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File Number 33-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
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(Exact Name of Registrant)
The Minnesota Mutual Life Insurance Company
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(Name of Depositor)
400 Robert Street North, St. Paul, Minnesota 55101-2098
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(Address of Depositor's Principal Executive Offices) (Zip Code)
(612) 298-3500
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(Depositor's Telephone Number, Including Area Code)
Dennis E. Prohofsky Copy to:
Vice President, General Counsel and Secretary J. Sumner Jones, Esq.
The Minnesota Mutual Life Insurance Company Jones & Blouch
400 Robert Street North 2100 Pennsylvania Avenue, N.W.
St. Paul, Minnesota 55101-2098 Washington, D.C. 20037
(Name and Address of Agent for Service)
Approximate Date of Public Offering: As soon as practicable after the date of
this Registration Statement.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its date or dates as may be necessary to delay its
effective date until the Registrant shall file a further amendment which
specifically states that the Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until
the Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a) may determine.
Pursuant to Regulation 270.24f-2 under the Investment Company Act of 1940,
Registrant hereby elects to register an indefinite number of its immediate
variable annuity contracts under the Securities Act of 1933. The amount of the
filing fee is $500.
Page 1 of ___.
Exhibit Index is on Page ___.
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PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
Minnesota Mutual Variable Annuity Account
Cross Reference Sheet to Prospectus
Form N-4
Item Number Caption in Prospectus
1. Cover Page
2. Special Terms
3. Questions and Answers About the Variable Annuity Contracts
4. Condensed Financial Information; Performance Data
5. General Descriptions
6. Contract Charges
7. Description of the Contracts
8. Description of the Contracts; Annuity Payments and Options
9. Description of the Contracts; Death Benefits
10. Description of the Contracts; Purchase Payments and Value of the
Contract
11. Description of the Contracts; Redemptions
12. Federal Tax Status
13. Not Applicable
14. Table of Contents of the Statement of Additional Information
<PAGE>
IMMEDIATE VARIABLE ANNUITY CONTRACT PROSPECTUS
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
("VARIABLE ANNUITY ACCOUNT"), A SEPARATE ACCOUNT OF
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY ("MINNESOTA MUTUAL")
The individual, immediate variable annuity contract offered by this Prospectus
is designed for use in connection with personal retirement plans, some of which
may qualify for federal income tax advantages available under sections 401, 403,
408 or 457 of the Internal Revenue Code. It may also be used apart from a
qualified plan.
The owner of a contract will have contract values invested on a variable basis
in the Variable Annuity Account (the "Separate Account"). Although the Separate
Account is comprised of several sub-accounts, only one of its sub-accounts (the
"Sub-Account") is available under this contract. The Sub-Account invests only in
the Index 500 Portfolio (the "Portfolio") of MIMLIC Series Fund, Inc. (the
"Fund"). The value of the contract and the amount of each variable annuity
payment will vary in accordance with the performance of the Sub-Account and the
Portfolio, except to the extent limited by Minnesota Mutual's contractual
guarantee of a minimum annuity payment amount. The contract is an immediate
annuity and annuity payments must begin within 12 months after the contract is
issued. The contract provides for additional purchase payments and withdrawals
during a portion of the annuity payment period.
This Prospectus sets forth concisely the information that a prospective
investor should know before purchasing a contract, and it should be read and
kept for future reference. A Statement of Additional Information, bearing the
same date, which contains further information, has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
Prospectus. A copy of the Statement of Additional Information may be obtained
without charge by calling (612) 298-3500, or by writing Minnesota Mutual at its
principal office at the Minnesota Mutual Life Center, 400 Robert Street North,
St. Paul, Minnesota 55101-2098. A Table of Contents for the Statement of
Additional Information appears in this Prospectus on page 25.
This Prospectus is not valid unless attached to a current prospectus of MIMLIC
Series Fund, Inc.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.
LOGO
The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101-2098
Telephone: (612) 298-3500
The date of this document and the Statement of Additional Information is:
, 199
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Special Terms........................................................................ 3
Questions and Answers About the Variable Annuity Contract............................ 5
Expense Table........................................................................ 8
Condensed Financial Information...................................................... 9
Performance Data..................................................................... 10
General Descriptions
The Minnesota Mutual Life Insurance Company...................................... 10
Separate Account................................................................. 10
MIMLIC Series Fund, Inc.......................................................... 10
Additions, Deletions or Substitutions............................................ 11
Contract Charges
Sales Charges.................................................................... 11
Risk Charge...................................................................... 12
Mortality and Expense Risk Charges............................................... 12
Administration Charge............................................................ 12
Voting Rights........................................................................ 13
Description of the Contracts
General Provisions............................................................... 13
Annuity Payments and Options..................................................... 14
Death Benefits................................................................... 16
Purchase Payments and Value of the Contract...................................... 17
Redemptions...................................................................... 18
Federal Tax Status................................................................... 20
Statement of Additional Information.................................................. 25
Appendix A--Computation and Examples of Withdrawals.................................. 26
Appendix B--Immediate Variable Annuity Illustration.................................. 28
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THE PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
2
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SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
AGE: the age of a person at nearest birthday.
ANNUITANT: the person named on page one of the contract who may receive lifetime
benefits under the contract. Except in the event of the death of either
annuitant prior to the annuity payment commencement date, joint annuitants will
be considered a single entity.
ANNUITY PAYMENT COMMENCEMENT DATE: the first annuity payment date as specified
on page one of the contract.
ANNUITY PAYMENT DATE: each day indicated by the annuity payment commencement
date and the annuity payment frequency for an annuity payment to be determined.
This is shown on page one of the contract.
ANNUITY PAYMENTS: payments made at regular intervals to the annuitant or any
other payee. The annuity payments will increase or decrease in amount. The
changes will reflect the investment experience of the sub-account of the
separate account.
ANNUITY UNIT: the standard of value for the variable annuity payment amount.
BENEFICIARY: the person, persons or entity designated to receive death benefits
payable under the contract in the event of the annuitant's death.
CASH VALUE: the dollar amount available for withdrawal under the contract at any
time. A cash value exists only as long as both the number of cash value units
and the applicable factor from the cash value factor table shown in the contract
are greater than zero.
CASH VALUE PERIOD: the time during which a cash value exists under the contract.
The cash value period begins on the annuity commencement date and ends on the
cash value end date shown on page one of the contract.
CASH VALUE UNIT: the measure of your interest in the Separate Account that is
available for withdrawal under the contract during the cash value period.
CODE: the Internal Revenue Code of 1986, as amended.
CONTRACT DATE: the effective date of a contract.
FUND: MIMLIC Series Fund, Inc. or any mutual fund or separate investment
portfolio within a series mutual fund which is designated as an eligible
investment for the Separate Account.
GENERAL ACCOUNT: all of our assets other than those in the Separate Account or
in other separate accounts established by us.
GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT: the amount which is guaranteed as the
minimum annuity payment amount. This amount is payable regardless of the
performance of the Sub-Account. Purchase payments and cash value withdrawals
will cause this guaranteed minimum annuity payment amount to be adjusted. The
adjustment will reflect your new interest in the Separate Account.
JOINT OWNER: the person designated to share equally in the rights and privileges
provided to the owner of this contract. Only you and your spouse may be named as
a joint owner.
PLAN: a tax-qualified employer pension, profit-sharing, or annuity purchase plan
under which benefits are to be provided by the variable annuity contracts
described herein.
PURCHASE PAYMENT DATE: the date we receive a purchase payment in our home
office.
PURCHASE PAYMENTS: amounts paid to us as consideration for the benefits provided
by the contract.
SEPARATE ACCOUNT: a separate investment account entitled Minnesota Mutual
Variable Annuity Account. This separate account was established by us under
Minnesota law. The Separate Account is composed of several sub-accounts. The
assets of the Separate Account are ours. Those assets are not subject to claims
arising out of any other business which we may conduct.
SURRENDER VALUE: the surrender value of the contract shall be the total annuity
value as of the date of surrender plus the amounts deducted from purchase
payments. These include deductions for sales charges, risk charges, and state
premium taxes where applicable.
TOTAL ANNUITY VALUE: the total annuity value represents your total interest in
the Separate Account.
VALUATION DATE: any date on which a Fund is valued.
VALUATION PERIOD: the period between successive valuation dates measured from
the time of one determination to the next.
3
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VARIABLE ANNUITY: an annuity providing for payments varying in amount in
accordance with the investment experience of the Fund.
WE, OUR, US: The Minnesota Mutual Life Insurance Company.
WRITTEN REQUEST: a request in writing signed by you. In the case of joint
owners, the signatures of both owners will be required to complete a written
request. In some cases, we may provide a form for your use. We may also require
that the contract be sent to us along with your written request.
YOU, YOUR: the owner of this contract. The owner may be the annuitant or someone
else. The owner shall be that person or entity named as owner in the
application.
1940 ACT: the Investment Company Act of 1940, as amended, or any similar
successor federal legislation.
4
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QUESTIONS AND ANSWERS ABOUT THE VARIABLE ANNUITY CONTRACT
WHAT IS AN ANNUITY?
An annuity is a series of payments for the life of a person or for the joint
lifetimes of the annuitant and another person and thereafter during the lifetime
of the survivor. An annuity with payments which are guaranteed as to amount
during the payment period is a fixed annuity. An annuity with payments which
vary during the payment period in accordance with the investment experience of a
separate account of an insurance company is called a variable annuity.
WHAT IS AN IMMEDIATE ANNUITY?
An immediate annuity is a contract which provides for annuity payments beginning
within a relatively short period after the issue of the contract. This type of
annuity is distinguished from a deferred annuity where contract values may be
left with an insurance company or separate account for some years prior to the
time that annuity payments begin. For the contract described in this Prospectus,
annuity payments must begin within 12 months from the day that the contract is
issued. In some states this period may be shortened so that the contract may be
considered to be an immediate annuity within that state.
WHAT IS THE CONTRACT OFFERED BY THIS PROSPECTUS?
The contract is an immediate, variable annuity contract which provides for
scheduled annuity payments. Annuity payments may be received on a monthly,
quarterly, semi-annual or annual basis. These payments may begin immediately and
must begin on a date within 12 months after the issue date of the contract.
Purchase payments received by us under a contract are allocated to the Separate
Account. In the Separate Account, your purchase payments are put into the Sub-
Account which invests in the Portfolio.
IS THERE A GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT?
Yes. You will receive at least the guaranteed minimum annuity payment amount
specified in your contract. Each variable annuity payment will vary upwards or
downwards in accordance with the performance of the Sub-Account, however, unless
it would be less than the guaranteed minimum annuity payment amount. Under the
terms of the contract's guarantee provisions, at each annuity payment date, we
will pay the annuitant or annuitants the greater of: (a) the annuity payment
amount determined by multiplying the number of annuity units times the annuity
unit value; or (b) the guaranteed minimum annuity payment amount currently in
force for the contract.
We guarantee that variable annuity payments will always be at least 85% of the
initial variable annuity payment amount. This guaranteed amount is determined on
the contract issue date and shown on page one of the contract. If an additional
purchase payment is made, we will guarantee that variable annuity payments will
always be at least 85% of the annuity amount attributable to that additional
purchase payment, plus the amount already guaranteed at the time of that
purchase payment. Withdrawals of cash value amounts under the contract will
reduce the guaranteed annuity payment amount by the same proportion that the
withdrawal reduces the number of annuity units under the contract.
IS THE AMOUNT OF THE CASH VALUE OF THE CONTRACT GUARANTEED?
No. The cash value of the contract decreases as annuity payments are made and it
also increases or decreases based upon the performance of the Sub-Account of the
Separate Account as reflected in the annuity unit value. We do not guarantee the
performance of any Sub-Account, nor do we guarantee the annuity unit value,
which may fall to zero. The performance of the Sub-Account will not affect the
duration of the cash value period.
ARE THERE LIMITATIONS ON PURCHASE PAYMENTS?
Yes. A purchase payment in an amount of at least $10,000 will be required in
order for us to issue the contract. A contract will not be issued if an initial
purchase payment is tendered which is less than that amount.
After the contract has been issued, you may make additional purchase payments,
but only during the cash value period of the contract. This period is shown on
page one of the contract. Additional purchase payments may be made only while
the annuitant is alive. Additional purchase payments must be in an amount of at
least $5,000. We will waive this contract provision for amounts which are
received after the contract effective date as part of an integrated rollover or
Section 1035 transaction.
WE RESERVE THE RIGHT TO SUSPEND THE SALE OF THESE CONTRACTS AND TO TERMINATE
YOUR ABILITY TO MAKE ADDITIONAL PURCHASE PAYMENTS INTO THE CONTRACT.
You may not make total purchase payments which exceed the amount of $1,000,000
except with our prior consent.
5
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WHAT INVESTMENT OPTIONS ARE AVAILABLE FOR THE SEPARATE ACCOUNT?
Currently, purchase payments are allocated to the Sub-Account and are invested
exclusively in shares of that Portfolio of the Fund. The Fund is a mutual fund
of the series type, which means that it has several different portfolios which
it offers for investment. Shares of the Portfolio are made available at net
asset value to the Separate Account to fund the contracts. The Fund is also
required to redeem its shares at net asset value at our request. We reserve the
right to add, combine or remove other eligible funds. The investment objectives
and certain policies of the Index 500 Portfolio are as follows:
The Portfolio seeks investment results that correspond generally to the
price and yield performance of the common stocks included in the Standard &
Poor's Corporation 500 Composite Stock Price Index (the "Index"). It is
designed to provide an economical and convenient means of maintaining a
broad position in the equity market as part of an overall investment
strategy. All common stocks, including those in the Index, involve greater
investment risk than debt securities. The fact that a stock has been
included in the Index affords no assurance against declines in the price or
yield performance of that stock.
There is no assurance that the Portfolio will meet its objectives. Additional
information concerning the investment objectives and policies of the Portfolio
can be found in the current prospectus for the Fund, which is attached to this
Prospectus.
ARE OTHER PORTFOLIOS AVAILABLE?
No. All Separate Account assets of these contracts are invested in the Index 500
Portfolio of the Fund.
WHAT CHARGES ARE ASSOCIATED WITH THE CONTRACTS?
Under the contract there are certain charges which are made as deductions from
purchase payments and other charges which are made directly to the assets held
in the Separate Account.
A deduction for a sales charge and a risk charge is made from purchase
payments. The sales charge is based upon the cumulative amount of total purchase
payments made under the contracts, including any new purchase payments. The
charges are illustrated in the table shown below.
<TABLE>
<CAPTION>
SALES CHARGE AS A
CUMULATIVE TOTAL PURCHASE PERCENTAGE OF
PAYMENTS PURCHASE PAYMENTS
----------------------------- ---------------------
<S> <C>
$ 0 to 499,999.99 4.500%
500,000 to 749,999.99 4.125%
750,000 to 1,000,000.00 3.750%
</TABLE>
The risk charge is also deducted from each purchase payment when made. This
charge is for guaranteeing the minimum annuity payment amount as shown in the
contract. The risk charge may be as much as 2% of each purchase payment.
Currently, a deduction for this charge is made at the per annum rate of 1.25% of
purchase payments made to the contract. This rate is not guaranteed for future
purchase payments made under the contract and may change based upon our
experience in guaranteeing the annuity payment levels based upon the performance
of the Index 500 Portfolio of the Fund.
A deduction is made from the value of the Sub-Account on a daily basis for our
assumption of mortality and expense risks and for administrative charges under
the contract.
We deduct from the net asset value of the Separate Account an amount, computed
daily, not to exceed an annual rate of 1.40% for mortality and expense risk
guarantees. Currently, our charge for mortality and expense risk guarantees
total .80%. This total represents a charge of .55% for our assumption of
mortality risks and .25% for our assumption of expense risks. We reserve the
right to increase the charge for our assumption of mortality risks to not more
than .80% and our charge for our assumption of expense risks to not more than
.60%. If these charges are increased to this maximum amount, then the total of
the mortality risk and expense risk charges would be 1.40% on an annual basis.
Any increase of the total charges above 1.25% on an annual basis would be
subject to the approval of the Securities and Exchange Commission. For more
information on these charges, please see the heading "Contract Charges," on page
11 of this Prospectus.
In addition, MIMLIC Asset Management Company, one of our subsidiaries, acts as
the investment adviser to the Fund and deducts from the net asset value of each
Portfolio of the Fund a fee for its services which are provided under an
investment advisory agreement. The investment advisory agreement provides that
the fee shall be computed at the annual rate which may not exceed .40% of the
Index 500 Portfolio. The Fund is subject to certain expenses that may be
incurred with respect to
6
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its operation and those expenses are allocated among the Portfolios. For more
information on the Fund, see the prospectus of MIMLIC Series Fund, Inc. which is
attached to this Prospectus.
We deduct from the net asset value of the Separate Account an amount, computed
daily, not to exceed an annual rate of .40% for administrative expenses.
Currently, our administrative charge is .15% on an annual basis. For more
information on this item, please see the heading "Contract Charges" on page 11
of this Prospectus.
Deductions for any applicable premium taxes may also be made (currently such
taxes range from 0.0% to 3.5%) depending upon applicable law.
For more information on charges, see the heading "Contract Charges" in this
Prospectus.
CAN YOU SURRENDER THE CONTRACT?
Yes. At any time before annuity payments begin, you can surrender the contract
for its surrender value. The surrender value of the contract shall be its total
annuity value as of the date of surrender plus the amounts deducted from your
purchase payments for sales charges, risk charges and state premium taxes where
applicable.
CAN YOU MAKE WITHDRAWALS FROM THE CONTRACT?
Yes. At any time during the cash value period, you can make withdrawals of the
cash value of the contract, pursuant to your written request. Each withdrawal
must be in an amount of at least $500 or, if the cash value of the contract is
less than that amount, all of the total remaining cash value in the contract
must be withdrawn. Withdrawals are not allowed during the period before annuity
payments begin.
A withdrawal of all or a portion of the cash value of the contract, subject to
the dollar limitations described above, may be made during the "cash value
period" of the contract. The amount of the cash value available for withdrawal
is equal to: (a) times (b) times (c), where (a) is the number of cash value
units credited to the contract, (b) is the current annuity unit value and (c) is
the appropriate cash value factor set forth in a table included in the contract.
The cash value period begins at the annuity commencement date of the contract
and runs for a period approximately equal to the annuitant's life expectancy at
the time the contract is issued. The number of cash value units and the cash
value period are shown on page one of each contract. If you make subsequent
purchase payments or withdrawals a new page one of the contract will be provided
to you.
When a withdrawal is made during the cash value period, the amount of the
annuity payment to be received by the annuitant after the withdrawal will be
recalculated and the guaranteed minimum annuity payment amount must be
redetermined as well, both of which will be adjusted downward to reflect the
withdrawal of cash values. For a description of the operation of the contract's
provisions on withdrawal and surrender see the heading "Redemptions" found on
page 18 of this Prospectus.
DO YOU HAVE A RIGHT TO CANCEL THE CONTRACT?
Yes. You may cancel the contract any time within 10 days of your receipt of the
contract by returning it to us or your agent.
WHAT ANNUITY OPTIONS ARE AVAILABLE?
The contracts allow for the selection of one of two variable annuity options.
One provides for lifetime variable annuity payments based on the life of a
single annuitant, the other provides for the lifetime variable annuity payments
based upon the combined lives of joint annuitants.
WHAT HAPPENS IF THE ANNUITANT DIES?
If the annuitant, or one of the named joint annuitants dies before annuity
payments begin, we will pay a death benefit to you or the named beneficiary.
This death benefit will be the sum of the contract's total annuity value plus
the amounts deducted from the contract's purchase payments for sales charges,
risk charges and state premium taxes, where applicable.
If the annuitant dies after annuity payments have begun, or after the second
death in the case of joint annuitants, we will pay a death benefit which shall
be equal to the cash value, if any, of the contract as of the date of the
annuitant's death. The death benefit will be paid to the beneficiary named in
the application for the contract or as subsequently changed. In each case, the
beneficiary may elect to receive annuity payments during the remainder of the
cash value period rather than a lump sum benefit. For a description of the
calculation of the amount of those annuity payments, please see the headings
"Annuity Payments and Options" and "Death Benefits" found on pages 14 and 16 of
this Prospectus, respectively.
WHAT VOTING RIGHTS DO YOU HAVE?
Contract owners and annuitants will be able to direct us as to how to vote
shares of the Portfolio held for their contracts in the Sub-Account of the
Separate Account. For more information on this subject, please see the heading
entitled "Voting Rights" found on page 13 of this Prospectus.
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EXPENSE TABLE
The following contract expense information is intended to illustrate the
expenses of the individual, immediate variable annuity contract. All expenses
shown are rounded to the nearest dollar. The information contained in the tables
must be considered with the narrative information which immediately follows them
in this heading.
INDIVIDUAL, IMMEDIATE VARIABLE ANNUITY CONTRACT
CONTRACT OWNER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
SALES CHARGE AS A
CUMULATIVE PERCENTAGE OF
TOTAL PURCHASE PAYMENTS PURCHASE PAYMENTS
--------------------------------------------- --------------------
<S> <C>
$ 0 to 499,999.99...................... 4.500%
500,000 to 749,999.99...................... 4.125%
750,000 to 1,000,000.00..................... 3.750%
</TABLE>
<TABLE>
<S> <C>
Risk Charge...................................................... 1.25%
------
Total Contract Expenses (assuming maximum sales charge)...... 5.75%
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Fees*............................. 0.80%
Administrative Charge*....................................... 0.15%
------
Total Separate Account Annual Expenses................... 0.95%
MIMLIC SERIES FUND, INC. INDEX 500 PORTFOLIO ANNUAL EXPENSES
(as a percentage of MIMLIC Series Fund average net assets for the
described Portfolio)
Index 500 Portfolio
Management Fees.............................................. .40%
Other Expenses............................................... .10%
-----
Total Index 500 Portfolio Annual Expenses................ .50%
-----
-----
EXAMPLE:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
-------- --------
<S> <C> <C>
Whether or not you surrender your contract at the end of the
applicable time period:
You would pay the following expenses on a $10,000
investment as of the end of the period indicated,
assuming a 5% annual return on assets:................. $ 714 $ 1,007
</TABLE>
*Under the terms of the contract, total mortality and expense risk fees may be
increased to as much as 1.40% (provided any necessary regulatory approvals are
obtained) and the administrative charge may be increased to as much as .40% (if
administrative costs have increased accordingly).
These figures are based on the assumption that the contract will accumulate
value prior to the annuity payment commencement date at a 5% annual return on
assets for one and three years, respectively. The maximum period allowable
between the issuance of a contract and the commencement of annuity payments is
one year.
The tables shown above are to assist a contract owner in understanding the
costs and expenses that a contract will bear directly or indirectly. For more
information on contract costs and expenses, see the Prospectus heading "Contract
Charges" and the information immediately following. The table does not reflect
deductions for any applicable premium taxes which may be made from each purchase
payment depending upon applicable law. The examples contained in this table
should not be considered a representation of past or future expenses. Actual
expenses may be greater or less than those shown.
8
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CONDENSED FINANCIAL INFORMATION
No condensed financial information is included in this Prospectus for the
Variable Annuity Account because no variable annuity contracts of this class
have been sold prior to the date of this Prospectus.
9
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PERFORMANCE DATA
From time to time the Variable Annuity Account may publish advertisements
containing performance data relating to the Sub-Account. Performance data will
consist of average annual total return quotations for recent one-year and
five-year periods and for the period since June 1, 1987, the date the
Sub-Account first became available pursuant to other registration statements of
the Variable Annuity Account. Performance data may also include cumulative total
return quotations for the period since June 1, 1987 or average annual total
return quotations for periods other than as described above. Performance figures
are based on historical performance information on the assumption that the
contracts offered by this Prospectus were available for sale on June 1, 1987 and
could accumulate value prior to the commencement of annuity payments for periods
in excess of one year. The figures are not intended to suggest that such
performance will continue in the future.
Average annual total return figures are the average annual compounded rates of
return required for an initial investment to equal its total annuity value at
the end of the period. The surrender value will reflect the sales and risk
charges deducted from purchase payments as well as all other contract charges.
Cumulative total return figures are the percentage changes between the value of
an initial investment and its total annuity value at the end of the period.
Cumulative total return figures will not reflect the deduction of any amounts
from purchase payments. Cumulative total return figures will always be
accompanied by average annual total return figures. More detailed information on
the computations is set forth in the Statement of Additional Information.
--------------------------------------------------------------------------------
GENERAL DESCRIPTIONS
A. THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
We are a mutual life insurance company organized in 1880 under the laws of
Minnesota. Our home office is at 400 Robert Street North, St. Paul, Minnesota
55101-2098, telephone: (612) 298-3500. We are licensed to do a life insurance
business in all states of the United States (except New York where we are an
authorized reinsurer), the District of Columbia, Canada and Puerto Rico.
B. SEPARATE ACCOUNT
A separate account called the Minnesota Mutual Variable Annuity Account was
established on September 10, 1984, by our Board of Trustees in accordance with
certain provisions of the Minnesota insurance law. The Separate Account is
registered as a "unit investment trust" with the Securities and Exchange
Commission (the "Commission") under the Investment Company Act of 1940 (the
"1940 Act"), but such registration does not signify that the Securities and
Exchange Commission supervises the management, or the investment practices or
policies, of the Separate Account. The Separate Account meets the definition of
a "separate account" under the federal securities laws.
The Minnesota law under which the Separate Account was established provides
that the assets of the Separate Account shall not be chargeable with liabilities
arising out of any other business which we may conduct, but shall be held and
applied exclusively to the benefit of the holders of those variable annuity
contracts for which the Separate Account was established. The investment
performance of the Separate Account is entirely independent of both the
investment performance of our general account and of any other separate account
which we may have established or may later establish. All obligations under the
contracts are general corporate obligations of Minnesota Mutual.
The Separate Account has one Sub-Account to which contract owners may allocate
purchase payments to the contracts described in this Prospectus. The only
Sub-Account which is available to the contract is that which invests in the
Index 500 Portfolio.
C. MIMLIC SERIES FUND, INC.
The Separate Account currently invests exclusively in MIMLIC Series Fund, Inc.
(the "Fund"), a mutual fund of the series type which is advised by MIMLIC Asset
Management Company. The Fund is registered with the Securities and Exchange
Commission as a diversified, open-end management investment company, but such
registration does not signify that the Commission supervises the management, or
the investment practices or policies, of the Fund. The Fund issues its shares,
continually and without sales charge, only to us and our separate accounts,
which currently include the Separate Account, Variable Fund D, the Variable Life
Account, the Group Variable Annuity Account and the Variable Universal Life
Account. Shares are sold and redeemed at net asset value.
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The Fund's investment adviser is MIMLIC Asset Management Company ("MIMLIC
Management"). It acts as an investment adviser to the Fund pursuant to an
advisory agreement. MIMLIC Management is a subsidiary of Minnesota Mutual.
The only Portfolio of the Fund which is available for investment by the
contract described in this Prospectus is the Index 500 Portfolio.
A prospectus for the Fund is attached to this Prospectus. A person should
carefully read the Fund's prospectus before investing in the contract.
D. ADDITIONS, DELETIONS OR SUBSTITUTIONS
We retain the right, subject to any applicable law, to make substitutions with
respect to the investments of the Sub-Accounts of the Separate Account. If
investment in a fund should no longer be possible or if we determine it becomes
inappropriate for contracts of this class, we may substitute another fund for a
sub-account. Substitution may be with respect to existing total annuity values
and cash values, future purchase payments and future annuity payments.
We reserve the right to transfer assets of the separate account to another
separate account. If this type of transfer is made, the term separate account,
as used in the contract, shall then mean the separate account to which the
assets were transferred.
We may also establish additional Sub-Accounts in the Separate Account and we
reserve the right to add, combine or remove any Sub-Accounts of the Separate
Account. Each additional Sub-Account will purchase shares in a new portfolio or
mutual fund. Such Sub-Accounts may be established when, in our sole discretion,
marketing, tax, investment or other conditions warrant such action. Similar
considerations will be used by us should there be a determination to eliminate
one or more of the Sub-Accounts of the Separate Account. The addition of any
investment option will be made available to existing contract owners on such
basis as may be determined by us.
We also reserve the right, when permitted by law, to de-register the Separate
Account under the Investment Company Act of 1940 (the "1940 Act"), to restrict
or eliminate any voting rights of the contract owners, and to combine the
Separate Account with one or more of our other separate accounts.
Shares of the Portfolios of the Fund are also sold to other of our separate
accounts, which are used to receive and invest premiums paid under our variable
life policies. It is conceivable that in the future it may be disadvantageous
for variable life insurance separate accounts and variable annuity separate
accounts to invest in the Fund simultaneously. Although neither Minnesota Mutual
nor the Fund currently foresees any such disadvantages either to variable life
insurance policy owners or to variable annuity contract owners, the Fund's Board
of Directors intends to monitor events in order to identify any material
conflicts between such policy owners and contract owners and to determine what
action, if any, should be taken in response thereto. Such action could include
the sale of Fund shares by one or more of the separate accounts, which could
have adverse consequences. Material conflicts could result from, for example,
(1) changes in state insurance laws, (2) changes in federal income tax laws, (3)
changes in the investment management of any of the Portfolios of the Fund, or
(4) differences in voting instructions between those given by policy owners and
those given by contract owners.
------------------------------------------------------------------------
CONTRACT CHARGES
Under this contract, there are certain deductions for charges which are made
from purchase payments and other charges which are made directly to the Separate
Account. Deductions from purchase payments are made for sales charges, risk
charges and state premium taxes, where applicable. Deductions for the mortality
risk charge, expense risk charge and the administrative charge are all deducted
on each valuation date from the Separate Account.
A. SALES CHARGES
A sales charge is deducted from the purchase payments using the percentages
shown in the table below:
<TABLE>
<CAPTION>
SALES CHARGE AS A
CUMULATIVE TOTAL PURCHASE PERCENTAGE OF
PAYMENTS PURCHASE PAYMENTS
----------------------------- ---------------------
<S> <C>
$ 0 to 499,999.99 4.500%
500,000 to 749,999.99 4.125%
750,000 to 1,000,000.00 3.750%
</TABLE>
The applicable percentage from the chart will be based on the total cumulative
purchase
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payments to the date of payment, including the new purchase payment.
These sales charges may be waived in whole or in part in certain circumstances
where sales expenses are not paid at the time of sale to registered
representatives and broker-dealers responsible for the sale of the contracts or
where the contract is sold in anticipation of reduced expenses. No elimination
or reduction of the sales charge will be permitted where that reduction or
elimination would be unfairly discriminatory to any person or class of persons.
B. RISK CHARGE
A risk charge is also deducted from each purchase payment for our guarantee of
the minimum annuity payment amount shown on page one of the contract and
described herein under the heading "The Guaranteed Minimum Annuity Payment
Amount", on page 16 of this Prospectus. The risk charge may be as much as 2% of
each purchase payment. Currently, a deduction for this charge is made at the per
annum rate of 1.25% of purchase payments made to the contract. This rate is not
guaranteed for future purchase payments made under the contract and may change
based upon our experience in guaranteeing the annuity payment levels based upon
the performance of the Portfolio.
If this deduction proves to be insufficient to cover the actual cost of the
risk assumed by us in providing a guaranteed minimum as to the amount of each
variable annuity payment made under a contract, then we will absorb the
resulting losses and make sufficient transfers to the Separate Account from our
General Account, where appropriate. Conversely, if these deductions prove to be
more than sufficient after the establishment of any contingency reserves deemed
prudent or required by law, any excess will be profit (or "surplus") to us.
C. MORTALITY AND EXPENSE RISK CHARGES
We assume the mortality risk under the contracts by our obligation to continue
to make scheduled annuity payments, determined in accordance with the annuity
rate tables and other provisions contained in the contracts, to each annuitant
regardless of how long that annuitant lives or all annuitants as a group live.
This assures an annuitant that neither the annuitant's own longevity nor an
improvement in life expectancy generally will have an adverse effect on the
scheduled annuity payments received under the contract. Actual mortality results
incurred by us shall not adversely affect any payments or values under this
contract.
We assume an expense risk by assuming the risk that deductions provided for in
the contracts for the sales and administrative expenses will be adequate to
cover our actual expenses incurred. Actual expense results incurred by us shall
not adversely affect any payments or values under this contract.
For assuming these risks, we currently make a deduction from the net asset
value of the Separate Account of an amount, computed daily, equal to an annual
rate of .80% for mortality and expense risk guarantees. This is composed of a
deduction of 0.55% for the mortality expense risk charge and 0.25% for the
expense risk charge. We reserve the right to increase the charge for the
assumption of the mortality risk to 0.80% and the assumption of expense risks to
0.60%. If these charges are increased to the maximum amount, then the total for
the mortality risk and expense risk charges would be 1.40% on an annual basis.
Any such increase of the total charges above 1.25% on an annual basis would be
subject to the approval of the Securities and Exchange Commission.
For a discussion of how these charges are applied in the calculation of the
annuity unit value, please see the discussion entitled "Purchase Payments and
Value of the Contract" on page 17.
If these deductions prove to be insufficient to cover the actual cost of the
expense and mortality risks assumed by us, then we will absorb the resulting
losses and make sufficient transfers to the Separate Account from our general
account, where appropriate. Conversely, if these deductions prove to be more
than sufficient after the establishment of any contingency reserves deemed
prudent or required by law, any excess will be profit (or "surplus") to us. Some
or all of such profit may be used to cover any distribution costs not recovered
through the sales charge.
D. ADMINISTRATION CHARGE
We perform all administrative services relative to the contract. These services
include the review of applications for compliance with our issue criteria, the
preparation and issue of the contract, the receipt of purchase payments,
forwarding amounts to the Fund for investment, the calculation of the guaranteed
minimum annuity payment amount, the preparation and
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<PAGE>
mailing of periodic reports and the performance of other services.
As consideration for providing these services, we currently make a deduction
from the Separate Account at the annual rate of 0.15%. We reserve the right to
increase this charge, based upon our experience with these contracts, to a
maximum which shall not exceed the amount of 0.40%.
------------------------------------------------------------------------
VOTING RIGHTS
We will vote fund shares held in the Separate Account at the regular and special
meetings of the Fund. We will vote shares attributable to contracts in
accordance with instructions received from the annuitant or annuitants or,
during the surrender period of the contract, from the owner, if different from
the annuitants. In the event no instructions are received from the person or
persons entitled to direct such a vote, we will vote shares attributable to that
contract in the same proportion as shares of the Portfolio held by the
Sub-Account for which instructions have been received. If, however, the 1940
Act, any regulation under that Act, or any interpretations of that Act or the
regulations under it, should change so that we may be allowed to vote shares in
our own right, then we may elect to do so.
The number of votes will be determined by dividing the total annuity value for
each contract allocated to the Sub-Account by the net asset value per share of
the underlying Fund shares held by that Sub-Account. The votes attributable to
any particular contract will decrease as the reserves decrease. In determining
any voting interest, fractional shares will be recognized.
We will notify each person entitled to vote of a Fund shareholders' meeting if
the shares held for his or her contract may be voted at that meeting. We will
also provide proxy materials and a form of instruction to facilitate provision
of voting instructions.
------------------------------------------------------------------------
DESCRIPTION OF THE CONTRACTS
A. GENERAL PROVISIONS
1. TYPES OF CONTRACTS OFFERED
(a) Variable Annuity Contract
The contract is an individual, immediate, variable annuity contract issued
by us which provides for scheduled annuity payments on a monthly, quarterly,
semi-annual or annual basis. These payments may begin immediately and must
begin on a date within 12 months after the issue date of the contract.
Purchase payments received by us under a contract are allocated to the
Separate Account. In the Separate Account, your purchase payments are put
into a Sub-Account which are then invested in the Portfolio.
This type of contract may be used in connection with a pension or profit
sharing plan under which plan contributions have been accumulating. It may
be used in connection with a plan which has previously been funded with
insurance or annuity contracts. It may also be purchased by individuals not
as a part of any qualified plan. The contract provides for a variable
annuity which is paid on the basis of a single or joint life annuity. Once
made, the annuity option elected may not be changed.
2. ISSUANCE OF CONTRACTS
The contracts are issued to you, the contract owner named in the application.
The owner of the contract may be the annuitant or someone else and the contract
may be owned by two persons jointly.
3. MODIFICATION OF THE CONTRACTS
A contract may be modified at any time by written agreement between you and us.
However, no such modification will adversely affect the rights of an annuitant
under the contract unless the modification is made to comply with a law or
government regulation. Such a modification will be in writing. You will have the
right to accept or reject the modification, except in circumstances where, when
the contract is used in a tax-qualified arrangement, and the change is required
to conform the contract with tax laws or regulations.
4. ASSIGNMENT
The annuitant, or the joint annuitants, can direct or assign the annuity
payments to be made under the contract so that they are paid to someone else. We
will not be bound by any assignment until we have recorded a written
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request of it at our home office. We are not responsible for the validity of any
assignment. An assignment will not apply to any payment or action before it was
recorded. Any claim made by an assignee will be subject to proof of the
assignee's interest and the extent of the assignment.
If the contract is sold in connection with a tax-qualified program, (including
employer-sponsored employee pension benefit plans, tax-sheltered annuities and
individual retirement annuities,) your or the annuitant's interest may not be
assigned, sold, transferred, discounted or pledged as collateral for a loan or
as security for the performance of an obligation or for any other purpose. To
the maximum extent permitted by law, benefits payable under the contract shall
be exempt from the claims of creditors.
5. LIMITATIONS ON PURCHASE PAYMENTS
Purchase payments must be made at our home office. Our home office is at 400
Robert Street North, St. Paul, Minnesota 55101-2098. When we receive a purchase
payment from you at our home office, we will send you a confirmation statement
and an updated page one for the contract.
A purchase payment in an amount of at least $10,000 will be required in order
for us to issue the contract. A contract will not be issued if an initial
purchase payment is made which is less than that amount.
After the contract has been issued, you may make additional purchase payments,
but only during the cash value period of the contract as shown on page one.
These additional purchase payments may be made only while the annuitant is
alive. Additional purchase payments must be in an amount of at least $5,000. We
will waive this contract provision for amounts which are received after the
contract effective date as part of an integrated rollover or Section 1035
transaction. WE RESERVE THE RIGHT TO SUSPEND THE SALE OF THESE CONTRACTS AND TO
TERMINATE YOUR ABILITY TO MAKE ADDITIONAL PURCHASE PAYMENTS INTO THE CONTRACT.
You may not make total purchase payments which exceed the amount of $1,000,000
except with our prior consent.
Some states will limit these contracts to a single purchase payment and
contracts issued there are so limited.
There may be limits on the maximum contributions to retirement plans that
qualify for special tax treatment.
6. DEFERMENT OF PAYMENT
Whenever any payment under a contract is to be made in a single sum, payment
will be made within 7 days after the date such payment is called for by the
terms of the contract, except as payment may be subject to postponement for:
(a) any period during which the New York Stock Exchange is closed other than
customary weekend and holiday closings, or during which trading on the
New York Stock Exchange is restricted, as determined by the Commission;
(b) any period during which an emergency exists as determined by the
Commission as a result of which it is not reasonably practical to
dispose of securities in the Fund or to fairly determine the value of
the assets of the Fund; or
(c) such other periods as the Commission may by order permit for the
protection of the contract owners.
7. PARTICIPATION IN DIVISIBLE SURPLUS
The contracts participate in our divisible surplus, according to the annual
determination of our Board of Trustees as to the portion, if any, of our
divisible surplus which has accrued on the contracts.
No assurance can be given as to the amount of divisible surplus, if any, that
will be distributable under these contracts in the future. Such amount may arise
if mortality and expense experience is more favorable than assumed. When any
distribution of divisible surplus is made, it will take the form of the purchase
of additional annuity units.
B. ANNUITY PAYMENTS AND OPTIONS
1. ANNUITY PAYMENTS
Variable annuity payments are determined on the basis of (a) the mortality table
specified in the contract, which reflects the age of the annuitant or the joint
annuitants, and (b) the investment performance of the Sub-Account. The amount of
the variable annuity payments will not be affected by adverse mortality
experience or by an increase in our expenses in excess of the expense deductions
provided for in the contract. The annuitant will receive the value of a fixed
number of annuity units on each scheduled annuity payment date. The value of
such units, and thus the amount of each scheduled annuity payment will reflect
investment gains and losses and investment income of the Portfolio. The amount
of the
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<PAGE>
annuity payment may increase or decrease from one annuity payment date to the
next unless affected by the guaranteed minimum annuity payment amount.
2. ELECTING THE ANNUITY COMMENCEMENT DATE
The contracts are issued as immediate annuities on the contract date. When you
purchase a contract, you must indicate the annuity commencement date which, in
any event, must be within 12 months from the contract date. Some jurisdictions
may restrict this time limit to a shorter period.
An annuity payment may begin on any day of the month. Annuity payments may be
received on a monthly, quarterly, semi-annual or annual basis.
Benefits under retirement plans that qualify for special tax treatment
generally must commence no later than the April 1 following the year in which
the participant reaches age 70 1/2 and are subject to other conditions and
restrictions.
3. ANNUITY FORMS
The contracts provide for two lifetime annuity forms, a life annuity or a joint
and last survivor annuity. Each annuity payment option is available only as a
variable annuity. No additional optional annuity forms are provided or allowed
under the contracts.
LIFE ANNUITY
This is a scheduled annuity payable during the lifetime of the annuitant.
Annuity payments terminate with the last scheduled payment preceding the death
of the annuitant if the annuitant's death occurs after the cash value period has
expired. If the annuitant dies during the cash value period, the beneficiary
will be paid a death benefit that permits the beneficiary to elect to continue
receiving payments until the end of the cash value period or to withdraw some or
all of the cash value amount. Annuity payment amounts payable as a death benefit
will be reduced for any cash value withdrawals received by the beneficiary.
