<PAGE>
File Number 33-80788
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment Number
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Post-Effective Amendment Number 6
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VARIABLE ANNUITY ACCOUNT
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(Exact Name of Registrant)
MINNESOTA LIFE INSURANCE COMPANY
(formerly 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)
(651) 665-3500
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(Depositor's Telephone Number, Including Area Code)
Dennis E. Prohofsky Copy to:
Senior Vice President, J. Sumner Jones, Esq.
General Counsel and Secretary Jones & Blouch L.L.P.
Minnesota Life Insurance Company 1025 Thomas Jefferson St., N.W.
400 Robert Street North Suite 405 West
St. Paul, Minnesota 55101-2098 Washington, D.C. 20007
- -------------------------------------------
(Name and Address of Agent for Service)
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (check appropriate box)
immediately upon filing pursuant to paragraph (b)
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on (date) pursuant to paragraph (b) of Rule 485
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60 days after filing pursuant to paragraph (a)(i)
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X on May 3, 1999 pursuant to paragraph (a)(i)
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75 days after filing pursuant to paragraph (a)(ii)
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on (date) pursuant to paragraph (a)(ii) of Rule 485.
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IF APPROPRIATE, CHECK THE FOLLOWING BOX:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
TITLE OF SECURITIES BEING REGISTERED
Variable Annuity Contracts
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
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 Contract
4. Condensed Financial Information; Performance Data - Appendix
5. General Descriptions
6. Contract Charges
7. Description of the Contract; General Descriptions
8. Description of the Contract; Annuity Payments and Options
9. Description of the Contract; Death Benefits
10. Description of the Contract; Purchase Payments and Value of the
Contract and Transfers
11. Description of the Contract; Redemptions
12. Federal Tax Status
13. Not Applicable
14. Table of Contents of the Statement of Additional
Information
<PAGE>
MULTIOPTION SELECT
VARIABLE ANNUITY CONTRACT
MINNESOTA LIFE INSURANCE COMPANY
400 Robert Street North
St. Paul, Minnesota 55101-2098
Telephone: (651) 665-3500
http://www.minnesotamutual.com
This Prospectus describes an individual, flexible payment, variable annuity
contract ("the contract") offered by Minnesota Life Insurance Company. The
contract may be used in connection with all types of personal retirement plans.
Your contract values are invested in our Variable Annuity Account. The Variable
Annuity Account invests in shares of Advantus Series Fund, Inc. and Class 2 of
the Templeton Developing Markets Funds (the "Funds"). Your contract's
accumulation value and the amount of each variable annuity payment will vary in
accordance with the performance of the Fund investment portfolio(s)
("Portfolio(s)") you select. You bear the entire investment risk for any amounts
you allocate to those Portfolios.
This Prospectus includes the information you should know before purchasing a
contract. You should read it and keep it for future reference. A Statement of
Additional Information, bearing the same date, which contains further contract
information, has been filed with the Securities and Exchange Commission ("SEC")
and is incorporated by reference into this Prospectus. A copy of the Statement
of Additional Information may be obtained without charge by calling (651)
665-3500, or by writing us at our office at 400 Robert Street North, St. Paul,
Minnesota 55101-2098.
THIS PROSPECTUS IS NOT VALID UNLESS ATTACHED TO A CURRENT PROSPECTUS OF THE
ADVANTUS SERIES FUND, INC. AND THE TEMPLETON DEVELOPING MARKETS FUND.
THE SEC HAS NOT APPROVED OR DISAPPROVED THE CONTRACTS OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus and of the Statement of Additional Information is:
May 3, 1999.
<PAGE>
THIS PROSPECTUS IS NOT AN OFFERING IN ANY JURISDICTION IN WHICH THE OFFERING
WOULD BE UNLAWFUL. WE HAVE NOT AUTHORIZED ANY DEALER, SALESMAN, OR OTHER PERSON
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,
YOU SHOULD NOT RELY ON THEM.
TABLE OF CONTENTS
SPECIAL TERMS 1
QUESTIONS AND ANSWERS ABOUT THE VARIABLE ANNUITY CONTRACT 2
EXPENSE TABLE 5
GENERAL DESCRIPTIONS 8
Minnesota Life Insurance Company 8
Variable Annuity Account 8
Advantus Series Fund, Inc. 8
Additions, Deletions or Substitutions 9
Templeton Variable Products Series Fund 9
CONTRACT CHARGES 10
Deferred Sales Charges 10
Mortality and Expense Risk Charges 11
Transaction and Contract Charges 12
VOTING RIGHTS 12
DESCRIPTION OF THE CONTRACT 13
General Provisions 13
Annuity Payments and Options 15
Death Benefit 20
Purchase Payments, Value of the Contract and Transfer 21
Redemptions 25
FEDERAL TAX STATUS 26
YEAR 2000 COMPUTER PROBLEM 32
STATEMENT OF ADDITIONAL INFORMATION 33
APPENDIX A -- ILLUSTRATION OF VARIABLE ANNUITY VALUES A-1
APPENDIX B -- CONDENSED FINANCIAL INFORMATION B-1
APPENDIX C -- TYPES OF QUALIFIED PLANS C-1
<PAGE>
SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCUMULATION UNIT: an accounting device used to determine the value of a
contract before annuity payments begin.
ACCUMULATION VALUE: the sum of your values under a contract in the Variable
Annuity Account.
ANNUITANT: the person who may receive lifetime benefits under the contract.
ANNUITY: a series of payments for life; for life with a minimum number of
payments guaranteed; for the joint lifetime of the annuitant and another person
and thereafter during the lifetime of the survivor; or for a period certain.
ANNUITY UNIT: an accounting device used to determine the amount of annuity
payments.
CODE: the Internal Revenue Code of 1986, as amended.
CONTRACT OWNER: the owner of the contract, which could be the annuitant, his or
her employer, or a trustee acting on behalf of the employer.
CONTRACT YEAR: a period of one year beginning with the contract date or a
contract anniversary.
FIXED ANNUITY: an annuity providing for payments of guaranteed amounts
throughout the payment period.
FUNDS: the mutual funds whose separate investment portfolios we have designated
as eligible investment for the Variable Annuity Account, currently, Advantus
Series Fund, Inc. ("Advantus Fund") and Class 2 of the Templeton Developing
Markets Funds ("Templeton Fund").
GENERAL ACCOUNT: all of our assets other than those in the Variable Annuity
Account or in our other separate accounts.
PLAN: a tax-qualified employer pension, profit-sharing, or annuity purchase
plan under which benefits are to be provided by the contract.
PURCHASE PAYMENTS: amounts you pay to us under your contract.
VALUATION DATE: each date on which a Fund Portfolio is valued.
VARIABLE ANNUITY ACCOUNT: a separate investment account called the Minnesota
Life Variable Annuity Account. The investment experience of its assets is
separate from that of our other assets.
VARIABLE ANNUITY: an annuity providing for payments varying in amount in
accordance with the investment experience of the Fund.
VOLUME CREDIT: an additional amount, other than a dividend, which we may credit
to your contract.
WE, OUR, US: Minnesota Life Insurance Company (formerly, "The Minnesota Mutual
Life Insurance Company").
YOU, YOUR: the Contract Owner.
PAGE 1
<PAGE>
QUESTIONS AND ANSWERS ABOUT
THE VARIABLE ANNUITY CONTRACT
WHAT IS AN ANNUITY?
An annuity is a series of payments by an insurance company to an "annuitant."
These payments may be made for the life of the annuitant; for life with a
minimum number of payments guaranteed; for the joint lifetime of the annuitant
and another person; or for a specified period of time. An annuity with payments
of a guaranteed amount is a fixed annuity. An annuity with payments which vary
with the investment experience of a separate account is a variable annuity.
WHAT TYPE OF CONTRACT IS OFFERED BY THIS PROSPECTUS?
The contract is a variable annuity contract which provides for monthly annuity
payments. These payments may begin immediately or at a future date you specify.
We allocate your purchase payments under your contract to the Variable Annuity
Account. The Variable Annuity Account invests in one or more Portfolios of
Advantus Series Fund, Inc., or Class 2 of the Templeton Developing Markets
Funds, according to your instructions. There are no interest or principal
guarantees on your contract values.
WHAT INVESTMENT OPTIONS ARE AVAILABLE?
Any purchase payments you allocate to the Variable Annuity Account are invested
exclusively in shares of one or more Fund Portfolios. We reserve the right to
add, combine or remove other eligible Funds and Portfolios.
The available Portfolios of Advantus Fund are:
Growth Portfolio
Bond Portfolio
Money Market Portfolio
Asset Allocation Portfolio
Mortgage Securities Portfolio
Index 500 Portfolio
Capital Appreciation Portfolio
International Stock Portfolio
Small Company Growth Portfolio
Maturing Government Bond Portfolios
Value Stock Portfolio
Small Company Value Portfolio
Global Bond Portfolio
Index 400 Mid-Cap Portfolio
Macro-Cap Value Portfolio
Micro-Cap Growth Portfolio
Real Estate Securities Portfolio
PAGE 2
<PAGE>
The Variable Annuity Account also invests in Class 2 shares of the Templeton
Developing Markets Fund.
There is no assurance that any Portfolio will meet its objectives. Detailed
information about the investment objectives and policies of the Portfolios can
be found in the current prospectus for each Fund, which are attached to this
Prospectus. You should carefully read each Fund prospectus before purchasing in
the contract.
CAN YOU CHANGE THE PORTFOLIO(S) THAT YOU SELECT?
Yes. You can change your allocation of future purchase payments by giving us
written notice or a telephone call notifying us of the change. Before annuity
payments begin, you may transfer all or a part of your accumulation value among
the Portfolios. After annuity payments begin, you may instruct us to transfer
amounts held as annuity reserves among the variable annuity sub-accounts,
subject to some restrictions. Annuity reserves may be transferred only from a
variable annuity to a fixed annuity during the annuity period.
WHAT CHARGES ARE ASSOCIATED WITH THE CONTRACT?
We deduct a daily charge equal to an annual rate of 1.25% of the net asset value
of the Variable Annuity Account for our mortality and expense risk guarantees.
We reserve the right to increase the charge to 1.40% on an annual rate.
A deferred sales charge of up to 7% of purchase payments may apply if you make
partial withdrawals or surrender your contract within seven or fewer years after
your last purchase payment.
Deductions for any applicable premium taxes may also be made (currently such
taxes range from 0.0% to 3.5%) depending upon applicable law.
There is a one time contract fee of $200 if you elect a fixed annuity.
The Portfolios pay investment advisory and other expenses. Total expenses of the
Portfolios range from .40% to 1.83% of average daily net assets of the
Portfolios on an annual basis.
We reserve the right to make a charge of up to $25 for transfers occurring more
frequently than once a month. We also reserve the right to assess a $50 fee to
cover administration costs if you exchange this contract for another of our
contracts. Currently we do not impose such charges.
CAN YOU MAKE PARTIAL WITHDRAWALS FROM THE CONTRACT?
Yes. You may make withdrawals of the accumulation value of your contract before
an annuity begins. Your requests for partial withdrawals must be in writing.
Partial withdrawals are generally subject to the deferred sales charge. In
addition, a penalty tax on the amount of the taxable distribution may be
assessed upon withdrawals from the variable annuity contract in certain
circumstances, including distributions made prior to the owner's attainment of
age 59 1/2.
PAGE 3
<PAGE>
DO YOU HAVE A RIGHT TO CANCEL YOUR CONTRACT?
Yes. You may cancel your contract any time within ten days of receiving it by
returning it to us or your agent. In some states, the free look period may be
longer than ten days. For example, California's free look period is thirty days.
These rights are subject to change and may vary among the states.
WHAT IF THE OWNER OR ANNUITANT DIES?
If the contract owner dies before annuity payments begin, we will pay the death
benefit to the beneficiary named in the contract application. In the case of
joint owners, this amount would be payable at the death of the second owner. The
death benefit payable to the beneficiary upon the death of the contract owner
during the accumulation period is equal to the greater of:
- the amount of the accumulation value payable at death; or
- the total amount of your purchase, less all partial withdrawals.
If the annuitant dies after annuity payments have begun, we will pay whatever
death benefit may be called for by the terms of the annuity option selected. If
the owner of this contract is other than a natural person, such as a trust or
other similar entity, we will pay a death benefit of the accumulation value to
the named beneficiary on the death of the annuitant if death occurs prior to the
commencement of annuity payments.
WHAT ANNUITY OPTIONS ARE AVAILABLE?
The annuity options available are:
- a life annuity;
- a life annuity with a period certain of either 120 months, 180 months or
240 months;
- a joint and last survivor annuity and
- a period certain annuity.
Each annuity option may be elected as either a variable annuity or fixed annuity
or a combination of the two. Other annuity options may be available from us on
request.
WHAT VOTING RIGHTS DO YOU HAVE?
Contract owners and annuitants will be able to direct us as to how to vote
shares of the Funds held for their contracts where shareholder approval is
required by law in the affairs of the Funds.
PAGE 4
<PAGE>
EXPENSE TABLE
The tables shown below are to assist you in understanding the costs and expenses
that you will bear directly or indirectly. The table does not reflect deductions
for any applicable premium taxes which may be made from each purchase payment
depending upon the applicable law. The tables show the expenses of each
Portfolio after expense reimbursement.
The following contract expense information is intended to illustrate the
expenses of the MultiOption Select 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.
CONTRACT OWNER TRANSACTION EXPENSES
The amount of the deferred sales charge percentage is as shown in the table
below:
<TABLE>
<CAPTION>
CONTRACT YEARS SINCE PAYMENT CHARGE
- ---------------------------------------- --------------------------------------
<S> <C>
0-1 7%
1-2 7%
2-3 6%
3-4 5%
4-5 4%
5-6 3%
6-7 2%
7 and thereafter 0%
</TABLE>
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
<TABLE>
<S> <C>
Mortality and Expense Risk Fees 1.25%
----
Total Separate Account Annual Expenses 1.25%
----
----
</TABLE>
Note: We reserve the right to increase the mortality and expense risk fees to
not more than 1.40% on an annual rate.
PAGE 5
<PAGE>
FUND ANNUAL EXPENSES
(As a percentage of average net assets for the described Advantus Series Fund,
Inc. Portfolios and the Templeton Variable Product Series).
<TABLE>
<CAPTION>
TOTAL FUND ANNUAL
INVESTMENT OTHER EXPENSES EXPENSES (AFTER
MANAGEMENT (AFTER EXPENSE DISTRIBUTION EXPENSE
FEES REIMBURSEMENTS) EXPENSES REIMBURSEMENTS)
------------ ----------------- ------------- -----------------
<S> <C> <C> <C> <C>
Advantus Series Fund, Inc.:
Growth Portfolio
Bond Portfolio
Money Market Portfolio
Asset Allocation Portfolio
Mortgage Securities Portfolio
Index 500 Portfolio
Capital Appreciation Portfolio
International Stock Portfolio
Small Company Growth Portfolio
Maturing Government Bond 2002 Portfolio (1)
Maturing Government Bond 2006 Portfolio (1)
Maturing Government Bond 2010 Portfolio (1)
Value Stock Portfolio
Small Company Value Portfolio (1)
Global Bond Portfolio
Index 400 Mid-Cap Portfolio (1)
Macro-Cap Value Portfolio (1)
Micro-Cap Growth Portfolio (1)
Real Estate Securities Portfolio (2)
Templeton Variable Products Series:
Developing Markets Fund Class 2
</TABLE>
(1) Minnesota Life voluntarily absorbed certain other fund operating expenses of
the Value Stock Portfolio for the year ended December 31, 1998. If this
portfolio had been charged for these expenses, the ratio of total annual fund
expenses to average daily net assets would have been .00%. It is Minnesota
Life's present intention to waive other fund operating expenses during the
current fiscal year which exceed, as a percentage of average daily net assets,
.00%. Minnesota Life also reserves the option to reduce the level of other fund
operating expenses which it will voluntarily absorb.
(2) Because the portfolio has only recently commenced operations, the figure for
other fund operating expenses has been based on estimates for the current fiscal
year. Minnesota Life has voluntarily agreed to absorb certain other fund
operating expense for the Small Company Value and Global Bond Portfolios for the
year ending December 31, 1997. If the Small Company Value and Global Bond
Portfolios were to be charged for these expenses, it is estimated that the ratio
of total fund annual expenses to average daily net assets would be .00% and
.00%, respectively.
PAGE 6
<PAGE>
CONTRACT OWNER EXPENSE EXAMPLE
FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
IF YOU ANNUITIZE FOR A LIFETIME
IF YOU SURRENDERED YOUR INCOME AT THE END OF THE
CONTRACT AT THE END OF THE APPLICABLE TIME PERIOD OR YOU
APPLICABLE TIME PERIOD DO NOT SURRENDER YOUR CONTRACT
----------------------------------------- -----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- -------- -------- --------- ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Growth Portfolio
Bond Portfolio
Money Market Portfolio
Asset Allocation Portfolio
Mortgage Securities Portfolio
Index 500 Portfolio
Capital Appreciation Portfolio
International Stock Portfolio
Small Company Growth Portfolio
Maturing Government Bond 2002
Portfolio (1)
Maturing Government Bond 2006
Portfolio (1)
Maturing Government Bond 2010
Portfolio (1)
Value Stock Portfolio
Small Company Value Portfolio (1)
Global Bond Portfolio
Index 400 Mid-Cap Portfolio (1)
Macro-Cap Value Portfolio (1)
Micro-Cap Growth Portfolio (1)
Real Estate Securities Portfolio
(2)
Templeton Variable Products Series:
Developing Markets Fund Class 2
</TABLE>
*Annuitization for this purpose means the election of an Annuity Option under
which benefits are expected to continue for at least 5 years.
The examples contained in the table should not be considered a representation of
past or future expenses. Actual expenses may be greater or less than those
shown.
PAGE 7
<PAGE>
(SIDEBAR)
We are a life insurance company.
The Variable Annuity Account is one of our separate accounts.
Each of the 20 sub-accounts of the Variable Annuity Account invests in a
different Fund Portfolio.
(END SIDEBAR)
GENERAL DESCRIPTIONS
A. MINNESOTA LIFE INSURANCE COMPANY
We are Minnesota Life Insurance Company ("Minnesota Life"), a life insurance
company organized under the laws of Minnesota. Minnesota Life was formerly known
as The Minnesota Mutual Life Insurance Company ("Minnesota Mutual"), a mutual
life insurance company organized in 1880 under the laws of Minnesota. On October
1, 1998, a plan of reorganization created a mutual insurance holding company
named Minnesota Mutual Companies, Inc. Minnesota Mutual reorganized as a stock
insurance company subsidiary of the new holding company and took the new name
Minnesota Life. Our home office is at 400 Robert Street North, St. Paul,
Minnesota 55101-2098, telephone: (651) 665-3500. 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, Puerto Rico and
Guam.
B. VARIABLE ANNUITY ACCOUNT
We established the Variable Annuity Account on September 10, 1984, in accordance
with Minnesota law. The separate account is registered as a "unit investment
trust" with the SEC under the Investment Company Act of 1940, but that
registration does not mean that the SEC supervises the management, or the
investment practices or policies, of the Variable Annuity Account.
The assets of the Variable Annuity Account are not chargeable with liabilities
arising out of any other business we may conduct. The investment performance of
the Variable Annuity Account is entirely independent of both the investment
performance of our General Account and of any of our separate accounts. All
obligations under the contracts are our general corporate obligations.
The Variable Annuity Account currently has twenty sub-accounts to which you may
allocate purchase payments. Each sub-account invests in shares of a
corresponding Portfolio of the Funds. Additional sub-accounts may be added at
our discretion.
C. THE FUNDS
Advantus Fund is a mutual fund advised by Advantus Capital Management, Inc.
("Advantus Capital"). Advantus Fund issues its shares only to us and our
separate accounts. It may be offered to separate accounts of insurance companies
affiliated with us in the future. Advantus Capital is a wholly-owned subsidiary
of Minnesota Life.
PAGE 8
<PAGE>
(SIDEBAR)
We may change the Portfolios offered under the contract.
(END SIDEBAR)
Advantus Capital has retained investment sub-advisers to manage the investments
of certain Portfolios of Advantus Fund. Those sub-advisers are:
<TABLE>
<CAPTION>
SERIES FUND PORTFOLIO SUB-ADVISER
- --------------------- --------------------------------------
<S> <C>
Capital Appreciation Winslow Capital Management, Inc.
International Stock Templeton Investment Counsel, Inc.
Macro-Cap Value J.P. Morgan Investment Management Inc.
Micro-Cap Growth Wall Street Associates
Global Bond Julius Baer Investment Management Inc.
</TABLE>
The Variable Annuity Account also invests in Class 2 shares of Templeton
Developing Markets Fund, a diversified portfolio of Templeton Fund. The
investment adviser of Templeton Developing Markets Fund is Templeton Asset
Management Ltd.
Prospectuses for Advantus Fund and Templeton Fund are attached to this
Prospectus. You should carefully read those prospectuses 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 Variable Annuity 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
accumulation values, future purchase payments and future annuity payments.
We may also establish additional sub-accounts in the Variable Annuity Account
and we reserve the right to add, combine or remove any sub-accounts of the
Variable Annuity Account. Each additional sub-account will purchase shares in a
new portfolio or mutual fund. New sub-accounts may be established when, in our
sole discretion, marketing, tax, investment or other conditions warrant. We will
use similar considerations in determining whether to eliminate one or more of
the sub-accounts of the Variable Annuity Account. The addition of any investment
option may be made available to existing contract owners on whatever basis we
determine.
We also reserve the right, when permitted by law, to de-register the Variable
Annuity Account under the Investment Company Act of 1940, to restrict or
eliminate any voting rights of the contract owners, and to combine the Variable
Annuity Account with one or more of our other separate accounts.
Shares of the Funds are also sold to some of our other separate accounts, which
are used to receive and invest purchase payments 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 a Portfolio simultaneously. Although neither we nor the Funds
currently
PAGE 9
<PAGE>
(SIDEBAR)
A deferred sales charge may apply.
(END SIDEBAR)
foresee any such disadvantages either to variable life insurance policy owners
or to variable annuity contract owners, the Funds' Boards of Directors intend to
monitor events in order to identify any material conflicts between policy owners
and contract owners and to determine what action, if any, should be taken in
response thereto. Possible actions 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:
- changes in state insurance laws,
- changes in federal income tax laws,
- changes in the investment management of any of the Portfolios of the
Fund, or
- differences in voting instructions between those given by policy owners
and those given by contract owners.
CONTRACT CHARGES
The contract has several types of charges, all of which are discussed below.
A. DEFERRED SALES CHARGE
No sales charge is deducted from a purchase payment made for this contract.
However, when a contract's accumulation value is reduced by a withdrawal or a
surrender, a deferred sales charge may be deducted for expenses relating to the
sale of the contracts. There is no deferred sales charge on:
- amounts applied to provide an annuity under the contract,
- amounts returned pursuant to the contract's cancellation right, or
- amounts paid in the event of the death of the owner.
The deferred sales charge is the charge made on contract withdrawals or
surrenders. It is made during the seven year period following the receipt of
each purchase payment. The amount withdrawn plus any deferred sales charge is
deducted from the accumulation value by canceling accumulation units.
The amount of the deferred sales charge is determined from the percentages shown
in the table below. All purchase payments will be allocated to a withdrawal or a
surrender for this purpose on a first-in, first-out basis. It applies only to
withdrawal or surrender of purchase payments we received within seven years of
the date of the withdrawal or surrender. However, you may withdraw without a
deferred sales charge the excess, if any, of the accumulation value of the
contract over the sum of all of the purchase payments made to the contract,
reduced by the amount of previous purchase payment withdrawals.
We will waive the sales charge on:
- any portion of a contract's purchase payments applied to the purchase of
an Adjustable Income Annuity (an immediate variable annuity product that
we issue) and
PAGE 10
<PAGE>
(SIDEBAR)
We pay broker-dealers to sell the contracts.
(END SIDEBAR)
- amounts withdrawn because of an excess contribution to a tax-qualified
contract including (including for example IRAs and tax sheltered
annuities).
The applicable deferred sales charge percentage is as shown in the table below:
<TABLE>
<CAPTION>
CONTRACT YEARS SINCE PAYMENT CHARGE
- ---------------------------- ------
<S> <C>
0-1 7%
1-2 7%
2-3 6%
3-4 5%
4-5 4%
5-6 3%
6-7 2%
7 and thereafter 0%
</TABLE>
The amount of the deferred sales charge is determined by:
- calculating the number of years each purchase payment being withdrawn has
been in the contract;
- multiplying each purchase payment withdrawn by the appropriate sales
charge percentage in the table; and
- adding the deferred sales charge from all purchase payments so
calculated.
Ascend Financial Services, Inc. ("Ascend Financial"), the principal underwriter
for the contracts, may pay up to 4.5% of the amount of purchase payments to
broker-dealers who sell the contracts. In addition, either we or Ascend
Financial will pay credits which allow registered representatives who are
responsible for sales of variable annuity contracts to attend conventions and
other meetings that we or our affiliates sponsor, for the purpose of promoting
the sale of the insurance and/or investment products that we or our affiliates
offer. Such credits may cover the registered representatives' transportation,
hotel accommodations, meals, registration fees and the like. We may also pay
those registered representatives amounts based upon their production and the
persistency of life insurance and annuity business they place with us.
B. MORTALITY AND EXPENSE RISK CHARGE
We assume mortality risks under the contract by our obligation to continue to
make monthly annuity payments to each annuitant, in accordance with the annuity
rate tables and other provisions in the contract, 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 monthly annuity payments received
under the contract.
PAGE 11
<PAGE>
(SIDEBAR)
The mortality and expense risk charge is 1.25%, but we may increase it to 1.40%.
You can instruct us how to vote Fund shares.
(END SIDEBAR)
Our expense risk is the risk that the charges under the contract will be
inadequate to cover our expenses.
For assuming these risks, we currently make a deduction from the Variable
Annuity Account at the annual rate of 1.25%. We reserve the right to increase
the charge to not more than 1.40% on an annual basis.
If these deductions are insufficient to cover our actual costs, then we will
absorb the resulting losses. Conversely, if the deductions are more than
sufficient after the establishment of any contingency reserves deemed prudent or
required by law, any excess will be profit to us. Some or all of such profit may
be used to cover any distribution costs not recovered through the deferred sales
charge.
C. TRANSACTION AND CONTRACT CHARGES
There currently is no charge for any transfer. We reserve the right to charge up
to $25, for the second and subsequent transfers in any calendar month. We also
reserve the right to charge a $50 fee to cover administrative costs if you
exchange the contract for another of our variable annuities.
A one time $200 contract fee is imposed if you elect a fixed annuity.
VOTING RIGHTS
We will vote the Fund shares held in the Variable Annuity Account at shareholder
meetings of the Funds. We will vote shares attributable to contracts in
accordance with instructions received from contract owners with voting interests
in each sub-account of the Variable Annuity Account. We will vote shares for
which no instructions are received and shares not attributable to contracts in
the same proportion as shares for which instructions have been received. The
number of votes for which a contract owner may provide instructions will be
calculated separately for each sub-account of the Variable Annuity Account. If
applicable laws should change so that we were allowed to vote shares in our own
right, then we may elect to do so.
