment of Death Benefit" below, a Variable
Annuity or a Fixed Annuity or a combination of both for the Beneficiary as
Payee. This election may be made by filing with the Company a written election
in such form as the Company may require. Any written election of a method of
settlement of the death benefit by the Beneficiary will become effective on the
later of: (a) the date the election is received by the Company at its Annuity
Service Mailing Address; or (b) the date due proof of the death of the Annuitant
and any required release or consent from any inheritance taxing authority is
received by the Company at its Annuity Service Mailing Address. If a written
election by the Beneficiary is not received by the Company within sixty (60)
days following the date due proof of the death of the Annuitant and any required
release or consent from any inheritance taxing authority is received by the
Company at its Annuity Service Mailing Address, the Beneficiary shall be deemed
to have elected a cash payment as of the last day of the sixty (60) day period.
Payment of Death Benefit
If the death benefit is to be paid in cash to the Beneficiary, payment
will be made within seven (7) days of the date the election becomes effective or
is deemed to become effective, except as the Company may be permitted to defer
such payment in accordance with the Investment Company Act of 1940. If the death
benefit is to be paid in one sum to the Owner, or, if the Annuitant was the
Owner, to the estate of the deceased Owner/Annuitant, payment will be made
within seven (7) days of the date due proof of the death of the Annuitant, the
Owner, and/or the designated Beneficiary, as applicable, is received by the
Company at its Annuity Service Mailing Address. If settlement under one or more
of the Annuity Options is elected by the Owner, the Annuity Commencement Date
will be the first day of the second calendar month following the date due proof
of the death of the Annuitant and the Beneficiary, if any, is received by the
Company at its Annuity Service Mailing Address. If settlement under one or more
of the Annuity Options is elected by the Beneficiary, the Annuity Commencement
Date will be the first day of the second calendar month following the effective
date of the election. The Owner or Beneficiary, as applicable, may elect an
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Annuity Commencement Date later than that specified above provided that such
date is (a) the first day of a calendar month and (b) not later than the first
day of the first month following the 85th birthday of the Owner or the
Beneficiary as the case may be. If a later Annuity Commencement Date has been
elected and the Owner or Beneficiary dies before this later Annuity Commencement
Date, the Contract's accumulated value will be paid in cash to the estate or
beneficiary, as appropriate, of the individual making the election.
Amount of Death Benefit
The death benefit is equal to the greatest of (a) the Contract's
Accumulation Account value; (b) the sum of all Purchase Payments made under the
Contract less the sum of all cash withdrawal payments; or (c) the Contract's
Accumulation Account value on the Seven Year Anniversary immediately preceding
the date of death of the Annuitant, adjusted for any subsequent Purchase
Payments, cash withdrawal payments and charges made between the immediately
preceding Seven Year Anniversary and the date of death. If (b) or (c) is
operative, the Accumulation Account value will be increased by the excess of (b)
or (c), as applicable, over (a) and the amount of the increase will be allocated
to the Fixed Account and the Variable Accounts based on the respective values of
the Fixed Account and the Variable Accounts on the date the amount of the death
benefit is determined.
The Accumulation Unit Values used in determining the amount of the
death benefit under (a) above will be those for the Valuation Period during
which due proof of the death of the Annuitant is received by the Company at its
Annuity Service Mailing Address if settlement is elected by the Owner under one
or more of the Annuity Options or, if no election by the Owner is in effect,
either the values for the Valuation Period during which an election by the
Beneficiary either becomes effective or is deemed effective, or the values for
the Valuation Period during which due proof of the death of both the Annuitant
and the designated Beneficiary is received by the Company at its Annuity Service
Mailing Address if the amount of the death benefit is to be paid n one sum to
the deceased Owner/Annuitant's estate.
SETTLEMENT PROVISIONS
General
On the Annuity Commencement Date, the adjusted value of the
Accumulation Account as determined in accordance with the "Determination of
Amount" provision will be applied, as specified by the Owner, under one or more
of the Annuity Options provided in the Contract or under such other settlement
options as may be agreed to by the Company.
Election and Effective Date of Election
During the lifetime of the Annuitant and prior to the Annuity
Commencement Date, the Owner may elect to have the adjusted value of the
Accumulation Account applied on the Annuity Commencement Date under one or more
of the Annuity Options provided in the Contract; if more than one person is
named as Annuitant, due to the Owner's designation of a "Co-Annuitant", the
Owner may elect to name one of such persons to be the sole Annuitant as of the
Annuity Commencement Date. The Owner may also change any election but any
election or change of election must be effective at least thirty (30) days prior
to the Annuity Commencement Date. This election or change of election may be
made by filing with the Company a written election or change of election in such
form as the Company may require. Any such election or change of election will
become effective on the date it is received by the Company at its Annuity
Service Mailing Address. If no such election is in effect on the 30th day prior
to the Annuity Commencement Date, the adjusted value of the Accumulation Account
will be applied under Annuity Option B, for a Life Annuity with 120 monthly
payments certain. If there is no election of a sole Annuitant in effect on the
30th day prior to the Annuity Commencement Date, the person who the Owner has
designated as Co-Annuitant will be the Payee under the applicable Annuity
Option.
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Any such election may specify the proportion of the adjusted value of
the Accumulation Account to be applied to the Fixed Account and the Variable
Accounts. In the event the election does not so, specify, then the portion of
the adjusted value of the Accumulation Account to be applied to the Fixed
Account and the Variable Accounts will be determined on a pro rata basis from
the composition of the Accumulation Account on the Annuity Commencement Date.
The Annuity Options in the Contract may also be elected by the Owner or
the Beneficiary as provided in the section of the Contract entitled "Death
Benefit".
Determination of Amount
The adjusted value of the Accumulation Account of the Contract to be
applied to provide a Variable Annuity or a Fixed Annuity or a combination of
both, shall be equal to the value of the Accumulation Account for the Valuation
Period which ends immediately preceding the Annuity Commencement Date, minus the
sum of any applicable premium or similar tax and a proportionate amount of the
contract maintenance charge to reflect the time elapsed between the last
Contract Anniversary and the day before the Annuity Commencement Date.
Effect of Annuity Commencement Date on Accumulation Account
On the Annuity Commencement Date the Accumulation Account of this
Contract will be cancelled.
Annuity Commencement Date
The Annuity Commencement Date is set forth on the Contract
Specifications Page. This date may be changed from time to time by the Owner
provided that each change is effective at least thirty (30) days prior to the
then current Annuity Commencement Date and the new Annuity Commencement Date is
a date which is: (1) at least thirty (30) days after the effective date of the
change: (2) the first day of a month, and (3) not later than the first day of
the first month following the Annuitant's 85th birthday Any change of the
Annuity Commencement Date may be made by filing with the Company a written
designation of a new Annuity Commencement Date in such form as the Company may
require. Any such change will become effective on the date the designation is
received by the Company at its Annuity Service Mailing Address.
The Annuity Commencement Date may also be changed by an election of a
settlement option as provided in the section of the Contract entitled "Death
Benefit".
<PAGE>
Fixed Annuity
The dollar amount of each fixed annuity payment shall be determined in
accordance with the Annuity Payment Rates found in the Contract which are based
on the minimum guaranteed interest rate of 4% per year or, if more favorable to
the Payee(s), in accordance with the Single Premium Immediate Settlement Rates
published by the Company and in use on the Annuity Commencement Date.
