PARTICIPATION AGREEMENT
AMONG
ADVANTUS SERIES FUND, INC.
ADVANTUS CAPITAL MANAGEMENT, INC.
AND
MINNESOTA LIFE INSURANCE COMPANY
DATED MARCH 1, 2000
THIS AGREEMENT, made and entered into as of the 1st day of March, 2000, by and
among Minnesota Life Insurance Company (hereinafter "Minnesota Life"), a
Minnesota corporation, on its own behalf and on behalf of each segregated asset
account of Minnesota Life set forth on Schedule A hereto, as may be amended from
time to time (each such account hereinafter referred to as "Account") and the
Advantus Series Fund, Inc., a Minnesota corporation (hereinafter the "Fund") and
Advantus Capital Management, Inc. (hereinafter the "Adviser"), a corporation
organized in the State of Minnesota.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(hereinafter collectively, the "Variable Insurance Products") to be offered by
insurance companies which have entered into participation agreements with the
Fund and the Adviser (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series of
shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets and liabilities; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission granting it and the Separate Accounts of Minnesota Life funding
variable annuity contracts and variable life insurance policies exemptions from
the provisions of Sections 9(a), 13(b), 15(a) and 15(b), of the Investment
Company Act of 1940 and Rule 6e-2(b)(15) under that Act, to the extent necessary
to permit separate accounts subject to the provisions of Clauses (i) thru (iv)
of Rule 6e-2(b)(15) thereunder, to the extent necessary to permit shares of the
Fund to be sold to and held by Variable Annuity and Variable Life Insurance
Separate Accounts so as to permit "mixed funding" of Variable Annuity and
Variable Life Separate Accounts under certain conditions (hereinafter the "Mixed
Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and its shares are registered under the Securities Act of
1933, as amended (hereinafter, the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under the
federal Investment Advisers Act of 1940 (hereinafter, the "Advisers Act") and
any applicable state securities law; and
WHEREAS, Minnesota Life has registered or will register certain variable life
insurance policies and variable annuity contracts under the 1933 Act, unless an
exemption is available and each such contract or policy will provide for the
allocation of net amounts received by Minnesota Life to an Account or
Sub-Account for investment in the Fund and its Portfolios as that selection may
be made by a participant or contract or policy owner, as applicable under that
contract or policy; and
WHEREAS, each Account is a duly organized, validly existing segregated asset
account, established by resolution of the Board of Trustees of Minnesota Life,
to set aside and invest assets attributable to the aforesaid Variable Insurance
Products; and
WHEREAS, Minnesota Life has registered or will register each Account as a unit
investment trust under the 1940 Act, unless an exemption from registration is
available; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
Minnesota Life intends to purchase shares in the Portfolios on behalf of each
Account to fund certain of the aforesaid Variable Insurance Products and the
Adviser is authorized to sell such shares to unit investment trusts such as each
Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, Minnesota Life, the
Fund and the Adviser agree as follows:
ARTICLE I.
PURCHASE AND REDEMPTION OF FUND PORTFOLIO SHARES
1.1 For purposes of this Article I, Minnesota Life shall be the Fund's
agent for receipt of purchase orders and requests for redemption relating to
each Portfolio from each Account or Sub-Account, provided that Minnesota Life
notifies the Fund of such purchase orders and requests for redemption by 10:00
a.m. Central time on the next following Business Day, as defined in Section 1.3.
The currently available Portfolios are as shown on Schedule B attached hereto.
1.2 The Fund agrees to make shares of the Portfolios available to the
Accounts and the Sub-Accounts of such Accounts for purchase at the net asset
value per share next computed after receipt of a purchase order by the Fund (or
its agent), as established in accordance with the provisions of the then current
prospectus of the Fund describing Portfolio purchase procedures on those days on
which the Fund calculates its net asset value pursuant to rules of the
Commission, and the Fund shall use its best efforts to calculate such net asset
value on each day on which the New York Stock Exchange ("NYSE") is open for
trading. Minnesota Life will transmit orders from time to time to the Fund for
the purchase of shares of the Portfolios. The Directors of the Fund (the
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"Directors") may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio if such action is
required by law or by regulatory authorities having appropriate jurisdiction or
if, in the sole discretion of the Directors acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, such action
is deemed in the best interests of the shareholders of such Portfolio.
1.3 Minnesota Life shall submit payment for the purchase of shares of a
Portfolio on behalf of an Account or Sub-Account no later than the close of the
Federal Reserve Bank, which is 6:00 p.m. Central time, on the next Business Day
after the Fund receives the purchase order. Payment shall be made in federal
funds transmitted by wire to the Fund. Upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of Minnesota
Life and shall become the responsibility of the Fund for this purpose. "Business
Day" shall mean any day on which the New York Stock Exchange is open for trading
and on which the Fund calculates its net asset value pursuant to the rules of
the Commission. If payment in federal funds for any purchase is not received by
the Fund or its designated custodian or is received after such time, Minnesota
Life shall promptly, upon written request, reimburse the Fund for any charges,
costs, fees, interest or other expenses incurred by the Fund as a result of
transactions effected by the Fund based upon such purchase order.