During the accumulation period, the contract owner holds the voting interest in
the contract. The number of votes will be determined by dividing the
accumulation value of the contract attributable to each sub-account by the net
asset value per share of the Fund shares held by that sub-account.
During the annuity period, the annuitant holds the voting interest in the
contract. The number of votes will be determined by dividing the reserve for
each contract allocated to each sub-account by the net asset value per share of
the Fund shares held by that sub-account. After an annuity begins, the votes
attributable to any particular contract will decrease as the reserves decrease.
In determining any voting interest, fractional shares will be recognized.
We shall notify each contract owner or annuitant of a Fund shareholders' meeting
if the shares held for the contract owner's contract may be voted at the
meeting. We will also send proxy materials and a form of instruction so that you
can instruct us with respect to voting.
PAGE 12
<PAGE>
(SIDEBAR)
The contract is a flexible payment variable annuity.
We issue the contract to you and you select the annuitant.
(END SIDEBAR)
DESCRIPTION OF THE CONTRACT
A. GENERAL PROVISIONS
1. Flexible Payment Variable Annuity Contract
The contract may be used in connection with all types of tax-qualified plans,
state deferred compensation plans or individual retirement annuities or may also
be purchased by individuals not as a part of any plan. The contract provides for
a variable annuity or a fixed annuity to begin at some future date. Purchase
payments are flexible with respect to timing and amount.
2. Issuance of Contract
The contract is issued to you, the contract owner named in the application. You
may be the annuitant or may specify someone else to be the annuitant.
3. Modification of the Contract
Your 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. You will have the right to accept or reject the
modification. This right of acceptance or rejection is limited for contracts
used as individual retirement annuities.
4. 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), then:
- 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, and
- to the maximum extent permitted by law, benefits payable under the
contract shall be exempt from the claims of creditors.
If the contract is not issued in connection with a tax-qualified program, any
person's interest in the contract may be assigned during the lifetime of the
annuitant.
We will not be bound by any assignment until we have recorded written notice 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 we make before
it was recorded. Any payments to an assignee will be paid in a single sum. Any
claim made by an assignee will be subject to proof of the assignee's interest
and the extent of the assignment.
PAGE 13
<PAGE>
(SIDEBAR)
You cannot pay more than $5 million unless we consent.
We may cancel your contract if you stop making payments and have a small
accumulation value.
We normally pay lump sum payments within 7 days, but may delay payments in
certain circumstances.
(END SIDEBAR)
5. Limitations on Purchase Payments
You choose when to make purchase payments. There is no minimum purchase payment
amount and there is no minimum amount which must be allocated to any sub-account
of the Variable Annuity Account. In the Variable Annuity Account, your purchase
payments are invested in the Funds according to your instructions. We will
return your initial payment within five business days if:
- your application fails to specify which Portfolios you desire, or is
otherwise incomplete, and
- you do not consent to our retention of your initial payment until the
application is made complete.
Total purchase payments under the contract may not exceed $5,000,000, except
with our consent.
The contract permits us to cancel your contract, and pay you its accumulation
value if:
- no purchase payments are made for a period of two or more full contract
years and
- the total purchase payments made, less any withdrawals and associated
charges are less than $2,000, and
- the accumulation value of the contract is less than $2,000.
We will notify you, in advance, of our intent to exercise this right in our
annual report to you about the status of your contract. We will cancel the
contract ninety days after the contract anniversary unless we receive an
additional purchase payment before the end of that ninety day period. Contracts
issued in some states (for example, New Jersey) do not contain such a
cancellation because the laws of those states do not permit it.
There may be limits on the maximum contributions to retirement plans that
qualify for special tax treatment.
6. Deferment of Payment
We will pay any single sum payment within seven days after the date the payment
is called for by the terms of the contract, unless the payment is postponed for:
- 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 SEC;
- any period during which an emergency exists as determined by the SEC as a
result of which it is not reasonably practical to dispose of securities
in the Portfolio(s) or to fairly determine the value of the assets of the
Portfolio(s); or
- other periods the SEC by order permits for the protection of the contract
owners.
PAGE 14
<PAGE>
(SIDEBAR)
The contract is non-participating.
Each of the annuity options is available on a fixed, variable or combination
fixed and variable basis.
You tell us when to begin making annuity payments to the annuitant, unless your
retirement plan requires them to commence by a certain age.
(END SIDEBAR)
7. Participation
The contract is non-participating. Contracts issued before October 1, 1998 were
participating.
No assurance can be given as to the amounts if any, that will be distributable
under participating contracts in the future. When we make any distribution, it
may take the form of additional payments to annuitants or the crediting of
additional accumulation units. We do not anticipate making dividend payments
under this contract.
B. ANNUITY PAYMENTS AND OPTIONS
1. Annuity Payments
Variable annuity payments are determined on the basis of:
- the mortality table specified in the contract, which reflects the age of
the annuitant,
- the type of annuity payment option you select, and
- the investment performance of the Fund Portfolios you select.
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 each month. The value of those units (and thus
the amounts of the monthly annuity payments) will, however, reflect investment
gains and losses and investment income of the Portfolios. Thus, the annuity
payments will vary with the investment experience of the assets of the
Portfolios you select.
2. Electing the Retirement Date and Form of Annuity
The contract provides for four annuity options. Any one of them may be elected
if permitted by law. Each annuity option may be elected on either a variable
annuity or a fixed annuity basis, or a combination of the two. We may make other
annuity options available on request.
While the contract requires that we must receive your notice of election to
begin annuity payments at least 30 days prior to the annuity commencement date,
we are currently waiving that requirement for variable annuity elections
received at least two valuation days prior to the 15th of the month. We reserve
the right to enforce the 30 day notice requirement at our option at any time in
the future.
The contract permits an annuity payment to begin on the first day of any month.
Under the contract, if you do not make an election, annuity payments will begin
on the later of:
- the 85th birthday of the annuitant, or
- five years after the date of issue of the contract.
PAGE 15
<PAGE>
Currently, it is our practice to await your instructions before beginning to pay
annuity payments. If you fail to elect an annuity option, a variable annuity
will be provided and the annuity option will be Option 2A, a life annuity with a
period of 120 months. The minimum first monthly annuity payment on either a
variable or fixed dollar basis must be at least $20. If the first monthly
annuity payment would be less than $20, we may fulfill our obligation by paying
in a single sum the surrender value of the contract which would otherwise have
been applied to provide annuity payments.
The maximum amount which may be applied to provide a fixed annuity under the
contract is $1,000,000.
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 Options
OPTION 1 - LIFE ANNUITY This is an annuity payable monthly during the lifetime
of the annuitant and terminating with the last monthly payment preceding the
death of the annuitant. This option offers the maximum monthly payment since
there is no guarantee of a minimum number of payments or provision for a death
benefit for beneficiaries. It would be possible under this option for the
annuitant to receive only one annuity payment if he or she died prior to the due
date of the second annuity payment, two if he or she died before the due date of
the third annuity payment, etc.
OPTION 2 - LIFE ANNUITY WITH A PERIOD CERTAIN OF 120 MONTHS (OPTION 2A), 180
MONTHS (OPTION 2B), OR 240 MONTHS (OPTION 2C) This is an annuity payable
monthly during the lifetime of the annuitant, with the guarantee that if the
annuitant dies before payments have been made for the period certain elected,
payments will continue to the beneficiary during the remainder of the period
certain. If the beneficiary so elects at any time during the remainder of the
period certain, the present value of the remaining guaranteed number of
payments, based on the then current dollar amount of one such payment and using
the same interest rate which served as a basis for the annuity shall be paid in
a single sum to the beneficiary.
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY This is an annuity payable monthly
during the joint lifetime of the annuitant and a designated joint annuitant and
continuing thereafter during the remaining lifetime of the survivor. Under this
option there is no guarantee of a minimum number of payments or provision for a
death benefit for beneficiaries. If this option is elected, the contract and
payments shall then be the joint property of the annuitant and the designated
joint annuitant. It would be possible under this option for both annuitants to
receive only one annuity payment if they both died prior to the due date of the
second annuity payment, two if they died before the due date of the third
annuity payment, etc.
PAGE 16
<PAGE>
(SIDEBAR)
The amount of your first annuity payment depends on the age of the annuitant and
the annuity option you select.
(END SIDEBAR)
OPTION 4 - PERIOD CERTAIN ANNUITY This is an annuity payable monthly for a
period certain of 5 to 20 years, as elected. If the annuitant dies before
payments have been made for the period certain elected, payments will continue
to the beneficiary during the remainder of the period certain. At any time
during the payment period, the payee may elect that:
- the present value of the remaining guaranteed number of payments, based
on the then current dollar amount of one such payment and using the same
interest rate which served as a basis for the annuity, shall be paid in a
single sum, or
- the commuted amount shall be applied to effect a life annuity under
Option 1 or Option 2.
4. Determination of Amount of First Monthly Annuity Payment
The first monthly annuity payment under the contract is determined by the
accumulation value of the contract when the annuity begins. In addition, many
states impose a premium tax on the amount used to purchase an annuity benefit,
depending on the type of plan involved. These taxes currently range from 0% to
3.5% and are deducted from the accumulation value applied to provide annuity
payments. We reserve the right to make such deductions from purchase payments as
they are received.
The amount of the first monthly payment depends on the optional annuity form
elected and the "adjusted age" of the annuitant. A formula for determining the
adjusted age is contained in your contract.
The contract contains tables indicating the dollar amount of the first fixed
monthly payment under each optional annuity form for each $1,000 of value
applied (after deduction of any premium taxes not previously deducted). If, when
annuity payments are elected, we are using tables of annuity rates for this
contract which result in larger annuity payments, we will use those tables
instead.
The dollar amount of the first monthly variable annuity payment is determined by
applying the accumulation value (minus any premium tax deduction) to a rate per
$1,000 contained in a table in the contract. The contract table on which the
rate per $1,000 is based assumes an interest rate of 4.5% per annum. The amount
of the first payment depends upon the annuity payment option selected and the
adjusted age(s) of the annuitant and any joint annuitant. A number of annuity
units is then determined by dividing this dollar amount by the then current
annuity unit value. Thereafter, the number of annuity units remains unchanged
during the period of annuity payments. This determination is made separately for
each sub-account of the Variable Annuity Account. The number of annuity units is
based upon the accumulation value in each sub-account as of the date annuity
payments are to begin.
The dollar amount determined for each sub-account will then be aggregated for
purposes of making payments.
PAGE 17
<PAGE>
The 4.5% interest rate assumed in the variable annuity determination would
produce level annuity payments if the net investment factor remained constant at
4.5% per year. Subsequent payments will decrease, remain the same or increase
depending upon whether the actual net investment factor is less than, equal to,
or greater than 4.5%.
Annuity payments are always made as of the first day of a month. The contract
requires that we receive notice of election to begin annuity payments at least
thirty days prior to the annuity commencement date. We currently waive this
notice requirement, but reserve the right to enforce it in the future.
Money will be transferred to the General Account for the purpose of electing
fixed annuity payments, or to the appropriate variable sub-accounts for variable
annuity payments, on the first valuation date on or following the fourteenth day
of the month preceding the date on which the annuity is to begin.
If a request for a fixed annuity is received between the first valuation date
following the fourteenth day of the month and the second to last valuation date
of the month prior to commencement, the transfer will occur on the next
valuation date on or following the date on which the request is received. If a
fixed annuity request is received after the third to the last valuation day of
the month prior to commencement, it will be treated as a request received the
following month, and the commencement date will be changed to the first of the
month following the requested commencement date. The account value used to
determine fixed annuity payments will be the value as of the last valuation date
of the month preceding the date the fixed annuity is to begin.
If a variable annuity request is received after the third valuation date
preceding the first valuation date following the fourteenth day of the month
prior to the commencement date, it will be treated as a request received the
following month, and the commencement date will be changed to the first of the
month following the requested commencement date. The account value used to
determine the initial variable annuity payment will be the value as of the first
valuation date following the fourteenth day of the month prior to the variable
annuity commencement date.
5. Amount of Second and Subsequent Monthly Annuity Payments
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 month to month.
6. Value of the Annuity Unit
The value of an annuity unit for a sub-account is determined monthly as of the
first day of each month by multiplying the value on the first day of the
preceding month by the product of:
- .996338, and
PAGE 18
<PAGE>
(SIDEBAR)
You may change Portfolios in the annuity period, subject to some restrictions.
(END SIDEBAR)
- the ratio of the value of the accumulation unit for that sub-account for
the valuation date next following the fourteenth day of the preceding
month to the value of the accumulation unit for the valuation date next
following the fourteenth day of the second preceding month (.996338 is a
factor to neutralize the assumed net investment factor, as discussed
above, of 4.5% per annum built into the first payment calculation which
is not applicable because the actual net investment rate is credited
instead).
The value of an annuity unit for a sub-account as of any date other than the
first day of a month is equal to its value as of the first day of the next
succeeding month.
7. Transfer of Annuity Reserves
During the annuity period, we hold amounts as "reserves" for our obligations to
make annuity payments under your contract. You specify where we hold those
reserves. If you specify a sub-account of the Variable Annuity Account, then the
amount of your annuity payments will vary with the performance of that sub-
account. Amounts held as annuity reserves may be transferred among the sub-
accounts. Annuity reserves may also be transferred from a variable annuity to a
fixed annuity during this time. The change must be made by a written request.
The annuitant and joint annuitant, if any, must make such an election.
There are restrictions to such a transfer:
- The transfer of an annuity reserve amount from any sub-account must be at
least equal to $5,000 or the entire amount of the reserve remaining in
that sub-account.
- Annuity payments must have been in effect for a period of 12 months
before a change may be made.
- Such transfers can be made only once every 12 months.
- We must receive the written request for an annuity transfer more than 30
days in advance of the due date of the annuity payment subject to the
transfer.
Upon request, we will make available to you annuity reserve amount sub-account
information.
A transfer will be made on the basis of annuity unit values. The number of
annuity units from the sub-account being transferred will be converted to a
number of annuity units in the new sub-account. The annuity payment option will
remain the same and cannot be changed. After this conversion, a number of
annuity units in the new sub-account will be payable under the elected option.
The first payment after conversion will be of the same amount as it would have
been without the transfer. The number of annuity units will be set at the number
of units which are needed to pay that same amount on the transfer date.
PAGE 19
<PAGE>
(SIDEBAR)
If you die prior to commencement of annuity payments, there is a death benefit
that is guaranteed not to be less than your purchase payments.
(END SIDEBAR)
When we receive a request for the transfer of variable annuity reserves, it will
be effective for future annuity payments. The transfer will be effective and
funds actually transferred in the middle of the month prior to the next annuity
payment affected by your request. We will use the same valuation procedures to
determine your variable annuity payment that we used initially.
Amounts held as reserves to pay a variable annuity may also be transferred to a
fixed annuity during the annuity period. However, the restrictions which apply
to annuity sub-account transfers will apply in this case as well. The amount
transferred will then be applied to provide a fixed annuity amount. This amount
will be based upon the adjusted age of the annuitant and any joint annuitant at
the time of the transfer and a $200 contract fee will be imposed. The annuity
payment option will remain the same. Amounts paid as a fixed annuity may not be
transferred to a variable annuity.
When we receive a request to make such a transfer to a fixed annuity, it will be
effective for future annuity payments. The transfer will be effective and funds
actually transferred in the middle of the month prior to the next annuity
payment. We will use the same fixed annuity pricing at the time of transfer that
we use to determine an initial fixed annuity payment. However, if your annuity
is based upon annuity units in a sub-account which matures on a date other than
the stated annuity valuation date, then your annuity units will be adjusted to
reflect sub-account performance in the maturing sub-account to which reserves
are transferred for the period between annuity valuation dates.
C. DEATH BENEFITS
If the owner dies before annuity payments begin, the amount of the death benefit
will be based upon the contract accumulation value next determined after we
receive due proof of death at our home office. Death proceeds will be paid in a
single sum to the beneficiary designated unless an annuity option is elected.
Payment will be made within seven days after we receive due proof of death.
Except as noted below, the entire interest in the contract must be distributed
within five years of the owner's death.
The contract has a guaranteed death benefit if the owner dies before annuity
payments have started. The death benefit shall be equal to the greater of:
- the amount of the accumulation value payable at death; or
- the amount of your total purchase payments paid, less all contract
withdrawals.
If the owner dies on or before the date on which annuity payments begin and if
the designated beneficiary is a person other than the owner's spouse, that
beneficiary may elect an annuity option measured by a period not longer than
that beneficiary's life expectancy only if annuity payments begin not later than
one year after the owner's death. If there is no designated beneficiary, then
the entire interest in a contract must be distributed within five years after
the
PAGE 20
<PAGE>
(SIDEBAR)
Initial purchase payments are credited within 2 business days of our receipt of
a complete application.
Subsequent purchase payments are credited on the day we receive them, or on the
next business day if they arrive late in the day.
(END SIDEBAR)
owner's death. If the annuitant dies after annuity payments have begun, any
payments received by a non-spouse beneficiary must be distributed at least as
rapidly as under the method elected by the annuitant as of the date of death.
If there are joint owners of this contract, the death benefit described will not
be payable until the death of the surviving joint owner.
If any portion of the contract interest is payable to the owner's designated
beneficiary who is also the surviving spouse of the owner, that spouse shall be
treated as the contract owner for purposes of determining:
- when payments must begin, and
- the time of distribution in the event of that spouse's death.
Payments must be made in substantially equal installments.
If the owner of this contract is other than a natural person, such as a trust or
other entity, we will pay a death benefit of the accumulation value to the named
beneficiary on the death of the annuitant, if death occurs prior to the date for
annuity payments to begin.
D. PURCHASE PAYMENTS AND VALUE OF THE CONTRACT
1. Crediting Accumulation Units
During the accumulation period (the period before annuity payments begin) each
purchase payment is credited on the valuation date on or following the date we
receive the purchase payment at our home office. When the contract is originally
issued, application forms are completed by the applicant and forwarded to our
home office. We will review each application form for compliance with our issue
criteria and, if it is accepted, we will issue a contract.
If your initial purchase payment is accompanied by an incomplete application,
your purchase payment will not be credited until we receive a completed
application. We will immediately return your initial purchase payment in full if
it appears your application cannot be completed within five business days,
unless you specifically consent to our holding your purchase payment until your
application is completed.
We will credit your purchase payments to your contract in the form of
accumulation units. The number of accumulation units credited with respect to
each purchase payment is determined by dividing the portion of the purchase
payment allocated to each sub-account by the then current accumulation unit
value for that sub-account.
The number of accumulation units so determined shall not be changed by any
subsequent change in the value of an accumulation unit, but the value of an
accumulation unit will vary from valuation date to valuation date to reflect the
investment experience of the Portfolios you select.
We will determine the value of accumulation units on each day on which each
Portfolio is valued. The net asset value of the Portfolios' shares shall be
computed
PAGE 21
<PAGE>
(SIDEBAR)
Systematic transfers and telephone transfers are available.
(END SIDEBAR)
once daily, and, in the case of Money Market Portfolio, after the declaration of
the daily dividend, as of the primary closing time for business on the New York
Stock Exchange (currently, 3:00 p.m., (Central Time)), on each day, Monday
through Friday, except:
- days on which changes in the value of that Fund's portfolio securities
will not materially affect the current net asset value of that
Portfolio's shares,
- days during which none of that Portfolio's shares are tendered for
redemption and no order to purchase or sell that Portfolio's shares is
received by that Portfolio and
- customary national business holidays on which the New York Stock Exchange
is closed for trading.
Accordingly, the value of accumulation units so determined will be applicable to
all purchase payments we receive at our home office on that day prior to the
close of business of the New York Stock Exchange. The value of accumulation
units applicable to purchase payments received after the close of business of
the New York Stock Exchange will be the value determined on the next valuation
date.
Applications lacking instructions about allocation of purchase payment amounts
among the sub-accounts of the Variable Annuity Account will be treated as
incomplete.
2. Transfers
Upon your written request, accumulation values may be transferred among the
sub-accounts of the Variable Annuity Account. We will make the transfer on the
basis of accumulation unit values on the valuation date we receive the request
at our home office. No deferred sales charge will be imposed on transfers. There
is no dollar amount limitation on transfers.
Systematic transfer arrangements may be established among the sub-accounts of
the Variable Annuity Account. They may begin on the 10th or 20th of any month
and if a transfer cannot be completed it will be made on the next available
transfer date. In the absence of specific instructions, systematic transfers
will be made on a monthly basis and will remain active until the appropriate
sub-account accumulation value is depleted. Systematic transfer arrangements are
limited to a maximum of twenty sub-accounts.
As a type of systematic transfer arrangement, for certain contracts we offer
automatic portfolio rebalancing ("APR") on a quarterly, semi-annual and annual
basis. Instructions to us must be in whole percentages totaling 100%. They will
be treated as instructions for transfers to and from the various sub-accounts.
Rebalancing instructions will not affect the current allocation of future
contributions; they may differ from those future allocations and are not limited
to any minimum or maximum number of sub-accounts. There will be no charge for
PAGE 22
<PAGE>
(SIDEBAR)
If you make very large purchase payments we may credit your contract with extra
values ("volume credits").
(END SIDEBAR)
APR transfers and this feature will be available after August 1, 1999. APR is
not available for values in the General Account or in the Series Fund Maturing
Government Bond Portfolios.
You may effect transfers, cancel automatic premium plans or change the
allocation of your future purchase payments by telephone. Telephone transfers
are subject to the same conditions and procedures as written transfer requests.
During periods of marked economic or market changes, you may experience
difficulty in implementing a telephone transfer due to a heavy volume of
telephone calls. If that occurs, you should consider submitting a written
transfer request while continuing to attempt telephone instructions. We reserve
the right to restrict the frequency of -- or otherwise modify, condition,
terminate or impose charges upon -- telephone transfer privileges. For more
information on telephone transfers, contact us.
Telephone contract services are automatically available to you. We will employ
reasonable procedures to satisfy ourselves that instructions received from
contract owners are genuine and, to the extent that we do not, we may be liable
for any losses due to unauthorized or fraudulent instructions. We require
contract owners or a person authorized by the owner to personally identify
themselves in telephone conversations through information we designate. We
record your telephone transfer instruction conversations and we provide you with
a written confirmation of your telephone transfer.
3. Volume Credit
Where allowed by law, we reserve the right to credit certain additional amounts
("volume credit") to your contract if you make large purchase payments. We pay
for your volume credit with funds from our General Account. We reserve the right
to modify, suspend or terminate this volume credit program at any time, or from
time to time, without notice.
The current breakpoints for qualifying for a volume credit are shown below. Also
shown is the value of the volume credit as a percentage of your purchase
payment.
<TABLE>
<CAPTION>
VOLUME CREDIT AS A
PURCHASE PAYMENT PERCENTAGE OF THE PURCHASE PAYMENT
- ---------------------- ----------------------------------
<S> <C>
$0 - 499,999.......... 0.000
500,000 - 749,999... 0.375
750,000 - 999,999... 0.750
1,000,000 -
1,499,999........... 1.125
1,500,000 -
1,999,999........... 1.500
2,000,000 -
2,499,999........... 1.875
2,500,000 -
2,999,999........... 2.250
3,000,000 -
3,999,999........... 2.625
4,000,000 -
5,000,000........... 3.000
</TABLE>
PAGE 23
<PAGE>
(SIDEBAR)
Volume credits may have tax consequences.
Your contract's accumulation value varies with the performance of the Portfolios
you select and is not guaranteed.
(END SIDEBAR)
Your volume credit is added the next business day after your purchase payments
are allocated to your contract, and are allocated to the investment options in
the same manner as the purchase payment. If you exercise your right to return
your contract under the free look provision, the value of any volume credit as
of the date your contract is canceled will be deducted from your accumulated
value prior to determining the amount to be returned to you. We do not consider
the volume credit to be part of your "investment in the contract" for income tax
purposes (see "Federal Tax Status"). Generally, volume credit will be treated as
gain upon distribution. Volume credit amounts may be withdrawn without
assessment of the deferred sales charge (see "Deferred Sales Charge").
Each time a new purchase payment is made, a new volume credit will be
calculated. The applicable percentage from the chart will be based on the total
cumulative purchase payments to date, including the new purchase payment, less
all prior purchase payments withdrawn. The new volume credit equals this
percentage times the amount of the new purchase payment.
4. Value of the Contract
The accumulation value of your contract at any time prior to the commencement of
annuity payments can be determined by multiplying the number of accumulation
units of each sub-account to which you allocate values by the current value of
those units and then adding the values so calculated. There is no assurance that
your accumulation value will equal or exceed your purchase payments. We will
advise you periodically of the number of accumulation units credited to your
contract for each sub-account of the Variable Annuity Account, the current value
of each accumulation unit, and the total value of your contract.
5. Accumulation Unit Value
The value of an accumulation unit for each sub-account of the Variable Annuity
Account was set at $1.000000 on the first valuation date of the sub-account. The
value of an accumulation unit on any subsequent valuation date is determined by
multiplying the value of that accumulation unit on the immediately preceding
valuation date by the net investment factor for the applicable sub-account
(described below) for the valuation period just ended. The value of an
accumulation unit as of any date other than a valuation date is equal to its
value on the next valuation date.
6. 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 any sub-account, the
net investment factor for a valuation period is the gross investment rate for
that sub-account for the valuation period, less a deduction for the mortality
and expense risk charge at the current rate of 1.25% per annum.
PAGE 24
<PAGE>
The gross investment rate is equal to:
- the net asset value per share of a Portfolio share held in a sub-account
of the Variable Annuity Account determined at the end of the current
valuation period, plus
- 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
- the net asset value per share of that Portfolio share determined at the
end of the preceding valuation period.
The gross investment rate may be positive or negative.
E. REDEMPTIONS
1. Partial Withdrawals and Surrender
Prior to the date annuity payments begin you may make partial withdrawals from
your contract in amounts of at least $250. Your accumulation value will be
reduced by the amount of your withdrawal and any applicable deferred sales
charge. Unless you instruct us otherwise, withdrawals will be made from the
Variable Annuity Account in the same proportion that the value of your interest
in any sub-account bears to your total accumulation value on a pro rata basis.
We will waive the applicable dollar amount limitation:
- on withdrawals where a systematic withdrawal program is in place and the
smaller amount satisfies the minimum distribution requirements of the
Code, or
- the withdrawal is requested because of an excess contribution to a tax-
qualified contract.
Withdrawal values will be determined as of the valuation date we received your
written withdrawal request at our home office.
Unless you tell us otherwise, systematic withdrawals will be made from the sub-
accounts on a pro rata basis if the accumulation values are in no more than
twenty sub-accounts. No more than twenty sub-accounts may be used for systematic
withdrawals.
Prior to the commencement of annuity payments, you may elect to surrender your
contract for its surrender value. You will receive in a single cash sum the
accumulation value computed as of the valuation date your surrender request is
received, reduced by any applicable deferred sales charge. In lieu of a cash sum
payment, you may elect an annuity.
Once annuity payments have commenced, the annuitant cannot surrender his or her
annuity benefit and receive a single sum settlement in lieu thereof. For a
discussion of commutation rights of annuitants and beneficiaries subsequent to
the annuity commencement date, see "Optional Annuity Forms."