Variable Annuity
The dollar amount of the first variable annuity payment shall be
determined in accordance with the Annuity Payment Rates found in the Contract,
which are based on an assumed interest rate of 4% per year.
All variable annuity payments other than the first are determined by
means of Annuity Units credited to the Contract. The number of Annuity Units to
be credited in respect of a particular Variable Account is determined by
dividing that portion of the first variable annuity payment attributable to that
Variable Account by the Annuity Unit Value of that Variable Account for the
Valuation Period which ends immediately preceding the Annuity Commencement Date.
The number of Annuity Units of each particular Variable Account credited to the
Contract then remains fixed unless an exchange of Annuity Units is made pursuant
to the "Exchange of Annuity Units" section. The dollar amount of each variable
annuity payment after the first may increase, decrease or remain constant, and
is equal to the sum of the amounts determined by multiplying the number of
Annuity Units of a particular Variable Account credited to the Contract by the
Annuity Unit Value for the particular Variable Account for the Valuation Period
which ends immediately preceding the due date of each subsequent payment.
Annuity Unit Value
The Annuity Unit Value for each Variable Account was established at
$10.00 for the first Valuation Period of the particular Variable Account. The
Annuity Unit Value for any subsequent Valuation Period is determined by
multiplying the Annuity Unit Value for the immediately preceding Valuation
Period by the Net Investment Factor for the current Valuation Period and then
multiplying that product by a factor to neutralize the assumed interest rate of
4% per year used to establish the Annuity Payment Rates found in this Contract.
The factor is 0.99989255 for a one day Valuation Period.
Exchange of Variable Annuity Units
After the Annuity Commencement Date the Payee may, by filing a written
request with the Company at its Annuity Service Mailing Address exchange the
value of a designated number of Annuity Units of particular Variable Accounts
then credited to the Contract into other Annuity Units the value of which would
be such that the dollar amount of an annuity payment made on the date of the
exchange would be unaffected by the exchange. No more than twelve (12) exchanges
may be made in any Contract Year. Exchanges may be made only between the
Variable Accounts. Exchanges shall be made using the Annuity Unit Values for the
Valuation Period during which the request for exchange is received by the
Company at its Annuity Service Mailing Address.
Contract Maintenance Charge
After the Annuity Commencement, a contract maintenance charge amounting
to $30 on an annual basis will be deducted pro rata from each annuity payment
made during the year to reimburse the Company for administrative expenses
relating to the Contract, the Fixed Account and the Variable Accounts.
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Description of Annuity Options
Annuity Options A, B and C are available on either a fixed annuity or a
variable annuity basis Annuity Options D and F are available on a fixed annuity
basis only.
Annuity Option A. Life Annuity: Monthly payments during the lifetime
of the Payee.
Annuity Option B. Life Annuity with 60, 120, 180 or240 Monthly Payments
Certain: Monthly payments during the lifetime of the Payee and in any event for
sixty (60), one hundred twenty (120), one hundred eighty (180) or two hundred
forty (240) months certain as elected.
Annuity Option C. Joint and Survivor Annuity: Monthly payments payable
during the joint lifetime of the Payee and a designated second person and during
the lifetime of the survivor. During the lifetime of the survivor variable
monthly payments, if any, will be determined using the percentage chosen at the
time of the election of this option of the number of each type of Annuity Unit
credited to the Contract and each fixed monthly payment, if any, will be equal
to the same percentage of the fixed monthly payment payable during the joint
lifetime of the Payee and the designated second person.
Annuity Option D. Fixed Payments for a Specified Period Certain:
Fixed monthly payments for an specified period of time (at least five (5) years
but not exceeding thirty (30) years), as elected.
Annuity Option E. Fixed Payments: The amount applied to provide fixed
payments in accordance with this Annuity Option will be held by the Company at
interest. Fixed payments will be made in such amounts and at such times (at
least #ver a period of five (5) years) as may be agreed upon with the Company
and will continue until the amount held by the Company with interest is
exhausted. The final payment will be for the balance remaining and may be less
than the amount of each preceding payment. Interest will be credited yearly on
the amount remaining unpaid at a rate which shall be determined by the Company
from time to time but which shall not be less than 4% per year compounded
annually. The rate so determined may be changed at any time and as often as may
be determined by the Company, provided, however, that the rate may not be
reduced more frequently than once during each calendar year.
Amounts Payable on Death of Payee
In the event of the death of the Annuitant on or after the Annuity
Commencement Date, the Company will pay the Beneficiary any remaining payments
under any Annuity Option then in effect as they become due. If there is no
designated Beneficiary then living, the Company will pay the amount specified in
the Schedule below for any Annuity Option when in effect in one sum to the
deceased Annuitant's estate. Any Beneficiary who becomes entitled to any
remaining payments under any Annuity Option may elect to receive the amount
specified in the Schedule below for such Option in one sum. In the event of the
death of a Beneficiary who has become entitled to receive any remaining payments
under any Annuity Option, the Company will pay the amount specified for such
Option in the Schedule below in one sum to the deceased Beneficiary's estate.
All payments made in one sum by the Company as provided in this paragraph are
made in lieu of paying any remaining payments under any Annuity Option then in
effect.
Option Amount
B The discounted value of the remaining payments, if any, for the
certain period.
D The discounted value of the remaining payments, if any for the
certain period.
E The unpaid balance of the proceeds and interest.
In the case of Option B the discounted value will be based for payments
being made on a variable basis, on interest compounded annually at the assumed
interest rate and for payments being made on a fixed basis, at the interest rate
initially used in determining the amount of each payment. For Variable
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Annuity payments this calculation will also be based on the assumptions that the
particular Annuity Unit Values applicable to the remaining payments will be the
particular Annuity Unit Values for the Valuation Period which ends on the day
before the date of the determination and that this value will remain unchanged
thereafter. In the case of Option D the discounted value will be based on the
interest rate initially used in determining the amount of each payment.
Annuity Payment Rates
The Annuity Payment Rates below show, for each $1000 applied, the
dollar amount of both (a) the first monthly variable annuity payment based on
the assumed interest rate of 4% and (b) the monthly fixed annuity payment, when
this payment is based on the minimum guaranteed interest rate of 4% per year.
The mortality table used in determining the Annuity Payment Rates for
Options A, B and C is the 1971 Individual Annuitant Mortality Table. In using
this mortality table, ages of Annuitants will be reduced by one year for Annuity
Commencement Dates occurring during the 1980's, reduced two years for Annuity
Commencement Dates occurring during the 19990's and so on.
The Annuity Payment Rates in the tables shown below reflect rates of
mortality appropriate for Annuity Commencement Dates occurring during the
1980's. Thus, for Annuity Commencement Dates occurring during the 1980's the
term "Adjusted Age", as used in the tables below, means actual age. "Adjusted
Age" shall mean actual age less one year for Annuity Commencement Dates
occurring during the 1990's, actual age less two years for Annuity Commencement
Dates occurring in the decade 2000-2009, and so on.
Adjusted ages will be determined based on the actual age(s) of
Annuitant(s), in completed years and months, as of the Annuity Commencement
Date. The tables below show Annuity Payment Rates for exact Adjusted Ages; rates
for Adjusted Ages expressed in completed years and months will be based on
straight line interpolation between the appropriate Annuity Payment Rates.
The dollar mount of annuity payment for any Adjusted Age or combination
of Adjusted Ages not shown below or for any other form of Annuity Option agreed
to by the Company will be quoted by the Company on request.