1.4 The Fund will redeem for cash any full or fractional shares of any
Portfolio, when requested by Minnesota Life on behalf of an Account, at the net
asset value next computed after receipt by the Fund (or its agent) of the
request for redemption, as established in accordance with the provisions of the
then current prospectus of the Fund describing Portfolio redemption procedures.
The Fund shall make payment for such shares in the manner established from time
to time by the Fund. Redemption with respect to a Portfolio will normally be
paid to Minnesota Life for an Account or Sub-Account in federal funds
transmitted by wire to Minnesota Life before the close of the Federal Reserve
Bank, which is 6:00 p.m. Central time on the next Business Day after the receipt
of the request for redemption. If payment in federal funds for any redemption
request is received by Minnesota Life after such time, the Fund shall promptly
upon Minnesota Life's written request, reimburse Minnesota Life for any charges,
costs, fees, interest, or other expenses incurred by Minnesota Life as a result
of such failure to provide redemption proceeds within the specified time.
Notwithstanding the foregoing, such payment may be delayed if the Portfolio's
cash position so requires or if extraordinary market conditions exist, but in no
event shall payment be delayed for a greater period than is permitted by the
0000 Xxx.
1.5 Payments for the purchase of shares of the Fund's Portfolios by
Minnesota Life under Section 1.3 and payments for the redemption of shares of
the Fund's Portfolios under Section 1.4 may be netted against one another on any
Business Day for the purpose of determining the amount of any wire transfer of
that Business Day.
1.6 Issuance and transfer of the Fund's Portfolio shares will be by book
entry only. Stock certificates will not be issued to Minnesota Life, an Account
or a Sub-Account. Portfolio Shares purchased from the Fund will be recorded in
the appropriate title for each Account or the appropriate sub-account of each
Account.
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1.7 The Fund shall furnish, on or before the ex-dividend date, notice to
Minnesota Life of any income dividends or capital gain distributions payable on
the shares of any Portfolio of the Fund. Minnesota Life hereby elects to receive
all such income dividends and capital gain distributions as are payable on a
Portfolio's shares in additional shares of the Portfolio. The Fund shall notify
Minnesota Life of the number of shares so issued as payment of such dividends
and distributions.
1.8 The Fund shall calculate the net asset value of each Portfolio on each
Business Day, as defined in Section 1.3. The Fund shall make the net asset value
per share for each Portfolio available to Minnesota Life or its designated agent
on a daily basis as soon as reasonably practical after the net asset value per
share is calculated (normally by 6:30 p.m. Central time) and shall use
reasonable efforts to make such net asset value per share available by 7:00 p.m.
Central time each Business Day.
1.9 The Fund agrees that its Portfolio shares will be sold only to
Participating Insurance Companies and their separate accounts and to certain
qualified pension and retirement plans to the extent permitted by the Mixed
Funding Exemptive Order. The Fund agrees that it will not sell shares of its
Portfolios to any other insurance company or separate account unless an
agreement containing provisions substantially the same as Section 2.4 and
Articles I and V of this Agreement is in effect to govern sales. No shares of
any Portfolio will be sold directly to the general public. Minnesota Life agrees
that it will use Fund shares only for the purposes of funding the Variable
Insurance Products through the Accounts listed in Schedule A, as amended from
time to time.
1.10 Minnesota Life agrees that all net amounts available under the
Variable Insurance Products referenced herein shall be invested in the Fund or
in such other investment companies advised by the Adviser or its affiliates as
may be mutually agreed to in writing by the parties hereto, or in Minnesota
Life's general account, provided that such amounts may also be invested in an
investment company other than the Fund if: (a) Minnesota Life gives the Fund and
the Adviser forty-five (45) days written notice of its intention to make such
other investment company available as a funding vehicle for these Variable
Insurance Products; or (b) such other investment company is available as a
funding vehicle for these Variable Insurance Products at the date of this
Agreement.
1.11 The Fund agrees that all Participating Insurance Companies shall have
the obligations and responsibilities regarding pass-through voting and conflicts
of interest corresponding to those contained in Section 2.10 and Article IV of
this Agreement.
ARTICLE II.
OBLIGATIONS OF THE PARTIES; FEES AND EXPENSES
2.1 The Fund shall prepare and be responsible for filing with the
Commission and any state regulators requiring such filing all shareholder
reports, notices, proxy materials (or similar materials such as voting
instruction solicitation materials), prospectuses and statements of additional
information of the Fund. The Fund shall bear the costs of registration and
qualification of its shares of the Portfolios, preparation and
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filing of the documents listed in this Section 2.1 and all taxes to which an
issuer is subject on the issuance and transfer of its shares.