PAGE 25
<PAGE>
(SIDEBAR)
You can cancel your contract within 10 days of receiving it and we will refund
you the greater of your accumulation value or your purchase payments.
We are not offering tax advice. You should consult your own tax adviser.
(END SIDEBAR)
You may also submit your signed written withdrawal or surrender requests to us
by facsimile (FAX) transmission. Our FAX number is (651) 665-7942. You also may
send us transfer instructions or changes of future allocations of purchase
payments by FAX. Payment of a partial withdrawal or surrender will be made to
you within 7 days after we receive your completed request.
2. Right of Cancellation
You should read your contract carefully as soon as you receive it. You may
cancel your 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. If you cancel and return your contract, we will refund to
you the greater of:
- the accumulation value of the contract, or
- the amount of purchase payments paid under the contract.
Payment of the requested refund will be made to you within seven days after we
receive notice of cancellation. In some states, the free look period may be
longer. For example, California's free look period is thirty days. Those rights
are subject to change and may vary among the states.
The liability of the Variable Annuity Account under the foregoing is limited to
the accumulation value of the contract at the time it is returned for
cancellation. We will pay for any additional amounts necessary to make our
refund to you equal to your purchase payments.
FEDERAL TAX STATUS
INTRODUCTION
Our tax discussion in this prospectus is general in nature and is not intended
as tax advice. You should consult a competent tax adviser. We make no attempt 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. We make no representation regarding the likelihood of continuation
of current income tax laws or the current interpretations of the Internal
Revenue Service ("IRS"). The contract may be purchased on a non-tax qualified
basis or purchased and used in connection with certain retirement arrangements
entitled to special income tax treatment under section 401(a), 403(b), 408(b),
408A or 457 of the Code. The ultimate effect of federal income taxes on the
amounts held under a contract, on annuity payments, and on the economic benefit
to the contract owner, the annuitant, or the beneficiary(s) may depend on the
tax status of the individual concerned.
We are taxed as a "life insurance company" under the Internal Revenue Code. The
operations of the Variable Annuity Account form a part of, and are taxed with,
our other business activities. Currently, we pay no federal income tax on income
dividends received by the Variable Annuity Account or on capital gains
PAGE 26
<PAGE>
(SIDEBAR)
Taxes on gains under the contract are normally deferred until there is a
distribution of contract values.
Ordinary income tax rates apply to amounts distributed in excess of purchase
payments. Gains are assumed to be distributed before return of purchase
payments.
A penalty tax may apply to distributions prior to age 59 1/2.
(END SIDEBAR)
arising from the Variable Annuity Account's activities. The Variable Annuity
Account is not taxed as a "regulated investment company" under the Code and we
do 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 generally 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. As a general rule, deferred
annuity contracts held by an entity (such as a corporation or trust) that is not
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.
The taxable portion of payments made in the event of a full surrender of an
annuity is generally the amount in excess of the purchase payments for the
contract. Amounts withdrawn upon a partial withdrawal from the variable annuity
contracts not part of a qualified program are treated first as taxable income to
the extent of the excess of the contract value over the purchase payments made
under the contract. All taxable amounts received under an annuity contract are
subject to tax at ordinary rather than capital gain tax rates.
In the case of a withdrawal under an annuity that is part of a tax-qualified
retirement plan, 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.
The taxable portion for annuity payments, is generally determined by a formula
that establishes the ratio of the cost basis of the contract to the expected
return under the contract. The taxable part is taxed at ordinary income rates.
The Code imposes a 10% penalty tax on the taxable portion of certain
distributions from annuity contracts. This additional tax does not apply:
- where 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 the owner, and
- in certain other circumstances.
The Code also provides an exception to the penalty tax for distributions, in
periodic payments, of substantially equal installments, where they are made for
the life (or life expectancy) of the taxpayer or the joint lives (or joint life
expectancies) of the taxpayer and beneficiary.
PAGE 27
<PAGE>
(SIDEBAR)
Transfers, assignments and certain designations of annuitants can have tax
consequences.
(END SIDEBAR)
For some types of qualified plans, other tax penalties may apply to certain
distributions.
A transfer of ownership of a contract, a pledge of any interest in a contract as
security for a loan, 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. If you are contemplating such a transfer, pledge,
designation or assignment, you should consult a competent tax adviser about its
potential tax effects.
For purposes of determining a contract owner's gross income, the Code provides
that 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.
DIVERSIFICATION REQUIREMENTS
Section 817(h) of the Code authorizes the Treasury Department to set standards
by regulation or otherwise for the investments of the Variable Annuity Account
to be "adequately diversified" in order for the contract to be treated as an
annuity contract for federal tax purposes. The Variable Annuity Account, through
the Fund Portfolios, intends to comply with the diversification requirements
prescribed in Regulations Section 1.817-5, which affect how the Portfolio's
assets may be invested. Although the investment adviser of Advantus Fund is an
affiliate of ours, we do not control Advantus Fund or the investments of its
Portfolios. Nonetheless, we believe that each Portfolio of Advantus Fund in
which the Variable Annuity Account owns shares will be operated in compliance
with the requirements prescribed by the Treasury.
Prior to the enactment of Section 817(h), the IRS published several rulings
under which owners of certain variable annuity contracts were treated as owners,
for federal income tax purposes, of the assets held in a separate account used
to support their contracts. In those circumstances, income and gains from the
separate account assets would be includable in the variable annuity contract
owner's gross income. However, the continued effectiveness of the pre-Section
817(h) published rulings is somewhat uncertain. In connection with its issuance
of proposed regulations under Section 817(h) in 1986, the Treasury Department
announced that those regulations did 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."
While the Treasury's 1986 announcement stated that guidance would be issued on
the "extent to which the policyholders may direct their investment to particular
sub-accounts without being treated as owners of the underlying assets", no such
guidance has been forthcoming.
PAGE 28
<PAGE>
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. For example,
the owner of a contract has the choice of several sub-accounts in which to
allocate net purchase payments and contract values, and may be able to transfer
among sub-accounts more frequently than in such rulings. Minnesota Life does not
believe that the ownership rights of a contract owner under the Contract would
result in any contract owner being treated as the owner of the assets of the
Variable Account. However, Minnesota Life does not know what standards would be
applied if the Treasury Department should proceed to issue regulations or
rulings on this issue. Minnesota Life 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 Variable 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:
- 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
- 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 will 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 that 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", who
must be a natural person, is the person designated by the owner as a beneficiary
and to whom ownership of the contract passes by reason of death. It must be a
natural person. If the owner's "designated beneficiary" is the surviving spouse
of the owner, however, 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. We
intend 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.
Other rules may apply to qualified contracts.
PAGE 29
<PAGE>
(SIDEBAR)
Congress may change the tax laws and reduce or eliminate any tax advantages of
the contract.
(END SIDEBAR)
TAXATION OF DEATH BENEFIT PROCEEDS
Death benefits paid upon the death of a contract owner, generally, 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,
or (2) if distributed under an annuity option, they are taxed in the same manner
as annuity payments, as described above.
POSSIBLE CHANGES IN TAXATION
Although the likelihood of there being any change is uncertain, there is always
the possibility that the tax treatment of the contracts could change by
legislation or other means. Moreover, it is also possible that any change could
be retroactive (that is, effective prior to the date of the change). You should
consult a tax adviser with respect to legislative developments and their effect
on the contract.
TAX QUALIFIED PROGRAMS
The contract 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; and
- other specified circumstances.
We make no attempt to provide more than general information about the use of
annuities with the various types of retirement plans. The rights of any person
to any benefits under annuity contracts 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 transfer restrictions, 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 contracts comply with applicable law. If you intend to purchase a
contract for use with any retirement plan you should consult your legal counsel
and tax adviser regarding the suitability of the contract. For qualified plans
under Section 401(a), 403(b), and 457, the Code requires that distributions
generally must commence no later than the later of April 1 of the calendar year
following the calendar year in which the Owner (or plan participant) reaches age
70 1/2 or retires and must be made in a specified form or manner. If the plan
participant is a "5 percent owner" (as defined in the Code), distributions
generally must begin no later than
PAGE 30
<PAGE>
(SIDEBAR)
Distributions are subject to income tax withholding requirements unless you take
steps to prevent it.
(END SIDEBAR)
April 1 of the calendar year following the calendar year in which the Owner (or
plan participant) reaches age 70 1/2. For IRAs described in Section 408,
distributions generally must commence no later than the later of April 1 of the
calendar year following the calendar year in which the Owner (or plan
participant) reaches age 70 1/2. Roth IRAs under Section 408A do not require
distributions at any time prior to the owner's death.
WITHHOLDING
In general, distributions from annuity contracts 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:
- one of a series of substantially equal annual (or more frequent) payments
made:
- over the life or life expectancy of the employee,
- over the joint lives or joint expectancies of the employee and the
employee's designated beneficiary, or
- for a specified period of ten years or more;
- a required minimum distribution; or
- 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
The foregoing summary of the federal income tax consequences under these
contracts is not exhaustive. Special rules are provided with respect to
situations not discussed herein. Should a plan lose its qualified status,
employees will lose some of the tax benefits described. Statutory changes in the
Code with varying effective dates, and regulations adopted thereunder may also
alter the tax
PAGE 31
<PAGE>
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 you should consult a qualified tax adviser.
PERFORMANCE DATA
From time to time the Variable Annuity Account may publish advertisements
containing performance data relating to its sub-accounts. In the case of the
Money Market Sub-Account, the Variable Annuity Account will publish yield or
effective yield quotations for a seven-day or other specified period. In the
case of the other sub-accounts, performance data will consist of average annual
total return quotations for one year, five year and ten year periods and for the
period since the inception of the underlying Portfolios. Such performance data
may be accompanied by cumulative total return quotations for the comparable
periods. For periods prior to the date of this Prospectus the quotations will be
based on the assumption that the contracts described herein were issued when the
underlying Portfolios first became available to the Variable Annuity Account
under other contracts issued by us. The Money Market Sub-Account may also quote
such average annual and cumulative total return figures. Performance figures
used by the Variable Annuity Account are based on historical information of the
sub-accounts for specified periods, and the figures are not intended to suggest
that such performance will continue in the future. Performance figures of the
Variable Annuity Account will reflect charges made pursuant to the terms of the
contracts offered by this Prospectus and charges of underlying funds. More
detailed information on the computations is set forth in the Statement of
Additional Information.
YEAR 2000 COMPUTER PROBLEM
The services we provide to the Variable Annuity Account and contract owners
depend on the smooth functioning of our computer systems. Many computer software
systems in use today cannot distinguish the year 2000 from the year 1900 because
of the way that dates are encoded, stored and calculated. That failure could
have a negative impact on our ability to provide services to contract owners. We
have been actively working on necessary changes to our computer systems to deal
with the year 2000. Although there can be no assurance of complete success, we
believe that we will be able to resolve these issues on a timely basis and that
there will be no material adverse impact on our ability to provide services to
the Variable Annuity Account.
In addition, our operations could be impacted by our service providers' or
suppliers' year 2000 efforts. We have undertaken an initiative to assess the
efforts of organizations where there is a significant business relationship.
There is no assurance, however, that we will not be affected by year 2000
problems of other organizations.
PAGE 32
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information, which contains additional information
including financial statements, is available from us at your request. The table
of contents for that Statement of Additional Information is as follows:
Directors and Principal Management Officers of Minnesota Life
Distribution of Contract
Performance Data
Auditors
Registration Statement
Financial Statements
PAGE 33
<PAGE>
APPENDIX A
ILLUSTRATION OF VARIABLE ANNUITY VALUES
The illustration included in this Appendix shows the effect of investment
performance on the monthly variable annuity income. The illustration assumes a
gross investment return, after tax, of: 0%, 6.54% and 12.00%.
For illustration purposes, an average annual expense equal to 2.02% of the
average daily net assets is deducted from the gross investment return to
determine the net investment return. The net investment return is then used to
project the monthly variable annuity incomes. The expense charge of 2.02%
includes: 1.25% for Mortality and Expense Risk, and an average of .77% for
investment management and other Fund expenses. These expenses are listed for
each portfolio in the table following.
The gross and net investment rates are for illustrative purposes only and are
not a reflection of past or future performance. Actual variable annuity income
will be more or less than shown if the actual returns are different than those
illustrated.
The illustration assumes 100% of the assets are invested in sub-account(s) of
the Variable Annuity Account. For comparison purposes, a current fixed annuity
income, available through the General Account is also provided. The illustration
assumes an initial interest rate, used to determine the first variable payment
of 4.50%. For contracts issued prior to May, 1993, an initial rate of 3.50% may
also be available. After the first variable annuity payment, future payments
will increase if the annualized net rate of return exceeds the initial interest
rate, and will decrease if the annualized net rate of return is less than the
initial interest rate.
The illustration provided is for a male, age 65, selecting a Life and 10 Year
Certain annuity option with $100,000 of non-qualified funds, residing in the
State of Minnesota. Upon request, we will provide a comparable illustration
based upon the proposed annuitant's date of birth, sex, annuity option, state of
residence, type of funds, value of funds, and selected gross annual rate of
return (not to exceed 12%).
ACTUAL 1998 VARIABLE ANNUITY ACCOUNT CHARGES AND FUND EXPENSES
<TABLE>
<CAPTION>
FUND
MORTALITY & MANAGEMENT OTHER FUND DISTRIBUTION
SEPARATE ACCOUNT SUB-ACCOUNT NAME EXPENSE RISK FEE EXPENSES EXPENSES TOTAL
- -------------------------------------------------- ------------ ------------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Growth............................................ 1.25% .50% .05% -- 1.80%
Bond.............................................. 1.25% .50% .07% -- 1.82%
Money Market...................................... 1.25% .50% .09% -- 1.84%
Asset Allocation.................................. 1.25% .50% .05% -- 1.80%
Mortgage Securities............................... 1.25% .50% .09% -- 1.84%
Index 500......................................... 1.25% .40% .05% -- 1.70%
Capital Appreciation.............................. 1.25% .75% .05% -- 2.05%
</TABLE>
PAGE A-1
<PAGE>
<TABLE>
<CAPTION>
FUND
MORTALITY & MANAGEMENT OTHER FUND DISTRIBUTION
SEPARATE ACCOUNT SUB-ACCOUNT NAME EXPENSE RISK FEE EXPENSES EXPENSES TOTAL
- -------------------------------------------------- ------------ ------------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
International Stock............................... 1.25% .71% .26% -- 2.22%
Small Company Growth.............................. 1.25% .75% .07% -- 2.07%
Maturing Government Bond 2002..................... 1.25% .25% .15% -- 1.65%
Maturing Government Bond 2006..................... 1.25% .25% .15% -- 1.65%
Maturing Government Bond 2010..................... 1.25% .25% .15% -- 1.65%
Value Stock....................................... 1.25% .75% .05% -- 2.05%
Small Company Value............................... 1.25% .75% .15% -- 2.15%
Global Bond....................................... 1.25% .60% 1.00% -- 2.85%
Index 400 Mid-Cap................................. 1.25% .40% .15% -- 1.80%
Macro-Cap Value................................... 1.25% .70% .15% -- 2.10%
Micro-Cap Growth.................................. 1.25% 1.10% .15% -- 2.50%
Real Estate Securities............................ 1.25% .75% .15% -- 2.15%
Templeton Developing Markets Portfolio Class
2(1)............................................ 1.25% 1.25% .33% .25% 3.08%
------------ ------------- ----------- ------------ ---------
Average........................................... 1.25% .59% .17% .01% 2.02%
</TABLE>
(1) Templeton Developing Markets Fund Class 2 has a distribution plan or "Rule
12b-1" Plan which is described in the Fund's prospectus. Because Class 2 shares
were not offered until May 1, 1997, figures (other than "Distribution Expenses")
are estimates for 1998 based on historical experiences of the Fund's Class 1
shares for the fiscal year ended December 31, 1997.
VARIABLE ANNUITY PAYOUT ILLUSTRATION
<TABLE>
<S> <C>
PREPARED FOR: Prospect ANNUITIZATION OPTION: 10 Year Certain
with Life Contingency
PREPARED BY: Minnesota Life QUOTATION DATE: 05/03/1999
SEX: Male DATE OF BIRTH: 05/03/1934 COMMENCEMENT DATE: 06/01/1999
STATE: MN SINGLE PAYMENT RECEIVED: $100,000.00
LIFE EXPECTANCY: 20.0(IRS) 18.1(MML) FUNDS: Non-Qualified
INITIAL MONTHLY INCOME: $663
</TABLE>
PAGE A-2
<PAGE>
<TABLE>
<CAPTION>
FUND
MORTALITY & MANAGEMENT OTHER FUND DISTRIBUTION
SEPARATE ACCOUNT SUB-ACCOUNT NAME EXPENSE RISK FEE EXPENSES EXPENSES TOTAL
- -------------------------------------------------- ------------ ------------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
International Stock............................... 1.25% .71% .26% -- 2.22%
Small Company..................................... 1.25% .75% .07% -- 2.07%
Maturing Government Bond 1998..................... 1.25% .25% .15% -- 1.65%
Maturing Government Bond 2002..................... 1.25% .25% .15% -- 1.65%
Maturing Government Bond 2006..................... 1.25% .25% .15% -- 1.65%
Maturing Government Bond 2010..................... 1.25% .25% .15% -- 1.65%
Value Stock....................................... 1.25% .75% .05% -- 2.05%
Small Company Value............................... 1.25% .75% .15% -- 2.15%
Global Bond....................................... 1.25% .60% 1.00% -- 2.85%
Index 400 Mid-Cap................................. 1.25% .40% .15% -- 1.80%
Macro-Cap Value................................... 1.25% .70% .15% -- 2.10%
Micro-Cap Growth.................................. 1.25% 1.10% .15% -- 2.50%
Real Estate Securities............................ 1.25% .75% .15% -- 2.15%
Templeton Developing Markets Portfolio Class
2(1)............................................ 1.25% 1.25% .33% .25% 3.08%
------------ ------------- ----------- ------------ ---------
Average........................................... 1.25% .59% .17% .01% 2.02%
</TABLE>
(1) Templeton Developing Markets Fund Class 2 has a distribution plan or "Rule
12b-1" Plan which is described in the Fund's prospectus. Because Class 2 shares
were not offered until May 1, 1997, figures (other than "Distribution Expenses")
are estimates for 1998 based on historical experiences of the Fund's Class 1
shares for the fiscal year ended December 31, 1997.
VARIABLE ANNUITY PAYOUT ILLUSTRATION
<TABLE>
<S> <C>
PREPARED FOR: Prospect ANNUITIZATION OPTION: 10 Year Certain
with Life Contingency
PREPARED BY: Minnesota Life QUOTATION DATE: 05/01/1998
SEX: Male DATE OF BIRTH: 05/01/1933 COMMENCEMENT DATE: 06/01/1998
STATE: MN SINGLE PAYMENT RECEIVED: $100,000.00
LIFE EXPECTANCY: 20.0(IRS) 18.1(MML) FUNDS: Non-Qualified
INITIAL MONTHLY INCOME: $663
</TABLE>
PAGE A-3
<PAGE>
The monthly variable annuity income amount shown below assumes a constant annual
investment return. The initial interest rate of 4.50% is the assumed rate used
to calculate the first monthly payment. Thereafter, monthly payments will
increase or decrease based upon the relationship between the initial interest
rate and the performance of the sub-account(s) selected. The investment returns
shown are hypothetical and not a representation of future results.
<TABLE>
<CAPTION>
ANNUAL RATE OF RETURN
--------------------------------------------------
0.00% GROSS 6.52% GROSS 12.00% GROSS
DATE AGE (-2.02% NET) (4.50% NET) (9.98% NET)
- ----------------------------------------- --------- ----------------- --------------- --------------
<S> <C> <C> <C> <C>
June 1, 1998............................. 65 $ 663 $ 663 $ 663
June 1, 1999............................. 66 622 663 698
June 1, 2000............................. 67 583 663 735
June 1, 2001............................. 68 547 663 773
June 1, 2002............................. 69 513 663 814
June 1, 2007............................. 74 371 663 l,051
June 1, 2012............................. 79 269 663 1,357
June 1, 2017............................. 84 195 663 1,752
June 1, 2022............................. 89 141 663 2,262
June 1, 2027............................. 94 102 663 2,920
June 1, 2032............................. 99 74 663 3,770
June 1, 2033............................. 100 70 663 3,968
</TABLE>
IF 100% OF YOUR PURCHASE WAS APPLIED TO PROVIDE A FIXED ANNUITY ON THE QUOTATION
DATE OF THIS ILLUSTRATION, THE FIXED ANNUITY INCOME AMOUNT WOULD BE $720.
Net rates of return reflect expenses totaling 2.02%, which consist of the 1.25%
Variable Annuity Account mortality and expense risk charge and .77% for the Fund
management fee and other Fund expenses (this is an average with the actual
varying from .40% to 1.83%).
Minnesota Life MultiOption variable annuities are available through registered
representatives of Ascend Financial Services, Inc.
This is an illustration only and not a contract.
PAGE A-4
<PAGE>
APPENDIX B -- CONDENSED FINANCIAL INFORMATION
The financial statements of the Variable Annuity Account and the Consolidated
Financial Statements of Minnesota Life Insurance Company may be found in the
Statement of Additional Information. The table below gives per unit information
about the financial history of each sub-account from the inception of each to
December 31, 1998. This information should be ready in conjunction with the
financial statements and related notes of the Variable Annuity Account included
in this prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Growth Sub-Account:
Unit value at beginning of period.......... $3.04 $2.63 $2.14 $2.22
Unit value at end of period................ $4.01 $3.04 $2.63 $2.14
Number of units outstanding at end of
period.................................... 44,705,247 38,448,452 35,809,340 33,090,790
Bond Sub-Account:
Unit value at beginning of period.......... $2.19 $2.15 $1.82 $1.84
Unit value at end of period................ $2.37 $2.19 $2.15 $1.82
Number of units outstanding at end of
period.................................... 43,266,404 36,732,062 28,069,241 23,798,963
Money Market Sub-Account:
Unit value at beginning of period.......... $1.57 $1.52 $1.46 $1.44
Unit value at end of period................ $1.63 $1.57 $1.52 $1.46
Number of units outstanding at end of
period.................................... 19,804,841 22,929,634 14,809,515 11,720,778
Asset Allocation Sub-Account:
Unit value at beginning of period.......... $2.76 $2.49 $2.01 $2.05
Unit value at end of period................ $3.25 $2.76 $2.49 $2.01
Number of units outstanding at end of
period.................................... 119,491,402 116,211,650 110,975,477 109,044,286
Mortgage Securities Sub-Account:
Unit value at beginning of period.......... $2.01 $1.93 $1.66 $1.68
Unit value at end of period................ $2.17 $2.01 $1.93 $1.66
Number of units outstanding at end of
period.................................... 34,751,197 32,527,955 31,277,934 31,542,405
Index 500 Sub-Account:
Unit value at beginning of period.......... $2.91 $2.43 $1.79 $1.85
Unit value at end of period................ $3.81 $2.91 $2.43 $1.79
Number of units outstanding at end of
period.................................... 54,579,265 46,097,553 35,272,024 29,639,298
Capital Appreciation Sub-Account:
Unit value at beginning of period.......... $2.93 $2.52 $2.08 $2.10
Unit value at end of period................ $3.71 $2.93 $2.52 $2.08
Number of units outstanding at end of
period.................................... 53,582,481 51,023,999 45,964,468 40,739,415
International Stock Sub-Account:
Unit value at beginning of period.......... $1.73 $1.46 $1.30 $1.37
Unit value at end of period................ $1.91 $1.73 $1.46 $1.30
Number of units outstanding at end of
period.................................... 103,600,602 86,521,264 68,725,183 61,474,893
Small Company Growth Sub-Account:
Unit value at beginning of period.......... $1.67 $1.59 $1.22 $1.21
Unit value at end of period................ $1.78 $1.67 $1.59 $1.22
Number of units outstanding at end of
period.................................... 68,590,765 59,295,273 43,234,716 29,723,609
Maturing Government Bond 2002 Sub-Account:
Unit value at beginning of period.......... $1.21 $1.20 $0.97 $0.99
Unit value at end of period................ $1.29 $1.21 $1.20 $0.97
Number of units outstanding at end of
period.................................... 2,938,848 2,935,860 2,417,823 2,528,509
</TABLE>
PAGE B-1
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Maturing Government Bond 2006 Sub-Account:
Unit value at beginning of period.......... $1.25 $1.28 $0.96 $0.96
Unit value at end of period................ $1.39 $1.25 $1.28 $0.96
Number of units outstanding at end of
period.................................... 2,665,421 2,334,109 1,878,731 1,808,705
Maturing Government Bond 2010 Sub-Account:
Unit value at beginning of period.......... $1.27 $1.33 $0.95 $0.94
Unit value at end of period................ $1.47 $1.27 $1.33 $0.95
Number of units outstanding at end of
period.................................... 2,017,743 2,077,124 924,681 913,358
Value Stock Sub-Account:
Unit value at beginning of period.......... $1.78 $1.38 $1.05 $1.09
Unit value at end of period................ $2.13 $1.78 $1.38 $1.05
Number of units outstanding at end of
period.................................... 68,251,135 43,796,523 18,744,902 7,178,675
Small Company Value Sub-Account:
Unit value at beginning of period.......... $1.00
Unit value at end of period................ $1.03
Number of units outstanding at end of
period.................................... 4,822,504
Global Bond Sub-Account:
Unit value at beginning of period.......... $1.00
Unit value at end of period................ $1.00
Number of units outstanding at end of
period.................................... 25,083,345
Index 400 Mid-Cap Sub-Account:
Unit value at beginning of period.......... $1.00
Unit value at end of period................ $1.00
Number of units outstanding at end of
period.................................... 5,020,041
Macro-Cap Value Sub-Account:
Unit value at beginning of period.......... $1.00
Unit value at end of period................ $0.98
Number of units outstanding at end of
period.................................... 5,003,390
Micro-Cap Growth Sub-Account:
Unit value at beginning of period.......... $1.00
Unit value at end of period................ $0.91
Number of units outstanding at end of
period.................................... 5,019,879
Templeton Developing Markets Sub-Account:
Unit value at beginning of period.......... $1.00
Unit value at end of period................ $0.69
Number of units outstanding at end of
period.................................... 724,374
</TABLE>
PAGE B-2
<PAGE>
APPENDIX C--TYPES OF QUALIFIED PLANS
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. Income attributable to elective contributions may not be distributed
in the case of hardship.
INDIVIDUAL RETIREMENT ANNUITIES
Section 408 of the Code permits eligible individuals to contribute to an
Individual Retirement Annuity, (an "IRA"). Distributions from certain other
types of qualified plans may be "rolled over" on a tax-deferred basis into an
IRA. The sale of a contract for use with an IRA may be subject to special
disclosure requirements of the IRS. Purchasers of a contract for use with IRAs
will be provided with supplemental information required by the IRS or other
appropriate agency. Such purchasers will have the right to revoke their purchase
within 7 days of the earlier of the establishment of the IRA or their purchase.
A qualified contract issued in connection with an IRA will be amended as
necessary to conform to the requirements of the Code. You should seek competent
advice as to the suitability of the Contract for use with IRAs.