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AMMOUNT OF FIRST MONTHLY ANNUITY PAYMENT PER $1,000
SINGLE LIFE ANNUITY
OPTION A OPTION B
LIFE ANNUITY LIFE ANNUITY WITH PAYMENTS CERTAIN
60 Payments 120 Payments 180 Payments 240 Payments
Adjusted
Age Male Female Male Female Male Female Male Female Male Female
20 3.72 3.62 3.72 3.61 3.71 3.61 3.71 3.61 3.71 3.61
25 3.82 3.70 3.82 3.70 3.82 3.69 3.81 3.69 3.80 3.69
30 3.96 3.80 3.95 3.80 3.95 3.79 3.94 3.79 4.08 3.91
35 4.13 3.93 4.12 3.93 4.12 3.92 4.10 3.91 4.08 3.91
40 4.35 4.09 4.34 4.09 4.33 4.08 4.30 4.07 4.26 4.06
45 4.63 4.31 4.63 4.30 4.60 4.29 4.55 4.27 4.48 4.24
50 5.00 4.59 4.99 4.58 4.93 4.56 4.84 4.52 4.73 4.47
55 5.47 4.96 5.43 4.95 5.34 4.91 5.19 4.84 5.01 4.75
60 6.06 5.45 6.01 5.42 5.84 5.35 5.60 5.23 5.30 5.07
65 6.87 6.11 6.77 6.06 6.48 5.93 6.06 5.71 5.59 5.41
70 8.01 7.08 7.81 6.99 7.26 6.71 6.54 6.26 5.81 5.71
75 9.67 8.57 9.22 8.34 8.14 7.68 6.95 6.79 5.95 5.90
80 12.12 10.86 11.06 10.22 9.01 8.69 7.22 7.13 6.00 5.98
85 15.84 14.43 13.34 12.57 9.67 9.45 7.32 7.28 6.00 6.00
OPTION C
JOINT AND SURVIVOR ANNUITY*
Adjusted Age Adjusted Age of Female
of Male _______________________________________________
55 60 65 70 75
55 4.95 5.19 5.45 5.75 6.10
60 5.15 5.43 5.74 6.11 6.53
65 5.37 5.69 6.07 6.52 7.04
70 5.61 5.98 6.43 6.99 7.65
75 5.87 6.30 6.82 7.50 8.35
OPTION 0
FIXED PAYMENTS FOR A SPECIFIED PERIOD CERTAIN
Years Amount Years Amount Years Amount
3 29.40 13 8.17 22 5.64
4 22.47 14 7.72 23 5.49
5 18.32 15 7.34 24 5.35
6 15.56 16 7.00 25 5.22
7 13.59 17 6.71 26 5.10
8 12.12 18 6.44 27 5.00
9 10.97 19 6.21 28 4.90
10 10.06 20 6.00 29 4.80
11 9.31 21 5.81 30 4.72
12 8.69
Table Based on Assumed Election if Joint and Two Thirds Survivor Annuity
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OWNERSHIP PROVISIONS
Owner
The Contract shall belong to the Owner. All Contract rights and
privileges may be exercised by the Owner, without the consent of the Beneficiary
(other than an irrevocably designated beneficiary) or any other person. Such
rights and privileges may be exercised only during the lifetime of the Annuitant
and prior to the Annuity Commencement Date except as otherwise provided in the
Contract. The Annuitant becomes the Owner on and after the Annuity Commencement
Date. The Beneficiary becomes the Owner on the death of the Annuitant.
Change of Ownership
Ownership of a Qualified Contract may not be transferred except to: (1)
the Annuitant; (2) a trustee or successor trustee of a pension or profit sharing
trust which is qualified under Section 401 the Internal Revenue Code; (3) the
employer of the Annuitant provided that the Qualified Contract after transfer is
maintained under the terms of a retirement plan qualified under Section 403(a)
of the Internal Revenue Code for the benefit of the Annuitant; (4) the trustee
of an individual retirement account plan qualified under Section 408 of the
Internal Revenue Code for the benefit of the Owner; or (5) as otherwise
permitted from time to time by laws and regulations governing the retirement or
deferred compensation plans for which a Qualified Contract may be issued.
Subject to the foregoing, a Qualified Contract may not be sold, assigned,
transferred, discounted or pledged as collateral for a loan or as security for
the performance of an obligation or for any other purpose to any person other
than the Company. The Owner of a Non-Qualified Contract may change the ownership
of the Contract during the lifetime of the Annuitant and prior to the Annuity
Commencement Date. A change of ownership will not be binding upon the Company
until written notification is received by the Company at its Annuity Service
Mailing Address. When such notification is so received, the change will be
effective as of the date on which the request for change was signed by the
Owner, but the change will be without prejudice to the Company on account of any
payment made or any action taken by the Company prior to receiving the change.
The Company may require that the signature of the Owner be guaranteed by a
member firm of the New York, American, Boston, Midwest, Philadelphia or Pacific
Stock Exchange, or by a commercial bank (not a savings bank) which is a member
of the Federal Deposit Insurance Corporation or, in certain cases, by a member
firm of the National Association of Securities Dealers, Inc. which has entered
into an appropriate agreement with the Company.
Voting Rights
Owners of and Payees under Contracts participating in the investment
experience of each Variable Account have the right to vote at meetings of
Owners/Payees of the particular Variable Account. All votes must be cast
according to the Rules and Regulations of the particular Variable Account and
may be cast in person or by proxy.
Prior to the Annuity Commencement Date the Owner may cast one vote for
each Variable Accumulation Unit in the particular Variable Account credited to
the Accumulation Account on the record date. On or after the Annuity
Commencement Date, the number of votes that a Payee may cast is determined by
dividing the reserve held in the particular Variable Account for the Contract by
the Variable Accumulation Unit Value of the particular Variable Account on the
record date.
Periodic Reports
The Company will send the Owner, or such other person having voting
rights, at least once during each Contract Year, a statement showing the number,
type and value of the Accumulation Units or Annuity Units credited to the Con
tract, which statement shall be accurate as of a date not more than two
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<PAGE>
(2) months previous to the date of mailing. In addition, every person having
voting rights will receive such reports or prospectuses concerning the Variable
Accounts as may be required by the Investment Company Act of 1940 and the
Securities Act of 1933. The Company will also send such statements reflecting
transactions in the Accumulation Account as may be required by applicable laws,
rules and regulations.
BENEFICIARY PROVISION
Designation and Change of Beneficiary
The Beneficiary designation contained in the Application will remain in
effect until changed. The interest of any Beneficiary is subject to the
Beneficiary surviving the Annuitant.
Subject to the rights of an irrevocably designated Beneficiary, the
Owner may change or revoke the designation of a Beneficiary at any time while
the Annuitant is living by filing with the Company a written beneficiary
designation or revocation in such form as the Company may require. The change or
revocation will not be binding upon the Company until it is received at the
Annuity Service Mailing Address. When it is so received the change or revocation
will be effective as of the date on which the Beneficiary designation or
revocation was signed but the change or revocation will be without prejudice to
the Company on account of any payment made or any action taken by the Company
prior to receiving the change or revocation.