2.2 At the option of Minnesota Life, the Fund or the Adviser shall either
(a) provide Minnesota Life with as many copies of portions of the Fund's current
prospectus, annual report, semi-annual report and other shareholder
communications, including any amendments or supplements to any of the foregoing,
pertaining specifically to the Portfolios as Minnesota Life shall reasonably
request; or (b) provide Minnesota Life with a camera ready copy of such
documents in a form suitable for printing and from which information relating to
series of the Fund other than the Portfolios has been deleted to the extent
practicable. The Fund or the Adviser shall provide Minnesota Life with a copy of
its current statement of additional information, including any amendments or
supplements, in a form suitable for duplication by Minnesota Life. Expenses of
furnishing such documents for marketing purposes shall be borne by Minnesota
Life and expenses of furnishing such documents for current contract owners
invested in the Fund shall be borne by the Fund or the Adviser.
2.3 The Fund (at its expense) shall provide Minnesota Life with copies of
any Fund-sponsored proxy materials in such quantity as Minnesota Life shall
reasonably require for distribution to contract owners. The Fund shall bear the
costs of distributing proxy materials (or similar materials such as voting
solicitation instructions). Minnesota Life shall bear the cost of distributing
prospectuses and statements of additional information to contract owners.
Minnesota Life assumes sole responsibility for ensuring that such materials are
delivered to contract owners in accordance with applicable federal and state
securities laws.
2.4 If and to the extent required by law, Minnesota Life shall: (i) solicit
voting instructions from contract owners; (ii) vote the Fund shares in
accordance with the instructions received from contract owners; and (iii) vote
Fund shares for which no instructions have been received in the same proportion
as Fund shares of such Portfolio for which instructions have been received; so
long as and to the extent that the Commission continues to interpret the 1940
Act to require pass-through voting privileges for variable contract owners.
Minnesota Life reserves the right to vote Fund shares held in any segregated
asset account in its own right, to the extent permitted by law.
2.5 Except as provided in Section 2.6, Minnesota Life shall not use any
designation comprised in whole or part of the names or marks "Advantus Series
Fund, Inc." or "Advantus Capital Management, Inc." without prior written consent
of the Fund or the Adviser, and upon termination of this Agreement for any
reason, Minnesota Life shall cease all use of any such name or xxxx as soon as
reasonably practicable.
2.6 Minnesota Life and its agents shall not give any information or make
any representations or statements on behalf of the Fund or concerning the Fund
or the Adviser or an Adviser in connection with the sale of the Variable
Insurance Products other than information or representations contained in and
accurately derived from the registration statement or prospectus for the Fund
shares (as such registration statement and prospectus may be amended or
supplemented from time to time), annual and semi-annual reports of the Fund,
Fund-sponsored proxy statements, or in sales literature or other promotional
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material prepared or approved by the Fund or its designee, except as required by
legal process or regulatory authorities or with the written permission of the
Fund or its designee.
2.7 The Fund shall use its best efforts to provide Minnesota Life, on a
timely basis, with such information about the Fund, the Portfolios and the
Adviser and any Sub-Advisers, in such form as Minnesota Life may reasonably
require, as Minnesota Life shall reasonably request in connection with the
preparation of registration statements and prospectuses and annual and
semi-annual reports pertaining to the Variable Insurance Products.
2.8 The Fund shall not give any information or make any representations or
statements on behalf of Minnesota Life or concerning Minnesota Life, the
Accounts or the Variable Insurance Products other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Variable Insurance Products (as any such
required registration statement and prospectus may be amended or supplemented
from time to time), or in materials prepared or approved by Minnesota Life for
distribution including sales literature or other promotional materials, except
as required by legal process or regulatory authorities or with the written
permission of Minnesota Life.
2.9 So long as, and to the extent that, the Commission interprets the 1940
Act to require pass-through voting privileges for contract owners, Minnesota
Life will provide pass-through voting privileges to contract owners whose
Contract values are invested, through the registered Accounts, in shares of one
or more Portfolios of the Fund. The Fund shall require all Participating
Insurance Companies to calculate voting privileges in the same manner and
Minnesota Life shall be responsible for assuring that the Accounts calculate
voting privileges in the manner established by the Fund. With respect to each
registered Account, Minnesota Life will vote shares of each Portfolio of the
Fund held by a registered Account for which no timely voting instructions from
contract owners are received in the same proportion as those shares held by that
registered Account for which voting instructions are received. Minnesota Life
and its agents will in no way recommend or oppose or interfere with the
solicitation of proxies for Portfolio shares held to fund the Variable Insurance
Products without the prior written consent of the Fund, which consent may be
withheld in the Fund's sole discretion.
2.10 The Fund and Adviser shall pay no fee or other compensation to
Minnesota Life under this Agreement except as provided on Schedule C, if
attached. Nevertheless, the Fund or the Adviser or an affiliate may make
payments (other than pursuant to a Rule 12b-1 Plan) to Minnesota Life or its
affiliates or to the Adviser in amounts agreed to by the Adviser in writing and
such payments may be made out of fees otherwise payable to the Adviser or its
affiliates, profits of the Adviser or its affiliates, or other resources
available to the Adviser or its affiliates.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Minnesota Life represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of Minnesota and
that it has legally and validly established each Account as a segregated asset
account under such law as of the date set forth in Schedule A.
