Exhibit 27(h)(1)
PARTICIPATION AGREEMENT
AMONG
ADVANTUS SERIES FUND, INC.
ADVANTUS CAPITAL MANAGEMENT, INC.
AND
NORTHSTAR LIFE INSURANCE COMPANY
DATED _________________, 200__
THIS AGREEMENT, made and entered into as of the ____ day of ____________, 200__,
by and among Northstar Life Insurance Company (hereinafter "Northstar Life"), a
New York corporation, on its own behalf and on behalf of each segregated asset
account of Northstar 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
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, Northstar 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 Northstar 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 Northstar Life,
to set aside and invest assets attributable to the aforesaid Variable Insurance
Products; and
WHEREAS, Northstar 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,
Northstar 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, Northstar 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, Northstar 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 Northstar 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. Northstar 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 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.
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1.3 Northstar 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 Northstar
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, Northstar
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 Northstar 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 Northstar Life for an Account or Sub-Account in federal funds
transmitted by wire to Northstar 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 Northstar Life after such time, the Fund shall promptly
upon Northstar Life's written request, reimburse Northstar Life for any charges,
costs, fees, interest, or other expenses incurred by Northstar 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
Northstar 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 Northstar 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
Northstar Life of any income dividends or capital gain distributions payable on
the shares of any Portfolio of the Fund. Northstar 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
Northstar Life of the number of shares so issued as payment of such dividends
and distributions.
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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 Northstar 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. Northstar 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 Northstar 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 Northstar
Life's general account, provided that such amounts may also be invested in an
investment company other than the Fund if: (a) Northstar 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 Northstar 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 Northstar Life's Contract/Policy Owners.
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
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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 Northstar Life, the Fund or the Adviser shall either
(a) provide Northstar 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 Northstar Life shall reasonably
request; or (b) provide Northstar 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 Northstar Life with a copy of
its current statement of additional information, including any amendments or
supplements, in a form suitable for duplication by Northstar Life. Expenses of
furnishing such documents for marketing purposes shall be borne by Northstar
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 Northstar Life with copies of
any Fund-sponsored proxy materials in such quantity as Northstar 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). Northstar Life shall bear the cost of distributing
prospectuses and statements of additional information to contract owners.
Northstar 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, Northstar 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.
Northstar 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, Northstar 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, Northstar Life shall cease all use of any such name or xxxx as soon as
reasonably practicable.
2.6 Northstar 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
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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 Northstar Life, on a
timely basis, with such information about the Fund, the Portfolios and the
Adviser and any Sub-Advisers, in such form as Northstar Life may reasonably
require, as Northstar 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 Northstar Life or concerning Northstar 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 Northstar 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 Northstar 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, Northstar
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
Northstar 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, Northstar 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. Northstar 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
Northstar 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 Northstar 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.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Northstar 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
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established each Account as a segregated asset account under such law as of the
date set forth in Schedule A.
3.2 Northstar 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 Northstar 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 Northstar 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. Northstar 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 Northstar 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.
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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 Northstar Life of any determination by
the Directors that an irreconcilable material conflict exists and of the
implications thereof.
4.2 Northstar Life agrees to promptly report any potential or existing
conflicts of which it is aware to the Directors. Northstar 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 Northstar Life to disregard
contract owner voting instructions. All communications from Northstar Life to
the Directors may be made in care of the Fund.
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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, Northstar 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
Northstar Life to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, Northstar 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
Northstar 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 Northstar Life conflicts with
a majority of other state regulators to which Northstar Life is subject, then
Northstar 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 Northstar 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 Northstar 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 Northstar Life will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Directors inform
Northstar 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.
4.7 Northstar 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
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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
Northstar 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 Northstar 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
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to Northstar Life and any federal income taxes or tax penalties incurred by
Northstar 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 Northstar 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 Northstar Life
(a) Northstar 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 Northstar 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 Northstar 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 Northstar 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 Northstar Life
- 11 -
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 Northstar Life; or
(iv) arise out of or result from any failure by Northstar 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 Northstar Life in this
Agreement or arise out of or result from any other material breach
of this Agreement by Northstar Life.
(b) Northstar 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. Northstar 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
Northstar 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 Northstar Life of any such claim shall not relieve Northstar 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.
Northstar Life also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from
Northstar Life to such party of Northstar 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 Northstar 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 Northstar 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 Northstar Life
and each of its Directors, officers, employees and each person, if any, who
controls Northstar Life within
- 12 -
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 Northstar 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 therein not misleading, if such statement or omission was
made in reliance upon information furnished to Northstar 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
- 13 -
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 Northstar 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) Northstar 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 Northstar Life,
and each of its directors and officers and each person, if any, who controls
Northstar 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 Director, officer, agent or employee of
the Fund
- 14 -
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
Northstar 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) Northstar 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
Northstar 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
Northstar Life has suffered a
- 15 -
material adverse change in its business, operations, financial
condition or prospects since the date of this Agreement; or
(b) if Northstar 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 Northstar Life upon
written notice to the Fund and the Adviser, if Northstar 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 Northstar 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.
7.6 Northstar 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, Northstar Life will promptly furnish to the Fund and the
Adviser the opinion of counsel for Northstar 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, Northstar 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.
- 16 -
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 Northstar Life:
Northstar Life Insurance Company
University Corporate Centre at Amherst
000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxx Xxxx 00000
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 Northstar 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.
- 17 -
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.
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.
Northstar Life:
Northstar Life Insurance Company
By its authorized officer
By:
------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
---------------------------------
Title: Vice President, Secretary and
---------------------------------
Director
---------------------------------
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: Xxxxxxxxx X. Xxxxxxxxx
---------------------------------
Title: Vice President and Treasurer
---------------------------------
- 18 -
SCHEDULE A
SEPARATE ACCOUNTS OF NORTHSTAR LIFE INSURANCE COMPANY
1. Northstar Life Variable Universal Life Account
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. Credit Suisse Asset Management, LLC
International Stock Advantus Capital Management, Inc. Xxxxxxxxx Investment Counsel, LLC
Small Company Growth Advantus Capital Management, Inc. Credit Suisse Asset Management, LLC
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. State Street Research & Management
Company
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
FEES OR OTHER COMPENSATION
Pursuant to the Fund's Rule 12b-1 Plan of Distribution, Northstar 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 Northstar 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: Northstar Life Insurance Company
000 Xxxxxx Xxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxx 00000-0000
Attn: Xx. Xxxx Xxxxx
Life Fund Accounting
Station Number: A6-6169
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").
As of _____________, ___________________, the Fund was in compliance with
the Section 817(h) Diversification Requirements.
Dated:________________________________
By:___________________________________
Title:________________________________
D-1