JOINT AND LAST SURVIVOR ANNUITY
This is a scheduled annuity payable during the joint lifetime of the annuitant
and a designated joint annuitant and continuing thereafter during the remaining
lifetime of the survivor. If the last surviving annuitant dies during the cash
value period, the beneficiary will be paid a death benefit that permits the
beneficiary to elect to continue receiving payments until the end of the cash
value period or to withdraw some or all of the cash value. Annuity payment
amounts payable as a death benefit will be reduced for any cash value
withdrawals received by the beneficiary. If this option is elected, the contract
and payments shall then be the joint property of the annuitant and the
designated joint annuitant.
The amount of the first scheduled payment depends on the annuity form elected
and the age of the annuitant and the joint annuitant, if any.
4. DETERMINATION OF AMOUNT OF VARIABLE ANNUITY PAYMENTS
Unless annuity payments are based on the guaranteed minimum annuity payment
amount, the dollar amount of each variable annuity payment is equal to the
number of annuity units credited to the contract multiplied by the annuity unit
value as of the due date of the payment. A number of annuity units is credited
at issuance of the contract based upon the initial annuity payment amount
attributable to the initial purchase payment received for the contract. The
number of annuity units to be credited is determined by dividing the initial
annuity payment amount by the annuity unit value as of the contract date. The
number of annuity units remains unchanged except as adjusted for additional
purchase payments, cash value withdrawals or an annuitant's death. For further
information on the crediting of annuity units, see "Crediting Annuity Units"
below.
The initial annuity payment amount is determined by applying the purchase
payment, net of deductions, to the appropriate annuity purchase rate per $1,000.
Deductions from purchase payments may include premium taxes imposed by certain
states depending upon the type of plan involved. Where applicable, these taxes
currently range from 0% to 3.5%.
The initial annuity payment amount depends on the annuity form elected and
upon the adjusted age of the annuitant and the joint annuitant, if any. A
formula for determining the adjusted age of persons receiving contract payments
is contained in the contract. The initial annuity payment amount is also based
upon annuity payment purchase rate tables which assume an interest rate of 4.5%
per annum. The 4.5% interest rate assumed in the variable annuity determination
will produce level annuity payments if the net investment performance remains
constant at 4.5% per year.
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Subsequent payments will decrease, remain the same or increase depending upon
whether the actual net investment performance is less than, equal to, or greater
than 4.5%.
5. AMOUNT OF SECOND AND SUBSEQUENT SCHEDULED ANNUITY PAYMENTS
Unless annuity payments are based on the guaranteed minimum annuity payment
amount, the dollar amount of the second and later variable annuity payments is
equal to the number of annuity units determined for each Sub-Account times the
annuity unit value for that Sub-Account as of the due date of the payment. This
amount may increase or decrease from payment to payment.
6. THE GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT
You will receive at least the guaranteed minimum annuity payment amount
specified in your contract. Each variable annuity payment will vary upwards or
downwards in accordance with the performance of the Sub-Account unless it would
be less than the guaranteed minimum annuity payment amount. Under the terms of
the contract's guarantee provisions, at each annuity payment date, we will pay
the annuitant or annuitants the greater of: (a) the annuity payment amount
determined by multiplying the number of annuity units times the annuity unit
value; or (b) the guaranteed minimum annuity payment amount currently in force
for the contract.
We guarantee that variable annuity payments will always be at least 85% of the
initial variable annuity payment amount. This guaranteed amount is determined on
the contract issue date and shown on page one of the contract. If an additional
purchase payment is made, we will guarantee that variable annuity payments will
always be at least 85% of the annuity amount attributable to that additional
purchase payment, plus the amount already guaranteed at the time of that
purchase payment. Withdrawals of cash value amounts under the contract will
reduce the guaranteed annuity payment amount by the same proportion that the
withdrawal reduces the number of annuity units under the contract.
C. DEATH BENEFITS
The contracts provide that in the event of the death of the annuitant or a joint
annuitant before the annuity commencement date, a death benefit will be paid to
you or, if applicable, to your beneficiary. This death benefit will be paid when
we receive due proof, satisfactory to us, of the death at our home office. This
death benefit will be the sum of the total annuity value of the contract plus
the amounts deducted from your purchase payments for sales charges, risk
charges, and state premium taxes where applicable. Death proceeds will be paid
in a single sum to the beneficiary designated to receive a lump sum benefit.
Payment will be made within 7 days after we receive due proof of death. Except
as noted below, the entire interest in the contract must be distributed within 5
years of an owner's death.
The contracts provide that in the event of the death of the annuitant or the
second joint annuitant after annuity payments have begun, we will pay the cash
value of the contract, if any, as a lump sum death benefit. The beneficiary will
be the person or persons named in the application for this contract or as
subsequently changed by you. In that event, we will pay the death benefit to the
beneficiary named in your last change of beneficiary request as provided for in
the contract.
You can file a written request with us to change the beneficiary. Your written
request will not be effective until it is recorded in our home office records.
After it has been recorded, it will take effect as of the date you signed the
request. However, if a death occurs before the request has been recorded, the
request will not be effective as to any death proceeds we have paid before the
request was recorded in our home office. If a beneficiary dies, that
beneficiary's interest in a contract ends with his or her death. Only those
beneficiaries who survive will be eligible to share in the amount payable to the
beneficiary at the annuitant's death. If there is no surviving beneficiary upon
the death of the annuitant, any remaining value of death benefit payable to the
beneficiary will be paid to the annuitant's estate.
If the death benefit is payable after annuity payments have begun, the
beneficiary may elect to receive annuity payments during the remainder of the
cash value period rather than a lump sum benefit. However, the number of annuity
units will be set as a number equal to the number of cash value units as of the
date of the annuitant's death. The annuity payments to the beneficiary will
terminate at the end of the cash value period and the guaranteed minimum annuity
payment amount will be adjusted in proportion to any change in the number of
annuity units. The new guaranteed minimum annuity payment amount will be equal
to the guaranteed minimum annuity payment amount just prior to the annuitant's
death, multiplied by
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the number of annuity units after the annuitant's death divided by the number of
annuity units prior to the annuitant's death.
If the beneficiary elects to continue the annuity payments, the cash value
will also continue on the beneficiary's behalf as part of the death benefit.
This allows the beneficiary to withdraw any or all of the cash value available
at any time during the remaining cash value period. As with cash value
withdrawals while the annuitant is alive, cash value withdrawals by the
beneficiary after the annuitant's death will reduce future annuity payments and
the guaranteed minimum annuity payment amount based on the reduced interest in
the Separate Account as described under the heading "Withdrawals and Surrender"
on page 18 of this Prospectus.
Death benefits payable after the annuitant's death must be distributed at
least as rapidly as under the method elected by the annuitant or annuitants.
D. PURCHASE PAYMENTS AND VALUE OF THE CONTRACT
1. CREDITING ANNUITY UNITS
Application forms are completed by the applicant and forwarded to our home
office when the contract is originally issued. We will review each application
form submitted to us for compliance with our issue criteria and, if it is
accepted, a contract will be issued. The initial purchase payment for the
contract must be an amount of at least $10,000.
If the initial purchase payment is accompanied by an incomplete application,
that purchase payment will not be credited until the valuation date coincident
with or next following the date a completed application is received and
accepted. We will offer to return the initial purchase payment accompanying an
incomplete application if it appears that the application cannot be completed
within five business days.
Purchase payments will be credited to the contract in the form of annuity
units and cash value units. Each purchase payment is credited on the valuation
date coincident with or next following the date such purchase payment is
received by us at our home office, except for the initial purchase payment. The
number of annuity units credited with respect to each purchase payment is
determined by dividing the initial annuity payment amount attributable to the
purchase payment by the then current annuity unit value for the Sub-Account on
the date the purchase payment is credited.
The net amount of each purchase payment, after deductions, will be applied to
purchase an additional initial annuity payment amount at least as great as that
determined by using the guaranteed annuity payment purchase rate table for new
purchase payments included in the contract. The guaranteed annuity payment
purchase rates used for new purchase payments as shown in the contract are based
on a 4.5% assumed interest rate and Individual Annuity 1983 Table A mortality
rates projected to the terminal age of the table using projections scale G. If,
when a purchase payment is made, we are using a table of annuity payment
purchase rates for new purchase payments for this class of contract which would
result in a larger initial annuity payment, we will use that table instead.
The number of annuity units so determined shall not be changed by any
subsequent change in the value of an annuity unit, but the value of an annuity
unit will vary from valuation date to valuation date to reflect the investment
experience of the Sub-Account unless annuity payments are based on the
guaranteed minimum annuity payment amount.
We will determine the value of annuity units on each day on which the
Portfolio of the Fund is valued.
2. CREDITING CASH VALUE UNITS
Cash value units will be credited for each purchase payment in a number equal to
the number of annuity units credited for each respective purchase payment. The
ratio of the number of cash value units to the number of annuity units
represents the portion of each annuity payment that is derived from the
contract's cash value during the cash value period. When the number of cash
value units equals the number of annuity units, the entire annuity payment
amount during the cash value period is being supported by the cash value. When
the number of annuity units is greater, the excess represents the portion of
each annuity payment that is the result of the redistribution of future life
contingent payments, originally expected to be paid after the cash value period
has expired (for those annuitant's who live beyond the cash value period), as
the result of a previous cash value withdrawal. This excess is not supported by
the cash value and is not part of the death benefit payable to the beneficiary.
The cash value of the contract is not guaranteed. The cash value decreases as
annuity payments are made, but also increases or decreases based on the
performance of the
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Sub-Account of the Separate Account given by the relative change in the annuity
unit value.
3. VALUE OF THE CONTRACT
The total annuity value of the contract at any time is the present value of the
future annuity payments expected to be made under the contract. The total
annuity value represents your total interest in the Separate Account.
When the annuitant is alive, the total annuity value is equal to the sum of
the number of cash value units, multiplied by the annuity unit value, multiplied
by the appropriate factor from the total annuity value factor table(s) included
in the contract; plus the number of annuity units in excess of the number of
cash value units, multiplied by the annuity unit value, multiplied by the
appropriate factor from the total annuity value factor table(s) included in the
contract.
After the annuitant's death, if the beneficiary elects to continue annuity
payments for the remainder of the cash value period, the total annuity value
will be equal to the cash value at all times during the cash value period.
4. VALUE OF THE ANNUITY UNIT
The value of an annuity unit for the Sub-Account is determined on each valuation
date by using the product of: (a) the value of an annuity unit on the preceding
valuation date, (b) the net investment factor for the Sub-Account for the
valuation period ending on the current valuation date; and (c) a daily factor
(.999879) which adjusts the value for the effect in the valuation period of the
4.5% annual assumed interest rate that has already been built into each
contract's total annuity value, cash value, and annuity payment calculations.
5. NET INVESTMENT FACTOR FOR EACH VALUATION PERIOD
The net investment factor is an index used to measure the investment performance
of a Sub-Account from one valuation period to the next. For the Sub-Account, the
net investment factor for a valuation period is the gross investment rate for
the valuation period, less a deduction for the mortality and expense risk
charges and the administrative charge at the current rate of 0.95% per annum.
The gross investment rate is equal to: (1) the net asset value of a Portfolio
share determined at the end of the current valuation period, plus (2) the per
share amount of any dividend or capital gain distribution by the Portfolio if
the "ex-dividend" date occurs during the current valuation period, divided by
(3) the net asset value of a Portfolio share determined at the end of the
preceding valuation period. The gross investment rate may be positive or
negative.
E. REDEMPTIONS
1. WITHDRAWALS AND SURRENDER
At any time during the cash value period of the contract, you may request a
withdrawal from the cash value of the contract. Each withdrawal must be in an
amount of at least $500 or, if the cash value of the contract is less than that
amount, the total of any remaining cash value in the contract must be withdrawn.
Other restrictions on withdrawals may be present when the contract is used in
conjunction with tax qualified programs. See the heading "Federal Tax Status" on
page 20 in this Prospectus. You must make a written request for any withdrawal
or surrender.
You may also surrender the contract at any time before the annuity payment
commencement date. Withdrawals are not allowed during the period before annuity
payments begin. The annuity payment commencement date is the day the first
annuity payment is made under the contract. If you make a surrender request, you
will receive the contract's surrender value. The surrender value will be
determined on the valuation date coincident with or next following the day your
written request is received at our home office.
Withdrawal or surrender proceeds will be paid in a single sum within seven
days of our receipt of your written request.
(a) Determination of Surrender Value
The surrender value of a contract is the total annuity value of the contract
as of the date of surrender plus the amounts deducted from your purchase
payments for sales charges, risk charges, and state premium taxes where
applicable. As this surrender value is available only until the time the
first annuity payment is made under the contract, this provision has the
effect of providing a return of your contract's charges, the net purchase
payments, plus or minus investment gains or losses and less Separate Account
charges, up until the time of that payment. As the maximum period of
deferral is 12 months after the Contract Date, this provision offers a
benefit which is limited in time.
(b) Determination of Cash Value
A withdrawal of all or a portion of the cash value of the contract, subject
to the dollar
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limitations described above, may be made during the "cash value period" of
the contract. The amount of the cash value available for withdrawal is equal
to: (a) times (b) times (c), where (a) is the number of cash value units
credited to the contract, (b) is the current annuity unit value and (c) is
the appropriate cash value factor set forth in a table in the contract. The
cash value period begins at the annuity commencement date of the contract
and runs for a period approximately equal to the annuitant's life expectancy
at the time the contract is issued. The number of cash value units and the
cash value period are shown on page one of the contract. A new page one will
be provided to you if you make subsequent purchase payments or withdrawals.
This will inform you of the number of cash value units remaining in your
contract.
The number of cash value units credited under a contract is based on
purchase payments to, and cash withdrawals from, the contract. On the issue
date of the contract the number of cash value units will be equal to the
number of annuity units credited to the contract. (The crediting of annuity
units is discussed under the heading "Crediting Annuity Units" found on page
17 in this Prospectus.) Normally, withdrawals will reduce both the number of
cash value units and the number of annuity units but at different rates, so
that after a withdrawal the number or cash value units will no longer equal
the number of annuity units. For a description of the manner in which
withdrawals affect the cash value of the contract, see "Effect of
Withdrawals on Cash Value," below.
(c) Effect of Withdrawals on Cash Value
A withdrawal during the cash value period reduces the number of cash value
units of the contract. The new number of cash value units after a withdrawal
is equal to the number of cash value units just prior to the withdrawal,
multiplied by the cash value prior to withdrawal, less the cash value
withdrawn, divided by the cash value prior to withdrawal. Cash value units
are reduced on a last in, first out basis. Therefore, if additional purchase
payments were made to the contract after its issue, the value of the cash
value units attributable to those payments will be valued and cashed out as
withdrawals first, running backwards in time until the values attributable
to the initial purchase payment are reached.
(d) Annuity Payment Determinations after Withdrawals
A cash value withdrawal will affect future annuity payments by reducing the
number of annuity units, the basis for determining the amount of such
payments. The new number of annuity units following a cash value withdrawal
will depend on whether or not the annuitant is alive at the time the cash
value withdrawal is made. If the annuitant is not alive, in other words if
the withdrawal is made by the beneficiary as part of the death benefit, the
new number of annuity units will equal the number of cash value units
following the withdrawal. At the death of the annuitant, the number of
annuity units is adjusted, if necessary, to equal the then number of cash
value units, and this equivalency is continued through any subsequent cash
value withdrawals.
If the annuitant is alive at the time of the withdrawal, the new number of
annuity units is determined by, first, computing a new initial annuity
payment amount and, then, dividing that amount by the annuity unit value at
the time of the withdrawal. The new initial annuity payment amount is based
on the total annuity value remaining in the contract after a cash value
withdrawal. The total annuity value has two components, a cash value and
annuity reserves in excess of the cash value. These excess reserves are
intended to support annuity payments that may be paid after the cash value
period of the contract has expired. When a withdrawal is made, the cash
value of the contract is reduced by the amount of the withdrawal, but the
withdrawal does not reduce the amount of the excess reserves. Because a
withdrawal does not affect the amount of annuity payments supported by the
excess reserves, future expected annuity payments are "redistributed" at the
time of a withdrawal so that, if net Sub-Account performance were equal to
the 4.5% assumed interest rate, annuity payments would be equal over the
entire future expected lifetime of the contract. When a cash value
withdrawal is made, we will inform you of the new number of annuity units by
sending you a new page one for your contract.
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Redistribution of annuity payments after withdrawals do not adjust
redistributions made in connection with prior withdrawals. Despite
redistributions, the original mortality guarantees associated with each
purchase payment are preserved.
While annuity payments will be reduced as a result of cash value
withdrawals, so long as the annuitant is alive, annuity payments will never
be eliminated by cash value withdrawals even if all available cash value is
completely withdrawn. Some level of annuity benefit, under the option
elected, will always be payable. Also, a new guaranteed annuity amount will
always be in effect after cash withdrawals. While a new initial annuity
payment amount is determined after a cash withdrawal, additional cash values
are not created.
A description of the computation used to determine the new initial annuity
payment amount and examples of the computation are set forth in Appendix A
of this Prospectus.
For an example which assumes a pattern of withdrawals and the effect of such
withdrawals on contract values, please see Appendix A to this Prospectus.
2. RIGHT OF CANCELLATION
You should read the contract carefully as soon as it is received. You may cancel
the purchase of a contract within ten days after its delivery, for any reason,
by giving us written notice at 400 Robert Street North, St. Paul, Minnesota
55101-2098, of your intention to cancel. If the contract is canceled and
returned, we will refund to you the greater of (a) the total annuity value of
the contract attributable to your purchase payments, plus the amounts deducted
from your purchase payments, or (b) the amount of purchase payments paid under
this contract. Payment of the requested refund will be made to you within 7 days
after we receive notice of cancellation.
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FEDERAL TAX STATUS
INTRODUCTION
The discussion contained herein is general in nature and is not intended as tax
advice. Each person concerned should consult a competent tax adviser. No attempt
is made to consider any applicable state or other tax laws. In addition, this
discussion is based on our understanding of federal income tax laws as they are
currently interpreted. No representation is made regarding the likelihood of
continuation of current income tax laws or the current interpretations of the
Internal Revenue Service.
We are taxed as a "life insurance company" under the Internal Revenue Code.
The operations of the Separate Account form a part of, and are taxed with, our
other business activities. Currently, no federal income tax is payable by us on
income dividends received by the Separate Account or on capital gains arising
from the Separate Account's activities. The Separate Account is not taxed as a
"regulated investment company" under the Code and it does not anticipate any
change in that tax status.
TAXATION OF ANNUITY CONTRACTS IN GENERAL
Section 72 of the Code governs taxation of nonqualified annuities in general and
some aspects of qualified programs. No taxes are imposed on increases in the
value of a contract until distribution occurs, either in the form of a payment
in a single sum or as annuity payments under the annuity option elected. As a
general rule, annuity contracts held by a corporation, trust or other similar
entity, as opposed to a natural person, are not treated as annuity contracts for
federal tax purposes. The investment income on such contracts is taxed as
ordinary income that is received or accrued by the owner of the contract during
the taxable year. There is an exception to this general rule for immediate
annuity contracts. An immediate annuity contract for these purposes is an
annuity (i) purchased with a single premium or annuity consideration, (ii) the
annuity starting of which commences within one year from the date of the
purchase of the annuity, and (iii) which provides for a series of substantially
equal periodic payments (to be made not less frequently than annually) during
the annuity period. Corporations, trusts and other similar entities, other than
natural persons, seeking to take advantage of this exception for immediate
annuity contracts should consult with a tax adviser.
Under current guidance, the tax consequences of additional premium payments
and partial withdrawals under nonqualified and qualified annuities are unclear,
including the effect on taxation of distributions, required distribution
provisions and penalty taxes. Consult a qualified tax adviser before
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submitting additional premium payments or requesting a partial withdrawal.
For payments made in the event of a full surrender of an annuity not part of a
qualified program, the taxable portion is generally the amount in excess of the
cost basis of the contract. Amounts withdrawn from the variable annuity
contracts are generally treated first as taxable income to the extent of the
excess of the contract value over the purchase payments made under the contract.
Such taxable portion is taxed at ordinary income tax rates.
In the case of a withdrawal under an annuity that is part of a qualified
program, a portion of the amount received is taxable based on the ratio of the
"investment in the contract" to the individual's balance in the retirement plan,
generally the value of the annuity. The "investment in the contract" generally
equals the portion of any deposits made by or on behalf of an individual under
an annuity which was not excluded from the gross income of the individual. For
annuities issued in connection with qualified plans, the "investment in the
contract" can be zero.
For annuity payments, the taxable portion is generally determined by a formula
that establishes a specific dollar amount of each payment that is not taxed. In
this respect, Congress has indicated that the Treasury Department may have
authority to treat the combination purchase of an immediate annuity contract and
a separate deferred annuity contract as a single annuity contract under its
general authority to prescribe rules as may be necessary to enforce the income
tax laws. A prospective purchaser of more than one annuity contract in a
calendar year should consult a tax adviser. The taxable part of each annuity
payment is taxed at ordinary income rates.
If a taxable distribution is made under the variable annuity contracts, an
additional tax of 10% of the amount of the taxable distribution may apply. This
additional tax does not apply where the payment is made under an immediate
annuity contract, as defined above, the taxpayer is 59-1/2 or older, where
payment is made on account of the taxpayer's disability, or where payment is
made by reason of the death of an owner.
The Code also provides an exception to the 10% additional tax for
distributions, in periodic payments, of substantially equal installments, be
made for the life (or life expectancy) of the taxpayer or the joint lives (or
joint life expectancies) of the taxpayer and beneficiary.
For some types of qualified plans, other tax penalties may apply to certain
distributions.
A transfer of ownership of a contract, the designation of an annuitant or
other payee who is not also the contract owner, or the assignment of the
contract may result in certain income or gift tax consequences to the contract
owner that are beyond the scope of this discussion. A contract owner who is
contemplating any such transfer, designation or assignment should consult a
competent tax adviser with respect to the potential tax effects of that
transaction.
For purposes of determining a contract owner's gross income, all nonqualified
deferred annuity contracts issued by the same company (or its affiliates) to the
same contract owner during any calendar year shall be treated as one annuity
contract. Additional rules may be promulgated under this provision to prevent
avoidance of its effect through serial contracts or otherwise. In this respect,
Congress has indicated that the Treasury Department may have authority to treat
the combination purchase of an immediate annuity contract and a separate
deferred annuity contract as a single annuity contract under its general
authority to prescribe rules as may be necessary to enforce the income tax laws.
A prospective purchaser of more than one annuity contract in a calendar year
should consult a tax adviser for further information on these rules.
DIVERSIFICATION REQUIREMENTS
Section 817(h) of the Code authorizes the Treasury to set standards by
regulation or otherwise for the investments of the Separate Account to be
"adequately diversified" in order for the contract to be treated as a life
insurance contract for federal tax purposes. The Separate Account, through the
Fund, intends to comply with the diversification requirements prescribed in
Regulations Section 1.817-5, which affect how the Fund's assets may be invested.
Although the investment adviser is an affiliate of Minnesota Mutual, Minnesota
Mutual does not have control over the Fund or its investments. Nonetheless,
Minnesota Mutual believes that the Portfolio of the Fund in which the Separate
Account owns shares will be operated in compliance with the requirements
prescribed by the Treasury.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
Separate Account used to support their contracts. In those circumstances, income
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and gains from the Separate Account assets would be includible in the variable
annuity contract owner's gross income. The IRS has stated in published rulings
that a variable contract owner will be considered the owner of Separate Account
assets if the contract owner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. The Treasury
Department has also announced, in connection with the issuance of regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor (i.e., the
contract owner), rather than the insurance company, to be treated as the owner
of the assets in the account." This announcement also states that guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular sub-accounts without being treated as
owners of the underlying assets." As of the date of this Prospectus, no such
guidance has been issued.
The ownership rights under the contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets.
These differences could result in a contract owner being treated as the owner of
the assets of the Separate Account. In addition, Minnesota Mutual does not know
what standards will be set forth, if any, in the regulations or rulings which
the Treasury Department has stated it expects to issue. Minnesota Mutual
therefore reserves the right to modify the contract as necessary to attempt to
prevent a contract owner from being considered the owner of a pro rata share of
the assets of the Separate Account.
REQUIRED DISTRIBUTIONS
In order to be treated as an annuity contract for federal income tax purposes,
Section 72(s) of the Code requires any nonqualified contract issued after
January 18, 1985 to provide that (a) if an owner dies on or after the annuity
starting date but prior to the time the entire interest in the contract has been
distributed, the remaining portion of such interest will be distributed at least
as rapidly as under the method of distribution being used as of the date of that
owner's death; and (b) if an owner dies prior to the annuity starting date, the
entire interest in the contract must be distributed within five years after the
date of the owner's death. These requirements shall be considered satisfied if
any portion of the owner's interest which is payable to or for the benefit of a
"designated beneficiary" is distributed over the life of such beneficiary or
over a period not extending beyond the life expectancy of that beneficiary and
such distributions begin within one year of that owner's death. The owner's
"designated beneficiary" is the person designated by such owner as a beneficiary
and to whom ownership of the contract passes by reason of death. It must be a
natural person. However, if the owner's "designated beneficiary" is the
surviving spouse of the owner, the contract may be continued with the surviving
spouse as the new owner.
Nonqualified contracts issued after January 18, 1985 contain provisions which
are intended to comply with the requirements of Section 72(s) of the Code,
although no regulations interpreting these requirements have yet been issued.
Minnesota Mutual intends to review such provisions and modify them if necessary
to assure that they comply with the requirements of Code Section 72(s) when
clarified by regulation or otherwise.
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Other rules may apply to qualified contracts.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a contract because of the death of an owner.
Generally, such amounts are includable in the income of the recipient as
follows: (1) if distributed in a lump sum, they are taxed in the same manner as
a full surrender of the contract, as described above, or (2) if distributed
under an annuity option, they are taxed in the same manner as annuity payments,
as described above.
POSSIBLE LEGISLATION
In the past years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of non-qualified annuities that
did not have "substantial life contingencies" by taxing income as it is credited
to the annuity. Although as of the date of this Prospectus Congress is not
actively considering any legislation regarding the taxation of annuities, there
is always the possibility that the tax treatment of annuities could change by
legislation or other means (such as IRS regulations, revenue rulings, judicial
decisions, etc.). Moreover, it is also possible that any change could be
retroactive (that is, effective prior to the date of the change).
TAX QUALIFIED PROGRAMS
The annuity is designed for use with several types of retirement plans that
qualify for special tax treatment. The tax rules applicable to participants and
beneficiaries in retirement plans vary according to the type of plan and the
terms and conditions of the plan. Special favorable tax treatment may be
available for certain types of contributions and distributions. Adverse tax
consequences may result from contributions in excess of specified limits;
distributions prior to age 59 1/2 (subject to certain exceptions); distributions
that do not conform to specified minimum distribution rules; aggregate
distributions in excess of a specified annual amount; and in other specified
circumstances.
We make no attempt to provide more than general information about use of
annuities with the various types of retirement plans. Some retirement plans are
subject to distribution and other requirements that are not incorporated in the
annuity. Owners and participants under retirement plans as well as annuitants
and beneficiaries are cautioned that the rights of any person to any benefits
under annuities purchased in connection with these plans may be subject to the
terms and conditions of the plans themselves, regardless of the terms and
conditions of the annuity issued in connection with such a plan. Some retirement
plans are subject to distribution and other requirements that are not
incorporated into our annuity administration procedures. Owners, participants
and beneficiaries are responsible for determining that contributions,
distributions and other transactions with respect to the annuities comply with
applicable law. Purchasers of annuities for use with any retirement plan should
consult their legal counsel and tax adviser regarding the suitability of the
contract.
PUBLIC SCHOOL SYSTEMS AND CERTAIN TAX EXEMPT ORGANIZATIONS
Under Code Section 403(b), payments made by public school systems and certain
tax exempt organizations to purchase annuity contracts for their employees are
excludable from the gross income of the employee, subject to certain
limitations. However, these payments may be subject to FICA (Social Security)
taxes.
Code Section 403(b)(11) restricts the distribution under Code Section 403(b)
annuity contracts of: (1) elective contributions made in years beginning after
December 31, 1988; (2) earnings on those contributions; and (3) earnings in such
years on amounts held as of the last year beginning before January 1, 1989.
Distribution of those amounts may only occur upon death of the employee,
attainment of age 59 1/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
INDIVIDUAL RETIREMENT ANNUITIES
Code Sections 219 and 408 permit individuals or their employers to contribute to
an individual retirement program known as an "Individual Retirement Annuity" or
"IRA". Individual Retirement Annuities are subject to limitations on the amount
which may be contributed and deducted and the time when distributions may
commence. In addition, distributions from certain other types of retirement
plans may be placed into an Individual Retirement Annuity on a tax deferred
basis. Employers may establish Simplified Employee Pension (SEP) Plans for
making IRA contributions on behalf of their employees.
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CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS
Code Section 401(a) permits employers to establish various types of retirement
plans for employees, and permits self-employed individuals to establish
retirement plans for
themselves and their employees. These retirement plans may permit the purchase
of the contracts to accumulate retirement savings under the plans. Adverse tax
or other legal consequences to the plan, to the participant or to both may
result if this annuity is assigned or transferred to any individual as a means
to provide benefit payments, unless the plan complies with all legal
requirements applicable to such benefits prior to transfer of the annuity.
DEFERRED COMPENSATION PLANS
Code Section 457 provides for certain deferred compensation plans. These plans
may be offered with respect to service for state governments, local governments,
political subdivisions, agencies, instrumentalities and certain affiliates of
such entities, and tax exempt organizations. The plans may permit participants
to specify the form of investment for their deferred compensation account. All
investments are owned by the sponsoring employer and are subject to the claims
of the general creditors of the employer. Depending on the terms of the
particular plan, the employer may be entitled to draw on deferred amounts for
purposes unrelated to its Section 457 plan obligations. In general, all amounts
received under a Section 457 plan are taxable and are subject to federal income
tax withholding as wages.
WITHHOLDING
In general, distributions from annuities are subject to federal income tax
withholding unless the recipient elects not to have tax withheld. Different
rules may apply to payments delivered outside the United States. Some states
have enacted similar rules.
Recent changes to the Code allow the rollover of most distributions from
tax-qualified plans and Section 403(b) annuities directly to other tax-qualified
plans that will accept such distributions and to individual retirement accounts
and individual retirement annuities. Distributions which may not be rolled over
are those which are: (1) one of a series of substantially equal annual (or more
frequent) payments made (a) over the life or life expectancy of the employee,
(b) the joint lives or joint expectancies of the employee and the employee's
designated beneficiary, or (c) for a specified period of ten years or more; (2)
a required minimum distribution; or (3) the non-taxable portion of a
distribution.
Any distribution eligible for rollover, which may include payment to an
employee, an employee's surviving spouse or an ex-spouse who is an alternate
payee, will be subject to federal tax withholding at a 20% rate unless the
distribution is made as a direct rollover to a tax-qualified plan or to an
individual retirement account or annuity. It may be noted that amounts received
by individuals which are eligible for rollover may still be placed in another
tax-qualified plan or individual retirement account or individual retirement
annuity if the transaction is completed within 60 days after the distribution
has been received. Such a taxpayer must replace withheld amounts with other
funds to avoid taxation on the amount previously withheld.
SEE YOUR OWN TAX ADVISER
It should be understood that the foregoing description of the federal income tax
consequences under these contracts is not exhaustive and that special rules are
provided with respect to situations not discussed herein. It should also be
understood that should a plan lose its qualified status, employees will lose
some of the tax benefits described. Statutory changes in the Internal Revenue
Code with varying effective dates, and regulations adopted thereunder may also
alter the tax consequences of specific factual situations. Due to the complexity
of the applicable laws, tax advice may be needed by a person contemplating the
purchase of a variable annuity contract or exercising elections under such a
contract. For further information a qualified tax adviser should be consulted.
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STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information, which contains additional information
including financial statements, is available from the offices of Minnesota
Mutual at your request. The Table of Contents for that Statement of Additional
Information is as follows:
Trustees and Principal Management Officers of Minnesota Mutual
Distribution of Contracts
Performance Data
Auditors
Registration Statement
Financial Statements
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APPENDIX A--COMPUTATION AND EXAMPLES OF WITHDRAWALS
A cash value withdrawal will affect future annuity payments by reducing the
number of annuity units, the basis for determining the amount of such payments.
If the annuitant is alive at the time of the withdrawal, the new number of
annuity units is determined by, first, computing a new initial annuity payment
amount and, then, dividing that amount by the annuity unit value at the time of
the withdrawal.
IF NO PRIOR WITHDRAWALS
If no prior cash withdrawals have been made, the new initial annuity payment
amount is the sum of
(i) the product of the number of cash value units after the withdrawal times
the current annuity unit value, and
(ii) the product of ([(a) X (b)]/1000) times (c), where
(a) is the excess of the total annuity value over the cash value
immediately prior to the withdrawal,
(b) is the ratio of the cash value withdrawn over the cash value prior to
the withdrawal, and
(c) is the applicable annuity purchase rate set forth in the contract in
the table captioned "Total Annuity Value Factors and Annuity Payment
Purchase Rates Applicable at a Cash Value Withdrawal while the
Annuitant is Alive" ("Table I").
In the above computation "(i)" reflects the portion of the new initial annuity
payment amount supported by the reserves attributable to the cash value of the
contract, and "(ii)" reflects the portion of the new initial annuity payment
amount supported by the annuity reserves in excess of the cash value. The excess
reserves, "(ii) (a)," are multiplied by the proportionate reduction in the cash
value, "(ii) (b)," to determine the portion of the excess reserves that are to
be redistributed, and the redistribution is effected by dividing the portion so
determined by 1000 and multiplying the result by the appropriate annuity
purchase rate.
An example of the withdrawal calculation may serve as a useful illustration.
Assume a contract issued to a woman, age 60, for an initial purchase payment of
$100,000, and assume further that the net Sub-Account performance matches the
assumed interest rate of 4.5% so that we need not consider the variation in
annuity payments as a result of fluctuations in investment performance. Assume
also that the annuity unit value is and remains $1.00. At the time of issue of
the contract, the initial annuity payment amount, if paid as a life annuity,
will be $460.99, and the number of annuity units and cash value units will be
460.9900. The guaranteed minimum annuity payment amount is $391.84 (85% X
$460.99).
Assume that at year five, the contract owner makes a withdrawal of 60% of the
cash value. Immediately prior to the withdrawal, the contract has a total
annuity value of $85,594, which is determined by multiplying the current annuity
payment amount, $460.99, by the appropriate factor set forth in the contract
applicable to cash value units in Table I, 185.6737. The total annuity reserves
amount is $85,594. The cash value of the contract immediately prior to the
withdrawal is $70,890, which is determined by multiplying the current annuity
payment amount, $460.99, by the appropriate factor set forth in the contract in
the table captioned "Cash Value Factors." ("Table II"), 153.7783. $70,890 is the
amount of the annuity reserves attributable to the cash value of the contract.
The cash value after the withdrawal is $28,356 ($70,890 - $42,534 (60% X
$70,890)), and the new number of cash value units is 184.3960 (460.9900 X
($28,356/$70,890)).
The new initial annuity payment amount is $235.19, the sum of
(i) $184.40, the product of the number of cash value units after the
withdrawal (184.3960) times the annuity unit value ($1.00), and
(ii) $50.79, the product of ([(a) X (b)]/1000) times (c), where
(a) is $14,704, the excess of the total annuity value ($85,594) over the
cash value ($70,890) immediately prior to the withdrawal,
(b) is .6, the ratio of the cash value withdrawn ($42,534) over the cash
value prior to the withdrawal ($70,890), and
(c) is 5.7568, the applicable annuity purchase rate set forth in the
contract in Table I.
The new guaranteed minimum annuity payment amount after the withdrawal is
$199.91 ($391.84 X (235.1900/460.9900)).
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IF PRIOR WITHDRAWALS
Where prior withdrawals have been made, the above formula is adjusted in the
manner shown in the following example. Assume that after the withdrawal of 60%
of the cash value in the contract described above the owner withdraws 75% of the
remaining cash value at year 15.
Immediately prior to the transaction the contract has a total annuity value of
$32,003. This is determined by multiplying the two components of the current
annuity payment amount $184.40 -- the portion attributable to the cash value
reserves, and $50.79 -- the portion attributable to the annuity reserves in
excess of the cash value, by the appropriate factors set forth in the contract
applicable to cash value units and annuity units in excess of cash value units,
respectively, in Table I, namely, 137.7353 and 130.0297. ($32,003 = ($184.40 X
137.7353) + ($50.79 X 130.0297)) The cash value of the contract immediately
prior to the withdrawal is $16,289, which is determined by multiplying the
portion of the current annuity payment amount attributable to the cash value,
$184.40, by the appropriate factor set forth in the contract in Table II,
88.3373 ($16,289 = $184.40 X 88.3373). The cash value after the withdrawal is
$4,072 ($16,289 - $12,217 (75% X $16,289)), and the new number of cash value
units is 46.0962 (184.3960 X ($4,072/$16,289)).
The new initial annuity payment amount is $149.44, the sum of
(i) $46.10, the product of the number of cash value units after the
withdrawal (46.0962) times the current annuity unit value ($1.00),
(ii) $50.79, the product of the number of annuity units (235.19) minus the
number of cash value units (184.40), each prior to the withdrawal,
times the current annuity unit value ($1.00), and
(iii) $52.55, the product of ([(a) X (b)]/1000) times (c), where
(a) is $9110, which is
(A) $15,714, the excess of the total annuity value ($32,003) over the
cash value ($16,289) immediately prior to the withdrawal, minus
(B) $6,604, the value is (ii) above ($50.79) multiplied by the
appropriate factor as of the withdrawal date applicable to Annuity
Units in excess of Cash Value Units set forth in the contract in
Table I (130.0297),
(b) is .75, the ratio of the cash value withdrawn ($12,217) over the cash
value prior to the withdrawal ($16,289), and
(c) is 7.6905, the applicable annuity purchase rate set forth in the
contract in Table I.
The new initial annuity payment amount has a new guaranteed minimum annuity
payment amount associated with it of $127.02 ($199.91 X 149.4400/235.1900).
27
<PAGE>
------------------------------------------------------------------------
APPENDIX B--IMMEDIATE VARIABLE ANNUITY ILLUSTRATION
PREPARED FOR: Jane M. Doe
DATE OF BIRTH: 10/01/35 SEX: Female
STATE: MN
PREPARED BY: Minnesota Mutual
FUNDS: Non-Qualified
LIFE EXPECTANCY: 24.2 (IRS)
ANNUITIZATION OPTION: Single Life
QUOTATION DATE: 10/01/95
COMMENCEMENT DATE: 10/01/95
SINGLE PAYMENT RECEIVED: $100,000.00
INCOME FREQUENCY: Monthly
INITIAL PERIODIC INCOME: $460.99
GUARANTEED MINIMUM INCOME AT ISSUE: $391.84
ESTIMATED ANNUAL EXCLUSION AMOUNT AT ISSUE: $4132.23
The variable annuity income amount shown below assumes a constant annual
investment return. The initial interest rate of 4.5% is the assumed rate used to
calculate the first payment. Thereafter, payments will increase or decrease
based upon the relationship between the initial interest rate and the
performance of the Index 500 Portfolio of the MIMLIC Series Fund, Inc. The
investment returns shown are hypothetical and not a representation of future
results.
The cash value is the dollar amount available for withdrawal under this
contract at a given point in time. The total annuity value represents your total
interest in the separate account.
<TABLE>
<CAPTION>
0.00% GROSS (-1.45% NET)
---------------------------------------------------
GUARANTEED PROJECTED TOTAL ANNUITY
DATE BEG OF YR. AGE INCOME INCOME CASH VALUE VALUE
--------------- ---------- --- ---------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Oct 1, 1995 1 60 392 461 81,667 93,789
Oct 1, 1996 2 61 392 435 75,159 87,032
Oct 1, 1997 3 62 392 410 69,049 80,682
Oct 1, 1998 4 63 392 392 63,313 74,715
Oct 1, 1999 5 64 392 392 57,930 69,110
Oct 1, 2004 10 69 392 392 35,629 45,849
Oct 1, 2009 15 74 392 392 19,528 29,070
Oct 1, 2014 20 79 392 392 8,014 17,347
Oct 1, 2018 24 83 392 392 1,288 11,031
Oct 1, 2019 25 84 392 392 0 9,860
Oct 1, 2024 30 89 392 392 0 5,571
Oct 1, 2029 35 94 392 392 0 3,119
Oct 1, 2034 40 99 392 392 0 1,503
Oct 1, 2035 41 100 392 392 0 1,326
</TABLE>
Deductions from your purchase payments are made for sales charges, risk
charges, and state premium taxes where applicable. Sales charges are based on
your total cumulative purchase payments (see prospectus for schedule). A risk
charge is deducted for Minnesota Mutual's guarantee of a minimum annuity payment
amount. This charge is 1.25% of each purchase payment.
Net rates of return reflect expenses totalling 1.45%, which consist of the
.95% Variable Annuity Account mortality and expense risk charge and
administrative charge, and .50% for the Series Fund management fee.
Minnesota Mutual variable immediate annuities are available through registered
representatives of MIMLIC Sales Corporation. This illustration must be
accompanied or preceded by a current prospectus for the Minnesota Mutual
Variable Annuity Account and for the MIMLIC Series Fund, Inc.
Page 1 of 3
Not valid without all pages.
This is an illustration only and not a contract.
Prepared by The Minnesota Mutual Life Insurance Company
28
<PAGE>
IMMEDIATE VARIABLE ANNUITY ILLUSTRATION
PREPARED FOR: Jane M. Doe
DATE OF BIRTH: 10/01/35 SEX: Female
STATE: MN
PREPARED BY: Minnesota Mutual
FUNDS: Non-Qualified
LIFE EXPECTANCY: 24.2 (IRS)
ANNUITIZATION OPTION: Single Life
QUOTATION DATE: 10/01/95
COMMENCEMENT DATE: 10/01/95
SINGLE PAYMENT RECEIVED: $100,000.00
INCOME FREQUENCY: Monthly
INITIAL PERIODIC INCOME: $460.99
GUARANTEED MINIMUM INCOME AT ISSUE: $391.84
ESTIMATED ANNUAL EXCLUSION AMOUNT AT ISSUE: $4132.23
The variable annuity income amount shown below assumes a constant annual
investment return. The initial interest rate of 4.5% is the assumed rate used to
calculate the first payment. Thereafter, payments will increase or decrease
based upon the relationship between the initial interest rate and the
performance of the Index 500 Portfolio of the MIMLIC Series
Fund, Inc. The investment returns shown are hypothetical and not a
representation of future results.