3.2 Minnesota Life represents and warrants that it has registered or, prior
to any issuance or sale of the Variable Insurance Contract(s), will register
each Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated asset account for the Variable Insurance
Products, unless an exemption from registration is available.
3.3 Minnesota Life represents and warrants that the Variable Insurance
Products will be registered under the 1933 Act, unless an exemption from
registration is available, prior to any issuance or sale of the Variable
Insurance Products; the Variable Insurance Products will be issued and sold in
compliance in all material respects with all applicable federal and state laws;
and the sale of the Variable Insurance Products shall comply in all material
respects with state insurance suitability requirements.
3.4 Minnesota Life represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals or entities
dealing with the money and/or securities are and shall be at all times covered
by a blanket fidelity bond or similar coverage in an amount not less than $5
million. The aforesaid bond shall include coverage for larceny and embezzlement
and shall be issued by a reputable bonding company. Minnesota Life agrees to
make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Adviser in the event that such coverage no longer applies.
3.5 The Fund represents and warrants that it is duly organized and validly
existing under the laws of the State of Minnesota and that it does and will
comply in all material respects with the 1940 Act and the rules and regulations
thereunder and with the diversification rules applicable to the Fund and its
Portfolios under Subchapter M of the Internal Revenue Code of 1986, as amended
(hereinafter "Code").
3.6 The Fund represents and warrants that the Portfolio shares offered and
sold pursuant to this Agreement will be registered under the 1933 Act and the
Fund shall be registered under the 1940 Act prior to and at the time of any
issuance or sale of such shares. The Fund shall amend its registration statement
under the 1933 Act and the 1940 Act from time to time as required in order to
effect the continuous offering of its shares. The Fund shall register and
qualify its shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by the Fund or the Adviser.
3.7 The Fund represents and warrants that it is currently qualified as a
"regulated investment company" under Subchapter M of the Code, that it will make
every effort to maintain such qualification and will notify Minnesota Life
immediately upon having a
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reasonable basis for believing it has ceased to so qualify or might not so
qualify in the future.
3.8 The Fund and its Adviser each represents and warrants that the
investment advisory or management fees paid to the Adviser are legitimate and
not excessive and are derived from an advisory contract which does not result in
a breach of fiduciary duty.
3.9 The Fund represents and warrants that should it ever desire to make any
payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940
Act, the Directors, including a majority who are not "interested persons" of the
Fund under the 1940 Act ("disinterested Directors"), will formulate and approve
any plan under Rule 12b-1 to finance distribution expenses. To the extent that
any Class of the Fund may finance its distribution expenses pursuant to a Plan
adopted under Rule 12b-1, the Fund undertakes to comply with any then current
SEC and SEC staff interpretations concerning Rule 12b-1 or any successor
provisions.
3.10 The Fund represents and warrants that it, its directors, officers,
employees and others dealing with the money or securities, or both, of a
Portfolio shall at all times be covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less than the minimum
coverage required by Rule 17g-1 or other regulations under the 1940 Act. Such
bond shall include coverage for larceny and embezzlement and be issued by a
reputable bonding company.
3.11 The Adviser represents and warrants that it is duly organized and
validly existing under the laws of the State of Minnesota and that it is
currently registered and will, during the term of this Agreement, remain
registered as an investment adviser under the Advisers Act.
ARTICLE IV.
POTENTIAL CONFLICTS
4.1 The parties acknowledge that a Portfolio's shares may be made available
for investment to other Participating Insurance Companies. In such event, the
Directors will monitor the Fund for the existence of any material irreconcilable
conflict between the interests of the contract owners of all Participating
Insurance Companies. An irreconcilable material conflict may arise for a variety
of reasons, including: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax, or
securities regulatory authorities; (c) an administrative or judicial decision in
any relevant proceeding; (d) the manner in which the investments of any
Portfolio are being managed; (e) a difference in voting instructions given by
variable annuity contract and variable life insurance contract owners; or (f) a
decision by an insurer to disregard the voting instructions of contract owners.
The Fund shall promptly inform Minnesota Life of any determination by the
Directors that an irreconcilable material conflict exists and of the
implications thereof.
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4.2 Minnesota Life agrees to promptly report any potential or existing
conflicts of which it is aware to the Directors. Minnesota Life will assist the
Directors in carrying out their responsibilities under the Mixed Funding
Exemptive Order by providing the Directors with all information reasonably
necessary for the Directors to consider any issues raised including, but not
limited to, information as to a decision by Minnesota Life to disregard contract
owner voting instructions. All communications from Minnesota Life to the
Directors may be made in care of the Fund.