GENERAL PROVISIONS
Age and Sex
If any date of birth or sex, or both, has been mis-stated the amounts
payable pursuant to the Contract will be the amounts which would have been
provided using the correct age or sex, or both. Any deficiency in the payments
already made by the Company shall be paid immediately and any excess in the
payments already made by the Company shall be charged against the benefits
failing due after adjustment
Contract
The Contract is issued in consideration of the Application and payment
of the first Purchase Payment. The Contract and the Application, a copy of which
is attached, constitute the entire Contract. All statements made in the
Application will be deemed representations and not warranties, and no statement
will void the Contract or h# used in defense to a claim under the Contract
unless it is contained n the Application and a copy of the Application is
attached at issue. Only the President, a Vice President, the Actuary or the
Secretary of the Company has authority to agree on behalf of the Company to any
alteration of the Contract or to any waiver of the rights or requirements of the
Company.
Currency
All amounts due under the Contract are payable in United States
Dollars, lawful money of the United States of America.
Determination of Values
The method of determination by the Company of the Net Investment Factor
and the number and value of Accumulation Units and Annuity Units shall be
conclusive upon the Owner, any Payee and any Beneficiary.
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<PAGE>
Guarantees
Subject to the Net Investment Factor provision, the Company guarantees
that the dollar amount of Variable Annuity payments made during the lifetime of
the Payee(s) will not be adversely affected by the actual mortality experience
of the Company or by the actual expenses incurred by the Company in excess of
the expense deductions provided for in this and other Contracts providing
benefits which vary in accordance with the investment performance of the
Variable Accounts.
Incontestability
This Contract is incontestable.
Modification
Upon notice to the Owner or the Payee(s) the Contract may be modified
by the Company, but only if such modification (i) is necessary to make the
Contract comply with any law or regulation issued by a governmental agency to
which the Company is subject or (ii) is necessary to assure continued
qualification of the Contract under the Internal Revenue Code or other federal
or state laws relating to retirement annuities or annuity contracts or (iii) is
necessary to reflect a change in the operation of the Variable Accounts or (iv)
provides additional Variable Account and/or fixed accumulation options. In the
event of any such modification, the Company may make appropriate endorsement in
this Contract to reflect such modification.
Nonparticipating
The Contract is nonparticipating and will not share in any surplus
earnings of the Company.
Payments by the Company
All sums payable by the Company pursuant to the Contract are payable
only at its Executive Office or such other place as may be designated by the
Company. The Company may require surrender of the Contract upon final payment of
all sums payable by the Company pursuant to the Contract.
Proof of Age
The Company shall have the right to require evidence of the age of any
Payee under Annuity Options A, B and C prior to the Annuity Commencement Date.
Proof of Survival
The Company shall have the right to require evidence of the survival of
any Payee under Annuity Options A, B and C at the time any payment payable to
such Payee is due.
Splitting Units
The Company reserves the right to split or combine the value of the
Variable Accumulation Units, the Fixed Accumulation Units, the Annuity Units or
any of them. In effecting any such change of unit values, strict equity will be
preserved and no change will have a material effect on the benefits or other
provisions of this Contract.
SPECIAL PROVISIONS
The following special provisions apply and shall take precedence over
contrary Contract provisions if the Application for this Contract indicates it
is a Qualified Contract to be issued: (a) as an
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<PAGE>
Individual Retirement Annuity under Section 408(b) or Section 408(d) of the
Internal Revenue Code; (b) as a Simplified Employee Pension Individual
Retirement Annuity under Section 408(k) of the Internal Revenue Code; (c) as a
"Terminal Funding" Annuity; (d) in connection with an H.R. 10 Plan under Section
401 of the Internal Revenue Code; or (e) as a Tax Sheltered Annuity under
Section 403(b) of the Internal Revenue Code.
(1) Unless this Contract is used in connection with an
H. R. 10 Plan, the Owner of this Contract is the Annuitant.
The Annuitant's entire interest in this Contract is
nonforfeitable.
(3) This Contract is amended as follows:
(a) Any payments under Annuity Option A, if
applicable, shall be measured only by the life of the
Annuitant.
(b) Any payments under Annuity Option B, if
applicable, shall be made only to the Annuitant and the
guaranteed period of payment shall not exceed the life
expectancy of the Annuitant at the time the first payment is
due.
(c) Any payments under Annuity Option C, if
applicable, shall be made only to the Annuitant and to the
Annuitant's spouse, who shall be the Payees thereunder.
(d) Any payments under Annuity Option D, if
applicable, shall be made only to the Annuitant and the period
of payment shall not exceed the life expectancy of the
Annuitant at the time the first payment is due.
(e) Annuity Option E is not available for use with
this Contract.
(4) The following special provisions shall apply, in addition
to those previously set forth herein, and shall take precedence over
contrary Contract provisions, if the Application for this Contract
indicates this Contract is to be issued as an Individual Retirement
Annuity under Section 408(b) or Section 408(d) of the Internal Revenue
Code, or as a Simplified Employee Pension Individual Retirement Annuity
under Section 408(k) of the Internal Revenue Code.
(a) Except in the case of a rollover contribution,
the total annual Purchase Payments will not exceed the dollar
limitation for an Individual Retirement Annuity or a
Simplified Employee Pension Individual Retirement Annuity.
For an Individual Retirement Annuity, such dollar limitation
shall not exceed an amount equal to 100% of the compensation
includable in an Annuitant's gross income for any taxable
year for $2,000, whichever is less, or the then applicable
limitation. For a Simplified Employee Pension Individual
Retirement Annuity, such dollar limitation shall not exceed
an amount equal to 15% of the compensation (not to exceed
$200,000) includable in an Annuitant's gross income for any
taxable year or $15,000, whichever is less, or the then
applicable limitation.
(b) The Annuity Commencement Date shall be no later
than the end of the tax year during which the Annuitant
attains age 70 1/2.
(c) Except in the case of the Annuitant's death or
disability as defined in Section 72(m) of the Internal
Revenue Code, or attainment of age 59 1/2, before the Company
makes any payment under the terms of this Contract, the
Annuitant must furnish the Company a declaration of the
Annuitant's intention s to the disposition of the amount to
be paid.
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<PAGE>
(d) The entire interest of the Annuitant will be
distributed to the Annuitant or will begin to be distributed
not later than the close of the tax year in which the
Annuitant attains age 70 1/2, over the life of such Annuitant
or the lives of such Annuitant and the Annuitant's spouse, in
equal or substantially equal amounts, or a period not
extending beyond the life expectancy of such Annuitant or the
life expectancy of such Annuitant and the Annuitant's spouse,
in equal or substantially equal amounts. However, if the
Joint and Survivor Annuity as described in the Contract is
elected, such substantially equal payments will be reduced by
the appropriate percentage at the death of the first spouse.
(e) If the Annuitant dies before the Annuitant's
entire interest has been distributed to the Annuitant, or if
distribution has commenced, as provided above, to the
Annuitant's surviving spouse and such surviving spouse dies
before the entire interest has been distributed to such
spouse, the entire interest (of the remaining part of such
interest if distribution thereof has commenced) will, within
five (5) years after the Annuitant's death (or the death of
the surviving spouse), be distributed. The preceding sentence
shall have no application if distribution over a term certain
commenced before the death of the Annuitant and the term
certain is for a period permitted under (d) above.
(5) The following special provisions shall apply, in addition to those
previously set forth herein, and shall take precedence over contrary Contract
provision, if the Application for this Contract indicates that this Contract is
to be issued in connection with an H.R. 10 Plan under Section 401 of the
Internal Revenue Code.
(a) The Annuitant shall be the applicable participant under
the H.R. 10 Plan and the Owner of the Contract shall be the person or
entity required to be the owner under the H.R. 10 Plan.