The cash value is the dollar amount available for withdrawal under this
contract at a given point in time. The total annuity value represents your total
interest in the separate account.
<TABLE>
<CAPTION>
5.95% GROSS
(4.50% NET)
---------------------------------------------------------------
PROJECTED TOTAL ANNUITY
DATE BEG OF YR. AGE GUARANTEED INCOME INCOME CASH VALUE VALUE
----------------------------- --------------- --------- ----------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Oct 1, 1995.................. 1 60 392 461 81,667 93,789
Oct 1, 1996.................. 2 61 392 461 79,697 92,286
Oct 1, 1997.................. 3 62 392 461 77,638 90,718
Oct 1, 1998.................. 4 63 392 461 75,487 89,081
Oct 1, 1999.................. 5 64 392 461 73,239 87,373
Oct 1, 2004.................. 10 69 392 461 60,387 77,708
Oct 1, 2009.................. 15 74 392 461 44,371 66,050
Oct 1, 2014.................. 20 79 392 461 24,412 52,838
Oct 1, 2018.................. 24 83 392 461 4,961 42,480
Oct 1, 2019.................. 25 84 392 461 0 40,261
Oct 1, 2024.................. 30 89 392 461 0 30,498
Oct 1, 2029.................. 35 94 392 461 0 22,888
Oct 1, 2034.................. 40 99 392 461 0 14,791
Oct 1, 2035.................. 41 100 392 461 0 13,837
</TABLE>
Deductions from your purchase payments are made for sales charges, risk
charges, and state premium taxes where applicable. Sales charges are based on
your total cumulative purchase payments (see prospectus for schedule). A risk
charge is deducted for Minnesota Mutual's guarantee of a minimum annuity payment
amount. This charge is 1.25% of each purchase payment.
Net rates of return reflect expenses totalling 1.45%, which consist of the
.95% Variable Annuity Account mortality and expense risk charge and
administrative charge, and .50% for the Series Fund management fee.
Minnesota Mutual variable immediate annuities are available through registered
representatives of MIMLIC Sales Corporation. This illustration must be
accompanied or preceded by a current prospectus for the Minnesota Mutual
Variable Annuity Account and for the MIMLIC Series Fund, Inc.
Page 2 of 3
Not valid without all pages.
This is an illustration only and not a contract.
Prepared by The Minnesota Mutual Life Insurance Company
29
<PAGE>
IMMEDIATE VARIABLE ANNUITY ILLUSTRATION
PREPARED FOR: Jane M. Doe
DATE OF BIRTH: 10/01/35 SEX: Female
STATE: MN
PREPARED BY: Minnesota Mutual
FUNDS: Non-Qualified
LIFE EXPECTANCY: 24.2 (IRS)
ANNUITIZATION OPTION: Single Life
QUOTATION DATE: 10/01/95
COMMENCEMENT DATE: 10/01/95
SINGLE PAYMENT RECEIVED: $100,000.00
INCOME FREQUENCY: Monthly
INITIAL PERIODIC INCOME: $460.99
GUARANTEED MINIMUM INCOME AT ISSUE: $391.84
ESTIMATED ANNUAL EXCLUSION AMOUNT AT ISSUE: $4132.23
The variable annuity income amount shown below assumes a constant annual
investment return. The initial interest rate of 4.5% is the assumed rate used to
calculate the first payment. Thereafter, payments will increase or decrease
based upon the relationship between the initial interest rate and the
performance of the Index 500 Portfolio of the MIMLIC
Series Fund, Inc. The investment returns shown are hypothetical and not a
representation of future results.
The cash value is the dollar amount available for withdrawal under this
contract at a given point in time. The total annuity value represents your total
interest in the separate account.
<TABLE>
<CAPTION>
12.00% GROSS
(10.55% NET)
-------------------------------------------------------------
PROJECTED TOTAL ANNUITY
DATE BEG OF YR. AGE GUARANTEED INCOME INCOME CASH VALUE VALUE
----------------------------- --------------- --------- ----------------- ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Oct 1, 1995.................. 1 60 392 461 81,667 93,789
Oct 1, 1996.................. 2 61 392 488 84,311 97,629
Oct 1, 1997.................. 3 62 392 516 86,888 101,527
Oct 1, 1998.................. 4 63 392 546 89,372 105,466
Oct 1, 1999.................. 5 64 392 577 91,730 109,433
Oct 1, 2004.................. 10 69 392 765 100,213 128,958
Oct 1, 2009.................. 15 74 392 1,014 97,564 145,235
Oct 1, 2014.................. 20 79 392 1,343 71,122 153,940
Oct 1, 2018.................. 24 83 392 1,682 18,102 155,010
Oct 1, 2019.................. 25 84 392 1,780 0 155,420
Oct 1, 2024.................. 30 89 392 2,358 0 155,993
Oct 1, 2029.................. 35 94 392 3,124 0 155,113
Oct 1, 2034.................. 40 99 392 4,139 0 132,815
Oct 1, 2035.................. 41 100 392 4,379 0 131,447
</TABLE>
Deductions from your purchase payments are made for sales charges, risk
charges, and state premium taxes where applicable. Sales charges are based on
your total cumulative purchase payments (see prospectus for schedule). A risk
charge is deducted for Minnesota Mutual's guarantee of a minimum annuity payment
amount. This charge is 1.25% of each purchase payment.
Net rates of return reflect expenses totalling 1.45%, which consist of the
.95% Variable Annuity Account mortality and expense risk charge and
administrative charge, and .50% for the Series Fund management fee.
Minnesota Mutual variable immediate annuities are available through registered
representatives of MIMLIC Sales Corporation. This illustration must be
accompanied or preceded by a current prospectus for the Minnesota Mutual
Variable Annuity Account and for the MIMLIC Series Fund, Inc.
Page 3 of 3
Not valid without all pages.
This is an illustration only and not a contract.
Prepared by The Minnesota Mutual Life Insurance Company
30
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
Minnesota Mutual Variable Annuity Account
Cross Reference Sheet to Statement of Additional Information
Form N-4
Item Number Caption in Statement of Additional Information
15. Cover Page
16. Cover Page
17. Trustees and Principal Management Officers of Minnesota Mutual
18. Not Applicable
19. Not Applicable
20. Distribution of Contracts
21. Performance Data
22. Not Applicable
23. Financial Statements
<PAGE>
Minnesota Mutual Variable Annuity Account
("Variable Annuity Account"), a Separate Account of
The Minnesota Mutual Life Insurance Company
("Minnesota Mutual")
400 Robert Street North
St. Paul, Minnesota 55101-2098
Telephone: (612) 298-3500
Statement of Additional Information
The date of this document and the Prospectus is: _______________
This Statement of Additional Information is not a prospectus. Much of the
information contained in this Statement of Additional Information expands upon
subjects discussed in the Prospectus. Therefore, this Statement should be read
in conjunction with the Fund's current Prospectus, bearing the same date, which
may be obtained by calling The Minnesota Mutual Life Insurance Company at (612)
298-3500, or writing to Minnesota Mutual at Minnesota Mutual Life Center, 400
Robert Street North, St. Paul, Minnesota 55101-2098.
Trustees and Principal Management Officers of Minnesota Mutual
Distribution of Contracts
Performance Data
Auditors
Registration Statement
Financial Statements
-1-
<PAGE>
TRUSTEES AND PRINCIPAL MANAGEMENT OFFICERS OF MINNESOTA MUTUAL
Trustees Principal Occupation
-------- --------------------
Anthony L. Andersen Chair-Board of Directors, H. B. Fuller Company,
St. Paul, Minnesota (Adhesive Products)
John F. Grundhofer Chairman of the Board, President and Chief
Executive Officer, First Bank System, Inc.,
Minneapolis, Minnesota (Banking)
Harold V. Haverty Chairman of the Board, Deluxe Corporation,
Shoreview, Minnesota (Check Printing)
Lloyd P. Johnson Retired since May 1995, prior thereto, for more
than five years Chairman, Norwest Corporation,
Minneapolis, Minnesota (Banking)
David S. Kidwell, Ph.D. Dean and Professor of Finance, The Curtis L.
Carlson School of Management, University of
Minnesota, since August 1991; prior thereto, Dean
of the School and Professor, University of
Connecticut, School of Business Administration
from 1988 to July 1991
Reatha C. King, Ph.D. President and Executive Director, General Mills
Foundation, Minneapolis, Minnesota
Thomas E. Rohricht Member, Doherty, Rumble & Butler Professional
Association, St. Paul, Minnesota (Attorneys)
Terry N. Saario, Ph.D. President, Northwest Area Foundation, St. Paul,
Minnesota (Private Regional Foundation)
Robert L. Senkler Chairman of the Board, The Minnesota Mutual Life
Insurance Company since August 1995;
Chief Executive Officer and President, The
Minnesota Mutual Life Insurance Company since July
1994; prior thereto for more than five years Vice
President and Actuary, The Minnesota Mutual Life
Insurance Company
Michael E. Shannon Vice Chairman and Chief Financial and
Administrative Officer, Ecolab, Inc., St. Paul,
Minnesota (Specialty Chemical Company)
Frederick T. Weyerhaeuser Chairman, Clearwater Management Company, St. Paul,
Minnesota (Financial Management)
Principal Officers (other than Trustees)
Name Position
---- --------
John F. Bruder Senior Vice President
-2-
<PAGE>
Keith M. Campbell Vice President
Paul H. Gooding Vice President and Treasurer
Robert E. Hunstad Executive Vice President
James E. Johnson Senior Vice President and Actuary
Joel W. Mahle Vice President
Dennis E. Prohofsky Vice President, General Counsel and Secretary
Gregory S. Strong Vice President and Actuary
Terrence M. Sullivan Senior Vice President
Randy F. Wallake Senior Vice President
All Trustees who are not also officers of Minnesota Mutual have had the
principal occupation (or employers) shown for at least five years with the
exception of Dr. Kidwell, whose prior employment is as indicated above. All
officers of Minnesota Mutual have been employed by Minnesota Mutual for at least
five years.
DISTRIBUTION OF CONTRACTS
The contract will be sold in a continuous offering by our life insurance agents
who are also registered representatives of MIMLIC Sales Corporation ("MIMLIC
Sales") or other broker-dealers who have entered into selling agreements with
MIMLIC Sales. MIMLIC Sales acts as principal underwriter of the contracts.
MIMLIC Sales is a wholly-owned subsidiary of MIMLIC Asset Management Company,
which in turn is a wholly-owned subsidiary of Minnesota Mutual. MIMLIC Asset
Management Company is a registered investment adviser and the investment
adviser to the MIMLIC Series Fund, Inc. MIMLIC Sales is registered as a
broker-dealer under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers, Inc. Amounts paid by
Minnesota Mutual to the underwriter for 1994 were in the amount of $7,363,105
for payments to associated dealers on the sale of other contracts of the
Registrant. Agents of Minnesota Mutual who are also registered
representatives of MIMLIC Sales are compensated directly by Minnesota
Mutual.
PERFORMANCE DATA
TOTAL RETURN FIGURES FOR THE SUB-ACCOUNT
Cumulative total return quotations for the Sub-Account represents the total
return for the period since the Portfolio became available pursuant to other
registration statements of the Variable Annuity Account. Cumulative total
return is equal to the percentage change between the net asset value of a
hypothetical $10,000 investment at the beginning of the period and the net asset
value
-3-
<PAGE>
of that same investment at the end of the period. Such quotations of cumulative
total return will not reflect the deduction of any amounts deducted from
purchase payments.
The cumulative total return figures published by the Variable Annuity Account
relating to the contract described in the Prospectus will reflect Minnesota
Mutual's voluntary absorption of certain expenses of the Index 500 Portfolio
(the "Portfolio") described below. The cumulative total return for the Sub-
Account for the period from June 1, 1987 to December 31, 1994 is 86.6%.
Cumulative total return would have been 86.0% had Minnesota Mutual not absorbed
Portfolio expenses as described above.
Cumulative total return quotations for the Sub-Account will be accompanied by
average annual total return figures for one-year and five-year periods and for
the period since the Sub-Account became available pursuant to other registration
statements of the Variable Annuity Account's registration statement. Average
annual total return figures are the average annual compounded rates of return
required for an initial investment of $10,000 to equal the total annuity value
of that same investment at the end of the period. The total annuity value will
reflect the deduction of the sales and risk charges applicable to the contract.
The average annual total return figures published by the Variable Annuity
Account will reflect Minnesota Mutual's voluntary absorption of certain
Portfolio expenses. Since inception, Minnesota Mutual has voluntarily absorbed
fees and expenses that exceed .55% of the average daily net assets of the
Portfolio. There is no specified or minimum period of time during which
Minnesota Mutual has agreed to continue its voluntary absorption of these
expenses, and Minnesota Mutual may in its discretion cease its absorption of
expenses at any time. Should Minnesota Mutual cease absorbing expenses the
effect would be to increase substantially Portfolio expenses and thereby reduce
investment return.
The average annual rates of return for the Sub-Account, in connection with the
contract described in the Prospectus, for the specified periods ended December
31, 1994 are shown in the table below. The figures in parentheses show what the
average annual rates of return would have been had Minnesota Mutual not absorbed
Portfolio expenses as described above.
Year Ended Five Years From Inception
12/31/94 Ended 12/31/94 to 12/31/94
-------- -------------- -----------
-5.5% (-5.5%) 7.0% (7.0%) 8.2% (8.1%)
AUDITORS
The financial statements of Minnesota Mutual included herein have been
audited by KPMG Peat Marwick LLP, 4200 Norwest Center, 90 South Seventh Street,
Minneapolis, Minnesota 55402, independent auditors, whose reports thereon
appear elsewhere herein, and have been so included in reliance upon the reports
of KPMG Peat Marwick LLP and upon the authority of said firm as experts in
accounting and auditing.
-4-
<PAGE>
REGISTRATION STATEMENT
We have filed with the Securities and Exchange Commission a registration
statement under the Securities Act of 1933, as amended, with respect to the
contracts offered hereby. This Prospectus does not contain all the information
set forth in the registration statement and amendments thereto and the exhibits
filed as a part thereof, to all of which reference is hereby made for further
information concerning the Variable Annuity Account, Minnesota Mutual, and the
contracts. Statements contained in this Statement of Additional Information as
to the contents of contracts and other legal instruments are summaries, and
reference is made to such instruments as filed.
-5-
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
Index to Financial Statements
and Financial Statement Schedules
Independent Auditors' Report............................................... 1
Balance Sheets............................................................. 2
Statements of Operations and Policyowners' Surplus......................... 3
Statements of Cash Flows................................................... 4
Notes to Financial Statements.............................................. 5
Financial Statement Schedules:
I. Summary of Investments--Other than Investments in Related Parties.. 17
V. Supplementary Insurance Information................................ 18
VI. Reinsurance........................................................ 19
<PAGE>
[KPMG Peat Marwick LLP]
Letterhead
INDEPENDENT AUDITORS' REPORT
The Board of Trustees
The Minnesota Mutual Life Insurance Company:
We have audited the accompanying balance sheets of The Minnesota Mutual Life
Insurance Company as of December 31, 1994 and 1993 and the related statements of
operations and policyowners' surplus and cash flows for each of the years in the
three-year period ended December 31, 1994. In connection with our audits of the
financial statements, we also have audited the financial statement schedules as
listed in the accompanying index. These financial statements and financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Minnesota Mutual Life
Insurance Company as of December 31, 1994 and 1993, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1994, in conformity with generally accepted accounting
principles (notes 1 and 10). Also in our opinion, the related financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material respects, the
information set forth therein.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 9, 1995
1
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(In thousands)
<TABLE>
<CAPTION>
ASSETS 1994 1993
---------- ----------
<S> <C> <C>
Bonds $5,134,554 $4,985,026
Common stocks 209,958 211,792
Mortgage loans 598,186 542,356
Real estate, including Home Office property 76,346 80,655
Other invested assets 60,604 49,599
Policy loans 185,599 177,820
Investments in subsidiary companies 155,404 125,865
Cash and short-term securities 112,869 90,266
Premiums deferred and uncollected 125,422 186,978
Other assets 134,594 118,596
---------- ----------
Total assets, excluding separate accounts 6,793,536 6,568,953
Separate account assets 1,750,680 1,235,157
---------- ----------
Total assets $8,544,216 $7,804,110
---------- ----------
---------- ----------
LIABILITIES AND POLICYOWNERS' SURPLUS
Liabilities:
Policy reserves:
Life insurance $1,981,469 $1,875,570
Annuities and other fund deposits 3,179,279 3,166,944
Accident and health 343,241 317,825
Policy claims in process of settlement 53,670 98,351
Dividends payable to policyowners 100,287 94,224
Other policy liabilities 388,538 371,333
Asset valuation reserve 165,341 135,936
Interest maintenance reserve 19,922 24,349
Federal income taxes 35,050 15,644
Other liabilities 186,575 162,934
---------- ----------
Total liabilities, excluding separate accounts 6,453,372 6,263,110
Separate account liabilities 1,708,529 1,193,100
---------- ----------
Total liabilities 8,161,901 7,456,210
Policyowners' surplus 382,315 347,900
---------- ----------
Total liabilities and policyowners' surplus $8,544,216 $7,804,110
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND POLICYOWNERS' SURPLUS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(In thousands)
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS
Revenues:
Premiums, annuity considerations and fund deposits $1,424,352 $1,289,954 $1,234,413
Net investment income 488,813 493,011 485,284
---------- ---------- ----------
Total revenues 1,913,165 1,782,965 1,719,697
---------- ---------- ----------
Benefits and expenses:
Policyowner benefits 1,259,685 1,131,638 968,539
Increase in policy reserves 94,116 122,280 243,014
General insurance expenses and taxes 279,022 268,041 249,943
Commissions 75,443 70,899 65,088
Federal income taxes 49,626 36,656 39,845
---------- ---------- ----------
Total benefits and expenses 1,757,892 1,629,514 1,566,429
---------- ---------- ----------
Gain from operations before net realized
capital gains (losses) and dividends 155,273 153,451 153,268
Realized capital gains (losses), net of tax 18,559 2,907 (23,311)
---------- ---------- ----------
Gain from operations before dividends 173,832 156,358 129,957
Dividends to policyowners 108,709 97,937 98,116
---------- ---------- ----------
Net income $ 65,123 $ 58,421 $ 31,841
---------- ---------- ----------
---------- ---------- ----------
STATEMENTS OF POLICYOWNERS' SURPLUS
Policyowners' surplus, beginning of year $ 347,900 $ 264,542 $ 219,488
Net income 65,123 58,421 31,841
Net change in unrealized capital gains and losses (317) 3,286 8,294
Change in policy reserve bases 1,463 -- (2,790)
Change in asset valuation reserve (29,405) (17,002) 2,217
Change in prior year federal income tax liability (512) 857 2,814
Guaranty fund certificate redemption (contribution) -- 19,171 (4,500)
Change in separate account surplus (3,764) 5,623 7,910
Business combination -- 16,684 --
Other, net 1,827 (3,682) (732)
---------- ---------- ----------
Policyowners' surplus, end of year $ 382,315 $ 347,900 $ 264,542
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(In thousands)
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
CASH PROVIDED:
From operations:
Revenues:
Premiums, annuity considerations and fund deposits $1,474,471 $1,252,183 $1,258,050
Net investment income 468,927 473,487 466,199
---------- ---------- ----------
Total receipts 1,943,398 1,725,670 1,724,249
---------- ---------- ----------
Benefits and expenses paid:
Policyowner benefits 1,301,060 1,069,090 957,013
Dividends to policyowners 103,634 97,697 93,087
Commissions and expenses 360,150 348,397 320,394
Federal income taxes 40,482 50,994 37,698
---------- ---------- ----------
Total payments 1,805,326 1,566,178 1,408,192
---------- ---------- ----------
Cash provided from operations 138,072 159,492 316,057
Proceeds from investments sold, matured or repaid:
Bonds 1,031,279 1,631,215 1,080,940
Common stocks 113,228 113,945 113,503
Mortgage loans 152,418 265,356 272,337
Real estate 17,571 10,100 46,142
Other invested assets 16,831 17,266 6,414
Separate account redemption 14,519 -- --
Business combination -- 24,628 --
Other sources, net 58,072 53,531 --
---------- ---------- ----------
Total cash provided 1,541,990 2,275,533 1,835,393
---------- ---------- ----------
CASH APPLIED:
Cost of investments acquired:
Bonds 1,146,117 1,966,653 1,678,256
Common stocks 132,301 123,185 94,724
Mortgage loans 203,803 109,559 69,587
Real estate 11,904 16,572 13,312
Other invested assets 12,732 9,800 8,079
Guaranty fund certificate contribution -- -- 4,500
Separate account investment 12,530 3,365 10,000
Other applications, net -- -- 6,051
---------- ---------- ----------
Total cash applied 1,519,387 2,229,134 1,884,509
---------- ---------- ----------
Net change in cash and short-term securities 22,603 46,399 (49,116)
Cash and short-term securities, beginning of year 90,266 43,867 92,983
---------- ---------- ----------
Cash and short-term securities, end of year $ 112,869 $ 90,266 $ 43,867
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of The Minnesota Mutual Life
Insurance Company (the Company) have been prepared in accordance with
accounting practices prescribed or permitted by the Commerce Department
of the State of Minnesota (Department of Commerce), which are currently
considered generally accepted accounting principles for mutual life
insurance companies (note 10). The significant accounting policies
follow:
REVENUES AND EXPENSES
Premiums are credited to revenue over the premium paying period of
the policies. Annuity considerations and fund deposits are recognized as
revenue when received. Expenses, including acquisition costs related to
acquiring new business, are charged to operations as incurred.
Investment income is recognized as earned, net of related investment
expenses.
VALUATION OF INVESTMENTS
Bonds and stocks are valued as prescribed by the National Association of
Insurance Commissioners (NAIC). Bonds are generally carried at cost,
adjusted for the amortization of premiums and discounts, and common
stocks at market value. Premiums and discounts are amortized over the
estimated lives of the bonds based on the interest yield method.
Mortgage loans are generally stated at the outstanding principal
balances, net of unamortized premiums and discounts. Premiums and
discounts are amortized over the terms of the related mortgage loans
based on the interest yield method.
Real estate, exclusive of properties acquired through foreclosure,
is carried at cost less accumulated depreciation of $35,707,000 and
$34,723,000 at December 31, 1994 and 1993, respectively. Depreciation is
computed principally on a straight-line basis. Properties acquired
through foreclosure are carried at the lower of cost or market.
In 1992, the Company transferred $31,770,000 of its investment in
oil and gas limited partnerships to Robert Street Energy, Incorporated
(Robert Street), a wholly-owned subsidiary. The carrying value of oil
and gas investments is reflected in investments in subsidiary companies.
The oil and gas investments are carried at the lower of cost or market
value and accounted for on a pooled investment basis. Cost represents
the original cost of the investment adjusted for depletion, and market
value represents discounted values based on estimates of the remaining
oil and gas reserves at oil and gas prices as of the valuation date.
Depletion is computed on the unit-of-production method.
As permitted by the Department of Commerce, changes in carrying
values of oil and gas investments, related to market value changes
incurred prior to January 1, 1992, the date of transfer to Robert
Street, were reflected as unrealized losses and charged to policyowners'
surplus. The unrealized losses incurred prior to January 1, 1992 were
evaluated on a pooled basis to determine if such losses are other than
temporary. Realized losses of $1,717,000, $9,257,000, and $8,362,000
were recognized in 1994, 1993, and 1992, respectively, based upon such
valuation. Changes in unrealized losses on oil and gas investments of
$1,717,000, $4,757,000, and $8,362,000 were credited to surplus in 1994,
1993, and 1992, respectively. As of December 31, 1994, Robert Street
holds no oil and gas investments.
Policy loans are carried at the unpaid principal balance.
(Continued)
5
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
VALUATION OF INVESTMENTS (CONTINUED)
Investments in subsidiary companies are accounted for using the
equity method. The Company records its equity in the earnings of its
subsidiaries as investment income and its equity in other changes in its
subsidiaries' surplus as credits (charges) to policyowners' surplus.
These investments include $74,154,000 and $28,026,000 at December 31,
1994 and 1993, respectively, in registered investment funds managed by a
subsidiary of the Company which are carried at the market value of the
underlying net assets. All significant subsidiaries are wholly-owned.
Short-term securities at December 31, 1994 and 1993 amounted to
$103,203,000 and $64,947,000, respectively, and are included in the
caption cash and short-term securities.
The Asset Valuation Reserve (AVR) is a formula reserve for possible
losses on bonds, stocks, mortgage loans, real estate, and other invested
assets. Changes in the reserve are reflected as direct charges or
credits to policyowners' surplus and are included in the change in asset
valuation reserve line.
INTEREST MAINTENANCE RESERVE
The Company separates realized capital gains and losses, net of tax,
on fixed income investments between those due to changes in interest
rates and those due to changes in credit quality. The net capital gains
and losses due to interest rate changes are amortized into investment
income over the original remaining life of the related bond or mortgage
sold. Realized capital gains and losses that are due to credit
deterioration are recognized immediately as realized capital gains and
losses, net of applicable taxes.
CAPITAL GAINS AND LOSSES
Unrealized capital gains and losses are accounted for as a direct
increase or decrease to policyowner's surplus. Realized capital gains
and losses, net of related taxes and amounts transferred to the Interest
Maintenance Reserves (IMR), if any, are reflected as a component of net
income. Both unrealized and realized capital gains and losses are
determined using the specific identification method.
NON-ADMITTED ASSETS
Certain assets, designated as "non-admitted assets" (principally
furniture, equipment and certain receivables), amounting to $26,123,000
and $32,352,000 at December 31, 1994 and 1993, respectively, have been
charged to policyowners' surplus.
SEPARATE ACCOUNT BUSINESS
Separate account business represents funds administered and invested
by the Company for the exclusive benefit of certain pension and variable
life policy and annuity contract holders. The Company receives
administrative and investment advisory fees for services rendered on
behalf of these funds. Separate account assets are carried at market value.
The Company periodically invests money in its separate accounts. The
appreciation or depreciation on the investment is reflected as a direct
charge or credit to policyowners' surplus. In 1994, the Company made a
contribution to its separate accounts in the amount of $12,530,000. The
Company also redeemed a portion of its investment in its separate
accounts in the amount of $14,518,730. A realized capital gain of
$3,018,000 was recognized as a result of this redemption.
(Continued)
6
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
POLICY RESERVES
Policy reserves for life insurance and annuities are based on mortality
and interest assumptions without consideration for lapses and
withdrawals. Mortality assumptions for life insurance and annuities are
based on various mortality tables including American Experience, 1941
Commissioners Standard Ordinary (CSO), 1958 CSO, 1980 CSO, Progressive
Annuity and 1960 Commissioners Standard Group. Interest assumptions
range from 2.0% to 6.0% for ordinary policy reserves and from 2.25% to
12.0% for group policy and annuity reserves. An unearned premium reserve
is held for credit life policies.
Approximately 16% of the ordinary life reserves are calculated on a
net level reserve basis and 84% on a modified reserve basis. The use of
a modified reserve basis partially offsets the effect of immediately
expensing acquisition costs by providing a policy reserve increase in
the first policy year which is less than the reserve increase in renewal
years. Policy reserves for group mortgage life are computed on a
mid-terminal basis.
Policy reserves for individual deferred annuities are generally equal to
the total contract holders' account balance, less applicable surrender
charges, calculated according to the Commissioners Annuity Reserve
Valuation Method. Policy reserves for immediate annuities and
supplementary contracts are equal to the present value of future benefit
payments based on the purchase interest rate and the Progressive Annuity
tables. Group annuity reserves are equal to the account value plus
expected interest strengthening.
Policy reserves for individual accident and health contracts include
reserves for active lives based on various morbidity tables including
the 1964 Commissioners Disability Table (CDT) and the 1985 Commissioners
Disability Table A, modified for actual morbidity experience discounted
at 7% interest. Disabled reserves on individual policies are based on
company morbidity experience at interest rates varying from 5.15% to 7%.
Group mortgage disability reserves are equal to the present value of
future benefits at 3% interest and the 1964 CDT modified for Company
experience. An unearned premium reserve is held for credit disability
policies.
The Company issues certain life and annuity products which are
considered financial instruments. The estimated fair value of these
liabilities as of the respective years ended December 31 are as follows:
<TABLE>
<CAPTION>
1994 1993
----------------------------- --------------------------
CARRYING FAIR CARRYING FAIR
IN THOUSANDS VALUE VALUE VALUE VALUE
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Deferred annuities $ 2,042,383 $ 2,042,060 $ 1,970,037 $ 1,978,374
Annuity certain contracts 41,934 41,828 38,431 41,940
Other fund deposits 798,509 791,732 736,467 765,875
Guaranteed investment contracts 68,568 69,353 204,663 212,308
Supplementary contracts without life contingencies 43,205 42,433 42,587 44,301
------------- ------------ ------------ ------------
Total financial liabilities $ 2,994,599 $ 2,987,406 $ 2,992,185 $ 3,042,798
------------- ------------ ------------ ------------
------------- ------------ ------------ ------------
</TABLE>
(Continued)
7
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
POLICY RESERVES (CONTINUED)
The fair value of deferred annuities, annuity certain contracts, and
other fund deposits, which have guaranteed interest rates and surrender
charges, were calculated using Commissioners' Annuity Reserve Valuation
Method calculation procedures and current market interest rates.
Contracts without guaranteed interest rates and surrender charges have
fair values equal to their accumulation values plus applicable market
value adjustments. The fair value of guaranteed investment contracts and
supplementary contracts without life contingencies were calculated using
discounted cash flows, based on interest rates currently offered for
similar products with maturities consistent with those remaining for the
contracts being valued. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated
fair value amounts.
The fair value estimates presented herein are based on pertinent
information available to management as of December 31, 1994 and 1993.
Although management is not aware of any factors that would significantly
affect the estimated fair values, such amounts have not been
comprehensively revalued since those dates and therefore, estimates of
fair value subsequent to the valuation dates may differ significantly
from the amounts presented herein.
PARTICIPATING BUSINESS
Substantially all of the Company's premium revenues are derived from
participating policies. Dividends and other discretionary payments are
declared by the Board of Trustees based upon actuarial determinations
which take into consideration current mortality, interest earnings and
expense factors, including federal income tax expense, attributable to
the policies. Dividends are generally recognized as expense consistent
with the recognition of premiums and contract considerations.
FEDERAL INCOME TAXES
Federal income taxes are based on income that is currently taxable.
Deferred federal income taxes are not provided for differences between
financial statement and taxable income.
RECLASSIFICATIONS
Certain 1993 financial statement balances have been reclassified to
conform with the 1994 presentation.
(2) ACCOUNTING CHANGES
CAPITAL GAINS AND LOSSES
Prior to 1993, the Company generally recorded credit deterioration by
reducing the carrying value of the related asset and recording a
realized capital loss. Beginning in 1993, the Company continues to
reduce the carrying value of its assets for credit deterioration but
records a realized capital loss only if the underlying asset has been
converted to another asset of lesser value. Otherwise, losses due to
credit deterioration are included in unrealized capital losses. The
effect of the accounting change resulted in an increase in income of
$10,761,000 in 1993.
SEPARATE ACCOUNT BUSINESS
Effective January 1, 1992, the Company changed its basis for computing
statutory reserves for deferred variable annuities from full
accumulation value to cash value, net of surrender charges. The change
resulted in an increase in earnings of $6,577,000 for the year ended
December 31, 1992.
(Continued)
8
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(3) INVESTMENTS
Net investment income for the respective years ended December 31, is as
follows:
<TABLE>
<CAPTION>
IN THOUSANDS 1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Bonds $ 412,873 $ 404,353 $ 382,890
Common stocks--unaffiliated 3,188 3,390 3,960
Common stocks--affiliated 8,526 9,562 8,674
Mortgage loans 49,882 63,881 78,837
Real estate, including Home Office property 11,337 11,554 11,938
Policy loans 11,800 10,866 10,021
Short-term securities 4,026 2,067 2,652
Other, net 1,717 2,868 2,237
----------- ----------- -----------
503,349 508,541 501,209
Amortization of interest maintenance reserve 3,741 3,458 1,728
Investment expenses (18,277) (18,988) (17,653)
----------- ----------- -----------
Total $ 488,813 $ 493,011 $ 485,284
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Changes in unrealized capital gains (losses) for the respective
years ended December 31, are as follows:
<TABLE>
<CAPTION>
IN THOUSANDS 1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Bonds $ 4,039 $ (3,753) $ 5,392
Common stocks--unaffiliated (5,465) 2,854 (1,840)
Common stocks--affiliated (997) (1,305) (2,387)
Mortgage loans (71) 1,361 (580)
Real estate 2,270 4,211 8,072
Other, net (93) (82) (363)
--------- --------- ---------
Total $ (317) $ 3,286 $ 8,294
--------- --------- ---------
--------- --------- ---------
</TABLE>
(Continued)
9
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(3) INVESTMENTS (CONTINUED)
The cost and gross unrealized gains (losses) on unaffiliated common
stocks at December 31, are as follows:
<TABLE>
<CAPTION>
IN THOUSANDS 1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Cost $ 159,511 $ 155,881 $ 128,342
Gross unrealized gains 56,813 58,440 55,172
Gross unrealized losses (6,366) (2,529) (2,159)
----------- ----------- -----------
Admitted asset value $ 209,958 $ 211,792 $ 181,355
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Net realized capital gains (losses) for the respective years ended
December 31 are as follows:
<TABLE>
<CAPTION>
IN THOUSANDS 1994 1993 1992
--------- --------- ----------
<S> <C> <C> <C>
Bonds $ (3,511) $ 31,234 $ (5,012)
Common stocks--unaffiliated 11,268 9,651 11,599
Mortgage loans (46) (741) 1,025
Real estate 2,041 (8,496) (13,420)
Other 15,872 7,837 (378)
--------- --------- ----------
25,624 39,485 (6,186)
Less: Amount transferred to the interest
maintenance reserve, net of taxes (685) 20,336 9,199
Income tax expense 7,750 16,242 7,926
--------- --------- ----------
Total $ 18,559 $ 2,907 $ (23,311)
--------- --------- ----------
--------- --------- ----------
</TABLE>
Gross realized gains (losses) on sales of bonds for the respective
years ended December 31, are as follows:
<TABLE>
<CAPTION>
IN THOUSANDS 1994 1993 1992
---------- --------- ----------
<S> <C> <C> <C>
Gross realized gains $ 13,249 $ 38,443 $ 20,092
Gross realized losses (16,760) (7,209) (11,547)
</TABLE>
Proceeds from the sale of bonds amounted to $638,420,000,
$1,058,684,000 and $522,546,000 for the years ended December 31, 1994,
1993, and 1992, respectively.
Bonds and mortgage loans held at December 31, 1994 and 1993 for
which no income was recorded for the previous twelve months totaled
$88,000 and $847,000, respectively.
At December 31, 1994, bonds with a carrying value of $2,497,000 were
on deposit with various regulatory authorities as required by law.
(Continued)
10
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(3) INVESTMENTS (CONTINUED)
The estimated fair value of the Company's financial instruments has
been determined using available market information as of December 31,
1994 and 1993 and appropriate valuation methodologies. Considerable
judgment, however, is required to interpret market data to develop the
estimates of fair value. Accordingly, the estimates presented herein are
not necessarily indicative of the amounts the Company could realize in a
current market exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated
fair value amounts. The admitted asset value and estimated fair value
for financial instruments as of December 31, are as follows:
<TABLE>
<CAPTION>
1994 1993
---------------------------- ----------------------------
ADMITTED FAIR ADMITTED FAIR
IN THOUSANDS ASSET VALUE VALUE ASSET VALUE VALUE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Bonds $ 5,134,554 $ 4,919,495 $ 4,985,026 $ 5,358,573
Common stocks 209,958 209,958 211,792 211,792
Commercial mortgages 342,205 341,195 287,932 298,698
Residential mortgages 255,981 255,449 254,424 268,783
Policy loans 185,599 185,599 177,820 177,820
Cash and short-term securities 112,869 112,869 90,266 90,266
Other assets 157,138 157,109 137,841 137,841
------------- ------------- ------------- -------------
Total financial instruments $ 6,398,304 $ 6,181,674 $ 6,145,101 $ 6,543,773
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
Fair values for bonds and commercial and residential mortgages are
based on quoted market prices, where available. If quoted market prices
are not available, fair values are estimated using values obtained from
independent pricing services which specialize in matrix pricing and
modeling techniques for estimating fair values. The admitted asset value
approximates fair value for common stock, policy loans, cash and
short-term securities, and other assets.
The fair value estimates presented herein are based on pertinent
information available to management as of December 31, 1994 and
1993. Although management is not aware of any factors that would
significantly affect the estimated fair value amounts, such amounts have
not been comprehensively revalued for purposes of the financial
statements since the original valuation dates and therefore, subsequent
estimates of fair value may differ significantly from the amounts
presented herein.
(Continued)
11
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(3) INVESTMENTS (CONTINUED)
The admitted asset value, gross unrealized appreciation and depreciation,
and estimated fair value of investments in bonds are as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED
IN THOUSANDS ADMITTED ------------------------------ FAIR
DECEMBER 31, 1994 ASSET VALUE APPRECIATION DEPRECIATION VALUE
---------------------------------------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Federal government $ 210,335 $ 19 $ 9,983 $ 200,371
State and local government 26,493 10 1,171 25,332
Foreign government 17,691 413 20 18,084
Corporate bonds 3,325,331 41,167 167,404 3,199,094
Mortgage-backed securities 1,554,704 11,110 89,200 1,476,614
------------- ------------- -------------- -------------
Total $ 5,134,554 $ 52,719 $ 267,778 $ 4,919,495
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
GROSS UNREALIZED
IN THOUSANDS ADMITTED ------------------------------- FAIR
DECEMBER 31, 1993 ASSET VALUE APPRECIATION DEPRECIATION VALUE
---------------------------------------------- -------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C>
Federal government $ 99,240 $ 569 $ 586 $ 99,223
State and local government 5,295 817 -- 6,112
Foreign government 2,721 126 94 2,753
Corporate bonds 3,246,373 289,746 4,606 3,531,513
Mortgage-backed securities 1,631,397 90,437 2,862 1,718,972
------------- -------------- ------- -------------
Total $ 4,985,026 $ 381,695 $ 8,148 $ 5,358,573
------------- -------------- --------- -------------
------------- -------------- --------- -------------
</TABLE>
The amortized cost and estimated fair value of bonds at December 31,
1994, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right
to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
ADMITTED FAIR
IN THOUSANDS ASSET VALUE VALUE
------------- -------------
<S> <C> <C>
Due in one year or less $ 81,762 $ 80,250
Due after one year through five years 802,900 793,430
Due after five years through ten years 1,433,303 1,363,187
Due after ten years 1,261,885 1,206,014
------------- -------------
3,579,850 3,442,881
Mortgage-backed securities 1,554,704 1,476,614
------------- -------------
Total $ 5,134,554 $ 4,919,495
------------- -------------
------------- -------------
</TABLE>
(Continued)
12
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(4) FEDERAL INCOME TAXES
The federal income tax expense varies from amounts computed by
applying the federal income tax rates of 35% for 1994 and 1993, and 34%
for 1992, to the gain from operations after dividends to policyowners
and before federal income taxes and realized capital gains (losses). The
reasons for this difference, and the tax effects thereof, are as follows:
<TABLE>
<CAPTION>
IN THOUSANDS 1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Computed tax expense $ 33,666 $ 32,260 $ 32,299
Difference between statutory and tax basis:
Investment income (5,853) (7,204) (7,409)
Policy reserves (767) (2,079) (700)
Dividends to policyowners 593 (1,907) (77)
Acquisition expense 9,013 8,393 8,592
Other expenses 2,137 3,739 750
Special tax on mutual life insurance companies 15,466 3,396 4,667
Other, net (4,629) 58 1,723
--------- --------- ---------
Tax expense $ 49,626 $ 36,656 $ 39,845
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Company's tax returns for 1991 through 1992 are under
examination by the Internal Revenue Service. The Company believes
additional taxes, if any, assessed as a result of these examinations
will not have a material effect on its financial position.
(5) ACCIDENT AND HEALTH CLAIM LIABILITY
Activity in the liability for unpaid claims and claim adjustment
expenses are summarized as follows:
<TABLE>
<CAPTION>
IN THOUSANDS 1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Balance at January 1 $ 274,253 $ 246,777 $ 227,548
Less: reinsurance recoverable 38,418 29,622 21,227
----------- ----------- -----------
Net balance at January 1 235,835 217,155 206,321
----------- ----------- -----------
Incurred related to:
Current year 91,573 85,112 87,268
Prior years (308) 7,121 125
----------- ----------- -----------
Total incurred 91,265 92,233 87,393
----------- ----------- -----------
Paid related to:
Current year 23,019 22,002 24,380
Prior years 50,380 51,551 52,179
----------- ----------- -----------
Total paid 73,399 73,553 76,559
----------- ----------- -----------
Net Balance at December 31 253,701 235,835 217,155
Plus: reinsurance recoverable 47,651 38,418 29,622
----------- ----------- -----------
Balance at December 31 $ 301,352 $ 274,253 $ 246,777
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Incurred claims related to prior years are due to the difference
between actual and estimated claims incurred as of the prior year end.
(Continued)
13
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(6) BUSINESS COMBINATION
On July 1, 1993, the Company entered into an "Agreement and Plan of
Reorganization" that combined all of the assets, liabilities, and
surplus of Ministers Life--A Mutual Life Insurance Company (Ministers
Life) into the Company. Ministers Life sold life and health insurance
products to religious professionals in the continental United States.
The business combination increased the Company's assets by $272,649,000,
liabilities by $255,965,000 and policyowners' surplus by $16,684,000.