4.3 If it is determined by a majority of the Directors, or a majority of
the disinterested Directors, that a material irreconcilable conflict exists that
affects the interests of contract owners, Minnesota Life shall, in cooperation
with other Participating Insurance Companies whose contract owners are also
affected, at its own expense and to the extent reasonably practicable take
whatever steps are necessary to remedy or eliminate the irreconcilable material
conflict.
4.4 If a material irreconcilable conflict arises because of a decision by
Minnesota Life to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, Minnesota Life
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such
Account; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested Directors. Any such withdrawal
and termination must take place within six (6) months after the Fund gives
written notice that this provision is being implemented. Until the end of such
six (6) month period, the Fund shall continue to accept and implement orders by
Minnesota Life for the purchase and redemption of shares of the Fund.
4.5 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to Minnesota Life conflicts with a
majority of other state regulators to which Minnesota Life is subject, then
Minnesota Life will withdraw the affected Account's investment in the Fund and
terminate this Agreement with respect to such Account within six (6) months
after the Directors inform Minnesota Life in writing it has determined that such
decision has created an irreconcilable material conflict; provided, however,
that such withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority of
the disinterested Directors. Until the end of such six (6) month period, the
Fund shall continue to accept and implement orders by Minnesota Life for the
purchase and redemption of shares of the Fund.
4.6 For purposes of Sections 4.3 through 4.6 of this Agreement, a majority
of the disinterested Directors shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Fund be required to establish a new funding medium for the Variable
Insurance Products. In the event that the disinterested Directors determine that
any proposed action does not adequately remedy any irreconcilable material
conflict, then Minnesota Life will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Directors inform
Minnesota Life in writing of the foregoing determination; provided, however,
that such withdrawal and termination shall be limited to the extent required by
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any such material irreconcilable conflict as determined by a majority of the
disinterested Directors.
4.7 Minnesota Life shall at least annually submit to the Directors such
reports, materials or data as the Directors may reasonably request so that the
Directors may fully carry out the duties imposed upon them by the Mixed Funding
Exemptive Order, and said reports, materials and data shall be submitted more
frequently if reasonably deemed appropriate by the Directors.
4.8 If and to the extent that Rule 6e-2 is amended, or similar rule is
adopted, so as to provide exemptive relief from any provision of the 1940 Act or
the rules promulgated thereunder with respect to mixed funding (as defined in
the Mixed Funding Exemptive Order) on terms and conditions materially different
from those contained in the Mixed Funding Exemptive Order, then the Fund and/or
the Participating Insurance Companies, as appropriate, shall take such steps as
may be necessary to comply with Rule 6e-2, as amended, or any other rule, as
adopted, to the extent such rules are applicable.
ARTICLE V.
DIVERSIFICATION AND QUALIFICATION
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5.1 Both the Fund and the Adviser each represent and warrant that the
Fund will at all times sell the share of each Series and invest the assets of
each Series in such a manner as to ensure that the Variable Insurance
Products will be treated as life insurance or annuity contracts, as the case
may be, under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, each of the Fund and the Adviser
represent and warrant that the Fund and each Portfolio thereof will at all
times comply with Section 817(h) of the Code and Treasury Regulation
Section.1.817-5, as amended from time to time, and any Treasury
interpretations thereof, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts and any amendments
or other modifications or successor provisions to such Section or
Regulations. The Fund and the Adviser agree that shares of the Fund's
Portfolios will be sold only to Participating Insurance Companies and their
separate accounts and to certain qualified pension and retirement plans to
the extent permitted by the Mixed Funding Exemptive Order. No shares of any
Fund's Portfolios will be sold to the general public.
5.2 The Fund represents that it will not be subject to federal income
taxation under current laws and regulations, consistent with the provisions of
Subchapter M of the Code.
5.3 The Fund or the Adviser will notify the Insurer immediately upon having
a reasonable basis for believing that the Fund or any Portfolio has ceased to
comply with the aforesaid Section 817(h) diversification requirements or might
not so comply in the future.
5.4 Each of the Fund and the Adviser acknowledges that full compliance with
the requirements referred to in Sections 5.1 and 5.2 hereof is absolutely
essential because any
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failure to meet those requirements would result in the Variable Insurance
Products not being treated as life insurance or annuity contracts, as the case
may be, for federal income tax purposes, which would have adverse tax
consequences for Contract owners and could also adversely affect Minnesota
Life's corporate tax liability. Each of the Fund and the Adviser also
acknowledges that it is solely within its power and control to meet those
requirements. Accordingly, without in any way limiting the effect of Section 8.2
hereof and without in any way limiting or restricting any other remedies
available to Minnesota Life, the Adviser will pay all costs associated with or
arising out of any failure, or any anticipated or reasonably foreseeable
failure, of the Fund or any Portfolio to comply with Sections 5.1 or 5.2 hereof,
including all costs associated with correcting or responding to any such
failure; such costs may include, but are not limited to, the costs involved in
creating and organizing a new investment company as a funding medium for the
Variable Insurance Products and/or the costs of obtaining whatever regulatory
authorizations are required to substitute shares of another investment company
for those of the failed Portfolio; such costs to include, but are not limited
to, fees and expenses of legal counsel and other advisers to Minnesota Life and
any federal income taxes or tax penalties incurred by Minnesota Life or its
contract owners in connection with any such failure or anticipated or reasonably
foreseeable failure.