(b) Unless another form of annuity payment is elected as
provided in this Contract, an annuity shall be paid under Annuity
Option C, with the continuing benefit of the Annuitant's spouse
established at 50%.
(c) To the fullest extent permitted by law, none of the
benefits, payments or proceeds of the Contract shall be subject to any
claim or legal process by a creditor of the Annuitant or of the
Beneficiary or in any way alienated, commuted or assigned by the
Annuitant or by the Beneficiary.
(6) The words "life expectancy" as used in subparagraph (3) above shall
mean expectation of life as determined according to the individual mortality
tables in use by the Company as of the date on which the first annuity payment
is due.
(7) All of the foregoing provisions are irrevocable unless this
Contract is amended from time to time as required to reflect any change in the
Internal Revenue Code, Internal Revenue Service regulations, published revenue
rulings or applicable case law.
23
<PAGE>
SunLife Sun Life Assurance Company of Canada (U.S.)
OF CANADA ( U.S.) A Wholly-Owned Subsidiary of Sun Life Assurance Company of
Canada
Executive Office Home Office: Annuity Service Mailing
Address:
One Sun Life Executive Park Wilmington, Delaware Sun Life Annuity Service Center
Wellesley Hills, P.O. Box 1024
Massachusetts 02181 Boston, Massachusetts 02103
Flexible Payment Deferred Combination Variable and Fixed Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED
AS TO DOLLAR AMOUNT
24
<PAGE>
EXHIBIT NO. 99.7
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
COMPASS II Executive Office: Wellesley Hills, MA 02181
COMBINATION FIXED/VARIABLE
ANNUITY FOR PERSONAL AND Please make checks payable to Sun Life Assurance
QUALIFIED RETIREMENTS PLANS Company of Canada (U.S.)
Send the Application and check to: Sun Life
Assurance Company of Canada (U.S.)
c/o Massachusetts Financial Service Center,
PO Box 1024,
Boston, MA 02103
- ---------------------------------------------------------------------------
VARIABLE ANNUITY APPLICATION
1. OWNER (Print Name)_________________________________________________________
First Middle Last
2. Address___________________________________ Tax I.D. No. or Soc. Sec. No.
Street City State Zip
3. Successor Owner __________________________ _______________________________
First Middles Last Street City State Zip
4. ANNUITANT (Print Name)____________________ Sex M F Date of Birth________
First Middle Last Mo Day Year
5. Address_____________________________________ Soc. Sec. No._______________
Street City State Zip
6. Occupation_________________________ 7. Employer_____________________
8. CO-ANNUITANT (Print Name)____________________ Soc. Sec. No.________________
First Middle Last
9. Address______________________________ Sex M F Date of Birth___________
Mo Day Year
10. BENEFICIARY (Print Name)_____________________ Relationship_____________
First Middle Last
11. Successor Beneficiary________________________ Relationship____________
First Middle Last
12. IRS TAX QUALIFIEID AND OTHER RETIREMENT PLANS This application cannot be
HR-10 IRA 401(a) 457 403(b) Other processed without the appropriate
Adoption Agreement if an MFS
Prototype is used.
13. PURCHASE PAYMENTS - An initial purchase payment of $_______ is attached
(payments must total at least $300 in the first year). Subsequent purchase
payments may be made in the amount of 25.00 or more. Please check this box ___
if you would like information on Bank Draft for future purchase payments.
14. PURCHASE PAYMENT ALLOCATION (Whole %)
___% Money Market Variable Account ___% Capital Appreciation Variable Acct.
___% High Yield Variable Account ___% Fixed Account
15. OPTIONAL ANNUITY FORM ELECTED
Joint and Survivor Life Annuity 60/ 120/ 180/ 240 Monthly Payments
Certain and Life Fixed Payment
Survivor Annuitant_______________________ Sex F M Date of Birth __________
First Middle Last Mo Day Year
____________________________________ Soc. Sec. No._______________________
Street City State Zip
16. ANNUITY COMMENCEMENT DATE 17. SPECIAL INSTRUCTIONS
The first day of ____________________________
Month Year
<PAGE>
18. Will this contract replace or change any existing life insurance or annuity
in this or any other company? No Yes. If yes, please explain under
Special Instructions and request replacement information from your agent.
I hereby represent my answers to the above questions to be correct and true to
the best of my knowledge and belief and agree that this application shall be a
part of any contract issued by the Company. ALL PAYMENTS AND VALUE PROVIDED BY
THIS CONTRACT WHEN BASED ON INVESTMENT EXPERIENCE OF A VARIABLE ACCOUNT ARE
VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT. I acknowledge receipt of a
current Compass II prospectus.
Signed at:__________________________________ on _____________________________
City State Date
Applicant__________________________________ Witness/Agent ____________________
Signature of Owner Print Agent's Name and Number
--------------------------------------
Signature of Agent
- -------------------------------------------------------------------------------
Complete this statement of the Annuitant/Co-Annuitant is different from the
owner.
Annuitant/Co-Annuitant: The Annuitant/Co-Annuitant (if other than Applicant)
declares that the statements made which relate to him/her are full and true to
the best of his/her knowledge and belief. The Annuitant/Co-Annuitant consents to
this application.
Signed at __________________ on _____________ 19__ _________________________
Signature of Annuitant
--------------------------------------------
Signature of Agent
- ------------------------------------------------------------------------------
Agent: Will this contract replace or change any existing life insurance or
annuity in this or any other company?
Yes No If yes, please explain under Special Instructions.
General Agent
Branch Office Address__________________________________________________________
Street City State Zip
<PAGE>
EXHIBIT NO. 99.8
CERTIFICATE OF INCORPORATION
of
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
1. The name of the corporation is Sun Life Assurance Company of Canada
(U.S.).
2. The address of its registered office in the State of Delaware is
100 West Tenth Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The nature of the business or purpose to be conducted or promoted
is:
(a)to transact the business of life insurance in all its
branches, to carry on the business of sickness, accident,
health and disability insurance in all their branches, and
to grant annuities of all kinds whether dependent on human
life or otherwise and whether immediate r deferred and
whether contingent or otherwise, and to issue policies in
respect of the foregoing which are participating or
non-participating, fixed or variable in amount, and on an
individual or group basis,
(b)to reinsure all or any risks connected with any of the
businesses aforesaid and to transact the business of
reinsurance,
(c)to create and maintain one or more separate accounts
attributable to any class of business for the time being
and from time to time carried on by the corporation, with
power to keep separate the assets of any such account from
the assets of any other account, to the end that that
portion of the assets of each such account equal to the
reserves and other contract liabilities with respect to
such account shall not be chargeable with liabilities
arising out of any other business which the corporation
may conduct,
(d)to invest any moneys of the corporation, including the
assets of any separate account or accounts established and
maintained by it, as may be authorized by law, and to
hold, sell or otherwise deal with such investments,
(e)to provide advisory, management or sales distribution
services to any investment company registered under the
Investment Company Act of
1
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1940, or to any entity carrying on an investment or
insurance business or a business reasonably incidental
to them,
(f)in general to possess and exercise all powers and
privileges granted and to engage in activities authorized
by the general corporation law of Delaware or by any other
law of Delaware to the extent reasonably incidental to the
transaction of its business.
4. The total number of shares of stock which the corporation shall
have authority of issue is five thousand (5,000) shares of common
stock and the par value of each of such shares is one thousand
dollars ($1,000.00) amounting in the aggregate to five million
dollars ($5,000,000).