(7) RELATED PARTY TRANSACTIONS
In 1993, the Company received 2,375,000 shares of common stock of the
Minnesota Fire and Casualty Company (the Casualty Company) in return for
the surrender of outstanding guaranty fund certificates totalling
$21,800,000 which had previously been charged to surplus. The surrender
of the certificates and concurrent issuance of stock were part of the
Casualty Company's "Demutualization and Stock Conversion Plan" (the
Plan) approved by the Department of Commerce. Pursuant to the Plan, the
Casualty Company became a subsidiary of the Company on December 31,
1993. The effect of the transaction was an increase to investments in
subsidiary companies and an increase to policyowners' surplus as of
December 31, 1993 of $19,171,000.
The Company has an agreement with two of its subsidiaries which requires
the Company to invest additional capital, as needed, for repayment of
any debt outstanding to the Company. As of December 31, 1994 and 1993,
$41,050,000 of subsidiary debt owed the Company was subject to this
agreement.
(8) PENSION PLANS AND OTHER RETIREMENT PLANS
PENSION PLANS
The Company has self-insured, noncontributory, defined benefit
retirement plans covering substantially all employees. The Company's
funding policy is to contribute annually the maximum amount that may be
deducted for federal income tax purposes. The Company expenses amounts
as contributed. The Company made a contribution of $1,714,200 in 1994.
No contributions were made in 1993 or 1992. Information for these plans
as of the beginning of the plan year is as follows:
<TABLE>
<CAPTION>
IN THOUSANDS 1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Actuarial present value of accumulated benefits:
Vested $ 42,849 $ 36,281 $ 33,761
Nonvested 12,033 12,996 10,556
--------- --------- ---------
Total $ 54,882 $ 49,277 $ 44,317
--------- --------- ---------
--------- --------- ---------
Net assets available for benefits $ 85,651 $ 78,952 $ 74,735
--------- --------- ---------
--------- --------- ---------
</TABLE>
In determining the actuarial present value of accumulated benefits, a
weighted average assumed rate of return of 8.4% was used in 1994, 1993,
and 1992.
(Continued)
14
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(8) PENSION PLANS AND OTHER RETIREMENT PLANS (CONTINUED)
PROFIT SHARING PLANS
The Company also has profit sharing plans covering substantially all
employees and agents. The Company's contribution rate to the employee
plan is determined annually by the Trustees of the Company and is
applied to each participant's prior year earnings. The Company's
contribution to the agent plan is made as a certain percentage, based
upon years of service, applied to each agent's total annual
compensation. The Company recognized contributions to the plans during
1994, 1993, and 1992 of $6,866,000, $6,753,000 and $4,630,000,
respectively. Participants may elect to receive a portion of their
contributions in cash.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company also has postretirement plans that provide certain health
care and life insurance benefits ("postretirement benefits") to
substantially all retired employees and agents. These plans are unfunded.
In 1993, the Company changed its method of accounting for the costs
of its postretirement benefit plans to the accrual method, and elected
to amortize its transition obligation for retirees and fully eligible
employees and agents over 20 years. The unamortized transition
obligation was $13,000,000 and $15,085,000 at December 31, 1994 and
1993, respectively.
The net postretirement benefit cost for the years ended December 31,
1994 and 1993, was $3,202,000 and $3,832,000, respectively. This amount
includes the expected cost of such benefits for newly eligible
employees, interest cost, and amortization of the transition obligation.
The Company made payments under the plans of $526,000 and $555,000 in
1994 and 1993, respectively, as claims were incurred.
At December 31, 1994 and 1993, the postretirement benefit obligation
for retirees and other fully eligible participants was $19,635,000 and
$18,362,000, respectively. The estimated cost of the benefit obligation
for active employees and agents who are not yet fully eligible was
$13,065,000 and $12,270,000 for 1994 and 1993, respectively. The
discount rate used in determining the accumulated postretirement benefit
obligation for 1994 and 1993 were 7.5% and 8.0%, respectively. The 1994
net health care cost trend rate was 11.5%, graded to 5.5% over 12 years,
and the 1993 rate was 12.5%, graded to 6% over 13 years.
The health care cost trend rate assumption has a significant effect
on the amounts reported. To illustrate, increasing the assumed health
care cost trend rates by one percentage point in each year would
increase the postretirement benefit obligation as of December 31, 1994
by $2,182,000 and the estimated eligibility cost and interest cost
components of net periodic postretirement benefit costs for 1994 by
$337,000.
(9) COMMITMENTS AND CONTINGENCIES
The Company reinsures certain individual and group business. At December
31, 1994, policy reserves in the accompanying balance sheet are
reflected net of reinsurance ceded of $49,564,000. To the extent that an
assuming reinsurer is unable to meet its obligation under its agreement,
the Company remains liable.
The Company has issued certain participating group annuity and life
insurance contracts jointly with another life insurance company. The
joint contract issuer has liabilities related to these contracts of
$419,278,000 as of December 31, 1994. To the extent the joint contract
issuer is unable to meet its obligation under the agreement, the Company
remains liable.
(Continued)
15
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(9) COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company has long-term commitments to fund venture capital and
real estate investments totaling $78,000,000 as of December 31, 1994.
The Company estimates that $18,000,000 of these commitments will be paid
in 1995 with the remaining $60,000,000 paid over the next five years.
At December 31, 1994, the Company had guaranteed the payment of
$58,400,000 in policyowner dividends payable in 1995. The Company has
pledged bonds, valued at $62,809,000, to secure this guarantee.
The Company is contingently liable under state regulatory
requirements for possible assessment pertaining to future insolvencies
and impairments of unaffiliated companies.
(10) MUTUAL LIFE INSURANCE COMPANY ACCOUNTING POLICIES
In April 1993 the Financial Accounting Standards Board (FASB) issued
Interpretation No. 40, "Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises." In January
1995 the FASB issued Statement of Financial Accounting Standards No. 120
(Statement), "Accounting and Reporting by Mutual Life Insurance
Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts" and, jointly with the American Institute of
Certified Public Accountants, issued a Statement of Position (SOP),
"Accounting for Certain Insurance Activities of Mutual Insurance
Enterprises." Under Interpretation No. 40, the Statement and SOP, mutual
life insurance companies that report their financial statements in
conformity with generally accepted accounting principles (GAAP) will be
required to apply all related authoritative accounting pronouncements.
Interpretation No. 40, the Statement and SOP apply to years
beginning after December 15, 1995. All of the guidance will require
restatement of prior year balances. Applying the provisions of
Interpretation No. 40, the Statement and SOP may result in
policyholders' surplus and net income (loss) amounts differing from the
amounts reported under existing practices. Management has not yet
determined the impact of the adoption of GAAP.
Alternatively, the Company may continue to prepare its financial
statements in accordance with statutory accounting practices prescribed
or permitted by the Department of Commerce, which will no longer be
considered generally accepted accounting principles after December 31, 1995.
16
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
SCHEDULE I--SUMMARY OF INVESTMENTS--OTHER THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 1994
(In thousands)
<TABLE>
<CAPTION>
AMOUNT AT WHICH
SHOWN IN THE
BALANCE
TYPE OF INVESTMENT COST(4) MARKET VALUE SHEET(1)(3)
------------- --------------- -----------------
<S> <C> <C> <C>
Bonds:
United States government and government agencies and authorities $ 210,335 $ 200,371 $ 210,335
States, municipalities and political subdivisions 26,493 25,332 26,493
Foreign governments 17,691 18,084 17,691
Public utilities 568,271 547,165 568,271
Mortgage-backed securities 1,554,704 1,476,614 1,554,704
All other corporate bonds 2,725,055 2,614,705 2,716,010
------------- --------------- -----------------
Total bonds 5,102,549 4,882,271 5,093,504
------------- --------------- -----------------
Equity securities:
Common stocks:
Public utilities 19,766 21,233 21,233
Banks, trusts and insurance companies 18,247 25,393 25,393
Industrial, miscellaneous and all other 121,499 163,332 163,332
------------- --------------- -----------------
Total equity securities 159,512 209,958 209,958
------------- --------------- -----------------
Mortgage loans on real estate 598,186 xxxxxx 598,186
Real estate (2) 76,346 xxxxxx 76,346
Policy loans 185,599 xxxxxx 185,599
Other long-term investments 60,604 xxxxxx 60,604
Short-term investments 92,363 xxxxxx 92,550
------------- -----------------
Total $ 1,013,098 xxxxxx $ 1,013,285
------------- -----------------
Total investments $ 6,275,159 xxxxxx $ 6,316,747
------------- -----------------
------------- -----------------
<FN>
---------
(1) Debt securities are carried at amortized cost or investment values
prescribed by the National Association of Insurance Commissioners.
(2) The carrying value of real estate acquired in satisfaction of indebtedness
is $4,192. Real estate includes property occupied by the Company.
(3) Differences between cost and amounts shown in the balance sheet for
investments, other than equity securities and bonds, represent non-admitted
investments.
(4) Original cost for equity securities and original cost reduced by repayments
and adjusted for amortization of premiums or accrual of discounts for
bonds.
</TABLE>
17
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
SCHEDULE V--SUPPLEMENTARY INSURANCE INFORMATION
(in thousands)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------------------------------------
FUTURE POLICY
DEFERRED BENEFITS, OTHER POLICY
POLICY LOSSES, CLAIMS CLAIMS AND
ACQUISITION AND SETTLEMENT UNEARNED BENEFITS
SEGMENT COSTS(1) EXPENSES(3) PREMIUMS(3) PAYABLE
----------------------------------- ----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
1994:
Life insurance $1,981,469 $37,909
Accident and health insurance 343,241 15,754
Annuity considerations 3,179,279 7
----------- -------------- ----------- ------------
Total -- 5,503,989 -- 53,670
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
1993:
Life insurance $1,875,570 $83,365
Accident and health insurance 317,825 14,979
Annuity considerations 3,166,944 7
----------- -------------- ----------- ------------
Total -- $5,360,339 -- $98,351
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
1992:
Life insurance $1,686,676 $39,643
Accident and health insurance 292,703 13,971
Annuity considerations 3,011,272 3
----------- -------------- ----------- ------------
Total -- $4,990,651 -- $53,617
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------
AMORTIZATION
PREMIUMS AND BENEFITS, OF DEFERRED
ANNUITY AND NET CLAIMS, LOSSES POLICY OTHER
OTHER FUND INVESTMENT AND SETTLEMENT ACQUISITION OPERATING PREMIUMS
SEGMENT DEPOSITS INCOME EXPENSES COSTS(1) EXPENSES WRITTEN(2)
----------------------------------- ------------ ---------- -------------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
1994:
Life insurance $ 802,265 $196,877 $ 608,091 $230,327
Accident and health insurance 142,032 32,724 93,634 71,958
Annuity considerations 480,055 259,212 652,076 52,180
------------ ---------- -------------- ------------ --------- ----------
Total 1,424,352 488,813 1,353,801 -- 354,465 --
------------ ---------- -------------- ------------ --------- ----------
------------ ---------- -------------- ------------ --------- ----------
1993:
Life insurance $ 718,232 $193,724 $ 538,880 $220,861
Accident and health insurance 138,690 31,452 88,857 72,616
Annuity considerations 433,032 267,835 626,181 45,463
------------ ---------- -------------- ------------ --------- ----------
Total $1,289,954 $493,011 $1,253,918 -- $338,940 --
------------ ---------- -------------- ------------ --------- ----------
------------ ---------- -------------- ------------ --------- ----------
1992:
Life insurance $ 672,004 $209,325 $ 507,921 $204,283
Accident and health insurance 135,176 16,927 85,555 71,190
Annuity considerations 427,233 259,032 618,077 39,558
------------ ---------- -------------- ------------ --------- ----------
Total $1,234,413 $485,284 $1,211,553 -- $315,031 --
------------ ---------- -------------- ------------ --------- ----------
------------ ---------- -------------- ------------ --------- ----------
<FN>
-------------
(1) Does not apply to financial statements of mutual life insurance companies
which are prepared on a statutory basis.
(2) Does not apply to life insurance.
(3) Unearned premiums and other deposit funds are included in future policy
benefits, losses, claims and settlement expenses.
</TABLE>
18
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
SCHEDULE VI--REINSURANCE
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(in thousands)
<TABLE>
<CAPTION>
PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
GROSS OTHER FROM OTHER ASSUMED TO
AMOUNT COMPANIES COMPANIES NET AMOUNT NET
----------- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
1994:
Life insurance in force $97,181,118 $13,314,267 $20,555,910 $104,422,761 19.7%
----------- ----------- ----------- ------------ -----
----------- ----------- ----------- ------------ -----
Premiums, annuity
considerations and fund
deposits:
Life insurance $ 792,087 $ 48,773 $ 58,951 $ 802,265 7.3%
Accident and health
insurance 150,876 10,145 1,301 142,032 0.9%
Annuity 480,055 -- -- 480,055 -----
----------- ----------- ----------- ------------ -----
Total premiums*,
annuity
considerations
and fund
deposits $ 1,423,018 $ 58,918 $ 60,252 $ 1,424,352 4.2%
----------- ----------- ----------- ------------ -----
----------- ----------- ----------- ------------ -----
1993:
Life insurance in force $93,206,579 $11,674,202 $19,758,935 $101,291,312 19.5%
----------- ----------- ----------- ------------ -----
----------- ----------- ----------- ------------ -----
Premiums, annuity
considerations and fund
deposits:
Life insurance $ 704,172 $ 43,313 $ 57,373 $ 718,232 8.0%
Accident and health
insurance 147,229 9,699 1,160 138,690 0.8%
Annuity 433,032 -- -- 433,032 -----
----------- ----------- ----------- ------------ -----
Total premiums*,
annuity
considerations
and fund
deposits $ 1,284,433 $ 53,012 $ 58,533 $ 1,289,954 4.5%
----------- ----------- ----------- ------------ -----
----------- ----------- ----------- ------------ -----
1992:
Life insurance in force $89,317,556 $8,962,842 $17,182,599 $ 97,537,313 17.6%
----------- ----------- ----------- ------------ -----
----------- ----------- ----------- ------------ -----
Premiums, annuity
considerations and fund
deposits:
Life insurance $ 661,835 $ 37,038 $ 47,207 $ 672,004 7.0%
Accident and health
insurance 143,432 9,424 1,168 135,176 0.9%
Annuity 427,233 -- -- 427,233 -----
----------- ----------- ----------- ------------ -----
Total premiums*,
annuity
considerations
and fund
deposits $ 1,232,500 $ 46,462 $ 48,375 $ 1,234,413 3.9%
----------- ----------- ----------- ------------ -----
----------- ----------- ----------- ------------ -----
<FN>
------------
* There are no premiums related to either property and liability or title
insurance.
</TABLE>
19
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
Minnesota Mutual Variable Annuity Account
Cross Reference Sheet to Other Information
Form N-4
Item Number Caption in Other Information
24. Financial Statements and Exhibits
25. Directors and Officers of the Depositor
26. Persons Controlled by or Under Common Control with the Depositor
or Registrant
27. Number of Contract Owners
28. Indemnification
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Audited Financial Statements of Minnesota Mutual Variable Annuity
Account for the fiscal year ended December 31, 1994, are included in
Part B of this filing and consist of the following:
1. Independent Auditors' Report
2. Statements of Assets and Liabilities.
3. Statements of Operations.
4. Statements of Changes in Net Assets.
5. Notes to Financial Statements.
(b) Audited Financial Statements of the Depositor, The Minnesota Mutual
Life Insurance Company, for the fiscal year ended December 31, 1994
and 1993, are included in Part B of this filing and consist of the
following:
1. Independent Auditors' Report - The Minnesota Mutual Life
Insurance Company.
2. Balance Sheets - The Minnesota Mutual Life Insurance Company.
3. Statements of Operations and Policyowners' Surplus - The
Minnesota Mutual Life Insurance Company.
4. Statements of Cash Flows - The Minnesota Mutual Life Insurance
Company.
5. Notes to Financial Statements - The Minnesota Mutual Life
Insurance Company.
6. Summary of Investments-Other than Investments in Related
Parties - The Minnesota Mutual Life Insurance Company.
7. Supplementary Insurance Information - The Minnesota Mutual Life
Insurance Company.
8. Reinsurance - The Minnesota Mutual Life Insurance Company.
9. Short-term Borrowings - The Minnesota Mutual Life Insurance
Company.
(c) Exhibits
1. The Resolution of The Minnesota Mutual Life Insurance Company's
Executive Committee of its Board of Trustees establishing the
Variable Annuity Account.
2. Not applicable.
3. (a) The Distribution Agreement between The Minnesota Mutual Life
Insurance Company and MIMLIC Sales Corporation.
(b) Dealer Selling Agreement.
<PAGE>
4. (a) The Immediate Variable Annuity Contract, form 95-9326.
(b) The Immediate Variable Annuity Contract (Unisex), form
95-9327.
(c) The Individual Retirement Annuity Agreement, form 83-9058
Rev. 10-93.
(d) The Qualified Plan Agreement, form 88-9176 Rev. 8-93.
(e) Tax Sheltered Annuity, form 88-9213.
5. (a) Application, form 95-9328.
6. Certificate of Incorporation and Bylaws.
(a) The Articles of Re-Incorporation of the Depositor.
(b) The Bylaws of the Depositor.
7. Not applicable.
8. Not applicable.
9. Opinion and consent of Donald F. Gruber, Esq.
10. Consent of KPMG Peat Marwick LLP.
11. Not applicable.
12. Not applicable.
13. Not applicable.
14. The Minnesota Mutual Life Insurance Company Power of Attorney To
Sign Registration Statements.
Item 25. Directors and Officers of the Depositor
Name and Principal Positions and Offices Positions and Offices
Business Address with Insurance Company with Registrant
---------------- ---------------------- ---------------
Anthony L. Andersen Trustee None
H. B. Fuller Company
2400 Energy Park Drive
St. Paul, MN 55108
John F. Grundhofer Trustee None
First Bank System, Inc.
601 2nd Avenue South
Suite 2900
Minneapolis, MN 55402
Harold V. Haverty Trustee None
Deluxe Corporation
1080 West County Road F
Shoreview, MN 55126-8201
<PAGE>
Lloyd P. Johnson Trustee None
Norwest Corporation
4900 IDS Center
80 South Eighth Street
Minneapolis, MN 55479
David S. Kidwell, Ph.D. Trustee None
The Curtis L. Carlson
School of Management
University of Minnesota
271 19th Avenue South
Minneapolis, MN 55455
Reatha C. King, Ph.D. Trustee None
General Mills Foundation
P.O. Box 1113
Minneapolis, MN 55440
Thomas E. Rohricht Trustee None
Doherty, Rumble & Butler
Professional Association
2800 Minnesota World
Trade Center
30 East Seventh Street
St. Paul, MN 55101-4999
Terry N. Saario, Ph.D. Trustee None
Northwest Area Foundation
E-1201 First National
Bank Building
St. Paul, MN 55101
Robert L. Senkler Chairman of the Board, None
The Minnesota Mutual President and Chief
Life Insurance Executive Officer
Company
400 Robert Street North
St. Paul, MN 55101
Michael E. Shannon Trustee None
Ecolab, Inc.
Ecolab Center
St. Paul, MN 55102
Frederick T. Weyerhaeuser Trustee None
Clearwater Management
Company
W-2090 First National Bank
Building
St. Paul, MN 55101
John F. Bruder Senior Vice President None
400 Robert Street North
St. Paul, MN 55101
Keith M. Campbell Vice President None
400 Robert Street North
St. Paul, MN 55101
Paul H. Gooding Vice President and None
400 Robert Street North Treasurer
St. Paul, MN 55101
Robert E. Hunstad Executive Vice President None
400 Robert Street North
St. Paul, MN 55101
<PAGE>
James E. Johnson Senior Vice President None
400 Robert Street North and Actuary
St. Paul, MN 55101
Joel W. Mahle Vice President None
400 Robert Street North
St. Paul, MN 55101
Dennis E. Prohofsky Vice President, General None
400 Robert Street North Counsel and Secretary
St. Paul, MN 55101
Gregory S. Strong Vice President and None
400 Robert Street North Actuary
St. Paul, MN 55101
Terrence M. Sullivan Senior Vice President None
400 Robert Street North
St. Paul, MN 55101
Randy F. Wallake Senior Vice President None
400 Robert Street North
St. Paul, MN 55101
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Wholly-owned subsidiaries of The Minnesota Mutual Life Insurance Company:
MIMLIC Asset Management Company
The Ministers Life Insurance Company
MIMLIC Corporation
Minnesota Fire and Casualty Company
Northstar Life Insurance Company (New York)
Robert Street Energy, Inc.
Open-end registered investment company offering shares solely to separate
accounts of The Minnesota Mutual Life Insurance Company:
MIMLIC Series Fund, Inc.
Wholly-owned subsidiary of MIMLIC Asset Management Company:
MIMLIC Sales Corporation
Advantus Capital Management, Inc.
Wholly-owned subsidiaries of MIMLIC Corporation:
DataPlan Securities, Inc. (Ohio)
MIMLIC Imperial Corporation
MIMLIC Funding, Inc.
MIMLIC Venture Corporation
Personal Finance Company (Delaware)
Wedgewood Valley Golf, Inc.
Ministers Life Resources, Inc.
Enterprise Holding Corporation
<PAGE>
Wholly-owned subsidiaries of Enterprise Holding Corporation:
Oakleaf Service Corporation
Lafayette Litho, Inc.
Financial Ink Corporation
Concepts in Marketing Research Corporation
Concepts in Marketing Services Corporation
Wholly-owned subsidiaries of Minnesota Fire and Casualty Company:
Viking Fire Insurance Company (New York)
HomePlus Insurance Company
HomePlus Agency, Inc.
Majority-owned subsidiary of MIMLIC Imperial Corporation:
J. H. Shoemaker Advisory Corporation
Fifty percent-owned subsidiary of MIMLIC Imperial Corporation:
C.R.I. Securities, Inc.
Wholly-owned subsidiary of Oakleaf Service Corporation:
New West Agency, Inc. (Oregon)
Majority-owned subsidiaries of The Minnesota Mutual Life Insurance Company:
MIMLIC Life Insurance Company (Arizona)
MIMLIC Cash Fund, Inc.
Advantus Cornerstone Fund, Inc.
Advantus Enterprise Fund, Inc.
Advantus International Balanced Fund, Inc.
Less than majority owned, but greater than 25% owned, subsidiaries of The
Minnesota Mutual Life Insurance Company:
Advantus Horizon Fund, Inc.
Advantus Money Market Fund, Inc.
Less than 25% owned subsidiaries of The Minnesota Mutual Life Insurance Company:
Advantus Bond Fund, Inc.
Advantus Spectrum Fund, Inc.
Advantus Mortgage Securities Fund, Inc.
Unless indicated otherwise parenthetically, each of the above
corporations is a Minnesota corporation.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of June 30, 1995, the number of holders of securities of the Registrant were
as follows:
Number of Record
Title of Class Holders
-------------- ----------------
Variable Annuity Contracts 44,975
<PAGE>
ITEM 28. INDEMNIFICATION
The State of Minnesota has an indemnification statute (Minnesota Statutes
300.083), as amended, effective January 1, 1984, which requires indemnification
of individuals only under the circumstances described by the statute. Expenses
incurred in the defense of any action, including attorneys' fees, may be
advanced to the individual after written request by the board of directors upon
receiving an undertaking from the individual to repay any amount advanced unless
it is ultimately determined that he or she is entitled to be indemnified by the
corporation as authorized by the statute and after a determination that the
facts then known to those making the determination would not preclude
indemnification.
Indemnification is required for persons made a part to a proceeding by reason of
their official capacity so long as they acted in good faith, received no
improper personal benefit and have not been indemnified by another organization.
In the case of a criminal proceeding, they must also have had no reasonable
cause to believe the conduct was unlawful. In respect to other acts arising out
of official capacity: (1) where the person is acting directly for the
corporation there must be a reasonable belief by the person that his or her
conduct was in the best interests of the corporation or, (2) where the person is
serving another organization or plan at the request of the corporation, the
person must have reasonably believed that his or her conduct was not opposed to
the best interests of the corporation. In the case of persons not directors,
officers or policy-making employees, determination of eligibility for
indemnification may be made by a board-appointed committee of which a director
is a member. For other employees, directors and officers, the determination of
eligibility is made by the Board or a committee of the Board, special legal
counsel, the shareholder of the corporation or pursuant to a judicial
proceeding.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of The
Minnesota Mutual Life Insurance Company and Minnesota Mutual Variable Annuity
Account pursuant to the foregoing provisions, or otherwise, The Minnesota Mutual
Life Insurance Company and Minnesota Mutual Variable Annuity Account have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by The Minnesota Mutual Life Insurance
Company and Minnesota Mutual Variable Annuity Account of expenses incurred or
paid by a director, officer or controlling person of The Minnesota Mutual Life
Insurance Company and Minnesota Mutual Variable Annuity Account in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer of controlling person in connection with the securities being
registered, The Minnesota Mutual Life Insurance Company and Minnesota Mutual
Variable Annuity Account will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) The principal underwriter is MIMLIC Sales Corporation. MIMLIC
Sales Corporation is also the principal underwriter for nine
mutual funds (Advantus Horizon Fund, Inc.; Advantus Spectrum
Fund, Inc.; Advantus Money market Fund, Inc.; Advantus Mortgage
Securities Fund, Inc.; Advantus Bond Fund, Inc.,; Advantus
Cornerstone Fund, Inc.; Advantus Enterprise Fund, Inc.; Advantus
International Balanced Fund, Inc.; and the MIMLIC Cash
<PAGE>
Fund, Inc.) and for four additional registered separate accounts
of The Minnesota Mutual Life Insurance Company, all of which
offer annuity contracts and life insurance policies on a variable
basis.
(b) Directors and Officers of Underwriter.
DIRECTORS AND OFFICERS OF UNDERWRITER
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Depositor
------------------ --------------------- ---------------------
Robert E. Hunstad Chairman of the Board Executive Vice
400 Robert Street North and Director President
St. Paul, Minnesota 55101
Bardea C. Huppert President, Chief Second Vice President
400 Robert Street North Executive Officer
St. Paul, Minnesota 55101 and Director
Derick R. Black Vice President and Manager
400 Robert Street North Chief Compliance
St. Paul, Minnesota 55101 Officer
Margaret Milosevich Vice President, Chief Manager
400 Robert Street North Operations Officer and
St. Paul, Minnesota 55101 Treasurer
Dennis E. Prohofsky Secretary and Director Vice President,
400 Robert Street North General Counsel and
St. Paul, Minnesota 55101 Secretary
Thomas L. Clark Assistant Secretary Compliance Analyst
400 Robert Street North
St. Paul, Minnesota 55101
Kevin Collier Assistant Secretary Broker-Dealer Trader
400 Robert Street North
St. Paul, Minnesota 55101
(c) All commissions and other compensation received by each principal
underwriter, directly or indirectly, from the Registrant during
the Registrant's last fiscal year:
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage Other
Underwriter Commissions Annuitization Commissions Compensation
----------- ---------------- --------------- ----------- ------------
MIMLIC Sales, $7,363,105 ___ ___ ___
Inc.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act and the Rules promulgated thereunder are in the physical
possession of The Minnesota Mutual Life Insurance Company, St. Paul, Minnesota
55101-2098.
ITEM 31. MANAGEMENT SERVICES
None.
<PAGE>
ITEM 32. UNDERTAKINGS
(a) The Registrant hereby undertakes to file a post-effective
amendment to this registration statement as frequently as is
necessary to ensure that the audited financial statements in the
registration statement are never more than 16 months old for so
long as payments under the Contracts may be accepted.
(b) The Registrant hereby undertakes to include as part of any
application to purchase a contract offered by the prospectus a
space that an applicant can check to request a Statement of
Additional Information.
(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statement required to be
made available under this form promptly upon written or oral
request.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the Registrant,
Minnesota Mutual Variable Annuity Account, has duly caused this Registration
Statement to be signed on its behalf by the Undersigned, thereunto duly
authorized, in the City of Saint Paul, and State of Minnesota, on the 25th day
of August, 1995.
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
(Registrant)
By: THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
(Depositor)
By /s/ Robert L. Senkler
-------------------------------------
Robert L. Senkler
Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the Depositor, The
Minnesota Mutual Life Insurance Company, has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Saint Paul, and State of Minnesota, on the 25th day
of August, 1995.
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By /s/ Robert L. Senkler
-------------------------------------
Robert L. Senkler
Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in their capacities
with the Depositor and on the date indicated.
Signature Title Date
--------- ----- ----
Robert L. Senkler* Chairman of the Board,)
-------------------------- President and Chief)
Robert L. Senkler Executive Officer)
)
Anthony L. Andersen* Trustee)
-------------------------- )
Anthony L. Andersen )
)
John F. Grundhofer* Trustee)
-------------------------- )
John F. Grundhofer )
<PAGE>
Signature Title Date
--------- ----- ----
Harold V. Haverty* Trustee)
-------------------------- )
Harold V. Haverty )
)
Lloyd P. Johnson* Trustee) /s/ Dennis E. Prohofsky
-------------------------- ) --------------------------
Lloyd P. Johnson ) Dennis E. Prohofsky
) Attorney-in-Fact
David S. Kidwell, Ph.D.* Trustee)
-------------------------- ) Dated: August 25, 1995
David S. Kidwell, Ph.D. )
)
Reatha C. King, Ph.D.* Trustee)
-------------------------- )
Reatha C. King, Ph.D. )
)
Thomas E. Rohricht* Trustee)
-------------------------- )
Thomas E. Rohricht )
Trustee)
-------------------------- )
Terry N. Saario, Ph.D. )
)
-------------------------- Trustee)
Michael E. Shannon )
)
Frederick T. Weyerhaeuser* Trustee)
-------------------------- )
Frederick T. Weyerhaeuser )
-------------
*Registrant's Officer and Trustee executing power of attorney dated February 13,
1995, a copy of which is filed herewith.
<PAGE>
EXHIBIT INDEX
Page Number in
Sequential Numbering
System Where
Exhibit Number Description of Exhibit Exhibit is Located
-------------- ---------------------- ------------------
1 The Resolution of The Minnesota
Mutual Life Insurance Company's
Executive Committee of its Board
of Trustees establishing the
Variable Annuity Account.
3(a) The Distribution Agreement between
The Minnesota Mutual Life Insurance
Company and MIMLIC Sales Corporation.
3(b) Dealer Selling Agreement.
4(a) The Immediate Variable Annuity
Contract, form 95-9326.
4(b) The Immediate Variable Annuity
Contract (Unisex), form 95-9327.
4(c) The Individual Retirement Annuity
Agreement, form 83-9058 Rev. 10-93.
4(d) The Qualified Plan Agreement, form
88-9176 Rev. 8-93.
4(e) Tax Sheltered Annuity Amendment,
form 88-9213.
5(a) Application, form 95-9328.
6(a) The Articles of Re-Incorporation of
the Depositor.
6(b) The Bylaws of the Depositor.
9 Opinion and Consent of Donald F.
Gruber, Esq.
10 Consent of KPMG Peat Marwick LLP.
14 The Minnesota Mutual Life
Insurance Company Power of
Attorney To Sign Registration
Statements.
<PAGE>
Exhibit 1
CERTIFICATE OF SECRETARY
I, Dennis E. Prohofsky, hereby certify that I am the Secretary of The
Minnesota Mutual Life Insurance Company, Saint Paul, Minnesota; that I have
charge, custody and control of the record books and corporate seal of said
Company; that the following is a true and correct copy of a resolution adopted
by the Executive Committee of said Company at a meeting held September 10, 1984,
at which meeting a quorum was present and acting throughout; and that the
meeting was duly called for the purpose of acting upon the attached "Resolution
- Separate Account H".
I hereby certify that the attached resolution has not been modified,
amended or rescinded and continues in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate
seal of The Minnesota Mutual Life Insurance Company this 10th day of August,
1995.
/s/ Dennis E. Prohofsky
----------------------
Secretary
(Seal)
<PAGE>
RESOLUTION - SEPARATE ACCOUNT H
"RESOLVED, That the Company hereby establishes a separate account in accordance
with Subdivision 1 of Section 61A.14 of Minnesota Statutes 1967, as amended, for
the purpose of issuing contracts on a variable basis, which account shall be
known as Minnesota Mutual Variable Fund H, or by such other name as the Chief
Executive Officer may determine;
FURTHER RESOLVED, That such separate account be registered as unit investment
trust pursuant to the provisions of the Investment Company Act of 1940, as
amended, and that application be made for such exemptions from that Act as may
be necessary or desirable;
FURTHER RESOLVED, That there be prepared and filed with the Securities and
Exchange Commission in accordance with the provisions, of the Securities Act of
1933, as amended, a registration statement, and any amendments thereto, relating
to such contracts on a variable basis as may be offered to the public;
FURTHER RESOLVED, That the chief executive officer of the Company or such
officer or officers as he may designate be, and they hereby are, authorized to
seek such exemptive or other relief as may be necessary or appropriate in
connection with the separate account or the offered contracts; and
FURTHER RESOLVED, That the chief executive officer of the Company or such
officer or officers as he may designate be, and they hereby are, authorized and
directed to take such further action as may in their judgment be necessary and
desirable to implement the foregoing resolutions."
<PAGE>
Exhibit 3(a)
DISTRIBUTION AGREEMENT
AGREEMENT made this 10th day of August, 1995, between and among The
Minnesota Mutual Life Insurance Company, a Minnesota corporation ("Minnesota
Mutual"), and MIMLIC Sales Corporation, a Minnesota corporation ("Distributor").
WITNESSETH:
WHEREAS, Minnesota Mutual is the depositor of Minnesota Mutual Variable
Annuity Account (the "Account"); and
WHEREAS, Minnesota Mutual proposes to offer for sale certain immediate
variable annuity contracts (the "contracts") which may be deemed to be
securities under the Securities Act of 1933 ("1933 Act") and the laws of some
states; and
WHEREAS, the Distributor, a wholly-owned subsidiary of MIMLIC Corporation,
which is in turn a wholly-owned subsidiary of Minnesota Mutual, is registered as
a broker-dealer with the Securities and Exchange Commission ("SEC") under the
Securities Exchange Act of 1934 ("1934 Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, the parties desire to have the Distributor act as principal
underwriter of the contracts and assume full responsibility for the securities
activities of each "person associated" (as that term is defined in Section
3(a)(18) of the 1934 Act) with the Distributor and engaged directly or
indirectly in the sale of the contracts (the "associated persons"); and
WHEREAS, the parties desire to have Minnesota Mutual perform certain
services in connection with the sale of the contracts;
NOW, THEREFORE, in consideration of the convenants and mutual promises of
the parties made to each other, it is hereby covenanted and agreed as follows:
1. The Distributor will act as the exclusive principal underwriter of the
contracts and as such will assume full responsibility for the securities
activities of all the associated persons. The Distributor will train the
associated persons, use its best efforts to prepare them to complete
satisfactorily the applicable NASD and state examinations so that they may be
qualified, register the associated persons as its registered representatives
before they engage in securities activities, and supervise and control them in
the performance of such activities. Unless otherwise permitted by applicable
state law, all persons engaged in the sale of the contracts must also be agents
of Minnesota Mutual.
2. The Distributor will assume full responsibility for the continued
compliance by itself and the associated persons with the NASD Rules of Fair
Practice and Federal and state laws, to
<PAGE>
the extent applicable, in connection with the sale of the contracts. The
Distributor will make timely filings with the SEC, NASD, and any other
regulatory authorities of all reports and any sales literature relating to the
contracts required by law to be filed by the Distributor. Minnesota Mutual will
make available to the Distributor copies of any agreements or plans intended for
use in connection with the sale of contracts in sufficient number and in
adequate time for clearance by the appropriate regulatory authorities before
they are used, and it is agreed that the parties will use their best efforts to
obtain such clearance as expeditiously as is reasonably possible.
3. With the consent of Minnesota Mutual, Distributor may enter into
agreements with other broker-dealers duly licensed under applicable Federal and
state laws for the sale and distribution of the contracts and may perform such
duties as may be provided for in such agreements.
4. Minnesota Mutual, with respect to the contracts, will prepare and file
all registration statements and prospectuses (including amendments) and all
reports required by law to be filed with Federal and state regulatory
authorities. Minnesota Mutual will bear the cost of printing and mailing all
notices, proxies, proxy statements, and periodic reports that are to be
transmitted to persons having voting rights under the contracts. Minnesota
Mutual will make prompt and reasonable efforts to effect and keep in effect, at
its expense, the registration or qualification of its contracts in such
jurisdictions as may be required by federal and state regulatory authorities.
5. Minnesota Mutual will (a) maintain and preserve in accordance with
Rules 17a-3 and 17a-4 under the 1934 Act all books and records required to be
maintained by it in connection with the offer and sale of the contracts, which
books and records shall be and remain the property of the Distributor and shall
at all times be subject to inspection by the SEC in accordance with Section
17(a) of the 1934 Act and by all other regulatory bodies having jurisdiction,
and (b) upon or prior to completion of each "transaction" as that term is used
in Rule 10b-10 of the 1934 Act, send a written confirmation for each such
transaction reflecting the facts of the transaction and showing that it is being
sent by Minnesota Mutual acting in the capacity of agent for the Distributor.
6. All purchase payments and any other monies payable upon the sale,
distribution, renewal or other transaction involving the contracts shall be paid
or remitted directly to, and all checks shall be drawn to the order of,
Minnesota Mutual, and the Distributor shall not have or be deemed to have any
interest in such payments or monies. All such payments and monies received by
the Distributor shall be remitted daily by the Distributor to Minnesota Mutual
for allocation to the Account in accordance with the contracts and any
prospectus with respect to the contracts.
7. Minnesota Mutual will, in connection with the sale of the contracts,
pay on behalf of the Distributor all amounts (including sales commissions) due
to the sales representatives of the Distributor or to broker-dealers who have
entered into sales agreements with the Distributor. The records in respect of
such payments shall be properly reflected on the books and records maintained by
the Minnesota Mutual.
2
<PAGE>
8. As compensation for the Distributor's assuming the expenses and
performing the services to be assumed and performed by it pursuant to this
Agreement, the Distributor shall receive from Minnesota Mutual the following
amounts:
(a) Upon receipt of proper evidence of expenditures, an amount sufficient
to reimburse the Distributor for its expenses incurred in carrying out
the terms of this Agreement, and
(b) such other amounts as may from time to time be agreed upon by the
Distributor and Minnesota Mutual.
9. As compensation for its services performed and expenses incurred under
this Agreement, Minnesota Mutual will receive all amounts deducted as
administrative, sales, mortality and expense risk charges under the contracts,
as specified in the contracts and in the prospectus or prospectuses forming a
part of any registration statement with respect to the contracts filed with the
SEC under the 1933 Act. It is understood that Minnesota Mutual assumes the risk
that the above compensation for its services under the contracts may not prove
sufficient to cover its actual expenses in connection therewith and that its
compensation for assuming such risk shall be included in and limited to the
foregoing charges described in said prospectus(es).
10. Minnesota Mutual will, except as otherwise provided in this Agreement,
bear the cost of all services and expenses, including legal services and
expenses and registration, filing and other fees, in connection with (a)
registering and qualifying the contracts and (to the extent requested by the
Distributor) the associated persons with Federal and state regulatory
authorities and the NASD and (b) printing and distributing all contracts and all
registration statements and prospectuses (including amendments), notices,
periodic reports, sales literature and advertising prepared, filed or
distributed with respect to the contracts.
11. Each party hereto shall advise the others promptly of (a) any action
of the SEC or any authorities of any state or territory, of which it has
knowledge, affecting registration or qualification of the contracts, or the
right to offer the contracts for sale, and (b) the happening of any event which
makes untrue any statement, or which requires the making of any change, in the
registration statement or prospectus in order to make the statements therein not
misleading.
12. The services of the Distributor and Minnesota Mutual under this
Agreement are not deemed to be exclusive and the Distributor and Minnesota
Mutual shall be free to render similar services to others, including, without
implied limitation, such other separate accounts as are now or hereafter
established by Minnesota Mutual, so long as the services of the Distributor and
Minnesota Mutual hereunder are not impaired or interfered with thereby.
13. This Agreement shall upon execution become effective as of the date
first above written, and shall continue in effect indefinitely unless terminated
by either party on 60 days' written notice to the other.
14. This Agreement may be amended at any time by mutual consent of the
parties.
3
<PAGE>
15. This Agreement shall be governed by and construed in accordance with
the laws of Minnesota.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
THE MINNESOTA MUTUAL LIFE
INSURANCE COMPANY
Witness: /s/ Dennis E. Prohofsky By: /s/ Robert L. Senkler
------------------------- ----------------------------
Dennis E. Prohofsky Robert L. Senkler
Secretary President and Chief Executive Officer
MIMLIC SALES CORPORATION
Witness: /s/ Derick R. Black By: /s/ Bardea C. Huppert
------------------------- ----------------------------
Derick R. Black Bardea C. Huppert
Vice President President
4
<PAGE>
Exhibit 3(b)
DEALER SELLING AGREEMENT
(VARIABLE ANNUITIES)
THIS AGREEMENT, made this ______ day of _______________, 19___, by and
between MIMLIC Sales Corporation, a Minnesota corporation (the "Underwriter"),
having its principal office at 400 Robert Street North, St. Paul, Minnesota
55101, The Minnesota Mutual Life Insurance Company (the "Issuer"), having its
principal office at 400 Robert Street North, St. Paul, Minnesota, 55101, and
_____________________, (the "Dealer"), having its principal office at
______________________________.
WHEREAS, the Underwriter has entered into Distribution Agreements relating
to variable annuity contracts described as "MultiOption Annuities" and the
"MultiOption Select Annuity" issued by the Minnesota Mutual Variable Annuity
Account, a separate account of the Issuer, under which the Underwriter was
engaged and agreed to act as principal underwriter in the sale and distribution
of MultiOption Annuities, the MultiOption Select Annuity and the Immediate
Variable Annuity (the "Contracts") to the public, either through dealers or
otherwise; and
WHEREAS, the parties hereto desire that the Dealer sell and distribute
those Contracts to the public;
NOW, THEREFORE, the Underwriter hereby authorizes the Dealer to sell and
distribute the Contracts to the public subject to the following terms and
conditions.
