Ex 99.26(h)(i)
PARTICIPATION AGREEMENT
AMONG
ADVANTUS SERIES FUND, INC.
ADVANTUS CAPITAL MANAGEMENT, INC.
AND
SECURIAN LIFE INSURANCE COMPANY
DATED APRIL 20, 2006
THIS AGREEMENT, made and entered into as of the 20th day of April, 2006, by and
among Securian Life Insurance Company (hereinafter "Securian Life"), a Minnesota
corporation, on its own behalf and on behalf of each segregated asset account of
Securian 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 exemptions from the provisions of Sections 9(a), 13(a),
15(a) and 15(b), of the Investment Company Act of 1940 and Rule 6e-2(b)(15)
thereunder so as to permit the sale of Fund shares to both variable annuity and
variable life separate accounts of both affiliated and unaffiliated life
insurance companies subject to the provisions of Clauses (i) through (iv) of
Rule 6e-2(b)(15) and the undertakings set forth in the order (hereinafter the
"Mixed and Shared 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
1
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, Securian 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 Securian 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 Directors of Securian Life,
to set aside and invest assets attributable to the aforesaid Variable Insurance
Products; and
WHEREAS, Securian 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,
Securian 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, Securian 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, Securian 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 Securian 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. Securian 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
"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
2
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 Securian 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 Securian 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, Securian 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 Securian 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 Securian Life for an Account or Sub-Account in federal funds transmitted
by wire to Securian 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 Securian Life after such time, the Fund shall promptly upon Securian
Life's written request, reimburse Securian Life for any charges, costs, fees,
interest, or other expenses incurred by Securian 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
Securian 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 Securian 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.
1.7 The Fund shall furnish, on or before the ex-dividend date, notice to
Securian Life of any income dividends or capital gain distributions payable on
the shares of any Portfolio of the Fund. Securian 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
3
shall notify Securian 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 Securian 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 and
Shared 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. Securian 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 Securian 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 Securian Life's
general account, provided that such amounts may also be invested in an
investment company other than the Fund if: (a) Securian 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.
1.12 In the event adjustments are required to correct any material error in
the computation of the net asset value of the Fund's shares, the Fund shall
notify Securian Life as soon as practicable after discovering the need for those
adjustments which result in a reimbursement to an Account in accordance with the
Fund's then current policies on reimbursement, which the Fund represents are
consistent with applicable SEC standards. If an adjustment is to be made in
accordance with such policies to correct an error which has caused an Account to
receive an amount different than that to which it is entitled, the Fund shall
make all necessary adjustments to the number of shares owned in the Account and
distribute to the Account the amount of such underpayment for credit to Securian
Life's Contract/Policy Owners.
4
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 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 Securian Life, the Fund or the Adviser shall either
(a) provide Securian 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 Securian Life shall reasonably
request; or (b) provide Securian 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 Securian Life with a copy of its current
statement of additional information, including any amendments or supplements, in
a form suitable for duplication by Securian Life. Expenses of furnishing such
documents for marketing purposes shall be borne by Securian 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 Securian Life with copies of
any Fund-sponsored proxy materials in such quantity as Securian 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). Securian Life shall bear the cost of distributing
prospectuses and statements of additional information to contract owners.
Securian 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, Securian 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.
Securian 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, Securian 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, Securian Life shall cease all use of any such name or xxxx as soon as
reasonably practicable.
5
2.6 Securian 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 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 Securian Life, on a
timely basis, with such information about the Fund, the Portfolios and the
Adviser and any Sub-Advisers, in such form as Securian Life may reasonably
require, as Securian 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 Securian Life or concerning Securian 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 Securian 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
Securian 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, Securian 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 Securian 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,
Securian 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. Securian 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
Securian 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 Securian Life or its
affiliates 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.
6
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Securian 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 Securian 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 Securian 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 Securian 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. Securian 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
7
such qualification and will notify Securian Life immediately upon having a
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 Securian Life of any determination by the
Directors that an irreconcilable material conflict exists and of the
implications thereof.
8
4.2 Securian Life agrees to promptly report any potential or existing
conflicts of which it is aware to the Directors. Securian Life will assist the
Directors in carrying out their responsibilities under the Mixed and Shared
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 Securian Life to disregard
contract owner voting instructions. All communications from Securian 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, Securian 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
Securian Life to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, Securian 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
Securian 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 Securian Life conflicts with a
majority of other state regulators to which Securian Life is subject, then
Securian 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 Securian 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 Securian 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 Securian Life will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Directors inform
Securian Life in writing of the foregoing determination; provided, however, that
such withdrawal and termination shall be limited to the extent required by any
such material irreconcilable conflict as determined by a majority of the
disinterested Directors.
9
4.7 Securian 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 and
Shared 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 and Shared Funding Exemptive Order) on terms and conditions materially
different from those contained in the Mixed and Shared 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
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 and Shared 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 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
Securian Life's corporate tax liability. Each of the Fund and the Adviser also
acknowledges that
10
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
Securian 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 Securian Life and any federal income taxes
or tax penalties incurred by Securian 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 Securian 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
6.1 INDEMNIFICATION BY SECURIAN LIFE
(a) Securian 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 Securian 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 Securian 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
11
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
Securian 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 Securian 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
Securian Life; or
(iv) arise out of or result from any failure by Securian 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 Securian Life in this Agreement
or arise out of or result from any other material breach of this
Agreement by Securian Life.
(b) Securian 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. Securian 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
Securian 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 Securian Life of any such claim shall not relieve Securian Life 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. Securian
Life also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from Securian Life
to such party of Securian 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 Securian 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.