Earnings in an IRA are not taxed until distribution. IRA contributions are
limited each year to the lesser or $2,000 or 100% of the owner's adjusted gross
income and may be deductible in whole or in part depending on the individual's
income. The limit on the amount contributed to an IRA does not apply to
distributions from certain other types of qualified plans that are "rolled over"
on a tax-deferred basis into an IRA. Amounts in the IRA (other than
nondeductible contributions) are taxed when distributed from the IRA.
Distributions prior to age 59 1/2 (unless certain exceptions apply) are subject
to a 10% penalty tax.
SIMPLIFIED EMPLOYEE PENSION (SEP) IRAS
Employers may establish Simplified Employee Pension (SEP) IRAs under Code
section 408(k) to provide IRA contributions on behalf of their employees. In
addition to all of the general Code rules governing IRAs, such plans are subject
to certain Code requirements regarding participation and amounts of
contributions.
PAGE C-1
<PAGE>
SIMPLE IRAS
Beginning January 1, 1997, certain small employers may establish Simple IRAs as
provided by Section 408(p) of the Code, under which employees may elect to defer
up to $6,000 (as increased for cost of living adjustments) as a percentage of
compensation. The sponsoring employer is required to make a matching
contribution on behalf of contributing employees. Distributions from a Simple
IRAs are subject to the same restrictions that apply to IRA distributions and
are taxed as ordinary income. Subject to certain exceptions, premature
distributions prior to age 59 1/2 are subject to a 10% penalty tax, which is
increased to 25% if the distribution occurs within the first two years after the
commencement of the employee's participation in the plan.
ROTH IRAS
Effective January 1, 1998, section 408A of the Code permits certain eligible
individuals to make nondeductible contributions to an individual retirement
program known as a Roth IRA. Contributions to a Roth IRA, which are subject to
certain limitations, must be made in cash or as a rollover or conversion from
another Roth IRA or a traditional IRA. A rollover from, or conversion of, a
traditional IRA to a Roth IRA may be subject to tax, contingent deferred sales
charge and other special rules may apply.
Qualified distributions from a Roth IRA, as defined by the Code, generally are
excluded from gross income. Qualified distributions include those distributions
made more than five years after the taxable year of the first contribution to
the Roth IRA, but only if : (1) the annuity owner has reached age 59 1/2; (2)
the distribution is paid to a beneficiary after the owner's death; (3) the
annuity owner becomes disabled; or (4) the distribution will be used for a first
time home purchase and does not exceed $10,000. Non-qualified distributions are
includable in gross income only to the extent they exceed contributions made to
the Roth IRA. The taxable portion of a non-qualified distribution may be subject
to a 10% penalty tax.
In addition, state laws may not completely follow the federal tax treatment of
Roth IRAs. You should consult your tax adviser for further information regarding
Roth IRAs.
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.
PAGE C-2
<PAGE>
DEFERRED COMPENSATION PLANS
Code Section 457 provides for certain deferred compensation plans. These plans
may be offered for service to 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. In
general, all amounts received under a Section 457 plan are taxable and are
subject to federal income tax withholding as wages. Under the provisions of the
Small Business Job Protection Act of 1996, all of the assets and income of a
governmental plan maintained by an eligible employer as a Section 457 plan must
be held in trust or in a qualifying custodial account or annuity contract held
for the exclusive benefit of plan participants and beneficiaries. For such plans
in effect at the time of the 1996 enactment, those plans must come into
compliance with this requirement before January 1, 1999.
PAGE C-3
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
VARIABLE ANNUITY ACCOUNT
CROSS REFERENCE SHEET TO STATEMENT OF ADDITIONAL INFORMATION
FORM N-4
<TABLE>
<CAPTION>
ITEM NUMBER CAPTION IN STATEMENT OF ADDITIONAL INFORMATION
- --------------------- ---------------------------------------------------------------------------
<S> <C>
15. Cover Page
16. Cover Page
17. Directors and Principal Management Officers of Minnesota Life
18. Not applicable
19. Not applicable
20. Distribution of Contract
21. Performance Data
22. Not applicable
23. Financial Statements
</TABLE>
<PAGE>
Variable Annuity Account
("Variable Annuity Account"), a Separate Account of
Minnesota Life Insurance Company
("Minnesota Life")
400 Robert Street North
St. Paul, Minnesota 55101-2098
Telephone: (651) 665-3500
Statement of Additional Information
The date of this document and the Prospectus is: May 3, 1999
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 Minnesota Life Insurance Company at
(651) 665-3500; or writing to Minnesota Life at Minnesota Mutual Life Center,
400 Robert Street North, St. Paul, Minnesota 55101-2098.
Directors and Principal Management Officers of Minnesota Life
Distribution of Contract
Performance Data
Auditors
Registration Statement
Financial Statements
<PAGE>
DIRECTORS AND PRINCIPAL MANAGEMENT OFFICERS OF MINNESOTA LIFE
Directors Principal Occupation
Giulio Agostini Senior Vice President, Finance and Administrative
Services, 3M, St. Paul, Minnesota
Anthony L. Andersen Chair-Board of Directors, H. B. Fuller Company, St.
Paul, Minnesota, since June 1995, prior thereto for
more than five years President and Chief Executive
Officer, H. B. Fuller Company (Adhesive Products)
Leslie S. Biller Vice Chairman and Chief Operating Officer, Wells
Fargo & Company, San Francisco, California (Banking)
John F. Grundhofer President, Chairman and Chief Executive Officer,
U.S. Bancorp, Minneapolis, Minnesota (Banking)
David S. Kidwell, Ph.D. Dean and Professor of Finance, The Curtis L.
Carlson School of Management, University of
Minnesota, Minneapolis, Minnesota
Reatha C. King, Ph.D. President and Executive Director, General Mills
Foundation, Minneapolis, Minnesota
William B. Lawson, Sr. Chairman and Chief Executive Officer, Lawson
Software, Minneapolis, Minnesota
Thomas E. Rohricht Of Counsel, Doherty, Rumble & Butler Professional
Association, St. Paul, Minnesota (Attorneys)
Robert L. Senkler Chairman of the Board, President and Chief
Executive Officer, Minnesota Life Insurance Company,
since August 1995; prior thereto for more than five
years Vice President and Actuary, Minnesota Life
Insurance Company
Michael E. Shannon Chairman, Chief Financial and Administrative
Officer, Ecolab, Inc., St. Paul, Minnesota
(Develops and Markets Cleaning and Sanitizing
Products)
Frederick T. Weyerhaeuser Retired since April 1998, prior thereto Chairman and
Treasurer, Clearwater Investment Trust, since May
1996, prior thereto for more than five years,
Chairman, Clearwater Management Company, St. Paul,
Minnesota (Financial Management)
1
<PAGE>
Principal Officers (other than Directors)
Name Position
John F. Bruder Senior Vice President
Keith M. Campbell Senior Vice President
Robert E. Hunstad Executive Vice President
James E. Johnson Senior Vice President and Actuary
Dennis E. Prohofsky Senior Vice President, General Counsel and
Secretary
Gregory S. Strong Senior Vice President and Chief Financial Officer
Terrence M. Sullivan Senior Vice President
Randy F. Wallake Senior Vice President
William N. Westhoff Senior Vice President and Treasurer
All Directors who are not also officers of Minnesota Life have had the principal
occupation (or employers) shown for at least five years. All officers of
Minnesota Life have been employed by Minnesota Life for at least five years with
the exception of Mr. Westhoff. Mr. Westhoff has been employed by Minnesota
Life since April 1998. Prior thereto, Mr. Westhoff was employed by American
Express Financial Corporation, Minneapolis, Minnesota, from August 1994 to
October 1997 as Senior Vice President, Global Investments and from November 1989
to July 1994 as Senior Vice President, Fixed Income Management.
DISTRIBUTION OF CONTRACT
The contract will be sold in a continuous offering by our life insurance
agents who are also registered representatives of Ascend Financial Services,
Inc. ("Ascend Financial") or other broker-dealers who have entered into
selling agreements with Ascend Financial. Ascend Financial acts as principal
underwriter of the contracts. Ascend Financial is a wholly-owned subsidiary
of Advantus Capital Management, Inc., which in turn is a wholly-owned
subsidiary of Minnesota Life. Advantus Capital Management, Inc., is a
registered investment adviser and the investment adviser to the Advantus
Series Fund, Inc. Ascend Financial 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 Life to
the underwriter for 1998, 1997 and 1996 were $15,989,724, $15,067,613, and
$13,034,146 respectively, for payment to associated dealers on the sale of
the contracts, which include other contracts issued through the Variable
Annuity Account. Agents of Minnesota Life who are also registered
representatives of Ascend Financial are compensated directly by Minnesota
Life.
2
<PAGE>
PERFORMANCE DATA
CURRENT YIELD FIGURES FOR MONEY MARKET SUB-ACCOUNT
Current annualized yield quotations for the Money Market Sub-Account are based
on the Sub-Account's net investment income for a seven-day or other specified
period and exclude any realized or unrealized gains or losses on sub-account
securities. Current annualized yield is computed by determining the net change
(exclusive of realized gains and losses from the sale of securities and
unrealized appreciation and depreciation) in the value of a hypothetical account
having a balance of one accumulation unit at the beginning of the specified
period, dividing such net change in account value by the value of the account at
the beginning of the period, and annualizing this quotient on a 365-day basis.
The Variable Annuity Account may also quote the effective yield of the Money
Market Sub-Account for a seven-day or other specified period for which the
current annualized yield is computed by expressing the unannualized return on a
compounded, annualized basis. The yield and effective yield of the Money Market
Sub-Account for the seven-day period ended December 31, 1998 were 3.78% and
3.85%, respectively. Such figures reflect the voluntary absorption of certain
expenses of Advantus Series Fund, Inc. (the "Fund") by Minnesota Life described
below under "Total Return Figures for All Sub-Accounts." Yield figures quoted
by the Money Market Sub-Account will not reflect the deduction of any applicable
deferred sales charges (the deferred sales charge, as a percentage of the
accumulation value withdrawn, begin as of the contract date at 9% for the
flexible payment contract).
TOTAL RETURN FIGURES FOR ALL SUB-ACCOUNTS
Cumulative total return quotations for Sub-Accounts represent the total
return for the period since the Sub-Account became available pursuant to the
Variable Annuity Account's registration statement. Cumulative total return is
equal to the percentage change between the net asset value of a hypothetical
$1,000 investment at the beginning of the period and the net asset value of
that same investment at the end of the period. Such quotations of cumulative
total return will not reflect the deduction of any applicable deferred sales
charges.
The cumulative total return figures published by the Variable Annuity Account
relating to the contract described in the Prospectus will reflect Minnesota
Life's voluntary absorption of certain Fund expenses described below.
3
<PAGE>
Cumulative total return quotations for Sub-Accounts will be accompanied by
average annual total return figures for a one-year period and for the period
since the Sub-Account became available pursuant to 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 $1,000 to equal the surrender value of that same investment at
the end of the period. The surrender value will reflect the deduction of the
deferred sales charge applicable to the contract and to the length of the
period advertised. The average annual total return figures published by the
Variable Annuity Account will reflect Minnesota Life's voluntary absorption
of certain Fund expenses.
<TABLE>
<CAPTION>
From Inception Date of
to 12/31/98 Inception
-------------- ---------
<S> <C> <C>
Growth Sub-Account 283.66% (280.17%) 12/3/85
Bond Sub-Account 134.03% (132.80%) 12/3/85
Money Market Sub-Account 61.78% (59.21%) 12/3/85
Asset Allocation Sub-Account 216.14% (215.45%) 12/3/85
Mortgage Securities Sub-Account 116.57% (116.17%) 6/1/87
Index 500 Sub-Account 281.10% (279.95%) 6/1/87
Capital Appreciation Sub-Account 272.38% (268.38%) 6/1/87
International Stock Sub-Account 91.03% (90.99%) 5/1/92
Small Company Growth Sub-Account 77.96% (77.95%) 5/3/93
Maturing Government Bond
2002 Sub-Account 32.17% (30.99%) 5/2/94
Maturing Government Bond
2006 Sub-Account 43.37% (41.31%) 5/2/94
Maturing Government Bond
2010 Sub-Account 53.10% (48.46%) 5/2/94
Value Stock Sub-Account 112.79% (112.43%) 5/2/94
Small Company Value Sub-Account 1.97% (1.09%) 10/1/97
Global Bond Sub-Account -.24% (-.24%) 10/1/97
Index 400 Mid-Cap Sub-Account -.25% (-1.40%) 10/1/97
Macro-Cap Value Sub-Account -2.39% (-2.39%) 10/15/97
Micro-Cap Growth Sub-Account -13.48% (-14.26%) 10/1/97
Real Estate Securities Sub-Account
Templeton Developing Markets Class 2 Sub-Account -30.60% -30.60%) 10/1/97
</TABLE>
4
<PAGE>
Cumulative total return quotations for Sub-Accounts will be accompanied by
average annual total return figures for a one-year period, five-year period
and ten-year period or for the period since the Sub-Account became available
pursuant to the Variable Annuity Account's registration statement if less
than ten years. Average annual total return figures are the average annual
compounded rates of return required for an initial investment of $1,000 to
equal the surrender value of that same investment at the end of the period.
The surrender value will reflect the deduction of the deferred sales charge
applicable to the contract (flexible premium/single premium) and to the
length of the period advertised. The average annual total return figures
published by the Variable Annuity Account will reflect Minnesota Life's
voluntary absorption of certain Fund expenses. For the period subsequent
to March 9, 1987, Minnesota Life is voluntarily absorbing the fees and expenses
that exceed .65% of the average daily net assets of the Growth, Bond, Money
Market, Asset Allocation and Mortgage Securities Portfolios of the Fund, .55%
of the average daily net assets of the Index 500 Portfolio of the Fund, .90%
of the average daily net assets of the Capital Appreciation and Small Company
Portfolios of the Fund and expenses that exceed 1.00% of the average daily net
assets of the International Stock Portfolio of the Fund exclusive of the
advisory fee. And, for the period subsequent to May 2, 1994, Minnesota Life has
voluntarily absorbed fees and expenses that exceed .90% of the average daily
net assets of the Value Stock Portfolio and fees and expenses that exceed .40%
of the average daily net assets of the Maturing Government Bond Portfolios. It
should be noted that for the Maturing Government Bond Portfolios maturing in
1998 and 2002, Minnesota Life voluntarily absorbed fees and expenses that
exceeded .20% of average daily net assets of those Portfolios until
April 30, 1998. For the period subsequent to April 30, 1998, Minnesota Life has
voluntarily agreed to absorb fees and expenses that exceed .40% of the average
daily net assets of the Maturing Government Bond Portfolios maturing in 1998
and 2002. Minnesota Life has voluntarily agreed to absorb fees and expenses
that exceed .55% of the average daily net assets of the Index 400 Mid-Cap
Portfolio, .90% of the average daily net assets of the Small Company Value
Portfolio, 1.25% of the average daily net assets of the Micro-Cap Growth
Portfolio, .85% of the average daily net assets of the Macro-Cap Value Portfolio
and expenses that exceed 1.00% of the average daily net assets of the Global
Bond Portfolio of the Fund exclusive of the advisory fee. For the period
subsequent to May 1, 1998, Minnesota Life has voluntarily agreed to absorb fees
and expenses the exceed .90% of the average daily net assets of the Real Estate
Securities Portfolio. There is no specified or minimum period of time during
which Minnesota Life has agreed to continue its voluntary absorption of these
expenses, and Minnesota Life may in its discretion cease its absorption of
expenses at any time. Should Minnesota Life cease absorbing expenses the effect
would be to increase substantially Fund expenses and thereby reduce investment
return.
5
<PAGE>
The average annual rates of return for the Sub-Accounts, in connection with
the contract described in the Prospectus, for the specified periods ended
December 31, 1998 are shown in the tables below. The figures in parentheses
show what the average annual rates of return would have been had Minnesota
Life not absorbed Fund expenses as described above. These figures also
assume that the contracts described herein were issued when the Underlying
Portfolios first became available to the Variable Annuity Account. This
contract only became available as of the date of September 15, 1994.
<TABLE>
<CAPTION>
Flexible Premium Deferred Variable Annuity
MultiOption Select
------------------------------------------
Year Ended Five Years Ten Years From Inception Date of
12/31/98 Ended 12/31/98 Ended 12/31/98 to 12/31/98 Inception
---------- -------------- -------------- ---------------- ---------
<S> <C> <C> <C> <C> <C>
Growth Sub-Account 24.76% (24.76%) 13.52% (13.52%) 14.00% (13.96%) N/A (N/A) 12/3/85
Bond Sub-Account 1.06% (1.06%) 5.28% (5.27%) 7.29% (7.23%) N/A (N/A) 12/3/85
Money Market Sub-Account -3.17% (-3.17%) 2.36% (2.17%) 4.02% (3.79%) N/A (N/A) 12/3/85
Asset Allocation
Sub-Account 10.51% (10.51%) 9.99% (9.99%) 11.47% (11.46%) N/A (N/A) 12/3/85
Mortgage Securities
Sub-Account .78% (.78%) 5.46% (5.46%) 7.85% (7.82%) N/A (N/A) 6/1/87
Index 500 Sub-Account 23.72% (23.72%) 17.69% (17.69%) 13.47% (13.44%) N/A (N/A) 6/1/87
Capital Appreciation
Sub-Account 19.67% (19.67%) 13.99% (13.98%) 14.89% (14.79%) N/A (N/A) 6/1/87
6
<PAGE>
International Stock
Sub-Account 3.55% (3.55%) 15.18% (15.18%) N/A (N/A) 11.78% (11.77%) 5/1/92
Small Company Growth
Sub-Account -.58% (-.58%) N/A (N/A) N/A (N/A) 12.60% (12.60%) 5/3/93
Maturing Government Bond
2002 Sub-Account -.15% (-.80%) N/A (N/A) N/A (N/A) 6.77% (5.85%) 5/2/94
Maturing Government Bond
2006 Sub-Account 4.23% (3.16%) N/A (N/A) N/A (N/A) 9.26% (8.08%) 5/2/94
Maturing Government Bond
2010 Sub-Account 9.40% (7.55%) N/A (N/A) N/A (N/A) 11.30% (9.12%) 5/2/94
Value Stock Sub-Account 12.69% (12.69%) N/A (N/A) N/A (N/A) 21.74% (21.66%) 5/2/94
Small Company Value
Sub-Account N/A (N/A) N/A (N/A) N/A (N/A) -5.03% (-5.91%) 10/1/97
Global Bond Sub-Account N/A (N/A) N/A (N/A) N/A (N/A) -7.24% (-7.24%) 10/1/97
Index 400 Mid-Cap
Sub-Account N/A (N/A) N/A (N/A) N/A (N/A) -7.25% (-8.40%) 10/1/97
Macro-Cap Value
Sub-Account N/A (N/A) N/A (N/A) N/A (N/A) -9.39% (-9.39%) 10/15/97
Micro-Cap Growth
Sub-Account N/A (N/A) N/A (N/A) N/A (N/A) -20.48% (-21.26%) 10/1/97
Real Estate Securities
Sub-Account
Templeton Developing Markets
Class 2 Sub-Account N/A (N/A) N/A (N/A) N/A (N/A) -37.60% (-37.60%) 10/1/97
</TABLE>
The average annual total return figures described above may be accompanied by
other average annual total return quotations which do not reflect the deduction
of any deferred sales charges. Such other average annual total return figures
will be calculated as described above, except that the initial $1,000 investment
will be equated to that same investment's net asset value, rather than its
surrender value, at the end of the period. The average annual rates of return,
as thus calculated, for the Sub-Accounts of the contracts described in the
Prospectus for the specified periods ended December 31, 1998 are shown in the
table below. Inasmuch as no deferred sales charges are reflected in these
figures, they are the same for both the flexible premium and the single premium
contracts. The figures in parentheses show what the average annual rates of
return, without the application of applicable deferred sales charges, would have
been had Minnesota Life not absorbed Fund expenses as described above.
<TABLE>
<CAPTION>
Year Ended Five Years Ten Years From Inception Date of
12/31/98 Ended 12/31/98 Ended 12/31/98 to 12/31/98 Inception
------------- -------------- -------------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Growth Sub-Account 31.76% (31.76%) 14.00% (14.00%) 14.00% (14.00%) N/A (N/A) 12/3/85
Bond Sub-Account 8.06% (8.06%) 5.93% (5.92%) 7.34% (7.28%) N/A (N/A) 12/3/85
7
<PAGE>
Money Market
Sub-Account 3.83% (3.83%) 3.07% (2.88%) 4.02% (3.79%) N/A (N/A) 12/3/85
Asset Allocation
Sub-Account 17.51% (17.51%) 10.53% (10.53%) 11.47% (11.47%) N/A (N/A) 12/3/85
Mortgage Securities
Sub-Account 7.78% (7.78%) 6.09% (6.09%) 7.85% (7.82%) N/A (N/A) 6/1/87
Index 500
Sub-Account 30.72% (30.72%) 18.11% (18.11%) 16.07% (16.04%) N/A (N/A) 6/1/87
Capital Appreciation
Sub-Account 26.67% (26.67%) 14.46% (14.46%) 14.89% (14.79%) N/A (N/A) 6/1/87
International Stock
Sub-Account 10.55% (10.55%) 15.63% (15.63%) N/A (N/A) 12.09% (12.08%) 5/1/92
Small Company Growth
Sub-Account 6.42% (6.42%) N/A (N/A) N/A (N/A) 13.15% (13.15%) 5/3/93
Maturing Government
Bond 2002
Sub-Account 7.15% (6.20%) N/A (N/A) N/A (N/A) 7.90% (6.98%) 5/2/94
Maturing Government
Bond 2006
Sub-Account 11.23% (10.16%) N/A (N/A) N/A (N/A) 10.32% (9.14%) 5/2/94
Maturing Government
Bond 2010
Sub-Account 16.40% (14.55%) N/A (N/A) N/A (N/A) 12.31% (10.13%) 5/2/94
Value Stock
Sub-Account 19.69% (19.69%) N/A (N/A) N/A (N/A) 22.54% (22.46%) 5/2/94
Small Company Value
Sub-Account N/A (N/A) N/A (N/A) N/A (N/A) 1.97% (1.09%) 10/1/97
Global Bond
Sub-Account N/A (N/A) N/A (N/A) N/A (N/A) -.24% (-.24%) 10/1/97
Index 400 Mid-Cap
Sub-Account N/A (N/A) N/A (N/A) N/A (N/A) -.25% (-1.40%) 10/1/97
Macro-Cap Value
Sub-Account N/A (N/A) N/A (N/A) N/A (N/A) -2.39% (-2.39%) 10/15/97
Micro-Cap Growth
Sub-Account N/A (N/A) N/A (N/A) N/A (N/A) -13.48% (-14.26%) 10/1/97
Real Estate Securities
Sub-Account
Templeton Developing
Markets Class 2
Sub-Account N/A (N/A) N/A (N/A) N/A (N/A) -30.60% (-30.60%) 10/1/97
</TABLE>
8
<PAGE>
PREDICTABILITY OF RETURN
ANTICIPATED VALUE AT MATURITY. The maturity values of zero-coupon bonds are
specified at the time the bonds are issued, and this feature, combined with
the ability to calculate yield to maturity, has made these instruments
popular investment vehicles for investors seeking reliable investments to
meet long-term financial goals.
Each Maturing Government Bond Portfolio of the Fund consists primarily of
zero-coupon bonds but is actively managed to accommodate contract owner
activity and to take advantage of perceived market opportunities. Because of
this active management approach, there is no guarantee that a certain price
per share of a Maturing Government Bond Portfolio, or a certain price per
unit of the corresponding Sub-Account, will be attained by the time a
Portfolio is liquidated. Instead, the Fund attempts to track the price
behavior of a directly held zero-coupon bond by:
(1) Maintaining a weighted average maturity within each Maturing
Government Bond Portfolio's target maturity year;
(2) Investing at least 90% of assets in securities that mature
within one year of that Portfolio's target maturity year;
(3) Investing a substantial portion of assets in Treasury STRIPS
(the most liquid Treasury zero);
(4) Under normal conditions, maintaining a nominal cash balance;
(5) Executing portfolio transactions necessary to accommodate net
contract owner purchases or redemptions on a daily basis; and
(6) Whenever feasible, contacting several U.S. government
securities dealers for each intended transaction in an effort
to obtain the best price on each transaction.
These measures enable the Company to calculate an anticipated value at
maturity (AVM) for each unit of a Maturing Government Bond Sub-Account,
calculated as of the date of purchase of such unit, that approximates the
price per unit that such unit will achieve by the weighted average maturity
date of the underlying Portfolio. The AVM calculation for each Maturing
Government Bond Sub-Account is as follows:
AVM = P(1 + AGR/2)2T
where P = the Sub-Account's current price per unit; T = the Sub-Account's
weighted average term to maturity in years; and AGR = the anticipated growth
rate.
This calculation assumes an expense ratio and a portfolio composition for the
underlying Maturing Government Bond Portfolio that remain constant for the
life of such Portfolio.
9
<PAGE>
Because the Portfolio's expenses and composition do not remain constant,
however, the Company may calculate AVM for each Maturing Government Bond
Sub-Account on any day on which the underlying Maturing Government Bond
Portfolio is valued. Such an AVM is applicable only to units purchased on
that date.
In addition to the measures described above, which the adviser believes are
adequate to assure close correspondence between the price behavior of each
Portfolio and the price behavior of directly held zero-coupon bonds with
comparable maturities, the Fund expects that each Portfolio will invest at
least 90% of its net assets in zero-coupon bonds until it is within four
years of its target maturity year and at least 80% of its net assets in
zero-coupon securities within two to four years of its target maturity year.
This expectation may be altered if the market supply of zero-coupon
securities diminishes unexpectedly.
ANTICIPATED GROWTH RATE. The Company calculates an anticipated growth rate
(AGR) for each Maturing Government Bond Sub-Account on each day on which the
underlying Portfolio is valued. AGR is a calculation of the anticipated
annualized rate of growth for a Sub-Account unit, calculated from the date of
purchase of such unit to the Sub-Account's target maturity date. As is the
case with calculations of AVM, the AGR calculation assumes that each
underlying Maturing Government Bond Portfolio expense ratio and portfolio
composition will remain constant. Each Maturing Government Bond Sub-Account
AGR changes from day to day (i.e., a particular AGR calculation is applicable
only to units purchased on that date), due primarily to changes in interest
rates and, to a lesser extent, to changes in portfolio composition and other
factors that affect the value of the underlying Portfolio.
The Company expects that a contract owner who holds specific units until the
underlying Portfolio's weighted average maturity date will realize an
investment return and maturity value on those units that do not differ
substantially from the AGR and AVM calculated on the day such units were
purchased. The AGR and AVM calculated with respect to units purchased on any
other date, however, may be materially different.
AUDITORS
The consolidated financial statements of Minnesota Life and the financial
statements of the Minnesota Life Variable Annuity Account 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.
10
<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
contract 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 Life, and the contract. Statements contained in this Prospectus
as to the contents of contracts and other legal instruments are summaries,
and reference is made to such instruments as filed.