5. The name and mailing address of each incorporator is as follows:
Name Address
David N. Brown 888 16th Street, N.W.
Washington, D.C. 20006
W. Crosby Roper, Jr. 888 16th Street, N.W.
Washington, D.C. 20006
Cyril V. Smith, Jr. 888 16th Street, N.W.
Washington, D.C. 20006
6. The corporation is to have perpetual existence.
7. Notwithstanding any other provision of this certificate of
incorporation, the corporation may:
(a)with respect to any separate account registered with the
Securities and Exchange Commission as a unit investment
trust, exercise voting rights in connection with any
securities of a regulated investment company registered
under the Investment Company Act of 1940 and held in such
separate account in accordance with instructions from
persons having interests in such account ratably as
determined by the corporation;
(b)with respect to any separate account registered with the
Securities and Exchange Commission as a management
investment company, establish for such account a
committee, board, or other body, the members of which may
or may not be otherwise affiliated with the corporation
and may be elected to such membership by the vote of
persons having interests in such account ratably as
determined by the
2
<PAGE>
corporation; such committee, board may have the power,
exercisable alone or in conjunction with others, to
manage such separate account and the investment
of its assets and to make such other provisions in respect
of any such separate account as my be deemed appropriate
to facilitate compliance with any Federal or State law now
or hereafter in effect, subject, however, to any required
approvals of regulatory agencies; and
(c)to the extent that the corporation deems it necessary or
desirable in order to comply with any applicable
regulatory requirements, provide for persons having an
interest in any separate account other voting and special
rights and procedures for the conduct of the business of
such account, including, without limitation, rights and
procedures relating to investment policies, investment
advisory and management services, selection of certified
public accountants and other matters affecting the
administration of such separate account.
8. Meetings of stockholders may be held within or without the State
of Delaware, as the by-laws provide. The books of the corporation
may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be
designated from the corporation. Election of directors need no be
by written ballot unless the by-laws of the corporation shall
provide.
9. The corporation may amend, alter, change or repeal any provision
contained in this certificate of incorporation, in the manner now
or hereafter prescribed by statute.
WE, THE UNDERSIGNED, being each of the incorporators herein before
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, do make this certificate, hereby
declaring and certifying that this is our act and deed and the facts herein
stated are true, and accordingly have hereunto set our hands this 7th day of
January, 1970.
DAVID N. BROWN
David N. Brown
W. CROSBY ROPER, JR.
W. Crosby Roper, Jr.
CYRIL V. SMITH, JR.
Cyril V. Smith, Jr.
<PAGE>
UNITED STATES OF AMERICA
DISTRICT OF COLUMBIA
BE IT REMEMBERED that on this 7th day of January, A.D. 1970, personally
came before me, a Notary Public for the District of Columbia, David N. Brown, W.
Crosby Roper, Jr. And Cyril V. Smith, Jr., all of the parties to the foregoing
certificate of incorporation, known to me personally to be such, and severally
acknowledged the said certificate to be the act and deed of the signers
respectively and that the facts stated therein are true.
GIVEN under my hand and seal of office the day and year aforesaid.
RUTH M. MILES
Ruth M. Miles
Notary Public
My commission expires
May 14, 1971
Ruth M. Miles
Notary Public
District of Columbia
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
BY-LAWS
ARTICLE I
OFFICES
Section 1.01. Registered Office. The registered office of the
corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 1.02. Other Offices. The corporation may also have offices at
such other places both within and without the State of Delaware as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE 2
MEETING OF STOCKHOLDERS
Section 2.01. Place of Meetings. All meetings of the stockholders shall
be held at such place, either within or without the State of Delaware, as shall
be designated from time to time by the board of directors and stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 2.02. Annual Meeting. Annual meetings of stockholders shall be
held in each year on such date and at such time as shall be determined from time
to time by the board of directors and stated in the notice of the meeting or in
a duly executed waiver of notice thereof. At each annual meeting the
stockholders shall elect by a plurality vote a board of directors, and transact
such other business as may properly be brought before the meeting.
Section 2.03. Notice of Annual Meeting. Written notice of the annual
meeting stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten nor more than
fifty days before the date of the meeting.
Section 2.04. Stockholders List. The officer who has charge of the
stock ledger of the corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place
5
<PAGE>
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or if not so specified, at the place where the
meeting if to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole item thereof, and may be inspected by any
stockholder who is present.
Section 2.05. Special Meetings. Special meetings of the stockholders,
for any purpose, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president or secretary at the request in
writing of a majority of the board of directors or at the request in writing of
the holders of a majority of the outstanding stock.
Section 2.06. Notice of Special Meetings. Written notice of a special
meeting stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be given not less than ten nor
more than fifty days before the date of the meeting, to each stockholder
entitled to vote at such meeting.
Section 2.07. Limitation on Business at Special Meeting. Business
transacted at any special meeting or stockholders shall be limited to the
purposes stated in the notice.
Section 2.08. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 2.09. Vote Required for Action. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock have voting power
present in person or represented by proxy shall decide any question brought
before such meeting, unless the question is one upon which by express provision
of the statutes or of the certificate of incorporation, a different vote is
required in which case such express provision shall govern and control the
decision of such question.
Section 2.10. Voting - Proxy. Unless otherwise provided in the
certificate of incorporation each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder, but no proxy shall
be voted on after three years from its date, unless the proxy provides for a
longer period.
6
<PAGE>
Section 2.11. Written Consent in Lieu of Vote. Any action required to
be taken at any annual or special meeting of stockholders of the corporation, or
any action which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of all shares of outstanding stock entitled to vote
thereon at a meeting.
ARTICLE 3
DIRECTORS
Section 3.01. Numbers if Directors. The number of directors which shall
constitute the whole board shall not be less than three nor more than seven. The
first board shall consist of five directors. Thereafter, within the limits above
specified, the number of directors shall be determined by resolution of the
board of directors or by the stockholders at the annual meeting. The directors
shall be elected at the annual meeting of the stockholders, except as provided
in Section 3.02 of this Article, and each director elected shall hold office
until his successor is elected and qualified. Directors need not be
stockholders.
Section 3.02. Vacancies and Newly Created Directorships. Vacancies and
newly created directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director, and the directors so chosen
shall hold office until the next annual election and until their successors are
duly elected and shall qualify, unless sooner displaced.
Section 3.03. Powers of Directors. The business and affairs of the
corporation shall be managed by its board of directors which may exercise all
such powers of the corporation and do all such lawful acts and things as are not
be statute or by require to be exercised or done by the stockholders, including
without limitation, the creation of one or more separate accounts and adoption
of rules and regulations providing for the operation and management of any such
separate account by a board, committee or other body selected as authorized by
such rules and regulations and the provisions of the certificate of
incorporation.
Section 3.04. Place of Meeting. The board of directors of the
corporation may hold meetings, both regular and special, either within or
without the State of Delaware.
Section 3.05. Regular Meetings. Regular meetings of the board of
directors may be held without notice at such time and at such place as shall
from time to time be determined by the board.
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Section 3.06. Special Meetings. Special meetings of the board may be
called by the president on three days notice to special meetings shall be called
by the president or secretary in like manner and on lie notice on the written
request of two directors.