1. ACCEPTANCE OF APPLICATIONS; REGISTRATION STATEMENT; PROSPECTUS.
Applications solicited by the Dealer will be accepted only in the amounts and on
the terms which are set forth in the then current Prospectus (and/or Statement
of Additional Information, if any) for the Contracts. Underwriter represents
and warrants that the Prospectus (and/or Statement of Additional Information, if
any) for the Contracts shown on Exhibit A are or will be filed with the
Securities and Exchange Commission ("SEC"), that such filings conform in all
material respects with the requirements of the SEC and that, except as
Underwriter has given written notice to Dealer, there is an effective
Registration Statement relating to such Contracts. Underwriter shall give
written notice to Dealer either (i) of specified states or jurisdiction in which
the Contracts may be offered and sold by the Dealer under all securities and
insurance laws applicable to the Issuer and Underwriter or (ii) of all states or
jurisdictions where the Contracts may not be offered or sold, but Underwriter
does not assume any responsibility as to the Dealer's right to sell the
Contracts in any state or jurisdiction. Underwriter, during the term of this
Agreement, shall (i) notify Dealer in writing of the issuance by the SEC of any
stop order with respect to a Registration Statement or the initiation of any
proceedings for such purpose or any other purpose relating to the registration
and/or offering of the Contracts, (ii) of any other action or
<PAGE>
circumstance known to them that may prevent the lawful sale of the Contracts in
any state or jurisdiction, and (iii) advise the Dealer in writing of any
amendment to the Registration Statement or supplement to any Prospectus. The
Underwriter shall make available to Dealer such number of copies of the
Prospectus (as amended or supplemented) (and/or Statements of Additional
Information, if any) or any Approved Supplemental Sales Literature created by
the Underwriter of Issuer as the Dealer may reasonably request.
2. DEALER COMMISSION. The Dealer shall receive, for each sale by the
Dealer, a commission in an amount equal to a percentage of the purchase payments
of the Contract sold in such sale, as specified in the schedule attached hereto
as Appendix A; provided that the amount of such percentage may be changed from
time to time by the Underwriter upon notice to the Dealer of such change. The
effective date of such change shall be as set forth in such notice.
3. PURCHASE PAYMENTS. Initial purchase payments for the Contracts shall
be allocated as described in the then current Prospectus (and/or Statement of
Additional Information, if any) for the Contracts and as instructed from time to
time by the Underwriter. Purchase payments shall be forwarded to the Issuer
promptly upon receipt. Each purchase payment shall be confirmed by the Dealer
to the Underwriter in writing on the day such purchase payment is received.
All other purchase payments and all monies or other settlements received by
the Dealer for or on behalf of the Underwriter or Issuer shall be received by
the Dealer in fiduciary capacity in trust for the Underwriter and Issuer and
shall be promptly transmitted to the Issuer, and, in no event, shall the Dealer
commingle such purchase payments and monies with other funds. The Dealer shall
keep correct accounts and records of all business transacted and monies
collected by Dealer for the Underwriter or Issuer to the extent required by the
Underwriter, which accounts and records shall be open at all times to inspection
and examination by the Underwriter's authorized representative. All accounts,
records and any supplies furnished to the Dealer for its use, consumption or
distribution to customers by the Underwriter shall remain the property of the
Underwriter and to the extent remaining shall be returned to the Underwriter
upon demand.
4. FAILURE OF ORDER. The Underwriter and the Issuer each reserves the
right at any time to refuse to accept and approve any application for the
Contracts obtained by the Dealer, and each reserves the right to settle any
claims against the Underwriter and the Issuer arising from the sale of the
Contracts by the Dealer and to refund to the owner payments made by him on his
Contract, without the Dealer's consent. In the event any order for a Contract
is rejected by the Underwriter or the Issuer or any purchase payment received
for a Contract cannot be collected, otherwise proves insufficient or worthless,
or is not paid, any compensation paid to the Dealer hereunder shall, promptly
upon notice to the Dealer, be returned by the Dealer to the Underwriter either
in cash or as a charge against the Dealer's account with the Underwriter, as the
Underwriter may elect. The Underwriter or Issuer shall also have the right to
refund any purchase payments paid on a Contract if it believes this is proper
where a Contract is rescinded, cancelled, or not accepted, or for any other
reason it believes is proper. The Dealer agrees to return to the
-2-
<PAGE>
Underwriter, upon its request, all Dealer commissions credited on any purchase
payments which are refunded. The Dealer hereby agrees that until the
Underwriter receives full reimbursement in cash, the amount of compensation due
and owing the Underwriter shall constitute a debt to the Underwriter which the
Underwriter may collect by any lawful means, and after written notice is given
to Dealer, with interest thereon at the maximum rate possible.
5. GENERAL. If required by the insurance laws of any jurisdiction, the
Issuer hereby appoints the Dealer as its agent for purposes of offering the
Contracts in such jurisdiction. The Dealer shall act as an independent
contractor and not on behalf or subject to the control of the Underwriter or
Issuer. Nothing herein shall constitute the Dealer as a partner of the
Underwriter or Issuer, any other broker-dealer, any registered representative of
the Underwriter, or render any such entity liable for obligations of the Dealer.
The Dealer understands that Dealer has no authority to incur any expenses or
obligations in the name of the Underwriter or Issuer, and Dealer agrees to
indemnify and save the Underwriter and Issuer harmless from any and all expenses
or obligations incurred by Dealer in the name of the Underwriter or Issuer for
which Dealer is responsible. Dealer agrees to pay all expenses incurred by
Dealer in connection with Dealer's work. The Dealer's participation in the sale
and distribution of the Contracts as contemplated by this Agreement is not
exclusive and the Underwriter may engage other broker-dealers and/or their
registered representatives to participate in the sale and distribution of the
Contracts on terms and conditions which may differ from the terms and conditions
of this Agreement.
6. DEALER'S UNDERTAKINGS. No person is authorized to make any
representation concerning the Contracts, the Minnesota Mutual Variable Annuity
Account or the Issuer except those contained in the then current Prospectus
(and/or Statement of Additional Information, if any). The Dealer shall not sell
the Contracts pursuant to this Agreement unless the then current Prospectus is
furnished to the purchaser prior to the offer and sale, unless then existing SEC
and NASD rules and regulations permit the delivery of the Prospectus (and/or
Statement of Additional Information) at a different time, in which case, Dealer
shall not sell the Contracts unless the then current Prospectus (and/or
Statement of Additional Information) is furnished in compliance with such rules
and regulations. The Dealer shall not use any supplemental sales literature of
any kind without prior written approval of the Underwriter unless it is
furnished by the Underwriter for such purpose ("Approved Supplemental Sales
Literature"). In offering and selling the Contracts, the Dealer shall not give
any information or make any representation other than those contained in the
then current Prospectus (and/or Statement of Additional Information, if any), or
Approved Supplemental Sales Literature. In offering and selling the Contracts,
the Dealer shall comply with all state and federal laws and regulations
applicable to it, all rules of the National Association of Securities Dealers,
Inc. (the "NASD") applicable to it, and all policies and rules of the
Underwriter applicable to it and communicated in writing to it. In the event of
the suspension, revocation, cancellation or other impairment of the Dealer's
membership in the NASD or the Dealer's registration, license or qualification to
sell the Contracts under any applicable state or federal law or regulation, the
Dealer shall give the Underwriter prompt notice of such suspension, revocation,
cancellation or other impairment, and the Dealer's authority under this
Agreement shall thereupon terminate as provided in paragraph 12.
-3-
<PAGE>
7. REPRESENTATIONS AND AGREEMENTS OF THE DEALER. By accepting this
Agreement, the Dealer represents that it: (i) is registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended; (ii) is qualified to act
under all applicable securities and insurance statutes, rules and regulations in
each jurisdiction in which it will offer the Contracts; (iii) is a member in
good standing of the NASD; and (iv) will maintain such registrations,
qualifications and memberships throughout the term of this Agreement.
8. DEALER'S EMPLOYEES. By accepting this Agreement, the Dealer assumes
full responsibility for the actions and course of conduct of its registered
representatives in the solicitation of applications for the purchase of the
Contracts. The Dealer shall provide thorough and prior training to its
registered representatives concerning the selling methods to be used in
connection with the offer and sale of the Contracts, giving special emphasis to
the principles of full and fair disclosure to prospective investors. The Dealer
may solicit sales of the Contracts only through registered representatives of
the Dealer, who shall also have such variable annuity or other insurance
licenses as are necessary for the sale of the Contracts and who shall have been
appointed agents of the Issuer, a list of which registered representatives as of
the date hereof is attached hereto as Appendix B. The Issuer may refuse to
appoint as its agent any registered representative of the Dealer if such
registered representative is deemed by the Issuer to be unsuitable for any
reason. The Dealer shall from time to time provide the Underwriter with an
updated list of the Dealer's registered representatives, and shall give the
Underwriter prompt notice in the event of (a) the suspension, revocation,
cancellation or other impairment of any such registered representative's
registration with the NASD or any such registered representative's registration,
license or qualification to sell the Contracts under any applicable state or
federal law or regulation, or (b) the termination of any such registered
representative's association with the Dealer.
9. INDEMNIFICATION BY UNDERWRITER. The Underwriter hereby agrees to
indemnify and to hold harmless the Dealer, each of its directors, officers or
employees and each person, if any, who controls the Dealer within the meaning of
Section 15 of the Securities Act of 1933 (the "Act") and their respective
successors and assigns (hereinafter in this paragraph separately and
collectively referred to as the "Defendants") from and against any and all
losses, claims, demands or liabilities (or actions in respect thereof), joint or
several, to which the Defendants may become subject under the Act, at common law
or otherwise (including any legal or other expense reasonably incurred in
connection therewith), insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue or
allegedly untrue statement of a material fact contained in the then current
Prospectus (and/or Statement of Additional Information, if any) of the Contract
or arise out of or are based upon the omission or alleged omission to state
therein a material fact that is required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or arise out of any claim based upon any Approved
Supplemental Sales Literature; provided that this indemnity agreement is subject
to the condition that notice be given as provided below.
-4-
<PAGE>
Upon the presentation in writing of any claim or the commencement of any
suit against any Defendant in respect of which indemnification may be sought
from the Underwriter on account of its agreement contained in the preceding
paragraph, such Defendant shall with reasonable promptness give notice in
writing of such suit to the Underwriter, but failure so to give such notice
shall not relieve the Underwriter from any liability that it may have to the
Defendants otherwise than on account of this indemnity agreement. The
Underwriter shall be entitled to participate at its own expense in the defense,
or, if it so elects, to assume the defense of any such claim or suit, but if
the Underwriter elects to assume the defense, such defense shall be conducted
by counsel chosen by it and satisfactory to the Defendants who are parties to
such suit or against whom such claim is presented. If the Underwriter elects
to assume the defense and retain such counsel as herein provided, such
Defendant shall bear the fees and expenses subsequently incurred of any
additional counsel retained by them, except the reasonable costs of
investigation and such other costs as are approved by the Underwriter;
provided, that if counsel for an indemnified Defendant determines in good
faith that there is a conflict which requires separate representation for
the indemnified Defendant, the indemnified Defendant shall be entitled to
indemnification for the reasonable expenses of one additional counsel and local
counsel to the extent provided above. Such counsel shall, to the fullest
extent consistent with its professional responsibilities, cooperate with the
Underwriter and its counsel. The Underwriter agrees to notify the Dealer
promptly, as soon as it has knowledge thereof, of the commencement of any
litigation or proceedings against the Underwriter, the Issuer, the Dealer or any
of their officers or directors, in connection with the offer or sale of the
Contracts to the public. The Underwriter's obligation under this paragraph
shall survive the termination of this Agreement.
10A. FIDELITY BOND OF DEALER AND INDEMNIFICATION BY DEALER. Dealer
represents that all directors, officers, partners, employees or registered
representatives of Dealer who are authorized pursuant to this Agreement to sell
the Contracts or who have access to purchase payments or other monies belonging
to the Underwriter or Issuer, including but not limited to monies submitted with
applications for purchase of Contracts or monies being returned to Contract
owners, are and shall be covered by a blanket fidelity bond, including coverage
for larceny and embezzlement, issued by a reputable bonding company. This bond
shall be maintained by Dealer at Dealer's expense. Such bond shall be at least
of the form, type and amount required under the NASD Rules of Fair Practice.
The maintenance by the Dealer of the NASD Fidelity Bond shall constitute
compliance with this requirement. The Underwriter may require evidence,
satisfactory to it, that such coverage is in force. Dealer shall give prompt
written notice to the Underwriter of any notice of cancellation or change of
coverage with respect to such bond.
Dealer hereby assigns any proceeds received from the fidelity bonding
company to the Underwriter and Issuer to the extent of the Underwriter's or
Issuer's loss due to activities under this Agreement covered by the bond. If
there is any deficiency amount, whether due to a deductible or otherwise, Dealer
shall promptly pay to the Underwriter or Issuer such amount on demand, and
Dealer hereby indemnifies and holds harmless the Underwriter and Issuer from any
such deficiency and from the costs of collection thereof, including reasonable
attorneys fees.
-5-
<PAGE>
Dealer also agrees to indemnify and hold harmless the Underwriter and
Issuer, and their officers, directors and employees and each person who controls
them within the meaning of Section 15 of the Securities Act of 1933 (hereinafter
in this paragraph referred to as Defendants) against any and all losses, claims,
damages or liabilities, including reasonable attorneys fees, to which they may
become subject under the Securities Act of 1933, the Securities Exchange Act of
1934, or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon: (i) any oral or written
misrepresentation, or any unauthorized action or statement, by Dealer or its
officers, directors, employees or agents, or (ii) the failure of Dealer or its
officers, directors, employees or agents to comply with any applicable
provisions of this Agreement; provided, that this indemnity agreement is subject
to the condition that notice be given as provided below.
Upon the presentation in writing of any claim or the commencement of any
suit against any Defendant in respect of which indemnification may be sought
from the Dealer on account of its agreement contained in the preceding
paragraph, such Defendant shall with reasonable promptness give notice in
writing of such suit to the Dealer, but failure to so give such notice shall
not relieve the Dealer from any liability that it may have to the Defendants
otherwise than on account of this indemnity agreement. The Dealer shall be
entitled to participate at its own expense in the defense, or, if it so elects,
to assume the defense of any such claim or suit with counsel chosen by it and
satisfactory to the defendants who are parties to such suit or against whom
such claim is presented. If the Dealer elects to assume the defense and
retain such counsel as herein provided, such Defendant shall bear the fees
and expenses subsequently incurred of any additional counsel retained by them,
except the reasonable costs of investigation and such other costs as are
approved by the Dealer; provided, that if counsel for an indemnified
Defendant determines in good faith that there is a conflict which requires
separate representation for the indemnified Defendant, the indemnified
Defendant shall be entitled to indemnification for the reasonable expenses
of one additional counsel and local counsel to the extent provided above.
Such counsel shall, to the fullest extent consistent with its professional
responsibilities, cooperate with the Dealer and its counsel. The Dealer's
obligations under this Paragraph 10 shall survive the termination of this
Agreement.
10B. SETTLEMENT; CONTRIBUTION. The indemnifying party shall not be liable
under this Agreement for any settlement made by an indemnified party without the
indemnifying party's prior written consent, and the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of the settlement of any claim or action with the consent of
the indemnifying party. The indemnifying party shall not settle any such claim
or action without prior written consent of the indemnified party. If the
foregoing indemnifications should, for reasons of public policy, not be
available to any indemnified party, then the indemnifying party will contribute
to the amount paid or payable by the indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and such
indemnified party on the other arising out of the matters contemplated by this
Agreement.
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<PAGE>
11. ASSIGNMENT AND TERMINATION. This Agreement may not be assigned by the
Dealer without consent of the Underwriter and Issuer.
12. TERMINATION. This Agreement shall terminate automatically in the
event of the suspension, revocation, cancellation or other impairment of the
Dealer's membership in the NASD or the Dealer's registration, license or
qualification to sell the Contracts under any applicable state or federal law or
regulation. This Agreement shall also automatically terminate should there be
any material change in the ownership of the Dealer from that existing at the
date of this Agreement without the consent of the Underwriter.
This Agreement may be terminated without cause and without a reason being
given at any time by any party. The party who wants to end the Agreement
without cause must give 30 days written notice to each of the other parties to
the contract. The Agreement will terminate as of 11:59 p.m. on the 30th day
following the date on which the notice is given.
This Agreement may be terminated for cause at any time by the Underwriter
or the Issuer. To end the Agreement for cause the Underwriter or Issuer must
state the reason for cause in writing. The Agreement will end as soon as the
written notice is given.
13. FIRST CLAIM ON EARNINGS AND LEGAL PROCEEDINGS. Underwriter shall have
a right of set-off on all of Dealer's earnings under this Agreement. This means
that Underwriter as and when it elects may keep all or any part of such earnings
to reduce any debt Dealer owes Underwriter or Issuer. While Underwriter may
release Dealer's earnings while Dealer owes a debt to Underwriter or Issuer,
this does not mean Underwriter has waived this right of set-off to Dealer's
earnings. Underwriter's right of set-off also takes precedence over claims of
Dealer's creditors. All Dealer's earnings kept by Underwriter will be used to
reduce debt owed to Underwriter. Dealer has no right to start any legal
proceedings on Underwriter's or Issuer's behalf or in their names.
14. NOTICE. Any notice to be given to a party hereto pursuant to this
Agreement shall be in writing, addressed to such party at the address of such
party set forth in the preamble hereof, or such other address as such other
party may from time to time designate in writing to the party hereto giving
notice. Any notice delivered by the mails, postage fully prepaid, shall be
deemed to have been given five (5) days after mailing or, if earlier, upon
receipt.
15. WAIVER. The Underwriter or Issuer may choose from time to time not to
enforce a provision of this Agreement or one of its rules. This does not mean
that it has waived the right to enforce it in the future. Also, it does not
mean that it ratifies or consents to those actions of the Dealer which are not
in accord with this Agreement or its rules.
-7-
<PAGE>
16. AMENDMENT. This Agreement may not be amended except by written
agreement executed by the parties hereto.
17. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Minnesota.
DEALER:
--------------------------------------------
(Name)
--------------------------------------------
(Tax Identification Number)
--------------------------------------------
(Street Address)
--------------------------------------------
(City) (State) (Zip)
By
------------------------------------------
Its
-----------------------------------------
MIMLIC SALES CORPORATION
By
-----------------------------------
Its PRESIDENT
-----------------------------------
Date: , 1995
------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By
-----------------------------------
Its PRESIDENT
-----------------------------------
Date: , 1995
------------------------------
-8-
<PAGE>
APPENDIX A
SCHEDULE OF DEALER COMMISSIONS
ON
VARIABLE ANNUITY CONTRACTS
Dealer shall receive the Dealer Commissions and other compensation described
below for contracts sold pursuant to this Agreement and while this Agreement
continues in effect.
I. Dealer Commissions.
For each type of Contract under A and B below, the Dealer may choose
between two different commission arrangements. One arrangement combines a
front-end commission with an asset-based trailing commission, while the
other arrangement provides a higher front-end commission without any
trailing commission. The Contract under C below allows for only one
commission arrangement.
A. Commissions for MultiOption Annuities (Choose One):
___ 1. 5.25% of the amount of each purchase payment received under the
Contract,
OR,
___ 2. 4.50% of the amount of each purchase payment received under the
Contract; plus, an amount equal to .0375% of the accumulation
value held in each Contract at the end of each calendar quarter
(.15% annually), provided, that such trail commission will not be
paid with respect to any Contract until 15 months after its date
of issue.
B. Commissions for MultiOption Select Annuity (Choose One):
Each time a new purchase payment is made, a new commission will be
calculated. The applicable percentage from the charts below will be
based on the total cumulative purchase payments to date under a
Contract, including the new purchase payment, less all prior purchase
payments withdrawn. The new commission equals this percentage times
the amount of the new purchase payment.
<PAGE>
___ 1. A commission determined in accordance with the following table:
Purchase Payment Commission
---------------- ----------
$ 0 - 499,999 5.250%
500,000 - 749,999 4.875%
750,000 - 999,999 4.500%
1,000,000 - 1,499,999 4.125%
1,500,000 - 1,999,999 3.750%
2,000,000 - 2,499,999 3.375%
2,500,000 - 2,999,999 3.000%
3,000,000 - 3,999,999 2.625%
4,000,000 - 5,000,000 2.250%
OR,
___ 2. An amount equal to .0375% of the accumulation value held in each
Contract at the end of each calendar quarter (.15% annually),
provided, that such trail commission will not be paid with
respect to any Contract until 15 months after its date of issue,
plus, a commission determined in accordance with the following
table:
Purchase Payment Commission
---------------- ----------
$ 0 - 499,999 4.500%
500,000 - 749,999 4.125%
750,000 - 999,999 3.750%
1,000,000 - 1,499,999 3.375%
1,500,000 - 1,999,999 3.000%
2,000,000 - 2,499,999 2.625%
2,500,000 - 2,999,999 2.250%
3,000,000 - 3,999,999 1.875%
4,000,000 - 5,000,000 1.500%
C. Commissions for Immediate Variable Annuity Contract:
Each time a new purchase payment is made, a new commission will be
calculated. The applicable percentage from the chart below will be
based on the total cumulative purchase payments to date under a
Contract, including the new purchase payment. The new commission
equals this percentage times the amount of the new purchase payment.
2
<PAGE>
Cumulative
Purchase Payment Commission
---------------- ----------
$ 0 - 499,999 4.500%
500,000 - 749,999 4.125%
750,000 - 1,000,000 3.750%
In addition, an amount equal to .0625% of the cash value held in each
Contract at the end of each calendar quarter (.25% annually).
II. Partial Withdrawals/Surrenders
A. MultiOption Annuities and MultiOption Select Annuity
Upon a partial withdrawal from or surrender of a Contract during the first
six months following the issue of such Contract, a commission adjustment
shall occur. Until further written notice from the Underwriter, the
commission adjustment will be equal to the commission percentage applicable
to the amount withdrawn or surrendered multiplied by the amount withdrawn
or surrendered, and will be deducted from future commission payment(s).
B. Immediate Variable Annuity Contract
Upon surrender of a Contract prior to the annuity payment commencement
date, a commission adjustment shall occur equal to the total commission
amount paid to date for the Contract. This adjustment will be deducted
from future commission payment(s).
There is no commission adjustment for cash value withdrawals which are
allowed under the contract after its annuity payment commencement date.
III. Commission Adjustment Balance
If after all commission adjustments have been made, a balance is due the
Underwriter, a charge-back equal to the outstanding balance will be made
against future commission payments, until all negative amounts have been
recovered.
3
<PAGE>
APPENDIX B
REGISTERED REPRESENTATIVES OF THE DEALER
WHO ARE ALSO APPOINTED AGENTS OF THE ISSUER
<PAGE>
Exhibit 4(a)
READ YOUR CONTRACT CAREFULLY
THIS IS A LEGAL CONTRACT
We promise to pay, subject to the provisions of this
contract, the benefits described by this contract.
We make this promise and issue this contract in
consideration of the application for this contract and
the payment of the purchase payments.
The owner and beneficiary are as named in the
application unless they are changed as provided for in
this contract.
You are a member of The Minnesota Mutual Life
Insurance Company. Our annual meetings are held at
our home office on the first Tuesday in March of each
year. The meetings begin at three o'clock in the afternoon.
Signed for The Minnesota Mutual Life Insurance
Company at St. Paul, Minnesota, on the contract date.
/s/ Robert L. Senkler
President
/s/ Dennis E. Prohofsky
Secretary
Registrar
NOTICE OF YOUR RIGHT TO EXAMINE THIS
CONTRACT FOR 10 DAYS.
IT IS IMPORTANT TO US THAT YOU ARE SATISFIED WITH THIS
CONTRACT. IF YOU ARE NOT SATISFIED, YOU MAY RETURN
THE CONTRACT TO US OR TO YOUR AGENT WITHIN 10 DAYS
OF ITS RECEIPT. IF YOU EXERCISE THIS RIGHT, YOU WILL
RECEIVE THE GREATER OF: (A) THE TOTAL ANNUITY VALUE
OF THIS CONTRACT ATTRIBUTABLE TO YOUR PURCHASE PAYMENTS
PLUS THE AMOUNTS DEDUCTED FROM YOUR PURCHASE PAYMENTS;
OR (B) THE AMOUNT OF PURCHASE PAYMENTS PAID UNDER THIS
CONTRACT. WE WILL PAY THIS REFUND WITHIN 7 DAYS AFTER WE IMMEDIATE
RECEIVE YOUR NOTICE OF CANCELLATION. VARIABLE ANNUITY
CONTRACT
ALL PAYMENTS AND VALUES PROVIDED BY GUARANTEED MINIMUM
THIS CONTRACT ARE VARIABLE. A MINIMUM ANNUITY PAYMENT
ANNUITY PAYMENT AMOUNT IS GUARANTEED AMOUNT
TO YOU. OTHER PAYMENTS AND VALUES ARE
NOT GUARANTEED. A PARTICIPATING
CONTRACT
MINNESOTA MUTUAL
The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, MN 55101-2098
95-9326
<PAGE>
CONTRACT INDEX
Alphabetical Index to the Provisions of Your Contract
Page
----
Additional Information
Amount Payable at Death
Annuity Provisions
Assignment
Beneficiary
Contract Charges
Definitions
Dividends
General Information
Misstatement
Purchase Payments
Valuation
Withdrawal and Surrender
<PAGE>
YOUR CONTRACT INFORMATION - EFFECTIVE OCTOBER 1, 1995
This page one supersedes any previously dated page one for this contract.
Please replace any prior page one of your contract with this new page.
Owner: Jane M. Doe
Contract Number: 1-234-567
Contract Date: October 1, 1995
Jurisdiction: Minnesota
Annuity Option: Single Life
Annuitant: Jane M. Doe
Annuitant's Date of Birth: October 1, 1935
Annuitant's Sex: Female
Joint Annuitant: not applicable
Joint Annuitant's Date of Birth: not applicable
Joint Annuitant's Sex: not applicable
Annuity Payment Commencement Date: October 1, 1995
Annuity Payment Frequency: Monthly
End of Cash Value Period: September 30, 2019
Annuity Unit Value on October 1, 1995: 1.012345
<TABLE>
<CAPTION>
Prior to Effect of
Purchase Payment Purchase Payment As of
October 1, 1995 October 1, 1995 October 1, 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Cumulative Purchase Payments: 0.00 100,000.00 100,000.00
Total Annuity Value: 0.00 93,789.44 93,789.44
Cash Value: 0.00 81,667.70 81,667.70
* Initial Annuity Payment Amount: 0.00 460.99 460.99
** Guaranteed Minimum
Annuity Payment Amount: 0.00 391.84 391.84
** Number of Annuity Units: 0.00 455.3685 455.3685
** Number of Cash Value Units: 0.00 455.3685 455.3685
<FN>
* The annuity payment amount shown here is annuity units multiplied by
the annuity unit value as of the effective date of this page one. The
actual annuity payment amount at the next annuity payment date will
differ from this amount. It will be based on the net separate account
sub-account performance from the effective date to the next annuity
payment date.
** These values will change each time you make a cash value withdrawal or
an additional purchase payment. You will be notified of the new
values.
</TABLE>
95-9326 1
<PAGE>
CASH VALUE FACTORS AND GUARANTEED ANNUITY PAYMENT PURCHASE RATES FOR
CALCULATING THE INITIAL ANNUITY PAYMENT AMOUNT WHICH IS PURCHASED WITH
EACH $1,000 OF VALUE APPLIED FOR A NEW PURCHASE PAYMENT
Annuitant: Jane M. Doe
Contract Number: 1-234-567
Guaranteed Annuity Payment
Amount per $1,000 of Value Applied
Cash Value Factor for a New Purchase Payment
----------------- --------------------------
Contract Date: not applicable 4.8911
Annuitization
Anniversary
-----------
0 177.1572 4.8911
1 172.8837 4.9703
2 168.4179 5.0558
3 163.7512 5.1482
4 158.8745 5.2483
5 153.7783 5.3569
6 148.4528 5.4749
7 142.8876 5.6034
8 137.0720 5.7437
9 130.9947 5.8972
10 124.6440 6.0657
11 118.0074 6.2510
12 111.0722 6.4553
13 103.8249 6.6810
14 96.2515 6.9309
15 88.3373 7.2079
16 80.0670 7.5141
17 71.4244 7.8540
18 62.3930 8.2312
19 52.9552 8.6490
20 43.0926 9.1100
21 32.7862 9.6147
22 22.0161 10.1598
23 10.7613 10.7353
24 0.0000 11.3202
over 24 0.0000 not applicable
This table provides factors to determine cash values and the guaranteed annuity
payment amount per $1,000 of value applied for a new purchase payment at the
contract date and each annuitization anniversary. The applicable factor at
times between these dates will be determined consistently with the mortality and
interest rates used to determine the factors shown here.
95-9326 2
<PAGE>
Total Annuity Value Factors and Annuity Payment Purchase Rates Applicable
at a Cash Value Withdrawal while the Annuitant is Alive
per $1,000 Applied - Single Life Issue
Annuitant: Jane M. Doe
Contract Number: 1-234-567
FOR CASH VALUE AND ANNUITY UNITS ATTRIBUTABLE TO TRANSACTIONS ON: OCTOBER 1,
1995
Annuity Payment
Factor Purchase Rate
Factor Applicable to at a Cash Value
Applicable to Annuity Units Withdrawal while
Cash Value in excess of Annuitant is alive
Units Cash Value Units per $1,000 Applied
----- ---------------- ------------------
Contract Date: 203.4522 191.6400 not applicable
Annuitization
Anniversary
-----------
0 203.4522 191.6400 5.2181
1 200.1934 188.2657 5.3116
2 196.7917 184.7827 5.4117
3 193.2402 181.1931 5.5189
4 189.5356 177.5000 5.6338
5 185.6737 173.7047 5.7568
6 181.6504 169.8072 5.8890
7 177.4614 165.8058 6.0311
8 173.1024 161.6965 6.1844
9 168.5694 157.4751 6.3502
10 163.8597 153.1408 6.5299
11 158.9726 148.6972 6.7250
12 153.9099 144.1518 6.9371
13 148.6764 139.5159 7.1676
14 143.2807 134.8037 7.4181
15 137.7353 130.0297 7.6905
This table provides factors to determine the total annuity value and the annuity
payment purchase rates applicable at a cash value withdrawal while the annuitant
is alive, at the contract date and each annuitization anniversary. The
applicable factor at times between these dates will be determined consistently
with the mortality and interest rates used to determine the factors shown here.
95-9326 3
<PAGE>
Total Annuity Value Factors and Annuity Payment Purchase Rates Applicable
at a Cash Value Withdrawal while the Annuitant is Alive
per $1,000 Applied - Single Life Issue
Annuitant: Jane M. Doe
Contract Number: 1-234-567
FOR CASH VALUE AND ANNUITY UNITS ATTRIBUTABLE TO TRANSACTIONS ON: OCTOBER 1,
1995
Annuity Payment
Factor Purchase Rate
Factor Applicable to at a Cash Value
Applicable to Annuity Units Withdrawal while
Annuitization Cash Value in excess of Annuitant is alive
Anniversary Units Cash Value Units per $1,000 Applied
----------- ----- ---------------- ------------------
16 132.0819 125.2714 7.9826
17 126.3228 120.4840 8.2998
18 120.4885 115.6810 8.6444
19 114.6193 110.8750 9.0191
20 108.7685 106.0804 9.4268
21 103.0065 101.3125 9.8704
22 97.4264 96.5881 10.3532
23 92.1500 91.9241 10.8785
24 87.3376 87.3376 11.4498
25 82.8458 82.8458 0.0000
26 78.4655 78.4655 0.0000
27 74.2135 74.2135 0.0000
28 70.1063 70.1063 0.0000
29 66.1586 66.1586 0.0000
30 62.3764 62.3764 0.0000
31 58.9525 58.9525 0.0000
32 55.7028 55.7028 0.0000
33 52.6101 52.6101 0.0000
34 49.6496 49.6496 0.0000
35 46.7882 46.7882 0.0000
36 43.9834 43.9834 0.0000
37 41.1801 41.1801 0.0000
38 38.3067 38.3067 0.0000
39 35.2973 35.2973 0.0000
40 32.0851 32.0851 0.0000
This table provides factors to determine the total annuity value and the annuity
payment purchase rates applicable at a cash value withdrawal while the annuitant
is alive, at the contract date and each annuitization anniversary. The
applicable factor at times between these dates will be determined consistently
with the mortality and interest rates used to determine the factors shown here.
95-9326 4
<PAGE>
Total Annuity Value Factors and Annuity Payment Purchase Rates Applicable
at a Cash Value Withdrawal while the Annuitant is Alive
per $1,000 Applied - Single Life Issue
Annuitant: Jane M. Doe
Contract Number: 1-234-567
FOR CASH VALUE AND ANNUITY UNITS ATTRIBUTABLE TO TRANSACTIONS ON: OCTOBER 1,
1995
Annuity Payment
Factor Purchase Rate
Factor Applicable to at a Cash Value
Applicable to Annuity Units Withdrawal while
Annuitization Cash Value in excess of Annuitant is alive
Anniversary Units Cash Value Units per $1,000 Applied
----------- ----- ---------------- ------------------
41 30.0168 30.0168 0.0000
42 27.9334 27.9334 0.0000
43 25.8440 25.8440 0.0000
44 23.7625 23.7625 0.0000
45 21.7058 21.7058 0.0000
46 19.6915 19.6915 0.0000
47 17.7367 17.7367 0.0000
48 15.8564 15.8564 0.0000
49 14.0629 14.0629 0.0000
This table provides factors to determine the total annuity value and the annuity
payment purchase rates applicable at a cash value withdrawal while the annuitant
is alive, at the contract date and each annuitization anniversary. The
applicable factor at times between these dates will be determined consistently
with the mortality and interest rates used to determine the factors shown here.
95-9326 5
<PAGE>
DEFINITIONS
When we use the following words, this is what we mean:
ANNUITANT
The person named on page one of the contract who may receive lifetime benefits
under the contract. Except in the event of the death of either annuitant prior
to the annuity payment commencement date, joint annuitants will be considered a
single entity.
YOU, YOUR
The owner of this contract. The owner may be the annuitant or someone else.
The owner shall be that person or entity named as owner in the application.
JOINT OWNER
The person designated to share equally in the rights and privileges provided to
the owner of this contract. Only you and your spouse may be named as joint
owners.
WE, OUR, US
The Minnesota Mutual Life Insurance Company.
BENEFICIARY
The person, persons or entity designated to receive death benefits payable under
the contract in the event of the annuitant's death.
WRITTEN REQUEST
A request in writing signed by you. In the case of joint owners, the signatures
of both owners will be required to complete a written request. In some cases,
we may provide a form for your use. We may also require that this contract be
sent to us with your written request.
PURCHASE PAYMENTS
Amounts paid to us as consideration for the benefits provided by this contract.
PURCHASE PAYMENT DATE
The date we receive a purchase payment in our home office.
CONTRACT DATE
The effective date of this contract.
ANNUITY PAYMENT DATE
Each day indicated by the annuity payment commencement date and the annuity
payment frequency for an annuity payment to be determined. This is shown on
page one of this contract.
ANNUITY PAYMENT COMMENCEMENT DATE
The first annuity payment date as specified on page one.
ANNUITIZATION ANNIVERSARY
The same day and month as the annuity payment commencement date for each
succeeding year of this contract.
95-9326 6
<PAGE>
FUND
The mutual fund or separate investment portfolio within a series mutual fund
which is designated as an eligible investment for the separate account.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
ANNUITY UNIT
The standard of value for the variable annuity payment amount.
CASH VALUE UNIT
The measure of your interest in the separate account that is available for
withdrawal under this contract during the cash value period.
CASH VALUE PERIOD
The time during which a cash value exists under the contract. The cash value
period begins on the annuity payment commencement date and ends on the cash
value end date shown on page one.
CASH VALUE
The dollar amount available for withdrawal under this contract during the cash
value period. A cash value exists only as long as both the number of cash value
units and the applicable factor from the cash value factor table are greater
than zero.
TOTAL ANNUITY VALUE
The total annuity value represents your total interest in the separate account.
SURRENDER VALUE
The surrender value of this contract shall be the total annuity value as of the
date of surrender plus the amounts deducted from your purchase payments. Those
include deductions for sales charges, risk charges, and state premium taxes
where applicable.
SEPARATE ACCOUNT
A separate investment account entitled Minnesota Mutual Variable Annuity
Account. This separate account was established by us under Minnesota law. The
separate account is composed of several sub-accounts. The assets of the
separate account are ours. Those assets are not subject to claims arising out
of any other business which we may conduct.
1940 ACT
The Investment Company Act of 1940, as amended, or any similar successor federal
legislation.
ANNUITY PAYMENTS
Payments made at regular intervals to the annuitant or any other payee. The
annuity payments will increase or decrease in amount. The changes will reflect
the investment experience of the sub-account of the separate account.
95-9326 7
<PAGE>
GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT
The amount which is guaranteed as the minimum annuity payment amount. This
amount is payable without regard to the performance of the sub-account of the
separate account. Purchase payments, cash value withdrawals, and surrenders
will cause this guaranteed minimum annuity payment amount to be adjusted. The
adjustment will reflect your new interest in the separate account.
AGE
The age of a person at nearest birthday.
GENERAL INFORMATION
WHAT IS YOUR AGREEMENT WITH US?
This contract and the copy of the application attached to it constitute the
entire contract between you and us. Any statements made in the application
either by you or by the annuitant will, in the absence of fraud, be considered
representations and not warranties. Also, any statement made either by you or
the annuitant will not be used to void this contract unless the statement is
contained in the application.
No change or waiver of any of the provisions of this contract will be valid
unless made in writing by us. This must be signed by our president, a vice
president, secretary or an assistant secretary. No agent or other person has
the authority to change or waive any provision of this contract.
Any additional agreement attached to this contract will become a part of this
contract. The agreement will be subject to all the terms and conditions of this
contract unless we state otherwise in it.
HOW DO YOU EXERCISE YOUR RIGHTS UNDER THIS CONTRACT?
You can exercise all the rights under this contract by giving us a written
request. We will deal with you, unless this contract provides otherwise, on the
basis that you have full ownership and control of this contract.
HOW WILL YOU KNOW THE VALUE OF YOUR CONTRACT?
Each year we will send you a report. This report will summarize the year's
transactions. It will show the current total annuity value and cash value of
this contract, the current annuity payment amount, and the current guaranteed
minimum annuity payment amount. It will also show the current annuity unit
value. This report will be as of a date within two months of its mailing.
PURCHASE PAYMENTS
IS THIS AN IMMEDIATE ANNUITY?
Yes. Annuity payments begin on the annuity payment commencement date. This
date is shown on page one. Annuity payments must begin not later than 12 months
after the contract date. An earlier date may be required by law to qualify this
contract as an immediate annuity in the state in which this contract is
delivered.
MAY YOU MAKE ADDITIONAL PURCHASE PAYMENTS TO THIS CONTRACT AFTER ITS ISSUE?
Yes. You may make additional purchase payments to this contract after its issue
as long as we are accepting purchase payments for this class of contract. Each
additional purchase payment must be in an amount of at least $5,000. Total
purchase payments made by you may not exceed $1,000,000, except with our prior
consent. We may discontinue accepting purchase payments for this class of
contract. We can do
95-9326 8
<PAGE>
this at any time. We may then terminate your ability to make additional
purchase payments into the contract.
DO YOU CHOOSE WHEN TO MAKE ADDITIONAL PURCHASE PAYMENTS?
Yes. You may choose when to make any additional purchase payments to this
contract at any time before the end of the cash value period. Purchase payments
may be made only while the annuitant is alive and we are accepting purchase
payments for this class of contract. No purchase payments are allowed after the
annuitant's death or after the cash value period has expired.
WHERE DO YOU MAKE ADDITIONAL PURCHASE PAYMENTS?
Your purchase payments must be made at our home office. Our home office is at
400 Robert Street North, St. Paul, Minnesota 55101-2098. When we receive a
purchase payment from you, we will send you a confirmation and an updated page
one for this contract.
WILL PURCHASE PAYMENTS AFFECT FUTURE ANNUITY PAYMENTS?
Yes. Purchase payments made by you will purchase additional annuity units.
The net amount of each purchase payment, after deductions, will be applied to
purchase an additional initial annuity payment amount. This will be determined
as of the purchase payment date. This amount will be at least as great as that
determined by using the guaranteed annuity payment purchase rate table for new
purchase payments. This table is included in this contract.
The new number of annuity units after a purchase payment will be equal to the
number of annuity units prior to the purchase payment plus the additional
annuity units resulting from the current purchase payment. These annuity units
shall equal a number which is equal to the initial annuity payment amount
attributable to the new purchase payment, divided by the annuity unit value on
the purchase payment date.
When you make a purchase payment, we will inform you of the number of annuity
units in your contract. Annuity units will be recorded separately whenever a
different annuity payment purchase rate table is used.
WHAT ARE THE GUARANTEED ANNUITY PAYMENT PURCHASE RATES TO BE USED IN DETERMINING
THE ADDITIONAL ANNUITY PAYMENT AMOUNT ATTRIBUTABLE TO A NEW PURCHASE PAYMENT?
The guaranteed annuity payment purchase rates used for new purchase payments are
given in the guaranteed annuity payment purchase rate table. This table is
included in this contract. The rates are based on a 4.5% assumed interest rate
and Individual Annuity 1983 Table A mortality rates projected to the terminal
age of the table using projection scale G.
WILL THE GUARANTEED TABLE ALWAYS BE USED FOR NEW PURCHASE PAYMENTS?
Not always. At the time of a purchase payment, we may be using a table of
annuity payment purchase rates for this contract which would result in a larger
initial annuity payment. If we are, we will use that table instead.
WILL PURCHASE PAYMENTS AFFECT THE CASH VALUE?