11
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
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 Variable Annuity Account for the
fiscal year ended December 31, 1998, are included in Part B of this
filing and consist of the following:
To be filed by Subsequent Amendment
(b) Audited Financial Statements of the Depositor, Minnesota Life
Insurance Company, for the fiscal year ended December 31, 1998
and 1997, are included in Part B of this filing and consist of the
following:
To be filed by Subsequent Amendment
(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 previously filed as this exhibit to
Registrant's Form N-4, File Number 33-80788, Post-Effective
Amendment Number 4, is hereby incorporated by reference.
2. Not applicable.
3. (a) The Distribution Agreement between The Minnesota Mutual Life
Insurance Company and Ascend Financial Services, Inc.
previously filed as this exhibit to Registrant's Form N-4,
File Number 33-80788, Post-Effective Amendment Number 4, is
hereby incorporated by reference.
<PAGE>
(b) Agent's Agreement previously filed as this exhibit to
Registrant's Form N-4, File Number 33-80788,
Post-Effective Amendment Number 4, is hereby incorporated
by reference.
4. (a) The Flexible Payment Deferred Variable Annuity, form
MHC-94-9307.
(b) The Qualified Plan Agreement, form 84-9094 previously
filed as this exhibit to Registrant's Form N-4, File
Number 33-80788, Post-Effective Amendment Number 4, is
hereby incorporated by reference.
(c) The Individual Retirement Annuity Agreement, form 83-9058
Rev. 3-1997 previously filed as this exhibit to Registrant's
Form N-4, File Number 33-80788, Post-Effective Amendment
Number 4, is hereby incorporated by reference.
(d) The Retirement Certificate, form MHC-83-9060.
(e) Tax Sheltered Annuity Loan Agreement, form MHC-94-9309.
(f) Individual Retirement Annuity (IRA) Agreement, SEP,
Traditional IRA and Roth-IRA, form number MHC-97-9418.
(g) Individual Retirement Annuity, SIMPLE - (IRA) Agreement,
form number MHC-98-9431.
5. (a) Application, form MHC-84-9093 Rev. 7-1998
(b) Application, form 92-9286 Rev. 9-1997 previously filed as
this exhibit to Registrant's Form N-4, File Number
33-80788, Post-Effective Amendment Number 5, is hereby
incorporated by reference.
6. Certificate of Incorporation and Bylaws.
(a) The Restated Certificate of Incorporation.
(b) The Bylaws of the Depositor.
7. Not applicable.
8. Not applicable.
9. Opinion and consent of Donald F. Gruber, Esq., to be filed by
subsequent amendment.
10. Consent of KPMG Peat Marwick LLP, to be filed by subsequent
amendment.
11. Not applicable.
12. Not applicable.
<PAGE>
13. Schedule for Computation of Performance Quotation
(a) Stock Segregated Sub-Account Performance Calculations
previously filed as this exhibit to Registrant's Form N-4,
File Number 33-80788, Post-Effective Amendment Number 4,
is hereby incorporated by reference.
(b) Bond Segregated Sub-Account Performance Calculations
previously filed as this exhibit to Registrant's Form N-4,
File Number 33-80788, Post-Effective Amendment Number 4,
is hereby incorporated by reference.
(c) Money Market Segregated Sub-Account Performance
Calculations previously filed as this exhibit to
Registrant's Form N-4, File Number 33-80788,
Post-Effective Amendment Number 4, is hereby incorporated
by reference.
(d) Managed Segregated Sub-Account Performance Calculations
previously filed as this exhibit to Registrant's Form N-4,
File Number 33-80788, Post-Effective Amendment Number 4,
is hereby incorporated by reference.
(e) Mortgage Securities Segregated Sub-Account Performance
Calculations previously filed as this exhibit to
Registrant's Form N-4, File Number 33-80788,
Post-Effective Amendment Number 4, is hereby incorporated
by reference.
(f) Index Segregated Sub-Account Performance Calculations
previously filed as this exhibit to Registrant's Form N-4,
File Number 33-80788, Post-Effective Amendment Number 4,
is hereby incorporated by reference.
(g) Aggressive Growth Segregated Sub-Account Performance
Calculations previously filed as this exhibit to
Registrant's Form N-4, File Number 33-80788,
Post-Effective Amendment Number 4, is hereby incorporated
by reference.
(h) International Stock Segregated Sub-Account Performance
Calculations previously filed as this exhibit to
Registrant's Form N-4, File Number 33-80788,
Post-Effective Amendment Number 4, is hereby incorporated
by reference.
(i) Small Company Segregated Sub-Account Performance
Calculations previously filed as this exhibit to
Registrant's Form N-4, File Number 33-80788,
Post-Effective Amendment Number 4, is hereby incorporated
by reference.
(j) Value Stock Segregated Sub-Account Performance
Calculations previously filed as this exhibit to
Registrant's Form N-4, File Number 33-80788,
Post-Effective Amendment Number 4, is hereby incorporated
by reference.
(k) Maturing Government Bond - 1998 Segregated Sub-Account
Performance Calculations previously filed as this exhibit
to Registrant's Form N-4, File Number 33-80788,
Post-Effective Amendment Number 4, is hereby incorporated
by reference.
<PAGE>
(l) Maturing Government Bond - 2002 Segregated Sub-Account
Performance Calculations previously filed as this exhibit
to Registrant's Form N-4, File Number 33-80788,
Post-Effective Amendment Number 4, is hereby incorporated
by reference.
(m) Maturing Government Bond - 2006 Segregated Sub-Account
Performance Calculations previously filed as this exhibit
to Registrant's Form N-4, File Number 33-80788,
Post-Effective Amendment Number 4, is hereby incorporated
by reference.
(n) Maturing Government Bond - 2010 Segregated Sub-Account
Performance Calculations previously filed as this exhibit
to Registrant's Form N-4, File Number 33-80788,
Post-Effective Amendment Number 4, is hereby incorporated
by reference.
15. Minnesota Life Insurance Company Power of Attorney To Sign
Registration Statements.
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Insurance Company with Registrant
- ------------------ ---------------------- ---------------------
<S> <C> <C>
Guilio Agostini Director None
3M
3M Center -
Executive 220-14W-08
St. Paul, MN 55144-1000
Anthony L. Andersen Director None
H. B. Fuller Company
2424 Territorial Road
St. Paul, MN 55114
Leslie S. Biller Director None
Wells Fargo & Company
MAC 0101-121
420 Montgomery Street
San Francisco, CA 94104
John F. Bruder Senior Vice President None
Minnesota Life Insurance
Company
400 Robert Street North
St. Paul, MN 55101
Keith M. Campbell Senior Vice President None
Minnesota Life Insurance
Company
400 Robert Street North
St. Paul, MN 55101
John F. Grundhofer Director None
U.S. Bancorp
601 2nd Avenue South
Suite 2900
Minneapolis, MN 55402-4302
Robert E. Hunstad Executive Vice President None
Minnesota Life Insurance
Company
400 Robert Street North
St. Paul, MN 55101
James E. Johnson Senior Vice President None
Minnesota Life Insurance and Actuary
Company
400 Robert Street North
St. Paul, MN 55101
David S. Kidwell, Ph.D. Director None
The Curtis L. Carlson
School of Management
University of Minnesota
321 19th Avenue South
Minneapolis, MN 55455
Reatha C. King, Ph.D. Director None
General Mills Foundation
P.O. Box 1113
Minneapolis, MN 55440
William B. Lawson, Sr. Director None
Lawson Software
1300 Godward Street
Minneapolis, MN 55413
Dennis E. Prohofsky Senior Vice President None
Minnesota Life Insurance General Counsel and
Company Secretary
400 Robert Street North
St. Paul, MN 55101
<PAGE>
Thomas E. Rohricht Director None
Doherty, Rumble & Butler
Professional Association
2800 Minnesota World Trade Center
30 East Seventh Street
St. Paul, MN 55101-4999
Robert L. Senkler Chairman, President and None
Minnesota Life Insurance Chief Executive Officer
Company
400 Robert Street North
St. Paul, MN 55101
Michael E. Shannon Director None
Ecolab, Inc.
370 Wabasha Street
Ecolab Center
St. Paul, MN 55102
Gregory S. Strong Senior Vice President and None
Minnesota Life Insurance Chief Financial Officer
Company
400 Robert Street North
St. Paul, MN 55101
Terrence M. Sullivan Senior Vice President None
Minnesota Life Insurance
Company
400 Robert Street North
St. Paul, MN 55101
Randy F. Wallake Senior Vice President None
Minnesota Life Insurance
Company
400 Robert Street North
St. Paul, MN 55101
William N. Westhoff Senior Vice President None
Minnesota Life Insurance
Company
400 Robert Street North
St. Paul, MN 55101
Frederick T. Weyerhaeuser Director None
Clearwater Investment Trust
332 Minnesota Street
Suite W-2090
St. Paul, MN 55101-1308
</TABLE>
<PAGE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Wholly-owned subsidiary of Minnesota Mutual Companies, Inc.:
Securian Holding Company (Delaware)
Wholly-owned subsidiary of Securian Holding Company:
Securian Financial Group, Inc. (Delaware)
Wholly-owned subsidiary of Securian Financial Group, Inc.:
Minnesota Life Insurance Company
Wholly-owned subsidiaries of Minnesota Life Insurance Company:
Advantus Capital Management, Inc.
HomePlus Insurance Company
Northstar Life Insurance Company (New York)
The Ministers Life Insurance Company
MIMLIC Life Insurance Company (Arizona)
Robert Street Energy, Inc.
Capitol City Property Management, Inc.
Personal Finance Company (Delaware)
Enterprise Holding Corporation
Wholly-owned subsidiary of Advantus Capital Management, Inc.:
Ascend Financial Services, Inc.
Wholly-owned subsidiaries of Ascend Financial Services, Inc.:
MIMLIC Insurance Agency of Massachusetts, Inc. (Massachusetts)
MIMLIC Insurance Agency of Texas, Inc. (Texas)
Ascend Insurance Agency of Nevada, Inc. (Nevada)
Ascend Insurance Agency of Oklahoma, Inc. (Oklahoma)
Wholly-owned subsidiaries of Enterprise Holding Corporation:
Financial Ink Corporation
Oakleaf Service Corporation
Concepts in Marketing Research Corporation
Concepts in Marketing Services Corporation
Lafayette Litho, Inc.
DataPlan Securities, Inc. (Ohio)
MIMLIC Imperial Corporation
MIMLIC Funding, Inc.
MCM Funding 1997-1, Inc.
MCM Funding 1998-1, Inc.
MIMLIC Venture Corporation
HomePlus Insurance Agency, Inc.
Ministers Life Resources, Inc.
Wedgewood Valley Golf, Inc.
Wholly-owned subsidiary of HomePlus Insurance Agency, Inc.:
HomePlus Insurance Agency of Texas, Inc. (Texas)
Majority-owned subsidiary of Ascend Financial Services, Inc.:
MIMLIC Insurance Agency of Ohio, Inc. (Ohio)
Open-end registered investment company offering shares solely to separate
accounts of Minnesota Life Insurance Company:
Advantus Series Fund, Inc.
Fifty percent-owned subsidiary of MIMLIC Imperial Corporation:
C.R.I. Securities, Inc.
Majority-owned subsidiaries of Minnesota Life Insurance Company:
Advantus Enterprise Fund, Inc.
Advantus International Balanced Fund, Inc.
Advantus Venture Fund, Inc.
Advantus Real Estate Securities Fund, Inc.
Less than majority-owned, but greater than 25% owned, subsidiaries of
Minnesota Life Insurance Company:
Advantus Money Market Fund, Inc.
MIMLIC Cash Fund, Inc.
Advantus Cornerstone Fund, Inc.
Advantus Index 500 Fund, Inc.
Less than 25% owned subsidiaries of Minnesota Life Insurance Company:
Advantus Horizon Fund, Inc.
Advantus Spectrum Fund, Inc.
Advantus Mortgage Securities Fund, Inc.
Advantus Bond Fund, Inc.
Unless indicated otherwise parenthetically, each of the above corporations
is a Minnesota corporation.
<PAGE>
ITEM 27. NUMBER OF CONTRACT OWNERS
As of March 25, 1998, the number of holders of securities of this class were
as follows:
<TABLE>
<CAPTION>
Number of Record
Title of Class Holders
-------------- ----------------
<S> <C>
Variable Annuity Contracts 5,943
</TABLE>
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
<PAGE>
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
Minnesota Life Insurance Company and Variable Annuity Account pursuant to the
foregoing provisions, or otherwise, Minnesota Life Insurance Company and
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
Minnesota Life Insurance Company and Variable Annuity Account of expenses
incurred or paid by a director, officer or controlling person of Minnesota
Life Insurance Company and 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, Minnesota
Life Insurance Company and 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 Ascend Financial Services, Inc.
Ascend Financial Services, Inc. is also the principal
underwriter for twelve 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.; Advantus Venture Fund, Inc.; Advantus Index 500 Fund,
Inc.; Advantus Real Estate Securities Fund, Inc.; and the MIMLIC
Cash Fund, Inc.) and for four additional registered separate
accounts of Minnesota Life Insurance Company, all of which offer
annual contracts and life insurance policies on a variable basis.
(b) Directors and Officers of Underwriter.
DIRECTORS AND OFFICERS OF UNDERWRITER
<TABLE>
<CAPTION>
Positions and Positions and
Name and Principal Offices Offices
Business Address with Underwriter with Registrant
- ---------------- ---------------- ---------------
<S> <C> <C>
<PAGE>
Robert E. Hunstad Director None
Minnesota Life
Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101
George I. Connolly President, Chief None
Ascend Financial Services, Inc. Executive Officer, Chief
400 Robert Street North Compliance Officer, and
St. Paul, Minnesota 55101 Director
Margaret Milosevich Vice President, Chief Assistant Secretary
Ascend Financial Services, Inc. Operations Officer,
400 Robert Street North Treasurer and Secretary
St. Paul, Minnesota 55101
Dennis E. Prohofsky Director None
Minnesota Life
Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101
Thomas L. Clark Assistant Treasurer Assistant Secretary
Ascend Financial Services, Inc. and Assistant Secretary
400 Robert Street North
St. Paul, Minnesota 55101
</TABLE>
(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
- ------------ ---------------- ---------------- ----------- ------------
Ascend
Financial
Services,
Inc. $15,989,724
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 Minnesota Life Insurance Company, St. Paul, Minnesota 55101-2098.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
(a) Previously Filed
(b) Previously Filed
(c) Previously Filed
(d) Minnesota Life Insurance Company hereby represents that, as to the
variable annuity contract which is the subject of this Registration
Statement, File No. 33-80788, the fees and charges deducted under the
contract, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred and the risks assumed by
the Minnesota Life Insurance Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of Saint Paul and the State of Minnesota on the 3rd day of March, 1999.
VARIABLE ANNUITY ACCOUNT
(Registrant)
By: MINNESOTA LIFE INSURANCE COMPANY
(Depositor)
By ______________________________________
Robert L. Senkler
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the Depositor,
Minnesota Life Insurance Company, has duly caused this Post-Effective
Amendment to the 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 3rd day of March, 1999.
MINNESOTA LIFE INSURANCE COMPANY
By ______________________________________
Robert L. Senkler
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
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
--------- ----- ----
Chairman, President and March 3, 1999
- ---------------------------- Chief Executive Officer
Robert L. Senkler
* Director
- ----------------------------
Giulio Agostini
* Director
- ----------------------------
Anthony L. Andersen
* Director
- ----------------------------
Leslie S. Biller
* Director
- ----------------------------
John F. Grundhofer
* Director
- ----------------------------
David S. Kidwell, Ph.D.
* Director
- ----------------------------
Reatha C. King, Ph.D.
Director
- ----------------------------
William B. Lawson, Sr.
* Director
- ----------------------------
Thomas E. Rohricht
* Director
- ----------------------------
Michael E. Shannon
* Director
- ----------------------------
Frederick T. Weyerhaeuser
Vice President March 3, 1999
- ---------------------------- (chief financial officer)
Gregory S. Strong
Vice President March 3, 1999
- ---------------------------- (chief accounting officer)
Gregory S. Strong
Attorney-in-Fact March 3, 1999
- ----------------------------
Dennis E. Prohofsky
* Pursuant to power of attorney dated October 19, 1998, a copy of which is
filed herewith.
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
4. (a) The Flexible Payment Deferred Variable Annuity, form
MHC-94-9307
(d) The Retirement Certificate, form MHC-83-9060
(e) Tax Sheltered Annuity Loan Agreement, form MHC-94-9309
(f) Individual Retirement Annuity (IRA) Agreement, SEP,
Traditional IRA and Roth-IRA, form number MHC-97-9418.
(g) Individual Retirement Annuity, SMIPLE - (IRA)
Agreement, form number MHC-98-9431.
5. (a) Application, form MHC-84-9093 Rev. 7-1998
6. (a) The Restated Certificate of Incorporation.
(b) The Bylaws of the Depositor
15. Minnesota Life Insurance Company Power of Attorney To Sign
Registration Statements
<PAGE>
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 the beneficiary are as named in the application unless they are
changed as provided for in this contract.
Minnesota Life Insurance Company is a subsidiary of Minnesota Mutual
Companies, Inc., a mutual insurance holding company. The owner is a memeber
of Minnesota Mutual Companies, Inc., which holds it's annual meetings on the
first Tuesday in March of each year at 3 p.m. local time. The meetings are
held at 400 Robert Street North, St. Paul, MN 55101-2098.
Signed for Minnesota Life Insurance Company at St. Paul, Minnesota, on the
contract date.
President
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 * FLEXIBLE PAYMENT DEFERRED *
RECEIPT. IF YOU EXERCISE THIS RIGHT, YOU * VARIABLE ANNUITY CONTRACT *
WILL RECEIVE THE GREATER OF (a) THE * *
ACCUMULATION VALUE OF THIS CONTRACT * FIXED OR VARIABLE ANNUITY *
ATTRIBUTABLE TO YOUR PURCHASE PAYMENTS, OR * BENEFITS *
(b) THE AMOUNT OF PURCHASE PAYMENTS PAID BY * *
YOU UNDER THIS CONTRACT. WE WILL PAY THIS * A NON PARTICIPATING *
REFUND WITHIN 7 DAYS AFTER WE RECEIVE YOUR * CONTRACT *
NOTICE OF CANCELLATION. *****************************
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT
MINNESOTA LIFE
Minnesota Life Insurance Company
400 Robert Street North
St. Paul, MN 55101-2098
MHC-94-9307
<PAGE>
CONTRACT INDEX
Alphabetical Index to the Provision of Your Contract
Page
----
Additional Information 10
Allocation of Purchase Payments 3
Amount Payable at Death 9
Annuity Payment Options 6
Annuity Provisions 6
Assignment 10
Beneficiary 10
Contract Charges 4
Definitions 2
General Information 2
Misstatement 10
Purchase Payments 3
Transfer Provisions 5
Valuation 4
Withdrawal and Surrender 5
<PAGE>
YOUR CONTRACT INFORMATION
Annuitant: John C. Doe
-----------
Date of Birth: April 1, 1963
-------------
Owner: John C. Doe
-----------
Jurisdiction: Your State
----------
Contract Number: 1-234-567
---------
Contract Date: September 1, 1998
-----------------
Annuity Commencement Date: January 1, 2024
---------------
Anticipated Purchase Payment: $5,000.00
---------
*****************************
* *
* FLEXIBLE PAYMENT DEFERRED *
* VARIABLE ANNUITY CONTRACT *
* *
* FIXED OR VARIABLE ANNUITY *
BENEFITS *
* *
* A NON PARTICIPATING *
* CONTRACT *
*****************************
MHC-94-9307 Minnesota Life 1
<PAGE>
DEFINITIONS
When we use the following words, this is what we mean:
THE ANNUITANT
The person named on page 1 who may receive lifetime benefits under this
contract. 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 named as owner in the application. The owner may
be changed. Joint owners will be considered a single entity.
JOINT OWNER
The person designated to share equally in all rights and privileges of this
contract. Only your spouse may be named as joint owner. Both signatures will
be required to exercise your rights under this contract.
BENEFICIARY
The person, persons or entity designated to receive death benefits payable under
the contract.
WE, OUR, US
Minnesota Life Insurance Company.
CONTRACT DATE
The effective date of this contract. It is also the date from which we
determine contract anniversaries and contract years.
CONTRACT ANNIVERSARY
The same day and month as the contract date for each succeeding year of this
contract.
CONTRACT YEAR
A period of one year beginning with the contract date or a contract anniversary.
MHC-94-9307 Minnesota Life 2
<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.
ACCUMULATION VALUE
The sum of your values under this contract in the separate account. It is
composed of your interest in one or more sub-accounts of the separate account
excluding variable annuity payment amounts. Your interest in each sub-account
shall be valued separately. The total of those values will be the accumulation
value.
SURRENDER VALUE
The surrender value of this contract shall be the accumulation value reduced by
any deferred sales charge.
SEPARATE ACCOUNT
A separate investment account titled Variable Annuity Account. This separate
account was established by us for this class of contract 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 of ours.
1940 ACT
The Investment Company Act of 1940, as amended, or any similar successor federal
legislation.
MHC-94-9307 Minnesota Life 3
<PAGE>
WRITTEN REQUEST
A request in writing signed by you. In the case of joint owners, the signatures
of both owners will be required. In some cases, we may provide a form for your
use. We also may require that this contract be sent in with your written
request.
PURCHASE PAYMENTS
Amounts paid to us as consideration for the benefits provided by this contract.
Total purchase payments in the contract may not exceed $5,000,000 without our
consent.
ANNUITY PAYMENTS
Payments made at regular intervals to the annuitant or any other payee. Annuity
payments will be due and payable only on the first day of a calendar month.
FIXED ANNUITY
Annuity payments of equal amounts during the payment period.
VARIABLE ANNUITY
Annuity payments which increase or decrease in amount to reflect the investment
experience of the separate account and its sub-accounts.
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 contain the entire
contract between you and us. Any statements made in the application either by
you or 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 avoid this contract or defend against a claim
under this contract unless the statement is contained in the application.
MHC-94-9307 Minnesota Life 4
<PAGE>
No change or waiver of any of the provisions of this contract will be valid
unless made in writing by us. It must also be signed by our president, a vice
president, our 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. It will be subject to all the terms and conditions of this contract
unless we state otherwise in the agreement.
HOW DO YOU EXERCISE YOUR RIGHTS UNDER THIS CONTRACT?
You can exercise all the rights under this contract. You can do this by making
a written request to us. You have these rights during the annuitant's lifetime
and before annuity payments begin. 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 accumulation value and surrender value
of this contract. It will also show the current separate account accumulation
unit values. The report will be as of a date within two months of its mailing.
PURCHASE PAYMENTS
WHERE DO YOU MAKE PURCHASE PAYMENTS?
All 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.
DO YOU CHOOSE WHEN TO MAKE PURCHASE PAYMENTS?
Yes. You may choose when to make purchase payments. They may be made at any
time prior to the date that annuity payments are to begin.
MHC-94-9307 Minnesota Life 5
<PAGE>
ARE THERE OTHER METHODS OF MAKING PURCHASE PAYMENTS?
Yes. It may be possible for you to arrange with your employer to make your
purchase payments by payroll deduction. Or, under some plans, your employer may
make purchase payments on your behalf. Also, your bank or other financial
institution may consent to have your purchase payments automatically withdrawn
from your account and paid directly to us.
WHAT DEDUCTIONS ARE MADE FROM PURCHASE PAYMENTS?
There are usually no deductions made from the purchase payments. However, we do
reserve the right to make a deduction from purchase payments for state premium
taxes, where applicable.
HOW ARE PURCHASE PAYMENTS ALLOCATED?
They are allocated to the separate account and its sub-accounts. The allocation
is made as you direct. Initially, you must indicate your allocation in the
application. Later, you may change your allocation for future purchase payments
by giving us written notice. Applications received without instructions as to
allocation will be treated as incomplete.
ARE SEPARATE ACCOUNT OPTIONS AVAILABLE?
Yes. The separate account currently is composed of the following sub-accounts:
Growth Account
Bond Account
Money Market Account
Asset Allocation Account
Mortgage Securities Account
Index 500 Account
Capital Appreciation Account
International Stock Account
Small Company Account
Value Stock Account
Maturing Government Bond-1998 Account
Maturing Government Bond-2002 Account
Maturing Government Bond-2006 Account
Maturing Government Bond-2010 Account
Purchase payments may be applied to one or more of these sub-accounts. They may
also be
MHC-94-9307 Minnesota Life 6
<PAGE>
made to any other sub-account which may be established by us under the separate
account for contracts of this class. We reserve the right to add, combine or
remove any sub-accounts of the separate account.
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. Purchase payments
are invested in the funds at their net asset value. The net asset value per
share for each fund is determined by adding the current value of all securities
and all other assets held by such fund, subtracting liabilities, and dividing
the remainder by the number of shares outstanding.
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 accumulation values, future
purchase payments and future annuity payments.
IS THERE A MINIMUM AMOUNT WHICH MUST BE ALLOCATED TO THE SUB-ACCOUNTS OF THE
SEPARATE ACCOUNT?
No.
MAY WE MAKE CHANGES TO THE SEPARATE ACCOUNT?
Yes. We reserve the right to transfer assets of the separate account to another
separate account when permitted by law. 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 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
MHC-94-9307 Minnesota Life 7
<PAGE>
(c) combine the separate account with one or more other separate accounts.
WHEN ARE PURCHASE PAYMENTS CREDITED TO THE CONTRACT?
Purchase payments are credited to the contract on the valuation date coincident
with or next following the day they are received in our home office. If they
are received on a day which is not a valuation date, those amounts will be
credited on the next valuation date.
MAY YOU STOP MAKING PURCHASE PAYMENTS?
Yes. You may stop making purchase payments at any time. If you stop making
purchase payments, the contract remains in force as a paid-up annuity according
to its terms. Its value may be applied to provide annuity payments at a later
date. You may make purchase payments again at any time before annuity payments
start unless the contract has been surrendered.
MAY WE CANCEL THE CONTRACT?
Yes. We may, in our discretion, cancel a contract if no purchase payments are
made for a period of two or more full contract years and both (a) the total
purchase payments made, less any withdrawals and associated charges, and (b) the
accumulation value of the contract, are less than $2,000. If such a
cancellation takes place, we will pay the accumulation value to you.
We will notify you of our intention to exercise these rights in our annual
report. We will act 90 days after the contract anniversary unless an additional
purchase payment is received before the end of that 90 day period.
CONTRACT CHARGES
ARE THERE CHARGES UNDER THIS CONTRACT?
Yes. There may be a deferred sales charge. Also, there are certain charges
which are made directly to the separate account and a transaction charge.
MHC-94-9307 Minnesota Life 8
<PAGE>
WHAT IS THE DEFERRED SALES CHARGE?
The deferred sales charge is the charge made on contract withdrawals or
surrenders. It is made during the seven year period following the receipt of
each purchase payment. The amount withdrawn plus any deferred sales charge is
deducted from the accumulation value. In the separate account, accumulation
units will be cancelled of a value equal to the applicable charge and the amount
of the withdrawal.
WHAT IS THE AMOUNT OF THE DEFERRED SALES CHARGE?