Section 3.07. Quorum. At all meetings of the board one-third of the
whole number of directors as last fixed prior to such meeting, but in any event
not less than two, shall constitute a quorum for the transaction of business and
the act of a majority of the directors present at any meeting at which there is
a quorum shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 3.08. Written Consent in Lieu of Meeting. Unless otherwise
restricted by the certificate of incorporation or these by-laws, any action
required or permitted to be taken at any meeting of the board of directors or of
any committee thereof may be taken without a meeting, if all members of board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the board or committee.
Section 3.09. Committees. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorized the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the powers or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.
Section 3.10. Committee Minutes and Reports. Each committee shall
keep regular minutes of its meetings and report the same to the board of
directors when required.
Section 3.11. Compensation. The compensation of the members of the
board of directors shall be authorized by the holders of a majority of the
outstanding stock.
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The directors may be paid their expenses, if any, of attendance at each meeting
of the board of directors and may be paid a fixed sum for attendance at each
meeting of the board of directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
ARTICLE 4
NOTICES
Section 4.01. Manner of Giving Notice. Whenever, under the provisions
of the statutes or of the certificate of incorporation or of these by-laws,
notice is required to be given to any director or stockholder, it shall not be
construed to mean personal notice, but such notice may be given in writing, by
mail, addressed to such director or stockholder, at his address as it appears on
the records of the corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be deposited in the
mail. Notice to directors may also be given by telegram or telephone.
Section 4.02. Waiver of Notice. Whenever any notice is required to be
given under the provisions of the statutes or of the certificate of
incorporation or of these by-laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE 5
OFFICERS
Section 5.01. Principal and Other Officers. The officers of the
corporation shall include a president, a secretary and a treasurer. The board of
directors amy also appoint a chairman, one or more vice-presidents, and such
other officers as are from time to time desired. Any number of offices may be
held by the same person, unless the certificate of incorporation or these
by-laws otherwise provide.
Section 5.02. Time and Manner of Selection. The board of directors at
its first meeting after each annual meeting of stockholders shall choose a
president, a secretary, a treasurer and such other officers as it shall deem
necessary.
Section 5.03. Compensation. The remuneration of all officers of the
corporation shall be fixed by the board of directors.
Section 5.04. Term of Office - Vacancies. The officers of the
corporation shall hold office until their successors are chosen and qualified or
until their earlier resignation or removal. Any officer elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the whole board of directors. Any
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vacancy occurring in any office of the corporation shall be filled by the board
of directors.
Section 5.05. The Chairman. The chairman, if one be appointed, shall
preside at all meetings of the stockholders and of the board of directors, and
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
Section 5.06. The President. The president shall be the chief executive
officer of the corporation, and if there is no chairman, or in the absence of
the chairman, or at the chairman's request, the president shall preside at all
meetings of the stockholders and of the board of directors, shall have general
management of the business of the corporation and shall see that all orders and
resolutions of the board of directors are carried into effect.
Section 5.07. The Vice-Presidents. In the absence of the president or
in the event of his inability or refusal to act, the vice-president (or in the
event there be more than one vice-president, the vice-presidents in the order
designated, or in the order of their election) shall perform the duties of the
president, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the president. The vice-presidents shall perform such
other duties and have such other powers as the board of directors may from time
to time prescribe.
Section 5.08. The Secretary. The secretary shall attend all meetings of
the board of directors and all meetings of the stockholders and record all the
proceedings of the meetings of the corporation and of the board of directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the board of
directors, and shall perform such other duties as may be prescribed by the board
of directors or president, under whose supervision he shall be. He shall have
custody of the corporate seal of the corporation and he shall have authority to
affix the same to any instrument requiring it and when so affixed, it may be
attested by his signature. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature.
Section 5.09. Treasurer. The treasurer shall keep full and accurate
books of account in which shall be recorded all receipts and disbursements of
the corporation, and shall pursuant to the direction of the board of directors
or of the president, under whose supervision he shall be, control the deposit of
moneys, the safekeeping of securities and the disbursement of the funds of the
corporation; he shall render to the president, or the board of directors at the
regular meetings thereof, or whenever required
Section 5.10. Other Officers. Officers other than the president,
secretary and treasurer, shall perform such duties as may be assigned to them by
the board of directors.
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ARTICLE 6
STOCK
Section 6.01. Stock Certificates. Every holder of stock in the
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the president or a vice-president and the treasurer or
the secretary of the corporation, certifying the number of shares owned by him
in the corporation.
Section 6.02. Facsimile Signature. Where a certificate is countersigned
(1) by a transfer agent other than the corporation or its employee, or, (2) by a
registrar other than the corporation or its employee, any other signature on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 6.03. Lost Certificates. The board of directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate of
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 6.04. Transfer of Stock. Upon surrender to the corporation or
the transfer agent of the corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 6.05. Fixing Record Date. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, to express consent to corporate action
in writing without a meeting, to receive payment of any dividend or other
distribution or allotment or any rights, to exercise any rights in respect of
any change, conversion or exchange of stock or for the purpose of any other
lawful action, the board of directors may fix, in a advance, a record date,
which shall not be more than sixty nor less than ten days prior to the
distribution of such rights, the exercise of such rights or the taking of any
other lawful action. A determination of stockholders of record entitled to
notice of or to vote at a meeting of
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stockholders shall apply to any adjournment of the meeting; provided, however,
that the board of directors may fix a new record date for the adjourned meeting.
Section 6.06. Registered Stockholders. The corporation shall be
entitled to treat the record holder of any share of the corporation as the owner
thereof for all purposes, including all rights deriving from such shares, and
shall not be bound to recognize any equitable or other claim to, or interest in,
such shares or rights deriving from such shares, on the part of any other
person, whether or not the corporation shall have either actual or constructive
notice thereof.
ARTICLE 7
GENERAL PROVISIONS
Section 7.01. Dividends. Dividends upon the capital stock of the
corporation may be declared by the board of directors at any regular or special
meeting out of any funds legally available therefor. Cash dividends may be paid
out of that part of the corporation's available and accumulated surplus funds
which was derived from realized net operating profits of its business and
realized capital gains. A cash dividend otherwise lawful may be paid out of such
earned surplus even though total surplus is at the time less than previously
contributed or paid in surplus. Stock dividends may be paid out of any available
surplus funds.
Section 7.02. Execution of Instruments. Except as otherwise provided in
these by-laws, all deeds, mortgages, bonds, contracts, policies, reports and
other instruments may be executed on behalf of the company by the president or
any vice-president or by any other officer authorized to act in such manner,
whether by law, the certificate of incorporation, these by-laws, or any general
or special authorization of the board of directors. The corporate seal may be
affixed and attested by the secretary or other officer authorized by the board
of directors.
Section 7.03. Facsimile Signatures. Any policy, insurance contract,
annuity contract, contract of deposit, premium receipt, dividend notice or
endorsement or amendment of any such instrument may be signed by means of an
engraved, lithographed or otherwise mechanically produced facsimile of the
signature of the president, secretary or other person or persons as may be
designated for this purpose by resolution of the board of directors, and the
execution by the corporation of any such instrument so signed shall be as valid
and binding upon the corporation as though manual signatures of the authorized
offices had been used in the signing thereof. If any officer whose facsimile
signature has been used as above provided has ceased to hold office prior to the
delivery of the instrument, the instrument may nevertheless be used and
delivered by the corporation and shall be valid and binding on the corporation.
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Section 7.04. Disbursement of Funds. All checks, drafts or demands for
money and notes of the corporation shall be signed by such officer or officers
or such other person or persons as the board of directors may from time to time
designate.