Yes. Purchase payments will affect the cash value. The purchase payment will
increase the number of cash value units. The new number of cash value units
after a purchase payment will be equal to the number of cash value units prior
to the purchase payment plus the number of annuity units attributable to the new
purchase payment.
95-9326 9
<PAGE>
We will inform you of the number of cash value units in your contract when you
make a purchase payment. Cash value units attributable to a purchase payment
will be recorded separately if a different annuity purchase rate table was used
to determine the additional annuity units purchased.
WILL PURCHASE PAYMENTS AFFECT THE GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT?
Yes. The guaranteed minimum annuity payment amount will be increased. This
increase will reflect your additional interest in the separate account after the
additional purchase payment. The new guaranteed minimum annuity payment amount
after an additional purchase payment will be equal to: the guaranteed minimum
annuity payment amount prior to the purchase payment, plus 85% of the additional
initial annuity payment amount attributable to the new purchase payment. This
will be determined on the date we receive the purchase payment.
We will inform you of the new guaranteed minimum annuity payment amount for your
contract when you make a purchase payment.
HOW ARE YOUR PURCHASE PAYMENTS INVESTED?
The net amount of your purchase payments, after deductions, is invested
exclusively in the Index 500 Account sub-account of the separate account.
ARE THERE ANY OTHER INVESTMENT OPTIONS?
No.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
The separate account is divided into sub-accounts. For each sub-account, there
is a fund for the investment of that sub-account's assets. Net purchase
payments are invested in the funds at their net asset value.
If investment in a fund should no longer be possible or if we determine it
becomes inappropriate for contracts of this class, we may substitute another
fund. Substitution may be with respect to existing total annuity values, cash
values, future annuity payments, or future purchase payments.
MAY WE MAKE CHANGES TO THE SEPARATE ACCOUNT?
Yes. We reserve the right to transfer assets of the separate account to another
separate account. The transfer will be of assets associated with this class of
contracts. We will make that determination. If this type of transfer is made,
the term separate account, as used in this contract, shall then mean the
separate account to which the assets were transferred.
We also reserve the right, when permitted by law, to:
(a) deregister the separate account under the Investment Company Act of
1940;
(b) restrict or eliminate any voting rights of contract owners or other
persons who have voting rights as to the separate account; and
(c) combine the separate account with one or more other separate accounts.
CONTRACT CHARGES
ARE THERE CHARGES UNDER THIS CONTRACT?
Yes. This contract makes certain deductions from purchase payments. There are
also certain charges which are made directly to the separate account.
95-9326 10
<PAGE>
WHAT DEDUCTIONS ARE MADE FROM YOUR PURCHASE PAYMENTS?
Deductions from your purchase payments are made for sales charges, risk charges,
and state premium taxes where applicable.
WHAT SALES CHARGES ARE DEDUCTED FROM YOUR PURCHASE PAYMENTS?
The sales charge is deducted from your purchase payments using the percentages
shown in the table below:
Cumulative Sales Charge as a Percentage
Total Purchase Payments of Purchase Payments
----------------------- --------------------
$ 0 - 499,999.99 4.500%
500,000 - 749,999.99 4.125%
750,000 - 1,000,000.00 3.750%
The applicable percentage from the chart will be based on the total cumulative
purchase payments to date, including the new purchase payment.
WHAT RISK CHARGES ARE DEDUCTED FROM YOUR PURCHASE PAYMENTS?
A risk charge is deducted from each purchase payment when paid. This is for our
guaranteeing the minimum annuity payment amount shown on page one. This risk
charge may be as much as 2% of each purchase payment.
WHAT ARE THE CHARGES ASSOCIATED WITH THE SEPARATE ACCOUNT?
There are three charges associated with the separate account. These are the
expense risk charge, the mortality risk charge, and the administrative charge.
All of these charges are deducted from the separate account on each valuation
date.
WHAT IS THE EXPENSE RISK CHARGE?
This is a charge to compensate us for the guarantee that the deductions provided
for in this contract will be sufficient to cover our actual expenses incurred.
Actual expense results incurred by us shall not adversely affect any payments or
values under this contract. On an annual basis, this charge may be as much as
0.60% of the net asset value of the separate account.
WHAT IS THE MORTALITY RISK CHARGE ASSOCIATED DIRECTLY WITH THE SEPARATE ACCOUNT?
This is a charge to compensate us for the mortality guarantees we make under the
contract. Actual mortality results incurred by us shall not adversely affect
any payments or values under this contract. On an annual basis, this charge may
be as much as 0.80% of the net asset value of the separate account.
WHAT IS THE ADMINISTRATIVE CHARGE?
This is a charge to compensate us for the administrative expenses we incur under
this contract. On an annual basis, this charge will not exceed 0.40% of the net
asset value of the separate account.
VALUATION
HOW IS THE CASH VALUE DETERMINED?
The cash value is equal to: the number of cash value units in the contract,
multiplied by the current annuity unit value, multiplied by the appropriate cash
value factor. The cash value factor comes from the table included in this
contract.
95-9326 11
<PAGE>
HOW IS THE TOTAL ANNUITY VALUE DETERMINED?
While the annuitant is alive, the total annuity value is equal to: the sum of
the number of cash value units, multiplied by the annuity unit value, multiplied
by the appropriate factor from the total annuity value factor table(s) included
in this contract; plus the number of annuity units in excess of the number of
cash value units, multiplied by the annuity unit value, multiplied by the
annuity value factor. The total annuity value factor comes from the table(s)
included in this contract.
After the annuitant's death, the beneficiary may elect to continue annuity
payments. The payments will continue for the remainder of the cash value
period. If the beneficiary does so elect, the total annuity value will be equal
to the cash value at all times during the cash value period.
WHAT IS THE ANNUITY UNIT VALUE AND HOW IS IT DETERMINED?
The annuity unit value reflects the net investment experience of the sub-account
of the separate account. The annuity unit value was originally set at $1.00 on
the first valuation date. For any subsequent valuation date, its value is equal
to: the value on the preceding valuation date, multiplied by the net investment
factor for the sub-account for the valuation period ending on the current
valuation date, and multiplied by a factor adjusting out the effect for the
valuation period of the 4.5% annual assumed interest rate. This rate has been
built into this contract's total annuity value, cash value, and annuity payment
calculations.
WHAT IS THE NET INVESTMENT FACTOR FOR THE SUB-ACCOUNT?
The net investment factor for a valuation period is the gross investment rate
for such valuation period, less a deduction for the expense and mortality risk
charges and administrative charges. These charges shall be at a rate of not
more than 1.80% per annum.
The gross investment rate is equal to:
(a) the net asset value per share of a fund share held in the sub-account
of the separate account determined at the end of the current valuation
period; plus
(b) the per share amount of any dividend or capital gain distributions by
the fund if the "ex-dividend" date occurs during the current valuation
period; divided by
(c) the net asset value per share of that fund share held in the sub-
account determined at the end of the preceding valuation period.
WITHDRAWAL AND SURRENDER
MAY YOU WITHDRAW FUNDS FROM THIS CONTRACT?
Yes. At any time during the cash value period of this contract you may request
a withdrawal from its cash value. Each withdrawal must be in the amount of at
least $500. However, if the cash value of the contract is less than that
amount, all of the remaining cash value in the contract must be withdrawn. You
must make a written request for any withdrawal.
IS A NEW NUMBER OF CASH VALUE UNITS DETERMINED AFTER A CASH VALUE WITHDRAWAL?
Yes. A cash value withdrawal reduces the number of cash value units of this
contract. The new number of cash value units after a withdrawal is equal to the
number of cash value units just prior to withdrawal, multiplied by the cash
value prior to withdrawal less the cash value withdrawn, divided by the cash
value prior to withdrawal. Cash value units are reduced on a last in, first out
basis.
When you make a withdrawal of cash value, we will inform you of the number of
cash value units remaining in your contract.
95-9326 12
<PAGE>
IS THE CASH VALUE GUARANTEED?
No. The cash value decreases as annuity payments are made under the contract.
The cash value will also increase or decrease based on the performance of the
separate account sub-account given by the relative change in the annuity unit
value.
WILL FUTURE ANNUITY PAYMENTS BE AFFECTED BY A CASH VALUE WITHDRAWAL?
Yes. The number of annuity units used to calculate each future annuity payment
will be reduced to reflect the cash value withdrawal. The calculation of the
new number of annuity units will be based on whether or not the annuitant is
alive at the time the cash value withdrawal is made.
We will inform you of the number of annuity units remaining in your contract
whenever you make a cash value withdrawal.
HOW WILL THE NUMBER OF ANNUITY UNITS BE DETERMINED AFTER A CASH VALUE WITHDRAWAL
WHILE THE ANNUITANT IS ALIVE?
The new number of annuity units will be the new initial annuity payment amount
after a cash value withdrawal, as described in the next paragraph, divided by
the annuity unit value at the time of the withdrawal. The new initial annuity
payment amount is determined separately for purchase payments which used
different annuity payment purchase rates at the purchase payment date. The
number of annuity units is reduced, treating the number of annuity units and
cash value units derived from purchase payments using different annuity payment
purchase rates separately, on a last in, first out basis.
The new initial annuity payment amount after a cash value withdrawal will be
based on the remaining total annuity value immediately following the cash value
withdrawal. The new initial annuity payment amount will be the sum of the
following three values shown in the paragraph below. Annuity payment amounts
will be determined separately for purchase payments which used different annuity
payment purchase rates at the purchase payment date.
The new initial annuity payment amount after a cash value withdrawal will be
equal to the sum of:
(a) The number of cash value units remaining after the withdrawal
multiplied by the annuity unit value; plus
(b) The number of annuity units just prior to withdrawal minus the cash
value units just prior to withdrawal, multiplied by the annuity unit
value; plus
(c) The amount determined by steps 1 through 4,
(1) the total annuity value just prior to withdrawal; less
(2) the cash value just prior to withdrawal; and less
(3) the value in (b) multiplied by the appropriate total annuity
value factor for annuity units in excess of cash value units, as
of the withdrawal date, from the total annuity value factor
table(s) included in this contract; this sum then multiplied by
(4) the ratio of the cash value withdrawn divided by the cash value
just prior to withdrawal; applied to the appropriate annuity
payment purchase rate factor from table(s) included in this
contract for use at a cash value withdrawal while the annuitant
is alive.
The actual annuity payment amount payable for the next annuity payment date will
differ from this new initial annuity payment amount determined on the date of
the withdrawal. It will be based on the performance of the separate account
sub-account between the date of withdrawal and the valuation date for the next
annuity payment date as given by the relative change in the annuity unit value.
95-9326 13
<PAGE>
HOW WILL THE NUMBER OF ANNUITY UNITS BE DETERMINED AFTER A CASH VALUE WITHDRAWAL
BY THE BENEFICIARY WHO ELECTED TO CONTINUE RECEIVING ANNUITY PAYMENTS FOR THE
REMAINDER OF THE CASH VALUE PERIOD AFTER THE ANNUITANT'S DEATH?
Whenever the beneficiary has elected to continue receiving annuity payments and
a withdrawal of cash value is made, the number of annuity units is set equal to
the number of cash value units as determined after the withdrawal of cash value.
WILL THE GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT BE AFFECTED BY A CASH VALUE
WITHDRAWAL?
Yes. The guaranteed minimum annuity payment amount will be reduced to reflect
your reduced interest in the separate account, after the cash value withdrawal,
as represented by the number of annuity units. The new guaranteed minimum
annuity payment amount will be equal to: the guaranteed minimum annuity payment
amount just prior to the withdrawal, multiplied by the number of annuity units
after the withdrawal divided by the number of annuity units prior to the
withdrawal.
We will inform you of the new guaranteed minimum annuity payment amount for your
contract when you make a cash value withdrawal.
MAY YOU SURRENDER THE CONTRACT?
Yes. At any time before the annuity payment commencement date you may surrender
this contract for its surrender value. You must make a written request for any
surrender. The surrender value will be determined as of the valuation date
coincident with or next following the date your written request is received at
our home office.
HOW WILL WITHDRAWAL OR SURRENDER PROCEEDS BE PAID?
We will pay those benefits in a single sum within seven days of receiving your
written request.
DIVIDENDS
WILL THIS CONTRACT RECEIVE DIVIDENDS?
Each year we will determine if we will pay a dividend on this contract.
HOW WILL DIVIDENDS BE APPLIED?
Dividends, if received, will be applied to the purchase of additional annuity
units.
ANNUITY PROVISIONS
WHAT ANNUITY OPTIONS ARE ALLOWED?
This contract provides for lifetime annuity payments which are based on the
survival of a single annuitant or based on the combined survival of joint
annuitants. On the contract date you elected between the single life or joint
life option as shown on page one of this contract. That election, once made,
cannot be changed under this contract.
WHEN DO ANNUITY PAYMENTS BEGIN?
Annuity payments begin on the annuity payment commencement date.
95-9326 14
<PAGE>
WHEN ARE ANNUITY PAYMENTS MADE?
Annuity payments are withdrawn from the sub-account on the valuation date on or
next following each annuity payment date. Each annuity payment is then paid as
directed immediately after its withdrawal from the sub-account.
HOW LONG ARE ANNUITY PAYMENTS PAID?
Annuity payments are paid during the lifetime of the annuitant. In the event of
the annuitant's death, the beneficiary may elect to continue annuity payments
for the remainder of the cash value period.
TO WHOM ARE THE ANNUITY PAYMENTS PAID?
Annuity payments will be paid to the person or persons named as an annuitant on
page one of this contract. Any annuity payments payable as a death benefit
elected by the beneficiary will be paid to the beneficiary.
CAN THE ANNUITANT DIRECT OR ASSIGN ANNUITY PAYMENTS TO BE PAID TO SOMEONE ELSE?
Yes. The annuitant, or the joint annuitants, can direct or assign annuity
payments to be made under the contract. Those payments will then be paid to
someone else. However, we will not be bound by any assignment until we have
recorded a written request of it at our home office. We are not responsible for
the validity of any direction or assignment. A direction to pay someone other
than the annuitant will not apply to any payment made by us before it was
recorded. Any claim made by an assignee will be subject to proof of the
assignee's interest and the extent of the assignment.
MAY WE REQUIRE ADDITIONAL INFORMATION?
Yes. We reserve the right to require proof satisfactory to us of the age of the
annuitant and of any joint annuitant. We may also require proof that a person
is alive before making any annuity payment which is based on the survival of
that person.
HOW IS THE AMOUNT OF AN ANNUITY PAYMENT DETERMINED?
The dollar amount of annuity payments is equal to the number of annuity units
remaining for this contract multiplied by the annuity unit value as of the
valuation date of the payment. The amount may increase or decrease from one
annuity payment date to the next.
IS THERE A GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT?
Yes. Each annuity payment date we will pay the annuitant the greater of: (a)
the annuity payment amount determined by multiplying the number of annuity units
times the annuity unit value; or (b) the guaranteed minimum annuity payment
amount currently in force for this contract.
AMOUNT PAYABLE AT DEATH
IS THERE A DEATH BENEFIT IF THE ANNUITANT OR JOINT ANNUITANT DIES BEFORE THE
ANNUITY PAYMENT COMMENCEMENT DATE?
Yes. When we receive due proof at our home office, satisfactory to us, of
either annuitant's death before the annuity payment commencement date, a death
benefit will be paid to you, or your beneficiary, if applicable. This death
benefit will be the sum of: the total annuity value plus the amounts deducted
from your purchase payments for sales charges, risk charges, and state premium
taxes where applicable.
IS THERE A DEATH BENEFIT WHEN THE ANNUITANT DIES AFTER THE ANNUITY PAYMENT
COMMENCEMENT DATE?
Yes. However, this death benefit is payable only so long as the contract has a
cash value. When we receive due proof, satisfactory to us, of the annuitant's
death after the annuity payment commencement date, we will pay the cash value of
the contract as a lump sum death benefit. The beneficiary will be the
95-9326 15
<PAGE>
person or persons named in the application for this contract unless you
subsequently change the beneficiary. In that event, we will pay the death
benefit to the beneficiary named in your last change of beneficiary request as
provided for in this contract.
MAY A BENEFICIARY, IN THE EVENT OF THE ANNUITANT'S DEATH AFTER ANNUITY PAYMENTS
HAVE BEGUN, ELECT TO CONTINUE ANNUITY PAYMENTS UNTIL THE END OF THE CASH VALUE
PERIOD INSTEAD OF RECEIVING THE LUMP SUM DEATH BENEFIT?
Yes. A beneficiary may elect to continue annuity payments. However, the number
of annuity units will be set equal to the number of cash value units at the time
of the annuitant's death, the annuity payments to the beneficiary will terminate
at the end of the cash value period, and the guaranteed minimum annuity payment
amount will be adjusted in proportion to any change in the number of annuity
units. The new guaranteed minimum annuity payment amount will be equal to the
guaranteed minimum annuity payment amount just prior to the annuitant's death,
multiplied by the number of annuity units after the annuitant's death divided by
the number of annuity units prior to the annuitant's death.
If the beneficiary elects to continue the annuity payments, the cash value will
also continue on the beneficiary's behalf as part of the death benefit. This
allows the beneficiary to withdraw any or all of the cash value at any time
during the remaining cash value period. As with cash value withdrawals while
the annuitant is alive, cash value withdrawals by the beneficiary after the
annuitant's death will reduce future annuity payments and the guaranteed minimum
annuity payment amount. This reduction will be based on the reduced interest in
the separate account as described in the "Withdrawal and Surrender" section of
this contract.
WHEN MUST DEATH BENEFITS PAID AS AN ANNUITY BE PAID?
Death benefits payable after the annuitant's death must be distributed at least
as rapidly as under the method elected by the annuitant.
WHAT HAPPENS IF A BENEFICIARY DIES BEFORE THE ANNUITANT DIES?
If a beneficiary dies, that beneficiary's interest in this contract ends with
his or her death. Only those beneficiaries who survive will be eligible to
share in the amount payable to the beneficiary at the annuitant's death. If
there is no surviving beneficiary upon the death of the annuitant, any remaining
value of death benefit payable to the beneficiary will be paid to the
annuitant's estate.
CAN YOU CHANGE THE BENEFICIARY?
Yes. You can file a written request with us to change the beneficiary. Your
written request will not be effective until it is recorded in our home office
records. After it has been recorded, it will take effect as of the date you
signed the request. However, if death occurs before the request has been
recorded, the request will not be effective as to any death proceeds we have
paid before the request was recorded in our home office.
ADDITIONAL INFORMATION
ARE THE CONTRACT BENEFITS PROTECTED?
Yes. To the extent permitted by law, no benefit provided by this contract will
be subject to any creditor's claim or process of law.
HOW WILL BENEFITS BE DETERMINED?
Any benefit described by this contract shall be calculated as of the date the
provisions of the contract are exercised.
95-9326 16
<PAGE>
WILL THERE BE AN ADJUSTMENT IF THE ANNUITANT'S AGE OR SEX IS MISSTATED?
Yes. If the annuitant's age or sex has been misstated, the amount payable under
this contract as an annuity will be that amount which would have been paid based
upon the annuitant's correct age and sex. In the case of an overpayment, we may
either deduct the required amount from future contract payments or, we may
require you to pay us in cash. We may do both until we are fully repaid. In
the case of an underpayment, we will pay the required amount with the next
payment.
MUST YOU PROVIDE ANY ADDITIONAL INFORMATION?
Yes. You must provide us with any other information we need to administer this
contract. If you cannot do so, we may ask the person concerned for that
information. We shall not be liable for any payment based upon information
given to us in error or not given to us.
DO CONTRACT VALUES COMPLY WITH STATE REQUIREMENTS?
Yes. All values and benefits described by this contract are not less than the
minimum values and benefits required by any statute of the state in which this
contract is delivered.
WILL WE HOLD ANNUITY RESERVES UNDER THIS CONTRACT?
Yes. Reserves held by us for annuity payments under this contract shall not be
less than those reserves required by the state law. We will refer to the laws
of the state in which this contract is delivered.
MAY THIS CONTRACT BE MODIFIED?
Yes. This contract may be modified at any time. It may be modified only by
written agreement between you and us. However, no such modification will
adversely affect the rights of an annuitant under this contract unless made to
comply with a law or government regulation. A modification must be in writing.
You will have the right to accept or reject a modification.
WHEN WILL LUMP SUM PAYMENTS BE MADE?
Usually, we will make payment within seven days after payment is called for by
the terms of the contract. In the case of payments from the separate account,
we reserve the right to defer payment for any period during which the New York
Stock Exchange is closed for trading (except for normal holiday closing), or
when trading on the Exchange is restricted when the Securities and Exchange
Commission has determined that a state of emergency exists which may make such
determination and payment impractical or such other periods as the Commission
may by order permit for the protection of contract owners.
DO YOU HAVE ADDITIONAL VOTING RIGHTS?
Yes. If you have separate account annuity units under this contract you may
direct us with respect to the voting rights of fund shares held by us and
attributable to this contract.
95-9326 17
<PAGE>
IMMEDIATE
VARIABLE ANNUITY CONTRACT
GUARANTEED MINIMUM
ANNUITY PAYMENT AMOUNT
A PARTICIPATING CONTRACT
MINNESOTA MUTUAL
<PAGE>
Exhibit 4(b)
READ YOUR CONTRACT CAREFULLY
THIS IS A LEGAL CONTRACT
We promise to pay, subject to the provisions of this
contract, the benefits described by this contract.
We make this promise and issue this contract in
consideration of the application for this contract and
the payment of the purchase payments.
The owner and beneficiary are as named in the
application unless they are changed as provided for in
this contract.
You are a member of The Minnesota Mutual Life
Insurance Company. Our annual meetings are held at
our home office on the first Tuesday in March of each
year. The meetings begin at three o'clock in the afternoon.
Signed for The Minnesota Mutual Life Insurance
Company at St. Paul, Minnesota, on the contract date.
/s/ Robert L. Senkler
President
/s/ Dennis E. Prohofsky
Secretary
Registrar
NOTICE OF YOUR RIGHT TO EXAMINE THIS
CONTRACT FOR 10 DAYS.
IT IS IMPORTANT TO US THAT YOU ARE SATISFIED WITH THIS
CONTRACT. IF YOU ARE NOT SATISFIED, YOU MAY RETURN
THE CONTRACT TO US OR TO YOUR AGENT WITHIN 10 DAYS
OF ITS RECEIPT. IF YOU EXERCISE THIS RIGHT, YOU WILL
RECEIVE THE GREATER OF: (A) THE TOTAL ANNUITY VALUE
OF THIS CONTRACT ATTRIBUTABLE TO YOUR PURCHASE PAYMENTS
PLUS THE AMOUNTS DEDUCTED FROM YOUR PURCHASE PAYMENTS;
OR (B) THE AMOUNT OF PURCHASE PAYMENTS PAID UNDER THIS
CONTRACT. WE WILL PAY THIS REFUND WITHIN 7 DAYS AFTER WE IMMEDIATE
RECEIVE YOUR NOTICE OF CANCELLATION. VARIABLE ANNUITY
CONTRACT
ALL PAYMENTS AND VALUES PROVIDED BY GUARANTEED MINIMUM
THIS CONTRACT ARE VARIABLE. A MINIMUM ANNUITY PAYMENT
ANNUITY PAYMENT AMOUNT IS GUARANTEED AMOUNT
TO YOU. OTHER PAYMENTS AND VALUES ARE
NOT GUARANTEED. A PARTICIPATING
CONTRACT
MINNESOTA MUTUAL
The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, MN 55101-2098
95-9327
<PAGE>
CONTRACT INDEX
Alphabetical Index to the Provisions of Your Contract
Page
----
Additional Information
Amount Payable at Death
Annuity Provisions
Assignment
Beneficiary
Contract Charges
Definitions
Dividends
General Information
Misstatement
Purchase Payments
Valuation
Withdrawal and Surrender
95-9327
<PAGE>
YOUR CONTRACT INFORMATION - EFFECTIVE OCTOBER 1, 1995
This page one supersedes any previously dated page one for this contract.
Please replace any prior page one of your contract with this new page.
Owner: Jane M. Doe
Contract Number: 1-234-567
Contract Date: October 1, 1995
Jurisdiction: Minnesota
Annuity Option: Single Life
Annuitant: Jane M. Doe
Annuitant's Date of Birth: October 1, 1935
Annuitant's Sex: Female
Joint Annuitant: not applicable
Joint Annuitant's Date of Birth: not applicable
Joint Annuitant's Sex: not applicable
Annuity Payment Commencement Date: October 1, 1995
Annuity Payment Frequency: Monthly
End of Cash Value Period: September 30, 2019
Annuity Unit Value on October 1, 1995: 1.012345
<TABLE>
<CAPTION>
Prior to Effect of
Purchase Payment Purchase Payment As of
October 1, 1995 October 1, 1995 October 1, 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Cumulative Purchase Payments: 0.00 100,000.00 100,000.00
Total Annuity Value: 0.00 93,789.44 93,789.44
Cash Value: 0.00 81,667.70 81,667.70
* Initial Annuity Payment Amount: 0.00 460.99 460.99
** Guaranteed Minimum
Annuity Payment Amount: 0.00 391.84 391.84
** Number of Annuity Units: 0.00 455.3685 455.3685
** Number of Cash Value Units: 0.00 455.3685 455.3685
<FN>
* The annuity payment amount shown here is annuity units multiplied by
the annuity unit value as of the effective date of this page one. The
actual annuity payment amount at the next annuity payment date will
differ from this amount. It will be based on the net separate account
sub-account performance from the effective date to the next annuity
payment date.
** These values will change each time you make a cash value withdrawal or
an additional purchase payment. You will be notified of the new
values.
</TABLE>
95-9327 1
<PAGE>
CASH VALUE FACTORS AND GUARANTEED ANNUITY PAYMENT PURCHASE RATES FOR
CALCULATING THE INITIAL ANNUITY PAYMENT AMOUNT WHICH IS PURCHASED WITH
EACH $1,000 OF VALUE APPLIED FOR A NEW PURCHASE PAYMENT
Annuitant: Jane M. Doe
Contract Number: 1-234-567
Guaranteed Annuity Payment
Amount per $1,000 of Value Applied
Cash Value Factor for a New Purchase Payment
----------------- --------------------------
Contract Date: not applicable 4.8911
Annuitization
Anniversary
-----------
0 177.1572 4.8911
1 172.8837 4.9703
2 168.4179 5.0558
3 163.7512 5.1482
4 158.8745 5.2483
5 153.7783 5.3569
6 148.4528 5.4749
7 142.8876 5.6034
8 137.0720 5.7437
9 130.9947 5.8972
10 124.6440 6.0657
11 118.0074 6.2510
12 111.0722 6.4553
13 103.8249 6.6810
14 96.2515 6.9309
15 88.3373 7.2079
16 80.0670 7.5141
17 71.4244 7.8540
18 62.3930 8.2312
19 52.9552 8.6490
20 43.0926 9.1100
21 32.7862 9.6147
22 22.0161 10.1598
23 10.7613 10.7353
24 0.0000 11.3202
over 24 0.0000 not applicable
This table provides factors to determine cash values and the guaranteed annuity
payment amount per $1,000 of value applied for a new purchase payment at the
contract date and each annuitization anniversary. The applicable factor at
times between these dates will be determined consistently with the mortality and
interest rates used to determine the factors shown here.
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<PAGE>
Total Annuity Value Factors and Annuity Payment Purchase Rates Applicable
at a Cash Value Withdrawal while the Annuitant is Alive per
$1,000 Applied - Single Life Issue
Annuitant: Jane M. Doe
Contract Number: 1-234-567
FOR CASH VALUE AND ANNUITY UNITS ATTRIBUTABLE TO TRANSACTIONS ON: OCTOBER 1,
1995
Annuity Payment
Factor Purchase Rate
Factor Applicable to at a Cash Value
Applicable to Annuity Units Withdrawal while
Cash Value in excess of Annuitant is alive
Units Cash Value Units per $1,000 Applied
----- ---------------- ------------------
Contract Date: 203.4522 191.6400 not applicable
Annuitization
Anniversary
-----------
0 203.4522 191.6400 5.2181
1 200.1934 188.2657 5.3116
2 196.7917 184.7827 5.4117
3 193.2402 181.1931 5.5189
4 189.5356 177.5000 5.6338
5 185.6737 173.7047 5.7568
6 181.6504 169.8072 5.8890
7 177.4614 165.8058 6.0311
8 173.1024 161.6965 6.1844
9 168.5694 157.4751 6.3502
10 163.8597 153.1408 6.5299
11 158.9726 148.6972 6.7250
12 153.9099 144.1518 6.9371
13 148.6764 139.5159 7.1676
14 143.2807 134.8037 7.4181
15 137.7353 130.0297 7.6905
This table provides factors to determine the total annuity value and the annuity
payment purchase rates applicable at a cash value withdrawal while the annuitant
is alive, at the contract date and each annuitization anniversary. The
applicable factor at times between these dates will be determined consistently
with the mortality and interest rates used to determine the factors shown here.
95-9327 3
<PAGE>
Total Annuity Value Factors and Annuity Payment Purchase Rates Applicable
at a Cash Value Withdrawal while the Annuitant is Alive per
$1,000 Applied - Single Life Issue
Annuitant: Jane M. Doe
Contract Number: 1-234-567
FOR CASH VALUE AND ANNUITY UNITS ATTRIBUTABLE TO TRANSACTIONS ON: OCTOBER 1,
1995
Annuity Payment
Factor Purchase Rate
Factor Applicable to at a Cash Value
Applicable to Annuity Units Withdrawal while
Annuitization Cash Value in excess of Annuitant is alive
Anniversary Units Cash Value Units per $1,000 Applied
----------- ----- ---------------- ------------------
16 132.0819 125.2714 7.9826
17 126.3228 120.4840 8.2998
18 120.4885 115.6810 8.6444
19 114.6193 110.8750 9.0191
20 108.7685 106.0804 9.4268
21 103.0065 101.3125 9.8704
22 97.4264 96.5881 10.3532
23 92.1500 91.9241 10.8785
24 87.3376 87.3376 11.4498
25 82.8458 82.8458 0.0000
26 78.4655 78.4655 0.0000
27 74.2135 74.2135 0.0000
28 70.1063 70.1063 0.0000
29 66.1586 66.1586 0.0000
30 62.3764 62.3764 0.0000
31 58.9525 58.9525 0.0000
32 55.7028 55.7028 0.0000
33 52.6101 52.6101 0.0000
34 49.6496 49.6496 0.0000
35 46.7882 46.7882 0.0000
36 43.9834 43.9834 0.0000
37 41.1801 41.1801 0.0000
38 38.3067 38.3067 0.0000
39 35.2973 35.2973 0.0000
40 32.0851 32.0851 0.0000
This table provides factors to determine the total annuity value and the annuity
payment purchase rates applicable at a cash value withdrawal while the annuitant
is alive, at the contract date and each annuitization anniversary. The
applicable factor at times between these dates will be determined consistently
with the mortality and interest rates used to determine the factors shown here.
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Total Annuity Value Factors and Annuity Payment Purchase Rates Applicable
at a Cash Value Withdrawal while the Annuitant is Alive per
$1,000 Applied - Single Life Issue
Annuitant: Jane M. Doe
Contract Number: 1-234-567
FOR CASH VALUE AND ANNUITY UNITS ATTRIBUTABLE TO TRANSACTIONS ON: OCTOBER 1,
1995
Annuity Payment
Factor Purchase Rate
Factor Applicable to at a Cash Value
Applicable to Annuity Units Withdrawal while
Annuitization Cash Value in excess of Annuitant is alive
Anniversary Units Cash Value Units per $1,000 Applied
----------- ----- ---------------- ------------------
41 30.0168 30.0168 0.0000
42 27.9334 27.9334 0.0000
43 25.8440 25.8440 0.0000
44 23.7625 23.7625 0.0000
45 21.7058 21.7058 0.0000
46 19.6915 19.6915 0.0000
47 17.7367 17.7367 0.0000
48 15.8564 15.8564 0.0000
49 14.0629 14.0629 0.0000
This table provides factors to determine the total annuity value and the annuity
payment purchase rates applicable at a cash value withdrawal while the annuitant
is alive, at the contract date and each annuitization anniversary. The
applicable factor at times between these dates will be determined consistently
with the mortality and interest rates used to determine the factors shown here.
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DEFINITIONS
When we use the following words, this is what we mean:
ANNUITANT
The person named on page one of the contract who may receive lifetime benefits
under the contract. Except in the event of the death of either annuitant prior
to the annuity payment commencement date, joint annuitants will be considered a
single entity.
YOU, YOUR
The owner of this contract. The owner may be the annuitant or someone else.
The owner shall be that person or entity named as owner in the application.
JOINT OWNER
The person designated to share equally in the rights and privileges provided to
the owner of this contract. Only you and your spouse may be named as joint
owners.
WE, OUR, US
The Minnesota Mutual Life Insurance Company.
BENEFICIARY
The person, persons or entity designated to receive death benefits payable under
the contract in the event of the annuitant's death.
WRITTEN REQUEST
A request in writing signed by you. In the case of joint owners, the signatures
of both owners will be required to complete a written request. In some cases,
we may provide a form for your use. We may also require that this contract be
sent to us with your written request.
PURCHASE PAYMENTS
Amounts paid to us as consideration for the benefits provided by this contract.
PURCHASE PAYMENT DATE
The date we receive a purchase payment in our home office.
CONTRACT DATE
The effective date of this contract.
ANNUITY PAYMENT DATE
Each day indicated by the annuity payment commencement date and the annuity
payment frequency for an annuity payment to be determined. This is shown on
page one of this contract.
ANNUITY PAYMENT COMMENCEMENT DATE
The first annuity payment date as specified on page one.
ANNUITIZATION ANNIVERSARY
The same day and month as the annuity payment commencement date for each
succeeding year of this contract.
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FUND
The mutual fund or separate investment portfolio within a series mutual fund
which is designated as an eligible investment for the separate account.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
ANNUITY UNIT
The standard of value for the variable annuity payment amount.
CASH VALUE UNIT
The measure of your interest in the separate account that is available for
withdrawal under this contract during the cash value period.
CASH VALUE PERIOD
The time during which a cash value exists under the contract. The cash value
period begins on the annuity payment commencement date and ends on the cash
value end date shown on page one.
CASH VALUE
The dollar amount available for withdrawal under this contract during the cash
value period. A cash value exists only as long as both the number of cash value
units and the applicable factor from the cash value factor table are greater
than zero.
TOTAL ANNUITY VALUE
The total annuity value represents your total interest in the separate account.
SURRENDER VALUE
The surrender value of this contract shall be the total annuity value as of the
date of surrender plus the amounts deducted from your purchase payments. Those
include deductions for sales charges, risk charges, and state premium taxes
where applicable.
SEPARATE ACCOUNT
A separate investment account entitled Minnesota Mutual Variable Annuity
Account. This separate account was established by us under Minnesota law. The
separate account is composed of several sub-accounts. The assets of the
separate account are ours. Those assets are not subject to claims arising out
of any other business which we may conduct.
1940 ACT
The Investment Company Act of 1940, as amended, or any similar successor federal
legislation.
ANNUITY PAYMENTS
Payments made at regular intervals to the annuitant or any other payee. The
annuity payments will increase or decrease in amount. The changes will reflect
the investment experience of the sub-account of the separate account.
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GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT
The amount which is guaranteed as the minimum annuity payment amount. This
amount is payable without regard to the performance of the sub-account of the
separate account. Purchase payments, cash value withdrawals, and surrenders
will cause this guaranteed minimum annuity payment amount to be adjusted. The
adjustment will reflect your new interest in the separate account.
AGE
The age of a person at nearest birthday.
GENERAL INFORMATION
WHAT IS YOUR AGREEMENT WITH US?
This contract and the copy of the application attached to it constitute the
entire contract between you and us. Any statements made in the application
either by you or by the annuitant will, in the absence of fraud, be considered
representations and not warranties. Also, any statement made either by you or
the annuitant will not be used to void this contract unless the statement is
contained in the application.
No change or waiver of any of the provisions of this contract will be valid
unless made in writing by us. This must be signed by our president, a vice
president, secretary or an assistant secretary. No agent or other person has
the authority to change or waive any provision of this contract.
Any additional agreement attached to this contract will become a part of this
contract. The agreement will be subject to all the terms and conditions of this
contract unless we state otherwise in it.
HOW DO YOU EXERCISE YOUR RIGHTS UNDER THIS CONTRACT?
You can exercise all the rights under this contract by giving us a written
request. We will deal with you, unless this contract provides otherwise, on the
basis that you have full ownership and control of this contract.
HOW WILL YOU KNOW THE VALUE OF YOUR CONTRACT?
Each year we will send you a report. This report will summarize the year's
transactions. It will show the current total annuity value and cash value of
this contract, the current annuity payment amount, and the current guaranteed
minimum annuity payment amount. It will also show the current annuity unit
value. This report will be as of a date within two months of its mailing.
PURCHASE PAYMENTS
IS THIS AN IMMEDIATE ANNUITY?
Yes. Annuity payments begin on the annuity payment commencement date. This
date is shown on page one. Annuity payments must begin not later than 12 months
after the contract date. An earlier date may be required by law to qualify this
contract as an immediate annuity in the state in which this contract is
delivered.
MAY YOU MAKE ADDITIONAL PURCHASE PAYMENTS TO THIS CONTRACT AFTER ITS ISSUE?
Yes. You may make additional purchase payments to this contract after its issue
as long as we are accepting purchase payments for this class of contract. Each
additional purchase payment must be in an amount of at least $5,000. Total
purchase payments made by you may not exceed $1,000,000, except with our prior
consent. We may discontinue accepting purchase payments for this class of
contract. We can do
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this at any time. We may then terminate your ability to make additional
purchase payments into the contract.
DO YOU CHOOSE WHEN TO MAKE ADDITIONAL PURCHASE PAYMENTS?
Yes. You may choose when to make any additional purchase payments to this
contract at any time before the end of the cash value period. Purchase payments
may be made only while the annuitant is alive and we are accepting purchase
payments for this class of contract. No purchase payments are allowed after the
annuitant's death or after the cash value period has expired.
WHERE DO YOU MAKE ADDITIONAL PURCHASE PAYMENTS?
Your purchase payments must be made at our home office. Our home office is at
400 Robert Street North, St. Paul, Minnesota 55101-2098. When we receive a
purchase payment from you, we will send you a confirmation and an updated page
one for this contract.
WILL PURCHASE PAYMENTS AFFECT FUTURE ANNUITY PAYMENTS?
Yes. Purchase payments made by you will purchase additional annuity units.
The net amount of each purchase payment, after deductions, will be applied to
purchase an additional initial annuity payment amount. This will be determined
as of the purchase payment date. This amount will be at least as great as that
determined by using the guaranteed annuity payment purchase rate table for new
purchase payments. This table is included in this contract.
The new number of annuity units after a purchase payment will be equal to the
number of annuity units prior to the purchase payment plus the additional
annuity units resulting from the current purchase payment. These annuity units
shall equal a number which is equal to the initial annuity payment amount
attributable to the new purchase payment, divided by the annuity unit value on
the purchase payment date.
When you make a purchase payment, we will inform you of the number of annuity
units in your contract. Annuity units will be recorded separately whenever a
different annuity payment purchase rate table is used.
WHAT ARE THE GUARANTEED ANNUITY PAYMENT PURCHASE RATES TO BE USED IN DETERMINING
THE ADDITIONAL ANNUITY PAYMENT AMOUNT ATTRIBUTABLE TO A NEW PURCHASE PAYMENT?
The guaranteed annuity payment purchase rates used for new purchase payments are
given in the guaranteed annuity payment purchase rate table. This table is
included in this contract. The rates are based on a 4.5% assumed interest rate
and Individual Annuity 1983 Table A female mortality rates projected to the
terminal age of the table using projection scale G.
WILL THE GUARANTEED TABLE ALWAYS BE USED FOR NEW PURCHASE PAYMENTS?
Not always. At the time of a purchase payment, we may be using a table of
annuity payment purchase rates for this contract which would result in a larger
initial annuity payment. If we are, we will use that table instead.
WILL PURCHASE PAYMENTS AFFECT THE CASH VALUE?
Yes. Purchase payments will affect the cash value. The purchase payment will
increase the number of cash value units. The new number of cash value units
after a purchase payment will be equal to the number of cash value units prior
to the purchase payment plus the number of annuity units attributable to the new
purchase payment.
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We will inform you of the number of cash value units in your contract when you
make a purchase payment. Cash value units attributable to a purchase payment
will be recorded separately if a different annuity purchase rate table was used
to determine the additional annuity units purchased.
WILL PURCHASE PAYMENTS AFFECT THE GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT?
Yes. The guaranteed minimum annuity payment amount will be increased. This
increase will reflect your additional interest in the separate account after the
additional purchase payment. The new guaranteed minimum annuity payment amount
after an additional purchase payment will be equal to: the guaranteed minimum
annuity payment amount prior to the purchase payment, plus 85% of the additional
initial annuity payment amount attributable to the new purchase payment. This
will be determined on the date we receive the purchase payment.
We will inform you of the new guaranteed minimum annuity payment amount for your
contract when you make a purchase payment.
HOW ARE YOUR PURCHASE PAYMENTS INVESTED?
The net amount of your purchase payments, after deductions, is invested
exclusively in the Index 500 Account sub-account of the separate account.
ARE THERE ANY OTHER INVESTMENT OPTIONS?
No.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
The separate account is divided into sub-accounts. For each sub-account, there
is a fund for the investment of that sub-account's assets. Net purchase
payments are invested in the funds at their net asset value.
If investment in a fund should no longer be possible or if we determine it
becomes inappropriate for contracts of this class, we may substitute another
fund. Substitution may be with respect to existing total annuity values, cash
values, future annuity payments, or future purchase payments.
MAY WE MAKE CHANGES TO THE SEPARATE ACCOUNT?
Yes. We reserve the right to transfer assets of the separate account to another
separate account. The transfer will be of assets associated with this class of
contracts. We will make that determination. If this type of transfer is made,
the term separate account, as used in this contract, shall then mean the
separate account to which the assets were transferred.