The amount of the deferred sales charge is determined from the percentages shown
in the table below. All purchase payments will be allocated to a withdrawal or
surrender on a first-in, first-out basis for the purpose of determining the
amount of the deferred sales charge. The deferred sales charge applies only to
withdrawal or surrender of purchase payments received by us within seven years
of the date of the withdrawal or surrender. The deferred sales charge
percentage is as shown in the table below:
<TABLE>
<CAPTION>
Years Since Payment Charge
------------------- ------
<S> <C>
0-1 7%
1-2 7%
2-3 6%
3-4 5%
4-5 4%
5-6 3%
6-7 2%
7 and thereafter 0%
</TABLE>
The amount of the deferred sales charge is determined by: (a) calculating the
number of years each purchase payment being withdrawn has been in the contract;
(b) multiplying each purchase payment being withdrawn by the appropriate
deferred sales charge percentage in the table; and (c) adding the deferred sales
charge from all purchase payments as calculated in (b).
ARE THERE CHARGES ASSOCIATED WITH THE SEPARATE ACCOUNT?
Yes. There are two charges associated with the separate account. They are the
mortality risk charge and the expense risk charge.
MHC-94-9307 Minnesota Life 9
<PAGE>
Both of these charges are deducted on each valuation date from the separate
account. On an annual basis, together they may be as much as 1.40% of the net
asset value of the separate account.
WHAT IS THE MORTALITY RISK CHARGE?
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, it may be as
much as .80% of the net asset value of the separate account.
WHAT IS THE EXPENSE RISK CHARGE?
This is a charge to compensate us for the guarantee that the deductions provided
in this contract will be sufficient to cover our actual expenses. Actual
expense results incurred by us shall not adversely affect any payments or values
under this contract. On an annual basis, it may be as much as .60% of the net
asset value of the separate account.
VALUATION
HOW IS YOUR ACCUMULATION VALUE DETERMINED?
It is determined for each sub-account of the separate account. The separate
account value will include all sub-accounts of the separate account.
For each sub-account of the separate account, it is your accumulation units
multiplied by the accumulation unit value.
WHAT IS AN ACCUMULATION UNIT AND HOW IS ITS VALUE DETERMINED?
An accumulation unit is a measure of your interest in each sub-account of the
separate account. The number of accumulation units credited with respect to
each purchase payment is determined by dividing the portion of the purchase
payment allocated to each sub-account by the then current accumulation unit
value for that sub-account. This determination is made as of the valuation date
coincident with or next following the date on which we receive your purchase
payment at our home office. Once determined, the number of accumulation units
will not be
MHC-94-9307 Minnesota Life 10
<PAGE>
affected by changes in the accumulation unit value. However, the total number
of accumulation units for a sub-account will be affected by future contract
transactions including that sub-account. In addition, the units of each
sub-account will be increased by subsequent purchase payments and transfers to
that sub-account. The units of each sub-account will be decreased by deductions
for deferred sales charges and for transfers or withdrawals from that
sub-account.
The accumulation unit value will increase or decrease on each valuation date.
The amount of any increase or decrease will depend on the net investment
experience of the sub-account of the separate account during the valuation
period. The value of an accumulation unit for each sub-account was originally
set at $1.00 on the first valuation date. For any subsequent valuation date,
its value is equal to its value on the preceding valuation date multiplied by
the net investment factor for that sub-account for the valuation period ending
on the subsequent valuation date.
WHAT IS THE NET INVESTMENT FACTOR FOR EACH SUB-ACCOUNT?
The net investment factor for a valuation period is the gross investment rate
for such valuation period, less a deduction for the charges associated with the
separate account at a rate of not more than 1.40% 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.
MHC-94-9307 Minnesota Life 11
<PAGE>
TRANSFER PROVISIONS
WHAT IS A TRANSFER?
A transfer is a reallocation of funds under this contract among the sub-accounts
of the separate account.
MAY YOU MAKE TRANSFERS OF AMOUNTS UNDER THE CONTRACT?
Yes. These transfers may be made by your written request. We will make the
transfer on the basis of accumulation unit values on the valuation date
coincident with or next following the day we receive the request at our home
office.
DOES A DOLLAR AMOUNT LIMIT APPLY TO TRANSFERS?
No.
DO ANY OTHER RESTRICTIONS APPLY?
Yes. We reserve the right to make a charge, not to exceed $25, for each
transfer among the sub-accounts of the separate account when the frequency of
such transfer requests exceeds one every calendar month. If applied, this
charge will be deducted from your accumulation value.
MAY TRANSFERS TAKE PLACE ONCE AN ANNUITY BEGINS?
Yes. However, transfers are limited. They may be made only with respect to any
variable annuity payments. See the Annuity Payment Options section of this
contract.
MHC-94-9307 Minnesota Life 12
<PAGE>
WITHDRAWAL AND SURRENDER
MAY YOU WITHDRAW FUNDS FROM THIS CONTRACT?
Yes. At any time before annuity payments begin, you may request a partial
withdrawal from the accumulation value. You must make a written request for any
withdrawal. The amount of any withdrawal must be for at least $250. In the
event of a cash withdrawal, the accumulation value will be reduced by the amount
requested and by the deferred sales charge, if any. However, you may receive
the excess, if any, of the accumulation value of the contract over the sum of
all of the purchase payments made to the contract, reduced by the amount of
previous purchase payment withdrawals, without a deferred sales charge.
Unless instructed otherwise by you, withdrawals will be made from your interest
in each sub-account of the separate account in the same proportion that the
value of your interest in any sub-account bears to your total accumulation
value. Withdrawal values will be determined as of the valuation date coincident
with or next following the date your written withdrawal request is received at
our home office.
Systematic withdrawal plans of a fixed amount or a fixed amount over a specified
period are also available.
MAY YOU SURRENDER THE CONTRACT?
Yes. At any time before annuity payments begin, you may surrender this contract
for its surrender value. 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 BENEFITS BE PAID?
We will pay these benefits in a single sum. However, if this contract is
surrendered you may elect one of the annuity payment options. This election is
subject to the provisions of this contract.
MHC-94-9307 Minnesota Life 13
<PAGE>
ANNUITY PROVISIONS
WHEN DO ANNUITY PAYMENTS BEGIN?
You must notify us in writing: (a) that annuity payments are to be made to the
annuitant; (b) when these payments are to begin; (c) the form of the annuity;
and (d) what annuity payment option has been selected. We must receive this
notice at least 30 days before annuity payments are to begin. This contract
permits annuity payments to begin no later than age 85 or five years after the
date of issue of this contract, whichever is later. However, the beginning date
for annuity payments must be consistent with any restrictions applicable to the
plan under which this contract may have been purchased.
WHAT VALUE IS AVAILABLE TO BE APPLIED TO PROVIDE ANNUITY PAYMENTS?
On the date annuity payments are to begin, we will apply the accumulation value.
WHAT TYPES OF ANNUITIES ARE AVAILABLE?
Both fixed and variable annuities are available under this contract.
ARE THERE RESTRICTIONS ON ANNUITY PAYMENTS?
Yes. We require that the first monthly fixed or variable annuity payment must
be at least $20. It may be less if a payment of a smaller minimum amount is
required by law. If the first monthly fixed or variable annuity payment would
be less than that amount, we reserve the right to pay you the surrender value in
a lump sum. This payment would be in lieu of all other rights under this
contract.
In addition, we restrict the maximum amount which may be applied to provide a
fixed annuity under this contract. The maximum amount which may be applied
under this contract for a fixed annuity is $1,000,000.
MAY WE REQUIRE INFORMATION BEFORE MAKING ANNUITY PAYMENTS?
Yes. We reserve the right to require proof satisfactory to us of the age of the
annuitant and of any joint annuitant before payments begin.
MHC-94-9307 Minnesota Life 14
<PAGE>
We may also require proof that a person is alive before making any annuity
payment which is based on the survival of that person.
IF YOU MAKE NO ELECTION, WHEN DO ANNUITY PAYMENTS BEGIN?
If you do not elect another date, annuity payments will begin on the later of
the first day of the month immediately following: (a) the 85th birthday of the
annuitant; or (b) five years after the date of issue of this contract.
IF YOU FAIL TO ELECT AN ANNUITY OPTION, IS THERE AN OPTION UNDER WHICH ANNUITY
PAYMENTS WILL BE MADE?
Yes. If you do not elect an annuity payment option, we will make monthly
payments on the basis of Option 2A, a life annuity with a period certain of 120
months.
IF YOU FAIL TO ELECT AN ANNUITY FORM, IS THERE A FORM UNDER WHICH ANNUITY
PAYMENTS WILL BE MADE?
Yes. If you do not elect an annuity payment form, we will make annuity payments
in the form of a variable annuity using the Money Market Account.
MUST AN ANNUITY PAYMENT OPTION BE ELECTED?
No. You may elect a lump sum payment instead. If you do so, you and the
annuitant shall have no further rights under this contract.
ANNUITY PAYMENT OPTIONS
WHAT ANNUITY PAYMENT OPTIONS ARE AVAILABLE?
The following annuity payment options are available:
Option 1 -- Life Annuity -- annuity payments payable monthly for the lifetime of
the annuitant, ending with the last payment due prior to the annuitant's death.
Option 2 -- Life Annuity with a Period Certain -- annuity payments payable
monthly for the lifetime of the annuitant; provided, if the annuitant dies
before payments have
MHC-94-9307 Minnesota Life 15
<PAGE>
been made for the entire period certain, those remaining certain payments will
be made to the beneficiary.
The period certain may be for 120 months (Option 2A); for 180 months (Option
2B); or for 240 months (Option 2C).
Option 3 -- Joint and Last Survivor Annuity -- annuity payments payable monthly
for the joint lifetimes of the annuitant and a designated joint annuitant. The
payments end with the last payment due before the survivor's death. If this
option is elected, the contract and payments shall be the joint property of the
annuitant and the designated joint annuitant.
Option 4 -- Fixed Period Annuity -- annuity payments payable monthly for a fixed
period of from five to twenty years. If the annuitant dies before all payments
for the fixed period are received, payments will continue for the remainder of
the fixed period to the beneficiary.
ARE OTHER ANNUITY PAYMENT OPTIONS AVAILABLE?
Yes. Other options may be available. They will be as agreed upon between you
and us.
MAY THE BENEFICIARY RECEIVE A LUMP SUM PAYMENT INSTEAD OF THE REMAINING PERIOD
CERTAIN ANNUITY PAYMENTS?
Yes. The beneficiary may elect to have the present value of the remaining
period certain payments paid in a lump sum. This right exists under Options 2
and 4.
The lump sum payment will be the commuted value of the remaining period certain
payments. It will be based on the then current dollar amount of one payment.
We will use the same interest rate which served as a basis for the annuity.
HOW IS THE AMOUNT OF A VARIABLE ANNUITY PAYMENT DETERMINED?
The dollar amount of the first monthly variable annuity payment is determined by
applying the available value, after deduction of any premium taxes not
previously deducted, to a rate per $1,000 which is based on the Progressive
Annuity Table with interest at the rate of 4.5% per annum, assuming births
MHC-94-9307 Minnesota Life 16
<PAGE>
in the year 1900 and with an age setback of six years. The amount of the first
payment depends upon the annuity payment option selected, the adjusted age of
the annuitant and any joint annuitant and the amount applied. The ages shall be
adjusted using the same table illustrated in the answer describing the
determination of a fixed annuity amount. A number of annuity units is then
determined by dividing this dollar amount by the then current annuity unit
value. Thereafter, the number of annuity units remains unchanged during the
period of annuity payments. This determination is made separately for each
sub-account of the separate account. The number of annuity units is based upon
the available value in each sub-account as of the date annuity payments are to
begin.
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 month to month.
The value of an annuity unit for a sub-account is determined each month as of
the first day of the month. The value is equal to the annuity unit value for
that sub-account as of the first day of the preceding month multiplied by the
product of: (a) .996338; and (b) a sub-account investment factor. This
investment factor is the accumulation unit value for that sub-account on the
valuation date next following the fourteenth day of the preceding month divided
by the accumulation unit value for that sub-account on the valuation date next
following the fourteenth day of the second preceding month. For any date other
than the first of a month, the annuity unit value is that on the first day of
the next month.
The dollar amount determined for each sub-account will be aggregated for
purposes of making payment.
HOW IS THE AMOUNT OF A FIXED ANNUITY PAYMENT DETERMINED?
The dollar amount of a fixed annuity payment is determined by applying the
available value, after deduction of any premium taxes
MHC-94-9307 Minnesota Life 17
<PAGE>
not previously deducted, and deduction of a one-time contract fee of $200, to
the tables shown below. They show the dollar amount of each payment that can be
provided with each $1,000 of available value. Amounts shown here are based on
the Progressive Annuity Table with interest at the rate of 3% per annum,
assuming births in the year 1900, and with an age setback of six years. The
amount of each payment depends upon the adjusted age of the annuitant and any
joint annuitant. The adjusted age is determined from the actual age nearest
birthday at the time the first payment is due in the following manner:
<TABLE>
<CAPTION>
CALENDAR YEAR ADJUSTED AGE IS
OF BIRTH IS EQUAL TO--
------------- ---------------
<S> <C>
1900 - 1919 Actual Age
1920 - 1939 Age Minus 1
1940 - 1959 Age Minus 2
1960 - 1979 Age Minus 3
1980 and Later Age Minus 4
</TABLE>
GUARANTEED MINIMUM DOLLAR AMOUNT OF FIXED MONTHLY PAYMENT WHICH IS PURCHASED
WITH EACH $1,000 OF VALUE APPLIED
<TABLE>
<CAPTION>
ADJUSTED AGE
OF ANNUITANT SINGLE LIFE ANNUITIES
- ------------ ---------------------------------------------------------------
OPTION 1 OPTION 2A OPTION 2B OPTION 2C
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
50 $3.99 $3.97 $3.94 $3.89
51 4.05 4.03 4.00 3.95
52 4.13 4.10 4.06 4.00
53 4.20 4.17 4.13 4.06
54 4.28 4.25 4.20 4.12
55 4.37 4.33 4.27 4.18
56 4.46 4.41 4.35 4.25
57 4.55 4.50 4.42 4.31
58 4.65 4.59 4.51 4.38
59 4.76 4.69 4.59 4.44
60 4.87 4.79 4.68 4.51
61 4.99 4.90 4.77 4.58
52 5.12 5.01 4.86 4.65
63 5.26 5.13 4.96 4.72
64 5.40 5.25 5.06 4.79
65 5.56 5.39 5.16 4.85
66 5.72 5.52 5.27 4.92
67 5.90 5.67 5.37 4.99
68 6.09 5.82 5.48 5.05
69 6.29 5.97 5.59 5.11
MHC-94-9307 Minnesota Life 18
<PAGE>
70 6.51 6.13 5.69 5.16
71 6.74 6.30 5.80 5.21
72 6.99 6.48 5.90 5.26
73 7.26 6.66 6.01 5.31
74 7.54 6.84 6.11 5.34
75 7.86 7.03 6.20 5.38
<CAPTION>
OPTION 3 -- JOINT AND LAST SURVIVOR LIFE ANNUITY
ADJUSTED AGE OF
JOINT ANNUITANT* ADJUSTED AGE OF ANNUITANT*
- ---------------- ----------------------------------------------------------
55 60 62 65 67 70 75
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
54 $3.80 $3.93 $3.98 $4.04 $4.08 $4.13 $4.19
59 3.95 4.14 4.21 4.32 4.38 4.46 4.57
61 4.00 4.22 4.31 4.43 4.50 4.61 4.75
64 4.07 4.34 4.44 4.60 4.70 4.83 5.03
66 4.12 4.41 4.53 4.71 4.82 4.99 5.23
69 4.17 4.50 4.65 4.86 5.01 5.23 5.56
74 4.25 4.64 4.81 5.09 5.29 5.60 6.11
</TABLE>
* Dollar amounts of the monthly payments for ages not shown in this table will
be calculated on the same basis as those shown and may be obtained from us
upon request.
OPTION 4 -- FIXED PERIOD ANNUITY
<TABLE>
<CAPTION>
FIXED PERIOD DOLLAR AMOUNT FIXED PERIOD DOLLAR AMOUNT
(YEARS) OF PAYMENT (YEARS) OF PAYMENT
------------ ------------- ------------ -------------
<S> <C> <C> <C>
5 $17.91 13 $7.71
6 15.14 14 7.26
7 13.16 15 6.87
8 11.68 16 6.53
9 10.53 17 6.23
10 9.61 18 5.96
11 8.86 19 5.73
12 8.24 20 5.51
</TABLE>
WILL THESE TABLES ALWAYS BE USED FOR ANNUITY PURCHASES?
Not necessarily. If, when annuity payments are elected, we are using tables of
annuity purchase rates for this class of contract which would result in larger
annuity payments, we will use those tables instead.
ONCE ANNUITY PAYMENTS BEGIN, MAY A FIXED ANNUITY OPTION BE CHANGED?
No.
MHC-94-9307 Minnesota Life 19
<PAGE>
ONCE ANNUITY PAYMENTS BEGIN, MAY A VARIABLE ANNUITY OPTION BE CHANGED?
No.
MAY AMOUNTS BE TRANSFERRED DURING THE ANNUITY PERIOD?
Yes. Amounts held as annuity reserves may be transferred among the variable
annuity sub-accounts during the annuity period. Annuity reserves may also be
transferred from a variable annuity to a fixed annuity during this time. The
maximum amount which may be applied for a fixed annuity is $1,000,000.
HOW DOES AN ANNUITANT CHANGE SUB-ACCOUNT ELECTIONS OR TRANSFER AMOUNTS TO A
FIXED ANNUITY?
The change must be made by written request. The annuitant and joint annuitant,
if any, must make such an election.
HOW WILL A TRANSFER OF VARIABLE ANNUITY SUB-ACCOUNTS BE MADE?
A transfer will be made on the basis of annuity unit values. The number of
annuity units from the sub-account being transferred will be converted to a
number of annuity units in a new sub-account. The annuity payment option will
stay the same.
When you tell us to make such a transfer it will be effective for future annuity
payments. Your transfer will be effective and funds will be actually
transferred in the middle of the month prior to the next annuity payment
affected by your request. We will use the described valuation procedures and
the adjusted current age of the annuitant and any joint annuitant to determine
an initial variable annuity payment.
After this conversion, a number of annuity units in the new sub-account will be
payable under the elected option. The first payment after conversion will be of
the same amount as it would have been without the transfer. The number of
annuity units will be set at that number of units which are needed to pay that
same amount on the transfer date.
MHC-94-9307 Minnesota Life 20
<PAGE>
ARE THERE ANY RESTRICTIONS ON ANNUITY SUB-ACCOUNT TRANSFERS?
Yes. The transfer of an annuity reserve amount from any sub-account must be at
least equal to: (a) $5,000; or (b) the entire amount of the reserve remaining
in that sub-account.
In addition, annuity payments must have been in effect for a period of 12 months
before a change may be made. Such transfers can be made only once every 12
months. Your written request for an annuity transfer must be received by us
more than 30 days in advance of the due date of the annuity payment subject to
the transfer.
MAY AMOUNTS HELD AS RESERVES TO PAY A VARIABLE ANNUITY BE TRANSFERRED TO A FIXED
ANNUITY?
Yes. However, the restrictions which apply to annuity sub-account transfers
will apply here as well.
When you tell us to make such a transfer it will be effective for future annuity
payments. Your transfer will be effective and funds will be actually
transferred in the middle of the month prior to the next annuity payment. We
will use the described fixed annuity pricing at the time of transfer to
determine an initial fixed annuity payment, including the deduction of a
one-time contract fee of $200 and using the adjusted current age of the
annuitant and any joint annuitant.
The amount transferred will then be applied to provide a fixed annuity amount.
This amount will be based upon the adjusted age of the annuitant and any joint
annuitant at the time of the transfer. The payment option will remain the same.
MAY AMOUNTS PAID AS A FIXED ANNUITY BE TRANSFERRED TO A VARIABLE ANNUITY?
No.
MHC-94-9307 Minnesota Life 21
<PAGE>
AMOUNT PAYABLE AT DEATH
WHAT AMOUNT IS PAYABLE AT DEATH?
If you die before annuity payments have started, we will pay the accumulation
value of the contract to the named beneficiary. If the owner of this contract
is other than a natural person, such as a trust or other similar entity, we will
pay a death benefit of the accumulation value to the named beneficiary on the
death of the annuitant, if it occurs prior to the date that annuity payments
have started.
The accumulation value will be determined as of the valuation date coincident
with or next following the day we receive due proof of death at our home office.
If the annuitant dies after annuity payments have started, we will pay whatever
amount may be called for by the terms of the annuity payment option selected.
The remaining interest in the contract must be distributed at least as rapidly
as under the option in effect at the annuitant's death.
IS THERE A GUARANTEED DEATH BENEFIT?
Yes. This contract has a guaranteed death benefit if you die before annuity
payments have started. The death benefit shall be equal to the greater of: (a)
the amount of the accumulation value payable at death; or (b) the amount of the
total purchase payments paid to us as consideration for this contract, less all
contract withdrawals.
TO WHOM WILL WE PAY THOSE BENEFITS?
When we receive due proof of death satisfactory to us, we will pay the amount
payable at death under this contract to the beneficiary or beneficiaries. The
beneficiary will be the person or persons named in the application for this
contract unless you subsequently change the beneficiary. In that event, we will
pay the amount payable at death to the beneficiary named in your last change of
beneficiary request as provided in this contract.
HOW WILL THE AMOUNT PAYABLE AT DEATH BE PAID?
We will pay that amount in a single sum unless another form of settlement has
been
MHC-94-9307 Minnesota Life 22
<PAGE>
requested and agreed to by us. All payments by us are payable at our home
office. Proof of any claim under this contract must be submitted in writing to
us at our home office.
WHEN MUST DEATH BENEFITS BE PAID?
If you die on or before the date on which annuity payments begin and if the
designated beneficiary is a person other than your spouse, that beneficiary may
elect an annuity option measured by a period not longer than that beneficiary's
life expectancy. Annuity payments must begin not later than one year after your
death. If there is no designated beneficiary, then the entire interest in this
contract must be distributed within five years after your death. If the
annuitant dies after annuity payments have begun, any payments received by a
non-spouse beneficiary must be distributed at least as rapidly as under the
method elected by the annuitant as of the date of death.
If there are joint owners of this contract, the death benefit described will not
be payable until the death of the surviving joint owner.
If any portion of the contract interest is payable to your designated
beneficiary who is your surviving spouse, that spouse shall be treated as the
contract owner for purposes of: (a) when payments must begin; and (b) the time
of distribution in the event of your spouse's death.
WHAT HAPPENS IF ONE OR ALL OF THE BENEFICIARIES DIE?
Before annuity payments have begun, if a beneficiary dies, that beneficiary's
interest in this contract ends with that beneficiary's death. Only those
beneficiaries who survive will be eligible to share in a death benefit. If no
beneficiary survives you prior to the date an annuity begins we will pay the
accumulation value of this contract to the executors or administrators of your
estate.
After annuity payments have begun, if there is no beneficiary after the death of
the annuitant, any remaining value under the annuity option will be paid to the
annuitant's estate.
MHC-94-9307 Minnesota Life 23
<PAGE>
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 the annuitant dies before the request has
been recorded, the request will not be effective as to those death proceeds we
have paid before the request was recorded in our home office records.
ADDITIONAL INFORMATION
CAN YOU ASSIGN THIS CONTRACT?
Unless this contract provides otherwise, you may assign all rights to this
contract during the lifetime of the annuitant. We will not be bound by any
assignment until we have recorded written notice 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 made by us before it was recorded. Any proceeds
payable to an assignee will be paid in a single sum. Any claim made by an
assignee will be subject to proof of the assignee's interest and the extent of
the assignment.
If this contract is issued pursuant to a retirement plan which receives
favorable tax treatment under the provisions of Section 401, 403, 404, 408 or
457 of the Internal Revenue Code, then, it may not be assigned, pledged or
otherwise transferred except under such conditions as may be allowed under
applicable law.
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 paid-up benefit, withdrawal benefit, surrender benefit, or any other benefit
described by this contract shall be
MHC-94-9307 Minnesota Life 24
<PAGE>
calculated as of the date the provisions of the contract are exercised.
WILL THERE BE AN ADJUSTMENT IF A PERSON'S AGE IS MISSTATED?
Yes. If a person's age has been misstated, the amount payable under this
contract as an annuity will be that amount which would have been paid based upon
that person's correct age. In the case of an overpayment, we may either deduct
the required amount from that person's payments under this contract; or, we may
require you to pay us in cash; or 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 ADDITIONAL INFORMATION?
Yes. You must provide 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. Amounts payable at death, withdrawal and surrender benefits, accumulation
values and the paid-up annuity benefit described by this contract are not less
than the minimum benefits required by any statue of the state in which this
contract is delivered.
WHAT ANNUITY RESERVES WILL WE HOLD UNDER THIS CONTRACT?
Reserves held by us for annuity payments under this contract shall not be less
than those reserves required by the law in the state in which this contract is
delivered.
MAY THIS CONTRACT BE MODIFIED?
Yes. This 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 this contract unless the modification is made to comply with a
law or government regulation. Such modification will be in writing. You will
have the right to accept or reject such a modification.
MHC-94-9307 Minnesota Life 25
<PAGE>
DO WE OWN THE SEPARATE ACCOUNT?
Yes. We have exclusive and absolute ownership of the assets of the separate
account.
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. 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 the Securities and Exchange Commission has
determined that a state of emergency exists which may make such determination
and payment impractical.
DO YOU HAVE ADDITIONAL VOTING RIGHTS?
Yes. If you have separate account accumulation or 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 where shareholder approval is required
by law.
FLEXIBLE PAYMENT DEFERRED
VARIABLE ANNUITY CONTRACT
FIXED OR VARIABLE ANNUITY BENEFITS
A NON PARTICIPATING CONTRACT
MINNESOTA LIFE
MHC-94-9307 Minnesota Life 26
<PAGE>
MINNESOTA LIFE ANNUITY PAYMENT ENDORSEMENT
Minnesota Life Insurance Company certifies that the Annuitant named in the
Schedule below is entitled to the Annuity Payments described in this
schedule. Payments are to commence on the Annuity Commencement Date.
ANNUITY PAYMENTS SCHEDULE
ANNUITANT_______________________________________________________________________
ANNUITANT'S DATE OF BIRTH_______________________________________________________
ANNUITY COMMENCEMENT DATE_______________________________________________________
FORM OF ANNUITY PAYMENT_________________________________________________________
FIXED ANNUITY PAYMENT $_________________________________________________________
NUMBER OF VARIABLE ANNUITY UNITS________________________________________________
INITIAL VARIABLE ANNUITY PAYMENT $______________________________________________
JOINT ANNUITANT_________________________________________________________________
JOINT ANNUITANT'S DATE OF BIRTH_________________________________________________
ANNUITANT'S BENEFICIARY_________________________________________________________
Secretary Registrar President
MHC-83-9060 Minnesota Life Insurance Company
<PAGE>
MINNESOTA LIFE TAX SHELTERED ANNUITY LOAN AGREEMENT
WHAT DOES THIS AGREEMENT PROVIDE?
Before we issued your contract, we made the following changes. They modify the
contract and are considered to be a part of it.