Section 7.05. Voting Stock in other Corporations. Unless otherwise
ordered by the board of directors, the chairman, the president, or any
vice-president shall have full power and authority to attend and act and vote at
any meeting of stockholders of any corporation in which this corporation may
hold stock, and the chairman, the president, or any vice-president of the
corporation may execute proxies authorizing designated persons to vote shares of
stock of other corporations standing in the name of this corporation.
Section 7.06. Fiscal Year. The fiscal year of the corporation shall
be the calendar year unless otherwise fixed by resolution of the board of
directors.
Section 7.07. Seal. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words "Corporate
Seal, Delaware". The seal may be used by causing it or a facsimile thereof the
be impressed or affixed or reproduced or otherwise.
ARTICLE 8
INDEMNIFICATION
Section 8.01.
(a) Every person who is or was a director, officer or employee of this
corporation or of any other corporation which he served at the
request of this corporation and in which this corporation owns or
owned shares of capital stock or of which it is or was a creditor
shall have a right to be indemnified by this corporation against
all liability and reasonable expenses incurred by him in
connection with ore resulting from any claim, action, suit or
proceeding in which he may become involved as a party or otherwise
by reason of his being or having been a director, officer or
employee of this corporation, Provided (1) said claim, action,
suit or proceeding shall be prosecuted to a final determination
and he shall be vindicated on the merits, or (2) in the absence of
such a final determination vindicating him on the merits, the
board of directors shall determine that he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the
best interests f the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful; said determination to be made by the
board of directors acting through a quorum of disinterested
directors, or in its absence on the opinion of counsel.
(b) For purposes of the preceding subsection: (1) "liability and
reasonable expenses" shall include but not be limited to
reasonable counsel fees and disbursements, amounts of any
judgement, fine or penalty, and reasonable
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amounts paid in settlement; (2) "claim, action, suit or
proceeding" shall include every such claim, action, suit or
proceeding, whether civil or criminal, derivative or otherwise,
administrative, judicial or legislative, any appeal relating
thereto, and shall include any reasonable apprehension or threat
of such a claim, action, suit or proceeding;; (3) a settlement,
plea of nolo contendere, consent judgment, adverse civil
judgment, or conviction shall not of itself create a
presumption that the conduct of the person seeking
indemnification did not meet the standard of conduct set forth in
subsection (a)(2)
(c) Notwithstanding the foregoing, the following limitations shall
apply with respect to any action by or in the right of the
Corporation: (1) no indemnification shall be made in respect of
any claim, issue or matter as to which the person seeking
indemnification shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such
action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper; and (2)
indemnification shall extend only to reasonable expensed,
including reasonable counsel's fees and disbursements.
(d) The right of indemnification shall extend to any person otherwise
entitled to it under this by-law whether or not that person
continues to be a director, officer or employee of this
corporation or such other corporation at the time such liability
or expense shall be incurred. The right of indemnification shall
extend to the legal representative and heirs of any person
otherwise entitled to indemnification. If a person meets the
requirement of this by-law with respect to some matters in a
claim, action, suit, or proceeding, but not with respect to
others, he shall be entitled to indemnification as the former.
Advances against liability and expenses may be made by ;the
corporation on terms fixed by the board of directors subject to an
obligation to repay if indemnification proves unwarranted.
(e) This by-law shall not exclude any other rights of indemnification
or other rights to which any director, officer or employee may be
entitled to be contract, vote of the stockholders or as a matter
of law. If any clause, provision or application of this section
shall be determined to be invalid, the other clauses provisions or
applications of this section shall not be affected but shall
remain in full force and effect. The provisions of this by-law
shall be applicable to claims, actions, suits or proceedings made
or commence after the adoption hereof, whether arising from acts
or omissions to act occurring before or after the adoption hereof.
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(f) Nothing contained in this by-law shall be construed to protect any
director or officer of the corporation against any liability to
the corporation or its security holders to which he would
otherwise be subject by reason of wilful misfeasance, bad faith,
gross negligence ore reckless disregard of the duties involved in
the conduct of his office.
ARTICLE 9
AMENDMENTS
Section 9.01. These by-laws may be altered, amended or repealed or new
by-laws be adopted by the stockholders at any meeting of the stockholders.
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EXHIBIT NO. 99.11(a)
SERVICE AGREEMENT
THIS AGREEMENT, made this 18th day of January, 1971 by and between
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.), a Delaware corporation (hereinafter
referred to as "Sun Life (U.S.)") and SUN LIFE ASSURANCE COMPANY OF CANADA, a
specially chartered Canadian life insurance company (hereinafter referred to as
"Sun Life (Canada)").
WITNESSETH:
WHEREAS, Sun Life (U.S.) is a wholly-owned subsidiary of Sun Life
(Canada); and
WHEREAS, Sun Life (Canada) has in the past made available to Sun Life
(U.S.) as required certain employees of Sun Life (Canada) to perform certain
marketing, administrative, investment and other incidental functions on behalf
of Sun Life (U.S.) on the understanding that Sun Life (U.S.) bears all costs
allocable to the time spent by them on the affairs of Sun Life (U.S.); and
WHEREAS, Sun Life (Canada) is willing to continue to make available to
Sun Life (U.S.) as required certain employees of Sun Life (Canada) to perform
certain marketing, administrative, investment and other incidental functions on
behalf of Sun Life (U.S.), provided that Sun Life (U.S.) bears all costs
allocable to the time spent by them on the affairs of Sun Life. (U.S.).
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
1. Sun Life (Canada) shall make available to Sun Life (U.S.) such
employees of Sun Life (Canada) as may be agreed upon from time to
time by Sun Life (U.S.) and Sun Life (Canada). It is anticipated
that most of these employees will be persons employed in the
Investment, Marketing and Control and Administration Divisions and
in the Law Department of Sun Life (Canada) who also perform
similar type functions for other subsidiaries of Sun Life
(Canada).
2. Sun Life (Canada) will, to the extent requested by Sun Life (U.S.)
and employees of Sun Life (U.S.) and employees of Sun Life
(Canada) serving Sun Life (U.S.), such clerical, stenographic and
administrative services and such office supplies and equipment as
may be reasonably required in order that they may properly perform
their respective functions on behalf of Sun Life (U.S.)
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3. In consideration of the services to be rendered by Sun Life
(Canada) and its employees pursuant to this Agreement, Sun Life
(U.S.) agrees to reimburse Sun Life (Canada) for such cost, direct
and indirect, as may be fairly attributable to the performance of
this Agreement by Sun Life (Canada).
4. A statement of such costs shall be submitted by Sun Life (Canada)
to Sun Life (U.S.) as of the last day of each month in each year,
and payment shall be made by Sun Life (U.S.) to Sun Life (Canada)
within 30 days' of the receipt of such statement.
5. This Agreement may be terminated by Sun Life (U.S.) or by Sun Life
(Canada) on 90 days' written notice to the other.
6. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage prepaid to the other party at such
address as such other party may designate for the receipt of such
notices. Until further notice to the other party it is agreed that
the address of Sun Life (U.S.) shall be 131 State Street, Boston,
Massachusetts, and the address of Sun Life (Canada) shall be Sun
Life Building, Dominion Square, Montreal, Quebec, Canada.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be
executed in duplicate on the day and year first above written.
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
By ANTHONY R. HICKS
Anthony R. Hicks
SUN LIFE ASSURANCE COMPANY OF CANADA
By A. G. MCCRAKEN
A. G. McCracken
By DAVID D. HORN
David D. Horn