We also reserve the right, when permitted by law, to:
(a) deregister the separate account under the Investment Company Act of
1940;
(b) restrict or eliminate any voting rights of contract owners or other
persons who have voting rights as to the separate account; and
(c) combine the separate account with one or more other separate accounts.
CONTRACT CHARGES
ARE THERE CHARGES UNDER THIS CONTRACT?
Yes. This contract makes certain deductions from purchase payments. There are
also certain charges which are made directly to the separate account.
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WHAT DEDUCTIONS ARE MADE FROM YOUR PURCHASE PAYMENTS?
Deductions from your purchase payments are made for sales charges, risk charges,
and state premium taxes where applicable.
WHAT SALES CHARGES ARE DEDUCTED FROM YOUR PURCHASE PAYMENTS?
The sales charge is deducted from your purchase payments using the percentages
shown in the table below:
Cumulative Sales Charge as a Percentage
Total Purchase Payments of Purchase Payments
----------------------- --------------------
$ 0 - 499,999.99 4.500%
500,000 - 749,999.99 4.125%
750,000 - 1,000,000.00 3.750%
The applicable percentage from the chart will be based on the total cumulative
purchase payments to date, including the new purchase payment.
WHAT RISK CHARGES ARE DEDUCTED FROM YOUR PURCHASE PAYMENTS?
A risk charge is deducted from each purchase payment when paid. This is for our
guaranteeing the minimum annuity payment amount shown on page one. This risk
charge may be as much as 2% of each purchase payment.
WHAT ARE THE CHARGES ASSOCIATED WITH THE SEPARATE ACCOUNT?
There are three charges associated with the separate account. These are the
expense risk charge, the mortality risk charge, and the administrative charge.
All of these charges are deducted from the separate account on each valuation
date.
WHAT IS THE EXPENSE RISK CHARGE?
This is a charge to compensate us for the guarantee that the deductions provided
for in this contract will be sufficient to cover our actual expenses incurred.
Actual expense results incurred by us shall not adversely affect any payments or
values under this contract. On an annual basis, this charge may be as much as
0.60% of the net asset value of the separate account.
WHAT IS THE MORTALITY RISK CHARGE ASSOCIATED DIRECTLY WITH THE SEPARATE ACCOUNT?
This is a charge to compensate us for the mortality guarantees we make under the
contract. Actual mortality results incurred by us shall not adversely affect
any payments or values under this contract. On an annual basis, this charge may
be as much as 0.80% of the net asset value of the separate account.
WHAT IS THE ADMINISTRATIVE CHARGE?
This is a charge to compensate us for the administrative expenses we incur under
this contract. On an annual basis, this charge will not exceed 0.40% of the net
asset value of the separate account.
VALUATION
HOW IS THE CASH VALUE DETERMINED?
The cash value is equal to: the number of cash value units in the contract,
multiplied by the current annuity unit value, multiplied by the appropriate cash
value factor. The cash value factor comes from the table included in this
contract.
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HOW IS THE TOTAL ANNUITY VALUE DETERMINED?
While the annuitant is alive, the total annuity value is equal to: the sum of
the number of cash value units, multiplied by the annuity unit value, multiplied
by the appropriate factor from the total annuity value factor table(s) included
in this contract; plus the number of annuity units in excess of the number of
cash value units, multiplied by the annuity unit value, multiplied by the
annuity value factor. The total annuity value factor comes from the table(s)
included in this contract.
After the annuitant's death, the beneficiary may elect to continue annuity
payments. The payments will continue for the remainder of the cash value
period. If the beneficiary does so elect, the total annuity value will be equal
to the cash value at all times during the cash value period.
WHAT IS THE ANNUITY UNIT VALUE AND HOW IS IT DETERMINED?
The annuity unit value reflects the net investment experience of the sub-account
of the separate account. The annuity unit value was originally set at $1.00 on
the first valuation date. For any subsequent valuation date, its value is equal
to: the value on the preceding valuation date, multiplied by the net investment
factor for the sub-account for the valuation period ending on the current
valuation date, and multiplied by a factor adjusting out the effect for the
valuation period of the 4.5% annual assumed interest rate. This rate has been
built into this contract's total annuity value, cash value, and annuity payment
calculations.
WHAT IS THE NET INVESTMENT FACTOR FOR THE SUB-ACCOUNT?
The net investment factor for a valuation period is the gross investment rate
for such valuation period, less a deduction for the expense and mortality risk
charges and administrative charges. These charges shall be at a rate of not
more than 1.80% per annum.
The gross investment rate is equal to:
(a) the net asset value per share of a fund share held in the sub-account
of the separate account determined at the end of the current valuation
period; plus
(b) the per share amount of any dividend or capital gain distributions by
the fund if the "ex-dividend" date occurs during the current valuation
period; divided by
(c) the net asset value per share of that fund share held in the sub-
account determined at the end of the preceding valuation period.
WITHDRAWAL AND SURRENDER
MAY YOU WITHDRAW FUNDS FROM THIS CONTRACT?
Yes. At any time during the cash value period of this contract you may request
a withdrawal from its cash value. Each withdrawal must be in the amount of at
least $500. However, if the cash value of the contract is less than that
amount, all of the remaining cash value in the contract must be withdrawn. You
must make a written request for any withdrawal.
IS A NEW NUMBER OF CASH VALUE UNITS DETERMINED AFTER A CASH VALUE WITHDRAWAL?
Yes. A cash value withdrawal reduces the number of cash value units of this
contract. The new number of cash value units after a withdrawal is equal to the
number of cash value units just prior to withdrawal, multiplied by the cash
value prior to withdrawal less the cash value withdrawn, divided by the cash
value prior to withdrawal. Cash value units are reduced on a last in, first out
basis.
When you make a withdrawal of cash value, we will inform you of the number of
cash value units remaining in your contract.
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IS THE CASH VALUE GUARANTEED?
No. The cash value decreases as annuity payments are made under the contract.
The cash value will also increase or decrease based on the performance of the
separate account sub-account given by the relative change in the annuity unit
value.
WILL FUTURE ANNUITY PAYMENTS BE AFFECTED BY A CASH VALUE WITHDRAWAL?
Yes. The number of annuity units used to calculate each future annuity payment
will be reduced to reflect the cash value withdrawal. The calculation of the
new number of annuity units will be based on whether or not the annuitant is
alive at the time the cash value withdrawal is made.
We will inform you of the number of annuity units remaining in your contract
whenever you make a cash value withdrawal.
HOW WILL THE NUMBER OF ANNUITY UNITS BE DETERMINED AFTER A CASH VALUE WITHDRAWAL
WHILE THE ANNUITANT IS ALIVE?
The new number of annuity units will be the new initial annuity payment amount
after a cash value withdrawal, as described in the next paragraph, divided by
the annuity unit value at the time of the withdrawal. The new initial annuity
payment amount is determined separately for purchase payments which used
different annuity payment purchase rates at the purchase payment date. The
number of annuity units is reduced, treating the number of annuity units and
cash value units derived from purchase payments using different annuity payment
purchase rates separately, on a last in, first out basis.
The new initial annuity payment amount after a cash value withdrawal will be
based on the remaining total annuity value immediately following the cash value
withdrawal. The new initial annuity payment amount will be the sum of the
following three values shown in the paragraph below. Annuity payment amounts
will be determined separately for purchase payments which used different annuity
payment purchase rates at the purchase payment date.
The new initial annuity payment amount after a cash value withdrawal will be
equal to the sum of:
(a) The number of cash value units remaining after the withdrawal
multiplied by the annuity unit value; plus
(b) The number of annuity units just prior to withdrawal minus the cash
value units just prior to withdrawal, multiplied by the annuity unit
value; plus
(c) The amount determined by steps 1 through 4,
(1) the total annuity value just prior to withdrawal; less
(2) the cash value just prior to withdrawal; and less
(3) the value in (b) multiplied by the appropriate total annuity
value factor for annuity units in excess of cash value units, as
of the withdrawal date, from the total annuity value factor
table(s) included in this contract; this sum then multiplied by
(4) the ratio of the cash value withdrawn divided by the cash value
just prior to withdrawal; applied to the appropriate annuity
payment purchase rate factor from table(s) included in this
contract for use at a cash value withdrawal while the annuitant
is alive.
The actual annuity payment amount payable for the next annuity payment date will
differ from this new initial annuity payment amount determined on the date of
the withdrawal. It will be based on the performance of the separate account
sub-account between the date of withdrawal and the valuation date for the next
annuity payment date as given by the relative change in the annuity unit value.
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HOW WILL THE NUMBER OF ANNUITY UNITS BE DETERMINED AFTER A CASH VALUE WITHDRAWAL
BY THE BENEFICIARY WHO ELECTED TO CONTINUE RECEIVING ANNUITY PAYMENTS FOR THE
REMAINDER OF THE CASH VALUE PERIOD AFTER THE ANNUITANT'S DEATH?
Whenever the beneficiary has elected to continue receiving annuity payments and
a withdrawal of cash value is made, the number of annuity units is set equal to
the number of cash value units as determined after the withdrawal of cash value.
WILL THE GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT BE AFFECTED BY A CASH VALUE
WITHDRAWAL?
Yes. The guaranteed minimum annuity payment amount will be reduced to reflect
your reduced interest in the separate account, after the cash value withdrawal,
as represented by the number of annuity units. The new guaranteed minimum
annuity payment amount will be equal to: the guaranteed minimum annuity payment
amount just prior to the withdrawal, multiplied by the number of annuity units
after the withdrawal divided by the number of annuity units prior to the
withdrawal.
We will inform you of the new guaranteed minimum annuity payment amount for your
contract when you make a cash value withdrawal.
MAY YOU SURRENDER THE CONTRACT?
Yes. At any time before the annuity payment commencement date you may surrender
this contract for its surrender value. You must make a written request for any
surrender. The surrender value will be determined as of the valuation date
coincident with or next following the date your written request is received at
our home office.
HOW WILL WITHDRAWAL OR SURRENDER PROCEEDS BE PAID?
We will pay those benefits in a single sum within seven days of receiving your
written request.
DIVIDENDS
WILL THIS CONTRACT RECEIVE DIVIDENDS?
Each year we will determine if we will pay a dividend on this contract.
HOW WILL DIVIDENDS BE APPLIED?
Dividends, if received, will be applied to the purchase of additional annuity
units.
ANNUITY PROVISIONS
WHAT ANNUITY OPTIONS ARE ALLOWED?
This contract provides for lifetime annuity payments which are based on the
survival of a single annuitant or based on the combined survival of joint
annuitants. On the contract date you elected between the single life or joint
life option as shown on page one of this contract. That election, once made,
cannot be changed under this contract.
WHEN DO ANNUITY PAYMENTS BEGIN?
Annuity payments begin on the annuity payment commencement date.
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WHEN ARE ANNUITY PAYMENTS MADE?
Annuity payments are withdrawn from the sub-account on the valuation date on or
next following each annuity payment date. Each annuity payment is then paid as
directed immediately after its withdrawal from the sub-account.
HOW LONG ARE ANNUITY PAYMENTS PAID?
Annuity payments are paid during the lifetime of the annuitant. In the event of
the annuitant's death, the beneficiary may elect to continue annuity payments
for the remainder of the cash value period.
TO WHOM ARE THE ANNUITY PAYMENTS PAID?
Annuity payments will be paid to the person or persons named as an annuitant on
page one of this contract. Any annuity payments payable as a death benefit
elected by the beneficiary will be paid to the beneficiary.
CAN THE ANNUITANT DIRECT OR ASSIGN ANNUITY PAYMENTS TO BE PAID TO SOMEONE ELSE?
Yes. The annuitant, or the joint annuitants, can direct or assign annuity
payments to be made under the contract. Those payments will then be paid to
someone else. However, we will not be bound by any assignment until we have
recorded a written request of it at our home office. We are not responsible for
the validity of any direction or assignment. A direction to pay someone other
than the annuitant will not apply to any payment made by us before it was
recorded. Any claim made by an assignee will be subject to proof of the
assignee's interest and the extent of the assignment.
MAY WE REQUIRE ADDITIONAL INFORMATION?
Yes. We reserve the right to require proof satisfactory to us of the age of the
annuitant and of any joint annuitant. We may also require proof that a person
is alive before making any annuity payment which is based on the survival of
that person.
HOW IS THE AMOUNT OF AN ANNUITY PAYMENT DETERMINED?
The dollar amount of annuity payments is equal to the number of annuity units
remaining for this contract multiplied by the annuity unit value as of the
valuation date of the payment. The amount may increase or decrease from one
annuity payment date to the next.
IS THERE A GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT?
Yes. Each annuity payment date we will pay the annuitant the greater of: (a)
the annuity payment amount determined by multiplying the number of annuity units
times the annuity unit value; or (b) the guaranteed minimum annuity payment
amount currently in force for this contract.
AMOUNT PAYABLE AT DEATH
IS THERE A DEATH BENEFIT IF THE ANNUITANT OR JOINT ANNUITANT DIES BEFORE THE
ANNUITY PAYMENT COMMENCEMENT DATE?
Yes. When we receive due proof at our home office, satisfactory to us, of
either annuitant's death before the annuity payment commencement date, a death
benefit will be paid to you, or your beneficiary, if applicable. This death
benefit will be the sum of: the total annuity value plus the amounts deducted
from your purchase payments for sales charges, risk charges, and state premium
taxes where applicable.
IS THERE A DEATH BENEFIT WHEN THE ANNUITANT DIES AFTER THE ANNUITY PAYMENT
COMMENCEMENT DATE?
Yes. However, this death benefit is payable only so long as the contract has a
cash value. When we receive due proof, satisfactory to us, of the annuitant's
death after the annuity payment commencement date, we will pay the cash value of
the contract as a lump sum death benefit. The beneficiary will be the
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person or persons named in the application for this contract unless you
subsequently change the beneficiary. In that event, we will pay the death
benefit to the beneficiary named in your last change of beneficiary request as
provided for in this contract.
MAY A BENEFICIARY, IN THE EVENT OF THE ANNUITANT'S DEATH AFTER ANNUITY PAYMENTS
HAVE BEGUN, ELECT TO CONTINUE ANNUITY PAYMENTS UNTIL THE END OF THE CASH VALUE
PERIOD INSTEAD OF RECEIVING THE LUMP SUM DEATH BENEFIT?
Yes. A beneficiary may elect to continue annuity payments. However, the number
of annuity units will be set equal to the number of cash value units at the time
of the annuitant's death, the annuity payments to the beneficiary will terminate
at the end of the cash value period, and the guaranteed minimum annuity payment
amount will be adjusted in proportion to any change in the number of annuity
units. The new guaranteed minimum annuity payment amount will be equal to the
guaranteed minimum annuity payment amount just prior to the annuitant's death,
multiplied by the number of annuity units after the annuitant's death divided by
the number of annuity units prior to the annuitant's death.
If the beneficiary elects to continue the annuity payments, the cash value will
also continue on the beneficiary's behalf as part of the death benefit. This
allows the beneficiary to withdraw any or all of the cash value at any time
during the remaining cash value period. As with cash value withdrawals while
the annuitant is alive, cash value withdrawals by the beneficiary after the
annuitant's death will reduce future annuity payments and the guaranteed minimum
annuity payment amount. This reduction will be based on the reduced interest in
the separate account as described in the "Withdrawal and Surrender" section of
this contract.
WHEN MUST DEATH BENEFITS PAID AS AN ANNUITY BE PAID?
Death benefits payable after the annuitant's death must be distributed at least
as rapidly as under the method elected by the annuitant.
WHAT HAPPENS IF A BENEFICIARY DIES BEFORE THE ANNUITANT DIES?
If a beneficiary dies, that beneficiary's interest in this contract ends with
his or her death. Only those beneficiaries who survive will be eligible to
share in the amount payable to the beneficiary at the annuitant's death. If
there is no surviving beneficiary upon the death of the annuitant, any remaining
value of death benefit payable to the beneficiary will be paid to the
annuitant's estate.
CAN YOU CHANGE THE BENEFICIARY?
Yes. You can file a written request with us to change the beneficiary. Your
written request will not be effective until it is recorded in our home office
records. After it has been recorded, it will take effect as of the date you
signed the request. However, if death occurs before the request has been
recorded, the request will not be effective as to any death proceeds we have
paid before the request was recorded in our home office.
ADDITIONAL INFORMATION
ARE THE CONTRACT BENEFITS PROTECTED?
Yes. To the extent permitted by law, no benefit provided by this contract will
be subject to any creditor's claim or process of law.
HOW WILL BENEFITS BE DETERMINED?
Any benefit described by this contract shall be calculated as of the date the
provisions of the contract are exercised.
95-9327 16
<PAGE>
WILL THERE BE AN ADJUSTMENT IF THE ANNUITANT'S AGE OR SEX IS MISSTATED?
Yes. If the annuitant's age or sex has been misstated, the amount payable under
this contract as an annuity will be that amount which would have been paid based
upon the annuitant's correct age and sex. In the case of an overpayment, we may
either deduct the required amount from future contract payments or, we may
require you to pay us in cash. We may do both until we are fully repaid. In
the case of an underpayment, we will pay the required amount with the next
payment.
MUST YOU PROVIDE ANY ADDITIONAL INFORMATION?
Yes. You must provide us with any other information we need to administer this
contract. If you cannot do so, we may ask the person concerned for that
information. We shall not be liable for any payment based upon information
given to us in error or not given to us.
DO CONTRACT VALUES COMPLY WITH STATE REQUIREMENTS?
Yes. All values and benefits described by this contract are not less than the
minimum values and benefits required by any statute of the state in which this
contract is delivered.
WILL WE HOLD ANNUITY RESERVES UNDER THIS CONTRACT?
Yes. Reserves held by us for annuity payments under this contract shall not be
less than those reserves required by the state law. We will refer to the laws
of the state in which this contract is delivered.
MAY THIS CONTRACT BE MODIFIED?
Yes. This contract may be modified at any time. It may be modified only by
written agreement between you and us. However, no such modification will
adversely affect the rights of an annuitant under this contract unless made to
comply with a law or government regulation. A modification must be in writing.
You will have the right to accept or reject a modification.
WHEN WILL LUMP SUM PAYMENTS BE MADE?
Usually, we will make payment within seven days after payment is called for by
the terms of the contract. In the case of payments from the separate account,
we reserve the right to defer payment for any period during which the New York
Stock Exchange is closed for trading (except for normal holiday closing), or
when trading on the Exchange is restricted or when the Securities and Exchange
Commission has determined that a state of emergency exists which may make such
determination and payment impractical or such other periods as the Commission
may by order permit for the protection of contract owners.
DO YOU HAVE ADDITIONAL VOTING RIGHTS?
Yes. If you have separate account annuity units under this contract you may
direct us with respect to the voting rights of fund shares held by us and
attributable to this contract.
95-9327 17
<PAGE>
IMMEDIATE
VARIABLE ANNUITY CONTRACT
GUARANTEED MINIMUM
ANNUITY PAYMENT AMOUNT
A PARTICIPATING CONTRACT
MINNESOTA MUTUAL
<PAGE>
Exhibit 4(c)
MINNESOTA MUTUAL INDIVIDUAL RETIREMENT ANNUITY
(IRA) AGREEMENT
WHAT DOES THIS AGREEMENT PROVIDE?
This agreement modifies the contract. Provisions are changed before issue. In
the event of a conflict between the provisions of this agreement and the
contract to which it is attached, the provisions of this agreement will control.
These changes will allow its use: (a) with a Simplified Employee Pension
(herein "SEP"); and/or (b) as an Individual Retirement Annuity under the
Employee Retirement Income Security Act of 1974, as amended (herein "IRA").
PURCHASE PAYMENTS
ARE IRA PURCHASE PAYMENTS LIMITED?
Yes. Where the annuitant has an IRA, purchase payments may be limited. An
annual cash purchase payment may not exceed the lesser of: (a) the amount of
compensation includible in gross income in any taxable year; or (b) $2,000, or
such other maximum amount as may be allowed by law.
Where an annuitant establishes an IRA along with a nonemployed spouse, purchase
payments may be limited. They are also limited if the annuitant is the
nonemployed spouse. The cash purchase payments for both annuities and accounts
must then be considered together. They may not exceed the lesser of: (a) the
amount of compensation includible in the working spouse's compensation
includible in gross income in any taxable year; or (b) $2,250, or such other
maximum amount as may be allowed by law. In no event may an annuitant's annual
purchase payment exceed the cash amount of: (a) $2,000; or (b) the maximum
annual contribution allowed for an IRA.
ARE SEP PURCHASE PAYMENTS LIMITED?
Yes. Where the annuitant's employer establishes a SEP, purchase payments may be
limited. The annual cash purchase payment must be the lesser of: (a) an amount
equal to 15% of the compensation included in gross income in any taxable year;
or (b) $30,000, or such other maximum amount as may be allowed by law.
Additional purchase payments may be made, as described above.
DO PURCHASE PAYMENT LIMITATIONS APPLY TO A ROLLOVER?
No. Limits on purchase payments to the contract do not apply with a rollover
contribution. A rollover contribution is one within the meaning of sections
408(d)(3), 402(c), 403(a)(4) or 403(b)(8) of the Internal Revenue Code (herein
"Code") or a purchase payment made in accordance wit the terms of a Simplified
Employee Pension (SEP) as described in Section 401(k) of the Code. In that
case, a cash purchase payment may be the amount received by or on behalf of an
annuitant as all or any portion of a distribution which is rollover
contribution. The
83-9058 Rev. 10-93 The Minnesota Mutual Life Insurance Company
<PAGE>
distribution may be one from an individual retirement account, annuity or bond
plan; or an eligible rollover distribution from a tax-exempt employee's trust, a
qualified employee annuity plan or such other plan as may be allowed by law. A
rollover contribution must be received by us not later than 60 days after the
annuitant receives it. A direct rollover payment may be made to us from the
plan making the distribution. A purchase payment may not include contributions
to a tax-qualified plan made by the annuitant as an employee.
MAY THE ANNUITANT ALWAYS MAKE PURCHASE PAYMENTS?
No. We will not accept purchase payments under this contract as of a date the
annuitant is not eligible for an IRA or SEP.
In addition, no additional cash contributions or rollover contributions may be
accepted under the contract if: (a) the owner dies before the distribution of
the entire interest in the contract; and (b) the beneficiary is not the
surviving spouse.
Purchase payments which exceed those allowed for an IRA may be returned. We
will send them to the annuitant. Return is without regard to the provisions of
this contract dealing with withdrawals. Excess purchase payments to a SEP may
similarly be returned. We will send them to the payer.
DISTRIBUTION PROVISIONS
ARE THERE RULES FOR THE TIMING OF DISTRIBUTIONS?
Yes. The distribution of an annuitant's value shall be made in accordance with
the minimum distribution requirements of section 408(b)(3) of the Code and the
regulations thereunder, including the incidental death benefit provisions of
section 1.401(a)(9)-2 of the proposed regulations. All of these rules are
incorporated herein by reference.
The annuitant's accumulation value, or withdrawal value if applicable, must be
distributed or begin to be distributed, by the annuitant's required beginning
date. This is the April 1 following the calendar year in which the annuitant
reaches age 70 1/2. For each succeeding year, a distribution must be made on or
before December 31.
WHAT FORMS OF DISTRIBUTION ARE AVAILABLE?
By the required beginning date the annuitant may elect to have the accumulation
value, or withdrawal value if applicable, distributed. It must be in one of the
following forms:
(a) a single sum payment;
(b) equal or substantially equal payments over the life of the annuitant;
(c) equal or substantially equal payments over the joint lives of the
annuitant and spouse;
(d) equal or substantially equal payments over a specified period that may
not be longer than the annuitant's life expectancy;
83-9058 Rev. 10-93 Minnesota Mutual 2
<PAGE>
(e) equal or substantially equal payments over a specified period that may
not be longer than the joint life and last survivor expectancy of the
annuitant and spouse.
Options (b), (c), (d), and (e) can be satisfied by an annuity form elected by
the annuitant or by systematic withdrawal.
Payments must be made in periodic payments at intervals of no longer than one
year. In addition, payments must be either nonincreasing or they may increase
only as provided in Q&A F-3 of section 1.401(a)(9)-1 of the Proposed Income Tax
Regulations or such final regulations as adopted.
ARE THERE SPECIAL RULES IF THE ANNUITANT DIES BEFORE THE ENTIRE VALUE IN THE
CONTRACT IS DISTRIBUTED?
Yes. If the annuitant dies on or after the date distributions have begun, the
entire remaining value must be distributed at least as rapidly as under the
method of distribution being used as of the date of the annuitant's death. If
the annuitant dies before distributions have begun, the entire remaining value
must be distributed as elected by the annuitant or, if the annuitant has not so
elected, as elected by the beneficiary or beneficiaries, as follows:
(a) by December 31st of the year containing the fifth anniversary of the
annuitant's death; or
(b) in equal or substantially equal payments over the life or life
expectancy of the designated beneficiary or beneficiaries starting by
December 31st of the year following the year of the annuitant's death.
If, however, the beneficiary is the annuitant's surviving spouse, then
this distribution is not required to begin until later. It must begin
by December 31st of the year in which the annuitant would have turned
70 1/2.
ARE OTHER OPTIONS AVAILABLE TO A SPOUSE BENEFICIARY?
Yes. In addition to the options discussed above, the spouse beneficiary has
other options. He or she may elect to treat the annuitant's IRA as his or her
own. This is done by either: (a) not taking a distribution within the five
year period; or (b) making eligible IRA contributions to it.
If the beneficiary chooses one of these options then he or she is the contract
owner. He or she will assume all rights and privileges under the contract.
This right is available only to the spouse of the annuitant.
HOW ARE LIFE EXPECTANCIES FOR CALCULATING REQUIRED DISTRIBUTIONS DETERMINED?
Life expectancy is computed by use of the expected return multiples in Table V
and VI of section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the annuitant prior to the commencement of
distributions or, if applicable, by the surviving spouse where the annuitant
dies before distributions have commenced,
83-9058 Rev. 10-93 Minnesota Mutual 3
<PAGE>
life expectancies of an annuitant or spouse beneficiary shall be recalculated
annually for purposes of required distributions. An election not to recalculate
shall be irrevocable and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary shall not be recalculated. Instead, life
expectancy will be calculated using the attained age of such beneficiary during
the calendar year in which the annuitant attains age 70 1/2, and payments for
subsequent years shall be calculated based on such life expectancy reduced by
one for each calendar year which has elapsed since the calendar year life
expectancy was first calculated. Instead, life expectancy will be calculated
using the attained age of such beneficiary during the calendar year in which the
annuitant attains age 70 1/2, and payments for subsequent years shall be
calculated based on such life expectancy reduced by one for each calendar year
which has elapsed since the calendar year life expectancy was first calculated.
MAY THE ANNUITANT SATISFY MINIMUM DISTRIBUTION REQUIREMENTS BY RECEIVING A
DISTRIBUTION FROM ANOTHER IRA?
Yes. An annuitant may satisfy the minimum distribution requirements under
sections 408(a)(6) and 408(b)(3) of the Code by receiving a distribution from
one IRA that is equal to the amount required to satisfy the minimum distribution
requirements for two or more IRAs. For this purpose, the owner of two or more
IRAs may use the "alternative method" described in Notice 88-38, to satisfy the
minimum distribution requirements described above.
WITHDRAWAL BENEFITS
ARE THERE LIMITS ON WITHDRAWALS?
Yes. These limits apply to a partial withdrawal or a surrender of the contract
before the annuitant's age 59 1/2. In that case, we must receive notice of the
intended disposition of the proceeds. This will not apply if the annuitant dies
or is disabled.
MAY TAX PENALTIES APPLY?
Yes. If a withdrawal or surrender occurs before the annuitant is age 59 1/2,
the annuitant may be subject to tax penalties. These penalties are imposed
under the Code. The annuitant may not be subject to tax penalties on amounts
received before age 59 1/2 if: (1) the annuitant becomes disabled as defined by
the Code; (2) the amount received is in excess of the allowed deduction and
returned to the annuitant before the required tax return filing date for that
year, together with any earned interest; or (3) if the entire amount in the
contract is received and reinvested in a similar plan entitled to similar tax
treatment. Additional exceptions to tax penalties may be available to the
annuitant.
We will not be liable for any tax penalties under this contract. We are not
liable for penalties on amounts received or paid by us under this contract. Any
transaction treated by law as a contract distribution may be treated by us as a
complete contract surrender.
83-9058 Rev. 10-93 Minnesota Mutual 4
<PAGE>
GENERAL INFORMATION
IS THE INTEREST OF THE ANNUITANT IN THIS CONTRACT NONFORFEITABLE?
Yes. The entire interest of the annuitant in this contract is nonforfeitable.
The annuitant shall possess the entire benefit provided by this contract. This
contract is established for the exclusive benefit of the annuitant and his or
her beneficiaries.
HOW WILL DIVIDENDS BE APPLIED?
Dividends, if received, must be added to the accumulation value or applied to
increase annuity payments.
HOW WILL A REFUND OF PREMIUMS BE APPLIED?
Any refund of premiums (other than those attributable to excess purchase
payments) will be applied, before the close of the calendar year following the
year of the refund, toward the payment of future premiums or the purchase of
additional benefits.
MAY THIS AGREEMENT BE AMENDED?
Yes. This contract may be amended as required to reflect any change in the
Code, regulations or published revenue rulings. The annuitant will be deemed to
have consented to any such amendment. We will promptly furnish any such
amendment to the annuitant.
This agreement is effective as of the original contract date unless a different
effective date is shown here.
/s/ Dennis E. Prohofsky /s/ Robert L. Senkler
Secretary President
83-9058 Rev. 10-93 Minnesota Mutual 5
<PAGE>
Exhibit 4(d)
MINNESOTA MUTUAL QUALIFIED PLAN AGREEMENT
WHAT DOES THIS AGREEMENT PROVIDE?
The Agreement modifies the contract. The Agreement is used when an annuity
contract is distributed by a pension or profit sharing plan. The plan must be
qualified under Section 401(a) of the Internal Revenue Code, ("Code") as
amended.
IS THIS CONTRACT TRANSFERABLE?
No. This contract is non-transferable. It may not be sold or assigned. There
is an exception if the contract is the subject of a domestic relations order.
IS THERE AN AUTOMATIC FORM OF RETIREMENT BENEFIT?
Yes. The automatic form is payable if the annuitant is married when a contract
benefit is paid. The automatic form is a joint and 100% to survivor annuity.
It is payable to the annuitant and the annuitant's spouse. The automatic option
is a life annuity if the annuitant is single when a contract benefit is paid.
It is payable to the annuitant.
MAY ANOTHER PAYMENT OPTION OF THE RETIREMENT BENEFIT BE ELECTED?
Yes. However, there are two conditions. First, the annuitant must elect a
different contract option. This election must be made within the 90 day period
before the benefit is paid. Second, the spouse of a married annuitant must
consent to any election of an optional form. This consent must be made on a
Minnesota Mutual form. It must contain a notarized statement. Any consent by a
spouse herein shall be effective only with respect to such spouse. Any annuity
payment option may not provide for payments over a period longer than the life
or the life expectancy of the annuitant or the joint annuitant.
ARE THERE RULES AS TO WHEN ANNUITY PAYMENT MUST BEGIN?
Yes. Payments under the contract must begin no later than April 1st following
the calendar year in which the annuitant attains age 70 1/2.
IS THERE A PRE-RETIREMENT DEATH BENEFIT?
Yes. The pre-retirement death benefit is payable if the annuitant dies before
annuity payments have started. It is the amount provided by the accumulation
value of the contract.
IS THE BENEFICIARY OF THE PRE-RETIREMENT DEATH BENEFIT SPECIFIED?
Yes. If the annuitant was married for a period of at least one year at the time
of death, the beneficiary of the pre-retirement death benefit is the annuitant's
spouse. The spouse's payment option is a life annuity.
88-9176 Rev. 8-93 The Minnesota Mutual Life Insurance Company
<PAGE>
If the annuitant was not married or was married less than one year at death, the
general rule does not apply. The beneficiary of this benefit is then the
designated beneficiary. The automatic annuity payment option in this case is a
lump sum payment.
MAY THE ANNUITANT WHO HAS BEEN MARRIED FOR AT LEAST ONE YEAR ELECT ANOTHER
BENEFICIARY FOR THE PRE-RETIREMENT DEATH BENEFIT?
Yes. Such an annuitant may choose a beneficiary. It may be a person other than
the spouse. The spouse must consent to such an election. The consent must be
obtained prior to the annuitant's death. This consent must be on a Minnesota
Mutual form. It must include a notarized statement. Consent must also be
obtained if there is a subsequent change of beneficiary.
MAY ANOTHER PAYMENT OPTION BE ELECTED FOR THE PRE-RETIREMENT DEATH BENEFIT?
Yes. On the annuitant's death, the beneficiary may elect any contract option.
The option elected must be permitted by the code.
MAY THE PAYMENT OF THE PRE-RETIREMENT DEATH BENEFIT BE DEFERRED?
Yes. The pre-retirement death benefit may begin at any time after the
annuitant's death. If the beneficiary is the annuitant's spouse, the spouse may
elect to defer the benefit. The benefit must begin by the time the annuitant
would have been age 70 1/2.
Payment rules differ if the beneficiary is not the annuitant's spouse. In that
case payment must begin no later than one year from the annuitant's death.
Payment must be: (a) in lump sum; (b) in substantially equal installments over
the life of that beneficiary; and (c) over a period not longer than that
beneficiary's life expectancy.
ARE THERE ANY EXCEPTIONS TO THESE DISTRIBUTION REQUIREMENTS?
No.
ARE THERE ADDITIONAL REQUIREMENTS THAT APPLY TO WITHDRAWALS AND SURRENDERS?
Yes. They may not be made without the written consent of the spouse entitled to
the pre-retirement death benefits.
ARE CONTRACT DISTRIBUTIONS TAXABLE?
Yes. Distributions from this contract are taxable. In addition, tax penalties
may apply to distributions which are classified as premature distributions. Tax
penalties may apply to amounts in excess of statutory limitations as described
in the Code.
Minnesota Mutual will not be liable for any tax or tax penalties on contract
amounts received or paid.
88-9176 Rev. 8-93 Minnesota Mutual 2
<PAGE>
MAY THIS CONTRACT BE ROLLED OVER OR EXCHANGED FOR ANOTHER CONTRACT OR FOR AN
INDIVIDUAL RETIREMENT ACCOUNT OR ANNUITY PLAN?
No. This contract may not be exchanged or rolled over. The issuance of this
contract to you is treated as a distribution from a qualified pension plan.
WILL MINNESOTA MUTUAL PROVIDE TAX ADVICE WITH RESPECT TO CONTRACT DISTRIBUTIONS?
No. For tax advice you must see your own tax adviser.
This Agreement is effective as of the original contract date. For purposes of
the deferred sales charge, the contract year shall be determined from the date
shown here.
/s/ Dennis E. Prohofsky
Secretary
/s/ Robert L. Senkler
President
88-9176 Rev. 8-93 Minnesota Mutual 3
<PAGE>
Exhibit 4(e)
MINNESOTA MUTUAL TAX SHELTERED ANNUITY AMENDMENT
We have made the following changes to your contract. They modify the contract.
They are considered to be a part of it. This agreement is effective as of the
original contract date unless a different effective date is shown here.
WHAT DOES THIS AGREEMENT PROVIDE?
This Agreement modifies your contract. The Agreement is used when the contract
is issued to fund a tax sheltered annuity program. This is as described in
Section 403(b) of the Internal Revenue Code (hereinafter "Code"), as amended.
PURCHASE PAYMENTS
ARE PURCHASE PAYMENTS LIMITED?
Yes. Where the annuitant has a tax sheltered annuity, purchase payments may be
limited. Elective deferrals which are purchase payments made by salary
reduction are limited to: (a) $9,500; or (b) an indexed amount, if greater.
A special increased limit in the case of an annuitant who has completed 15 years
of service with an educational organization, a hospital, a home health service
agency, a church, a convention or association of churches, or a health and
welfare service agency may be available. The limit for any one year is
increased by the lesser of:
(a) $3,000;
(b) $15,000 reduced by amounts already excluded for prior taxable years by
reason of this special exception; or
(c) the excess of $5,000 multiplied by the number of years of service the
annuitant has with the employer less all prior elective deferrals.
The amount of salary reduction excludable from an annuitant's gross income may
actually be less than the amount permitted under this limit on elective
deferrals. This may be true if the annuitant's exclusion allowance, described
in Section 403(b)(2), of the Code or the overall limit as described in Section
415(c) of the Code is less.
WITHDRAWAL AND SURRENDERS
ARE THERE RESTRICTIONS ON WHEN WITHDRAWALS FROM THIS CONTRACT MAY BE MADE?
Yes. Contracts issued to fund 403(b) tax sheltered annuity programs must
restrict certain withdrawals. Any purchase payment made after January 1, 1989
pursuant to a salary reduction agreement between you and your employer may be
paid only when:
88-9213 The Minnesota Mutual Life Insurance Company
<PAGE>
(a) you attain age 59 1/2;
(b) when you separate from service with your employer;
(c) when you die;
(d) when you become disabled; or
(e) if you qualify for a hardship withdrawal.
WHAT IS MEANT BY A HARDSHIP WITHDRAWAL?
A hardship withdrawal is one that is made on account of an immediate and heavy
financial need and a withdrawal is necessary to satisfy that financial need.
You may be required to provide us with information so that we may be satisfied
that your hardship is one described in the Code and its regulations.
WHAT AMOUNT MAY BE WITHDRAWN UNDER THE HARDSHIP PROVISION?
You may withdraw only the amount represented by your salary reduction
contributions. Any earnings attributable to such contributions may not be
withdrawn.
MAY TAX PENALTIES APPLY?
Yes. If a withdrawal or surrender occurs before the annuitant is age 59 1/2,
the annuitant may be subject to tax penalties. These penalties are imposed
under the Code. The annuitant may not be subject to tax penalties on amounts
received before age 59 1/2 if:
(a) the annuitant becomes disabled as defined by the Code;
(b) The amount received is in excess of the allowed elective deferral and
returned to the annuitant before the required tax return filing date for
that year, together with any earned interest; or
(c) if the entire amount in the contract is received and reinvested in a
similar plan entitled to similar tax treatment.
We will not be liable for any tax penalties on amounts received or paid by us
under this contract. We also retain the right to treat any transaction treated
by law as a contract distribution as a complete contract surrender.
88-9213 The Minnesota Mutual Life Insurance Company
<PAGE>
GENERAL INFORMATION
IS THERE A TIME WHEN DISTRIBUTIONS FROM THIS CONTRACT MUST BE MADE?
Yes. Distributions must begin within 90 days after the end of the year in which
the annuitant reaches age 70 1/2. Distributions may be made as withdrawals or
under one of the available annuity forms. In order to avoid tax penalties, you
will have to meet certain minimum distribution requirements.
IS THIS CONTRACT TRANSFERABLE?
No. This contract is non-transferable. It may not be sold or assigned.
/s/ Dennis E. Prohofsky
Secretary
/s/ Robert L. Senkler
President
88-9213 The Minnesota Mutual Life Insuranse Company
<PAGE>
<TABLE>
<CAPTION>
Exhibit 5(a)
<S> <C>
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MINNESOTA MUTUAL VARIABLE ANNUITY APPLICATION
PROTECTOR ANNUITY
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The Minnesota Mutual Life Insurance Company - Annuity Services - 400 Robert Street North - St Paul, Minnesota 55101-2098 -
Toll Free 1-800-362-3141
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OWNER (PLEASE PRINT) ANNUITANT (IF OTHER THAN OWNER)
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NAME NAME
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ADDRESS ADDRESS
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CITY, STATE, ZIP CITY, STATE, ZIP
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DATE OF BIRTH SEX TAXPAYER I.D. DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
(SOC SECURITY # OR EIN)
/ /M / /F / /M / /F
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JOINT OWNER (OPTIONAL - MUST BE SPOUSE OF OWNER) JOINT ANNUITANT (OPTIONAL - MUST BE SPOUSE OF ANNUITANT)
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NAME NAME
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DATE OF BIRTH SEX SOCIAL SECURITY NUMBER DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
/ /M / /F / /M / /F
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BENEFICIARY
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CLASS NAME RELATIONSHIP DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
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/ /M / /F
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/ /M / /F
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TYPE OF PLAN (PLEASE CHECK ONLY ONE BOX - SEE REVERSE FOR ADDITIONAL INSTRUCTIONS)
/ / Non-Qualified / / Salary Reduction Simplified Employee Pension (SARSEP)
/ / Tax Sheltered Annuity (IRC Section 403(b))
/ / Individual Retirement Annuity (IRA) for tax year __________ Annual Earned Income $ __________
/ / IRA Rollover / / Qualified Retirement Plan (IRC Section 401)
/ / IRA Transfer from existing IRA / / Public Employee Deferred Compensation (IRC Section 457)
/ / Simplified Employee Pension (SEP) / / Non-Qualified Deferred Compensation
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ANNUITY OPTION REPLACEMENT
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/ / Single life option commencing on ________ month ___ day Will this contract applied for replace or change an existing
/ / Joint life option commencing on ________ month ___ day insurance or annuity contract?
/ / Yes* / / No
*If yes, please provide your contract number and the name of
the insurance company under Special Instructions.
-----------------------------------------------------------
The Prospectuses for the Variable Annuity Account and the
Fund each refer to a Statement of Additional Information.
Would you like us to send you a copy? / / Yes / / No
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SPECIAL INSTRUCTIONS OR REMARKS
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OWNER/ANNUITANT SIGNATURES
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I represent that the statements and answers in this application are full, complete and true to the best of my knowledge. I agree
that they are to be considered the basis of any contract issued to me. I ACKNOWLEDGE RECEIPT OF A CURRENT VARIABLE ANNUITY ACCOUNT
PROSPECTUS AND A CURRENT PROSPECTUS FOR THE MIMLIC SERIES FUND, INC. I UNDERSTAND THAT ALL PAYMENTS AND VALUES OF ANY CONTRACT
ISSUED, WHEN BASED UPON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO A FIXED DOLLAR
AMOUNT.