These changes will allow contract loans when the contract is used as a tax
sheltered annuity. A tax sheltered annuity ("TSA") is one described under
Section 403(b) of the Internal Revenue Code, as amended.
DEFINITIONS
GENERAL ACCOUNT
All assets of ours other than those in the separate accounts established by us.
ACCUMULATION VALUE
The sum of your values under this contract in the separate account and in the
general account. It is composed of your interest in the general account, which
exists only during the period that a TSA loan is outstanding, and your interest
in one or more sub-accounts of the separate account, excluding variable annuity
payment amounts. Your interest in each sub-account and the general account
shall be valued separately. The total of those values will be your accumulation
value.
TSA LOAN ACCOUNT
A portion of our general account, created for accounting purposes only, to which
contract amounts are transferred as security for an outstanding loan under a
tax-sheltered annuity contract.
CONTRACT LOANS
CAN YOU BORROW MONEY ON YOUR CONTRACT?
Yes. You may borrow up to the maximum loan amount determined as of the date we
receive your request for a loan. We will require your written request for a
contract loan. We will send you a loan application and agreement for your
signature. We will charge interest on the loan in arrears. The contract will
be the only security required for your loan.
ARE THERE LIMITATIONS ON THE AMOUNT WHICH MAY BE BORROWED?
Yes. There is both a minimum loan amount and a maximum loan amount.
WHAT IS THE MINIMUM LOAN AMOUNT?
The minimum loan amount is $2,500.
WHAT IS THE MAXIMUM LOAN AMOUNT?
The maximum loan amount is the lesser of: a) $50,000; or b) one-half of your
contract's accumulation value or, if greater, your accumulation value up to
MHC-94-9309 MINNESTOA LIFE INSURANCE COMPANY
<PAGE>
the amount of $10,000, less 7% and less the amount of interest that would be
charged during the first quarter that such a loan would be outstanding.
WHAT ARE THE CONDITIONS OF THE LOAN REPAYMENT?
You must execute a loan agreement. The loan agreement will call for the
repayment of the loan over a period of five years or less. Repayment must be
made in substantially equal payments. The loan repayment schedule will require
the level amortization of the loan over the repayment period. Early repayment
may be made without penalty. You may repay the balance of the loan at any time.
Failure to meet the requirements of the loan agreement will result in its
termination. Loan amounts will then be treated as distributions under the
contract. Treatment of a loan as a distribution will result in taxable income.
In addition, depending upon your circumstances, it may result in income
taxation, tax penalties and disqualification of the contract as a tax-sheltered
annuity.
If there is a distribution, your surrender value will be reduced. The surrender
value will be reduced by the amount of the distribution, plus any applicable
deferred sales charges on that amount.
We will not be liable for any taxes or tax penalties on amounts received or paid
by us under the contract.
HOW ARE LOAN AMOUNTS SHOWN IN THE CONTRACT?
At the time that you make application for a loan, the amount requested as a loan
plus the interest that will be charged during the first quarter that the loan is
outstanding, plus an amount equal to 7% of the amount requested, will be
transferred from your separate account accumulation value into the general
account on the date your application is approved. The TSA Loan Account will
then be the source of the loan and the succeeding loan transactions.
ARE THERE ANY OTHER CONDITIONS?
Yes. You must indicate the separate account sub-accounts that will be
transferred to the TSA Loan Account. Unless instructed by you, transfers of
amounts to the TSA Loan Account will be made from amounts in each sub-account of
the separate account in the same proportion that the value of an amount in any
sub-account bears to your total accumulation value prior to the loan.
WHAT INTEREST RATE DO YOU HAVE TO PAY?
The loan interest rate will be set quarterly on the first day of each
calendar quarter. It will apply to the loan balance in that calendar
quarter. This rate will not exceed the greater of: the "published monthly
average" for the calendar month ending two months before the beginning of the
calendar quarter; the composite interest rate in effect on the contract plus
1%.
The "published monthly average" means the Moody's Composite Average of Yields on
Bonds as published by the Moody's Investors Service.
DOES THE CONTRACT CREDIT INTEREST ON THE GENERAL ACCOUNT?
Yes. This contract credits interest on the general account accumulation value
of this contract. Interest is credited at a rate of at least 3% per year,
compounded annually. We guarantee this rate for the life of the contract.
MHC-94-9309 MINNESTOA LIFE INSURANCE COMPANY
<PAGE>
MAY ADDITIONAL INTEREST BE CREDITED ON THE GENERAL ACCOUNT?
Yes. As conditions permit, we will credit additional amounts of interest to the
general account accumulation value.
HOW ARE TSA LOAN REPAYMENTS ALLOCATED?
As TSA loan amounts are repaid, those amounts are used to reduce the loan. When
the loan is repaid in full through early repayment or the completion of the loan
payments over the scheduled payment period, then the TSA Loan Account balance is
transferred to the Money Market Sub-Account of the separate account and TSA Loan
Account in the general account terminates. You may reallocate amounts among the
sub-accounts of the separate account by exercising your contract rights of
transfer.
Should you make application for a TSA contract loan and not complete the
necessary loan repayment forms, then after a period of sixty days the amount
transferred to the TSA Loan Account in the general account to secure the loan
will be transferred to the Money Market Sub-Account of the separate account.
The TSA Loan Account in the general account will then terminate. You may
reallocate amounts among the sub-accounts of the separate account by exercising
your contract rights of transfer.
WHAT HAPPENS IF YOU DO NOT REPAY YOUR LOAN?
Your contract will remain in force so long as there is a surrender value. If
there is a loan equal to the surrender value and if it is not repaid, a
distribution of the surrender value will cause the contract to terminate and may
disqualify the contract as a tax-sheltered annuity.
ARE THERE OTHER LIMITATIONS ON CONTRACT LOANS?
Yes. Those additional limitations are:
a) Only one loan may be outstanding at any time.
b) A period of at least three months is required between the repayment of a
loan and the application for a new loan.
c) If there is an outstanding loan on the contract, then any withdrawals will
be limited to the separate account accumulation values less any deferred
sales charges.
d) A loan is not available if annuity payments have begun.
e) The TSA Loan Account portion of your contract in the general account may
not be transferred to the separate account when the loan is outstanding,
provided, however, that a single transfer from the TSA Loan Account to the
separate account will be allowed each calendar year. The amount remaining
in the TSA Loan Account must be equal to the amount of the loan outstanding
plus 7% of that amount plus the amount of interest that would be charged
during the next calendar quarter on such loan.
MAY THE CONTRACT BE SURRENDERED WHILE THERE IS A LOAN?
Yes. If there is a loan and the contract is surrendered, the loan is due. If
it is not repaid prior to the surrender, the payment on surrender will be the
surrender value less the current loan balance. In addition, depending upon your
circumstances, such a surrender may result in income taxation, tax penalties and
disqualification of the contract as a tax-sheltered annuity.
<PAGE>
MAY THIS AGREEMENT BE AMENDED?
Yes. This agreement may be amended. It may be amended only to reflect any
change in the Internal Revenue Code, regulations or published revenue rulings.
You will be deemed to have consented to such an amendment. We will promptly
furnish you with any such amendment.
This agreement is effective as of the original contract date unless a different
effective date is shown here.
Secretary Registrar President
<PAGE>
MINNESOTA LIFE INDIVIDUAL RETIREMENT ANNUITY
(IRA) AGREEMENT
SEP, TRADITIONAL IRA AND ROTH-IRA
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 a Traditional Individual Retirement Annuity under
the Employee Retirement Income Security Act of 1974, as amended (herein "IRA");
and/or (c) as a Roth Individual Retirement Annuity under section 408A of the
Internal Revenue Code (herein "Roth-IRA"). The provisions that apply for
Traditional IRAs generally apply for SEPs, unless otherwise stated.
PURCHASE PAYMENTS
ARE TRADITIONAL 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 lower earning spouse,
purchase payments may be limited. They are also limited if the annuitant is the
lower earning 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) $4,000, 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.
The annuitant's employer may make purchase payments under the annuitant's SEP up
to the lesser of 15% of the annuitant's compensation (exclusive of compensation
in excess of $160,000) or $30,000. Other limits will apply if the annuitant's
IRA is used as part of a salary reduction SEP.
The annuitant, or the annuitant and his or her employer, are responsible for
determining the maximum purchase payments that may be made to an IRA.
ARE ROTH-IRA PURCHASE PAYMENTS LIMITED?
Yes. Where the annuitant has a Roth-IRA, purchase payments may be limited.
Annual purchase payments for all IRAs maintained by the annuitant may not exceed
the lesser of 100% of the annuitant's compensation includible in gross income in
any taxable year or $2,000. The maximum purchase payment that an annuitant may
make to a Roth-IRA will depend on the amount of the annuitant's income. The
maximum annual purchase payment allowed for a Roth-IRA is gradually reduced to
$0 between certain levels of Adjusted Gross Income ("AGI"). Adjusted gross
income is defined in section 408A(c)(3) of the Code and does not include amounts
transferred or rolled over to Traditional IRAs or Roth-IRAs. In accordance with
section 408A(c)(3) of the Code, if an annuitant is single, the $2,000 limit is
phased out between AGI of $95,000 and $110,000; if an annuitant is married and
files a joint federal income tax return, it is phased out between $150,000 and
$160,000; and if an annuitant is married and
MHC-97-9418 Minnesota Life Insurance Company
<PAGE>
files a separate federal income tax return, it is phased out between $0 and
$10,000.
If an annuitant is married, the maximum purchase payment to the lower-earning
spouse's Spousal Roth-IRA may not exceed the lesser of: (a) 100% of both
spouses' combined compensation minus any Roth-IRA or deductible Traditional IRA
contribution for the spouse with the higher compensation; or (b) $2,000. A
maximum of $4,000 may be contributed to both spouses' Spousal Roth-IRAs.
Purchase payments can be divided between the spouses' IRAs as the annuitant and
his spouse wish, but annual purchase payments to either one of the IRAs may not
exceed $2,000.
DO PURCHASE PAYMENT LIMITATIONS APPLY TO A ROLLOVER TO A ROTH-IRA?
No. However, some individuals are not eligible to make rollover purchase
payments to a Roth-IRA.
A qualified rollover is a rollover contribution from another Roth-IRA or
Traditional individual retirement account or annuity in accordance with sections
408(d)(3), 408A(c)(3)(B), 408A(c)(6) and 408A(e) of the Code. A cash purchase
payment may be the amount received by or on behalf of the annuitant as all or
any portion of a distribution which is a rollover contribution. The
distribution may be one from a Traditional IRA or Roth-IRA, but may not be an
eligible rollover distribution from a tax-exempt employee's trust or a qualified
employee annuity plan.
A rollover or transfer from a Traditional IRA to a Roth-IRA will not be
permitted if the annuitant's AGI for the tax year exceeds $100,000 or if the
annuitant is married and files a separate federal income tax return. A rollover
contribution must be received by us not later than 60 days after the annuitant
receives it.
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), 403(b)(8), 408A(c)(3)(B), 408A(c)(6), 408A(d)(3)
or 408A(e) of the Internal Revenue Code (herein "Code") or a purchase payment
made in accordance with the terms of a SEP as described in section 408(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 a
rollover contribution. The 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 Roth-IRA, however, may not receive a
rollover contribution directly from any plan other than a Traditional IRA or
another Roth-IRA. In addition, a rollover or transfer from a Traditional IRA to
a Roth-IRA will not be permitted if the annuitant's AGI for the tax year exceeds
$100,000; or if the annuitant is married and files a separate federal income tax
return. 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 a SEP, IRA or Roth-IRA.
MHC-97-9418 Minnesota Life 2
<PAGE>
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 or Roth-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.
The annuitant has the sole responsibility for determining whether any purchase
payments meet applicable income tax requirements.
DISTRIBUTION PROVISIONS
ARE THERE RULES FOR THE TIMING OF DISTRIBUTIONS FROM AN IRA?
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.
The annuitant or, if applicable, the annuitant's beneficiary, is responsible for
assuring that the required minimum distribution is taken in a timely manner and
that the correct amount is distributed.
ARE THERE RULES FOR THE TIMING OF DISTRIBUTIONS FROM A ROTH-IRA WHILE THE
ANNUITANT IS ALIVE?
No. The rules that apply to Traditional IRAs regarding required distributions
while an annuitant is alive do not apply to Roth-IRAs.
WHAT FORMS OF DISTRIBUTION ARE AVAILABLE FROM AN IRA?
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;
(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.
MHC-97-9418 Minnesota Life 3
<PAGE>
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. Minimum payments to
the surviving spouse will be calculated in accordance with the applicable
regulations.
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 or Roth-IRA as
his or her own. This is done by either: (a) not taking a distribution within
the required time period; or (b) making eligible IRA or Roth-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, 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.
MHC-97-9418 Minnesota Life 4
<PAGE>
In the case of a Roth-IRA, life expectancy will be calculated using the attained
age of such beneficiary in the calendar year distributions are required to
begin; 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 FROM AN IRA?
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.
ARE ALL WITHDRAWALS FROM ROTH-IRAS SUBJECT TO FEDERAL INCOME TAX?
No. Purchase payments to Roth-IRAs are not deductible. Any partial withdrawal
or surrender of the contract that includes a return of the annuitant's purchase
payment(s) will not be taxable to the extent it is attributable to the purchase
payment(s). Earnings on the purchase payment(s) that are withdrawn are subject
to income tax if withdrawn within 5 years of the annuitant's first contribution
to a Roth-IRA or within 5 years of a rollover purchase payment. In addition,
earnings will be subject to income tax if withdrawn before the annuitant reaches
age 59 1/2; unless the earnings are being withdrawn because of the annuitant's
death or disability or to pay first-time home buyer expenses. If a withdrawal
is made, we must receive notice of the reason for withdrawal or intended
disposition of the proceeds. Income tax will also not apply to distributions
made if the amount received is in excess of the allowed contribution and
returned to the annuitant before the required tax return filing date for that
year, together with any earned interest; or if the entire contract is received
and reinvested in a similar plan entitled to similar tax treatment.
MAY TAX PENALTIES APPLY FOR WITHDRAWALS FROM AN IRA?
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.
MHC-97-9418 Minnesota Life 5
<PAGE>
Any transaction treated by law as a contract distribution may be treated by us
as a complete contract surrender.
MAY TAX PENALTIES APPLY FOR WITHDRAWALS FROM ROTH-IRAS?
Yes. Certain tax penalties are imposed under the Code. If the annuitant owes
income tax on the amount withdrawn, the annuitant will also generally be subject
to a 10% premature withdrawal tax penalty on the amount on which the annuitant
paid income tax. However, the tax penalties will not apply if earnings in the
Roth-IRA are withdrawn within 5 years of the annuitant's first contribution to a
Roth-IRA or within 5 years of a rollover purchase payment from a Traditional IRA
if the distribution is: (1) made on or after the date on which the annuitant
attains age 59 1/2; (2) made because of the annuitant's disability or death; or
(3) made because the amount received was in excess of the allowed contribution
and returned to the annuitant before the required tax return filing date for
that year, together with any earned interest. In addition, the tax penalty will
not apply to a distribution if the entire 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.
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 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.
Secretary
President
MHC-97-9418 Minnesota Life 6
<PAGE>
MINNESOTA LIFE INDIVIDUAL RETIREMENT ANNUITY
SIMPLE - (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 with a Savings Incentive Match Plan for
Employees (herein "SIMPLE-IRA").
PURCHASE PAYMENTS
ARE SIMPLE-IRA PURCHASE PAYMENTS LIMITED?
Yes. Where the annuitant's employer establishes a SIMPLE-IRA, purchase payments
may be limited. The annual cash purchase payments must be the lesser of: (a)
an amount equal to 100% of the compensation included in gross income in any
taxable year; or (b) $6,000, or such other maximum amount as may be allowed by
law. Mandated employer purchase payments, in addition to your purchase
payments, can range from 0% to 3% of your annual compensation.
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)(G) of the Internal Revenue Code (herein "Code") or a purchase payment
made in accordance with the terms of a SIMPLE-IRA as described in section 408(p)
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
a rollover contribution. The distribution may be one as 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 a SIMPLE-IRA.
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 a SIMPLE-IRA may be returned.
We will send them to the payer. Return is without regard to the provisions of
this contract dealing with withdrawals.
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.
MHC-98-9431 Minnesota Life Insurance Company
<PAGE>
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;
(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
MHC-98-9431 Minnesota Life 2
<PAGE>
own. This is done by either: (a) not taking a distribution within the required
time 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, 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.
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.
MHC-98-9431 Minnesota Life 3
<PAGE>
Any transaction treated by law as a contract distribution may be treated by us
as a complete contract surrender.
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 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
Secretary
/s/ Robert L.Senkler
President
MHC-98-9431 Minnesota Life 4
<PAGE>
<TABLE>
<CAPTION>
<S><C>
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MINNESOTA LIFE VARIABLE ANNUITY APPLICATION
- ------------------------------------------------------------------------------------------------------------------------------------
The Minnesota Life Insurance Company - Annuity Services - 400 Robert Street North - St. Paul, Minnesota 55101-2098
Toll Free 1-800-362-3141
- ------------------------------------------------------------------------------------------------------------------------------------
OWNER (PLEASE PRINT) ANNUITANT (IF OTHER THAN OWNER)
- ------------------------------------------------------------------------------------------------------------------------------------
NAME NAME
- ------------------------------------------------------------------------------------------------------------------------------------
ADDRESS ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
CITY, STATE, ZIP CITY, STATE, ZIP
- ------------------------------------------------------------------------------------------------------------------------------------
DATE OF BIRTH SEX TAXPAYER I.D. (Soc Sec # or EIN) DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
/ /M / /F / /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
JOINT OWNER (OPTIONAL - MUST BE SPOUSE OF OWNER) JOINT ANNUITANT (OPTIONAL - MUST BE SPOUSE OF ANNUITANT)
- ------------------------------------------------------------------------------------------------------------------------------------
NAME NAME
- ------------------------------------------------------------------------------------------------------------------------------------
DATE OF BIRTH SEX SOCIAL SECURITY NUMBER DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
/ /M / /F / /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
BENEFICIARY
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS NAME RELATIONSHIP DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
/ /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
/ /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUITANT'S EMPLOYER (IF NOT SELF EMPLOYED)
- ------------------------------------------------------------------------------------------------------------------------------------
NAME ADDRESS CITY, STATE, ZIP
- ------------------------------------------------------------------------------------------------------------------------------------
TYPE OF PLAN (PLEASE CHECK ONLY ONE BOX) PURCHASE PAYMENT ACCOUNT ALLOCATION
- ------------------------------------------------------------------------------------------------------------------------------------
/ / Non-Qualified $____________
/ / Under the ____ (state) Uniform Transfers To Minor Act ______% General (Not available for MultiOption Select)
/ / Individual Retirement Annuity (IRA) for tax year ________ ______% Maturing Government Bond - 2002
/ / IRA Rollover $____________ ______% Maturing Government Bond - 2006
/ / IRA Transfer from existing IRA $____________ ______% Maturing Government Bond - 2010
/ / Roth IRA for tax year _____________ ______% Growth
/ / Simplified Employee Pension (SEP) ______% Bond
/ / SIMPLE ______% Money Market
/ / Tax Sheltered Annuity (IRC Section 403(b)) ______% Asset Allocation
Annual Earned Income $____________ ______% Mortgage Securities
/ / Qualified Retirement Plan (IRC Section 401) ______% Index 500
/ / Employee Funded / / Employer Funded ______% Capital Appreciation
/ / Public Employee Deferred Compensation (IRC Section 457) ______% International Stock
/ / Non-Qualified Deferred Compensation ______% Small Company
/ / Other ___________________ ______% Value Stock
- ----------------------------------------------------------------- ______% Small Company Value
TYPE OF CONTRACT AND AMOUNT OF PAYMENT ______% Global Bond
- ----------------------------------------------------------------- ______% Index 400 Mid-Cap
/ / MultiOption Select Flexible Payment Deferred Variable Annuity ______% Templeton Developing Markets
of $______ per ______ OR $______ as a single payment ______% Macro-Cap Value
/ / MultiOption Flexible Payment Deferred Variable Annuity ______% Micro-Cap Growth
of $______ per ______ OR $______ as a single payment ______% Real Estate Securities
/ / MultiOption Single Payment Deferred Variable Annuity __________
of $_________________ ($5,000 Minimum) TOTAL 100%
- -----------------------------------------------------------------
The prospectuses for the Variable Annuity Account, Advantus
Series Fund and Templeton Developing Markets Fund each refer
to a Statement of Additional Information. Would you like us to
send you a copy? / / Yes / / No
- ------------------------------------------------------------------------------------------------------------------------------------
PAYMENT METHOD
- ------------------------------------------------------------------------------------------------------------------------------------
/ / APP (Automatic Payment Plan) commencing on Month _____________ Day _________
/ / Enclosed APP Authorization form and voided check
/ / Bill employer commencing on Month ____ and continuing Add to existing case# ______________
/ / Annually (1) / / Semi-Annually (2) / / Quarterly (4)
/ / Monthly (12) / / Semi-Monthly (24) / / Bi-Weekly (26)
Individual billing, commencing on the 1st day of Month ________ and continuing / / Quarterly / / Semi-Annually / / Annually
</TABLE>
MHC-84-9093 Rev. 7-1998
<PAGE>
- - I have received and had an opportunity to read a current copy of the
Variable Annuity Account Prospectus and the current prospectuses for the
Advantus Series Fund and Templeton Developing Markets Fund for this
investment prior to investing.
- - I have been informed of all charges and expenses associated with this
investment.
- - I realize that this may be a long-term investment which should be held
for a number of years. Due in part to the sales charges involved,
selling or surrendering in the short term may result in a loss.
- - I am aware there is no assurance that the initial objective/s of this
investment will be achieved. Thus, when I ultimately sell or surrender the
investment, I may receive more or less than the amount I invested.
- - I realize that the element of risk is inherent in any investment - what
varies is the degree of risk. Generally, the greater the expected return,
the greater risk I must be willing to assume.
- - I will only make payment by check payable to the entity listed on the
application or in the prospectus and never payable directly to a
representative or an entity to which the representative may gain access to
my funds. I will not loan to nor borrow from a representative any monies
or securities.
- - Given my personal circumstances, this is a suitable investment.
- - Financial data should be updated approximately every two years as
investment activity warrants.
<TABLE>
<CAPTION>
IMPORTANT INSTRUCTIONS
<S> <C>
1. COMPLETE ALL ITEMS OF THE APPLICATION
2. IF YOU ARE REQUESTING: PLEASE SUBMIT:
Automatic Payment Plan (APP) - APP Authorization F. 25744.2
- Voided check
Direct Rollover (client initiated distribution) - Transfer/Rollover/1035 Exchange F. 52258 (send to
existing institution)
Immediate Annuity Contract - Annuity Service Request F. 35264
(includes W-4P. If Deferred Compensation, submit W-4)
- Proof of age for annuitant(s) if a life contingency option
is selected (copy of driver's license or birth certificate)
MultiOption Annuity Exchange - Exchange Authorization F. 35079
MultiOption Select Annuity Exchange - MOA Select Exchange Authorization F. 51459
Qualified Retirement Plan - Employee Benefit Plan Disclosure Statement F. 23273
Replacement of another life insurance or - Appropriate replacement forms as required by the
annuity contract state of jurisdiction
SEP contract - Completed IRS form 5305-SEP or
- Prototype Request and Document Services
Agreement and service fee
SIMPLE - Completed 5304 SIMPLE or Adoption Agreement
Systematic Dollar Cost Averaging - Annuity Service Request F. 35264
Systematic Withdrawal - Annuity Service Request F. 35264
Traditional IRA to Roth Internal Exchange - Roth Exchange F. 52223
Transfer (available for use with transfers - Transfer/Rollover/1035 Exchange F. 52258
from TSA to TSA or IRA/Roth/SEP to
IRA/Roth/SEP only)
TSA contract - TSA Withdrawal Disclosure F. 38754
- Salary Modification Agreement F. 23251
Calculation worksheet if the contribution is to exceed
maximum exclusion allowance
1035 Exchange (non-qualified) - Transfer/Rollover/1035 Exchange F. 52258
- Original contract
3. IF YOU ARE REPLACING A MUTUAL FUND, VARIABLE, OR - Switch Form F. 51821
FIXED PRODUCT FOR AN ANNUITY:
</TABLE>
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, 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.
<PAGE>
<TABLE>
<CAPTION>
<S><C>
- ------------------------------------------------------------------------------------------------------------------------------------
REPLACEMENT
- ------------------------------------------------------------------------------------------------------------------------------------
Will this contract applied for replace or change an existing contract? / / Yes / / No
If yes please provide: COMPANY NAME __________________________________ CONTRACT NUMBER(S) ______________________
Have you completed a State Replacement Form (where required)? (Based on jurisdiction, not state of residence)
/ / Not Required / / Enclosed
- ------------------------------------------------------------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS OR REMARKS
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT SUMMARY
- ------------------------------------------------------------------------------------------------------------------------------------
1. Are you an employee of Minnesota Mutual or a subsidiary? / / Yes / / No
2. Are you a spouse or dependent child of an employee of Minnesota Mutual or a subsidiary? / / Yes / / No
3. Are you or your spouse an employee or employed by an NASD firm? / / Yes / / No
4. Dependents: / / Spouse / / Children Ages ____________________
5. How was account acquired? / / Known Personally / / Unsolicited / / Solicited / / Referred By __________________________
6. Current Approximate: Annual Income $___________________ Assets $__________________ Debt $_________________ Tax Bracket _______%
7. Other Investments: (Exclusive of personal residence, automobile and this investment.)
Savings $____________________ Balanced/Total Return Funds $____________________
Insurance Cash Values $____________________ Stock Funds $____________________
Real Estate $____________________ Bond Funds $____________________
Business Interests $____________________ Individual Stocks $____________________
Retirement Funds $____________________ Individual Bonds $____________________
Other________________ $____________________
8. Ranking of Investment 9. Ranking of Investment
Objectives (Rank 1 - 5 in order of importance): Objectives (Rank 1 - 5 in order of importance):
CURRENT INVESTMENT TOTAL PORTFOLIO
________ Conservative Income/Capital Preservation ________ Conservative Income/Capital Preservation
________ Current Income ________ Current Income
________ Conservative Growth/Total Return ________ Conservative Growth/Total Return
________ Growth ________ Growth
________ Aggressive Growth ________ Aggressive Growth
10. Risk tolerance of current investment (Please select only 11. Risk tolerance of total portfolio (Please select only one):
one):
/ / Low Risk / / Moderate Risk / / High Risk / / Low Risk / / Moderate Risk / / High Risk
- ------------------------------------------------------------------------------------------------------------------------------------
OWNER/ANNUITANT SIGNATURES
- ------------------------------------------------------------------------------------------------------------------------------------
- - 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 THE CURRENT
PROSPECTUSES FOR THE ADVANTUS SERIES FUND AND TEMPLETON DEVELOPING MARKETS FUND. 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.