5.5 Within 45 days of the close of each calendar quarter, the Fund shall
provide Minnesota Life or its designee with a certification of compliance with
the aforesaid Section 817(h) diversification and Code qualification
requirements, in substantially the form attached hereto as Schedule D, provided,
however, that providing such certification does not relieve the Fund or the
Adviser of its responsibility for such compliance or of liability for any
non-compliance.
ARTICLE VI.
INDEMNIFICATION
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6.1 INDEMNIFICATION BY MINNESOTA LIFE
(a) Minnesota Life agrees to indemnify and hold harmless the Fund and
each of its Directors, officers, employees and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" and individually the "Indemnified
Party" for purposes of this Article VI) against any an all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of Minnesota Life, which consent shall not be unreasonably
withheld) or expenses (including the reasonable costs of investigating or
defending any alleged loss, claim, damage, liability or expense and
reasonable legal counsel fees incurred in connection therewith)
(collectively, "Losses"), to which the Indemnified Parties may become
subject under any statute or regulation, or at common law or otherwise,
insofar as such Losses are related to the sale or acquisition of Fund
Shares or the Variable Insurance Products and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a registration
statement or prospectus for the Variable Insurance Products or in the
Variable Insurance Products themselves or in sales literature generated by
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Minnesota Life on behalf of the Variable Insurance Products or Accounts (or
any amendment or supplement to any of the foregoing) (collectively,
"Company Documents" for the purposes of this Article VI), or arise out of
or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this indemnity shall not
apply as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and was accurately
derived from written information furnished to Minnesota Life by or on
behalf of the Fund for use in Company Documents or otherwise for use in
connection with the sale of the Variable Insurance Products or Fund shares;
or
(ii) arise out of or result from written statements or representations
(other than statements or representations contained in and accurately
derived from Fund Documents as defined in Section 6.2 (a)(i)) or wrongful
conduct of Minnesota Life or persons under its control, with respect to the
sale or acquisition of the Variable Insurance Products or Fund shares; or
(iii) arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in Fund Documents as defined
in Section 6.2(a)(i) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was made in
reliance upon and accurately derived from written information furnished to
the Fund by or on behalf of Minnesota Life; or
(iv) arise out of or result from any failure by Minnesota Life to
provide the services or furnish the materials required under the terms of
this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by Minnesota Life in this Agreement or
arise out of or result from any other material breach of this Agreement by
Minnesota Life.
(b) Minnesota Life shall not be liable under this indemnification provision
with respect to any Losses to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement. Minnesota Life shall also not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified Minnesota Life in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify Minnesota Life of
any such claim shall not relieve Minnesota Life from any liability which it may
have to the
-12-
Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. Minnesota Life also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from Minnesota Life to such party of Minnesota
Life's election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and Minnesota
Life will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
(c) The Indemnified Parties will promptly notify Minnesota
Life of the commencement of any litigation or proceedings against them or their
officers and directors in connection with the issuance or sale of the Fund
shares or the Variable Insurance Products or the operation of the Fund.
6.2 INDEMNIFICATION BY THE ADVISER
(a) The Adviser agrees to indemnify and hold harmless
Minnesota Life and each of its Directors, officers, employees and each person,
if any, who controls Minnesota Life within the meaning of Section 15 of the 1933
Act (collectively, the "Indemnified Parties" and individually an "Indemnified
Party" for purposes of this Section 6.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Adviser, which consent shall not be unreasonably withheld) or
expenses (including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal counsel
fees incurred in connection therewith) (collectively, "Losses") to which the
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such Losses are related to the sale or acquisition of the
Fund's Shares or the Variable Insurance Products and:
(i) arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact
contained in the Registration Statement, prospectus or sales
literature of the Fund (or any amendment or supplement to any
of the foregoing) (collectively, the "Fund Documents") or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission of such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
the Adviser or Fund by or on behalf of Minnesota Life for use
in the Registration Statement or prospectus for the Fund or in
sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Variable Insurance
Products or Fund shares; or
(ii) arise out of or as a result of written statements
or representations (other than statements or representations
contained and accurately derived from the registration
statement, prospectus or sales literature for the Variable
Insurance Products) or wrongful conduct of the Fund, Adviser
or
-13-
persons under their control, with respect to the sale or
distribution of the Variable Insurance Variable Insurance
Products or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus or sales literature covering the
Variable Insurance Products, or any amendment thereof or
supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance
upon information furnished to Minnesota Life by or on behalf
of the Fund; or
(iv) arise as a result of any failure by the Fund or
Adviser to provide the services and furnish the materials
under the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise, to comply
with the qualification representation specified in Section 5.2
of this Agreement and the diversification requirements
specified in Section 5.1 of this Agreement); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the Adviser in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Adviser, as limited by and in
accordance with the provisions of Sections 5.2(b) and 5.2(c)
hereof.