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SIGNED AT (City, State) DATE AMOUNT REMITTED WITH APPLICATION
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SIGNATURE OF OWNER SIGNATURE OF ANNUITANT (if other than owner)
X X
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SIGNATURE OF JOINT OWNER SIGNATURE OF JOINT ANNUITANT (if other than joint owner)
X X
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TO BE COMPLETED BY REPRESENTATIVE
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To the best of my knowledge this contract / / will / / will not replace or change an existing insurance or annuity contract. I
certify that a current prospectus was delivered. No written sales materials were used other than those furnished by the Home
Office.
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REPRESENTATIVE NAME (PRINT) REPRESENTATIVE SIGNATURE AGENCY CODE AGENT CODE
X %
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X %
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TO BE COMPLETED BY DEALER
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DEALER NAME DATE SIGNATURE OF AUTHORIZED DEALER
X
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THIS APPLICATION BECOMES EFFECTIVE ONLY UPON ITS ACCEPTANCE BY MIMLIC SALES CORPORATION
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ACCEPTED BY DATE CONTRACT NUMBER CASE NUMBER
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95-9328 WHITE - Home Office WHITE - Home Office CANARY - Agent
IMPORTANT INSTRUCTIONS
Please submit:
- Proof of Age for annuitant(s)
- Copy of driver's license or birth certificate
- Annuity Service Request F.35264
- New Account Information F.38487
IF YOU ARE REQUESTING: PLEASE SUBMIT:
- TSA Contract - TSA Withdrawal Disclosure F.38754
- Qualified Retirement Plan - Employee Benefit Plan Statement F.23273
- SEP Contract - Completed IRS form 5305-SEP or
5305 A-SEP or
- Prototype Request and Document Services
Agreement and service fee
- Replacement of another life insurance - Appropriate replacement forms as required
or annuity contract by the state of jurisdiction
- 1035 Exchange (non-qualified) - Agreement for Exchange F.32059
- Original Contract
- Transfer (Available for use with transfers - Transfer Authorization F.28325
from TSA to TSA or IRA/SEP to IRA/SEP only)
- Direct Rollover (Client initiated distribution) - Request for Direct Rollover F.45256 (send
to existing institution)
If more than one beneficiary is specified, indicate the class of each. All living Class 1 beneficiaries
receive an equal share of the death proceeds. If no Class 1 beneficiaries are living, all living Class
2 beneficiaries receive an equal share and so on.
Class 1 beneficiaries are considered the primary beneficiaries.
Class 2 beneficiaries and so on, are considered the contingent beneficiaries.
</TABLE>
<PAGE>
Exhibit 6(a)
RE-INCORPORATION
OF
"THE BANKERS LIFE ASSOCIATION OF MINNESOTA"
and
Change of Name to
"THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY"
(as adopted on August 5, 1901)
"Resolved, that THE BANKERS LIFE ASSOCIATION OF MINNESOTA, hereby
authorizes and declares its Re-incorporation, and does hereby Re-incorporate
under and by virtue of Chapter One Hundred and Seventy-five (175), as amended,
of the General Laws of the State of Minnesota for the year Eighteen Hundred and
Ninety-five entitled 'An Act to Revise and Codify the Insurance Laws of the
State'; and to that end does hereby adopt the following Articles of
Incorporation, in lieu of, and as a substitute for, any and all Articles of
Incorporation, heretofore existing, viz:
ARTICLE I.
The future corporate name of this corporation is THE MINNESOTA MUTUAL
LIFE INSURANCE COMPANY.
ARTICLE II.
The location and Home Office of the Company is and shall be in the
City of Saint Paul, State of Minnesota.
ARTICLE III.
This Company is re-incorporated for the purpose of transacting and it
proposes, upon the Mutual Plan, to transact, the business of, and to make,
insurance upon the lives of individuals, and every insurance appertaining
thereto or connected therewith; to grant, purchase or dispose of annuities and
endowments of any kind whatsoever; and to take risks, and insure, against
accident to or sickness of persons.
It is proposed and intended that the duration and continuance of this
corporation and its corporate powers shall be perpetual, and that it shall have
perpetual succession.
<PAGE>
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ARTICLE IV.
By-laws not in conflict herewith or with the law, may be adopted, and
from time to time amended, repealed or abrogated in whole or in part, by the
Board of Trustees.
ARTICLE V.
Except as herein otherwise expressly provided, all of the corporate
powers of the company shall be exercised and the amount of compensation of
Officers and Trustees shall be regulated by a Board of Trustees, and authority
is vested in the Board of Trustees to appoint, and delegate power and authority
to, such Officers, Servants and Agents as said Board shall by resolution or by-
law determine.
ARTICLE VI.
The Board of Trustees shall consist of at least five persons, and may
consist of a greater number, if the by-laws shall at any time so provide.
All of the members of the Board of Trustees shall be residents and
citizens of the State of Minnesota, until such time as the By-laws otherwise
provide.
The names of the members of the present Board of Trustees are CHARLES
H. BIGELOW, MAURICE AUERBACH, JOHN B. SANBORN, CRAWFORD LIVINGSTON AND J.F.R.
FOSS.
ARTICLE VII.
The first meeting of members hereafter shall be held at three o'clock
in the afternoon on the first Tuesday in March, A.D. Nineteen Hundred and Two at
the Home Office of the Company; provided, that a special meeting, or special
meetings of members may be held prior to said date upon due notice.
ARTICLE VIII.
The regular annual meeting of members shall be held at three o'clock
in the afternoon of the first Tuesday in March of each year, at the Home Office,
for the election of Trustees, whenever any are to be elected, and for the
transaction of such other business as may properly come before it.
<PAGE>
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ARTICLE IX.
Article ten of these Articles relates solely to a Guaranty Trust Fund
heretofore created by the deposits of members who became such under the
assessment plan.
ARTICLE X.
All amounts pledged to this Company to secure payment of assessments
occasioned by death of its members shall be used only for that purpose, and
meanwhile the same shall be and remain invested in United States Registered
Bonds, and shall constitute and be know as "The Guaranty Trust Fund". Such
bonds shall be made payable to this company, and shall be transferable or
convertible only upon resolution of its Board of Trustees, and such board shall
have the exclusive charge and control thereof.
All interest realized from such bonds shall meanwhile be used to
defray the Company's operating expenses.
This article shall never be amended or in any way at all changed
without the consent of every member of this Company, to be given in writing,
signed by him and filed with the Company's Secretary, and reciting in full the
proposed amendment or change.
ARTICLE XI.
These Articles may be amended at any time to any extent, not in
violation of law, by resolution adopted by a two-thirds vote of all the votes
cast by the members at any special meeting lawfully called for that purpose, or
by such two-thirds vote at any regular meeting of the members."
<PAGE>
Exhibit 6(b)
BY-LAWS
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
ST. PAUL, MINNESOTA
As Amended by Resolution of
the Board of Trustees
July 22, 1994
<PAGE>
BY-LAWS
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
TABLE OF CONTENTS
Page
----
ARTICLE I. MEMBERS
Section 1. Regular Annual Meetings. . . . . . . . 1
Section 2. Special Meetings . . . . . . . . . . . 1
Section 3. Number of Votes. . . . . . . . . . . . 2
Section 4. Proxies. . . . . . . . . . . . . . . . 2
Section 5. Quorum . . . . . . . . . . . . . . . . 2
Section 6. Presiding Officer and Recording
of Minutes . . . . . . . . . . . . . 3
ARTICLE II. BOARD OF TRUSTEES
Section 1. Composition of the Board of Trustees . 3
(a) Number of Trustees . . . . . . . . . . . 3
(b) Qualifications . . . . . . . . . . . . . 4
(c) Election . . . . . . . . . . . . . . . . 4
(d) Term of Office of Elected Trustee. . . . 4
(e) Appointment by the Board . . . . . . . . 5
Section 2. Meetings of the Board. . . . . . . . . 5
(a) Place of Meetings. . . . . . . . . . . . 5
(b) Regular Meetings . . . . . . . . . . . . 5
(c) Special Meetings . . . . . . . . . . . . 6
(d) Notice . . . . . . . . . . . . . . . . . 6
(e) Quorum . . . . . . . . . . . . . . . . . 7
(f) Action without Meeting . . . . . . . . . 7
Section 3. Removal. . . . . . . . . . . . . . . . 7
Section 4. Chair of the Board . . . . . . . . . . 8
Section 5. Compensation . . . . . . . . . . . . . 8
ARTICLE III. COMMITTEES OF THE BOARD
Section 1. Standing and Other Committees
of the Board. . . . . . . . . . . . 9
(a) Creation of Committees . . . . . . . . . 9
(b) Appointments . . . . . . . . . . . . . . 9
(c) Qualifications . . . . . . . . . . . . . 9
(d) Committee Chairs . . . . . . . . . . . . 10
(e) Meetings . . . . . . . . . . . . . . . . 10
(f) Quorum . . . . . . . . . . . . . . . . . 10
(g) Vacancies. . . . . . . . . . . . . . . . 11
(h) Minutes and Reports. . . . . . . . . . . 11
Section 2. Audit Committee. . . . . . . . . . . . 11
Section 3. Corporate Governance and Public
Affairs Committee. . . . . . . . . . 12
Section 4. Executive Committee. . . . . . . . . . 14
Section 5. Investment Committee . . . . . . . . . 14
Section 6. Personnel and Compensation Committee . 15
<PAGE>
ARTICLE IV. OFFICERS Page
----
Section 1. Number . . . . . . . . . . . . . . . . 17
Section 2. Election . . . . . . . . . . . . . . . 17
Section 3. Term of Office . . . . . . . . . . . . 17
Section 4. Removal. . . . . . . . . . . . . . . . 18
Section 5. Vacancies. . . . . . . . . . . . . . . 18
Section 6. Duties of Officers . . . . . . . . . . 18
(a) Chief Executive Officer. . . . . . . . . 18
(b) President. . . . . . . . . . . . . . . . 18
(c) Vice Presidents. . . . . . . . . . . . . 19
(d) Secretary. . . . . . . . . . . . . . . . 19
(e) Treasurer. . . . . . . . . . . . . . . . 20
(f) Controller . . . . . . . . . . . . . . . 20
(g) Actuary. . . . . . . . . . . . . . . . . 20
(h) Other Officers . . . . . . . . . . . . . 20
Section 7. Absence or Disability. . . . . . . . . 21
ARTICLE V. DISPOSITION OF FUNDS AND INVESTMENTS
Section 1. Fund and Investments . . . . . . . . . 21
Section 2. Deposits . . . . . . . . . . . . . . . 21
ARTICLE VI. INDEMNIFICATION
Section 1. Trustees and Officers. . . . . . . . . 22
Section 2. Employees and Agents . . . . . . . . . 23
Section 3. Insurance. . . . . . . . . . . . . . . 24
Section 4. Other Indemnification Permitted. . . . 24
ARTICLE VII. CORPORATE SEAL. . . . . . . . . . . . . . 24
ARTICLE VIII. AMENDMENTS . . . . . . . . . . . . . . . 25
<PAGE>
BY-LAWS
OF
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
ST. PAUL, MINNESOTA
AS AMENDED BY RESOLUTION
OF THE BOARD OF TRUSTEES
JULY 22, 1994
ARTICLE I
MEMBERS
Section 1. REGULAR ANNUAL MEETINGS. The regular annual meeting of members
shall be held at three o'clock in the afternoon of the first Tuesday in March of
each year, at the Home Office of the Company, as required by Article VIII of the
Articles of Re-incorporation. Notice of the meeting shall be as prescribed in
Section 61A.32 of Minnesota Statutes, as amended from time to time.
Section 2. SPECIAL MEETINGS. A special meeting of the members may be
called at any time by the Board of Trustees or by the joint action of either the
Chair of the Board or the Chief Executive Officer and not less than three other
Trustees. The Secretary shall give notice of the special meeting by causing to
be mailed to each member, at the member's address then appearing on the books of
the Company, a notice of the time, place and purpose of the meeting at least
thirty days before the date set for the meeting.
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<PAGE>
Section 3. NUMBER OF VOTES. At each meeting of the members, every person
insured by this Company will be a member entitled to one vote, and one
additional vote for each one thousand dollars of insurance in excess of the
first one thousand dollars, subject to a maximum of one hundred votes; provided,
however, that, in the case of group insurance, voting rights shall be determined
by Section 61A.32 of Minnesota Statutes, as amended from time to time. The
Company has no cumulative voting.
Section 4. PROXIES. Any member may vote by proxy at any meeting of
members. To be valid, the proxy appointment must be in writing and must be
filed with, and received by, the Secretary at the Home Office of the Company at
least five days before the meeting at which it is to be used, exclusive of the
day of the meeting, but inclusive of the day of receipt and filing of the proxy.
A proxy appointment may be for a specified period of time or may provide that it
will be in effect until revoked. A proxy may be revoked by a member at any time
by written notice to the Secretary, or by executing a new proxy appointment and
filing it as required herein, or by personally appearing and exercising his or
her rights as a member at any meeting of the members.
Section 5. QUORUM. Insurance of an amount not less than One Hundred
Million Dollars, represented in person or by proxy, or partly in person and
partly by proxy, shall constitute a quorum at any regular or special meeting of
members. In the
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<PAGE>
absence of a quorum, those members present may adjourn the meeting from time to
time until a quorum shall be present. If a quorum is present when a duly called
or held meeting is convened, the members present may continue to transact
business until adjournment, even though member(s) may have left the meeting so
that less than a quorum is present at the meeting.
Section 6. PRESIDING OFFICER AND RECORDING OF MINUTES. Meetings of the
members shall be presided over by the Chair of the Board, if present, otherwise
by the Chief Executive Officer, if present, otherwise by the President, if
present, otherwise by a Vice President; provided that if none of those
designated are present, then by a chair to be chosen by a majority of the
members who are present in person or by proxy. The Secretary, if present,
otherwise an Assistant Secretary, shall record the minutes of every meeting;
provided that if none of those designated are present, then a person to record
the minutes of that meeting shall be chosen by a majority of the members who are
present in person or by proxy.
ARTICLE II
BOARD OF TRUSTEES
Section 1. COMPOSITION OF THE BOARD OF TRUSTEES. The composition of the
Board of Trustees shall be as follows:
(a) NUMBER OF TRUSTEES. The property, affairs and business of the Company
shall be managed by a Board of Trustees which shall consist of not fewer than
five (as required by
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<PAGE>
Article VI of the Articles of Re-incorporation) or more than sixteen persons,
the number of which for each year shall be determined by the members at their
regular annual meeting. The person or persons who hold the offices of Chief
Executive Officer and President shall, without the necessity of election, be
Trustees by virtue of the office.
(b) QUALIFICATIONS. Trustees need not be members of the Company, nor
residents or citizens of Minnesota. Additional qualifications for initial or
continued Board membership may be prescribed from time to time by the Board.
(c) ELECTION. Except as otherwise provided in these By-Laws, Trustees
shall be elected at regular annual meetings of the members. Nominations for the
office of Trustee shall be made before voting for that office commences. Votes
for persons not so nominated shall be disregarded. The election of each Trustee
shall be by a plurality of the votes cast for the office. In the event the
members fail to elect nominees to fill all of the offices to be elected, then
the Board of Trustees shall have the authority to choose qualified persons to
fill such office or offices by appointment as provided in Section 1(e) of this
Article II.
(d) TERM OF OFFICE OF ELECTED TRUSTEE. The term of office of each elected
Trustee shall be to such of the next three regular annual meetings of the
members as is stated in his or her nomination, or, if none is stated, to the
third such meeting following the date of his or her election, or until his
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<PAGE>
or her earlier death, resignation or removal. No Trustee shall be elected to
the Board for a term of office which extends beyond the annual meeting of
members which coincides with or next follows his or her seventieth birthday.
(e) APPOINTMENT BY THE BOARD. If the office of any Trustee is not filled
by the members at a regular annual meeting of members, a majority of the
Trustees may choose a person to fill that office. If the office of any Trustee
becomes vacant for any reason, a majority of the remaining Trustees may choose a
successor. Each Trustee so chosen shall hold office until the next regular
annual meeting of the members. Not more than one-third of the maximum number of
Trustees may be so chosen by the Board between regular annual meetings of the
members.
Section 2. MEETINGS OF THE BOARD. Meetings of the Board of Trustees shall
be as follows:
(a) PLACE OF MEETINGS. Meetings of the Board may be held either within or
without the State of Minnesota.
(b) REGULAR MEETINGS. Regular meetings of the Board shall be held at such
times and places as are fixed from time to time by resolution of the Board.
Notice need not be given of those regular meetings of the Board held at the
times and places fixed by resolution, nor need notice be given of adjourned
meetings. If either or both the time or place of a regular meeting are other
than that fixed by resolution, a telephonic or written notice shall be given to
each Trustee not
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<PAGE>
less than twenty-four hours prior to the time of that regular meeting.
(c) SPECIAL MEETINGS. Special meetings of the Board may be held at any
time upon call either of the Chair of the Board, or of the Chief Executive
Officer, or upon written request of any three or more Trustees. Except as
otherwise provided, notice of a special meeting shall be given to each Trustee
either in writing or by telephone. Notice of at least seventy-two hours prior
to the meeting time is required if written notice is deposited in the United
States mail in the City of Saint Paul. Notice of at least twenty-four hours
prior to the meeting time is required if written notice is left at either the
place of business or residence of each Trustee. Notice of at least six hours
prior to the meeting time is required if all Trustees are personally either
served with a written notice or contacted by telephone. Notice need not be
given to the Trustees of adjourned special meetings. Also, special meetings may
be held at any time without notice if all of the Trustees are present, or if,
before the meeting, those not present waive such notice in writing. Notice of a
special meeting shall state the purpose of the meeting.
(d) NOTICE. All notices of meetings of the Board required to be given
under these By-Laws shall be given either by the person or persons who called
the meeting, or by the Secretary, or, in his or her absence, by an Assistant
Secretary.
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<PAGE>
(e) QUORUM. A majority of the Trustees shall constitute a quorum for the
transaction of business at any meeting of the Board. In the absence of a
quorum, those Trustees present may adjourn the meeting from time to time until a
quorum shall be present. Except as otherwise provided in these By-Laws, the
acts of a majority of the Trustees present at any meeting at which a quorum is
present shall be the acts of the Board. The Trustees present at a duly called
or held meeting at which a quorum is present, may continue to transact business
until adjournment, even though Trustee(s) may have left the meeting so that less
than a quorum is present at the meeting.
(f) ACTION WITHOUT MEETING. Any action which may be taken at a meeting of
the Board may be taken without a meeting if a consent in writing, setting forth
the actions to be taken, shall be signed by all of the Trustees. The action so
taken shall be effective on the date on which the last signature is placed on
the writing or writings, or on such earlier effective date as is stated in the
writing.
Section 3. REMOVAL. A member of the Board of Trustees who fails to meet
the standards set by the Board for Board members, or who is deemed by the
remaining members of the Board to be untrustworthy, or incapable by reason of
total and permanent disability of fulfilling the duties of his or her office,
may be removed from office by the unanimous vote of the remaining Trustees then
in office.
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<PAGE>
Section 4. CHAIR OF THE BOARD. The Board of Trustees shall elect annually
from among its members a Chair of the Board. The Chair of the Board shall
continue to serve at the will and pleasure of the Board, for the term of his or
her election or until his or her prior death, resignation, or removal from the
Board. The Chair of the Board shall preside at meetings of the members, of the
Board and of the Executive Committee. In addition, the Chair shall have such
other powers, duties and responsibilities as may be determined and assigned by
the Board or these By-Laws.
Section 5. COMPENSATION. Except as provided in this Section, Trustees
shall be entitled to reasonable compensation for their services, and to
reimbursement for reasonable expenses incurred, as Trustees and as members of
committees of the Board. The amount of compensation shall be set from time to
time by resolution of the Board of Trustees. Except as otherwise expressly
provided by the Board, no such compensation or reimbursement shall be paid to an
officer of the Company who also serves as a Trustee. Any Trustee receiving
compensation under this Section shall not be barred from serving the Company in
a non-officer capacity and receiving reasonable compensation for such other
services.
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<PAGE>
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. STANDING AND OTHER COMMITTEES OF THE BOARD. The Board of
Trustees shall have the following committees:
(a) CREATION OF COMMITTEES. The following designated standing committees
of the Board are hereby authorized and created: Audit, Corporate Governance and
Public Affairs, Executive, Investment, and Personnel and Compensation. In
addition, the Board is authorized to create any other committee or committees of
the Board as the Board from time to time deems necessary. The name, duration
and duties of each other committee and the number of members thereof shall be as
prescribed in the action creating the committee.
(b) APPOINTMENTS. Except as provided in Section 4 of this Article III,
the members of each standing Board committee shall consist of those Trustees
appointed by the Board of Trustees. Each Trustee appointed to a Board committee
shall continue to serve on that committee at the will and pleasure of the Board
for the period specified in his or her appointment or until his or her earlier
death, resignation or removal.
(c) QUALIFICATIONS. Each Trustee is qualified to be appointed and
successively reappointed to one or more committees, except that a Trustee who
also acts as an officer or employee of the Company shall not serve as a member
of the Audit Committee.
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<PAGE>
(d) COMMITTEE CHAIRS. The Board shall appoint one of the members of each
of the Board committees, except the Executive Committee, to chair that committee
and, in its discretion, may also appoint one of the members of each of the
committees to serve as a vice chair of that committee. If neither the committee
chair nor the committee vice chair is present at a meeting of a committee, the
committee members present at that committee meeting shall elect another
committee member to chair that meeting.
(e) MEETINGS. Each committee shall meet at such times as the chair of
that committee may designate or as a majority of that committee may determine,
subject to a minimum of not less than two meetings per calendar year, except
that the Executive Committee is not subject to a minimum number of meetings
requirement.
(f) QUORUM. A majority of each Board committee shall constitute a quorum
at each meeting of that committee. At any meeting of a committee at which a
quorum is present, the committee may continue to transact business until
adjournment, even though committee member(s) may have left the meeting so that
less than a quorum is present at the meeting. If a quorum is not present for a
committee meeting, the chair of that committee may request the Board to appoint
a sufficient number of other Trustees to serve as members of the committee only
for that meeting, so as to obtain a quorum. If the Board makes the
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<PAGE>
requested appointments, any action so taken at the committee meeting shall be
valid and binding.
(g) VACANCIES. In the case of the death, resignation or removal of a
member of a committee, the Board may appoint another Trustee to fill the vacancy
so created on that committee for the balance of the unexpired appointment. The
appointment shall be subject to the qualifications set forth for that committee.
(h) MINUTES AND REPORTS. Each committee shall keep a written record of
its acts and proceedings and shall submit that record to the Board of Trustees
at a regular meeting of the Board and at such other times as requested by the
Board or when a majority of the committee deems it desirable to do so. Failure
to submit a record will not, however, invalidate any action taken by the
committee prior to the time the record of the action was, or should have been
submitted to the Board. The minutes of the Corporate Governance and Public
Affairs, Executive, and Personnel and Compensation Committees shall be recorded
by the Secretary. The minutes of each of the other committees shall be recorded
by the person designated by the chair of that committee.
Section 2. AUDIT COMMITTEE. The Audit Committee shall consist of not
fewer than four non-management Trustees and shall have the following powers and
duties:
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<PAGE>
(a) Annually recommend to the Board a firm of independent certified public
accountants to audit the Company's books, records and accounts.
(b) Approve the scope of audits to be conducted by the independent
certified public accountants, taking into account the principal risks inherent
in the Company's business and the recommendations from the independent
accountants as to scope of audit.
(c) Review all recommendations made by the independent certified public
accountants in their audit reports to the Board.
(d) Approve the scope of audits to be conducted by the Company's internal
auditors and review the reports of those audits.
(e) Review the reports which result from the examinations of the Company
conducted by state insurance authorities.
(f) Review corporate litigation involving extra-contractual damages.
(g) Periodically review the Company's plans for data security and disaster
recovery.
(h) Advise the Board of the results of Committee reviews and
recommendations resulting therefrom.
Section 3. CORPORATE GOVERNANCE AND PUBLIC AFFAIRS COMMITTEE. The
Corporate Governance and Public Affairs Committee shall consist of not fewer
than four Trustees and shall have the following powers and duties:
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<PAGE>
(a) Annually review the size and composition of the Board.
(b) Periodically develop and recommend to the Board the standards to be
met by persons selected for nomination to the Board.
(c) Prior to the annual meeting of members each year, recommend to the
Board a slate of persons to be nominated to serve on the Board for whom the
Company should solicit proxies.
(d) On the recommendation of the Chair of the Board or the Chief Executive
Officer, review the ongoing affiliation with the Board of any member who fails
to meet the standards set by the Board for Board members, or who is deemed by
the remaining members of the Board to be untrustworthy, or incapable by reason
of total and permanent disability of fulfilling the duties of his or her office.
(e) Periodically, review the powers and duties of Board committees.
(f) Annually review and approve the methods and levels of compensation for
members of the Board, including but not limited to benefit plans and
compensation deferral plans; and review and make changes in the method and
timing of benefits for individuals covered under any such plans in accordance
with the terms of such plans.
(g) Annually review and approve the contributions policy.
(h) Annually review Company contributions to be made to the foundation.
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<PAGE>
(i) Review Company's code of ethics and conflict of interest disclosures.
(j) Review Company policy on major issues in areas of social
responsibility and public affairs, including such matters as voting and
solicitation of proxies, "social purpose" investments, and other like matters as
may properly come before it.
(k) Periodically review Company by-laws.
(l) Advise the Board of the results of Committee reviews and
recommendations resulting therefrom.
Section 4. EXECUTIVE COMMITTEE. The Executive Committee shall consist of
the Chairs of the other standing Board committees and the Chair of the Board
and, in the interim between meetings of the Board, shall have and exercise all
of the powers and authority of the Board (including the determination of whether
a person is entitled to indemnification under Article VI of these By-Laws as
required by Section 300.083, Subdivision 6(b) of Minnesota Statutes, as amended
from time to time), except the Committee shall not:
(a) alter or amend the By-Laws;
(b) make appointments to the Board of Trustees;
(c) elect, appoint or terminate the Chairman of the Board, Chief Executive
Officer, President, any Vice President, Secretary, or Treasurer.
Section 5. INVESTMENT COMMITTEE. The Investment Committee shall consist
of not fewer than four Trustees and
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<PAGE>
shall have the following powers and duties which shall be exercised not less
than once every twelve months:
(a) Review the written investment policy for Company investments, the
procedures for the valuation of real estate owned by the Company and commercial
loans held by the Company, recommend changes thereto, and submit to the Board
for its approval and adoption the policy and procedures for the ensuing twelve
months.
(b) Review all investments, except policy loans, of Company funds,
including their acquisition and sale and report findings to the Board.
(c) Furnish the Board with summaries of investment transactions.
(d) Review compliance with the written investment policy and valuation
procedures and submit findings to the Board.
Section 6. PERSONNEL AND COMPENSATION COMMITTEE. The Personnel and
Compensation Committee shall consist of not fewer than four Trustees and shall
have the following powers and duties:
(a) For senior management, annually review performance and total
compensation, including salary, bonus plans, employee benefits and perquisites.
Senior management is defined as Chief Executive Officer, Chief Operating
Officer, President and all vice presidents. Approve and report to the Board for
ratification total compensation for the Chief Executive
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Officer, President and Chief Operating Officer. Approve total compensation for
the vice presidents.
(b) Review qualifications of candidates for election as officers of the
Company. Recommend to the Board for approval officer candidates for the
positions of Chief Executive Officer, Chief Operating Officer, President, all
vice presidents, controller, secretary, treasurer, assistant secretary and
assistant treasurer.
(c) Periodically review succession plans for Chief Executive Officer,
Chief Operating Officer and senior vice presidents.
(d) Review and report to the Board organization changes that have
significant Company and business impact.
(e) Review and approve special employment or compensation contracts for
active, retired or terminated employees.
(f) Annually review and approve salary policies for Company employees.
(g) Annually review and recommend to the Board a PSP distribution to
covered employees.
(h) Periodically review and approve changes to compensation deferral plans
for officers and employees, including the designation of plan trustees and plan
administrators. Review and make changes in the method of timing of benefits for
individuals covered under any of said plans in accordance with the terms of said
plans. Annually determine and approve the interest crediting rates for amounts
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held under deferred compensation plans for officers, employees and Trustees and
make any other determination necessary or advisable in the administration of
those plans.
(i) Periodically review and approve major changes to benefit plans.
(j) Annually review programs and progress made for developing diversity at
all levels of the Company and submit findings to the Board.
ARTICLE IV
OFFICERS
Section 1. NUMBER. The officers of the Company shall be a Chief Executive
Officer, a President, one or more Vice Presidents, a Treasurer, an Actuary, a
Controller, a Secretary, and one or more Assistant Secretaries. In addition,
there may be such other officers as the Board of Trustees from time to time may
deem necessary. One individual may hold two or more offices, except that of
President and Secretary.
Section 2. ELECTION. Officers shall be elected or appointed by the Board
of Trustees.
Section 3. TERM OF OFFICE. Each officer shall serve for the term stated
in his or her election or appointment or until his or her earlier death,
resignation or removal.
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Section 4. REMOVAL. Any officer may be removed from office, with or
without cause, at any time by the affirmative vote of the majority of the Board
of Trustees then in office.
Section 5. VACANCIES. Any vacancy in any office from any cause may be
filled by the Board of Trustees at its next meeting.
Section 6. DUTIES OF OFFICERS. The duties of the officers shall be as
follows:
(a) CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall have
general active management of the business of the Company and, in the absence of
the Chair of the Board, shall preside at all meetings of the members and the
Board of Trustees, and shall see that all orders and resolutions of the Board
are carried into effect. Except where, by law, the signature of the President
is required, the Chief Executive Officer shall possess the same power as the
President to sign and execute all authorized certificates, contracts, bonds, and
other obligations of the Company.
(b) PRESIDENT. The President, in the absence of the Chair of the Board
and the Chief Executive Officer, shall preside at all meetings of the members
and the Board of Trustees. The President shall be the chief administrative
officer of the Company and shall have the power to sign and execute all
authorized certificates, contracts, bonds, and other obligations of the Company.
The President also shall perform such other duties as are incident to the office
or are
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properly required of him or her by the Board or the Chief Executive Officer.
(c) VICE PRESIDENTS. Each Vice President will perform those duties as
from time to time may be assigned by the Chief Executive Officer. In the
absence of the President, a Vice President designated by the Board of Trustees
shall perform the duties of the President. A Vice President shall have the
power to sign and execute all authorized certificates, contracts, bonds and
other obligations of the Company. One or more of the Vice Presidents may be
entitled Executive Vice President, Senior Vice President, Vice President, Second
Vice President, Group Vice President, Assistant Vice President, or such other
variation thereof as may be designated by the Board.
(d) SECRETARY. The Secretary shall give notice and keep the minutes of
all meetings of the members, the Board of Trustees, the Corporate Governance and
Public Affairs Committee, the Executive Committee and the Personnel and
Compensation Committees and shall give and serve all notices of the Company.
The Secretary or an Assistant Secretary shall have the power to sign with the
Chief Executive Officer, President, or any Vice President in the name of the
Company all authorized certificates, contracts, bonds, or other obligations of
the company and may affix the Company Seal thereto. The Secretary shall have
charge and custody of the books and papers of the Company and in general shall
perform all duties incident to the office of Secretary, except as otherwise
specifically
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provided in these By-Laws, and such other duties as from time to time may be
assigned by the Chief Executive Officer. If Assistant Secretaries are elected
or appointed, they shall have those powers and perform those duties as from time
to time may be assigned to them by the Chief Executive Officer and, in the
absence of the Secretary, one of them shall perform the duties of the Secretary.
(e) TREASURER. The Treasurer shall have those powers and shall perform
those duties as from time to time may be assigned by the Chief Executive
Officer. If Assistant Treasurers are elected or appointed, they shall have
those powers and perform those duties as from time to time may be assigned to
them by the Chief Executive Officer and, in the absence of the Treasurer, one of
them shall perform the duties of the Treasurer.
(f) CONTROLLER. The Controller shall have those powers and shall perform
those duties as from time to time may be assigned by the Chief Executive
Officer.
(g) ACTUARY. The Actuary shall have those powers and shall perform those
duties as from time to time may be assigned by the Chief Executive Officer.
(h) OTHER OFFICERS. Other officers elected or appointed by the Board of
Trustees shall have those powers and perform those duties as from time to time
may be assigned by the Chief Executive Officer.
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Section 7. ABSENCE OR DISABILITY. In the case of the absence or
disability of any officer of the Company or of any person authorized to act in
his or her place during such period of absence or disability, the Board of
Trustees from time to time may delegate the powers and duties of such officer to
any other officer, or any Trustee, or any other person whom they may select.
ARTICLE V
DISPOSITION OF FUNDS AND INVESTMENTS
Section 1. FUNDS AND INVESTMENTS. All funds and investments of the
Company shall be held in the name of "The Minnesota Mutual Life Insurance
Company" or its nominee or as otherwise provided in accordance with applicable
Minnesota Statutes, as amended from time to time. In no event shall any funds
or investments be held in the name of any individual who is an officer or
employee of the Company.
Section 2. DEPOSITS. The Board of Trustees shall designate those banks
and financial institutions in which Company funds shall be deposited. The Board
by separate resolution also shall designate the persons authorized to withdraw
or transfer funds held in those accounts. No funds shall be withdrawn or
transferred from those accounts except upon the authorization of the person or
persons so authorized.
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ARTICLE VI
INDEMNIFICATION
Section 1. TRUSTEES AND OFFICERS. To the fullest extent permitted by
applicable Minnesota Statutes, as amended from time to time, the Company shall
indemnify each person (and the legal representatives of the person) who has
been, or is, a Trustee or officer of the Company. This indemnification shall
extend to all judgments, penalties, and fines, including, without limitation,
excise taxes assessed against the person with respect to an employee benefit
plan, settlements, and reasonable expenses, including attorney's fees and
disbursements incurred by the person in connection with the defense of a
threatened, pending, or completed claim, action, suit or other proceeding,
whether it be civil, criminal, administrative, arbitration, or investigative
proceeding. This shall include any proceeding by or in the right of the
Company, in which the person becomes involved as a party or otherwise by reason
of his or her being or having been a Trustee or officer of the Company or who,
while a Trustee or officer of the Company, is or was serving at the request of
the Company or whose duties in that position involve or involved service as a
director, officer, partner, trustee, employee, or agent of another organization
or of an employee benefit plan. However, indemnification for appeals from any
determination in a proceeding shall be subject to prior approval of the Board by
Trustees.
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Section 2. EMPLOYEES AND AGENTS. Subject to the provisions of applicable
Minnesota Statutes, as amended from time to time, the Board of Trustees may, but
need not, decide to indemnify a person (and the legal representatives of the
person), other than a Trustee or officer, who has been or is an employee or
agent of the Company. The indemnification, if any, shall extend to all
judgments, penalties, and fines, including, without limitation, excise taxes
assessed against the person with respect to an employee benefit plan,
settlements, and reasonable expenses, including attorney's fees and
disbursements incurred by the person in connection with the defense of a
threatened, pending, or completed claim, action, suit or other proceeding,
whether it be civil, criminal, administrative, arbitration, or investigative
proceeding. This shall include any proceeding by or in the right of the
Company, in which the person becomes involved as a party or otherwise by reason
of his or her being or having been an employee or agent of the Company or who,
while an employee or agent of the Company, is or was serving at the request of
the Company or whose duties in that position involve or involved service as a
director, officer, partner, trustee, employee or agent of another organization
or of an employee benefit plan. Also, indemnification for appeals from any
determination in a proceeding, where indemnification was previously granted by
the Board, shall be subject to prior approval by the Board.
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<PAGE>
Section 3. INSURANCE. The Board of Trustees may authorize the purchase
and maintenance of such form or forms of insurance as the Board may deem
necessary or prudent to indemnify the Company and/or those persons who have
been, are or may be Trustees, officers, employees, or agents of the Company, or
who, while a Trustee, officer, employee or agent of the Company, is or was
serving at the request of the Company as a director, officer, partner, trustee,
employee, or agent of another organization or of an employee benefit plan
against any liability asserted against and incurred by the person in or arising
from that capacity, whether or not the Company would have been required to
indemnify the person against the liability under the provisions of this Article
VI or under applicable Minnesota Statutes, as amended from time to time.
Section 4. OTHER INDEMNIFICATION PERMITTED. Nothing contained in this
Article shall affect the rights to indemnification to which Company personnel
other than Trustees and officers may be entitled by contract or otherwise under
law.
ARTICLE VII
CORPORATE SEAL
The corporate seal of this Company shall be the words "Corporate Seal"
encircled with the words "The Minnesota Mutual Life Insurance Company".
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ARTICLE VIII
AMENDMENTS
By the affirmative vote of a majority of the Board of Trustees, these By-
Laws, or any part thereof, may be amended, repealed, or abrogated.
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<PAGE>
Exhibit 9
[Letterhead]
August 11, 1995
The Minnesota Mutual Life Insurance Company
Minnesota Mutual Life Center
400 Robert Street North
St. Paul, Minnesota 55101
Re: Minnesota Mutual Variable Annuity Account
Immediate Variable Annuity Contract
Gentlepersons:
In my capacity as counsel for The Minnesota Mutual Life Insurance Company (the
"Company"), I have reviewed certain legal matters relating to the Company's
Separate Account entitled Minnesota Mutual Variable Annuity Account (the
"Account") in connection with the filing of a Registration Statement on Form
N-4. This Registration Statement is to be filed by the Company and the Account
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, with respect to certain immediate variable annuity contracts.
Based upon that review, I am of the following opinion:
1. The Account is a separate account of the Company duly created and
validly existing pursuant of the laws of the State of Minnesota; and
2. The issuance and sale of these variable annuity contracts funded by
the Account have been duly authorized by the Company and such
contracts, when issued in accordance with and as described in the
current Prospectus contained in the Registration Statement, and upon
compliance with applicable local and federal laws, will be legal and
binding obligations of the Company in accordance with their terms.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Donald F. Gruber
Donald F. Gruber
Senior Counsel
<PAGE>
Exhibit 10
[KPMG Peat Marwick Letterhead]
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
The Minnesota Mutual Life Insurance Company:
We consent to the use of our reports included herein and to the reference to our
Firm under the heading "AUDITORS" in Part B of the Registration Statement.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
August 24, 1995
<PAGE>
Exhibit 14
The Minnesota Mutual Life Insurance Company
Power of Attorney
To Sign Registration Statements
WHEREAS, The Minnesota Mutual Life Insurance Company ("Minnesota Mutual")
has established certain separate accounts to fund certain variable annuity and
variable life insurance contracts, and
WHEREAS, Minnesota Mutual Variable Fund D ("Fund D") is a separate account
of Minnesota Mutual registered as a unit investment trust under the Investment
Company Act of 1940 offering variable annuity contracts registered under the
Securities Act of 1933, and
WHEREAS, Minnesota Mutual Variable Annuity Account ("Variable Annuity
Account") is a separate account of Minnesota Mutual registered as a unit
investment trust under the Investment Company Act of 1940 offering variable
annuity contracts registered under the Securities Act of 1933, and
WHEREAS, Minnesota Mutual Variable Life Account ("Variable Life Account")
is a separate account of Minnesota Mutual registered as a unit investment trust
under the Investment Company Act of 1940 offering variable adjustable life
insurance policies registered under the Securities Act of 1933,
WHEREAS, Minnesota Mutual Group Variable Annuity Account ("Group Variable
Annuity Account") is a separate account of Minnesota Mutual which has been
established for the purpose of issuing group annuity contracts on a variable
basis and which is to be registered as a unit investment trust under the
Investment Company Act of 1940 offering group variable annuity contracts and
certificates to be registered under the Securities Act of 1933;
WHEREAS, Minnesota Mutual Variable Universal Life Account ("Variable
Universal Life Account") is a separate account of Minnesota Mutual which has
been established for the purpose of issuing group and individual variable
universal life insurance policies on a variable basis and which is to be
registered as a unit investment trust under the Investment Company Act of 1940
offering group and individual variable universal life insurance policies to be
registered under the Securities Act of 1933;
NOW THEREFORE, We, the undersigned Trustees of Minnesota Mutual, do hereby
appoint Dennis E. Prohofsky and Garold M. Felland, and each of them
individually, as attorney in fact for the purpose of signing in their names and
on their behalf as Trustees of Minnesota Mutual and filing with the Securities
and Exchange Commission Registration Statements, or any amendment thereto, for
the purpose of: a) registering contracts and policies of Fund D, the Variable
Annuity Account, the Variable Life Account, the Group Variable Annuity Account
and the Variable Universal Life Account for sale by those entities and Minnesota
Mutual under the Securities Act of 1933; and b) registering Fund D, the Variable
Annuity Account, the Variable Life Account, the Group Variable Annuity Account
and the Variable Universal Life Account as unit investment trusts under the
Investment Company Act of 1940.
Signature Title Date
--------- ----- ----
/s/ Coleman Bloomfield Chairman of the Board February 13, 1995
----------------------------
Coleman Bloomfield
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Robert L. Senkler President and Chief
----------------------------- Executive Officer February 13, 1995
Robert L. Senkler
/s/ Anthony L. Andersen Trustee February 13, 1995
-----------------------------
Anthony L. Andersen
/s/ John F. Grundhofer Trustee February 13, 1995
-----------------------------
John F. Grundhofer
/s/ Harold V. Haverty Trustee February 13, 1995
-----------------------------
Harold V. Haverty
/s/ Lloyd P. Johnson Trustee February 13, 1995
-----------------------------
Lloyd P. Johnson
/s/ David S. Kidwell, Ph.D. Trustee February 13, 1995
-----------------------------
David S. Kidwell, Ph.D.
/s/ Reatha C. King, Ph.D. Trustee February 13, 1995
-----------------------------
Reatha C. King, Ph.D.
/s/ Thomas E. Rohricht Trustee February 13, 1995
-----------------------------
Thomas E. Rohricht
Trustee
-----------------------------
Terry N. Saario, Ph.D.
/s/ Frederick T. Weyerhaeuser Trustee February 13, 1995
-----------------------------
Frederick T. Weyerhaeuser