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNED AT (CITY, STATE) DATE SIGNATURE OF OWNER SIGNATURE OF ANNUITANT
X X
- ------------------------------------------------------------------------------------------------------------------------------------
AMOUNT REMITTED WITH APPLICATION SIGNATURE OF JOINT OWNER SIGNATURE OF JOINT ANNUITANT
$ X X
- ------------------------------------------------------------------------------------------------------------------------------------
TO BE COMPLETED BY REPRESENTATIVE
- ------------------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------------------
REPRESENTATIVE NAME (PRINT) REPRESENTATIVE SIGNATURE AGENCY CODE AGENT CODE
X %
- ------------------------------------------------------------------------------------------------------------------------------------
X %
- ------------------------------------------------------------------------------------------------------------------------------------
TO BE COMPLETED BY DEALER
- ------------------------------------------------------------------------------------------------------------------------------------
DEALER NAME DATE SIGNATURE OF AUTHORIZED DEALER
X
- ------------------------------------------------------------------------------------------------------------------------------------
THIS APPLICATION BECOMES EFFECTIVE ONLY UPON ITS ACCEPTANCE BY ASCEND FINANCIAL SERVICES, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
ACCEPTED BY DATE CONTRACT NUMBER CASE NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
MINNESOTA LIFE INSURANCE COMPANY
Robert L. Senkler and Dennis E. Prohofsky, respectively, the President and
Secretary of Minnesota Life Insurance Company, a corporation under and existing
by virtue of the laws of the State of Minnesota, do hereby certify that the
following Restated Certificate of Incorporation was duly adopted by an
affirmative vote of a majority of the stockholders at a special meeting of the
Company on December 10, 1998.
This Restated Certificate of Incorporation of Minnesota Life Insurance Company
supersedes and takes the place of the existing Certificate of Incorporation and
all amendments to it:
ARTICLE I
The name of the Company is Minnesota Life Insurance Company (the "Company").
ARTICLE II
The principal office of the Company shall be located at 400 Robert Street North,
Saint Paul, Minnesota 55101-2098.
ARTICLE III
The Company is incorporated for the purpose of transacting the business of and
making insurance upon the lives of individuals and every assurance pertaining
thereto or connected therewith, to grant, purchase and dispose of annuities and
endowments of every kind and description whatsoever, to provide an indemnity
against death and for weekly or other periodic indemnity for disability
occasioned by accident or sickness to the person of the assured and to have all
the further rights, powers and privileges granted or permitted life insurance
companies organized under the provisions of Minnesota Statutes, Chapter 300, and
all Acts amendatory thereof or additional thereto.
ARTICLE IV
The duration and continuation of the Company shall be perpetual.
ARTICLE V
The authorized capital stock of this Company shall be 5,000,000 shares initially
paid in by operation of Minnesota Statutes Section 60A.077 and subsequently paid
in cash, consisting of shares of Common Stock, with par value of $1.00 per
share. Each share of the Common Stock shall have one vote per share.
No shareholder of the Company shall have any pre-emptive or preferential right,
nor be entitled as such as a matter of right, to subscribe for or purchase any
part of any new or additional issue of stock of the Company of any class or
series, whether issued for money or for consideration other than money, or of
any issue of securities convertible into stock of the Company.
ARTICLE VI
The corporate powers of the Company shall be vested in a Board of Directors of
at least five persons and shall be exercised by the Board of Directors and by
such officers, agents, employees and committees as the Board of Directors may,
in its discretion, from time to time appoint and empower. The Board of
Directors shall have the power from time to time to make, amend or repeal such
bylaws, rules and regulations for the transaction of the business of the Company
as the Board of Directors may deem expedient and as are not inconsistent with
this Certificate of Incorporation or the constitution or other laws of the State
of Minnesota.
The directors of the Company shall be divided into three classes, as nearly
equal in number as reasonably possible: the first class, the second class and
the third class. Each such director shall serve for a term ending on the third
annual meeting of stockholders following the annual meeting at which such
director was elected, provided, that the directors first elected to the first
class shall serve for a term ending upon the election of directors at the annual
meeting in 2000, the directors
<PAGE>
first elected to the second class shall serve for a term ending upon the
election of directors at the annual meeting in 2001, and the directors first
elected to the third class shall serve for a term ending upon the election of
directors at the annual meeting in 2002.
At each annual election, commencing at the annual meeting in 2000, the
successors to the class of directors whose term expires at that time shall be
elected by stockholders to hold office for a term of three years to succeed
those directors whose term expires, so that the term of one class of directors
shall expire each year.
Notwithstanding the requirement that the three classes of directors shall be as
nearly equal in number of directors as reasonably possible, in the event of any
change in the authorized number of directors, each director then continuing to
serve as such shall nevertheless continue as a director of the class of which he
or she is a member until the expiration of his or her current term, or his or
her prior resignation, disqualification, disability or removal. There shall be
no cumulative voting in the election of the directors.
Any vacancy on the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office, an increase in the number of
directorships or other cause shall be filled only by the affirmative vote of a
majority of directors then in office, although less than a quorum or by the sole
remaining director. A director so chosen shall hold office for a term expiring
at the annual meeting at which the term of the class to which he or she has been
elected expires. If the number of directors is changed, any increase or
decrease shall be apportioned among the three classes by a two-thirds (2/3) vote
of the directors then in office. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
-2-
<PAGE>
ARTICLE VII
The incumbent members of the Board of Directors as of the date of the filing of
this Restated Certificate of Incorporation shall continue to be directors of the
Company until their successors are duly elected and qualified in accordance with
the bylaws. The current members of the Board of Directors who shall continue to
be directors of the Company and their respective addresses are:
NAME OF DIRECTOR ADDRESS
Giulio Agostini 3M
3M Center - Executive 220-14W-08
St. Paul, MN 55144-1000
Anthony L. Andersen H. B. Fuller Company
2424 Territorial Road
St. Paul, MN 55114
Leslie S. Biller Norwest Corporation
Sixth and Marquette
Minneapolis, MN 55479-1052
John F. Grundhofer U.S. Bancorp
601 2nd Avenue South
Suite 2900
Minneapolis, MN 55402-4302
Harold V. Haverty 701 Fourth Avenue South, Suite 300
Minneapolis, MN 55415
David S. Kidwell The Curtis L. Carlson School of Management
University of Minnesota
321 19th Avenue South
Minneapolis, MN 55455
Reatha C. King General Mills Foundation
P O Box 1113
Minneapolis, MN 55440
Thomas E. Rohricht Doherty, Rumble & Butler P.A.
2800 Minnesota World Trade Center
30 East Seventh Street
St. Paul, MN 55101-4999
Terry T. Saario Bravo!, LLC
900 Hennepin Avenue
Minneapolis, MN 55403
Robert L. Senkler Minnesota Life Insurance Company
400 Robert Street North
St. Paul, MN 55101
Michael E. Shannon Ecolab, Inc.
370 Wabasha Street
Ecolab Center
St. Paul, MN 55102
Frederick T. Weyerhaeuser Clearwater Investment Trust
332 Minnesota Street
Suite W-2090
St. Paul, MN 55101-1308
-3-
<PAGE>
ARTICLE VIII
A director of the Company shall not be liable to the Company or the stockholders
of the Company for monetary damages for a breach of the fiduciary duty of care
as a director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Minnesota Statutes, Section 300.64, as the
same currently exists or hereafter is amended. Specifically such exemption
shall not apply to:
(a) a breach of the director's duty of loyalty to the Company or its
stockholders;
(b) acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of the law;
(c) acts prohibited under Minnesota Statutes, Section 300.60, as the same
currently exists or is hereafter amended;
(d) payment of a dividend when the Company is insolvent;
(e) intentional neglect or refusal to perform a duty imposed by law;
(f) a transaction from which the director derives an improper personal
benefit; or
(g) an act or omission occurring prior to the date when this Restated
Certificate of Incorporation became effective.
ARTICLE IX
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. The Board of Directors shall
designate those banks and financial institutions in which the 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.
ARTICLE X
The annual meeting of the Company shall be held on the first Tuesday in May of
each year, if not a legal holiday, and if a legal holiday, then on the next day
not a legal holiday.
ARTICLE XI
The Company is authorized to issue any or all of its policies with or without
participation in profits, savings or unabsorbed portions of premiums; to
classify such policies issued on a participating or nonparticipating basis; and
to determine the right to participate and the extent of participation of any
class or classes of such policies, at the discretion of the Board of Directors.
The declaration and crediting of any policy dividend shall be subject to
approval by majority vote of the Minnesota Mutual Companies, Inc. Board of
Directors.
ARTICLE XII
This Restated Certificate of Incorporation may be amended at any annual meeting
of the Company, or any special meeting of the Company called for that expressly
stated purpose, by the affirmative vote of a majority of the stockholders.
IN WITNESS WHEREOF, the undersigned have executed this Restated Certificate of
Incorporation.
, 1998 -----------------------------------
- ------------------ Robert L. Senkler
Chairman of the Board, President
and Chief Executive Officer
, 1998 -----------------------------------
- ------------------ Dennis E. Prohofsky
Senior Vice President, Secretary
and General Counsel
-4-
<PAGE>
BYLAWS
OF
MINNESOTA LIFE INSURANCE COMPANY
As adopted on October 1, 1998
<PAGE>
BYLAWS
OF
MINNESOTA LIFE INSURANCE COMPANY
TABLE OF CONTENTS
ARTICLE I STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.1 ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.2 SPECIAL MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.3 PLACE AND HOUR OF MEETING. . . . . . . . . . . . . . . . . . . . .1
SECTION 1.4 NOTICE OF MEETINGS; RECORD DATE. . . . . . . . . . . . . . . . . .1
SECTION 1.5 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.6 VOTING RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.7 VOTING BY PROXY. . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.8 VOTING OF SHARES BY CERTAIN HOLDERS. . . . . . . . . . . . . . . .2
ARTICLE II BOARD OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 2.1 NUMBER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 2.1 NON-OVERLAPPING DIRECTORS. . . . . . . . . . . . . . . . . . . . .2
SECTION 2.2 FILLING OF VACANCIES . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 2.3 PLACE OF MEETING, CORPORATE BOOKS. . . . . . . . . . . . . . . . .2
SECTION 2.4 REGULAR MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . .3
SECTION 2.5 SPECIAL MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . .3
SECTION 2.6 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
SECTION 2.7 COMPENSATION OF DIRECTORS. . . . . . . . . . . . . . . . . . . . .3
SECTION 2.8 ACTION BY UNANIMOUS WRITTEN CONSENT OF DIRECTORS . . . . . . . . .3
SECTION 2.9 REMOVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
ARTICLE III COMMITTEES OF THE BOARD. . . . . . . . . . . . . . . . . . . . . .3
SECTION 3.1 CREATION OF COMMITTEES . . . . . . . . . . . . . . . . . . . . . .3
SECTION 3.2 APPOINTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.3 QUALIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.4 COMMITTEE CHAIRS . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.5 MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.6 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.7 VACANCIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.8 MINUTES AND REPORTS. . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.9 AUDIT COMMITTEE. . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.10 INVESTMENT COMMITTEE. . . . . . . . . . . . . . . . . . . . . . .5
SECTION 3.11 COMMITTEE OF NON-OVERLAPPING DIRECTORS. . . . . . . . . . . . . .5
<PAGE>
ARTICLE IV OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
SECTION 4.1 NUMBER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
SECTION 4.2 ELECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
SECTION 4.3 TERM OF OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . .5
SECTION 4.4 REMOVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 4.5 VACANCIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 4.6 DUTIES OF OFFICERS . . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 4.7 ABSENCE OR DISABILITY. . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE V INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES . . . . . . . .7
ARTICLE VI DISPOSITION OF FUNDS AND INVESTMENTS. . . . . . . . . . . . . . . .7
SECTION 6.1 FUNDS AND INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . .7
SECTION 6.2 DEPOSITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE VII CORPORATE STOCK. . . . . . . . . . . . . . . . . . . . . . . . . .7
SECTION 7.1 CERTIFICATES FOR SHARES. . . . . . . . . . . . . . . . . . . . . .7
SECTION 7.2 TRANSFER OF SHARES . . . . . . . . . . . . . . . . . . . . . . . .7
Section 7.3 TRANSFER BOOKS . . . . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE VIII AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
<PAGE>
BYLAWS
OF
MINNESOTA LIFE INSURANCE COMPANY
ARTICLE I
STOCKHOLDERS
SECTION 1.1 ANNUAL MEETING.
The annual meeting of stockholders shall be held on the first Tuesday in May of
each year, if not a legal holiday, and if a legal holiday, then on the next day
not a legal holiday, when members of the Board of Directors shall be elected to
succeed those whose terms are then expiring and such other business shall be
transacted as may properly be brought before the meeting.
SECTION 1.2 SPECIAL MEETINGS.
Special meetings of stockholders for the transaction of such business as may
properly come before the meeting may be called by order of the Board of
Directors or by stockholders holding together at least a majority of all the
shares of the Company entitled to vote at the meeting. Business transacted at
all special meetings of stockholders shall be confined to the purpose or
purposes stated in the notice of the meeting.
SECTION 1.3 PLACE AND HOUR OF MEETING.
Every annual meeting of stockholders shall commence at such hour as shall be
determined by the Board of Directors. Every meeting of stockholders, whether an
annual or a special meeting, shall be held at the principal office of the
Company at 400 Robert Street North in the City of Saint Paul, in the State of
Minnesota (the "Home Office"), or at such other place as may be selected by the
Board of Directors.
SECTION 1.4 NOTICE OF MEETINGS; RECORD DATE.
Notice of each meeting of stockholders shall be mailed to each stockholder of
the Company not less than thirty days previous to such meeting, and every such
notice shall state the day and hour and the place at which the meeting is to be
held and, in the case of any special meeting, shall indicate briefly the purpose
or purposes thereof. The Board of Directors may fix in advance a date, not less
than twenty calendar days preceding the dates of the aforenamed occurrences, as
a record date for the determination of the shareholders entitled to notice of,
and to vote at, any such meeting and any adjournment thereof, or entitled to
receive payment of any such dividend or to any such allotment of rights, or to
exercise the rights in respect of any such change, conversion or exchange of
shares. In such case, such stockholders, and only such stockholders as are
stockholders of the Company of record on the record date so fixed, are entitled
to notice of, and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the Company after such record date so fixed. If the
Board of Directors shall not set a record date for the determination of the
stockholders entitled to notice of, and to vote at, a meeting of stockholders,
only the stockholders who are stockholders of record at the close of business on
the 20th day preceding the date of the meeting are entitled to notice of, and to
vote at, the meeting and any adjournment of the meeting.
SECTION 1.5 QUORUM.
A majority of the outstanding shares entitled to notice of and to vote at a
meeting, present in person or by proxy conforming the requirements of Section
1.7 of these bylaws, shall constitute a quorum for the transaction of any
business coming before any regular or special meeting of stockholders duly and
properly called, except as provided by law, the Restated Certificate of
Incorporation of the Company, or these bylaws. If, however, such quorum of
stockholders shall not be present or represented at any meeting of stockholders,
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a requisite number of stockholders shall be
present. At any such adjourned meeting at which the requisite number of
stockholders shall be represented, any business may be transacted which might
have been transacted at the meeting as originally notified.
-1-
<PAGE>
SECTION 1.6 VOTING RIGHTS.
Each outstanding share of Common Stock shall be entitled to one vote upon each
matter submitted to a vote at any annual or special meeting of stockholders.
SECTION 1.7 VOTING BY PROXY.
Any stockholder may vote by proxy at any meeting of stockholders. 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 not to exceed one year. A proxy may be
revoked by a stockholder at any time by written notice to the Secretary of the
Company, 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
stockholder at any meeting of the stockholders.
SECTION 1.8 VOTING OF SHARES BY CERTAIN HOLDERS.
(a) Shares of stock in the name of another corporation, foreign or
domestic, are to be voted by such officer, agent, or proxy as the bylaws of such
corporation may determine.
(b) Shares of stock in the name of a deceased person are to be voted
by his executor or administrator in person or by proxy.
(c) Shares of stock in the name of a fiduciary, such as guardian,
curator, or trustee are to be voted by such fiduciary either in person or by
proxy, provided the books of the Company show the stock to be in the name of
such fiduciary in such capacity.
(d) Shares of stock in the name of a receiver are to be voted by such
receiver, and shares held by, or in the control of, a receiver are to be voted
by such receiver without the transfer thereof into his name, if such voting
authority is contained in an appropriate order of the court by which such
receiver was appointed.
(e) Shares of stock which have been pledged are to be voted by the
pledgor until the shares of stock have been transferred into the name of the
pledgee, and thereafter, the pledgee is entitled to vote the shares so
transferred.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1 NUMBER.
The Board of Directors shall consist of such number of Directors, not fewer than
five or more than sixteen, as the Board shall from time to time determine.
SECTION 2.1 NON-OVERLAPPING DIRECTORS.
Commencing with the first annual election of directors, and unless and until
Minnesota Mutual Companies, Inc. (or any successor mutual insurance holding
company) is converted from a mutual insurance holding company to a stock
company, the Board of Directors shall at all times include at least three
directors who are not concurrently serving as directors on the board(s) of
Minnesota Mutual Companies, Inc., Securian Holding Company or Securian Financial
Group, Inc. ("Non-overlapping Directors").
SECTION 2.2 FILLING OF VACANCIES.
If the office of any Director becomes vacant for any reason, a majority of the
remaining Directors may choose a successor. Each Director so chosen shall hold
office until the next regular annual meeting of the shareholders and until his
or her successor has been duly elected and qualified. Not more than one-third
of the maximum number of Directors may be so chosen by the Board between regular
annual meetings of the shareholders.
SECTION 2.3 PLACE OF MEETING, CORPORATE BOOKS.
The Board of Directors may hold its meetings and keep the books of the Company
at the Home Office of the Company, or at such other place or places as they may
from time to time by resolution determine, except as otherwise required by law.
-2-
<PAGE>
SECTION 2.4 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 Director not less than
twenty-four hours prior to the time of that regular meeting.
SECTION 2.5 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 directors. Except as otherwise provided, notice of a
special meeting shall be given to each director 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 director. Notice of at least six hours prior to the meeting time is
required if all directors are personally either served with a written notice or
contacted by telephone. Notice need not be given to the directors of adjourned
special meetings. Also, special meetings may be held at any time without notice
if all of the directors 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.
SECTION 2.6 QUORUM.
At all meetings of the Board of Directors, a majority of the directors then in
office shall be necessary and sufficient to constitute a quorum for the
transaction of business, but if, at any meeting, less than a quorum shall be
present, a majority of those present may adjourn the meeting from time to time,
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the Board of Directors, except as may be
otherwise specifically provided by statute or by the Restated Certificate of
Incorporation of the Company or by these bylaws.
SECTION 2.7 COMPENSATION OF DIRECTORS.
Members of the Board of Directors, who are not salaried officers of the Company,
shall receive such annual compensation as shall be fixed from time to time by
resolution of the Board of directors; and, in addition, the directors who are
not salaried officers of the Company shall receive a sum in such amount as shall
be fixed from time to time by resolution of the Board of Directors, and the
expenses of attendance, if any, for attendance at each regular or special
meeting of the Board, whether or not an adjournment be had because of the
absence of a quorum.
SECTION 2.8 ACTION BY UNANIMOUS WRITTEN CONSENT OF DIRECTORS.
If all the directors severally or collectively consent in writing to any action
taken or to be taken by the directors, such consents have the same force and
effect as a unanimous vote of the directors at a meeting duly held, and may be
stated as such in any certificate or document filed with the Secretary of State
of Minnesota or any other state in the United States of America or other
Country. The Secretary of the Company shall file such consents with the minutes
of the meetings of the Board of Directors.
SECTION 2.9 REMOVAL.
Any director or the entire Board of Directors may be removed at any time but
only for cause or pursuant to the Company's retirement policy in effect when the
director was first elected.
ARTICLE III
COMMITTEES OF THE BOARD
SECTION 3.1 CREATION OF COMMITTEES.
The following designated standing committees of the Board are hereby authorized
and created: Audit, Investment, and Non-overlapping Directors. 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. In the event the Board of Directors
creates an Executive Committee invested with the full powers of the Board of
Directors
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between meetings of the Board of Directors, then that Committee must have at
least the same proportion of Non-overlapping Directors as does the full Board of
Directors.
SECTION 3.2 APPOINTMENTS.
The members of each standing Board committee shall consist of those Directors
appointed by the Board of Directors. Each Director 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.
SECTION 3.3 QUALIFICATIONS.
Each Director is qualified to be appointed and successively reappointed to one
or more committees.
SECTION 3.4 COMMITTEE CHAIRS.
The Board shall appoint one of the members of each of the Board committees 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.
SECTION 3.5 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.
SECTION 3.6 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 directors to serve as members of the committee only for that meeting, so
as to obtain a quorum. If the Board makes the requested appointments, any
action so taken at the committee meeting shall be valid and binding.
SECTION 3.7 VACANCIES.
In the case of the death, resignation or removal of a member of a committee, the
Board may appoint another Director 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.
SECTION 3.8 MINUTES AND REPORTS.
Each committee shall keep a written record of its acts and proceedings and shall
submit that record to the Board of Directors 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 each committee shall be recorded by the person designated by the
chair of that committee.
SECTION 3.9 AUDIT COMMITTEE.
The Audit Committee shall consist of not fewer than four directors that are not
officers or employees of Minnesota Mutual Companies, Inc. or any of its
subsidiaries. The committee shall have the following powers and duties:
(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.
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(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 the committee's reviews and
recommendations resulting therefrom.
SECTION 3.10 INVESTMENT COMMITTEE.
The Investment Committee shall consist of not fewer than four directors and
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 the Company investments,
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 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 3.11 COMMITTEE OF NON-OVERLAPPING DIRECTORS.
The Committee of Non-overlapping Directors shall consist of not fewer than three
Non-overlapping Directors (as described in Section 2.1 of these bylaws) and
shall have the following powers and duties:
(a) Review all agreements and material transactions between and among the
Company, its affiliates and subsidiaries to assure that such agreements and
transactions are fair and reasonable and that they comply with Minnesota
Statutes, Section 60D, and all Acts amendatory thereof or additional thereto.
For purposes of this section, the term "material" shall have the definition set
forth in Minnesota Statutes, Section 60D.19, subd. 4, as it may be amended from
time to time.
(b) Such other powers and duties as determined by the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 4.1 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 Directors from time to time may deem necessary. One
individual may hold two or more offices, except those of President and
Secretary.
SECTION 4.2 ELECTION.
Officers shall be elected or appointed by the Board of Directors.
SECTION 4.3 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 4.4 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 Directors then in office.
SECTION 4.5 VACANCIES.
Any vacancy in any office from any cause may be filled by the Board of Directors
at its next meeting.
SECTION 4.6 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 Directors, 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 Directors. 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 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 Directors
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, 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 and of the Board of Directors 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 provided in these bylaws, 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 Directors 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 4.7 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 Directors from time to time may delegate the powers and
duties of such officer to any other officer, or any Director, or any other
person whom they may select.
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
The Company shall, to the fullest extent permitted under Minnesota Statutes,
Section 300.083, as the same currently exists or hereafter is amended, indemnify
(and advance expenses to) the directors, officers and employees of this Company.
The provisions of this Article shall not be deemed to limit or preclude
indemnification of a director, officer or employee by the Company for any
liability which has not been eliminated by the provisions of this Article.
ARTICLE VI
DISPOSITION OF FUNDS AND INVESTMENTS
SECTION 6.1 FUNDS AND INVESTMENTS.
All funds and investments of the Company shall be held in the name of "Minnesota
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 6.2 DEPOSITS.
The Board of Directors 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.
ARTICLE VII
CORPORATE STOCK
SECTION 7.1 CERTIFICATES FOR SHARES.
The Board of Directors is to prescribe the form of the certificate(s) of stock
of the Company. The certificate is to be signed by the President or Vice
President and by the Secretary, Treasurer, or Assistant Secretary or Assistant
Treasurer, is to be sealed with the seal of the Company and is to be numbered
consecutively. The name of the owner of the certificate, the number of shares
of stock represented thereby, and the date of issue are to be recorded on the
books of the Company. Certificates of stock surrendered to the Company for
transfer are to be canceled, and new certificates of stock representing the
transferred shares issued. New stock certificates may be issued to replace
lost, destroyed or mutilated certificates upon such terms and with such security
to the Company as the Board of Directors may require.
SECTION 7.2 TRANSFER OF SHARES.
Shares of stock of the Company may be transferred on the books of the Company by
the delivery of the certificates representing such shares to the Company for
cancellation, and with an assignment in writing on the back of the certificate
executed by the person named in the certificates as the owner thereof, or by a
written power of attorney executed for such purpose by such person. The person
registered on the books of the Company as the owner of shares of stock of the
Company is deemed the owner thereof and is entitled to all rights of ownership
with respect to such shares.
SECTION 7.3 TRANSFER BOOKS.
Transfer books are to be maintained under the direction of the Secretary,
showing the ownership and transfer of all certificates of stock issued by the
Company.
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ARTICLE VIII
AMENDMENTS
These bylaws may be amended by the Board of Directors or by the stockholders at
a regular meeting, or at a special meeting called for that expressly-stated
purpose, by the affirmative vote of a majority of the stockholders present, in
person or by proxy, at the meeting.
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Minnesota Life Insurance Company
Power of Attorney
To Sign Registration Statements
WHEREAS, Minnesota Life Insurance Company ("Minnesota Life") has
established certain separate accounts to fund certain variable annuity and
variable life insurance contracts, and
WHEREAS, Variable Fund D ("Fund D") is a separate account of Minnesota Life
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, Variable Annuity Account ("Variable Annuity Account") is a
separate account of Minnesota Life 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 Life Variable Life Account ("Variable Life Account") is
a separate account of Minnesota Life 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, Group Variable Annuity Account ("Group Variable Annuity Account")
is a separate account of Minnesota Life 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 Life Variable Universal Life Account ("Variable
Universal Life Account") is a separate account of Minnesota Life 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 Directors and Officers of Minnesota
Life, 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 Directors of Minnesota Life 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 Life 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/Robert L. Senkler Chairman of the Board, October 19, 1998
- ------------------------------- President and Chief
Robert L. Senkler Executive Officer
<PAGE>
Signature Title Date
--------- ----- ----
/s/Giulio Agostini Director October 19, 1998
- -------------------------------
Giulio Agostini
/s/Anthony L. Andersen Director October 19, 1998
- -------------------------------
Anthony L. Andersen
/s/Leslie S. Biller Director October 19, 1998
- -------------------------------
Leslie S. Biller
/s/John F. Grundhofer Director October 19, 1998
- -------------------------------
John F. Grundhofer
/s/Harold V. Haverty Director October 19, 1998
- -------------------------------
Harold V. Haverty
/s/David S. Kidwell Director October 19, 1998
- -------------------------------
David S. Kidwell, Ph.D.
/s/Reatha C. King, Ph.D. Director October 19, 1998
- -------------------------------
Reatha C. King, Ph.D.
/s/Thomas E. Rohricht Director October 19, 1998
- -------------------------------
Thomas E. Rohricht
/s/Terry Tinson Saario Director October 19, 1998
- -------------------------------
Terry Tinson Saario, Ph.D.
/s/Michael E. Shannon Director October 19, 1998
- -------------------------------
Michael E. Shannon
/s/Frederick T. Weyerhaeuser Director October 19, 1998
- -------------------------------
Frederick T. Weyerhaeuser