12
(c) The Indemnified Parties will promptly notify Securian 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 Securian Life
and each of its Directors, officers, employees and each person, if any, who
controls Securian 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 Securian 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 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
13
therein not misleading, if such statement or omission was made in
reliance upon information furnished to Securian 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 Securian 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 such party independently in connection with the defense thereof other than
reasonable costs of investigation.
(d) Securian 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 Securian Life, and
each of its directors and officers and each person, if any, who controls
Securian Life within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section
14
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 Director, 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
Securian 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 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) Securian 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.
15
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
Securian 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
Securian Life has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of this
Agreement; or
(b) if Securian 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 Securian Life upon
written notice to the Fund and the Adviser, if Securian 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 Securian 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 "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.
16
7.6 Securian 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, Securian Life will promptly furnish to the Fund and the
Adviser the opinion of counsel for Securian 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, Securian 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, Xxxxxxxxx 00000-0000
Attention: President
If to Securian Life:
Securian Life Insurance Company
000 Xxxxxx Xxxxxx Xxxxx
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: President
ARTICLE IX.
COMPLIANCE WITH ANTI-MONEY LAUNDERING LAWS AND REGULATIONS
9.1 Securian Life agrees to comply with any and all laws, regulations, and
other requirements relating to money laundering, including, without limitation,
the International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001 (Title III of the USA Patriot Act), hereinafter, collectively with the
rules, regulations and orders promulgated thereunder, the "Act," and any
requirements and/or requests in connection therewith, made by regulatory
authorities, the Fund or the Fund's underwriter or their duly appointed agents,
either
17
generally or in respect of a specific transaction, and/or in the context of a
"primary money laundering concern" as defined in the Act.
9.2 Securian Life agrees as a condition precedent to any transaction taking
or continuing to be in effect, to comply with any and all anti-money laundering
laws, regulations, orders or requirements, and without prejudice to the
generality of the above, to provide regulatory authorities, the Fund, the Fund's
underwriter or their duly appointed agents, with all necessary reports and
information for them to fulfill their obligations, if any, under the Act for the
purposes of the Fund, the Fund's underwriter, or other third parties complying
with any and all anti-money laundering requirements, including, without
limitation, the enhanced due diligence obligations, imposed by the Act, the
filing of Currency Transaction Reports and/or of Suspicious Activity Reports
obligations required by the Act, and/or the sharing of information requirements
imposed by the Act.
9.3 In the event satisfactory reports and information are not received
within a reasonable time period from the date of the request, the Fund or the
Fund's underwriter reserve the right to reject any transaction.
9.4 Further, Securian Life represents that it has not received notice of,
and to its knowledge, there is no basis for, any claim, action, suit,
investigation or proceeding that might result in a finding that Securian Life is
not or has not been in compliance with the Act, and the rules and regulations
promulgated thereunder. Securian Life agrees to notify the Fund and the Fund's
underwriter promptly if the representation in the previous sentence is no longer
true or if Securian Life has a reasonable basis for believing that such
representation may no longer be true.
ARTICLE X.
MISCELLANEOUS
10.1 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.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 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.
10.4 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 Securian Life.
18
10.5 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.
10.6 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.
10.7 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.
10.8 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.
10.9 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.
19
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.
Securian Life:
Securian Life Insurance Company
By its authorized officer
By:
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and
Chief Executive Officer
The Fund:
Advantus Series Fund, Inc.
By its authorized officer
By:
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
The Adviser:
Advantus Capital Management, Inc.
By its authorized officer
By:
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
20
SCHEDULE A
SEPARATE ACCOUNTS OF SECURIAN LIFE INSURANCE COMPANY
1. Securian Life Variable Universal Life Account
A-1
SCHEDULE B
FUND PORTFOLIOS AND CLASSES AVAILABLE
INVESTMENT INVESTMENT
PORTFOLIO CLASS ADVISER SUB-ADVISER
-------------------------------------------------------------------------------------------------------------
Bond Advantus Capital Management, Inc.
Money Market Advantus Capital Management, Inc.
Mortgage Securities Advantus Capital Management, Inc.
Index 500 Advantus Capital Management, Inc.
International Bond Advantus Capital Management, Inc. Xxxxxx Xxxx Investments Limited
Maturing Government Bond - 2006 Advantus Capital Management, Inc.
Maturing Government Bond - 2010 Advantus Capital Management, Inc.
Index 400 Mid-Cap Advantus Capital Management, Inc.
Real Estate Securities Advantus Capital Management, Inc.
B-1
SCHEDULE C
FEES OR OTHER COMPENSATION
Pursuant to the Fund's Rule 12b-1 Plan of Distribution, Securian Life shall
receive 12b-1 fees in connection with this Agreement in such amounts and subject
to such terms as are set forth in the separate Fund Shareholder Services
Agreement between Securian Life and the Fund's distributor, Securian Financial
Services, Inc.
C-1
SCHEDULE D
CERTIFICATE OF COMPLIANCE
Name of Fund: Advantus Series Fund, Inc.
Name of each Portfolio: __________________________________
To: Securian Life Insurance Company
000 Xxxxxx Xxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxx 00000-0000
Attn: Xx. Xxxxxxxx Xxxxxxxxx
Life Fund Accounting
Station Number: A6-5136
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").
As of _____________, ___________________, the Fund was in compliance with
the Section 817(h) Diversification Requirements.
Dated:
---------------------------------------
By:
------------------------------------------
Title:
---------------------------------------
D-1