(b) The Adviser shall not be liable under this indemnification
provision with respect to any Losses to which an Indemnified Party would
otherwise be subject to reason of such Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to Minnesota Life or the Account,
whichever is applicable.
(c) The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Adviser will be entitled to participate at
its own expense, in the defense thereof. The Adviser also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Adviser to such party of the Adviser's election to
assume the defense thereof, the Indemnified Party shall bear the expenses of any
additional counsel retained by it, and the Adviser will not be liable to such
party under this Agreement for any legal or other expenses subsequently incurred
by
-14-
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
(d) Minnesota Life agrees promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Variable Insurance
Products or the operation of each Account.
6.3 INDEMNIFICATION BY THE FUND
(a) The Fund agrees to indemnify and hold harmless Minnesota
Life, and each of its directors and officers and each person, if any, who
controls Minnesota Life within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 5.3)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Fund, which consent shall not be
unreasonably withheld) or litigation (including legal and other expenses) to
which the Indemnified Parties may become subject under any statute, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund, and arise out of or result from any
material breach of any representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material breach of this
Agreement by the Fund; as limited by and in accordance with the provisions of
Section 5.3(b) and 5.3(c) hereof. It is understood and expressly stipulated that
neither the holders of shares of the Fund nor any Trustee, officer, agent or
employee of the Fund shall be personally liable hereunder, nor shall any resort
to be had to other private property for the satisfaction of any claim or
obligation hereunder, but the Fund only shall be liable.
(b) The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against any Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement to
Minnesota Life or the Account, whichever is applicable.
(c) The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claims shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to
-15-
the party named in the action. After notice from the Fund to such party of the
Fund's election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the Fund
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
(d) Minnesota Life and the Adviser agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Variable Insurance Products, with respect to the
operation of either the Account, or the sale or acquisition of share of the
Fund.
ARTICLE VII.
TERMINATION
-----------
7.1 This Agreement may be terminated by any party in its entirety or with
respect to one, some or all Portfolios for any reason by sixty (60) days advance
written notice delivered to the other parties, and shall terminate immediately
in the event of its assignment, as that term is used in the 1940 Act.
7.2 This Agreement may be terminated immediately by either the Fund or the
Adviser following consultation with the Directors upon written notice to
Minnesota Life:
(a) if either one or both of the Fund or the Adviser respectively,
shall determine, in their sole judgment exercised in good faith, that
Minnesota Life has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of this
Agreement; or
(b) if Minnesota Life gives the Fund and the Adviser the written
notice specified in Section 1.10 hereof and at the same time such notice
was given there was no notice of termination outstanding under any other
provision of this Agreement; provided, however, that any termination under
this Section 7.2(b) shall be effective forty-five (45) days after the
notice specified in Section 1.10 was given.
7.3 This Agreement may be terminated immediately by Minnesota Life upon
written notice to the Fund and the Adviser, if Minnesota Life shall determine,
in its sole judgment exercised in good faith, that either the Fund or the
Adviser has suffered a material adverse change in its business, operations,
financial conditions or prospects since the date of this Agreement or is the
subject of material adverse publicity.
7.4 If this Agreement is terminated for any reason, except under Article IV
(Potential Conflicts) above, the Fund shall, at the option of Minnesota Life,
continue to make available additional shares of any Portfolio and redeem shares
of any Portfolio pursuant to all of the terms and conditions of this Agreement
for all Variable Insurance Products in effect on the effective date of
termination of this Agreement (hereinafter
-16-
"Existing Contracts"). Specifically without limitation the owners of the
Existing Contracts shall be permitted to reallocate investments in the Fund,
redeem investments in the Fund, and/or invest in the Fund upon the making of
additional purchase payments under the Existing Contracts. The parties agree
that this Section 7.4 shall not apply to any terminations pursuant to Article
IV, and that the provisions of Article IV shall govern.
7.5 The provisions of Articles III (Representations and Warranties) and VI
(Indemnification) shall survive the termination of this Agreement. All other
applicable provisions of this Agreement shall survive the termination of this
Agreement, as long as shares of the Fund are held on behalf of contract owners
in accordance with Section 7.4, except that the Fund and the Adviser shall have
no further obligation to sell Fund shares with respect to Variable Insurance
Products issued after termination.
7.6 Minnesota Life shall not redeem Fund shares attributable to the
Variable Insurance Products except (i) as necessary to implement contract owner
initiated or approved transactions, (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), or (iii) as
permitted by an order of the Commission pursuant to Section 26(b) of the 1940
Act. Upon request, Minnesota Life will promptly furnish to the Fund and the
Adviser the opinion of counsel for Minnesota Life (which counsel shall be
reasonably satisfactory to the Fund and the Adviser) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Variable
Insurance Products, Minnesota Life shall not prevent contract owners from
allocating payments to a Portfolio that was otherwise available under the
Variable Insurance Products without first giving the Fund or the Adviser ninety
(90) days notice of its intention to do so.
ARTICLE VIII.
NOTICES
-------
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund or the Adviser:
Advantus Capital Management, Inc.
000 Xxxxxx Xxxxxx Xxxxx
Xx. Xxxx, XX 00000-0000
Attention: President
If to Minnesota Life:
Minnesota Life Insurance Company
000 Xxxxxx Xxxxxx Xxxxx
Xx. Xxxx, XX 00000-0000
-17-
Attention: General Counsel
ARTICLE IX.
MISCELLANEOUS
-------------
9.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
9.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
9.3 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
9.4 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Minnesota. It shall also
be subject to the provisions of the federal securities laws and the rules and
regulations thereunder and to any orders of the Commission granting exemptive
relief therefrom and the conditions of such orders. Copies of any such orders
shall be promptly forwarded by the Fund to Minnesota Life.
9.5 The parties to this Agreement acknowledge and agree that all
liabilities of the Fund arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Fund and that no director, officer, agent or holder of shares of
beneficial interest of the Fund shall be personally liable for any such
liabilities.
9.6 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the Commission, the
National Association of Securities Dealers, Inc. and state insurance regulators)
and shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
9.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
9.8 The parties of this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect, except as provided in Section 1.10.
9.9 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by all
parties.
-18-
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Participation Agreement as of the date and year first
above written.
Minnesota Life:
Minnesota Life Insurance Company
By its authorized officer
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
The Fund:
Advantus Series Fund, Inc.
By its authorized officer
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
The Adviser:
Advantus Capital Management, Inc.
By its authorized officer
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
-19-
SCHEDULE A
SEPARATE ACCOUNTS OF MINNESOTA LIFE INSURANCE COMPANY
-----------------------------------------------------
1. Variable Annuity Account
2. Variable Fund D
3. Minnesota Life Variable Life Account
4. Group Variable Annuity Account
5. Minnesota Life Variable Universal Account
6. Group Variable Universal Life Account
7. Variable Universal Life Account II
8. Variable Universal Life Account III
9. Variable Universal Life Account IV
10. Variable Universal Life Account V
11. Variable Universal Life Account VI
A-1
SCHEDULE B
FUND PORTFOLIOS AND CLASSES AVAILABLE
----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INVESTMENT
PORTFOLIO CLASS ADVISER SUB-ADVISER
---------------------------------------------------------------------------------------------------------------------------
Growth Advantus Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------------
Bond Advantus Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------------
Money Market Advantus Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------------
Asset Allocation Advantus Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------------
Mortgage Securities Advantus Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------------
Index 500 Advantus Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Advantus Capital Management, Inc. Xxxxxxx Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------------
International Stock Advantus Capital Management, Inc. Xxxxxxxxx Investment Counsel, Inc.
---------------------------------------------------------------------------------------------------------------------------
Small Company Growth Advantus Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------------
Maturing Government Bond - 2002 Advantus Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------------
Maturing Government Bond - 2006 Advantus Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------------
Maturing Government Bond - 2010 Advantus Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------------
Value Stock Advantus Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------------
Small Company Value Advantus Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------------
Global Bond Advantus Capital Management, Inc. Xxxxxx Xxxx Investment Management,
Inc.
---------------------------------------------------------------------------------------------------------------------------
Index 400 Mid-Cap Advantus Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------------
Macro-Cap Value Advantus Capital Management, Inc. X.X. Xxxxxx Investment Management,
Inc.
---------------------------------------------------------------------------------------------------------------------------
Micro-Cap Growth Advantus Capital Management, Inc. Wall Street Associates
---------------------------------------------------------------------------------------------------------------------------
Real Estate Securities Advantus Capital Management, Inc.
---------------------------------------------------------------------------------------------------------------------------
B-1
SCHEDULE C
RULE 12b-1 PLANS
C-1
SCHEDULE D
CERTIFICATE OF COMPLIANCE
Name of Fund:
Name of each Portfolio:
To: Minnesota Life Insurance Company
000 Xxxxxx Xxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxx 00000-0000
Attn: Xx. Xxxx Xxxx
Life Fund Accounting
Station Number: 9-6169
We have reviewed compliance of the Fund named above with respect to
certain investment diversification requirements for the Fund for the quarter
ending, __________, __________. The review was limited to verifying whether the
Fund complied with the quarterly diversification requirements described in
Section 817(h) of the Internal Revenue Code of 1986, as amended, and the
regulations thereunder (the "Section 817(h) Diversification Requirements").
The review did not include testing compliance with any other investment
limitations in the Private Placement Memorandum of the Fund or the Private
Placement Memorandum of the Policies issued by Minnesota Life.
As of _____________, ___________________, the Fund was in compliance
with the Section 817(h) Diversification Requirements.
Dated:
---------------------
By:
-----------------------
Title:
--------------------
D-1
